OBAN MINING CORPORATION
(FORMERLY BRAEVAL MINING CORPORATION)
NOTICE OF MEETING
and
MANAGEMENT INFORMATION CIRCULAR
for the
ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
to be held on
JUNE 25, 2015
DATED AS OF MAY 14, 2015
OBAN MINING CORPORATION
(formerly Braeval Mining Corporation)
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
Notice is hereby given that an annual and special meeting (the "Meeting") of the shareholders ("Shareholders") of
Oban Mining Corporation (formerly Braeval Mining Corporation) (the "Corporation") will be held at the offices of
Bennett Jones LLP, Suite 3400, One First Canadian Place, Toronto, Ontario on June 25, 2015 at 10:00 a.m. (Eastern
Daylight Time), for the following purposes:
1.
2.
3.
4.
5.
to receive and consider the financial statements of the Corporation for the year ended December 31, 2014
and the report of the auditors thereon;
to appoint KPMG LLP, Chartered Accountants as the auditors of the Corporation for the ensuing year and
to authorize the directors to fix their remuneration;
to elect the directors of the Corporation for the ensuing year;
to consider and, if deemed advisable, to pass a resolution, with or without variation, approving the stock
option plan of the Corporation and the unallocated rights, options and other entitlements thereunder; and
to transact such other business as may properly come before the Meeting or any adjournments or
postponements thereof.
The nature of the business to be transacted at the Meeting is described in further detail in the accompanying
management information circular.
The record date for the determination of Shareholders entitled to receive notice of, and to vote at, the Meeting or any
adjournments or postponements thereof is May 26, 2015 (the "Record Date"). Shareholders whose names have been
entered in the register of shareholders at the close of business on the Record Date will be entitled to receive notice
of, and to vote at, the Meeting or any adjournments or postponements thereof.
A Shareholder may attend the Meeting in person or may be represented by proxy. Shareholders who are
unable to attend the Meeting or any adjournments or postponements thereof in person are requested to
complete, date, sign and return the accompanying form of proxy for use at the Meeting or any adjournments
or postponements thereof. To be effective, the enclosed form of proxy must be mailed or faxed so as to reach or
be deposited with TMX Equity Transfer Services at Suite 300, 200 University Avenue, Toronto, Ontario, M5H 4H1,
Fax Number: (416) 595-9593 not later than forty-eight (48) hours (excluding Saturdays, Sundays and statutory
holidays in the City of Toronto, Ontario) prior to the time set for the Meeting or any adjournments or postponements
thereof.
DATED this 14th day of May, 2015.
BY ORDER OF THE BOARD OF DIRECTORS OF
OBAN MINING CORPORATION
"Jose Vizquerra Benavides"
Jose Vizquerra Benavides
President, Chief Executive Officer and Director
GENERAL INFORMATION RESPECTING THE MEETING
Solicitation of Proxies
This Circular is furnished in connection with the solicitation of proxies by the management of Oban Mining
Corporation (formerly Braeval Mining Corporation) (the "Corporation") for use at the annual and special
meeting (the "Meeting") of the shareholders of the Corporation (the "Shareholders") to be held at 10:00 a.m.
(Eastern Daylight Time) on June 25, 2015 at the offices of Bennett Jones LLP, Suite 3400, One First
Canadian Place, Toronto, Ontario, for the purposes set forth in the Notice accompanying this Circular (the
"Notice"). References in this Circular to the Meeting include any adjournment(s) or postponement(s) thereof. It is
expected that the solicitation of proxies will be primarily by mail; however, proxies may also be solicited by the
officers, directors and employees of the Corporation by telephone, electronic mail, telecopier or personally. These
persons will receive no compensation for such solicitation other than their regular fees or salaries. The cost of
soliciting proxies in connection with the Meeting will be borne directly by the Corporation.
The board of directors of the Corporation (the "Board") has fixed the close of business on May 26, 2015 as the
record date, being the date for the determination of the registered Shareholders entitled to receive notice of, and to
vote at, the Meeting. All duly completed and executed proxies must be received by the Corporation's registrar and
transfer agent, TMX Equity Transfer Services at Suite 300, 200 University Avenue, Toronto, Ontario, M5H 4H1,
Fax Number: (416) 595-9593 not later than forty-eight (48) hours (excluding Saturdays, Sundays and statutory
holidays in the City of Toronto, Ontario) prior to the time set for the Meeting or any adjournments or postponements
thereof.
In this Circular, unless otherwise indicated, all references to "$" refer to Canadian dollars.
Unless otherwise stated, the information contained in this Circular is as of May 14, 2015.
Voting of Proxies
The common shares in the capital stock of the Corporation ("Common Shares") represented by the accompanying
form of proxy (if same is properly executed and is received at the offices of TMX Equity Transfer Services at the
address provided herein, not later than forty-eight (48) hours (excluding Saturdays, Sundays and statutory holidays
in the City of Toronto, Ontario) prior to the time set for the Meeting or any adjournment(s) or postponement(s)
thereof), will be voted at the Meeting, and, where a choice is specified in respect of any matter to be acted upon, will
be voted or withheld from voting in accordance with the specification made on any ballot that may be called for. In
the absence of such specification, proxies in favour of management will be voted in favour of all resolutions
described below. 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 and with respect to other matters
which may properly come before the Meeting. At the time of printing of this Circular, management knows of no
such amendments, variations or other matters to come before the Meeting. However, if any other matters that are not
now known to management should properly come before the Meeting, the form of proxy will be voted on such
matters in accordance with the best judgment of the named proxies.
Appointment of Proxies
The persons named in the enclosed form of proxy are officers and/or directors of the Corporation. A Shareholder
desiring to appoint some other person, who need not be a Shareholder, to represent him or her at the
Meeting, may do so by inserting such person's name in the blank space provided in the enclosed form of
proxy or by completing another proper form of proxy and, in either case, depositing the completed and
executed proxy at the offices of TMX Equity Transfer Services, at the address provided herein, not later than
forty-eight (48) hours (excluding Saturdays, Sundays and statutory holidays in the City of Toronto, Ontario)
prior to the time set for the Meeting or any adjournment(s) or postponement(s) thereof.
A Shareholder forwarding the enclosed form of proxy may indicate the manner in which the appointee is to vote
with respect to any specific item by checking the appropriate space. If the Shareholder giving the proxy wishes to
- - 2 - -
confer a discretionary authority with respect to any item of business, then the space opposite the item is to be left
blank. The Common Shares represented by the form of proxy submitted by a Shareholder will be voted in
accordance with the directions, if any, given in the form of proxy.
To be valid, a form of proxy must be executed by a Shareholder or a Shareholder's attorney duly authorized in
writing or, if the Shareholder is a body corporate, under its corporate seal or, by a duly authorized officer or
attorney.
Revocation of Proxies
A proxy given pursuant to this solicitation may be revoked at any time prior to its use. A Shareholder who has given
a proxy may revoke the proxy by:
(a)
(b)
completing and signing a proxy bearing a later date and depositing it at the offices of TMX Equity
Transfer Services at Suite 300, 200 University Avenue, Toronto, Ontario, M5H 4H1, Fax Number:
(416) 595-9593;
depositing an instrument in writing executed by the Shareholder or by the Shareholder's attorney
duly authorized in writing or, if the Shareholder is a body corporate, under its corporate seal or by
a duly authorized officer or attorney either with TMX Equity Transfer Services at Suite 300, 200
University Avenue, Toronto, Ontario, M5H 4H1, Fax Number: (416) 595-9593 at any time up to
and including the last business day preceding the day of the Meeting or any adjournment(s) or
postponement(s) thereof or with the Chairman of the Meeting prior to the commencement of the
Meeting on the day of the Meeting or any adjournment(s) or postponement(s) thereof; or
(c)
in any other manner permitted by law.
Such instrument will not be effective with respect to any matter on which a vote has already been cast pursuant to
such proxy.
Voting by Non-Registered Shareholders
Only registered Shareholders or the persons they appoint as their proxies are permitted to vote at the Meeting. Most
Shareholders are "non-registered" Shareholders ("Non-Registered Shareholders") because the Common Shares
they own are not registered in their names but are instead registered in the name of the brokerage firm, bank or trust
company through which they purchased the Common Shares. Common Shares beneficially owned by a Non-
Registered Shareholder are registered either: (i) in the name of an intermediary ("Intermediary") that the Non-
Registered Shareholder deals with in respect of the Common Shares; or (ii) in the name of a clearing agency (such
as The CDS Clearing and Depository Services Inc. ("CDS")) of which the Intermediary is a participant. In
accordance with applicable securities law requirements, the Corporation will have distributed copies of the Notice,
this Circular, the form of proxy and a request card for interim and annual materials (collectively, the "Meeting
Materials") to the clearing agencies and Intermediaries for distribution to Non-Registered Shareholders.
Intermediaries are required to forward the Meeting Materials to Non-Registered Shareholders unless a Non-
Registered Shareholder has waived the right to receive them. Intermediaries often use service companies to forward
the Meeting Materials to Non-Registered Shareholders. Generally, Non-Registered Shareholders who have not
waived the right to receive Meeting Materials will either:
(a)
be given a voting instruction form which is not signed by the Intermediary and which, when
properly completed and signed by the Non-Registered Shareholder and returned to the
Intermediary or its service company, will constitute voting instructions (often called a "voting
instruction form") which the Intermediary must follow. Typically, the voting instruction form
will consist of a one page pre-printed form. The majority of brokers now delegate responsibility
for obtaining instructions from clients to Broadridge Financial Solutions, Inc. ("Broadridge") in
Canada. Broadridge typically prepares a machine-readable voting instruction form, mails those
- - 3 - -
forms to Non-Registered Shareholders and asks Non-Registered Shareholders to return the forms
to Broadridge or otherwise communicate voting instructions to Broadridge (by way of the Internet
or telephone, for example). Broadridge then tabulates the results of all instructions received and
provides appropriate instructions respecting the voting of the Common Shares to be represented at
the Meeting. Sometimes, instead of the one-page pre-printed form, the voting instruction form will
consist of a regular printed proxy form accompanied by a page of instructions which contains a
removable label with a bar-code and other information. In order for this form of proxy to validly
constitute a voting instruction form, the Non-Registered Shareholder must remove the label from
the instructions and affix it to the form of proxy, properly complete and sign the form of proxy and
submit it to the Intermediary or its service company in accordance with the instructions of the
Intermediary or its service company. A Non-Registered Shareholder who receives a voting
instruction form cannot use that form to vote his or her Common Shares at the Meeting; or
(b)
be given a form of proxy which has already been signed by the Intermediary (typically by a
facsimile, stamped signature), which is restricted as to the number of Common Shares beneficially
owned by the Non-Registered Shareholder but which is otherwise not completed by the
Intermediary. Because the Intermediary has already signed the form of proxy, this form of proxy is
not required to be signed by the Non-Registered Shareholder when submitting the proxy. In this
case, the Non-Registered Shareholder who wishes to submit a proxy should properly complete the
form of proxy and deposit it with TMX Equity Transfer Services at Suite 300, 200 University
Avenue, Toronto, Ontario, M5H 4H1.
In either case, the purpose of these procedures is to permit Non-Registered Shareholders to direct the voting of the
Common Shares they beneficially own. Should a Non-Registered Shareholder who receives one of the above forms
wish to vote at the Meeting, or any adjournment(s) or postponement(s) thereof (or have another person attend and
vote on behalf of the Non-Registered Shareholder), the Non-Registered Shareholder should strike out the names of
the persons named in the voting instruction form or form of proxy, as applicable, and insert the Non-Registered
Shareholder's or such other person's name in the blank space provided. In either case, Non-Registered
Shareholders should carefully follow the instructions of their Intermediary, including those regarding when
and where the voting instruction form is to be delivered.
A Non-Registered Shareholder may revoke a voting instruction form or a waiver of the right to receive Meeting
Materials and to vote which has been given to an Intermediary at any time by written notice to the Intermediary
provided that an Intermediary is not required to act on a revocation of a voting instruction form or of a waiver of the
right to receive Meeting Materials and to vote, which is not received by the Intermediary at least seven (7) days prior
to the Meeting.
INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON
Other than as disclosed herein, no director or executive officer of the Corporation who has held such position at any
time since the beginning of the Corporation's last financial year, each proposed nominee for election as a director of
the Corporation, and associates or affiliates of the foregoing persons, has any material interest, direct or indirect, by
way of beneficial ownership of securities or otherwise, in any matters to be acted upon at the Meeting, other than the
election of directors and the appointment of auditors.
VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES
The authorized share capital of the Corporation consists of an unlimited number of Common Shares. As at the date
hereof, there are 119,881,561 Common Shares issued and outstanding.
Each Common Share entitles the holder thereof to one vote on all matters to be acted upon at the Meeting. The
record date for the determination of Shareholders entitled to receive notice of the Meeting has been fixed at May 26,
2015 (the "Record Date"). All holders of Common Shares of record at the close of business on the Record Date are
entitled either to attend the Meeting and vote the Common Shares held by them in person or, provided a completed
and executed proxy shall have been delivered to the Corporation's transfer agent, TMX Equity Transfer Services,
- - 4 - -
within the time specified in the attached Notice, to have a proxy attend and vote the Common Shares in accordance
with the Shareholder's instructions.
To the knowledge of the directors and executive officers of the Corporation, as of the date hereof, no person or
company beneficially owns, controls or directs, directly or indirectly, voting securities of the Corporation carrying
10% or more of the voting rights attached to all outstanding Common Shares, other than as set out below:
Name of Shareholder
Stagleap Incorporated(3)
Sean Roosen
Number of Common Shares(1)(2)
Percentage of Common Shares(1)(2)
18,265,569
14,632,831
15.3%
12.2%
Notes:
(1)
(2)
(3)
The information as to Common Shares beneficially owned, controlled or directed, not being within the knowledge of the Corporation,
has been obtained by the Corporation from publicly disclosed information and/or furnished by the Shareholder listed above.
Calculated on a non-diluted basis on the basis of Common Shares issued and outstanding.
Stagleap Incorporated is a holding company jointly controlled by Terence Harbort, Ruben Padilla, and Chris Lodder, a former director
of the Corporation.
Compensation Discussion and Analysis
EXECUTIVE COMPENSATION
The purpose of this Compensation Discussion and Analysis ("CD&A") is to provide information about the
Corporation's executive compensation philosophy, objectives, and processes and to discuss compensation decisions
relating to the Corporation's Chief Executive Officer, Chief Financial Officer, and, if applicable, its three most
highly compensated individuals acting as, or in a like capacity as, executive officers of the Corporation whose total
compensation for the most recently completed financial year was individually equal to more than $150,000 (the
"NEOs" or "Named Executive Officers"), during the Corporation's most recently completed financial year, being
the financial year ended December 31, 2014 (the "Last Financial Year"). The only NEOs of the Corporation during
the Last Financial Year were Jose Vizquerra Benavides, the Corporation's President and Chief Executive Officer,
Blair Zaritsky, the Corporation's Chief Financial Officer and Corporate Secretary and Gernot Wober, the
Corporation's Vice President, Exploration. The Corporation had no other executive officers whose total salary
(including incentive awards) and bonus during the Last Financial Year exceeded $150,000.
Corporate Governance and Compensation Committee
The CG&C Committee is currently comprised of four directors, namely Robert Wares (Chair), Bernardo Calderon,
Patrick Anderson and John Burzynski. All of the members of the CG&C Committee are independent within the
meaning of National Instrument 58-101 – Disclosure of Corporate Governance Practices ("NI 58-101").
The CG&C Committee is appointed by the Board to assist in fulfilling its corporate governance responsibilities
under applicable laws, to promote a culture of integrity throughout the Corporation, to assist the Board in setting
director and senior executive compensation, and to develop and submit to the Board recommendations with respect
to other employee benefits as the CG&C Committee sees fit. In the performance of its duties, the CG&C Committee
is guided by the following principles:
establishing sound corporate governance practices that are in the interests of Shareholders and that
contribute to effective and efficient decision-making;
offering competitive compensation to attract, retain and motivate the very best qualified
executives in order for the Corporation to meet its goals; and
acting in the interests of the Corporation and the Shareholders by being fiscally responsible.
- - 5 - -
Compensation Process
The Board relies on the knowledge and experience of the members of the CG&C Committee to set appropriate
levels of compensation for senior officers. Neither the Corporation nor the CG&C Committee currently has, or has
had at any time since incorporation, any contractual arrangement with any executive compensation consultant who
has a role in determining or recommending the amount or form of senior officer compensation.
Upon the Corporation becoming a reporting issuer in December of 2012, the CG&C Committee adopted a
compensation process whereby it will review annually the total remuneration (including benefits) and the main
components thereof for the officers and directors, and compare such remuneration with that of peers in the same
industry, and review periodically bonus plans and the Option Plan (as hereinafter defined), and consider these in
light of new trends and practices of peers in the same industry. The CG&C Committee's recommendations regarding
director and officer compensation are presented to the Board for its consideration and approval. The Board is
responsible for reviewing the compensation of members of senior management to ensure that they are competitive
within the industry and that the form of compensation aligns the interests of each such individual with those of the
Corporation.
Compensation Program
Principles/Objectives of the Compensation Program
The primary goal of the Corporation's executive compensation program is to attract, motivate and retain top quality
individuals at the executive level. The program is designed to ensure that the compensation provided to the
Corporation's senior officers is determined with regard to the Corporation's business strategy and objectives and
financial resources, and with the view of aligning the financial interests of the senior officers with those of the
Shareholders.
Compensation Program Design and Analysis of Compensation Decisions
Standard compensation arrangements for the Corporation's senior officers are composed of the following elements,
which are linked to the Corporation's compensation and corporate objectives as follows:
Compensation Element
Link to Compensation Objectives
Link to Corporate Objectives
Base Salary and/or Annual Bonus
Attract and Retain
Options
Motivate and Align interests with
shareholders
Competitive pay ensures access to skilled
employees necessary to achieve corporate
objectives.
Long-term incentives motivate senior
officers to increase shareholder value by the
achievement of long-term corporate
strategies and objectives.
Elements of Compensation
The Corporation is an exploration stage mining company and does not expect to be generating revenues from
operations in the foreseeable future. As a result, the use of traditional performance standards, such as corporate
profitability, are not considered by the CG&C Committee to be appropriate in the evaluation of corporate or NEO
performance. The compensation of senior officers is based, in part, on trends in the mineral exploration industry as
well as achievement of the Corporation's business plans.
The elements of compensation earned by the NEOs are: (a) base salary and bonus; (b) option-based awards; (c)
perquisites and personal benefits; and (d) termination and change of control benefits.
- - 6 - -
Base Salaries/Consulting Fees and Bonuses
The Corporation provides senior officers with base salaries or consulting fees which represent their minimum
compensation for services rendered, or expected to be rendered. NEOs' base compensation depends on the scope of
their experience, responsibilities, leadership skills, performance, length of service, general industry trends and
practices, competitiveness, and the Corporation's existing financial resources. Base salaries are reviewed annually by
the CG&C Committee.
Base salary is a fixed element of compensation that is payable to each NEO for performing the specific duties of his
position. The amount of base salary is determined through negotiation of employment terms with each NEO and is
determined on an individual basis. While base salary is intended to fit into the Corporation's overall compensation
objectives by serving to attract and retain talented executive officers, the size of the Corporation and the nature and
stage of its business also impacts the level of base salary. Compensation is set with informal reference to the market
for similar jobs in Canada and internationally. Given the stage of the Corporation's business and operations, it did
not benchmark against a peer group of companies.
Bonuses are short-term performance based financial incentives that are determined through the compensation review
process. As the Corporation grows and develops its projects, it is expected that an annual incentive award program
will be formalized that will clearly articulate performance objectives and specific measurable goals that will be
linked to individual performance criteria set for the NEOs and other executive officers. The Corporation did not pay
bonuses to its NEOs for the 2014 financial year.
As a result of the completion of the acquisition of Oban Exploration Limited ("OEL") by the Corporation on April
14, 2014 (the "Business Combination"), and given that the executive officers of the Corporation, who previously
devoted 50% of their time to the Corporation and 50% of their time to OEL, began thereafter to devote 100% of
their time to the Corporation, the executive officers' compensation was adjusted at such time to have regard to the
fact that the companies have been combined. Commencing after the completion of the Business Combination, Mr.
Vizquerra's annual salary was set at $256,250, Mr. Zaritsky's annual salary was set at $205,000 and Mr. Wober's
annual salary was set at $215,250. There were no other changes made to the base compensation of the NEOs during
the Last Financial Year.
Options
The grant of options to acquire Common Shares ("Options") pursuant to the Corporation's stock option plan (the
"Option Plan") is an integral component of the compensation arrangements of the senior officers of the
Corporation. The Board believes that the grant of Options to senior officers and Common Share ownership by such
officers serves to motivate them to strive towards achievement of the Corporation's long-term strategic objectives,
which will benefit Shareholders. Options are awarded by the Board to directors, officers, employees and consultants
of the Corporation, on the basis of the recommendation of the CG&C Committee. Decisions with respect to Options
granted are based on the individual's level of responsibility and their contribution towards the Corporation's goals
and objectives, and additionally may be awarded in recognition of the achievement of a particular goal or
extraordinary service. The Board considers the overall number of Options that are outstanding relative to the number
of outstanding Common Shares in determining whether to make any new grants of Options and the size of such
grants. The Board generally grants Options to officers, employees and consultants that vest in tranches of one-third,
with one-third of the Options vesting on the date of grant, one-third of the Options vesting on the first anniversary of
the date of grant, and one-third of the Options vesting on the second anniversary of the date of grant. An annual
Option grant program may be considered as the Corporation grows and develops its projects.
Perquisites and Personal Benefits
The Corporation also provides basic perquisites and personal benefits to certain of its NEOs. These perquisites and
personal benefits are determined through negotiation of an executive employment agreement with each NEO. While
perquisites and personal benefits are intended to fit the Corporation's overall compensation objectives by serving to
attract and retain talented executive officers, the size of the Corporation and the nature and stage of its business also
impacts the level of perquisites and benefits. Currently a benefit program with life insurance and health benefits is
- - 7 - -
offered to all NEOs. The Corporation has also provided a parking spot in the Corporation's office building to the
President and CEO.
Termination and Change of Control Benefits
For a description of the termination and change of control benefits provided by the Corporation to the NEOs, please
see "Termination and Change of Control Benefits" below.
Compensation Risk Considerations
The CG&C Committee is responsible for considering, establishing and reviewing executive compensation programs,
and whether the programs encourage unnecessary or excessive risk taking. The Corporation believes the programs
are balanced and do not motivate unnecessary or excessive risk taking. The Corporation has a policy that restricts
directors and NEOs from purchasing financial instruments in an amount greater than $150,000, including, for
greater certainty, prepaid variable forward contracts, equity swaps, collars, or units of exchange funds that are
designed to hedge against or offset a decrease in market value of equity. To the knowledge of the Corporation, as of
the date of hereof, no director or NEO of the Corporation has participated in the purchase of such financial
instruments.
Base salaries are fixed in amount thus do not encourage risk taking. While annual incentive awards and bonuses
focus on the achievement of short term or annual goals and short term goals may encourage the taking of short-term
risks at the expense of long term results, the Corporation's annual incentive award program represents a small
percentage of employees' total compensation opportunities. Annual incentive awards are based on various personal
and company-wide achievements.
Funding of any annual incentive awards is capped at the company level and the distribution of funds to the executive
officers is at the discretion of the CG&C Committee.
Option awards are important to further align NEOs' interests with those of the Shareholders. The ultimate value of
the awards is tied to the Corporation's stock price and, since awards are staggered and subject to long-term vesting
schedules, they help ensure that NEOs have significant value tied to long-term stock price performance.
Performance Graph
The following graph compares the yearly percentage change in the cumulative total Shareholder return for $100
invested in the Common Shares on December 20, 2012 (the day the Common Shares began trading on the Toronto
Stock Exchange (the "TSX")) against the cumulative total return of the S&P/TSX Composite Index for the period
ending on December 31, 2014.
Oban Mining Corporation
S&P/TSX Composite Index
C$200.00
C$150.00
C$100.00
C$50.00
C$0.00
Dec 20, 2012 Dec 31, 2012 Dec 31, 2013 Dec 31, 2014
The amounts indicated in the graph above and in the chart below are as of December 20, 2012 and December 31 in
each of the years 2012, 2013 and 2014.
- - 8 - -
Year
December 20,
2012
December 31,
2012
December 31,
2013
December 31,
2014
Common Shares(1)
S&P/TSX Composite Index
100.00
100.00
90.00
100.55
15.00
113.62
7.64
125.61
Notes:
(1)
Based on the trading price for the Common Shares on the TSX on December 20, 2012.
The performance graph above shows a downward trend in the price of the Common Shares. During the same period,
total compensation paid to the Corporation's NEOs also decreased, particularly when consideration is given to the
fact that the compensation for the NEOs prior to the completion of the Business Combination did not correspond to
a commitment of 100% of the NEOs' time to the Corporation. Summary Compensation Table
The following table provides information for the Last Financial Year, and financial years ended December 31, 2013
and December 31, 2012 regarding compensation earned by the Corporation's NEOs.
Name and
principal
position
Year
Ended
December
31(1)
Salary
($)
Share-
based
awards
($)
Option-
based awards
($)
Non-equity
incentive plan
compensation
($)
Annual
incentive
plans
Long-
term
incentiv
e plans
Pension
value
($)
All other
compensation
($)
Total
compensation
($)
2014
2013
256,250
125,000
Nil
Nil
570,871(4)
Nil
Nil
Nil
Nil
Nil
2012
125,000
Nil
1,351,446(5) 31,250(7)
Nil
2014
2013
205,000
100,000
2012
94,796(2)
2014
2013
2012
215,250
105,000
64,167(3)
Nil
Nil
Nil
Nil
Nil
Nil
171,261(4)
Nil
Nil
Nil
Nil
Nil
405,433(5)
21,875(7)
Nil
171,261(4)
Nil
407,091(6)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
827,121
125,000
1,507,696
376,261
100,000
522,104
386,511
105,000
40,000(8)
511,258
Jose
Vizquerra
Benavides
President &
CEO
Blair
Zaritsky
CFO &
Corporate
Secretary
Gernot
Wober
VP,
Exploration
Notes:
(1) Each NEO of the Corporation devoted 50% of their time to the Corporation and 50% to OEL during each of the periods covered prior
to the completion of the Business Combination, after which time each of the NEOs devoted 100% of their time to the Corporation.
(2) As of June 1, 2012, Mr. Zaritsky's annual base salary was increased from $87,500 to $100,000. $94,796 represents Mr. Zaritsky's
former base salary of $87,500 on a pro-rata basis for five months and his base salary of $100,000 on a pro-rata basis for the final seven
months of the period.
(3) Based on an annual salary of $105,000, pro-rated for six months beginning on June 1, 2012.
(4) On April 22, 2014 the Corporation granted 3,500,000 Options to Mr. Benevides, 1,050,000 Options to Mr. Zaritsky and 1,050,000
Options to Mr. Wober with an expiry date of April 22, 2019 and an exercise price of $0.22 per Common Share. These Options were
granted as replacements for the options that were cancelled in connection with the Business Combination. One-third of the Options
vested on the date of grant and the remaining thirds vested on each of the first and second anniversaries of April 22, 2014. The fair
value of these Options at the date of grant was estimated using the Black-Scholes option pricing model with the following
assumptions: five year expected term; 99.7% volatility; risk-free interest rate of 1.59% per annum; and a dividend yield of 0%. The
fair value of the cancelled options at the date of grant was estimated using the Black-Scholes option pricing model with the following
assumptions: five year expected term; 99.7% volatility; risk-free interest rate of 1.59% per annum; and a dividend yield of 0%. The
incremental fair value shown above is equal to the difference between the value of the Options granted and the value of the options
that were cancelled. Additional information relating to the Business Combination can be found in the Corporation's annual
information form for the year ended December 31, 2014, and the Corporation's management information circular dated March 11,
2014, both of which are available under the Corporation's issuer profile on SEDAR at www.sedar.com
- - 9 - -
(5) On June 1, 2012, the Corporation granted Mr. Wober 900,000 Options with an expiry date of June 1, 2017 and an exercise price of
$0.60 per Common Share. One-third of the Options vested on the date of grant and the remaining thirds vested on each of the first and
second anniversaries of June 1, 2012. The fair value of these Options at the date of grant was estimated using the Black-Scholes option
pricing model with the following assumptions: five year expected term; 102.29% volatility; risk-free interest rate of 1.06% per annum;
and a dividend yield of 0%.
(6) On April 2, 2012, the Corporation granted 3,000,000 Options to Mr. Benavides and 900,000 Options to Mr. Zaritsky with an expiry
date of April 2, 2017 and an exercise price of $0.60 per Common Share. One-third of the Options vested on the date of grant and the
remaining thirds vested on the first and second anniversaries of April 2, 2012. The fair value of these Options at the date of grant was
estimated using the Black-Scholes option pricing model with the following assumptions: five year expected term; 101% volatility;
risk-free interest rate of 1.47% per annum; and a dividend yield of 0%.
(7) Represents bonus award based on the Board's assessment of the performance of the NEO, including the success and contribution in
developing and executing the Corporation's business plan and strategic initiative.
(8) Represents remuneration for moving expenses and other relocation benefits provided to Mr. Wober in connection with his relocation
to Toronto from Alaska.
Incentive Plan Awards
The following table provides information regarding the incentive plan awards outstanding for each NEO as of
December 31, 2014.
Outstanding Share Awards and Option Awards
Option-based Awards
Share-based Awards
Name
Number of
Common
Shares
underlying
unexercised
Options
(#)
Option
exercise
price
($)
Option
expiration
date
Value of
unexercised
in-the-
money
Options(1)
($)
Number of
shares or
units
of shares that
have not
vested (#)
Market or
payout value of
share awards
that have not
vested
($)
Market or payout
value of vested
share-based
awards
not paid out of
distributed
Jose Vizquerra
Benavides
3,500,000
0.22 April 22, 2019
Blair Zaritsky
1,050,000
0.22 April 22, 2019
Gernot Wober
1,050,000
0.22 April 22, 2019
Nil
Nil
Nil
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Notes:
(1)
Calculated based on the difference between the market price of the Common Shares on December 31, 2014 and the exercise price of
the Options. The closing price of the Common Shares as listed on the TSX on December 31, 2014 was $0.12.
The following table sets forth, for each of the NEOs, the value of all incentive plan awards that vested during the
year ended December 31, 2014.
Incentive Plan Awards – Value Vested or Earned During the Year
Name
Option-based awards – Value
vested during the year(1)
($)
Share-based awards – Value
vested
($)
Non-equity incentive plan
compensation – Value earned
during the year
($)
Jose Vizquerra Benavides
Blair Zaritsky
Gernot Wober
Nil
Nil
Nil
N/A
N/A
N/A
N/A
N/A
N/A
Notes:
(1)
This is the aggregate dollar value that would have been realized if the Options vested during the year had been exercised on their
respective vesting dates.
- - 10 - -
Pension Plan Benefits
As at the date of this Circular, the Corporation does not have any pension plans.
Termination and Change of Control Benefits
Pursuant to an employment agreement between the Corporation and Jose Vizquerra Benavides dated April 2, 2012
and entered into when the Corporation was a private company, in the event that Mr. Benavides's employment is
terminated by the Corporation without cause, the Corporation shall pay to Mr. Benavides 24 months' salary and
accrued vacation, and "salary" shall mean the per annum salary in effect at the time of such termination and any
bonus paid under the agreement in the year of or year prior to the year of termination. The Corporation, during said
severance period, shall maintain any health, medical disability and life insurance coverage, or in the alternative,
shall compensate Mr. Benavides the cost of alternative comparative coverage he obtains to replace said coverage.
Any Options that would automatically vest during said period shall vest to the benefit of Mr. Benavides, and any
Options so vested shall be exercised within the earlier of (i) the date of expiry and (ii) 30 days of the end of the 24-
month period from the date of Mr. Benavides' termination (or the maximum period permitted by applicable
regulations, if 30 days from the end of the 24-month period following the date of Mr. Benavides' termination is not
permitted).
In addition, in the event of a Change in Control (as defined below), Mr. Benavides shall have the right, for a period
of 120 days, to terminate his employment and become entitled to the termination rights summarized above. "Change
in Control" means the occurrence of any one or more of the following events: (i) the Corporation is not the
surviving entity in a merger, amalgamation or other reorganization (or survives only as a subsidiary of an entity
other than a previously wholly-owned subsidiary of the Corporation); (ii) the Corporation sells all or substantially all
of its assets to any other person or entity (other than a wholly-owned subsidiary of the Corporation); (iii) the
Corporation is to be dissolved and liquidated; (iv) any person, entity or group of persons, or entities acting jointly or
in concert acquires or gains ownership or control (including, without limitation, the power to vote) more than 30%
of the Corporation's outstanding voting securities; or (v) as a result of or in connection with (A) the contested
election of directors or (B) a transaction referred to above whereby the persons who were directors of the
Corporation before such election shall cease to constitute a majority of the Board.
Pursuant to an employment agreement between the Corporation and Blair Zaritsky dated April 2, 2012 and entered
into when the Corporation was a private company, in the event that Mr. Zaritsky's employment is terminated by the
Corporation without cause, the Corporation shall pay to Mr. Zaritsky 24 months' salary and accrued vacation, and
"salary" shall mean the per annum salary in effect at the time of such termination and any bonus paid under the
agreement in the year of or year prior to the year of termination. The Corporation, during said severance period,
shall maintain any health, medical disability and life insurance coverage, or in the alternative shall compensate Mr.
Zaritsky the cost of alternative comparative coverage he obtains to replace said coverage. Any Options that would
automatically vest during said period shall vest to the benefit of Mr. Zaritsky, and any Options so vested shall be
exercised within the earlier of (i) the date of expiry and (ii) 30 days of the end of the 24-month period from the date
of Mr. Zaritsky's termination (or the maximum period permitted by applicable regulations, if 30 days from the end
of the 24-month period following the date of Mr. Zaritsky's termination is not permitted). In addition, in the event of
a Change in Control (as defined above), Mr. Zaritsky shall have the right, for a period of 120 days, to terminate his
employment and become entitled to the termination rights summarized above.
Pursuant to an employment agreement between the Corporation and Gernot Wober dated April 2, 2012 and entered
into when the Corporation was a private company, in the event that Mr. Wober's employment is terminated by the
Corporation without cause, the Corporation shall pay to Mr. Wober 24 months' salary and accrued vacation, and
"salary" shall mean the per annum salary in effect at the time of such termination and any bonus paid under the
agreement in the year of or year prior to the year of termination. The Corporation, during said severance period,
shall maintain any health, medical disability and life insurance coverage, or in the alternative shall compensate Mr.
Wober the cost of alternative comparative coverage he obtains to replace said coverage. Any Options that would
automatically vest during said period shall vest to the benefit of Mr. Wober, and any Options so vested shall be
exercised within the earlier of (i) the date of expiry and (ii) 30 days of the end of the 24-month period from the date
of Mr. Wober's termination (or the maximum period permitted by applicable regulations, if 30 days from the end of
the 24-month period following the date of Mr. Wober's termination is not permitted). In addition, in the event of a
- - 11 - -
Change in Control (as defined above), Mr. Wober shall have the right, for a period of 120 days, to terminate his
employment and become entitled to the termination rights summarized above.
The following shows the estimated incremental payments that would be payable to each of the NEOs of the
Corporation in the event of a change of control or termination without cause of such NEOs on December 31, 2014.
Name
Jose Vizquerra Benavides
Blair Zaritsky
Gernot Wober
Director Compensation
Estimated Change of
Control Payment
Estimated Termination
Without Cause Payment
$512,500
$410,000
$430,500
$512,500
$410,000
$430,500
The Board determines the level of compensation for directors, based on recommendations from the CG&C
Committee. The Board is responsible for reviewing the compensation of members of the Board to ensure that the
compensation realistically reflects the responsibilities and risks involved in being an effective director. During the
Last Financial Year, the Board established a cash compensation program for its directors with respect to general
directors' duties, meeting attendance or for additional service on Board committees. The Board determined, based on
recommendations by the CG&C Committee, to provide $20,000 in annual cash compensation to each member of the
Board, an additional $10,000 for the Chair of the Audit Committee and an additional $10,000 for the Chair of the
CG&C Committee.
Directors may receive Option grants as determined by the Board pursuant to the Option Plan. The exercise price of
such Options is determined by the Board, but shall in no event be less than the market price of the Common Shares
at the time of the grant of the Options, less any permissible discounts pursuant to the Option Plan and the policies of
the TSX.
Director Compensation Table
The following table provides information regarding compensation paid to the Corporation's directors, other than
Jose Vizquerra Benavides, during the financial year ended December 31, 2014. Compensation for Mr. Benavides is
fully reflected under the heading "Executive Compensation – Summary Compensation Table".
Name
Fees earned
($)
Share-
based
awards ($)
Option-based
awards(1)
($)
Non-equity
incentive plan
compensation
($)
Pension
value
($)
All other
compensation
($)
John Burzynski
Patrick Anderson
Keith McKay
Robert Wares
Bernardo
Calderon(2)
30,000
20,000
30,000
20,000
14,438
Nil
Nil
Nil
Nil
Nil
47,300
40,777
40,777
40,777
40,777
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Nil
Nil
Nil
N/A
N/A
Total
($)
77,300
60,777
70,777
60,777
55,215
Notes:
(1)
On April 22, 2014 the Corporation granted 290,000 Options to Mr. Burzynski and 250,000 Options to Mr. Anderson, Mr. McKay, Mr.
Wares and Mr. Calderon with an expiry date of April 22, 2019 and an exercise price of $0.22 per Common Share. These Options were
granted as replacements for the options that were cancelled in connection with the Business Combination. The Options vest as to one-
third on the date of grant and remaining thirds each vesting on the first and second anniversaries of April 22, 2014. The fair value of
these Options at the date of grant was estimated using the Black-Scholes option pricing model with the following assumptions: five
year expected term; 99.7% volatility; risk-free interest rate of 1.59% per annum; and a dividend yield of 0%. The fair value of the
cancelled options at the date of grant was estimated using the Black-Scholes option pricing model with the following assumptions:
five year expected term; 99.7% volatility; risk-free interest rate of 1.59% per annum; and a dividend yield of 0%. The incremental fair
value shown above is equal to the difference between the value of the Options granted and the value of the options that were
- - 12 - -
cancelled. Additional information relating to the Business Combination can be found in the Corporation's annual information form for
the year ended December 31, 2014, and the Corporation's management information circular dated March 11, 2014, both of which are
available under the Corporation's issuer profile on SEDAR at www.sedar.com
Mr. Calderon was appointed as a director of the Corporation effective April 14, 2014.
(2)
Incentive Plan Awards
The following table provides information regarding the incentive plan awards for each director, other than Jose
Vizquerra Benavides, outstanding as of December 31, 2014.
Outstanding Share Awards and Options Awards
Option-based Awards
Share-based Awards
Name
Number of
Securities
underlying
unexercised
Options (#)
Option
exercise
price ($)
Option
expiration
date
Value of
unexercised
in-the-
money
Options(1)
($)
John Burzynski
290,000
Patrick Anderson
250,000
250,000
250,000
Keith McKay
Robert Wares
Bernardo
Calderson(2)
0.22
0.22
0.22
0.22
April 22, 2019
April 22, 2019
April 22, 2019
April 22, 2019
Nil
Nil
Nil
Nil
Nil
250,000
0.22
April 22, 2019
Number
of shares
or units
of shares
that
have not
vested
(#)
N/A
N/A
N/A
N/A
N/A
Market or
payout value
of share-based
awards that
have not
vested ($)
Market or payout
value of vested
share-based
awards not paid
out of distributed
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Notes:
(1)
(2)
Calculated based on the difference between the market price of the Common Shares on December 31, 2014 and the exercise price of
the Options. The closing price of the Common Shares as listed on the TSX on December 31, 2014 was $0.12.
Mr. Calderon was appointed as a director of the Corporation effective April 14, 2014.
The following table provides information regarding the value vested or earned on incentive plan awards for each
director, other than Jose Vizquerra Benavides, during the year ended December 31, 2014.
Incentive Plan Awards – Value Vested or Earned During the Year
Name
Option awards - Value vested
during year(1) ($)
Share awards - Value vested
during the year ($)
Non-equity incentive plan
compensation - Value earned
during the year ($)
John Burzynski
Patrick Anderson
Keith McKay
Robert Wares
Bernardo Calderon(2)
Nil
Nil
Nil
Nil
Nil
N/A
N/A
N/A
N/A
N/A
Nil
Nil
Nil
Nil
Nil
Notes:
(1)
(2)
This is the aggregate dollar value that would have been realized if the Options vested during the year had been exercised on their
respective vesting dates.
Mr. Calderon was appointed as a director of the Corporation effective April 14, 2014.
- - 13 - -
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
Stock Option Plan
The Option Plan is the Corporation's only equity compensation plan. The Option Plan is a rolling stock option plan,
under which 10% of the outstanding Common Shares at any given time are available for issuance thereunder. The
purpose of the Option Plan is to attract, retain and motivate persons as directors, officers, employees and consultants
of the Corporation and any subsidiaries (hereinafter "Optionees"), and to advance the interests of the Corporation by
providing such persons with the opportunity, through Options, to acquire an increased proprietary interest in the
Corporation.
The following information is intended to be a brief description and summary of the material features of the Option
Plan. The full text of the Option Plan is attached hereto as Schedule "B".
The maximum aggregate number of Common Shares reserved by the Corporation for issuance and which may be
purchased upon the exercise of all Options shall not exceed 10% of the issued and outstanding Common Shares (on
a non-diluted basis). As a result, should the Corporation issue additional Common Shares in the future, the number
of Common Shares issuable under the Option Plan will increase accordingly. The Option Plan is considered an
"evergreen" plan, since the Common Shares covered by Options which have been exercised shall be available for
subsequent grants under the Option Plan, and the number of Options available to grant increases as the number of
issued and outstanding Common Shares increases.
1.
2.
3.
4.
Options may be granted by the Corporation pursuant to the recommendations of the Board from time to
time, provided and to the extent that such decisions are approved by the Board. Subject to the provisions of
the Option Plan, the number of Common Shares subject to each Option, the Option Price (as defined in the
Option Plan), the expiration date of each Option, the extent to which each Option is exercisable from time
to time during the term thereof, and other terms and conditions relating to each such Option, shall be
determined by the Board. At no time shall the period during which an Option is exercisable exceed five
years, and the Option Price shall in no circumstances be lower than the market price (being the closing
price of the shares of the Corporation on the TSX) of the Common Shares. Options cannot be assigned or
transferred.
The maximum number of Common Shares which may be issued to any one Optionee under the Option Plan
together with any Share Compensation Arrangement (as defined in the Option Plan) in any 12 month
period shall not exceed 5% of the number of Common Shares outstanding (on a non-diluted basis) from
time to time, unless disinterested Shareholder approval is obtained pursuant to the policies of the TSX or
any stock exchange or regulatory authority having jurisdiction over the securities of the Corporation.
The maximum number of Common Shares which may issuable to all Insiders (as defined in the Option
Plan) at any time under this Option Plan together with any other Share Compensation Arrangement shall
not exceed 10% of the Common Shares outstanding (on a non-diluted basis) from time to time. The number
of Common Shares issued to Insiders within any one year period pursuant to all of the Corporation's Share
Compensation Arrangements shall not exceed 10% of the number of outstanding Common Shares on a
non-diluted basis.
Options granted to any director, officer, employee or consultant must expire within 90 days after such
person ceases to be in at least one of those categories (or within 30 days for an investor relations
employee), or such longer period as may be determined by the Board, provided that such extension shall
not be granted beyond the original expiry date of the Option. Options shall not be affected by any change of
employment or status of the Optionee where the Optionee remains eligible for participation in the Option
Plan.
5.
In the event of certain transactions affecting the ownership or assets of the Corporation, Optionees shall,
upon notice from the Corporation, be entitled to exercise their Options to the full amount of the Common
- - 14 - -
6.
7.
Shares remaining at that time during the period provided by the notice (but in no event later than the expiry
date of the Option).
In the event that no specific determination is made by the Board, any Options granted shall vest on the date
of the grant, subject to limited exceptions.
The board of directors may amend the Option Plan at any time, and without Shareholder approval, provided
however, that no such amendment may materially and adversely affect any Option previously granted to an
Optionee without the consent of the Optionee, except to the extent required by law. Any such amendment
shall be subject to the receipt of requisite regulatory approval including, without limitation, the approval of
any stock exchange upon which the shares may trade from time to time, provided, however, that no such
amendment may: (i) increase the maximum number of Common Shares that may be optioned under the
Option Plan; (ii) change the manner of determining the minimum exercise price; or (iii) effect a reduction
in the exercise price or extension of the term of any Options granted to an insider of the Corporation, unless
Shareholder and regulatory approval is obtained. Any amendments to the terms of an Option under the
Option Plan shall also require regulatory approval, including without limitation, the approval of any stock
exchange upon which the shares may trade from time to time. For greater certainty, the board of directors
may make the following amendments without seeking the approval of the Shareholders:
(a)
(b)
(c)
(d)
(e)
amendments to the Option Plan to rectify typographical errors and/or to include clarifying
provisions for greater certainty;
amendments to the vesting provisions of a security or the Option Plan;
amendments to the termination provisions of a security or the Option Plan which does not entail
an extension beyond the original expiry date thereof;
amendments to the exercise price (so long as any reduction does not cause the exercise price to go
below the market price of the Common Shares (as defined in the Option Plan) (unless such
amendment would benefit "insiders" as defined in the Securities Act (Ontario)); and
the inclusion of cashless exercise provisions in the Option Plan or in any option granted
thereunder, which provide for a full deduction of the number of underlying securities from the
Option Plan reserve.
8.
Except where not permitted by the TSX, if an Option expiration date falls within a Black-Out Period (as
defined in the Option Plan) or within ten business days of the end of a Black-Out Period, the term of such
Option shall be extended to the date which is ten business days following the end of such Black-Out Period.
Equity Compensation Plan Information
The following table provides details of the equity securities of the Corporation authorized for issuance as of the
financial year ended December 31, 2014 pursuant to the Option Plan currently in place.
Option Plan
Category
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights (a)
Weighted-average exercise
price of outstanding options,
warrants and rights (b)
Number of securities
remaining available for
future issuance under equity
compensation plans
(excluding securities
reflected in column (a))(1)
Equity compensation plans
approved by securityholders
Equity compensation plans not
approved by securityholders(2)
Total
N/A
7,040,000
7,040,000(3)
N/A
$0.22
$0.22
N/A
2,948,156
2,948,156
- - 15 - -
Notes:
(1)
(2)
(3)
Based on a total of 9,988,156 Options issuable pursuant to the Option Plan representing 10% of the Corporation's issued and
outstanding share capital of 99,881,561 Common Shares as at December 31, 2014.
Stock option plans and other security based compensation arrangements which have been adopted prior to an issuer listing on TSX
and are in effect upon listing on the TSX must be in compliance with TSX requirements. However, such arrangements do not need to
be approved by the security holders at the time of listing on the TSX. Within three years after institution, and within every three years
thereafter, listed issuers must obtain security holder approval for rolling stock option plans in order to continue to grant awards.
Shareholders will be asked to consider the Option Plan Resolution to approve the Option Plan at the Meeting. See "Business of the
Meeting - Approval of the Stock Option Plan".
As at December 31, 2014, the Corporation had 7,040,000 Options issued and outstanding representing approximately 7.05% of the
issued and outstanding Common Shares with a total of 2,948,156 Options available for future issuance under the Option Plan.
Financial Statements
BUSINESS OF THE MEETING
The Shareholders will receive and consider the audited consolidated financial statements of the Corporation for the
fiscal year ended December 31, 2014, together with the auditor's report thereon.
Appointment of Auditors
KPMG LLP, Chartered Accountants ("KPMG") are the independent registered certified auditors of the Corporation.
KPMG were first appointed auditors of the Corporation on August 9, 2011.
Unless the Shareholder has specifically instructed in the form of proxy that the Common Shares represented
by such proxy are to be withheld or voted otherwise, the persons named in the accompanying proxy will vote
FOR the re-appointment of KMPG as auditors of the Corporation to hold office until the next annual
meeting of Shareholders or until a successor is appointed and to authorize the Board to fix the remuneration
of the auditors.
Election of Directors
The Corporation's articles provide that the Board consist of a minimum of three (3) and a maximum of ten (10)
directors. At the Meeting, the following six (6) persons named hereunder will be proposed for election as directors
of the Corporation. Management does not contemplate that any of the nominees will be unable to serve as a director,
but if that should occur for any reason prior to the Meeting, it is intended that discretionary authority shall be
exercised by the persons named in the proxy to vote the proxy for the election of any other person or persons in
place of any nominee or nominees unable to serve. Each director elected will hold office until the close of the next
annual meeting of Shareholders, or until his successor is duly elected unless prior thereto he resigns or his office
becomes vacant by reason of death or other cause.
Majority Voting for Directors
The Board has adopted a policy requiring that, in an uncontested election of directors, any nominee who receives a
greater number of votes "withheld" than votes "for" will tender a resignation to the Chairman of the Board promptly
following the Meeting. The CG&C Committee will consider the offer of resignation and, except in special
circumstances, will recommend that the Board accept the resignation. The Board will make its decision and
announce it in a press release within 90 days following the Meeting, including the reasons for rejecting the
resignation, if applicable. The nominee will not participate in any CG&C Committee or Board deliberations on the
resignation offer. The policy does not apply in circumstances involving contested director elections.
Nominees
The following table sets forth the name of all persons proposed to be nominated for election as directors, their place
of residence, position held, and periods of service with, the Corporation, or any of its affiliates, their principal
occupations and the approximate number of Common Shares beneficially owned, controlled or directed, directly or
indirectly, by them.
- - 16 - -
Shareholders have the option to (i) vote for all of the directors of the Corporation listed in the table below; (ii) vote
for some of the directors and withhold for others; or (iii) withhold for all of the directors. Unless the Shareholder
has specifically instructed in the form of proxy that the Common Shares represented by such proxy are to be
withheld or voted otherwise, the persons named in the proxy will vote FOR the election of each of the
proposed nominees set forth below as directors of the Corporation.
Director Since
Present Principal Occupation and Positions Held
during the Preceding Five Years
Name, Province or
State and Country of
Residence
Jose Vizquerra
Benavides
Ontario, Canada
December 2011
John Burzynski(2)(3)
Ontario, Canada
February 2010
Patrick Anderson(2)(3)
Ontario, Canada
August 2012
Keith McKay(2)
Ontario, Canada
August 2012
Robert Wares(3)
Québec, Canada
January 2013
Currently, President and CEO of the Corporation;
formerly, President and CEO of Oban Exploration
Limited; Head of Project Evaluations, Cia. de Minas
Buenaventura S.A.A; Exploration Geologist, Goldcorp
Canada Ltd.
Senior Vice President, New Business Development and
Director, Osisko Gold Royalties Ltd since June 2014;
prior thereto, Vice President, Corporate Development,
Osisko Mining Corporation.
Chief Executive Officer, Dalradian Resources Inc.; prior
thereto, President and Chief Executive Officer, Aurelian
Resources Inc.
Chief Financial Officer and Corporate Secretary,
Dalradian Resources Inc.; prior thereto, Chief Financial
Officer, Continental Gold Limited; Chief Financial
Officer, Andina Minerals Inc.; Vice President and Chief
Financial Officer, Aurelian Resources Inc.
President and Chief Executive Officer, NioGold Mining
Corporation; prior thereto, Senior Vice President,
Exploration and Resource Development, Osisko Mining
Corporation.
Number of Common
Shares beneficially
owned or controlled,
directly or
indirectly(1)
2,455,046
7,147,950
Nil
100,000
1,928,325
304,666
Bernardo Calderon(2)(3)
Ontario, Canada
April 2014
President and Chief Executive Officer,
Analytica Mineral Services.
Notes:
(1)
(2)
(3)
The information with respect to the Common Shares beneficially owned, controlled or directed is not within the direct knowledge of
the Corporation and has been furnished by the respective individuals.
Member of the Audit Committee. Mr. McKay is the Chair.
Member of the CG&C Committee. Mr. Wares is the Chair.
As a group, the current and proposed directors beneficially own, control or direct, directly or indirectly, 11,935,988
Common Shares, representing approximately 9.96% of the issued and outstanding Common Shares.
Corporate Cease Trade Orders, Bankruptcies, Penalties or Sanctions
No proposed Board nominee or current Board member is, as of the date hereof, or has been, within 10 years before
the date of this hereof, a director, chief executive officer or chief financial officer of any company (including the
Corporation) that:
1.
was subject to a cease trade order, an order similar to a cease trade order or an order that denied the
relevant company access to any exemption under securities legislation, that was in effect for a period of
more than 30 consecutive days that was issued while such individual was acting in the capacity as director,
chief executive officer or chief financial officer; or
- - 17 - -
2.
was subject to a cease trade order, an order similar to a cease trade order or an order that denied the
relevant company access to any exemption under securities legislation, that was in effect for a period of
more than 30 consecutive days, that was issued after such individual ceased to be a director, chief executive
officer or chief financial officer and which resulted from an event that occurred while such proposed
director was acting in the capacity as director, chief executive officer or chief financial officer.
No proposed Board nominee or current Board member (or any personal holding company of any such individual) is,
as of the date of this hereof, or has been within ten years before the date of the date hereof, a director or executive
officer of any company (including the Corporation) that, while such individual was acting in that capacity, or within
a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating
to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with
creditors or had a receiver, receiver manager or trustee appointed to hold its assets.
No proposed Board nominee or current Board member (or any personal holding company of any such individual)
has, within the ten years before the date hereof, become bankrupt, made a proposal under any legislation relating to
bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with
creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of such individual.
No proposed Board nominee or current Board member (or any personal holding company of any such individual)
has been subject to:
1.
2.
any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory
authority or has entered into a settlement agreement with a securities regulatory authority; or
any other penalties or sanctions imposed by a court or regulatory body that would likely be considered
important to a reasonable investor in deciding whether to vote for the proposed Director.
Approval of the Stock Option Plan
The current Option Plan was adopted on June 1, 2011 and has not been approved by the Shareholders since the
Corporation completed its initial public offering on December 20, 2012. A summary of the Option Plan is included
above under the heading "Securities Authorized For Issuance Under Equity Compensation Plans – Stock Option
Plan". The full text of the Option Plan is set out in Schedule "B" to this Circular.
Section 613(a) of the TSX Company Manual provides that every three years after the institution of a security-based
compensation arrangement which does not have a fixed maximum number of securities issuable under it, all
unallocated rights, options or other entitlements under such security-based compensation arrangement must be
approved by a majority of the issuer's directors and by the issuer's security holders. The Option Plan is a "rolling
plan" which provides that the maximum number of Common Shares made available for the Plan shall be determined
from time to time by the Board but, in any case, shall not exceed 10% of the total number of Common Shares issued
and outstanding from time to time. Based on the foregoing, approval of the Shareholders is being sought at the
Meeting to approve the unallocated awards under the Option Plan.
As of the date hereof, 119,881,561 Common Shares were outstanding, 7,040,000 Common Shares (representing
approximately 5.87% of the outstanding Common Shares) were reserved for issuance in connection with the grant of
options under the Option Plan and 4,948,156 Common Shares (representing approximately 4.13% of the outstanding
Common Shares) remained available for issuance in connection with future grants of options under the Option Plan.
The Board approved certain amendments to the Option Plan effective as of May 25, 2015 (the "Amendments"),
including the addition of an insider participation limit and certain other limitations, as well as a provision setting out
certain events under which disinterested shareholder approval is required. As a result of such amendments, the
following text was added to Section 3 of the Option Plan:
"The maximum number of shares which may be issued to any one optionee under this Plan together
with any Share Compensation Arrangement in any 12 month period shall not exceed 5% of the number
- - 18 - -
of shares outstanding (on a non-diluted basis) from time to time, unless disinterested shareholder
approval is obtained pursuant to the policies of the TSX or any stock exchange or regulatory authority
having jurisdiction over the securities of the Corporation.
The maximum number of shares which may issuable to all Insiders at any time under this Plan together
with any other Share Compensation Arrangement shall not exceed 10% of the shares outstanding (on a
non-diluted basis) from time to time. The number of shares issued to Insiders within any one year
period pursuant to all of the Corporation's Share Compensation Arrangements shall not exceed 10% of
the number of outstanding shares on a non-diluted basis.
For the purpose of this Plan, "Insider" shall have the meaning ascribed to such term in the TSX
Company Manual. For the purposes of this Plan, "Share Compensation Arrangement" means a stock
option, stock option plan, employee stock purchase plan or any other compensation or incentive
mechanism involving the issuance or potential issuance of shares to one or more service providers for
the Corporation, including a share purchase from treasury which is financially assisted by the
Corporation by way of a loan, guarantee or otherwise."
At the Meeting, Shareholders will be asked to consider, and if deemed advisable, to pass, with or without variation,
a resolution (the "Option Plan Resolution") approving the Option Plan:
"BE IT RESOLVED, as an ordinary resolution of the Shareholders, that:
1.
the Corporation's stock option plan attached as Schedule "B" to the Corporation's management
information circular dated May 14, 2015 be and is hereby ratified, confirmed and approved;
2. all unallocated rights, options or other entitlements under the Corporation's stock option plan
attached as Schedule "B" to the Corporation's management information circular dated May 14,
2015 be and are hereby ratified, confirmed and approved until June 25, 2018; and
3.
the Amendments (as defined in the Corporation's management information circular dated May 14,
2015) be and are hereby ratified, confirmed and approved."
The Corporation's board of directors recommends that Shareholders vote FOR the approval of the Option Plan
Resolution. In the absence of a contrary instruction, the persons named in the form of proxy accompanying this
Circular intend to vote FOR the Option Plan Resolution.
If the Option Plan Resolution is not approved, any unallocated rights, options or other entitlements under the Option
Plan will not be available for future grants and previously granted options will not be available for reallocation if
they are cancelled prior to exercise. Whether or not the Option Plan Resolution is approved, all options already
granted and currently outstanding under the Option Plan will remain in effect.
Unless the Shareholder has specifically instructed in the form of proxy that the Common Shares represented
by such proxy are to be withheld or voted otherwise, the persons named in the accompanying proxy intend to
vote FOR the Option Plan Resolution.
Other Matters
Management of the Corporation knows of no amendment, variation or other matter to come before the Meeting
other than the matters referred to in the Notice. However, if any other matter properly comes before the Meeting, the
form of proxy furnished by the Corporation will be voted on such matters in accordance with the best judgment of
the persons voting the proxy.
- - 19 - -
STATEMENT OF CORPORATE GOVERNANCE
The Board and senior management consider good corporate governance to be central to the effective and efficient
operation of the Corporation. The Board is committed to a high standard of corporate governance practices. The
Board believes that this commitment is not only in the best interest of the Shareholders, but that it also promotes
effective decision making at the Board level. The Board has adopted the Code of Conduct to encourage and promote
a culture of ethical business conduct amongst the directors, officers, employees and consultants of the Corporation.
The Code is available under the Corporation's issuer profile on SEDAR at www.sedar.com. See "Statement of
Corporate Governance – Ethical Business Conduct".
The Board encourages and promotes an overall culture of ethical business conduct by promoting compliance with
applicable laws, rules and regulations, and advocating awareness of the guidelines and policies detailed in the Code
of Conduct. Through its meetings with management and other informal discussions with management, the Board
believes the Corporation's management team likewise promotes and encourages a culture of ethical business conduct
throughout the Corporation's operations, and the management team is expected to monitor the activities of the
Corporation's employees, consultants and agents in that regard.
Board of Directors
NI 58-101 defines an "independent director" as a director who has no direct or indirect "material relationship" with
the issuer. A "material relationship" is as a relationship which could be, in the view of the board of directors of a
company, reasonably expected to interfere with the exercise of a member's independent judgment.
The Board believes that it functions independently of management, and reviews its procedures on an ongoing basis
to ensure that it is functioning independently of management. The Board meets without management present, as
circumstances require. When conflicts arise, interested parties are precluded from voting on matters in which they
may have an interest. In light of the suggestions contained in National Policy 58-201 – Corporate Governance
Guidelines ("NP 58-201"), the Board convenes meetings, as deemed necessary, of the independent directors, at
which non-independent directors and members of management are not in attendance. During the Last Financial
Year, the Board held Nil meetings at which non-independent directors and members of management were not in
attendance.
The Board is currently comprised of six directors being Mr. Jose Vizquerra Benavides, Mr. John Burzynski, Mr.
Patrick Anderson, Mr. Keith McKay, Mr. Robert Wares and Mr. Calderon. Messrs. Burzynski, Anderson, McKay,
Wares and Calderon are independent within the meaning of NI 58-101. Jose Vizquerra Benavides is not independent
as he is an officer of the Corporation and thereby has a "material relationship" with the Corporation.
Other Public Company Directorships
The following members of the Board currently hold directorships with other reporting issuers as set forth below.
Name of Director
Name of Reporting Issuers
Markets
Jose Vizquerra Benavides
John Burzynski
Patrick Anderson
Keith McKay
Robert Wares
Timmins Gold Corp.
Condor Petroleum Inc.
Osisko Gold Royalties Ltd.
Dalradian Resources Inc.
Dalradian Resources Inc.
Bowmore Exploration Ltd.
Niogold Mining Corporation
Wildcat Silver Inc.
Komet Resources Inc.
TSX
TSX
TSX
TSX
TSX
TSX-V
TSX-V
TSX-V
TSX-V
- - 20 - -
Meetings of the Board
The Board held seven (7) meetings during the year ended December 31, 2014. The members of the Board and their
attendance are set forth in the table below.
Name of Director
John Burzynski
Jose Vizquerra Benavides
Patrick Anderson
Keith McKay
Robert Wares
Bernardo Calderon(2)
Independent(1)
Meeting Attendance
Yes
No
Yes
Yes
Yes
Yes
7/7
7/7
5/7
7/7
6/7
2/3
Notes:
(1)
(2)
To be considered independent, a member of the Board must not have any direct or indirect or "material relationship" with the
Corporation. A material relationship is a relationship which could, in the view of the Board, be reasonably expected to interfere with
the exercise of a member's independent judgment.
Mr. Calderon was appointed as a director of the Corporation effective April 14, 2014.
Board Mandate
The Board has adopted a written Board mandate pursuant to which the Board assumes responsibility for the
stewardship of the Corporation. The Board mandate is attached hereto as Schedule "A". The Board's primary
responsibility is to develop and adopt the strategic direction of the Corporation and to, at least annually, review and
approve a strategic plan as developed and proposed by management, which takes into account the business
opportunities and risks of the Corporation. The Board is responsible for reviewing and approving the Corporation's
financial objectives, plans and actions, including significant capital allocations and expenditures. The Board is also
responsible for, among other things: (i) monitoring corporate performance against the strategic and business plans;
(ii) identifying principal business risks and implementing appropriate systems to manage such risks; (iii) monitoring
and ensuring internal control and procedures; (iv) ensuring appropriate standards of corporate conduct; (v)
reviewing and approving financial statements and management's discussion and analysis; (vi) reviewing
compensation of the members of the Board; (vii) reviewing and approving material transactions and annual budgets;
(viii) developing the Corporation's approach to corporate governance; and (ix) assessing its own effectiveness in
fulfilling its mandate.
The Board's mandate sets forth procedures relating to the Board's operations such as the size of Board and selection
process, director qualifications, director orientation and continuing education, meetings and committees,
evaluations, compensation and access to independent advisors. Pursuant to the Board's mandate, the Board is
required to hold at minimum four scheduled meetings per year and directors are expected to attend a minimum of
75% of all meetings of the Board held in any given year.
Position Descriptions
Chairman of the Board
The Chairman of the Board is currently John Burzynski. The Board has developed and adopted a written position
description for the Chairman of the Board, which is attached as Appendix "A" to the Board mandate which is
attached hereto as Schedule "A". Pursuant to the written description, the Chairman is responsible for, among other
things: (i) chairing all meetings of the Board in a manner that promotes meaningful discussion; (ii) together with the
Lead Director, if any, providing leadership to enhance the Board's effectiveness by (a) ensuring that the
responsibilities of the Board are well understood by both management and the Board, (b) ensuring that the Board
works as a cohesive team with open communication, (c) ensuring that the resources available to the Board (in
particular timely and relevant information) are adequate to support its work, (d) together with the CG&C
Committee, ensuring that a process is in place by which the effectiveness of the Board and its committees (including
- - 21 - -
size and composition) is assessed at least annually, and (e) together with the CG&C Committee, ensuring that a
process is in place by which the contribution of individual directors to the effectiveness of the Board is assessed at
least annually; (iii) together with the Lead Director, if any, managing the Board (including delegation and
succession planning); (iv) acting as a liaison between the Board and management to ensure that relationships
between the Board and management are conducted in a professional and constructive manner; and (v) at the request
of the Board, representing the Corporation to external groups, including Shareholders, community groups and
governments. The Chairman is also responsible for working with the CG&C Committee to ensure that the
Corporation is building a healthy governance culture.
Chief Executive Officer
The Chief Executive Officer of the Corporation is currently Jose Vizquerra Benavides. The Board has also
developed and adopted a role statement for the Chief Executive Officer whose primary role is to take overall
supervisory and managerial responsibility for the day to day operations of the Corporation's business and manage
the Corporation in order to achieve the goals and objectives determined by the Board in the context of the
Corporation's strategic plan. The Chief Executive Officer's responsibilities include, but are not limited to: (i)
developing and maintain the Corporation's goal to operate to the highest standards of the mining industry; (ii)
maintaining and developing with the Board strategic plans for the Corporation, and implementing such plans to the
best abilities of the Corporation; (iii) providing quality leadership to the Corporation's staff and ensure that the
Corporation's human resources are managed properly; (iv) providing high-level policy options, orientations and
discussions for consideration by the Board; (v) together with any special committee appointed for such purpose,
maintaining existing and developing new strategic alliances, and considering possible merger or acquisition
transactions with other mining companies which will be constructive for the Corporation's business and which will
help enhance Shareholder value; (vi) providing support, co-ordination and guidance to various responsible officers
and managers of the Corporation; (vii) ensuring communications between the Corporation and major stakeholders,
including most importantly the Shareholders, are managed in an optimum way and are made in accordance with
applicable securities laws; (viii) providing timely strategic, operational and reporting information to the Board, and
implementing its decisions in accordance with good governance, with the Corporation's policies and procedures, and
within budget; (ix) acting as an entrepreneur and innovator within the strategic goals of the Corporation; (x)
coordinating the preparation of an annual business plan or strategic plan; (xi) ensuring appropriate governance skills
development and resources are made available to the Board; (xii) providing a culture of high ethics throughout the
organization; and (xiii) taking primary responsibility for the administration of all of the Corporation's sub-areas and
administrative practices.
Chairmen of the Audit and the Corporate Governance and Compensation Committees
The Board has developed and adopted a written position description for the Chairman of each of the Audit
Committee and CG&C Committee, which delineate the role and responsibility of each Chairman and outline
specific tasks, duties and responsibilities of the respective Chairman and committee in accordance with the
recommendations set forth in NP 58-201.
Chairman of the Audit Committee
The Chairman of the Audit Committee is currently Keith McKay. The following are the primary responsibilities of
the Chairman of the Audit Committee: (i) chairing all meetings of the committee in a manner that promotes
meaningful discussion; (ii) ensuring adherence to the Audit Committee's charter and that the adequacy of the Audit
Committee's charter is reviewed annually; (iii) providing leadership to the committee to enhance its effectiveness;
(iv) ensuring that procedures as determined by the committee are in place for employees to submit confidential
anonymous concerns, and for dealing with complaints received by the Corporation regarding accounting, internal
controls and auditing matters; (v) managing the committee; and (vi) performing such other duties as may be
delegated from time to time to the Chairman by the Board.
Chairman of the Corporate Governance and Compensation Committee
The Chairman of the CG&C Committee is currently Robert Wares. The following are the primary responsibilities of
the Chairman of the CG&C Committee: (i) chairing all meetings of the committee in a manner that promotes
- - 22 - -
meaningful discussion; (ii) ensuring adherence to the committee's Charter and that the adequacy of the CG&C
Committee's charter is reviewed annually; (iii) providing leadership to the committee to enhance its effectiveness;
(iv) managing the committee; and (v) together with the Chairman of the Board, ensuring that the Board, committees
of the Board, individual directors and senior management of the Corporation understand and discharge their duties
and obligations under the approach to corporate governance adopted by the Board from time to time.
Orientation and Continuing Education
The Board, together with the CG&C Committee, is responsible for providing a comprehensive orientation and
education program for new directors which deals with the role of the Board and its committees; the nature and
operation of the business of the Corporation; and the contribution which individual directors are expected to make to
the Board in terms of both time and resource commitments.
In addition, the Board, together with the CG&C Committee, is also responsible for providing continuing education
opportunities to existing directors so that individual directors can maintain and enhance their abilities and ensure
that their knowledge of the business of the Corporation remains current.
Ethical Business Conduct
The Board has adopted a written code of business conduct and ethics (the "Code of Conduct") to encourage and
promote a culture of ethical business conduct amongst the directors, officers, employees and consultants of the
Corporation. Copies of the Code of Conduct are available upon written request from the Chief Executive Officer or
Chief Financial Officer of the Corporation. The Board is responsible for ensuring compliance with the Code of
Conduct. There have been no departures from the Code of Conduct since its adoption.
To ensure the directors exercise independent judgment in considering transactions and agreements in which a
director or officer has a material interest, all such matters are considered and approved by the independent directors.
Any interested director would be required to declare the nature and extent of his interest and would not be entitled to
vote at meetings of directors which evoke such a conflict.
The Corporation believes that it has adopted corporate governance procedures and policies which encourage ethical
behavior by the Corporation's directors, officers and employees.
Nomination of Directors
The Board, the CG&C Committee and the individual directors hold the responsibility for the nomination and
assessment of new directors. The Board seeks to achieve a balance of knowledge, experience and capability among
the members of the Board. When presenting Shareholders with a slate of nominees for election, the Board considers
the following:
1.
2.
3.
4.
the competencies and skills necessary for the Board as a whole to possess;
the competencies and skills necessary for each individual director to possess;
competencies and skills which each new nominee to the Board is expected to bring; and
whether the proposed nominees to the Board will be able to devote sufficient time and resources to the
Corporation.
The Board also recommends the number of directors on the Board to Shareholders for approval, subject to
compliance with the requirements of the Business Corporations Act (Ontario) (the "OBCA") and the Corporation's
articles and by-laws. Between annual Shareholder meetings, the Board may appoint directors to serve until the next
annual Shareholder meeting, subject to compliance with the requirements of the OBCA. Individual directors are
responsible for assisting the Board in identifying and recommending new nominees for election to the Board, as
needed or appropriate.
- - 23 - -
The Board will periodically assess the appropriate number of directors on the Board and whether any vacancies on
the Board are expected due to retirement or otherwise. If vacancies are anticipated, or otherwise arise, or the size of
the Board is expanded, the Board will consider various potential candidates for director. Candidates may come to the
attention of the Board through current directors or management, Shareholders or other persons. These candidates
will be evaluated at a regular or special meeting of the Board, and may be considered at any point during the year.
Compensation
The CG&C Committee reviews the compensation of the directors and senior officers. All of the members of the
CG&C Committee are independent within the meaning of NI 58-101. The CG&C Committee reviews and makes
recommendations to the Board regarding the granting of Options to directors and senior officers, compensation for
senior officers, and directors' fees, if any, from time to time. Senior officers and directors may be compensated in
cash and/or equity for their expert advice and contribution towards the success of the Corporation. The form and
amount of cash compensation will be evaluated by the CG&C Committee, which will be guided by the following
goals:
Assessments
compensation should be commensurate with the time spent by senior officers and directors in
meeting their obligations and reflective of the compensation paid by companies similar to the
Corporation in size, business and stage of development; and
the structure of the compensation should be simple, transparent and easy for Shareholders to
understand. Shareholders will be given the opportunity to vote on all new or substantially revised
equity compensation plans for directors as required by regulatory policies.
The Board does not consider formal assessments of its members and committees useful given the stage of the
Corporation's business and operations and did not have any formal assessments given during the Last Financial
Year, instead implementing a more informal assessment procedure. The Chairman of the Board plans to meet
annually with each director individually, and facilitate a discussion of his contribution and that of other directors.
When needed, time is set aside at a meeting of the Board for a discussion regarding the effectiveness of the Board
and its committees. If appropriate, the Board then considers procedural or substantive changes to increase the
effectiveness of the Board and its committees. On an informal basis, the Chairman of the Board is also responsible
for reporting to the Board on areas where improvements can be made. Any agreed-upon improvements required to
be made are implemented and overseen by the CG&C Committee. A more formal assessment process will be
instituted if and when the Board considers it to be necessary.
Director Term Limits and Other Mechanisms of Board Renewal
As set forth above under "Business of the Meeting – Election of Directors", each director (if elected) serves until the
next annual meeting of Shareholders or until his successor is duly elected or appointed. The Board does not
currently have a limit on the number of consecutive terms for which a director may sit; while the Board has not
experienced any turnover of directors since the Corporation became a reporting issuer, the Board expects
appropriate levels of turnover through normal processes in the future.
Composition of the Board
The members of the Board have diverse backgrounds and expertise, and were selected on the belief that the
Corporation and its stakeholders would benefit materially from such a broad range of talent and experience. As the
need for new directors or executive officers arises, the Board and the CG&C Committee assess candidates on the
basis of knowledge, industry experience, financial literacy, professional ethics and business acumen, among other
factors. While the Board and the CG&C Committee recognize the potential benefits from new perspectives that
could manifest through greater gender diversity and recognizes that diversity can enhance culture and create value
for the Corporation and its stakeholders, the Corporation has not formally adopted a written diversity policy and,
given the size and stage of development of the Corporation, the Board and the CG&C Committee do not at this time
- - 24 - -
formally consider the level of representation of women on the board or in senior management when identifying
candidates for such positions. Currently, the number of women directors and executive officers of the Corporation is
nil (or zero percent of current directors and executive officers, respectively). While the Corporation has not set a
target with respect to the appointment of female directors or executive officers (in part due to not yet having had any
turnover of directors and executive officers since the Corporation became a reporting issuer), the Corporation is
committed to providing an environment in which all employees and directors are treated with fairness and respect,
and have equal access to opportunities for advancement based on skills and aptitude.
AUDIT COMMITTEE INFORMATION
Additional information regarding the Audit Committee is contained in the AIF under the heading "Audit Committee"
and a copy of the charter of the Audit Committee is attached to the AIF as Schedule "A". The AIF is available under
the Corporation's issuer profile on SEDAR at www.sedar.com.
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
No director, executive officer, or employee of the Corporation or any of its subsidiaries, former director, executive
officer, or employee of the Corporation or any of its subsidiaries, proposed nominee for election as director of the
Corporation, or any associate of any of the foregoing, (i) has been or is indebted to the Corporation or any of its
subsidiaries, at any time during its last completed fiscal year, or (ii) has had any indebtedness to another entity at
any time during its last completed fiscal year which has been the subject of a guarantee, support agreement, letter of
credit, or other similar arrangement provided by the Corporation or any of its subsidiaries.
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
Certain directors and executive officers of the Corporation, including Jose Vizquerra Benavides, John Burzynski,
Blair Zaritsky and Gernot Wober had certain interests in connection with the Business Combination as such
directors and executive officers held common shares of OEL and were also directors and officers of OEL. In
connection with the Business Combination, all of the Common Shares held by the directors, officers and other
insiders of the Corporation were treated identically and in the same manner under the Business Combination as
Common Shares held by any other Shareholder. In addition, all previously outstanding options to acquire Common
Shares were terminated with the consent of the former option holders and new options were granted by the
Corporation in replacement upon completion of the Business Combination. The Business Combination and the
issuance of the replacement options were approved by the vote of disinterested Shareholders on April 10, 2014, prior
to the completion of the Business Combination. For additional information relating to the Business Combination,
please see the Corporation's management information circular dated March 11, 2014 which is available under the
Corporation's issuer profile on SEDAR at www.sedar.com.
To the knowledge of the Corporation, after reasonable enquiry, other than as disclosed herein, no informed person of
the Corporation, any proposed nominee for election as a director, or any associate or affiliate of any informed
person, or proposed nominee for election as a director has or had any material interest, direct or indirect, in any
transaction or any proposed transaction which has materially affected or would materially affect the Corporation or
its subsidiaries since the commencement of the Corporation's most recently completed fiscal year.
ADDITIONAL INFORMATION
Additional information relating to the Corporation may be found under the Corporation's issuer profile on SEDAR at
www.sedar.com. Inquiries including requests for copies of the Corporation's financial statements and management's
discussion and analysis for the year ended December 31, 2014 may be directed to the Corporation at 150 York
Street, Suite 410, Toronto, Ontario M5H 3S5, Attention: Jose Vizquerra Benavides, President and CEO. Additional
financial information is provided in the Corporation's financial statements and management's discussion and analysis
for the year ended December 31, 2014 which are also available under the Corporation's issuer profile on SEDAR at
www.sedar.com.
- - 25 - -
APPROVAL
The contents of this Circular and the sending thereof to the Shareholders have been approved by the Board.
BY ORDER OF THE BOARD OF DIRECTORS
"Jose Vizquerra Benavides"
Jose Vizquerra Benavides
President, Chief Executive Officer and Director
SCHEDULE "A"
BOARD MANDATE
MANDATE FOR THE BOARD OF DIRECTORS
PURPOSE
The Board assumes responsibility for the stewardship of the Corporation.
Although Directors may be nominated by certain persons to bring special expertise or a point of view to Board
deliberations, they are not chosen to represent a particular constituency. The best interests of the Corporation must
be paramount at all times.
RESPONSIBILITIES
As an integral part of that stewardship responsibility, the Board has responsibility for the following matters (either
itself, or through duly appointed and constituted committees of the Board in accordance with applicable laws):
a)
b)
c)
d)
e)
f)
g)
h)
The Board has primary responsibility for the development and adoption of the strategic direction
of the Corporation. The Board contributes to the development of strategic direction by approving,
at least annually, a strategic plan developed and proposed by management. The plan will take into
account the business opportunities and business risks of the Corporation. The Board reviews with
management from time to time the strategic planning environment, the emergence of new
opportunities, trends and risks and the implications of these developments for the strategic
direction of the Corporation. The Board reviews and approves the Corporation's financial
objectives, plans and actions, including significant capital allocations and expenditures.
The Board monitors corporate performance against the strategic and business plans, including
assessing operating results to evaluate whether the business is being properly managed.
The Board identifies the principal business risks of the Corporation and ensures that there are
appropriate systems put in place to manage these risks.
The Board monitors and ensures the integrity of the internal controls and procedures (including
adequate management information systems) within the Corporation and its financial reporting
procedures of the Corporation.
The Board is responsible for ensuring appropriate standards of corporate conduct including,
adopting a corporate code of ethics for all employees and senior management, and monitoring
compliance with such code, if appropriate.
The Board is responsible for the review and approval of annual financial statements,
management's discussion and analysis related to such financial statements, and forecasts.
The Board is responsible for establishing and reviewing from time to time a dividend policy for
the Corporation.
The Board is responsible for reviewing the compensation of members of the Board to ensure that
the compensation realistically reflects the responsibilities and risks involved in being an effective
director and for reviewing the compensation of members of the senior management team to ensure
that they are competitive within the industry and that the form of compensation aligns the interests
of each such individual with those of the Corporation.
i)
The Board reviews and approves material transactions not in the ordinary course of business.
- A2 -
j)
k)
l)
m)
n)
o)
p)
The Board reviews and approves the budget on an annual basis, including the spending limits and
authorizations, as recommended by the Audit Committee.
The Board ensures that there is in place appropriate succession planning, including the
appointment, training and monitoring of senior management and members of the Board.
The Board is responsible for assessing its own effectiveness in fulfilling its mandate and
evaluating the relevant disclosed relationships of each independent director and shall make an
affirmative determination that such relationships do not preclude a determination that the director
is independent.
The Board approves a disclosure policy that includes a framework for investor relations and a
public disclosure policy.
The Board is responsible for satisfying itself as to the integrity of the Chief Executive Officer (the
“CEO”) and other senior officers and that the CEO and other senior officers create a culture of
integrity throughout the organization. The Board is responsible for developing and approving
goals and objectives, which the CEO is responsible for meeting.
The Board is responsible for developing the Corporation's approach to corporate governance
principles and guidelines that are specifically applicable to the Corporation.
The Board is responsible for performing such other functions as prescribed by law or assigned to
the Board in the Corporation's governing documents.
Size of Board and selection process
A. The directors of the Corporation are elected each year by the shareholders at the annual
meeting of shareholders. The Board will determine a slate of nominees to be put to the
shareholders for election based upon the following considerations and such other factors
the Board considers relevant:
the competencies and skills which the Board as a whole should possess;
the competencies and skills which each existing director possesses; and
the appropriate size of the Board to facilitate effective decision-making.
B. Any shareholder may propose a nominee for election to the Board either by means of a
the Business
shareholder proposal upon compliance with
Corporations Act (Ontario) (“OBCA”) and the Corporation's by-laws or at the annual
meeting in compliance with the requirements of the OBCA and the Corporation's by-
laws.
the requirements of
C. The Board also recommends the number of directors on the Board to shareholders for
approval, subject to compliance with the requirements of the OBCA and the
Corporation's by-laws.
D. Between annual meetings, the Board may appoint directors to serve until the next annual
meeting, subject to compliance with the requirements of the OBCA.
E. Individual Board members are responsible for assisting the Board in identifying and
recommending new nominees for election to the Board, as needed or appropriate.
Director orientation and continuing education – The Board, together with the Corporate
Governance & Compensation Committee is responsible for providing a comprehensive orientation
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and education program for new directors which deals with the following matters and such other
matters the Board considers relevant:
A. the role of the Board and its committees;
B.
the nature and operation of the business of the Corporation; and
C.
the contribution which individual directors are expected to make to the Board in terms of
both time and resource commitments.
In addition, the Board together with the Corporate Governance & Compensation Committee,is also
responsible for providing continuing education opportunities to existing directors so that individual
directors can maintain and enhance their abilities and ensure that their knowledge of the business
of the Corporation remains current, at the request of any individual director.
Meetings – The Board has at least four scheduled meetings a year. The Board is responsible for its
agenda. Prior to each Board meeting, a Board member shall circulate an agenda to the Board.
Materials for each meeting will be distributed to directors in advance of the meetings. Directors
are expected to attend at least 75% of all meetings of the Board held in a given year, and are
expected to make reasonable efforts to adequately review meeting materials in advance of all such
meetings.
The independent directors or non-management directors shall meet at the end of each Board
meeting without management and non-independent directors present. The Chairman of the Board
shall chair these meetings, unless the Chairman of the Board is not an independent director, in
which case the lead director shall chair these meetings. If a lead director has not been appointed,
the independent directors shall appoint a chairman to chair these meetings. The independent
directors shall appoint a person to maintain minutes of the meetings or, if no person is so
appointed, the chair of the meeting shall maintain minutes of the meeting.
Committees – The Board has established the following standing committees to assist the Board in
discharging its responsibilities: the Audit Committee, the Corporate Governance & Compensation
Committee. Special committees are established from time to time to assist the Board in connection
with specific matters. The Board will appoint the members of each committee and may appoint
the chair of each committee annually following the Corporation's annual meeting of shareholders.
The chair of each committee reports to the Board following meetings of the committee. The terms
of reference of each standing committee are reviewed annually by the Board.
Evaluation – The Corporate Governance & Compensation Committee performs an annual
evaluation of the effectiveness of the Board as a whole, the committees of the Board, and the
contributions of individual directors.
Compensation – The Corporate Governance & Compensation Committee recommends to the
Board the compensation and benefits for non-management directors. The Committee seeks to
ensure that such compensation and benefits reflect the responsibilities and risks involved in being
a director of the Corporation and align the interests of the directors with the best interests of the
Corporation.
Nomination – The Board, the Corporate Governance & Compensation Committee and the
individual directors from time to time, will identify and recommend new nominees as directors of
the Corporation, based upon the following considerations:
i)
ii)
the competencies and skills necessary for the Board as a whole to possess;
the competencies and skills necessary for each individual director to possess;
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iii)
iv)
competencies and skills which each new nominee to the Board is expected to bring; and
whether the proposed nominees to the Board will be able to devote sufficient time and
resources to the Corporation.
Access to independent advisors – The Board may at any time retain outside financial, legal or
other advisors at the expense of the Corporation. Any director may, subject to the approval of the
Corporate Governance & Compensation Committee, retain an outside advisor at the expense of the
Corporation.
LEAD DIRECTOR
a)
b)
c)
d)
The Board will appoint a Lead Director in circumstances in which the Chairman of the Board is
not considered independent under applicable securities laws, in order to provide independent
leadership to the Board and for the other purposes set forth below.
The Corporate Governance & Compensation Committee will recommend a candidate for the
position of Lead Director from among the independent members of the Board. The Board will be
responsible for appointing the Lead Director.
The Lead Director will hold office at the pleasure of the Board, until a successor has been duly
elected or appointed or until the Lead Director resigns or is otherwise removed from the office by
the Board.
The Lead Director will provide independent leadership to the Board and will facilitate the
functioning of the Board independently of the Corporation's management. Together with the Chair
of the Corporate Governance & Compensation Committee, the Lead Director will be responsible
for the corporate governance practices of the Corporation.
e)
The Lead Director will:
i)
ii)
iii)
iv)
v)
vi)
vii)
in conjunction with the Chair of the Corporate Governance & Compensation Committee,
provide leadership to ensure that the Board functions independently of management of
the Corporation;
chair meetings of independent directors or non-management directors held following
Board meetings;
in the absence of the Chairman, act as chair of meetings of the Board;
recommend, where necessary, the holding of special meetings of the Board;
review with the Chairman and the CEO items of importance for consideration by Board;
consult and meet with any or all of the Corporation's independent directors, at the
discretion of either party and with or without the attendance of the Chairman, and
represent such directors in discussions with management of the Corporation concerning
corporate governance issues and other matters;
together with the Chairman, ensure that all business required to come before the Board is
brought before the Board, such that the Board is able to carry out all of its duties to
supervise the management of the business and affairs of the Corporation, and together
with the Chairman and the CEO, formulate an agenda for each Board meeting;
viii)
together with the Chairman and the Chair of the Corporate Governance & Compensation
Committee, ensure that the Board, committees of the Board, individual directors and
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senior management of the Corporation understand and discharge their duties and
obligations under the approach to corporate governance adopted by the Board from time
to time;
mentor and counsel new members of the Board to assist them in becoming active and
effective directors;
facilitate the process of conducting director evaluations;
promote best practices and high standards of corporate governance; and
perform such other duties and responsibilities as may be delegated to the Lead Director
by the Board from time to time.
ix)
x)
xi)
xii)
As of March 10, 2015.
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Appendix "A"
POSITION DESCRIPTION FOR THE
CHAIRMAN OF THE BOARD OF DIRECTORS
PURPOSE
The Chairman of the Board shall be a director who is designated by the full Board to act as the leader of the Board.
WHO MAY BE CHAIRMAN
The Chairman will be selected amongst the directors of the Corporation who have a sufficient level of experience
with corporate governance issues to ensure the leadership and effectiveness of the Board.
The Chairman will be selected annually at the first meeting of the Board following the annual general meeting of
shareholders.
RESPONSIBILITIES
The following are the responsibilities of the Chairman. The Chairman may delegate or share, where appropriate,
certain of these responsibilities with the Corporate Governance & Compensation Committee and/or any other
independent committee of the Board:
a)
b)
Chairing all meetings of the Board in a manner that promotes meaningful discussion.
Together with the Lead Director, if any, providing leadership to the Board to enhance the Board's
effectiveness, including:
i)
Ensuring that the responsibilities of the Board are well understood by both management and
the Board;
ii) Ensuring that the Board works as a cohesive team with open communication;
iii) Ensuring that the resources available to the Board (in particular timely and relevant
information) are adequate to support its work;
iv) Together with the Corporate Governance & Compensation Committee, ensuring that a process
is in place by which the effectiveness of the Board and its committees (including size and
composition) is assessed at least annually; and
v) Together with the Corporate Governance & Compensation Committee, ensuring that a process
is in place by which the contribution of individual directors to the effectiveness of the Board is
assessed at least annually.
c)
Together with the Lead Director, if any, managing the Board, including:
i)
Preparing the agenda of the Board meetings and ensuring pre-meeting material is distributed in
a timely manner and is appropriate in terms of relevance, efficient format and detail;
ii) Adopting procedures to ensure that the Board can conduct its work effectively and efficiently,
including committee structure and composition, scheduling, and management of meetings;
iii) Ensuring meetings are appropriate in terms of frequency, length and content;
iv) Ensuring that, where functions are delegated to appropriate committees, the functions are
carried out and results are reported to the Board;
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v) Ensuring that a succession planning process is in place to appoint senior members of
management when necessary;
vi) Ensuring procedures are established to identify, assess and recommend new nominees for
appointment to the Board and its committees; and
vii) Together with any special committee appointed for such purpose, approaching potential
candidates once potential candidates are identified, to explore their interest in joining the Board
and proposing new nominees for appointment to the Board and its committees.
d)
If the Chairman is an independent director, the Chairman will:
i.
in conjunction with the Chair of the Corporate Governance & Compensation Committee,
provide leadership to ensure that the Board functions independently of management of the
Corporation;
ii.
chair meetings of independent directors or non-management directors held following Board
meetings;
iii.
recommend, where necessary, the holding of special meetings of the Board;
iv.
review with the CEO items of importance for consideration by Board;
v.
vi.
vii.
consult and meet with any or all of the Corporation's independent directors, at the discretion of
either party and represent such directors in discussions with management of the Corporation
concerning corporate governance issues and other matters;
ensure that all business required to come before the Board is brought before the Board, such
that the Board is able to carry out all of its duties to supervise the management of the business
and affairs of the Corporation, and together with the CEO, formulate an agenda for each Board
meeting;
together with the Chair of the Corporate Governance & Compensation Committee, ensure that
the Board, committees of the Board, individual directors and senior management of the
Corporation understand and discharge their duties and obligations under the approach to
corporate governance adopted by the Board from time to time;
viii. mentor and counsel new members of the Board to assist them in becoming active and effective
directors;
ix.
facilitate the process of conducting director evaluations; and
x.
promote best practices and high standards of corporate governance.
e)
f)
Acting as liaison between the Board and management to ensure that relationships between the
Board and management are conducted in a professional and constructive manner. This involves
working with the Corporate Governance & Compensation Committee to ensure that the
Corporation is building a healthy governance culture.
At the request of the Board, representing the Corporation to external groups such as shareholders
and other stakeholders, including community groups and governments.
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REVIEW
The Committee will annually review and reassess the adequacy of these position descriptions and submit any
recommended changes to the Board for approval.
As of March 10, 2015.
Appendix "B"
ROLE STATEMENT OF THE CHIEF EXECUTIVE OFFICER
1. The Chief Executive Officer (the “CEO”) primary role is to take overall supervisory and managerial
responsibility for the day to day operations of the Corporation's business and to manage the Corporation in
an effective, efficient and forward-looking way and to fulfill the priorities, goals and objectives determined
by the Board in the context of the Corporation's strategic plans, budgets and responsibilities set out below,
with a view to increasing shareholder value. The CEO is responsible to the Board.
2. Without limiting the foregoing, the CEO is responsible for the following:
a. Develop and maintain the Corporation's goal to operate to the highest standards of the mining
industry.
b. Maintain and develop with the Board strategic plans for the Corporation, and implement such
plans to the best abilities of the Corporation.
c. Provide quality leadership to the Corporation's staff and ensure that the Corporation's human
resources are managed properly.
d. Provide high-level policy options, orientations and discussions for consideration by the Board.
e. Together with any special committee appointed for such purpose, maintain existing and develop
new strategic alliances, and consider possible merger or acquisition transactions with other mining
companies which will be constructive for the Corporation's business and which will help enhance
shareholder value.
f. Provide support, co-ordination and guidance to various responsible officers and managers of the
Corporation.
g. Ensure communications between the Corporation and major stakeholders, including most
importantly the Corporation's shareholders, are managed in an optimum way and are made in
accordance with applicable securities laws.
h. Provide timely strategic, operational and reporting information to the Board, and implement its
decisions in accordance with good governance, with the Corporation's policies and procedures,
and within budget.
i. Act as an entrepreneur and innovator within the strategic goals of the Corporation.
j. Co-ordinate the preparation of an annual business plan or strategic plan.
k. Ensure appropriate governance skills development and resources are made available to the Board.
l. Provide a culture of high ethics throughout the organization.
m. Take primary responsibility for the administration of all of the Corporation's sub-areas and
administrative practices.
As of March 10, 2015.
SCHEDULE "B"
OBAN MINING CORPORATION
STOCK OPTION PLAN
1.
PURPOSE
The purpose of this stock option plan (the "Plan") is to authorize the grant to service providers for Oban Mining
Corporation (the "Corporation") of options to purchase common shares ("shares") of the Corporation's capital and
thus benefit the Corporation by enabling it to attract, retain and motivate service providers by providing them with
the opportunity, through share options, to acquire an increased proprietary interest in the Corporation.
2.
ADMINISTRATION
The Plan shall be administered by the board of directors of the Corporation or a committee established by the board
of directors for that purpose (the "Committee"). Subject to approval of the granting of options by the board of
directors or Committee, as applicable, the Corporation shall grant options under the Plan.
3.
SHARES SUBJECT TO PLAN
Subject to adjustment under the provisions of paragraph 11 hereof, the aggregate number of shares of the
Corporation which may be issued and sold under the Plan will not exceed 10% of the total number of issued and
outstanding shares of the Corporation from time to time. The Corporation shall not, upon the exercise of any option,
be required to issue or deliver any shares prior to (a) the admission of such shares to listing on any stock exchange
on which the Corporation's shares may then be listed, and (b) the completion of such registration or other
qualification of such shares under any law, rules or regulation as the Corporation shall determine to be necessary or
advisable. If any shares cannot be issued to any optionee for whatever reason, the obligation of the Corporation to
issue such shares shall terminate and any option exercise price paid to the Corporation shall be returned to the
optionee. Any increase in the issued and outstanding shares will result in an increase in the available number of
shares issuable under the Plan, and any exercises of options will make new grants available under the Plan
effectively resulting in a re-loading of the number of options available to grant under the Plan.
The maximum number of shares which may be issued to any one optionee under this Plan together with any Share
Compensation Arrangement in any 12 month period shall not exceed 5% of the number of shares outstanding (on a
non-diluted basis) from time to time, unless disinterested shareholder approval is obtained pursuant to the policies of
the TSX or any stock exchange or regulatory authority having jurisdiction over the securities of the Corporation.
The maximum number of shares which may issuable to all Insiders at any time under this Plan together with any
other Share Compensation Arrangement shall not exceed 10% of the shares outstanding (on a non-diluted basis)
from time to time. The number of shares issued to Insiders within any one year period pursuant to all of the
Corporation's Share Compensation Arrangements shall not exceed 10% of the number of outstanding shares on a
non-diluted basis.
For the purpose of this Plan, "Insider" shall have the meaning ascribed to such term in the TSX Company Manual.
For the purposes of this Plan, "Share Compensation Arrangement" means a stock option, stock option plan,
employee stock purchase plan or any other compensation or incentive mechanism involving the issuance or potential
issuance of shares to one or more service providers for the Corporation, including a share purchase from treasury
which is financially assisted by the Corporation by way of a loan, guarantee or otherwise.
4.
ELIGIBILITY
Options shall be granted only to service providers for the Corporation. The term "service providers for the
Corporation" means (a) any full or part-time employee ("Employee") or officer, or insider of the Corporation or any
of its subsidiaries; (b) any other person employed by a company or individual providing management services to the
Corporation ("Management Company Employee"); (c) any other person or company engaged to provide ongoing
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consulting services for the Corporation or any entity controlled by the Corporation ("Consultant") or (d) any
individual engaged to provide services that promote the purchase or sale of the issued securities ("Investor Relations
Employee") (any person in (a) (b), (c) or (d) hereinafter referred to as an "Eligible Person"); and (e) any registered
retirement savings plan established by such Eligible Person, or any corporation controlled by such Eligible Person,
the issued and outstanding voting shares of which are, and will continue to be, beneficially owned, directly or
indirectly, by such Eligible Person and/or the spouse, children and/or grandchildren of such Eligible Person. For
stock options to Employees, Consultants or Management Company Employees, the Corporation must represent that
the optionee is a bona fide Employee, Consultant or Management Company Employee as the case may be. The
terms "insider", "controlled" and "subsidiaries" shall have the meanings ascribed thereto in the Securities Act
(Ontario) from time to time. Subject to the foregoing, the board of directors or Committee, as applicable, shall have
full and final authority to determine the persons who are to be granted options under the Plan and the number of
shares subject to each option.
5.
PRICE
The purchase price (the "Price") for the shares of the Corporation under each option shall be determined by the
board of directors or Committee, as applicable, on the basis of the market price at the time the option is granted,
where "market price" shall mean the closing price of the shares of the Corporation on the Toronto Stock Exchange
(the "TSX") or another stock exchange or dealing network where the majority of the trading volume or value of the
shares occurs, on the date immediately preceding the date of the option grant in question, subject to applicable laws
and regulations, and where there is no such closing price or trade on the prior trading day, "market price" shall mean
the average of the most recent bid and ask of the shares of the Corporation on any stock exchange on which the
shares are listed or dealing network on which the shares of the Corporation trade. In the event the shares are listed
on the TSX, the price may not be less than the market price less any discounts from the market price allowed by the
TSX.
6.
PERIOD OF OPTION AND RIGHTS TO EXERCISE
Subject to the provisions of this paragraph 6 and paragraphs 7, 8, 9 and 16 below, options will be exercisable in
whole or in part, and from time to time, during the currency thereof. Options shall not be granted for a term
exceeding the later of (i) five years following the date of grant thereof; and (ii) the date which is the fifth business
day following the conclusion of a self-imposed blackout period of the Corporation which is in effect on the date
which is five years following the date of grant thereof. The shares to be purchased upon each exercise of any option
(the "optioned shares") shall be paid for in full at the time of such exercise. Except as provided in paragraphs 7, 8, 9
and 16 below, no option which is held by a service provider may be exercised unless the optionee is then a service
provider for the Corporation.
7.
CESSATION OF PROVISION OF SERVICES
Subject to paragraph 9 below, if any optionee who is a service provider shall cease to be a service provider for the
Corporation for any reason (except as otherwise provided in paragraphs 8 or 9 below) (whether or not for cause) the
optionee may, but only within the period of ninety days, or thirty days if the service provider is an Investor Relations
Employee, next succeeding such cessation and in no event after the expiry date of the optionee's option, exercise the
optionee's options which have vested as of the date of such cessation, unless such period is extended as provided in
paragraph 9 below or reduced in accordance with any agreement pursuant to which the option is granted. For
greater certainty, no options shall vest following the date upon which an optionee who is a service provider shall
cease to be a service provider of the Corporation for any reason, unless otherwise approved by the board of
directors.
8.
DEATH OF OPTIONEE
Subject to paragraph 9 below, in the event of the death of an optionee during the currency of the optionee's option,
the option theretofore granted to the optionee shall be exercisable within, but only within, the period of one year
next succeeding the optionee's death and in no event after the expiry date of the option. Before expiry of an option
under this paragraph 8, the board of directors or Committee, as applicable, shall notify the optionee's representative
in writing of such expiry.
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9.
EXTENSION OF OPTION
In addition to the provisions of paragraphs 7 and 8, the board of directors or Committee, as applicable, may extend
the period of time within which an option held by a deceased optionee may be exercised or within which an option
may be exercised by an optionee who has ceased to be a service provider for the Corporation, but such an extension
shall not be granted beyond the original expiry date of the option. Any extensions of options granted under this Plan
are subject to applicable regulatory approval.
10.
NON-ASSIGNABILITY AND NON-TRANSFERABILITY OF OPTION
An option granted under the Plan shall be non-assignable and non-transferable by an optionee otherwise than by will
or by the laws of descent and distribution, and such option shall be exercisable, during an optionee's lifetime, only
by the optionee.
11.
ADJUSTMENTS IN SHARES SUBJECT TO PLAN
The aggregate number and kind of shares available under the Plan shall be appropriately adjusted in the event of a
reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, rights
offering or any other change in the corporate structure or shares of the Corporation. The options granted under the
Plan may contain such provisions as the board of directors, or Committee, as applicable, may determine with respect
to adjustments to be made in the number and kind of shares covered by such options and in the option price in the
event of any such change. If there is a reduction in the exercise price or an extension of the term of the options of an
insider of the Corporation under any circumstances, the Corporation will be required to obtain approval from
disinterested shareholders.
12.
AMENDMENT AND TERMINATION OF THE PLAN
The board of directors or Committee may amend the Plan at any time, and without shareholder approval, provided
however, that no such amendment may materially and adversely affect any option previously granted to an optionee
without the consent of the optionee, except to the extent required by law. Any such amendment shall be subject to
the receipt of requisite regulatory approval including, without limitation, the approval of any stock exchange upon
which the shares may trade from time to time, provided, however, that no such amendment may: (i) increase the
maximum number of shares that may be optioned under the Plan; (ii) change the manner of determining the
minimum Price; or (iii) effect a reduction in the exercise price or extension of the term of any options granted to an
insider of the Corporation, unless shareholder and regulatory approval is obtained. Any amendments to the terms of
an option under the Plan shall also require regulatory approval, including without limitation, the approval of any
stock exchange upon which the shares may trade from time to time. For greater certainty, the board of directors or
Committee may make the following amendments without seeking the approval of the shareholders of the
Corporation:
(a)
(b)
(c)
(d)
(e)
amendments to the Plan to rectify typographical errors and/or to include clarifying provisions for
greater certainty;
amendments to the vesting provisions of a security or the Plan;
amendments to the termination provisions of a security or a Plan which does not entail an
extension beyond the original expiry date thereof;
amendments to the exercise price (so long as any reduction does not cause the exercise price to go
below the current "market price" as defined in paragraph 5 hereof) unless such amendment would
benefit "insiders" as defined in the Securities Act (Ontario)); and
the inclusion of cashless exercise provisions in the Plan or in any option granted thereunder, which
provide for a full deduction of the number of underlying securities from the Plan reserve.
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13.
EFFECTIVE DATE OF THE PLAN
The Plan becomes effective on the date of its approval by the shareholders of the Corporation.
14.
EVIDENCE OF OPTIONS
Each option granted under the Plan shall be embodied in a written option agreement between the Corporation and
the optionee which shall give effect to the provisions of the Plan.
15.
EXERCISE OF OPTION
Subject to the provisions of the Plan and the particular option, an option may be exercised from time to time by
delivering to the Corporation at its registered office a written notice of exercise specifying the number of shares with
respect to which the option is being exercised and accompanied by payment in cash or certified cheque for the full
amount of the purchase price of the shares then being purchased.
Upon receipt of a certificate of an authorized officer directing the issue of shares purchased under the Plan, the
transfer agent is authorized and directed to issue and countersign share certificates for the optioned shares in the
name of such optionee or the optionee's legal personal representative or as may be directed in writing by the
optionee's legal personal representative.
Notwithstanding any other provision herein, no options may be exercised during any self-imposed blackout period
of the Corporation. In the event that the expiry date of an option falls within any such self-imposed blackout period,
such expiry date shall be the date which is the fifth business day following the conclusion of such blackout period of
the Corporation.
16.
VESTING RESTRICTIONS
Options issued under the Plan may vest at the discretion of the board of directors or Committee, as applicable,
provided that the number of shares which may be acquired pursuant to the Plan shall not exceed a specified number
or percentage during the term of the option.
17.
NOTICE OF SALE OF ALL OR SUBSTANTIALLY ALL SHARES OR ASSETS
If at any time when an option granted under this Plan remains unexercised with respect to any optioned shares:
(a)
(b)
the Corporation seeks approval from its shareholders for a transaction which, if completed, would
constitute an Acceleration Event; or
a third party makes a bona fide formal offer or proposal to the Corporation or its shareholders
which, if accepted, would constitute an Acceleration Event;
the Corporation shall notify the optionee in writing of such transaction, offer or proposal as soon as practicable and,
provided that the board of directors or Committee, as applicable, has determined that no adjustment shall be made
pursuant to section 11 hereof, (i) the board of directors or Committee, as applicable, may permit the optionee to
exercise the option granted under this Plan, as to all or any of the optioned shares in respect of which such option
has not previously been exercised (regardless of any vesting restrictions), during the period specified in the notice
(but in no event later than the expiry date of the option), so that the optionee may participate in such transaction,
offer or proposal; and (ii) the board of directors or Committee, as applicable, may require the acceleration of the
time for the exercise of the said option and of the time for the fulfilment of any conditions or restrictions on such
exercise.
For these purposes, an Acceleration Event means:
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(a)
(b)
(c)
(d)
the acquisition by any "offeror" (as defined in Part XX of the Securities Act (Ontario)) of
beneficial ownership of more than 50% of the outstanding voting securities of the Corporation, by
means of a takeover bid or otherwise;
any consolidation or merger of the Corporation in which the Corporation is not the continuing or
surviving corporation or pursuant to which shares of the Corporation would be converted into
cash, securities or other property, other than a merger of the Corporation in which shareholders
immediately prior to the merger have the same proportionate ownership of stock of the surviving
corporation immediately after the merger;
any sale, lease exchange or other transfer (in one transaction or a series of related transactions) of
all or substantially all of the assets of the Corporation; or
the approval by the shareholders of the Corporation of any plan of liquidation or dissolution of the
Corporation.
18.
RIGHTS PRIOR TO EXERCISE
An optionee shall have no rights whatsoever as a shareholder in respect of any of the optioned shares (including any
right to receive dividends or other distributions therefrom or thereon) other than in respect of optioned shares in
respect of which the optionee shall have exercised the option to purchase hereunder and which the optionee shall
have actually taken up and paid for.
19.
GOVERNING LAW
This Plan shall be construed in accordance with and be governed by the laws of the Province of Ontario and shall be
deemed to have been made in said Province, and shall be in accordance with all applicable securities laws.
20.
EXPIRY OF OPTION
On the expiry date of any option granted under the Plan, and subject to any extension of such expiry date permitted
in accordance with the Plan, such option hereby granted shall forthwith expire and terminate and be of no further
force or effect whatsoever as to such of the optioned shares in respect of which the option has not been exercised.