Great Panther Silver Ltd.: Exhibit 99.2 - Filed by newsfilecorp.com
| GREAT PANTHER SILVER LIMITED |
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| NOTICE OF ANNUAL GENERAL AND SPECIAL MEETING
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| INFORMATION CIRCULAR |
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| April 29, 2016 |
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| Suite 1330, 200 Granville Street |
| Vancouver, British Columbia, Canada V6C 1S4
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SHAREHOLDERS OF GREAT PANTHER SILVER LIMITED: These
materials are important and require your immediate attention. They require you
to make important decisions. If you are in doubt as to how to make such
decisions, please contact your financial, legal, or other professional advisors.
If you have any questions or require more information with regard to voting
your shares of Great Panther Silver Limited, please contact the Assistant
Corporate Secretary at (604) 608-1766.
| GREAT PANTHER SILVER LIMITED |
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| Suite 1330, 200 Granville Street |
| Vancouver, British Columbia, Canada V6C 1S4 |
| Telephone: (604) 608-1766 / Facsimile: (604) 608-1768
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NOTICE OF ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS
TAKE NOTICE that the annual general and special meeting
(the “Meeting”) of shareholders of GREAT PANTHER SILVER LIMITED
(“Great Panther” or the “Company”) will be held at Suite 1330, 200
Granville Street, Vancouver, British Columbia, Canada on Thursday, June 9, 2016,
at 11:00 a.m. (Pacific Daylight Time), for the following purposes:
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to receive the consolidated financial statements of the
Company for the financial year ended December 31, 2015 and the report of
the auditor on those statements; |
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to set the number of directors at six; |
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to elect directors of the Company to hold office until
the close of the next annual general meeting; |
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to appoint an auditor of the Company to serve until the
close of the next annual general meeting and to authorize the directors to
fix the auditor’s remuneration; |
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to approve the Company’s Share Option Plan, with the
amendments to the Share Option Plan approved by the board of directors of
the Company on April 29, 2016; |
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to approve and ratify a Shareholder Rights Plan, which
will replace the current plan that expires on the day following the
meeting; and |
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to transact such other business as may properly come
before the Meeting or any adjournments thereof. |
The Company has elected to use the notice-and-access provisions
under National Instrument 54-101 and National Instrument 51-102
(“Notice-and-Access Provisions”) for this Meeting. Notice-and-Access
Provisions are a set of rules developed by the Canadian Securities
Administrators that reduce the volume of materials that must be physically
mailed to shareholders of the Company (“Shareholders”) by allowing the
Company to post the Information Circular and any additional materials online.
Under Notice-and-Access Provisions, instead of receiving printed copies of the
Meeting materials, Shareholders will receive a Notice-and-Access notification
containing details of the Meeting date, location and purpose, as well as
information on how they can access the Meeting materials electronically.
The Information Circular is available at
www.greatpanther.com, at
www.envisionreports.com/great-panther-AGM2016 and under the Company’s
profile on SEDAR at www.sedar.com. Any Shareholder who wishes to receive a paper
copy of the Information Circular should contact the Company at Suite 1330, 200
Granville Street, Vancouver, British Columbia V6C 1S4, by telephone:
1-604-608-1766, toll free: 1-888-355-1766 or by fax: 604-608-1768. A Shareholder
may also use the numbers noted above to obtain additional information about the
Notice-and-Access Provisions. Under Notice-and-Access Provisions, meeting related materials will be available for
viewing for up to one year from the date of posting and a paper copy of the
materials can be requested at any time during this period.
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In order to allow for reasonable time to be allotted for a
Shareholder to receive and review a paper copy of the Information Circular prior
to the Proxy Deadline, any Shareholder wishing to request a paper copy of the
Information Circular as described above should ensure such request is received
no later than May 25, 2016.
The Information Circular contains details of matters to be
considered at the Meeting.
Regardless of whether a Shareholder plans to attend the Meeting
in person, we request that each Shareholder please complete and deliver the form
of proxy, or follow the other voting procedures, all as set out in the form of
proxy and Information Circular.
Non-registered Shareholders who plan to attend the Meeting must
follow the instructions set out in the form of proxy or voting instruction form
and in the Information Circular to ensure that their shares will be voted at the
Meeting. A Shareholder who holds shares through a brokerage account is not a
registered Shareholder.
DATED at Vancouver, British Columbia, April 29, 2016.
BY ORDER OF THE BOARD OF DIRECTORS
“R.W. (Bob) Garnett”
R.W. (Bob) Garnett
Chair of the Board
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TABLE OF CONTENTS
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| GREAT PANTHER SILVER LIMITED |
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| Suite 1330, 200 Granville Street |
| Vancouver, British Columbia, Canada V6C 1S4 |
| Telephone: (604) 608-1766 / Facsimile: (604) 608-1768
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| INFORMATION CIRCULAR |
| (unless otherwise specified, information is as of April
22, 2016) |
This Information Circular is furnished in connection with the
solicitation of proxies by the management of Great Panther Silver Limited
(the “Company” or “Great Panther”) for use at the annual
general and special meeting (the “Meeting”) of its Shareholders to
be held at Suite 1330, 200 Granville Street, Vancouver, British Columbia, Canada
on Thursday, June 9, 2016, at 11:00 a.m. (Pacific Daylight Time), for the
purposes set forth in the accompanying notice of the Meeting.
In this Information Circular, references to “we” and
“our” refer to the Company. The “board of directors” or the “Board” refers
to the board of directors of the Company. “Director” refers to a member of the
board of directors of the Company. “Common Shares” means common shares without
par value in the capital of the Company. “Great Panther Shareholders” and
“Shareholders” refer to Shareholders of the Company. “Registered Shareholders”
means Shareholders of the Company who hold Common Shares in their own name.
“Beneficial Shareholders” means Shareholders of the Company who do not hold
Common Shares in their own name and “intermediaries” refers to brokers,
investment firms, clearing houses and similar entities that own securities on
behalf of Beneficial Shareholders.
The board of directors has approved the contents and
distribution of this Information Circular. All dollar amounts referred to herein
are in Canadian currency unless otherwise indicated.
GENERAL PROXY INFORMATION
Solicitation of Proxies
The solicitation of proxies will be primarily by mail, subject
to the use of Notice-and-Access Provisions in relation to the delivery of this
Information Circular, but proxies may be solicited personally, by telephone or
other means by Directors, officers and regular employees of the Company or by
solicitation agents engaged by the Company. The Company will bear all costs of
this solicitation. We have arranged for intermediaries to forward the meeting
materials to Beneficial Shareholders of the Common Shares held of record by
those intermediaries and we may reimburse the intermediaries for their
reasonable fees and disbursements in that regard.
Notice and Access Process
Notice-and-Access means provisions concerning the delivery of
proxy-related materials to Shareholders found in section 9.1.1 of National
Instrument 51-102 – Continuous Disclosure Obligations (“NI
51-102”), in the case of Registered Shareholders, and section 2.7.1 of
National Instrument 54-101 – Communication with Beneficial Owners of
Securities of a Reporting Issuer (“NI 54-101”), in the case of
Beneficial Shareholders (collectively, the “Notice-and-Access
Provisions”), which would allow an issuer to deliver an information circular
forming part of proxy-related materials to Shareholders via certain specified
electronic means provided that the conditions of NI 51-102 and NI 54-101 are
met.
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The Notice-and-Access Provisions are a mechanism which allows
reporting issuers, other than investment funds, to choose to deliver
proxy-related materials to registered holders and beneficial owners of
securities by posting such materials on a non-SEDAR website (usually the
reporting issuer’s website and sometimes the transfer agent’s website) rather
than delivering such materials by mail. The Notice-and-Access Provisions can be
used to deliver materials for both special and general meetings. Reporting
issuers may still choose to continue to deliver such materials by mail, and
beneficial owners will be entitled to request delivery of a paper copy of the
information circular at the reporting issuer’s expense.
The use of the Notice-and-Access Provisions reduces paper waste
and mailing costs of the issuer. In order for the Company to utilize the
Notice-and-Access Provisions to deliver proxy-related materials by posting an
information circular (and if applicable, other materials) electronically on a
website that is not SEDAR, the Company must send a notice to Shareholders,
including Non-Registered Holders (as defined below), indicating that the
proxy-related materials have been posted and explaining how a Shareholder can
access them or obtain from the Company a paper copy of those materials. This
Information Circular has been posted in full at www.greatpanther.com, at
www.envisionreports.com/great-panther-AGM2016 and under the Company’s
SEDAR profile at www.sedar.com.
In order to use Notice-and-Access Provisions, a reporting
issuer must set the record date for notice of the meeting to be on a date that
is at least 40 days prior to the meeting in order to ensure there is sufficient
time for the materials to be posted on the applicable website and other
materials to be delivered to Shareholders. The Notice-and-Access notification,
which requires the Company to provide basic information about the Meeting and
the matters to be voted on, explains how a Shareholder can obtain a paper copy
of the Information Circular and any related Meeting materials. A
Notice-and-Access notification has been delivered to Shareholders by the
Company, along with the applicable voting document (a form of proxy in the case
of Registered Shareholders or a voting instruction form in the case of
Non-Registered Holders).
The Company is required to file a notification at least 25 days
prior to the Record Date indicating its intent to use the Notice-and Access
Provisions.
The Company will not rely upon the use of ‘stratification’.
Stratification occurs when a reporting issuer using the Notice-and-Access
Provisions provides a paper copy of the information circular with the notice to
be provided to Shareholders as described above. In relation to the Meeting, all
Shareholders will have received the required documentation under the
Notice-and-Access Provisions and all documents required to vote in respect of
all matters to be voted on at the Meeting. No Shareholder will receive a paper
copy of the information circular from the Company or any intermediary unless
such Shareholder specifically requests same.
Any Shareholder who wishes to receive a paper copy of this
Information Circular must make contact with the Company at Suite 1330, 200
Granville Street, Vancouver, British Columbia V6C 1S4, by telephone
1-604-608-1766, toll free: 1-888-355-1766 or by fax: 604-608-1768. In
order to ensure that a paper copy of the Information Circular can be delivered
to a requesting Shareholder in time for such Shareholder to review the
Information Circular and return a proxy or voting instruction form prior to the
Proxy Deadline, it is strongly suggested that a Shareholder ensure their request
is received no later than May 25, 2016.
All Shareholders may call 1-888-355-1766 (toll-free) in order
to obtain additional information relating to the Notice-and-Access Provisions or
to obtain a paper copy of the Information Circular, up to and including the date
of the Meeting, including any adjournment of the Meeting.
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Appointment of Proxyholders
The individuals named in the accompanying form of proxy (the
“Proxy”) are Directors or officers of the Company. If you are a Shareholder
entitled to vote at the Meeting, you have the right to appoint a person or
company other than either of the persons designated in the Proxy (who is not
required to be a Shareholder), to attend and act for you and on your behalf at
the Meeting. You may do so either by inserting the name of that other person in
the blank space provided in the Proxy or by completing and delivering another
suitable form of proxy.
Voting by Proxyholder
The persons named in the Proxy will vote or withhold from
voting the Common Shares represented thereby in accordance with your
instructions on any ballot that may be called for. If you specify a choice with
respect to any matter to be acted upon, your Common Shares will be voted
accordingly. The Proxy confers discretionary authority on the persons named
therein with respect to:
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each matter or group of matters identified therein for
which a choice is not specified, other than the appointment of an auditor
and the election of Directors; |
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(b) |
any amendment to or variation of any matter identified
therein; and |
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any other matter that properly comes before the
Meeting. |
In respect of a matter for which a choice is not specified in
the Proxy, the management appointee acting as a proxyholder will vote in favour
of each matter identified on the Proxy. However, under NYSE MKT Exchange
(“NYSE MKT”) rules, a broker who has not received specific voting
instructions from the beneficial owner may not vote the shares in its discretion
on behalf of such beneficial owner on “non-routine” proposals, although such
shares will be included in determining the presence of a quorum at the Meeting.
Thus, such broker “non-votes” will not be considered votes “cast” for purposes
of voting on the election of Directors. The ratification of the appointment of
the Company’s auditors, qualifies as a “routine” proposal that brokers may vote
upon without having received specific voting instruction from the beneficial
owner; any broker “non-votes” with respect to this matter will not be considered
votes “cast” and therefore will have no effect on the vote with respect to the
appointment of the auditors.
Registered Shareholders
If you are a Registered Shareholder (a Shareholder whose name
appears on the records of the Company as the registered holder of Common Shares)
of the Company, you may wish to vote by proxy whether or not you are able to
attend the Meeting in person. Registered Shareholders electing to submit a proxy
may do so by:
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completing, dating and signing the Proxy, accompanying
the Notice and Access notification and returning it to the Company’s
registrar and transfer agent, Computershare Investor Services Inc.
(“Computershare”), by fax within North America at 1-866-249- 7775,
outside North America at 1-416-263-9524, or by mail or hand delivery to
8th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1 or
by hand delivery at 3rd Floor, 510 Burrard Street, Vancouver,
British Columbia, Canada V6C 3B9; |
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(b) |
using a touch-tone phone to transmit voting choices to
the toll free number given in the Proxy. Registered Shareholders who
choose this option must follow the instructions of the voice response
system and refer to the enclosed Proxy for the toll free number, the
holder’s account number and the proxy access number; or |
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using Computershare’s website,
www.investorvote.com. Registered Shareholders must follow the
instructions that appear on the screen and refer to the enclosed Proxy for
the holder’s account number and the proxy access
number. |
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In all cases ensuring that the Proxy is received at least 48
hours (excluding Saturdays, Sundays and holidays) before the Meeting or the
adjournment thereof at which the Proxy is to be used.
Beneficial Shareholders (Non-Registered
Shareholders)
Many Shareholders are “non-registered” Shareholders because
the shares of the Company 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 shares. More particularly, a person is not
a Registered Shareholder in respect of shares which are held on behalf of that
person (the “Non-Registered Holder”) but which are registered either: (a)
in the name of an intermediary (an “Intermediary”) that the
Non-Registered Holder deals with in respect of the shares (Intermediaries
include, among others, banks, trust companies, securities dealers or brokers and
trustees or administrators of self-administered RRSPs, RRIFs, RESPs, TFSAs and
similar plans); or (b) in the name of a clearing agency (such as The Canadian
Depository for Securities Limited) of which the Intermediary is a
participant.
Intermediaries are required to seek voting instructions from
Beneficial Shareholders in advance of meetings of Shareholders. Every
intermediary has its own mailing procedures and provides its own return
instructions to clients.
There are two kinds of Beneficial Shareholders: Objecting
Beneficial Owners (“OBOs”) who object to their name being disclosed to
the issuers of securities they own; or Non-Objecting Beneficial Owners
(“NOBOs”) who do not object to the issuers of the securities they own
knowing who they are.
The Company is taking advantage of NI 54-101 provisions
permitting it to deliver proxy-related materials directly to its NOBOs. As a
result, NOBOs can expect to receive a scannable Voting Instruction Form
(“VIF”), accompanying the Notice and Access notification from
Computershare. The VIF is to be completed and returned to Computershare as set
out in the instructions provided on the VIF. Computershare will tabulate the
results of the VIFs received from NOBOs and will provide appropriate
instructions at the Meeting with respect to the shares represented by the VIFs
they receive.
These securityholder materials are sent to both registered and
non-registered owners of the securities of the Company utilizing the
Notice-and-Access Provisions. If you are a non-registered owner, and the Company
or its agent sent these materials directly to you, your name, address and
information about your holdings of securities were obtained in accordance with
applicable securities regulatory requirements from the intermediary holding
securities on your behalf.
By choosing to send these materials to you directly utilizing
the Notice-and-Access Provisions, the Company (and not the intermediary holding
securities on your behalf) has assumed responsibility for (i) delivering these
materials to you, and (ii) executing your proper voting instructions. Please
return your VIF as specified in the request for voting instructions that was
sent to you.
Beneficial Shareholders who are OBOs should follow the
instructions of their intermediary carefully to ensure their Common Shares are
voted at the Meeting.
The form of proxy supplied to you by your broker will be
similar to the proxy provided to Registered Shareholders by the Company.
However, its purpose is limited to instructing the intermediary on how to vote
your Common Shares on your behalf. Most brokers delegate responsibility for
obtaining instructions from clients to Broadridge Financial Solutions, Inc.
(“Broadridge”) in Canada and in the United States. Broadridge mails a VIF
in lieu of a proxy provided by the Company. The VIF will name the same persons
as the Company’s Proxy to represent your Common Shares at the Meeting. You have
the right to appoint a person (who need not be a Beneficial Shareholder of the
Company), other than any of the persons designated in the VIF, to represent your
Common Shares at the Meeting and that person may be you. To exercise this right,
insert the name of your desired representative (which may be you) in the blank
space provided in the VIF. The completed VIF must then be returned to Broadridge
in accordance with Broadridge’s instructions. Broadridge then tabulates the
results of all instructions received and provides appropriate instructions
respecting voting of the Common Shares to be represented at the Meeting and the
appointment of any Shareholder’s representative.
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If you receive a VIF from Broadridge, the VIF must be
completed and returned to Broadridge, in accordance with its instructions, well
in advance of the Meeting in order to have your Common Shares voted, or to have
an alternate representative duly appointed to attend the Meeting and vote your
Common Shares at the Meeting.
Notice to Shareholders in the United States
This solicitation of proxies involves securities of an issuer
located in Canada and is being effected in accordance with the corporate laws of
the Province of British Columbia and the securities laws of applicable provinces
of Canada. The proxy solicitation rules under the United States Securities
Exchange Act of 1934, as amended, are not applicable to the Company or this
solicitation, and this solicitation has been prepared in accordance with the
disclosure requirements of the securities laws of the applicable provinces of
Canada. Shareholders should be aware that disclosure requirements under the
securities laws of the applicable provinces of Canada differ from the disclosure
requirements under United States securities laws.
Revocation of Proxies
In addition to revocation in any other manner permitted by law,
a Registered Shareholder who has given a proxy may revoke it:
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(a) |
by executing a proxy bearing a later date or by executing
a valid notice of revocation, either of the foregoing to be executed by
the Registered Shareholder or the Registered Shareholder’s authorized
attorney in writing, or, if the Shareholder is a corporation, under its
corporate seal by an officer or attorney duly authorized, and by
delivering the proxy bearing a later date to Computershare, or to the
Company at the address of the registered office of the Company at Suite
1330, 200 Granville Street, Vancouver, British Columbia, V6C 1S4, at any
time up to and including the last business day before the day of the
Meeting or, if the Meeting is adjourned, the last business day before any
reconvening thereof, or to the chair of the Meeting at the Meeting or any
reconvening thereof, or in any other manner provided by law; or |
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by personally attending the Meeting and voting the
Registered Shareholder’s Common Shares. |
A revocation of a proxy will not affect a matter on which a
vote is taken before the revocation.
INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE
ACTED UPON
To the best of our knowledge, except as otherwise disclosed
herein, no person who has been a Director or executive officer of the Company at
any time since the beginning of the Company’s last completed financial year, nor
any proposed nominee for election as a director of the Company nor any associate
or affiliate of the foregoing persons, has any substantial or material interest,
direct or indirect, by way of beneficial ownership of securities or otherwise,
in any matter to be acted on at the Meeting other than the election of
directors.
RECORD DATE AND VOTING SECURITIES
Record Date
The board of directors has fixed April 22, 2016, as the record
date (the “Record Date”) for the determination of persons entitled
to receive notice of and vote at the Meeting. Only Shareholders of record at the
close of business on the Record Date who either (i) attend the Meeting
personally, (ii) complete, sign and deliver a form of proxy in the manner and
subject to the provisions described above, or (iii) vote in one of the manners
provided for in the VIF, will be entitled to vote or to have their Common Shares
voted at the Meeting.
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Voting Securities
Great Panther’s authorized share capital consists of an
unlimited number of common shares without par value, and an unlimited number of
Class A preferred shares without par value, issuable in series and an unlimited
number of Class B preferred shares without par value, issuable in series. The
Common Shares are listed for trading on the Toronto Stock Exchange (the
“TSX”) under the symbol “GPR” and on the NYSE MKT under the
symbol “GPL”. As of April 22, 2016, there were 143,310,123 Common Shares issued
and outstanding and no preferred shares issued and outstanding.
Holders of Common Shares are entitled to one vote per Common
Share at meetings of Shareholders. No group of Shareholders of the Company has
the right to elect a specified number of directors, nor are there cumulative or
similar voting rights attached to the Common Shares, other than as described
under “Number of and Election of Directors – Nominees for Election”.
To the knowledge of the directors and executive officers of the
Company, no person or company beneficially owns, or controls or directs,
directly or indirectly, Common Shares carrying more than 10% of the voting
rights attached to all outstanding Common Shares of the Company as at April 22,
2016.
NUMBER OF AND ELECTION OF DIRECTORS
The number of Directors was last fixed by Shareholders of the
Company at six. At the Meeting, Shareholders will be asked to approve an
ordinary resolution to fix the number of Directors at six.
The term of office of each of the current Directors will end
immediately before the election of Directors at the Meeting. Unless the
Director’s office is vacated earlier in accordance with the provisions of the
Business Corporations Act (British Columbia) (“BCA”), each
Director elected will hold office until immediately before the election of
directors at the next annual general meeting of Shareholders, or if no Director
is then elected, until a successor is elected, or until he or she otherwise
ceases to hold office under the BCA or the terms of the Articles.
Majority Voting for Directors
The Board has adopted a policy stipulating that if the votes in
favour of the election of a nominee director at a Shareholders’ meeting
represent less than a majority of the shares voted and withheld, the nominee
will submit his or her resignation promptly after the meeting to the Board, to
be effective upon acceptance by the Board. The Nominating and Corporate
Governance Committee will review the circumstances of the election and make a
recommendation to the Board as to whether or not to accept the tendered
resignation. The Board will determine whether or not to accept the tendered
resignation as soon as reasonably possible and in any event within 90 days of
the election. The nominee will not participate in any Nominating and Corporate
Governance Committee or Board deliberations on the offered resignation. The
Company will promptly disclose in a news release the determination made by the
Board including, if applicable, the reasons for rejecting the nominee’s
resignation.
Subject to any corporate law restrictions, the Board may fill
any resulting vacancy through the appointment of a new Director. The policy does
not apply in circumstances involving contested director elections.
Advance Notice Policy
The Board adopted an advance notice policy (the “Advance
Notice Policy”) effective May 24, 2013, which was approved by Shareholders
at the Company’s annual and special meeting of Shareholders held on June 27,
2013. The Advance Notice Policy provides for advance notice to the Company in
circumstances where nominations of persons for election to the Board are made by
Shareholders other than pursuant to (i) a requisition of a meeting made pursuant
to the provisions of the BCA or (ii) a Shareholder proposal made pursuant to the
provisions of the BCA.
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The purpose of the Advance Notice Policy is to foster a variety
of interests of the Shareholders and the Company by ensuring that all
Shareholders –including those participating in a meeting by proxy rather than in
person– receive adequate notice of the nominations to be considered at a meeting
and can thereby exercise their voting rights in an informed manner. Among other
things, the Advance Notice Policy fixes a deadline by which holders of Common
Shares must submit director nominations to the Company prior to any annual or
special meeting of Shareholders and sets forth the minimum information that a
Shareholder must include in the notice to the Company for the notice to be in
proper written form.
The foregoing is merely a summary of the Advance Notice Policy,
is not comprehensive and is qualified by the full text of such policy, a copy of
which is available on the Company’s website.
As of the date of this Information Circular, the Company has
not received notice of a nomination in compliance with the Advance Notice
Policy.
Nominees for Election
The Company has set forth six nominees for election to the
board of directors of the Company. Voting for the election of the six nominee
directors will be conducted on an individual basis. All of the six nominees for
election at the Meeting are currently directors of Great Panther. All nominees
have agreed to stand for election. If, however, one or more of them should
become unable to stand for election, it is likely that one or more other persons
would be nominated for election at the Meeting.
The following disclosure sets out, as at the date of this
Information Circular, (a) the names of nominees for election as Directors, and
their residency, (b) all major offices and positions with the Company each now
holds, (c) each nominee’s principal occupation, business or employment, (d) the
period of time during which each has been a Director of the Company, (e) the
current equity ownership consisting of Common Shares beneficially owned,
directly or indirectly, or controlled or directed, and options credited to each
nominee, (f) other current public board memberships and committees, and (g)
Board and committee meeting attendance in the year ended December 31, 2015.
The information as to Common Shares beneficially owned,
directly or indirectly, or over which control or direction is exercised has been
furnished to the Company or has been extracted from insider reports filed by the
respective nominees and publicly available through the Internet at the website
for the Canadian System for Electronic Disclosure by Insiders (SEDI) at
www.sedi.ca.
Unless authority to do so with respect to one or more Directors
is withheld and subject to NYSE MKT rules, the persons designated as
proxyholders in the accompanying Proxy intend to vote the Common Shares
represented by each properly executed Proxy FOR the election of each of
the nominees set forth in this Information Circular. Great Panther’s 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 before the Meeting, it is
intended that discretionary authority will be exercised by the persons named in
the accompanying Proxy to vote for the election of any other person or persons
in place of any nominee or nominees unable to serve.
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| ROBERT A. ARCHER, P. Geo. |
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Okanagan Falls, BC, Canada
President and Chief
Executive
Officer, and Non-Independent
Director
Director Since: April 27, 2004
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Mr. Archer has been the Chief Executive Officer and a
Director of the Company since 2004. He also held the title of President of
the Company from 2004 to 2012; and from 2013 to present. Mr. Archer has a
B.Sc. (Hons.) degree in Geology from Laurentian University in Ontario and
is a registered Professional Geologist. He has more than 16 years of
experience working with major mining
companies including Newmont
Exploration Canada Ltd., Rio Algom Exploration Inc., Placer Dome Canada
Ltd., and Noranda Exploration Inc. In the past 20 years, he has held
various positions at the senior management level of junior exploration and
producing companies. Mr. Archer also served as Chair of the Board of
Directors and chair of the Audit Committee of Altair Gold Inc. from 2006
to 2014. Altair Gold Inc. is a junior gold exploration company listed on
the TSX Venture Exchange under the trading symbol AVX. Mr. Archer was also
the President and Chief Executive Officer and a Director of Cangold
Limited (“Cangold”), a junior mineral exploration company which was
acquired by the Company on May 27, 2015. |
| Securities Held: |
Board/Committee Membership |
Attendance |
Common Shares:
1,694,455
Stock Options:
1,853,000 |
Board |
10 of 10 |
100% |
| Other Public Directorships |
Other Public Committee
Appointments |
| None |
None |
| R.W. (BOB) GARNETT, CPA, CA,
ICD.D |
Richmond, BC, Canada
Independent Director
Director Since: May 3, 2011 |
Mr. Garnett is a Chartered Professional Accountant in the
Province of British Columbia (1973) and obtained a Bachelor of Arts
(Commerce) from Simon Fraser University in 1972. In 2007, he completed the
Certified Directors Program with the Institute of Corporate Directors. In
2012 he was appointed a Commissioner of the Financial Institutions
Commission by the Lieutenant Governor in Council on the recommendation of
the Minister of Finance of the Province of British Columbia which
appointment has been extended to 2018. The Financial Institutions
Commission is an agency of the provincial government, which administers
nine statutes providing regulatory rules for the protection of the public
in the province of British Columbia. Mr. Ga rnett also currently serves on
the board of Media Valet Inc., a Vancouver based company that provides
cloud based digital asset management software to many of the world’s
leading brands. Mr. Garnett is also chair of the Audit Committee of Media
Valet Inc. Mr. Garnett served as President of a world ranked golf facility
located near Merritt, British Columbia from 2012 to 2015. From 2008 to
2011 he was a director and chair of the Audit Committee of the South Coast
British Columbia Transportation Authority (Translink) and during 2011 he
was the Vice-Chair. From 1996 to 2010, Mr. Garnett was President of PDG
Management Partners, Inc. which most recently owned US and Canadian based
companies in the same day courier industry. From 2009 to 2010 he was a
director and member of the Audit Committee of Central 1 Credit Union which
is the liquidity provider to credit unions in Ontario and British
Columbia. |
| Securities Held: |
Board/Committee Membership |
Attendance |
Common Shares: 100,250
Stock Options: 666,500 |
Board |
9 of 10 |
90% |
| Audit Committee |
6 of 6 |
100% |
| Human Resources and Compensation Committee |
3 of 3 |
100% |
| Nominating and Corporate
Governance Committee |
2 of 2 |
100% |
| Other Public Directorships |
Other Public Committee
Appointments |
| |
Media Valet Inc. (TSX Venture Exchange) |
Audit Committee Chair
Compensation Committee
Corporate Governance Committee |
8
| KENNETH W. MAJOR, P. Eng. |
Maple Ridge, BC, Canada
Independent
Director
Director Since: March 17, 2011
|
Mr. Major is an independent mineral processing consultant
for precious and base metals mining companies. Mr. Major graduated from
McGill University with a degree in Metallurgical Engineering in 1976. He
has more than 39 years of experience in the mining industry, including
operations and management with Sherritt Gordon Mines and Newmont Mining
Corporation. In 1987, Mr. Major joined Kilborn Engineering in Vancouver as
a Senior Process Engineer and Project Manager. In 1994, he became an
owner/partner on formation of Rescan Engineering Ltd., an engineering
company providing feasibility study and detailed engineering services to
the mining industry. Rescan Engineering Ltd. was subsequently acquired by
HATCH Engineers and became the global hub for the development of mining
and mineral processing engineering opportunities. In 2006, Mr. Major left
HATCH Engineers to form an independent processing consulting company, KWM
Consulting Inc., and has continued to provide services to the mining
community, including major companies such as Newmont Mining, Goldcorp and
Agnico-Eagle. Mr. Major also served on the board and Audit Committee of
Cangold Limited from December 2011 until May 27, 2015 when it was acquired
by the Company. |
| Securities Held: |
Board/Committee Membership |
Attendance |
Common
Shares: 27,833
Stock
Options: 449,667 |
Board |
10 of 10 |
100% |
| Safety, Health and Environment Committee
(Chair) |
1 of 1 |
100% |
| Nominating and Corporate Governance Committee
|
2 of 2 |
100% |
| Other Public Directorships |
Other Public Committee
Appointments |
| None |
None |
| JOHN JENNINGS, CFA |
North Vancouver, BC, Canada
Independent
Director
Director Since: June 28, 2012
|
Mr. Jennings is a Chartered Financial Analyst who has
almost three decades of experience in the Canadian and International
financial services sectors, as Chief Executive Officer of a Canadian
investment dealer and, thereafter, a senior investment banker providing
strategic advice, raising capital and executing mergers and acquisitions,
primarily for middle-market companies. He has been a Senior Client Partner
at Korn Ferry since 2012, the world’s largest talent management
organization, and prior to that, he was the Chief Operating Officer of
Anthem Properties Group, a privately held real estate development,
management and investment firm. Mr. Jennings also served as Senior
Director and Head of Mid-Market Investment Banking, Western Canada for
CIBC from 2003 to 2010. He earned a Masters in Business Administration
degree from London Business School in London, England, and a Bachelor of
Science degree in chemistry from the University of Western Ontario in
London, Ontario. |
| Securities Held: |
Board/Committee Membership |
Attendance |
Common
Shares: Nil
Stock
Options: 442,167 |
Board |
10 of 10 |
100% |
| Audit Committee |
6 of 6 |
100% |
| Human Resources and Compensation Committee
(Chair) |
3 of 3 |
100% |
| Other Public Directorships |
Other Public Committee
Appointments |
| None |
None |
9
| W.J. (JAMES) MULLIN |
Tulameen, BC, Canada
Independent Director
Director Since: August 6, 2013 |
Mr. Mullin is a retired Professional Engineer in the
province of British Columbia. He is a graduate of Colorado School of Mines
(Mining Engineering) and spent 33 years with Newmont Mining Corporation.
After advancing through progressively senior roles at the Similkameen Mine
in Princeton, BC (now Copper Mountain), he was appointed Vice President
and General Manager of the operation. In 1989, he moved to Nevada where he
managed several of Newmont's operations. His career culminated in the
position of Senior Vice President of North American Operations. His
responsibilities included the management of open pit and underground
mines, and processing plants in Canada, the United States and Mexico. He
retired from Newmont in 2001. Mr. Mullin has a lengthy, successful history
of establishing safety and production records, with particular emphasis on
cost reduction, improving efficiencies and developing operating synergies
between mine sites. Through a series of mergers and acquisitions, Mr.
Mullin became skilled at the integration and reorganization of operations
to achieve substantial improvements in processes and cost savings. During
the five years prior to the date of this Information Circular he has acted
as an independent consultant in the mining industry and owned and operated
a mid-sized cattle ranch. |
| Securities Held: |
Board/Committee Membership |
Attendance |
Common Shares: Nil
Stock Options: 338,000 |
Board |
10 of 10 |
100% |
| Human Resources and Compensation Committee |
3 of 3 |
100% |
| Nominating and Corporate Governance Committee
(Chair) |
2 of 2 |
100% |
| Safety, Health and Environment Committee |
1 of 1 |
100% |
| Other Public Directorships |
Other Public Committee
Appointments |
| None |
None |
| JEFFREY R. MASON, CPA, CA, ICD.D |
Vancouver, BC, Canada
Independent
Director
Director Since: May 6, 2014 |
Mr. Mason is a Chartered Professional Accountant and
holds an Institute of Corporate Directors designation. He has over 25
years of public company experience in exploration, development,
construction and operation for silver, gold, copper, nickel, lead, zinc,
platinum group metals and diamond projects in the Americas, Asia and
Africa. In 2004 he was awarded the BC Ernst & Young Entrepreneur of
the Year Award (Natural Resources Category). He has expertise in
operations and construction reporting, mergers and acquisitions,
exploration, corporate finance, exploration regulatory reporting, and
corporate governance including 15 years (1994-2008) as a Principal with,
and Chief Financial Officer of, Hunter Dickinson Inc., which included
experience also as Chief Financial Officer, Corporate Secretary and
director for 15 public companies listed on the TSX, TSX Venture Exchange,
NYSE MKT and NASDAQ. Mr. Mason served as director and audit chair for
eight years of TSX/NASDAQ-listed, Coastal Contacts Inc., an online
e-retailer with annual sales of over $220 million and 650 employees, which
was sold for $430 million to Essilor International in 2014. He began his
career with Deloitte LLP as a Chartered Accountant, followed by six years
at Homestake Mining Company (merged with Barrick Gold Corporation) in
mineral exploration, construction and operations reporting. Currently, Mr.
Mason is the Chief Financial Officer of Wellgreen Platinum Ltd. Mr. Mason
also sits as an independent board member of three (one of which is
inactive) TSX Venture Exchange listed issuers. Although the activity
levels of these TSX Venture Exchange issuers is limited relative to Great
Panther Silver Limited, Mr. Mason’s independent directorship of these
Venture companies provides the benefits of his years of public company
experience to guide their development. As Audit Committee chair of the
Company, Mr. Mason led a tendering process for the Company’s financial
audit in 2015 which achieved a reduction in audit costs year over year,
and updated the Company’s Audit Committee charter. He attended all (100%)
committee and board meetings in the year, including a weeklong tour of the
Company’s operations in Mexico and Peru. He notably resigned from the
board of the TSX listed Wellgreen Platinum Ltd in 2015 in order to
dedicate more time to the Company. |
| Securities Held: |
Board/Committee Membership |
Attendance |
Common Shares: 671,599
Stock Options: 351,000
|
Board |
10 of 10 |
100% |
| Audit Committee (Chair) |
6 of 6 |
100% |
| Safety, Health and Environment Committee |
1 of 1 |
100% |
| Other Public Directorships |
Other Public Committee
Appointments |
Amarc Resources Ltd.
(TSX Venture Exchange)
|
Audit Committee |
Red Eagle Mining Corporation
(TSX Venture
Exchange) |
Audit Committee (Chair)
Compensation Committee |
Libero Mining Corporation
(TSX Venture
Exchange - inactive) |
Audit Committee (Chair)
|
10
Summary of Director Qualifications and Expertise
The Nominating and Corporate Governance Committee has
determined that the six Director nominees possess the competencies necessary for
the Board to effectively fulfill its responsibilities:
|
R.W. (BOB)
GARNETT |
ROBERT A.
ARCHER |
JOHN
JENNINGS |
W.J.
(JAMES)
MULLIN |
JEFFREY R.
MASON |
KENNETH
W. MAJOR |
|
|
| Strategic Leadership |
√ |
√ |
√ |
√ |
√ |
√ |
| Industry Experience |
√ |
√ |
√ |
√ |
√ |
√ |
| Financial Literacy |
√ |
√ |
√ |
|
√ |
|
| Board Experience / Governance |
√ |
√ |
√ |
√ |
√ |
√ |
| Human Resources & Compensation |
√ |
√ |
√ |
√ |
√ |
|
| Health, Safety & Environmental |
|
√ |
|
√ |
√ |
√ |
| Operations |
|
√ |
|
√ |
√ |
√ |
| Mergers & Acquisitions / Investment |
√ |
√ |
√ |
|
√ |
|
| International Business |
√ |
√ |
√ |
|
√ |
√ |
| Risk Management |
√ |
√ |
√ |
√ |
√ |
√ |
Cease Trade Orders, Bankruptcies, Penalties and Sanctions
No proposed director is, as at the date of this Information
Circular, or has been, within the last 10 years before the date of this
Information Circular, a director, or executive officer of any company (including
Great Panther) that was:
| |
(a) |
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 the proposed
director was acting in the capacity as director, chief executive officer
or chief financial officer; or |
11
| |
(b) |
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 the proposed
director ceased to be a director, chief executive officer or chief
financial officer and which resulted from an event that occurred while
that person was acting in the capacity as director, chief executive
officer or chief financial officer. |
No proposed director is, as at the date of this Information
Circular, or has been, within 10 years before the date of this Information
Circular, a director or executive officer of any company (including Great
Panther) that:
| |
(a) |
while that person was acting in that capacity, or within
a year of 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; or |
| |
|
|
| |
(b) |
became 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 the
proposed director. |
No proposed director has been subject to:
| |
(a) |
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 |
| |
|
|
| |
(b) |
any other penalties or sanctions imposed by a court or
regulatory body that would likely be considered important to a reasonable
Shareholder in deciding whether to vote for a proposed
director. |
APPOINTMENT OF AUDITOR
KPMG LLP, Chartered Accountants, located at 777 Dunsmuir
Street, Vancouver, British Columbia, will be nominated at the Meeting for
reappointment as auditor of the Company to serve until the close of the next
annual general meeting of Shareholders, at a remuneration to be fixed by the
Directors.
Unless authority to do so is withheld, the persons designated
as proxyholders in the accompanying Proxy intend to vote the Common Shares
represented by each properly executed Proxy FOR the appointment of KPMG
LLP as auditor of the Company to serve until the close of the next annual
general meeting of Shareholders and the authorization of the Directors to fix
the remuneration of the auditor.
The following table sets out the aggregate fees billed to the
Company by its external auditor, KPMG LLP, in each of the last two fiscal years:
| Category |
Year ended December 31, 2015 |
Year ended December 31, 2014
|
| Audit Fees (1) |
$359,403 |
$443,428 |
| Audit-Related Fees |
Nil |
Nil |
| Tax Fees (2) |
$12,500 |
$10,000 |
| All Other Fees |
Nil |
Nil |
Notes:
| (1) |
“Audit Fees” include fees billed by the Company’s auditor
related to the audits of the Company’s consolidated financial statements
and internal control over financial reporting, and the reviews of the
Company’s condensed interim consolidated financial statements. |
| (2) |
“Tax Fees” include fees for the preparation of the
Company’s corporation income tax return and related tax
filings. |
12
APPROVAL OF CONTINUATION OF SHARE OPTION PLAN
Under the rules, regulations and policies of the TSX (the
“TSX Policies”), listed issuers must obtain shareholder approval for the
renewal of the unallocated awards (including options) under any security based
compensation arrangement that does not have a fixed maximum aggregate of
securities issuable, including all unallocated options, rights or other
entitlements under such security based compensation arrangement. The renewal
must be obtained every three years.
The Company’s Amended and Restated Incentive Share Option Plan
(2007) dated for reference June 28, 2007 (the “Share Option Plan”) was
last approved by shareholders of the Company at the annual and special meeting
of shareholders held on June 27, 2013. A summary of the material terms and
conditions of the Share Option Plan are described under the heading
“Securities Authorized for Issuance Under Equity Compensation Plans – Share
Option Plan”. The Company will be seeking re-approval of the Share Option
Plan, with certain amendments to the Share Option Plan described below, at the
Meeting. A marked copy of the Share Option Plan is attached to this Information
Circular as Schedule “B”.
Pursuant to the Share Option Plan, a maximum of 10% of the
Company’s issued and outstanding Common Shares can be reserved for issuance
under the Share Option Plan from time to time (which as at the date hereof,
represents 14,331,012 Common Shares), less any Common Shares reserved for
issuance under other share compensation arrangements. As of April 22, 2016,
options to purchase an aggregate of 10,649,370 Common Shares (representing
approximately 7.4% of the issued and outstanding Common Shares) are outstanding
under the Share Option Plan. Therefore, unallocated options to purchase an
aggregate of 3,681,642 Common Shares, representing approximately 2.6% of the
issued and outstanding Common Shares, remain available for issuance under the
Share Option Plan.
On April 29, 2016, the Board approved the following amendments
to Share Option Plan. The amendments will be adopted upon Shareholder approval
of the Share Option Plan at the Meeting:
|
• |
Limits on Option Grants to Non-Employee Directors.
The amendments limit the total annual grant to any one non-employee
directors cannot exceed a grant value of $100,000, determined using a
Black-Scholes calculation or such other similar and acceptable
methodology, applied consistently and appropriately as determined by the
Board; |
| |
|
|
|
• |
Termination of Exercise Right. The amendments
increase the number of days during which Options may be exercised by a
participant who ceases to be an eligible person for any reason other than
death from 30 days to 90 days after the termination date of the
participant; |
| |
|
|
|
• |
Right to Terminate Options on Sale of Company. The
Share Option Plan currently provides that the Board may by resolution, in
connection with any proposed sale or conveyance of all or substantially
all of the property and assets of the Company or any proposed merger,
consolidation, amalgamation or offer to acquire all of the outstanding
Common Shares (collectively, the “Proposed Transaction”), give
written notice (the “Notice”) to participants advising that their
Options may be exercisable only within 30 days (the “Exercise
Period”) after the date of the Notice, and not thereafter, provided
that the Proposed Transaction is completed within 180 days after the date
of the Notice. The amendments increase the Exercise Period from 30 days to
90 days such that Options may be exercisable within 90 days after date of
the Notice; |
| |
|
|
|
• |
Acceleration on Change of Control. The Share
Option Plan currently provides that, in the event of a Change of Control
(as defined in the Share Option Plan), all Options outstanding will
immediately vest. The amendments add language that, notwithstanding the
foregoing, if the Company completes a transaction constituting a Change of
Control, and as a result of such Change of Control receives securities of
another issuer (the “Continuing Entity”) in full substitution or
replacement for the Common Shares (“Replacement Securities”) then
any Options that have been granted after June 9, 2016 will be adjusted so
that the holder would receive such number of Replacement Securities as he
or she would have received as a result of such Change of Control if the
holder had exercised his or her Options to purchase Common Shares prior to
the completion of the Change of Control and had held such Common Shares on
the effective date of such Change of Control. |
13
The amendments add further language
that in the event of a Change of Control:
|
o |
if within 12 months following such Change of Control a
holder who was also an officer or employee of, or consultant to, the
Company prior to the Change of Control has their employment or consulting
agreement, or position, with the Company or the Continuing Entity (as
applicable), terminated, or altered in such a way that the holder is
effectively constructively dismissed from their position with the Company,
or the holder resigns from their position as an employee or officer of the
Company then the Options will immediately fully vest and become
exercisable and will remain open for exercise until the earlier of their
expiry date and the date that is 90 days after such termination or
dismissal; and |
| |
|
|
|
o |
if: (i) the Continuing Entity does not (or, upon the
occurrence of the Change of Control, will not) substitute or replace, or
the nature of the Change of Control does not provide for the full
substitution or replacement of, the securities issuable upon the exercise
of Options outstanding under the Share Option Plan on the above described
terms; (ii) the Board determines, acting reasonably, that such
substitution or replacement is not practicable or impairs or does not
substantially preserve the rights of the holders of Options; (iii) the
Board determines, acting reasonably, that such substitution or replacement
would give rise to adverse tax results to holders of Options; or (iv) the
Replacement Securities are not (or, upon the occurrence of the Change of
Control, will not be) listed and posted for trading on a recognizable
stock exchange; the outstanding Options will become fully vested and may
be exercised by the holder prior to, but conditional upon the consummation
of, the Change of Control. Any Options that have not been exercised will
be forfeited and cancelled without compensation to the holder thereof upon
the consummation of such Change of Control. If for any reason such Change
of Control is not consummated, any Common Shares purchased by the Option
holder upon the exercise of an Option for the purposes of participating in
the Change of Control or whose vesting has been accelerated pursuant to
these provisions will be cancelled and returned to the Company, will be
added back to the number of Common Shares, if any, remaining unexercised
under the Option, and the Company will refund to the Option holder all
consideration paid by it to exercise those Options.
|
In addition to the foregoing, the
amendments amend the definition of Change of Control to increase the thresholds
at which a Change of Control is deemed to occur. The Company amended the
following to provide that a Change of Control will be deemed to occur, amongst
other things, upon the following events:
|
• |
the sale, lease, exchange or other disposition, in a
single transaction or a series of related transactions, of assets, rights
or properties of the Company and/or any of its subsidiaries (as defined in
the Securities Act (Ontario)) which have an aggregate book value
greater than 50% (formerly this was set at 30%) of the book value of the
assets, rights and properties of the Company and its subsidiaries on a
consolidated basis to any other person or entity, other than a disposition
to a wholly-owned subsidiary of the Company in the course of a
reorganization of the assets of the Company and its subsidiaries; and
|
| |
|
|
|
• |
any person, entity or group of persons or entities acting
jointly or in concert (an “Acquiror”) acquires or acquires control
(including, without limitation, the right to vote or direct the voting) of
Voting Securities of the Company which, when added to the Voting
Securities owned of record or beneficially by the Acquiror or which the
Acquiror has the right to vote or in respect of which the Acquiror has the
right to direct the voting, would entitle the Acquiror and/or the
Acquiror’s Associates and/or the Acquiror’s affiliated companies (as
defined in the Securities Act (Ontario)) to cast or to direct the
casting of 40% (formerly this was set at 20% of the outstanding shares) or
more of the votes attached to all of the Company’s outstanding Voting
Securities which may be cast to elect directors of the Company or the successor company (regardless
of whether a meeting has been called to elect directors); |
14
The other instances where a Change of
Control may be deemed to have occurred remain unchanged.
|
• |
Additional Amendments Requiring Shareholder Approval.
The amendments expand the circumstances where shareholder approval for
changes to the Share Option Plan or outstanding options is required,
including amendments with respect to any of the following:
|
|
o |
any amendment to eligible participants which may permit
the introduction or re- introduction of non-employee directors on a
discretionary basis or amendments that increase limits previously imposed
on non-employee director participation; |
| |
|
|
|
o |
any amendment which would permit Options granted under
the Share Option Plan to be transferable or assignable other than to a
related Permitted Assign (as such term is defined in the 2016 Share Option
Plan) and for normal estate settlement purposes; |
| |
|
|
| |
o |
any reduction in exercise price or cancellation
and reissue of Options; |
| |
|
|
| |
o |
any amendment that extends the terms of an
Option beyond the original expiry date; and |
| |
|
|
| |
o |
any amendment to the amendment provisions of
the Share Option Plan. |
The amendments described above are intended as a summary only
and are qualified in their entirety by reference to the Share Option Plan which
is attached as Schedule “B” hereto.
At the Meeting, shareholders will be asked to consider and, if
deemed advisable, to approve, with or without variation, an ordinary resolution
(the “2016 Share Option Plan Resolution”) approving, confirming and
ratifying the Share Option Plan. The text of the 2016 Share Option Plan
Resolution is as follows:
“RESOLVED AS AN ORDINARY RESOLUTION THAT:
| 1. |
The Share Option Plan, attached as Schedule “B” to the
Management Information Circular of the Company dated April 29, 2016, with
the amendments to the Share Option Plan approved by the Board on April 29,
2016, is hereby approved, confirmed and ratified, and the Board be
authorized to continue granting options under the Share Option Plan, as
amended, until June 9, 2019. |
| |
|
| 2. |
Any director or officer of the Company is hereby
authorized and directed, for and on behalf of the Company, to do all
things and execute and deliver all such agreements, documents and
instruments necessary or desirable in connection with the
foregoing.” |
An ordinary resolution is a resolution passed by a simple
majority of the votes cast in person or by proxy. Unless otherwise indicated
and subject to NYSE MKT rules, the persons designated as proxyholders in the
accompanying Proxy intend to vote the Common Shares represented by each properly
executed Proxy FOR the Share Option Plan Resolution.
The Share Option Plan benefits the Company’s shareholders by
enabling the Company to attract and retain personnel of the highest caliber by
rewarding them for their contribution to the generation of shareholder value,
and aligning the interests of the Company’s directors and officers with those of
the Company’s shareholders. Accordingly, the Board recommends that
shareholders vote in favour of the 2016 Share Option Plan Resolution.
All previously allocated options will continue unaffected
regardless of the outcome of the vote. However, should the 2016 Share Option
Plan Resolution not be approved by the shareholders, the Company will no longer
be able to make option grants under the Share Option Plan, and all allocated
options will no longer be available for reallocation if they are cancelled, or expire
unexercised. Any future option grants then would require shareholder approval.
15
APPROVAL OF THE CONTINUATION AND AMENDMENT AND RESTATEMENT OF
THE
SHAREHOLDER RIGHTS PLAN
Background to the Shareholder Rights Plan
The Company adopted a shareholder rights plan dated effective
as of June 29, 2012, pursuant to the shareholder rights plan agreement between
the Company and Computershare, as rights agent, dated effective as of April 17,
2012 (the “Existing Rights Plan”). At the Meeting, the Company will be
seeking the approval of Shareholders to ratify the continued existence of the
Existing Rights Plan and its amendment and restatement to give effect to certain
amendments to the Existing Rights Plan as described below under “Proposed
Amendments”.
These amendments are being proposed as a result of the new
take-over bid proposals being put forward by the Canadian Securities
Administrators (“CSA”). The CSA have approved some changes to the
take-over bid regime in Canada, including that a formal take-over bid must
remain open for acceptance for at least 105 days, subject to the ability of the
target issuer to voluntarily reduce that period. The amendments are scheduled to
come into force on May 9, 2016.
The amended and restated plan is referred to herein as the
“Shareholder Rights Plan”. With the exception of the amendments described
herein, the Shareholder Rights Plan contains substantially the same terms and
conditions as the Existing Rights Plan, except certain housekeeping changes.
Purpose of the Shareholder Rights Plan
The approval of the Shareholder Rights Plan and its
continuation for the next three years are not being proposed in response to, or
in anticipation of, any pending, threatened or proposed acquisition or take-over
bid that is known to management of the Company. The proposed approval and
continuation of the Shareholder Rights Plan are also not intended as a means to
prevent a take-over of the Company, to secure the continuance of management or
the Board in their respective offices, or to deter fair offers for the Common
Shares.
Unless otherwise defined below, all capitalized terms have the
meaning specified in the Existing Rights Plan.
Pursuant to its terms, the Existing Rights Plan will expire
upon the termination of the Meeting, unless its continuation is ratified by the
Shareholders in accordance with its provisions. Management of the Company has
reviewed the terms of the Existing Rights Plan for conformity with current
Canadian securities laws, as well as practices of public corporations in Canada.
On April 29, 2016, the Board confirmed and approved the Shareholders Rights Plan
and approved amendments to the Shareholder Rights Plan in order to update the
Existing Rights Plan to be consistent with current practices.
Shareholder Approval at the Meeting
Approval of the Shareholder Rights Plan by Shareholders is
required by the terms of the Shareholder Rights Plan. At the Meeting,
Shareholders will be asked to consider and, if thought advisable, to approve and
confirm the Shareholder Rights Plan by means of an ordinary resolution (the
“Shareholder Rights Plan Resolution”) in substantially the following
form:
“RESOLVED THAT:
| 1. |
The Shareholder Rights Plan, with the amendments to the
Shareholder Rights Plan approved by the Board on April 29, 2016, is hereby
approved, confirmed and ratified. |
16
| 2. |
Any director or officer of the Company is hereby
authorized and directed, for and on behalf of the Company, to do all
things and execute and deliver all such agreements, documents and
instruments necessary or desirable in connection with the
foregoing.” |
The directors unanimously recommend that Shareholders vote in
favour of the Shareholder Rights Plan Resolutions. Unless otherwise
indicated, proxies given pursuant to this solicitation will be voted on any poll
in favour of this resolution.
Proposed Amendments
On April 29, 2016, the Board approved the following amendments
to Existing Rights Plan. The amendments will be adopted upon Shareholder
approval of the Shareholder Rights Plan at the Meeting:
|
• |
The definition of a “Permitted Bid” has been amended and
it requires that a Permitted Bid remain open for a period of 105 days or
such shorter minimum period that a takeover bid must remain open for
deposits of securities, in the applicable circumstances pursuant to the MI
62-104. |
| |
|
|
|
• |
The definition of a “Competing Permitted Bid” has been
modified to align with the minimum period such a bid must remain open
under pursuant to MI 62-104. |
| |
|
|
|
• |
The definition of “Beneficial Ownership” has been
modified to cover securities which are subject to a Permitted Lock-Up
Agreement to tender or deposit them into any Takeover Bid made by such
Person or made by any Affiliate or Associate of such Person or made by any
other person acting jointly or in concert with such Person. |
| |
|
|
|
• |
The definition of “Permitted Lock-Up Agreement” has been
modified to include another component that allows a Locked-Up Person to
withdraw their shares from a Locked-Up Bid to tender to another Takeover
Bid subject to certain conditions being satisfied. |
| |
|
|
| |
• |
The definition of “Share Registration” has also
been revised to include uncertificated shares. And, |
| |
|
|
| |
• |
The definition of “Expiration Time” has been
changed to align with the new duration of the plan. |
In addition to the amendments described above, certain other
amendments of a non-substantive, “housekeeping” nature have been made to provide
for greater clarity and consistency.
A copy of the Existing Rights Plan is available under the
Company’s SEDAR profile at www.sedar.com and on the Company’s website at
www.greatpanther.com.
A summary of the principal terms of the Shareholder Rights Plan
is attached as Schedule “C” to this Information Circular. The summary is
qualified in its entirety by reference to the text of the Shareholder Rights
Plan, which is available upon request from the Company at Suite 1330, 200
Granville Street, Vancouver, British Columbia V6C 1S4 (604 608 1766).
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
General
Corporate governance refers to the policies and structure of a
company’s board of directors, whose members are elected by, and are accountable
to the shareholders of that company. Corporate governance encourages
establishing a reasonable degree of independence of the board of directors from
executive management and the adoption of policies to ensure the board of
directors recognizes the principles of good management. The Board is committed
to following sound corporate governance practices, as such practices are both in
the interests of the Company and Shareholders and help to contribute to
effective and efficient decision-making. In support of this objective, the Board
has adopted corporate governance policies, including the following which are
available on the Company’s website at
www.greatpanther.com/Corporate/Governance/Governance-and-Policies:
17
| |
(a) |
Code of Business Conduct and Ethics; and |
| |
|
|
| |
(b) |
Whistleblower Policy. |
The following disclosure has been prepared under the direction
of the Nominating and Corporate Governance Committee and has been approved by
the Board.
Board of Directors
Independence of the Board
The Board of the Company facilitates its exercise of
independent supervision over management by ensuring representation on the Board
by directors who are independent of management. Directors are considered to be
independent if they have no direct or indirect material relationship with the
Company. A “material relationship” is a relationship which could, in the view of
the Company’s Board, be reasonably expected to interfere with the exercise of a
director’s independent judgment. The independence of the directors is outlined
on pages 8-10. Currently, Robert A. Archer, President and CEO, is the only
non-independent Director.
Diversity and Gender Equality
Even though the Board has not yet adopted a written policy
relating to the identification and nomination of female directors or a formal
diversity policy, the Board, through its direction to management, continues to
generally promote diversity in the workplace. The Company respects and values
differences in gender, age, ethnic origin, religion, education, sexual
orientation, political belief or disability. The Company recognizes the benefits
arising from Board, management and employee diversity, including broadening the
Company’s skill sets and experience, accessing different outlooks and
perspectives and benefiting from all available talent.
The Board is committed to fostering a diverse workplace
environment where:
| |
• |
individual differences and opinions are heard
and respected; |
| |
• |
employment opportunities are based on the qualifications
required for a particular position at a particular time, including
training, experience, performance, skill and merit; and |
| |
• |
inappropriate attitudes, behaviors, actions and
stereotypes are not tolerated and will be addressed and eliminated.
|
The Board monitors the Company’s adherence to these principles.
Consistent with these principles, the Board will seek to have at least one
female candidate for any future director positions. Directors will be recruited
and promoted based upon their qualifications, abilities and contributions. There
are currently no female directors on the Board.
Though the Company does not have any female executive officers,
the Company benefits from the distinguished service of women in senior
management, including at vice president and director-level (management position
as opposed to a member of the Board of Directors). The Company has not adopted
any targets for the number of woman in executive officer positions, but intends
to seek to have at least one female candidate for any new executive officer
position. Executive officers will be recruited and promoted based upon their
qualifications, abilities and contributions.
Committee Composition
There are currently four committees of the Board: (a) the Audit
Committee, (b) the Human Resources and Compensation Committee (“HRCC”),
(c) the Nominating and Corporate Governance Committee (“NCGC”) and (d)
the Safety, Health and Environment Committee (“SHEC”). All four
committees are comprised solely of independent directors.
18
Meeting Attendance Record
Directors are expected to attend all meetings of the Board and
the committees of which they are members in person, to attend such meetings
fully prepared, and to remain in attendance for the duration of the meeting.
Attendance by telephone is acceptable in appropriate circumstances. Where a
Director’s absence from a meeting is unavoidable, the Director is expected to
contact the Chair, the Chief Executive Officer or the Corporate Secretary as
soon as possible for a briefing on the substantive elements of the meeting. The
director summary tables on pages 8-10 set out the attendance of Directors at
meetings of the Board and each Committee during the year ended December 31,
2015.
The independent Directors hold regularly scheduled meetings at
which non-independent Directors and members of management do not attend. The
Board holds in-camera meetings which are attended only by the independent
Directors regularly as part of board meetings and Audit Committee meetings.
During the financial year ended December 31, 2015, the independent Directors
held ten in-camera meetings in conjunction with each board meeting held in the
year. In addition, four in-camera Audit Committee meetings were held during the
year that were attended only by the Audit Committee members, other independent
Directors, as guests, and the Company’s auditors.
The Audit Committee meets at least four times per year in
conjunction with the review and approval of annual and quarterly financial
statements, management’s discussion and analysis of operating results, and
related filings. The HRCC meets as often as deemed necessary, but will meet at
least three times per year. Other Board Committees hold regular meetings
throughout the year as required, but will meet at least once annually.
The following tables set out the attendance of Directors at
Board and Committee meetings during the year ended December 31, 2015:
| Meetings Attended Out of Meetings
Held |
| Director |
Board |
Audit
Committee |
HRCC |
NCGC |
SHEC |
Individual
Attendance
Rate |
|
|
| ROBERT A. ARCHER |
10 of 10 |
N/A |
N/A |
N/A |
N/A |
100% |
| R.W. (BOB) GARNETT |
9 of 10 |
6 of 6 |
3 of 3 |
2 of 2 |
N/A |
95% |
| KENNETH W. MAJOR |
10 of 10 |
N/A |
N/A |
2 of 2 |
1 of 1 |
100% |
| JOHN JENNINGS |
10 of 10 |
6 of 6 |
3 of 3 |
N/A |
N/A |
100% |
| W.J. (JAMES) MULLIN |
10 of 10 |
N/A |
3 of 3 |
2 of 2 |
1 of 1 |
100% |
| JEFFREY MASON |
10 of 10 |
6 of 6 |
N/A |
N/A |
1 of 1 |
100% |
Mandate and Charters
The Board has developed and approved a written mandate for the
Board (“Board Mandate”) and formal charters for each Committee. A copy of
the Board Mandate is attached to this Information Circular as Appendix A. Copies
of the Committee charters can be found on the Company’s website at
www.greatpanther.com. Summaries of the Board Mandate and the
responsibilities of each Board Committee are set out below.
Mandate of the Board
The Directors are stewards of the Company, responsible for the
overall management and direction of the Company. The Board has the
responsibility to oversee the conduct of the Company’s business, to supervise
management and to act with a view towards the best interests of the Company. The
Board has adopted a Board Mandate, the principles of which define the parameters
for the implementation and achievement of corporate goals and objectives. The
Board Mandate requires compliance from each Director in letter and spirit. Each
Director will execute his duties as a member of the Board in accordance with the terms contained in the Board Mandate. In discharging
its Board Mandate, the Board is responsible for the oversight and review of the
development of, among other things, the following matters:
19
| • |
Strategic planning, including:
|
|
o |
participation with management in the development of, and
annual approval of, a strategic plan that takes into consideration, among
other things, the risks and opportunities of the business; |
| |
|
|
|
o |
approval of annual capital and operating
budgets that support the Company’s ability to meet its strategic
objectives; |
| |
|
|
|
o |
directing management to develop, implement and maintain a
reporting system that accurately measures the Company’s performance
against its business plans; |
| |
|
|
|
o |
approval of entry into, or withdrawal from,
lines of business that are, or are likely to be, material to the Company;
and |
| |
|
|
| |
o |
approval of material acquisitions and
divestitures. |
| • |
Financial and corporate matters, including:
|
|
o |
taking reasonable steps to ensure the implementation and
integrity of the Company’s internal control and management information
systems; |
| |
|
|
|
o |
approval of financings and the incurrence of
material debt outside the ordinary course of business; and |
| |
|
|
| |
o |
approval of commencement or settlement of
material litigation. |
| • |
Business and risk management, including:
|
|
o |
ensuring that management identifies the principal risks
of the Company’s business and implements appropriate systems to manage the
risks; |
| |
|
|
| |
o |
approval of any plans to hedge sales; and
|
| |
|
|
|
o |
evaluation of, and assessing, information provided by
management and others about the effectiveness of risk management systems.
|
| • |
Policies and procedures, including:
|
|
o |
approval of, and monitoring of compliance with,
all significant policies and procedures that govern the Company’s
operations; |
| |
|
|
| |
o |
approving and acting as guardian of the
Company’s corporate values; and, |
| |
|
|
|
o |
directing management to ensure that the Company operates
within applicable laws and regulations and to the highest ethical and
moral standards. |
Audit Committee Charter
The Audit Committee is responsible for overseeing the policies
and practices relating to integrity of financial and regulatory reporting, as
well as internal controls to achieve the objectives of safeguarding of corporate
assets, reliability of information, and compliance with policies and laws. The
Audit Committee’s role is to support the Board in meeting its responsibilities
to Shareholders, review and enhance the independence of the external auditor,
facilitate effective communication between management and the external auditor,
provide a link between the external auditor and the Board, and increase the
integrity and objectivity of financial reports and public disclosure. The
full text of the Audit Committee Charter is available for viewing on the
Company’s website at www.greatpanther.com/Corporate/Governance/Governance-and-Policies.
20
The Audit Committee has complete and unrestricted direct access
to the external auditor and is responsible for approving the nomination, and
establishing the independence, of the external auditor. The role of the Audit
Committee has been discussed at various times with the external auditor.
Human Resources and Compensation Committee Charter
The role of the HRCC includes evaluating the performance of the
Chief Executive Officer, Chief Financial Officer and the Chief Operating
Officer. The HRCC also approves all compensation for executive officers and
Directors, recommends compensation plans, including equity-based compensation
plans to the Board, and performs an annual review of the Company’s benefits
programs. The full text of the HRCC Charter is available for viewing on the
Company’s website at
www.greatpanther.com/Corporate/Governance/Governance-and-Policies.
Nominating and Corporate Governance Committee Charter
The NCGC enhances the Company’s performance by developing and
recommending governance principles and by assisting the Company in discharging
its corporate governance responsibilities under the applicable law. It also
assesses and makes recommendations relating to the effectiveness and performance
of the Board. This committee is responsible for establishing and leading the
process for identifying, recruiting, appointing, re-appointing and providing
ongoing development for Directors. As part of its mandate, the NCGC, among other
things, develops and reviews a long-term plan for Board composition, reviews the
Board’s relationship with management to ensure the Board functions
independently, develops criteria for Directors, recommends nominees for election
as Directors and for appointment to committees, and reviews and monitors
orientation and education of directors. The full text of the NCGC Charter is
available for viewing on the Company’s website at
www.greatpanther.com/Corporate/Governance/Governance-and-Policies.
Safety, Health and Environment Committee Charter
The role of the SHEC is to assist the Board in the review,
monitoring, and oversight of the Company’s Safety, Health and Environmental
policies and regulatory compliance obligations. It is the responsibility of this
committee to review and make recommendations with respect to the safety and
health program, including corporate occupational health and safety policies and
procedures, and safety and health compliance issues. The SHEC must satisfy
itself that the management of the Company monitors trends, and reviews current
and emerging issues in the safety and health field, and evaluates the impact on
the Company. The full text of the SHEC Charter is available for viewing on the
Company’s website at
www.greatpanther.com/Corporate/Governance/Governance-and-Policies.
Position Descriptions
Written position descriptions have been developed for the
President and Chief Executive Officer, the Chair of the Board, and the Chair of
each committee of the Board. The position descriptions are further augmented by
the experience of the President and Chief Executive Officer, Chair of the Board
and respective chairs of the Board committees, who have a thorough knowledge and
understanding of the responsibilities associated with their respective roles.
Orientation and Continuing Education
The NCGC is responsible for establishing and monitoring the
orientation and continuing education of Directors. When new Directors are
appointed, they receive orientation, commensurate with their previous
experience, on the Company’s properties, business, technology and industry and
on the responsibilities of Directors. Board meetings also include presentations
by the Company’s management and employees to give the Directors additional
insight into the Company’s business. While the Company does not have a formal continuing education program, in order to enable each
Director to better perform his or her duties and to recognize and deal
appropriately with issues that arise, the Company provides Directors with
suggestions to undertake continuing director education, the cost of which is
borne by the Company. All Board members have significant experience in the
governance of public companies, which the Board believes ensures the effective
operation and governance of the Board.
21
The following table provides details regarding continuing
education of Directors during the financial year ended December 31, 2015:
| Name |
Course / Event |
Date |
| ROBERT A. ARCHER |
BMO Global Metals & Mining
Conference
Denver Gold Forum
Guanajuato Mine Complex Site Visit,
Mexico
Coricancha Mine Site Visit, Peru |
February 2015
October 2015
October 2015
October 2015 |
|
|
|
| R.W. (BOB) GARNETT |
KPMG - Managing the Tax Function
Deloitte 360
CPA - RBC Economic Update
Credit Union Conference
(FICOM)
CPA - IFRS Update
KPMG Mining Seminar
COSO Framework
presentation by Grant Thornton
Guanajuato Mine Complex Site Visit,
Mexico
Coricancha Mine Site Visit, Peru
BCCAT Education Conference
ICD Diversity in the Boardroom
KPMG Financial Reporting Update |
January 2015
January 2015
May 2015
June 2015
June 2015
September 2015
September
2015
October 2015
October 2015
October 2015
November 2015
November 2015 |
|
|
|
|
|
|
|
|
|
|
|
| KENNETH W. MAJOR |
Canadian Mineral Processors – Annual
Meeting
International SAG Grinding Conference, Vancouver
Guanajuato Mine Complex Site Visit, Mexico
Coricancha Mine Site
Visit, Peru |
January 2015
September 2015
October 2015
October 2015 |
|
|
|
| JOHN JENNINGS |
ICD Corporate Governance Seminars
ACG Capital Connection
COSO Framework presentation by Grant
Thornton
Guanajuato Mine Complex Site Visit, Mexico
Coricancha Mine
Site Visit, Peru |
Various in 2015
March 2015
September 2015
October 2015
October 2015 |
|
|
|
|
| W.J. (JAMES) MULLIN |
Guanajuato Mine Complex Site Visit,
Mexico
Coricancha Mine Site Visit, Peru |
October 2015
October 2015 |
|
| JEFFREY R. MASON |
Chartered Accountant/CPA PD courses and
seminars
Cambridge Resource Investment Conference
The Association
for Mineral Exploration BC Round up
COSO Framework presentation by Grant
Thornton
Guanajuato Mine Complex Site Visit, Mexico
Coricancha Mine
Site Visit, Peru |
Various in 2015
January 2015
January 2015
September 2015
October 2015
October 2015
|
|
|
|
|
|
Ethical Business Conduct
The Board has adopted a Code of Business Conduct and Ethics
(the “Code”) which applies to its Directors, officers and employees. The
Code sets out expectations for the conduct of the Company’s business in
accordance with all applicable laws, rules and regulations and the highest
ethical standards. The Code is available on the Company’s website at
www.greatpanther.com/Corporate/Governance/Governance-and-Policies. In
addition, the Board has found that fiduciary duties placed on individual
Directors by governing corporate legislation and the common law, and
restrictions placed by applicable corporate legislation on an individual
Director’s participation in decisions of the Board in which the Director has an
interest, are sufficient to ensure the Board operates independently of
management and in the best interests of the Company. In 2015, the Company
reviewed and updated the Code for best practices.
22
The NCGC oversees compliance with the Code and Mr. Bob Garnett,
the independent Chair of the Board, is the Business Ethics Officer responsible
for ensuring adherence with the Code. While serving in this capacity, the
Business Ethics Officer reports directly to the Board.
Training on the Code for Directors, officers and employees is
conducted on an ongoing basis. To ensure familiarity with the Code, Directors,
officers and employees are required to read the Code and sign a compliance
certificate annually.
The Code states that the Company’s Directors, officers and
employees should not be involved in any activity that creates or gives the
appearance of a conflict of interest. Directors, officers, and employees must
immediately notify the Business Ethics Officer of the existence of any actual or
potential conflict of interest which includes any interest in respect of any
transaction or agreement to be entered into by the Company. Once such interest
has been disclosed, the Board as a whole determines the appropriate level of
involvement that the Director or executive officer should have in respect of the
transaction or agreement. All Directors and executive officers are subject to
the requirements of the BCA with respect to the disclosure of any conflicts of
interests and the voting on transactions giving rise to such conflicts.
A conflict of interest occurs when a Director, officer or
employee finds himself or herself in a position where his or her personal
interests conflict with the interests of the Company or have an adverse effect
on the Director’s, officer’s or employee’s motivation or the proper performance
of his/her job.
Directors, officers and employees must report, in person or in
writing, any known or suspected violations of laws, governmental regulations or
the Code to the Business Ethics Officer as soon as practicable upon becoming
aware of the known or suspected violation. Additionally, Directors, officers,
and employees may contact the Business Ethics Officer with a question or concern
about the Code or a business practice. The Code provides that each Director,
officer and employee is personally responsible for, and it is their duty to
report, violations or suspected violations of the Code to the Business Ethics
Officer, and that no employee will be discriminated against for reporting what
the employee reasonably believes to be a breach of the Code or any law or
regulation. Additionally, Directors, officers, and employees may contact the
Business Ethics Officer with a question or concern about this Code or a business
practice.
The Company has also adopted a Whistleblower Policy and
reporting system to complement the Code. The Code and Whistleblower Policy
provide a mechanism for Directors, officers, employees and contractors of the
Company and its subsidiaries, to report violations or concerns. The reporting
person is encouraged to discuss concerns or violations to the Code directly with
their supervisor or Human Resources, but if, for any reason, these channels are
not appropriate, concerns can be reported through the alternative anonymous and
confidential reporting system via the Internet, electronic email, telephone or
mail. The system will provide an immediate notice to the Business Ethics Officer
and the Chair of the Audit Committee. The Code requires any questions or
reported violations to be addressed immediately and seriously, and provides that
reporting of suspected breaches can be made anonymously. Upon review and
investigation of the reported matters, the Company may take corrective and
disciplinary action, if appropriate.
Nomination of Directors
The Board considers its size each year when it considers the
number of Directors to recommend to the Shareholders for election at the annual
meeting of Shareholders, taking into account the number required to carry out
the Board’s duties effectively and to maintain a diversity of views and
experience. The NCGC recommends the six continuing Directors for election this
year.
The NCGC is composed of Messrs. Mullin, Garnett and Major, all
of whom are independent Directors. The mandate of the NCGC includes identifying
individuals qualified to be nominated for election as Directors of the Company
or any of the Board's committees. It also extends to evaluating the
qualifications and independence of each member of the Board and its committees,
and recommending to the Board any appropriate changes in the composition of the
Board and any of its committees.
In fulfilling its mandate, the NCGC, among other things:
identifies and evaluates individuals qualified to be nominated for election as
Directors of the Company or any of the Board's committees (the
“Nominees”); reviews and develops the Board's criteria for selecting
Nominees; selects, or recommends that the Board select, Nominees for election at
the annual meeting of the Shareholders of the Company; evaluates any individuals
nominated for election as Directors of the Company by the Shareholders of the
Company; and retains a search firm to assist the NCGC in identifying, screening
and attracting Nominees, if necessary.
23
Assessments and Performance Reviews
The Board monitors the adequacy of information given to
Directors, communication between the Board and management, and the strategic
direction and processes of the Board and its committees. The NCGC oversees an
annual formal assessment of the Board, its committees, and the individual
Directors. The Board has also undertaken formal director peer reviews utilizing
a third party professional. The Board is satisfied with the overall progress and
corporate achievements of the Company and believes this reflects well on the
Board and its practices
NYSE MKT Corporate Governance Requirements
In addition to the corporate governance requirements prescribed
under applicable Canadian securities laws, rules and policies, the Company is
also subject to corporate governance requirements prescribed by the listing
standards of the NYSE MKT, and the rules and regulations promulgated by the U.S.
Securities and Exchange Commission under the U.S. Securities Exchange Act of
1934, as amended (the “Exchange Act”) (including those applicable rules
and regulations mandated by the Sarbanes-Oxley Act of 2002).
Section 110 of the NYSE MKT Company Guide permits the NYSE MKT
to consider the laws, customs and practices of foreign issuers in relaxing
certain NYSE MKT listing criteria, and to grant exemptions from NYSE MKT listing
criteria based on these considerations. A company seeking relief under these
provisions is required to provide written certification from independent local
counsel that the non-complying practice is not prohibited by home country law.
Section 123 of the NYSE MKT Company Guide recommends that the
quorum for meetings of Shareholders of a listed company be not less than 33-1/3%
of the issued and outstanding shares entitled to vote at a meeting of
Shareholders. Upon listing, the Company received an exemption from this listing
standard. The Company’s quorum requirement is specified in its corporate charter
as two persons who are, or who represent by proxy, Shareholders.
Section 713 of the NYSE MKT Company Guide requires that the
Company obtain the approval of its Shareholders for share issuances equal to 20
percent or more of presently outstanding shares for a price which is less than
the greater of book or market value of the shares. This requirement does not
apply to public offerings. There is no such requirement under British Columbia
law or under the Company’s home stock exchange rules (the TSX) unless the
dilutive financing results in a change of control. The Company intends to seek a
waiver from NYSE MKT’s section 713 requirements should a dilutive private
placement financing trigger the NYSE MKT Shareholders’ approval requirement in
circumstances where the same financing does not trigger such a requirement under
British Columbia law or under the Company’s home country stock exchange rules.
The Company believes that there are otherwise no significant
differences between its corporate governance policies and those required to be
followed by United States domestic issuers listed on the NYSE MKT. In
particular, in addition to having a separate Audit Committee, the Company’s
Board has established a separately-designated HRCC that materially meets the
requirements for a compensation committee under section 805 of the NYSE MKT
Company Guide, as currently in force.
The Company’s governance practices also differ from those
followed by U.S. domestic companies pursuant to NYSE MKT listing standards in
the following manner, although the Company does not believe such differences to
be particularly significant:
24
Board Meetings
Section 802(C) of the NYSE MKT Company Guide requires that the
Board hold meetings on at least a quarterly basis. The Board of the Company is
not required to meet on a quarterly basis under the laws of the Province of
British Columbia.
Solicitation of Proxies
NYSE MKT requires the solicitation of proxies and delivery of
proxy statements for all Shareholder meetings, and requires that these proxies
shall be solicited pursuant to a proxy statement that conforms to applicable SEC
proxy rules. The Company is a foreign private issuer as defined in rule 3b-4
under the Exchange Act, and the equity securities of the Company are accordingly
exempt from the proxy rules set forth in sections 14(a), 14(b), 14(c) and 14(f)
of the Exchange Act. The Company solicits proxies in accordance with applicable
rules and regulations in Canada.
AUDIT COMMITTEE
In addition to the disclosure under “Statement of Corporate
Governance Practices – Mandates and Charters – Audit Committee Charter”,
information about the Audit Committee, as well as a copy of its Charter, are
attached as Appendix A to the Annual Information Form (the “AIF”) which was
filed on SEDAR at www.sedar.com on March 30, 2016, under the heading
“Audit Committee Information”. The AIF is available under the Company’s profile
on SEDAR at www.sedar.com and a copy of the AIF is available upon request
from the Assistant Corporate Secretary at Suite 1330, 200 Granville Street,
Vancouver, British Columbia, telephone number 604-608-1766, toll free:
1-888-355-1766, or fax number 604-608-1768, or email
info@greatpanther.com, free of charge to security holders of the Company.
The Company may require the payment of a reasonable charge from any person or
company who is not a security holder of the Company, who requests a copy of the
AIF.
STATEMENT OF EXECUTIVE COMPENSATION
For the purposes of this Information Circular:
| |
(a) |
“CEO” of the Company means each individual who
served as Chief Executive Officer of the Company or acted in a similar
capacity for any part of the most recently completed financial
year; |
| |
|
|
| |
(b) |
“CFO” of the Company means each individual who
served as Chief Financial Officer of the Company or acted in a similar
capacity for any part of the most recently completed financial
year; |
| |
|
|
| |
(c) |
“COO” of the Company means each individual who
served as Chief Operating Officer of the Company or acted in a similar
capacity for any part of the most recently completed financial
year; |
| |
|
|
| |
(d) |
“Executive Officer(s)” means the legally appointed
executive officers of the Company which consist of the CEO, the CFO, the
COO and the Vice President, Exploration; and, |
| |
|
|
| |
(e) |
“Named Executive Officers” means (i) CEO, (ii)
CFO, (iii) each of the three most highly compensated executive officers of
the Company, including any subsidiary of the Company, or the three most
highly compensated individuals acting in a similar capacity, other than
the CEO and CFO, at the end of the most recently completed financial year
whose total compensation was, individually, more than $150,000; and (iv)
each individual who would be a Named Executive Officer under paragraph
(iii) but for the fact that the individual was neither an executive
officer of the Company or a subsidiary of the Company, nor acting in a
similar capacity, at the end of that financial year;
and, |
25
Named Executive Officers
During the financial year ended December 31, 2015, the Company
had the following Named Executive Officers (“NEOs”):
| |
• |
Robert A. Archer, President and Chief Executive
Officer (“CEO”); |
| |
|
|
| |
• |
Jim A. Zadra, Chief Financial Officer and
Corporate Secretary (“CFO”); |
| |
|
|
| |
• |
Ali Soltani, Chief Operating Officer (“COO”);
|
| |
|
|
| |
• |
Robert F. Brown, Vice President, Exploration
(“VP Exploration”); and |
| |
|
|
| |
• |
Mary Ellen Thorburn, Vice President, Finance
(“VP Finance”). |
COMPENSATION DISCUSSION AND ANALYSIS
Below are some of the key aspects of the Company’s executive
compensation program that are in place to ensure good governance:
Pay for performance – 53% of CEO Total Direct
Compensation is variable and at-risk through the Annual Incentive and Share
Option grants. The average percentage for other NEOs is 48%.
Relevant performance metrics – The performance metrics
and expected performance levels for the short-term incentive plan is reviewed on
an annual basis to ensure the metrics and expected performance focus the NEOs on
relevant activities for the business and ties payouts to positive performance
for Shareholders.
Annual review of peer group – The HRCC annually reviews
the applicability of the compensation peer group for NEOs and adjusts the peer
group, as necessary, to ensure it remains relevant and comparable with the ever
evolving size and scope of our operations.
Cap on short-term incentive payouts – Payouts under the
short-term incentive plan are capped for all NEOs at 200% of Target.
Threshold performance expectations before incentive payouts
are made – Threshold performance expectations are set to make sure that a
minimum level of performance is achieved against short-term incentive
performance metrics before payouts can be made for that metric. Share option
grants, due to the requirement for Great Panther’s share price to exceed the
exercise price on grant date for value to be earned upon exercise, also act as a
minimum performance expectation in the long run.
Modest benefits and perquisites – Benefits and
perquisites are set at competitive levels, but represent a small part of total
NEO compensation.
Review of compensation risk – The HRCC monitors the risk
inherent within its compensation program to ensure the program does not
encourage excessive risk-taking.
Employment agreements – The Company has employment
agreements with all NEOs to protect proprietary knowledge obtained while at
Great Panther.
Independent advice – The HRCC has engaged an independent
advisor, Global Governance Advisors, to advise it on compensation and governance
matters.
No share option repricing – Share options are not
allowed to be repriced under the Share Option Plan.
No excessive severance obligations – NEO severance
obligations are capped at no higher than 24 months.
26
No hedging of share based compensation – The Company has
a policy restricting employees, officers and Directors from purchasing financial
instruments to hedge or offset a decrease in market value in share options or
any other share based compensation.
The Company’s Executive Officers participate in executive
compensation decisions by making recommendations to the HRCC regarding (a)
Executive Officer base salary, annual short-term and long-term incentive awards;
(b) annual and long-term quantitative and qualitative goals and objectives for
the Executive Officers; and (c) recommendations to amend short-term and
long-term incentive plans, as necessary.
The HRCC reviews the basis for these recommendations and can
exercise its discretion in modifying any of the recommendations prior to making
its recommendations to the Board.
The following executive compensation principles guide the HRCC
in fulfilling its roles and responsibilities in the design and ongoing
administration of the Company’s executive compensation program:
|
• |
Compensation levels and opportunities should be
sufficiently competitive to facilitate recruitment and retention of
qualified and experienced executives, while being fair and reasonable to
Shareholders; |
| |
|
|
|
• |
Compensation should reinforce the Company’s business
strategy by communicating key metrics and operational performance
objectives (both annual and long-term) in its incentive plans and by
emphasizing incentives in the total compensation mix; |
| |
|
|
|
• |
Incentive compensation should be responsive to the
Company’s commodity-based cyclical business environment by emphasizing
operation performance over performance measures that are more directly
influenced by metals prices; and |
| |
|
|
|
• |
Compensation programs should align executives’ long-term
financial interests with those of Shareholders by providing equity-based
incentives. |
The Company’s executive compensation program is designed to
encourage, compensate and reward executives on the basis of individual and
corporate performance, both in the short and the long term. Executive Officer
and NEO compensation includes base salary and benefits, payments under the
Company’s Short-term Incentive Program (the “STIP”) and share options, however,
Executive Officers have a higher portion of their compensation comprised of
variable incentives tied to corporate performance (STIP and share options).
Salaries are a base level of compensation designed to attract and retain
executives and employees with the appropriate skills and experience. STIP
payments are designed to reward for the achievement of short-term corporate
objectives (generally one year) and individual contribution towards achieving
those objectives, while share options are designed to provide incentives to
increase Shareholder value over the longer-term and thereby better align
executive compensation with the interests of Shareholders.
27
Each element of executive compensation is carefully considered
by the HRCC to ensure that there is the right mix of short-term and long-term
incentives for the purposes of achieving the Company’s goals and objectives.
To emphasize a pay-for-performance philosophy at Great Panther,
Total Direct Compensation is heavily weighted towards “at risk” compensation
through the Short-Term Incentive and Share Option awards. As shown below, a
significant portion of the CEO’s and NEO’s Target Total Direct Compensation, 54%
and 46% respectively, is at risk and tied to annual and long-term performance.
During 2015, the HRCC retained Global Governance Advisors
(“GGA”) to provide independent compensation advice to the HRCC and to the Board.
GGA is an internationally recognized, independent advisory firm that provides
counsel to boards of directors on matters relating to executive compensation and
governance. GGA is retained to continually review the compensation levels for
the Company’s Executive Officers and Directors and short and long-term incentive
plans, and evaluate and make recommendations on the Company’s overall executive
and Director compensation philosophy, objectives and approach.
28
GGA’s services in 2015 included:
| |
• |
Director education on mining compensation and
governance trends and practices; |
| |
|
|
| |
• |
Stress testing of the Company’s Share Option
Plan; |
| |
|
|
| |
• |
LTIP design and market prevalence review;
|
| |
|
|
| |
• |
High-level review of executive compensation
levels against the competitive marketplace; |
| |
|
|
| |
• |
Management Information Circular review; and
|
| |
|
|
| |
• |
Advice as it relates to Director compensation
levels. |
Fees for GGA's services are set forth in the table below.
| Year |
Executive
Compensation
Related Fees |
All Other Fees
|
|
| 2015 |
$36,340 |
Nil |
| 2014 |
$58,240 |
Nil |
The HRCC reviews all fees and the terms of consulting services
provided by its compensation consultant.
Based on this review, the Company has maintained the following
general principles in determining its executive and Director total compensation
plans for the year ended December 31, 2015:
Annual Compensation Review Process
The HRCC follows an annual compensation review process, working
in collaboration with its independent compensation advisor, GGA. The process
includes the following key steps:
| |
1. |
Review and validate the Compensation
Philosophy; |
| |
|
|
| |
2. |
Review and validate the Peer Group; |
| |
|
|
| |
3. |
Detailed Executive Compensation Review; |
| |
|
|
| |
4. |
Detailed review of performance metrics and determine
incentive awards; and |
| |
|
|
| |
5. |
Establish performance metrics for following fiscal
year. |
Peer Group
The Company uses the following criteria when determining
appropriate comparators for compensation benchmarking purposes:
| |
• |
Companies of a similar (0.5x to 2x) size to Great
Panther, mostly from a total assets perspective, but also taking into
account other factors such as market capitalization and revenue;
|
| |
|
|
| |
• |
Companies that are operational in nature (not
just an exploration company); |
| |
|
|
| |
• |
Companies that have multiple mine sites that
they are either operating or exploring; |
| |
|
|
| |
• |
Companies that operate in a similar geography
(i.e. Mexico/South America); |
| |
|
|
| |
• |
Companies that have underground mine sites; and
|
| |
|
|
|
• |
Companies that produce similar metals to Great
Panther (i.e. silver, gold and/or other precious metals).
|
29
The peer group defines the competitive market, which Great
Panther uses to guide executive compensation design and pay levels.
The custom peer group based on the criteria listed above is:
| 2015 Peer Group for Great Panther Silver
Limited |
| Aurcana Corporation |
Fortuna Silver Mines Inc. |
Santacruz Silver Mining Ltd. |
| Endeavour Silver Corp. |
IMPACT Silver Corp. |
Scorpio Mining Corp. |
| Excellon Resources Inc. |
Primero Mining Corp. |
Sierra Metals Inc. |
| First Majestic Silver Corp. |
Revett Minerals Inc. |
Silvercrest Mines Inc.
|
In addition to the custom peer group, for additional context
the Company evaluates the Global Mining Industry Data for Companies with Assets
between $100 and $200 Million from GGA’s Global Mining Executive and Director
Compensation Survey Report.
Base Salary
Executive Officer base salary is intended to remunerate the
Executive Officer for discharging job responsibilities and reflects the
executive’s performance over time. Individual salary adjustments take into
account performance contributions in connection with their specific duties. The
base salary of each Executive Officer is determined by the Board based on an
assessment by the HRCC of his or her sustained performance and consideration of
competitive compensation levels for the markets in which the Company operates.
In making its recommendations to the Board, the HRCC also considers the
particular skills and experience of the individual. A final determination on
executive compensation, including salary, is made by the Board in its sole
discretion based on the recommendations of the HRCC and its knowledge of the
industry and geographic markets in which the Company operates. While the
Executive Officers may provide their recommendation to the HRCC on Executive
Officer annual base salaries, the HRCC and the Board make the final
determination. The HRCC does not use any type of quantitative formula to
determine the base salary level of any of the Executive Officers. During 2015
there were no increases in base salaries for Executive Officers employed under
employment agreements. The President and CEO was transitioned from a consulting
contract to a new employment agreement effective January 1, 2015, such that
there are no longer any Executive Officers employed under consulting contracts.
The Company has employment agreements with each of its
Executive Officers. The agreements specify the terms and conditions of
employment, the duties and responsibilities of the executive during this term,
the compensation and benefits to be provided by the Company in exchange for the
executive’s services, the compensation and benefits to be provided by the
Company in the event of a qualifying termination of employment not preceded by a
change in control of the Company, and the compensation and benefits to be
provided by the Company in the event of a qualifying termination of employment
that is preceded by a change in control of the Company. The HRCC believes that
such agreements benefit the Company by clarifying the terms of employment and
ensuring the Company is protected by non-compete and non-disclosure provisions.
Additional information regarding the employment agreements with the NEOs is
found in “Termination and Change in Control Provisions”.
| Named Executive Officer (Position) |
Base Salary |
| Robert A. Archer (CEO) |
$475,000 |
| Jim A. Zadra (CFO) |
$285,000 |
| Ali Soltani (COO) |
$364,323* |
| Robert F. Brown (VP Exploration) |
$220,000 |
| Mary Ellen Thorburn (VP Finance) |
$200,000 |
* Salary of US$285,000 shown in Canadian dollars using an
exchange rate of $1.00=USD0.7823.
30
Short-term Incentive Program
The Company’s objective is to achieve certain strategic
objectives and milestones. The Board will consider executive incentive
compensation dependent on the Company meeting those strategic objectives and
milestones and sufficient cash resources being available for the granting of
STIP payments. STIP payments, if awarded, recognize extraordinary contributions
to achieving the Company’s objectives. STIP payments are reviewed and approved
by the HRCC to ensure that such remuneration is appropriate, equitable and
commensurate with the Company’s performance and achievement of goals and
objectives.
The STIP determines annual incentive compensation with specific
targets and objectives recommended by the HRCC and approved by the Board. Under
the STIP, employees of the Company are grouped into different categories each
with a different target award opportunity and percentage allocation of corporate
versus personal goals. Incentive compensation for the employees will be directly
tied to the achievement of corporate objectives as well as the achievement of
individual goals. The purpose of the STIP is to align individual contributions
with the Company’s objectives, communicate key objectives which are most highly
valued, and reward senior management for achieving objectives commensurate with
the business and operational results of the Company.
The STIP payments to each of the NEOs were based on a formula
taking into account both Corporate Objectives and Personal Objectives, weighted
65% and 35% respectively in the case of CEO, CFO, COO and VP Exploration. For
the VP Finance, the achievement of Corporate Objectives and Personal Objectives
are considered equally (50/50 weighting). The Personal Objectives are both
quantitative and qualitative in nature and support the achievement of overall
Corporate Objectives. The Corporate Objectives include an overarching safety
objective to promote the importance of maintaining an organization that values
safe operations.
The following table provides the mix of Corporate and Personal
Objectives used in the STIP payment determination, and the target award and
ranges.
|
CEO |
COO & CFO
|
VP
Exploration |
VP Finance
|
|
| Target STIP (% of Base Salary) |
40% |
35% |
30% |
25% |
| STIP Award Range (% of Salary) |
0-80% |
0-70% |
0-60% |
0-37.5% |
| Weighting of Corporate Objectives |
65% |
65% |
65% |
50% |
| Weighting of Personal Objectives |
35% |
35% |
35% |
50% |
The achievement of Corporate Objectives may range from 0% to
200% depending on the specific goals and actual performance relative to the
target, while the HRCC may also include bonus achievement rewards relative to
unforeseen matters or specific accomplishments. In addition, the results of each
Corporate Objective is multiplied by a factor ranging from 0.5x to 1.5x based on
the safety record of the mining operations, to determinate an overall percentage
achievement for the Corporate Objectives.
The final STIP payment for each NEO is computed as follows:
| (1) |
Adjusted by a safety record multiplier of 0.5 – 1.5,
while maintaining cap of 200%. |
| (2) |
65%/35% weighting applies to Executive Officers. NEOs who
are not Executive Officers are weighted 50%/50%. |
| (3) |
Range of Individual Performance score for NEOs who are
not Executive Officers is 0-150%. |
During 2015, the Executive Officers and certain members of the
Company’s senior management team agreed to reduce their respective STIP awards
in exchange for a grant of employee stock options of a fair value in the amount
of the STIP reductions. The step was taken as a cash conservation measure and to
better align the interests of the management team with longer terms success of
the Company. The Executive Officers took reductions in their STIP awards ranging
from 6 to 8% of their base salary, while a 2% reduction applied to the other
members of the senior management team.
The following table describes the Corporate Objectives for the
purposes of the STIP, as well as the final evaluation of the achievement of each
Corporate Objective:
| Metric |
Measurement |
Target Weighting
|
Achievement(1) |
| Metal Production |
Actual silver
equivalent ounce production
relative to budget and guidance production
numbers. |
25% |
50% |
|
|
| Resources |
Replacement of mine
resources and
increases in resources at the at the
Company’s
Guanajuato Mine Complex
(“GMC”). |
20% |
20% |
|
|
|
|
| Production cash cost(1)
|
Actual cash cost relative
to budget and
guidance cash cost. |
20% |
40% |
|
|
| Free Cash Flow (“FCF”)(2)
|
Actual FCF relative to budgeted
FCF(2) |
Corporate Social
Responsibility
(“CSR”)
|
Define adopted CSR
frameworks according
to international standards and enhance
measurement of CSR indicators. |
10%
|
15%
|
|
|
Corporate growth
|
Achievement of corporate
development and
other growth initiatives. |
25% |
40% |
|
| Subtotal for Corporate Objectives
|
100% |
165% |
| Adjustment for Safety Factor |
|
1.1x |
| Net Corporate Objectives
Achievement (Target 100%; Range 0-200%) |
|
182% |
Notes:
| (1) |
Cash cost per payable ounce is a non-IFRS measure. It is
a widely reported measure in the silver mining industry as a benchmark for
performance, but does not have a standardized meaning. Cash cost is
calculated based on the total cash operating costs with the deduction of
revenues attributable to sales of by-product metals net of the respective
smelting and refining charges and net of mining duties calculated on
applicable gross revenue. By-products consist of gold at the GMC, and
gold, lead and zinc at the Topia Mine. |
| (2) |
Free Cash Flow is a non-IFRS measure and does not have a
standardized meaning. Free Cash Flow has been determined as EBITDA less
sustaining capital expenditure. |
The HRCC also assessed the individual performance of each of
the Executive Officer and reviews STIP and LTIP awards of all NEOs. The NEOs
achieved the following overall (reflecting both the level of achievement on
Corporate Objectives and Personal Objectives) STIP awards:
| Position |
Target
STIP
(% of Base
Salary) |
STIP
(%
of Target) |
Actual STIP
(% of Base
Salary) |
Actual
STIP ($)* |
STIP
Taken in Cash
($)* |
STIP
Exchanged for
Options ($)* |
|
|
|
| CEO |
40% |
152% |
61.0% |
$289,670 |
$252,350 |
$37,320 |
| CFO |
35% |
153% |
53.4% |
$152,194 |
$132,825 |
$19,369 |
| COO |
35% |
155% |
54.4% |
$198,106** |
$172,832 |
$25,274 |
| VP Exploration |
30% |
147% |
44.2% |
$97,219 |
$84,700 |
$12,519 |
| VP Finance |
25% |
131% |
32.8% |
$65,552 |
$61,300 |
$4,252 |
32
* Actual STIP payouts in cash were reduced and NEOs granted
options on December 11, 2015 in consideration the reduction in their 2015 STIP
payments. These options vested immediately on the date of grant.
** Salary
of US$285,000 used to calculate Actual STIP Award at an average exchange rate of
$1.00=USD0.7823.
Long-term Incentive Plans
The share option component of executive officers’ compensation
is intended to advance the interests of the Company by encouraging the
Directors, officers, employees and consultants of the Company to remain
associated with the Company and furnishing them with an additional incentive in
their efforts on behalf of the Company in the conduct of its affairs. Grants
under the Share Option Plan are intended to provide long-term awards linked
directly to the market value performance of the Company’s shares. The HRCC
reviews management’s recommendations and makes its own recommendations to the
Board. Share options are granted according to the specific level of
responsibility of the particular executive and the number of options for each
level of responsibility is determined by the HRCC. When new grants are made,
previous grants are also taken into consideration to ensure that the overall
options granted are fair in relation to those of other employees and executives
and within the range of option grants of similar companies in the mining
industry. The number of outstanding options is also considered by the HRCC when
determining the number of options to be granted in any particular year due to
the limited number of options which are available for grant under the Share
Option Plan. Details on the option grants made during 2015 are provided in the
table below.
| Position |
Regular
Grant |
STIP
Deferral Grant |
Total Value of
|
Number
of
Options
Granted* |
Grant Date
Fair
Value of
Options
($) |
Number
of
Options Granted**
|
Grant
Date
Fair Value of
Options
($) |
Options
Granted in
2015
($) |
|
|
|
| CEO |
1,115,000 |
$255,239 |
158,000 |
$37,320 |
$292,559 |
| CFO |
775,000 |
$177,050 |
82,000 |
$19,369 |
$196,419 |
| COO |
478,000 |
$110,764 |
107,000 |
$25,274 |
$136,037 |
| VP Exploration |
344,000 |
$78,748 |
53,000 |
$12,519 |
$91,267 |
| VP Finance |
85,000 |
$19,488 |
18,000 |
$4,252 |
$23,740 |
* Options granted vest 1/6 each on the 6-month, 1-year,
18-month, 2-year, 30-month and 3-year anniversary from grant date.
**
Options granted vested immediately upon grant date.
For a detailed discussion of the Share Option Plan, see
“Securities Authorized for Issuance Under Equity Compensation Plans – Share
Option Plan”.
Benefits and Perquisites
The primary purpose of providing benefits and limited
perquisites to the Company’s executives is to attract and retain the talent to
manage the Company. The Company intends that the type and value of benefits and
perquisites offered are to be competitive with market practices. Details of the
benefits and perquisites provided to the NEOs are disclosed in the “All Other
Compensation” column of the 2015 Summary Compensation Table set forth in this
Information Circular. The primary benefits for the Company’s executives include
participation in the Company’s broad-based plans: health and dental coverage,
various company-paid insurance plans, including disability and life insurance,
paid vacation, and retirement savings plan benefits. In general, the Company
will provide a specific perquisite only when the perquisite provides competitive
value and promotes retention of executives, or when the perquisite provides
shareholder value. In addition, perquisites that promote efficient performance
of the Company’s executives are also considered. The limited
perquisites the Company provides its NEOs may include a cellular telephone and
commuting expenses.
33
Compensation Governance
The HRCC consists of John Jennings (Chair), R.W. (Bob) Garnett,
and W.J. (James) Mullin, all of whom are independent Directors. The Board is
satisfied that each member has the skills and experience to carry out of the
Mandate of the HRCC. The HRCC meets at least annually or more frequently, as
circumstances require.
Mr. Jennings is a Senior Client Partner at Korn Ferry, a leader
and innovator in executive, CEO and board recruitment, assessment and
compensation. In addition to his compensation expertise, Mr. Jennings has almost
three decades of experience in the Canadian and international financial sectors,
as chief executive officer of a Canadian investment dealer and thereafter, a
senior investment banker providing strategic advice, raising capital and
executing mergers and acquisitions, primarily for middle market companies. Mr.
Garnett has 40 years’ experience serving on boards and committees in a broad
range of industries. He also holds a Chartered Professional Accountant
designation and an ICD.D certification from the Institute of Corporate
Directors. Mr. Garnett is a Commissioner of the Financial Institutions
Commission, (“FICOM”). FICOM is an agency of the provincial government
which administers nine statutes providing regulatory rules for the protection of
the public in the province of British Columbia. Mr. Mullin is a graduate of
Colorado School of Mines (Mining Engineering) and is a retired Professional
Engineer in British Columbia. He spent his 33-year career with Newmont Mining
Corporation. The experience of the HRCC members has provided each member with
broad exposure to the compensation practices and policies in the mining
industry, in addition to a number of other industry sectors.
The HRCC has not conducted a formal evaluation of the risks
associated with the Company’s compensation policies and practices; however, the
HRCC carefully considers whether the design and structure of compensation
programs and related performance criteria provide appropriate incentives without
creating undue risks.
Due to the small size of the Company and the current level of
the Company’s activity, the HRCC is able to closely monitor and consider any
risks which may be associated with the Company’s compensation policies and
practices. Risks, if any, may be identified and mitigated through regular
meetings of the HRCC during which financial and other information of the Company
are reviewed. No risks have been identified arising from the Company’s
compensation policies and practices that are reasonably likely to have a
material adverse effect on the Company.
Compensation Risk Management
The Company has taken steps to ensure its executive
compensation program does not incent risk outside the Company’s risk appetite.
Some of the risk management initiatives currently employed by the Company are as
follows:
| |
• |
Appointing a HRCC comprised of only independent
Directors to oversee the executive compensation program; |
| |
|
|
| |
• |
Retaining independent compensation advisors to
provide advice on the level of compensation for executives; |
| |
|
|
| |
• |
Setting performance hurdles and milestones for
determining STIP payouts; |
| |
|
|
| |
• |
The use of deferred equity compensation to
encourage a focus on long-term corporate performance versus short-term
results; |
| |
|
|
| |
• |
Paying performance related incentives only when
performance results are known; |
| |
|
|
| |
• |
Setting caps on incentive programs; and |
| |
|
|
|
• |
Use of discretion in adjusting incentive
payments up or down as the HRCC deems appropriate and recommends.
|
34
Performance Graph
The following graph compares the cumulative total Shareholder
return for $100 invested in Common Shares of the Company on January 1, 2011,
with the cumulative total return of the TSX Composite Index and the TSX Global
Mining Index, from January 1, 2011 to December 31, 2015:
|
Jan. 01,
2011 |
Dec. 31,
2011 |
Dec. 31,
2012 |
Dec. 31,
2013 |
Dec. 31,
2014 |
Dec. 31,
2015 |
|
| Great Panther Silver Limited |
$100.00 |
$76.83 |
$59.46 |
$29.73 |
$27.03 |
$27.03 |
| S&P/TSX Composite Index |
$100.00 |
$91.54 |
$98.12 |
$110.86 |
$122.56 |
$112.37 |
| S&P/TSX Global Mining Index |
$100.00 |
$74.71 |
$71.69 |
$57.47 |
$49.04 |
$35.07 |
As discussed in the Compensation Discussion and Analysis,
compensation for the Company’s NEOs is comprised of different elements. These
include elements that do not directly correlate to the market price of the
Company’s common shares such as base salary and the STIP which pays an award
based on the achievement of specific corporate and personal objectives. The
Company’s share price is heavily influenced by the price of silver which has
seen significant fluctuation in recent years and, in particular, significant
declines in 2012 through 2015. 2013 saw a very sharp decline in silver prices
which significantly affected the Company’s share price and profitability. As a
result, the Company undertook a restructuring which included the elimination of
the standalone role of the President. Severance payments in respect of this
restructuring significantly increased NEO total compensation for 2013. Annual
incentive compensation also increased as specific goals and objectives were
achieved which were independent of the share price. In 2014, the Company
expanded its portfolio of producing mines with the commencement of commercial
production at the San Ignacio Mine. The Company increased metal production by
12% in terms of silver equivalent ounces; however, the benefit of increased
production was offset by significant declines in the silver and gold prices.
The net effect was that the Company’s share price remained essentially unchanged
at the end of 2014, compared to the closing price 12 months earlier. In order to
better direct the Company’s expanding operations, the Company appointed a new
Chief Operating Officer during September 2014, which resulted in an increase in
NEO compensation. In addition, compensation related to option-based awards
increased as a result of the independent review of NEO compensation and the
desire to enhance retention of NEOs through longer-term incentives such as
option-based awards which vest over several years. In 2015, there were no
increases in base salaries for NEOs as a result of continued declines in silver
and gold prices which, in turn, caused significant declines in share prices
across the industry. Despite significant declines in metal prices, the Company
achieve a 30% increase in production, and 38% decrease in all-in sustaining
costs, and exceeded its operational goals and plans. As a results, STIP awards
increased as did non-cash LTIP awards.
35
Summary Compensation Table
The following table sets out information concerning the
compensation earned or awarded to the Named Executive Officers during the
financial years ended December 31, 2015, 2014 and 2013:
| |
|
|
|
|
Non-equity incentive |
|
|
|
| |
|
|
|
|
plan compensation |
|
|
|
| |
|
|
|
|
($) |
|
|
|
| |
|
|
Share- |
Option- |
Short- |
Long- |
|
All other |
|
| Name and current
|
Year |
Salary |
based |
based |
term |
term |
Pension value |
compen- |
Total |
| principal
position |
|
($) |
awards |
awards(1) |
incentive(2) |
incentive |
($) |
sation (3) |
($)
|
| |
|
|
($) |
($) |
plans |
plans |
|
($) |
|
| ROBERT.A. ARCHER,
|
2015 |
475,000 |
NIL |
292,559 |
252,350 |
N/A |
N/A |
12,685 |
1,032,594 |
| P. GEO. (4)
|
2014 |
457,200 |
NIL |
277,336 |
89,700 |
N/A |
N/A |
N/A |
824,236
|
| President & CEO |
2013 |
492,390 |
NIL |
46,332 |
80,000 |
N/A |
N/A |
N/A |
618,722 |
| JIM A. ZADRA, CPA,
CA |
2015 |
285,000 |
NIL |
196,419 |
132,825 |
N/A |
N/A |
16,582 |
630,826
|
| CFO &
Corporate |
2014 |
285,000 |
NIL |
229,608 |
56,100 |
N/A |
N/A |
14,250 |
584,958
|
| Secretary |
2013 |
262,500 |
NIL |
77,219 |
60,000 |
N/A |
N/A |
12,135 |
411,854 |
| ALI SOLTANI (5)
|
2015 |
364,323 |
NIL |
136,037 |
172,832 |
N/A |
N/A |
N/A |
673,192
|
| COO |
2014 |
99,856 |
NIL |
108,508 |
17,700 |
N/A |
N/A |
N/A |
226,065
|
| |
2013 |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
| ROBERT F. BROWN, |
2015 |
220,000 |
NIL |
91,267 |
84,700 |
N/A |
N/A |
11,000 |
406,967
|
| P. GEO. |
2014 |
220,000 |
NIL |
99,325 |
32,500 |
N/A |
N/A |
11,000 |
362,825
|
| VP Exploration |
2013 |
215,000 |
NIL |
30,888 |
40,000 |
N/A |
N/A |
11,022 |
296,910 |
| MARY ELLEN THORBURN,
|
2015 |
200,000 |
NIL |
23,740 |
61,300 |
N/A |
N/A |
10,000 |
295,040
|
| CPA, CA, CFA
(6) |
2014 |
128,030 |
NIL |
64,497 |
17,600 |
N/A |
N/A |
3,333 |
213,460
|
| VP Finance |
2013 |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
Notes:
| (1) |
Option-based awards are valued using the Black-Scholes
stock option valuation methodology, consistent with the values used in the
Company’s financial statements. The June 5, 2015 grants were valued using
the following assumptions: Exercise Price: $0.65; Risk Free Rate of
Return: 0.63%; Volatility Estimate: 68%; Expected Life (Years): 2.0;
Dividend Rate: Nil; Per Option Value: $0.23. The December 11, 2015 grants
were valued using the following assumptions: Exercise Price: $0.71; Risk
Free Rate of Return: 0.48%; Volatility Estimate: 59%; Expected Life
(Years): 2.0; Dividend Rate: Nil; Per Option Value: $0.24. |
| (2) |
The 2015 STIP was paid in 2016; the 2014 STIP was paid in
2015, and the 2013 STIP was paid in 2014. On December 11, 2015, the NEOs
were granted options as consideration for a reduction in their 2015 STIP
payments. These options vested immediately on the date of grant. |
| (3) |
Retirement plan benefits. |
| (4) |
Salary for 2014 and 2013 consist of consulting fees paid
to Platoro Resource Corp., a British Columbia company controlled by Robert
A. Archer. Effective January 1, 2015, Mr. Archer entered into an
employment agreement with the Company. |
| (5) |
Mr. Soltani was appointed COO of the Company on September
1, 2014. Mr. Soltani’s salary has been established and paid in US dollars.
It has been converted to Canadian dollars at an average exchange rate of
$1.00=USD0.7823. for 2015 and $1.00=USD 0.8912 for 2014. |
| (6) |
Ms. Thorburn was appointed VP Finance of the Company on
May 12, 2014. |
36
Incentive Plan Awards
Outstanding Share-based Awards and Option-based Awards
The following table sets out all option-based awards and
share-based awards outstanding as at December 31, 2015, for each NEO:
| |
Option-based Awards |
Share-based Awards |
| |
|
|
|
|
|
|
Market or |
| |
|
|
|
|
|
Market or |
payout |
| |
|
|
|
|
Number of |
payout |
value of |
| |
Number of |
|
|
Value of |
shares or |
value of |
vested |
| Name |
securities |
|
|
unexercised |
units of |
share-based |
share-based |
| |
underlying |
Option |
Option |
in-the- |
shares |
awards that |
awards not |
| |
unexercised |
exercise |
expiration |
money |
that have |
have not |
paid out or |
| |
options |
price |
date |
options |
not vested |
vested |
distributed |
| |
(#) |
($) |
|
($)(1) |
(#) |
($) |
($) |
| ROBERT A. ARCHER |
150,000 |
0.70 |
28-JUN-16 |
NIL |
N/A |
N/A |
N/A
|
| |
100,000 |
1.71 |
16-AUG-17 |
NIL |
|
|
|
| |
430,000 |
1.31 |
27-JUN-19 |
NIL |
|
|
|
| |
759,000 |
0.65 |
05-JUN-20 |
$37,950 |
|
|
|
| |
356,000 |
0.71 |
11-DEC-20 |
NIL |
|
|
|
| |
158,000(2) |
0.71 |
11-DEC-20 |
NIL |
|
|
|
| JIM A. ZADRA |
250,000 |
0.70 |
28-JUN-16 |
NIL |
N/A |
N/A |
N/A
|
| |
150,000 |
2.40 |
05-DEC-16 |
NIL |
|
|
|
| |
100,000 |
1.71 |
16-AUG-17 |
NIL |
|
|
|
| |
356,000 |
1.31 |
27-JUN-19 |
NIL |
|
|
|
| |
561,000 |
0.65 |
05-JUN-20 |
$28,050 |
|
|
|
| |
214,000 |
0.71 |
11-DEC-20 |
NIL |
|
|
|
| |
82,000(2) |
0.71 |
11-DEC-20 |
NIL |
|
|
|
| ALI SOLTANI |
250,000 |
0.86 |
04-NOV-19 |
NIL |
N/A |
N/A |
N/A
|
| |
200,000 |
0.65 |
05-JUN-20 |
$10,000 |
|
|
|
| |
278,000 |
0.71 |
11-DEC-20 |
NIL |
|
|
|
| |
107,000(2) |
0.71 |
11-DEC-20 |
NIL |
|
|
|
| ROBERT F. BROWN
(3) |
100,000 |
0.70 |
28-JUN-16 |
NIL |
N/A |
N/A |
N/A
|
| |
154,000 |
1.31 |
27-JUN-19 |
NIL |
|
|
|
| |
234,000 |
0.65 |
05-JUN-20 |
$11,700 |
|
|
|
| |
110,000 |
0.71 |
11-DEC-20 |
NIL |
|
|
|
| |
53,000(2) |
0.71 |
11-DEC-20 |
NIL |
|
|
|
| MARY ELLEN THORBURN
|
100,000 |
1.31 |
27-JUN-19 |
NIL |
N/A |
N/A |
N/A
|
| |
55,000 |
0.65 |
05-JUN-20 |
$2,750 |
|
|
|
| |
30,000 |
0.71 |
11-DEC-20 |
NIL |
|
|
|
| |
18,000(2) |
0.71 |
11-DEC-20 |
NIL |
|
|
|
Notes:
| (1) |
The value of unexercised “in-the-money options” at the
financial year-end is the difference between the option exercise price and
the closing price of the underlying Common Shares on the TSX on December
31, 2015, which was $0.70 per share. |
| (2) |
On December 11, 2015, the NEOs were granted options in
consideration of a reduction in their 2015 STIP payment. These options
vested immediately on the date of grant. |
| (3) |
Mr. Brown also holds 10,000 assumed Cangold Options at an
exercise price of $3.00 to expire on May 24, 2017; and 2,500 Cangold
Options at an exercise price of $2.00 to expire on January 20, 2019. See
section “Interest of Informed Persons in Material
Transactions”. |
Incentive Plan Awards – Value Vested or Earned During the
Year
The following table sets out the value vested or earned under
incentive plans during the year ended December 31, 2015 for each NEO:
37
| Name |
Option-based awards –
Value vested during the
year
($)(1) |
Share-based
awards –
Value vested during the
year
($) |
Non-equity
incentive
plan compensation –
Value earned during
the
year
($) |
|
|
|
|
| ROBERT A. ARCHER |
$3,795 |
NIL |
$252,350 |
| JIM A. ZADRA |
$2,805 |
NIL |
$132,825 |
| ALI SOLTANI |
$1,000 |
NIL |
$172,832 |
| ROBERT F. BROWN |
$1,170 |
NIL |
$84,700 |
| MARY ELLEN THORBURN |
$275 |
NIL |
$61,300 |
Notes:
| (1) |
This amount is based on the aggregate dollar value that
would have been realized if the options under the option-based award had
been exercised on the vesting date. It was computed using the dollar value
that would have been realized by determining the difference between the
market price of the underlying securities at exercise and the exercise or
base price of the options under the option-based award on the vesting
date. The value reported for the year relates to the vesting of share
options granted on June 5, 2015 at an exercise price of $0.65, the first
tranche of which vested on December 5, 2015. |
See “Securities Authorized under Equity Compensation Plans” for
further information on the Company’s Share Option Plan.
Pension Plan Benefits
The Company does not have in place a deferred compensation plan
or pension plan that provides for payments or benefits at, following or, in
connection with, retirement.
Retirement Plan Benefits
The NEOs are eligible to participate in the Company’s matching
retirement benefits program, which was implemented on January 1, 2012 and is
available to all of the Company’s Canadian resident employees. A similar savings
plan program is offered to the Company’s employees in Mexico. The Company pays
contributions to a Deferred Profit Sharing Plan or Registered Retirement Savings
Plan (each as defined by the Income Tax Act Canada) to a maximum of 5% of
the employee’s salary, or such maximum as provided under the applicable tax
regulations. The Company-paid contributions vest fully after two years of
employment, and thereafter are fully vested on payment.
The NEOs received Company paid contributions totaling $50,267
in 2015, of which $40,267 were fully vested.
Termination and Change in Control Provisions
The Company has entered into employment agreements with each of
the Named Executive Officers under which each such executive has agreed to
continue to serve the Company in his current office and perform the duties of
such office in accordance with the terms set out in their employment agreements.
Under the terms of each of the executive employment agreements, each executive
has made commitments in favour of the Company including non-competition and
non-disclosure covenants and minimum notice periods in the event of the
executive’s resignation.
In the event of termination of the NEOs’ employment, other than
for cause, the Company will provide such executive with working notice or
severance pay or a combination of notice and severance. Following are the
significant terms of each of the Company’s NEOs’ employment agreements:
Employment Agreement – Robert A. Archer
The Company entered into an employment agreement with Mr.
Archer (the “Archer Agreement”) effective January 1, 2015. Under the
terms of the Archer Agreement, Mr. Archer continues to be engaged as the
President and Chief Executive Officer. Mr. Archer continues to participate in
the Company’s STIP and Share Option Plan, and he is also eligible to receive
retirement plan benefits.
38
The Company may terminate the Archer Agreement for cause,
without notice or any payment in lieu thereof. The Company may also terminate
the Archer Agreement without cause, and without further obligation, by providing
notice, or salary in lieu of notice, of the greater of (a) 18 months’ salary or
(b) 12 months’ salary plus the average of the previous two years’ STIP payments,
provided that in no case the amount would exceed an amount equivalent to 24
months’ salary.
In the event that a “Change in Control” of the Company leads to
the termination of Mr. Archer’s employment (as defined in the Archer Agreement),
Mr. Archer would be entitled to receive the same benefits as in the event of
termination without cause, plus an additional six months’ salary, provided
however that the total amount to be paid in the event of a “Change in Control”
shall not exceed 24 months’ salary.
Employment Agreement – Jim A. Zadra
The Company entered into an Employment Agreement with Mr. Zadra
effective July 18, 2012 (the “Zadra Agreement”), which superseded any
previous employment agreements with the Company, and an Amending Agreement dated
August 1, 2013 (collectively the “Zadra Agreements”). Mr. Zadra is
engaged as the Chief Financial Officer and Corporate Secretary of the Company.
Mr. Zadra is entitled to a STIP payment based on performance. The criteria for
the STIP payment is reviewed and established by the HRCC and reflected in the
terms of the Company’s STIP. Under the terms of the Zadra Agreement, Mr. Zadra
is also entitled to participate in the Company’s Share Option Plan.
Under the Zadra Agreement, the Company may terminate Mr.
Zadra’s employment without cause, and without further obligation, by providing
notice, or salary in lieu of notice, or a combination of both notice and 18
months’ salary and two years’ STIP payments. The STIP payment is to be
calculated as the average of any STIP payments awarded in the previous two-year
period or such lesser period as Mr. Zadra has worked with the Company, and the
equivalent of two years of other compensation, if any.
In the event of a “Change of Control” of the Company, Mr. Zadra
is entitled to receive from the Company a payment equal to two times his annual
salary, STIP payment and other compensation, if any. The STIP payment is
calculated at two times the average of any STIP payments awarded in the previous
two-year period or such lesser period as Mr. Zadra has worked with the Company.
Employment Agreement – Ali Soltani
The Company entered into an employment agreement with Ali
Soltani on September 1, 2014 (the “Soltani Agreement”). Under the terms
of the Soltani Agreement, Mr. Soltani is engaged as the Chief Operating Officer
of the Company and is entitled to participate in the Company’s Share Option
Plan. Under the terms of the Soltani Agreement, the Company may terminate Mr.
Soltani’s employment for cause, without notice or any payment of any kind. The
Company may terminate Mr. Soltani’s employment without cause, and without
further obligation, by providing notice, or salary in lieu of notice or a
combination of both, paying a termination amount (the “Termination
Amount”) as follows:
| |
a) |
after three consecutive months of employment, two months’
salary or notice; |
| |
|
|
| |
b) |
after 12 consecutive months of employment, six months’
salary or notice, plus three months’ salary for each additional year of
employment, up to a maximum of 18 months’ salary. |
In the event of a termination associated with a “Change of
Control” of the Company, Mr. Soltani is entitled to receive from the Company a
payment equal to the Termination Amount plus additional six months’ salary.
Employment Agreement – Robert F. Brown
The Company entered into an employment agreement with Robert F.
Brown on July 11, 2008 (the “Brown Agreement”). Under the terms of the
Brown Agreement, Robert Brown is engaged as the VP Exploration of the Company
and is entitled to participate in the Company’s Share Option Plan.
39
Under the terms of the Brown Agreement, the Company may
terminate Mr. Brown’s employment for cause, without notice or any payment of any
kind. The Company may terminate Mr. Brown’s employment without cause, and
without further obligation, by providing notice, or salary in lieu of notice, or
a combination of both notice and 12 months’ salary. In the event of a “Change of
Control” of the Company which results in Mr. Brown ceasing to be VP Exploration
of the Company, he is entitled to severance equal to 12 months’ salary.
Employment Agreement – Mary Ellen Thorburn
The Company entered into an employment agreement with Mary
Ellen Thorburn on May 12, 2014 (the “Thorburn Agreement”). Under the
terms of the Thorburn Agreement, Mary Ellen Thorburn is engaged as the VP
Finance and is entitled to participate in the Company’s Share Option Plan.
Under the terms of the Thorburn Agreement, the Company may
terminate Ms. Thorburn’s employment for cause, without notice or any payment of
any kind. The Company may terminate Ms. Thorburn’s employment without cause, and
without further obligation, by providing one-month notice or salary in lieu of
notice, plus one month’s salary or notice for each additional year of
employment, up to a maximum of six months’ salary or notice. In the event of a
termination associated with a “Change of Control” of the Company, Ms. Thorburn
is entitled to receive from the Company a payment equal to six months’
salary.
Incremental Payments
The estimated incremental payments from the Company to each of
Messrs. Archer, Zadra, Soltani and Brown and Ms. Thorburn on (i) termination
without cause or (ii) termination without cause or resignation within 12 months
following a “Change of Control”, assuming the triggering event occurred on
December 31, 2015, are as follows:
| NEO |
Element |
Estimated
Incremental
Payment – Termination
without Cause
|
Estimated
Incremental
Payment – Termination
without Cause on
a
Change of Control |
ROBERT A. ARCHER
President & CEO
|
Salary |
$712,500 |
$950,000 |
Annual Performance-
Based Cash Incentive
|
Nil
|
Nil
|
| Benefits |
Nil |
Nil |
JIM A. ZADRA
CFO & Corporate
Secretary |
Salary |
$427,500 |
$570,000 |
Annual Performance-
Based Cash Incentive
|
$188,925
|
$188,928
|
| Benefits(1) |
$40,358 |
$40,358 |
ALI SOLTANI(2)
Chief Operating
Officer |
Salary |
$199,001 |
$398,003 |
Annual Performance-
Based Cash
Incentive |
Nil
|
Nil
|
|
| Benefits |
Nil |
Nil |
ROBERT F. BROWN
VP Exploration |
Salary |
$220,000 |
$220,000 |
| Annual Performance- |
Nil |
Nil |
| Based Cash Incentive |
|
|
| Benefits |
Nil |
Nil |
MARY ELLEN THORBURN
VP Finance |
Salary |
$27,306 |
$100,000 |
Annual Performance-
Based Cash
Incentive |
Nil
|
Nil
|
|
| Benefits |
Nil |
Nil |
40
Notes:
| (1) |
Mr. Zadra would be entitled to two years’ benefits. The
annual benefits amount consists of $16,582 in retirement plan benefits and
$3,597 other benefits. |
| (2) |
Mr. Soltani is paid in US dollars. These amounts are
translated at the December 31, 2015 exchange rate of $1.00=USD
0.7161. |
Director Compensation
During 2015, independent Directors were compensated areas as
follows:
| Board Chair Retainer (inclusive of Board Member Retainer)
|
$90,000 |
| Board Member Retainer |
$45,000 |
| Audit Committee Chair Retainer |
$12,000 |
| Human Resources & Compensation Committee Chair Retainer
|
$10,000 |
| Retainer for Chairs of other committees |
$5,000 |
| Board Chair Equity Grants (inclusive of Board Member Equity
Grant) |
252,500 options |
| Board Member Equity Grants |
175,000 options |
| Per Diem Allowance for Travel within British Columbia |
$500 |
| Per Diem Allowance for Travel outside of British Columbia
|
$1,000
|
The compensation earned by Directors who were not a NEO for the
Company’s most recently completed financial year of December 31, 2015, is as
follows:
| Name |
Fees earned
($) |
Share-
based
awards
($) |
Option-based
awards(1)
($) |
Non-equity
incentive plan
compensation
($) |
Pension
value
($) |
All other
compensation
($) |
Total
($) |
|
|
|
| R.W. (BOB) GARNETT |
94,500(2) |
Nil |
57,901 |
Nil |
Nil |
3,757(3) |
156,158 |
| KENNETH W. MAJOR |
52,000 |
Nil |
39,997 |
Nil |
Nil |
Nil |
91,997 |
| JOHN JENNINGS |
59,500(2) |
Nil |
39,997 |
Nil |
Nil |
Nil |
99,497 |
| W.J. (JAMES) MULLIN |
56,500 |
Nil |
39,997 |
Nil |
Nil |
Nil |
96,497 |
| JEFFREY MASON |
69,000(2) |
Nil |
39,997 |
Nil |
Nil |
Nil |
108,997 |
Notes:
| (1) |
Option-based awards are valued using the Black-Scholes
stock option valuation methodology. This is consistent with the accounting
values used in the Company’s financial statements. The June 5, 2015 grants
were valued using the following assumptions: Exercise Price: $0.65; Risk
Free Rate of Return: 0.63%; Volatility Estimate: 68%; Expected Life
(Years): 2; Dividend Rate: Nil; Per Option Value: $0.23. The December 11,
2015 grants were valued using the following assumptions: Exercise Price:
$0.71; Risk Free Rate of Return: 0.48%; Volatility Estimate: 59%; Expected
Life (Years): 2; Dividend Rate: Nil; Per Option Value: $0.24. |
| (2) |
Includes additional Special Committee fees paid to
oversee the acquisition of Cangold. Mr. Mason served as Chair of the
Special Committee and received an additional fee in the amount of $10,000.
Messrs. Garnett and Jennings were members of the Special Committee and
received additional fees of $2,500 each. |
| (3) |
Payment of benefits. |
Incentive Plan Awards
Outstanding Share-Based and Option-Based Awards
The following table sets out all option-based awards and
share-based awards outstanding for the Directors who were not NEOs for the
Company’s most recently completed financial year ended December 31, 2015:
41
Name
|
Option-based Awards |
Share-based
Awards |
Number
of
securities
underlying
unexercised
options
(#) |
Option
exercise
price
($) |
Option
expiration
date |
Value
of
unexercised
in-the-
money
options
($) (1) |
Number
of
shares or
units of
shares that
have not
vested
(#) |
Market
or
payout value
of share-
based
awards that
have not
vested
($) |
Market
or
payout
value of
vested
share-based
awards not
paid out
or
distributed
($) |
|
|
|
|
|
|
|
|
R.W. (BOB) GARNETT
|
100,000
200,000
100,000
114,000
162,500
90,000 |
0.70
2.40
1.71
1.31
0.65
0.71 |
28-Jun-16
5-Dec-16
16-Aug-17
27-Jun-19
5-Jun-20
11-Dec-20 |
Nil
Nil
Nil
Nil
$8,125
Nil |
N/A |
N/A |
N/A |
|
|
|
|
|
KENNETH W. MAJOR (2)
|
75,000
200,000
88,000
125,000
50,000 |
0.70
2.40
1.31
0.65
0.71 |
28-Jun-16
5-Dec-16
27-Jun-19
5-Jun-20
11-Dec-20 |
Nil
Nil
Nil
$6,250
Nil |
N/A |
N/A |
N/A |
|
|
|
|
JOHN JENNINGS
|
75,000
200,000
88,000
125,000
50,000 |
0.70
1.71
1.31
0.65
0.71 |
28-Jun-16
16-Aug-17
27-Jun-19
5-Jun-20
11-Dec-20 |
Nil
Nil
Nil
$6,250
Nil |
N/A |
N/A |
N/A |
|
|
|
|
W.J. (JAMES) MULLIN
|
75,000
88,000
125,000
50,000 |
0.92
1.31
0.65
0.71 |
11-Aug-16
27-Jun-19
5-Jun-20
11-Dec-20 |
Nil
Nil
$6,250
Nil |
N/A |
N/A |
N/A |
|
|
|
JEFFREY MASON
|
176,000
125,000
50,000 |
1.31
0.65
0.71 |
27-Jun-19
5-Jun-20
11-Dec-20
|
Nil
$6,250
Nil |
N/A |
N/A |
N/A |
|
|
Notes:
| (1) |
The value of unexercised “in-the-money options” at the
financial year-end is the difference between the option exercise price and
the market value of the underlying Common Shares on the TSX on December
31, 2015. The market value is the closing price of the Company’s Common
Shares on the TSX on December 31, 2015, which was $0.70 per
share. |
| (2) |
Mr. Major also holds 5,000 assumed Cangold options at an
exercise price of $3.00 to expire on May 24, 2017; and 2,500 Cangold
options at an exercise price of $2.00 to expire on January 20, 2019. See
section “Interest of Informed Persons in Material
Transactions”. |
Value on Pay-Out or Vesting of Incentive Plan Awards
The following table sets out the value vested or earned under
incentive plans during the fiscal year ended December 31, 2015, for the
Directors, excluding a Director who is already set out in disclosure above for
an NEO for the Company:
Name
|
Option-based awards –
Value
vested
during the year (1)
($) |
Share-based
awards – Value
vested during the year
($) |
Non-equity
incentive plan
compensation – Value
earned during
the year
($) |
| R.W. (BOB) GARNETT |
$812 |
Nil |
Nil
|
| KENNETH W. MAJOR |
$625 |
Nil |
Nil
|
| JOHN JENNINGS |
$625 |
Nil |
Nil
|
| W.J. (JAMES) MULLIN |
$625 |
Nil |
Nil
|
| JEFFREY MASON |
$625 |
Nil |
Nil
|
Notes:
| (1) |
The value vested during the year represents the aggregate
dollar value that would have been realized if a Director had exercised
each of his options that vested in 2015 on the date of such
vesting. |
42
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
PLANS
Share Option Plan
The only equity compensation plan which the Company has in
place is the amended and restated incentive share option plan (2007) dated for
reference June 28, 2007 (the “Share Option Plan”) which was previously
approved by shareholders on June 27, 2013. On April 29, 2016, the Board of
Directors approved amendments to the Share Option Plan in order to continue to
align the Company with leading governance practices. The amendments are not in
effect until the Share Option Plan, as amended (the “2016 Share Option
Plan”) has been approved by Shareholders. The approval of the Shareholders
of the Company for the 2016 Share Option Plan will be sought at the Meeting. See
“Particulars of Matters to Be Acted Upon at the Meeting – Share Option
Plan” for information regarding the amendments and the Shareholder approval
sought.
The Share Option Plan was established to advance the interests
of the Company by (i) promoting a proprietary interest among Eligible Persons
(defined below) in the success of the Company and its Related Entities; (ii)
attracting and retaining qualified directors, officers, employees and
Consultants which the Company and its Related Entities require; (iii) providing
Eligible Persons with additional incentive and encouraging share ownership by
such Eligible Persons. The Share Option Plan is administered by the Board of
Directors and provides for the grant of options to directors, officers,
employees or consultants of the Company or a subsidiary of the Company. The
Share Option Plan provides that the number of Common Shares reserved for issue
from time to time under the Share Option Plan will not exceed 10% of the total
number of issued and outstanding Common Shares.
The following is a summary of the material terms of the Share
Option Plan currently in place:
Eligible Persons. “Eligible Persons” are defined as any
director, officer, employee or consultant of the Company or a related entity of
the Company.
Number of Securities Issuable. A maximum of 10% of the
Company’s issued and outstanding Common Shares at the time the Common Shares are
reserved for issuance may be reserved for issuance under the Share Option
Plan. As of April 22, 2016, options to purchase an aggregate of 10,649,370
Common Shares (net of cancelled options), representing approximately 7.4% of the
issued and outstanding Common Shares, are outstanding under the Share Option
Plan. Options to purchase an aggregate of 3,681,642 Common Shares, representing
approximately 2.6% of the issued and outstanding Common Shares, remain available
for issuance under the Share Option Plan.
Limits with Respect to Issue of Shares. The maximum
number of Common Shares that may be (i) reserved for issuance to insiders as a
group under the Share Option Plan, together with any Common Shares reserved for
issuance to insiders under any other share compensation arrangements, shall not
exceed 10 % of the outstanding Common Shares at the time of grant; (ii) issued
to insiders as a group under the Share Option Plan and any other share
compensation arrangement within a one year period shall not exceed 10% of the
outstanding Common Shares, and to any one insider shall not exceed 5% of the
outstanding Common Shares; and (iii) reserved for issue to any one person shall
not exceed 5% of the outstanding Common Shares at the time of the determination.
Exercise Price. The Board will establish the exercise
price the options at the time the options are granted provided that such price
shall not be less than the closing price of the Common Shares on the TSX on the
last business day immediately preceding the date of grant of the options. If
there is no trading on that date, the exercise price shall not be less than the
weighted average of the bid and ask prices on the five consecutive days
preceding the date of grant.
Vesting. Pursuant to the terms of the Share Option Plan,
the vesting of options is set at the discretion of the Board, which is often
described in the optionee’s employment agreement. The Share Option Plan
provides that, in the event of a change of control of the
Company, all outstanding options will immediately vest. Under the Share Option
Plan, change of control of the Company occurs upon any one or more of the
following events: (i) a consolidation, merger, amalgamation, arrangement or
other reorganization or acquisition involving the Company or any related entity
of the Company and another entity, as a result of which holders of Common Shares
prior to the completion of the transaction hold less than 50% of the outstanding
shares of the successor corporation after completion of the transaction; (ii)
the sale, lease, exchange or other disposition of assets, rights or properties
of the Company and/or any of its subsidiaries which have an aggregate book value
greater than 30% of the book value of the assets, rights or properties of the
Company and its subsidiaries; (iii) a resolution is adopted to wind-up, dissolve
or liquidate the Company; (iv) any person, entity or group of persons or
entities acting jointly or in concert acquires or acquires control (including,
without limitation, the right to vote or direct the voting) 20% or more of the
voting shares of the Company; (v) as a result of, or in connection, with (i) a
contested election of directors, or (ii) a consolidation, merger, amalgamation,
arrangement or other reorganization or acquisition involving the Company or any
of its related entities and another entity, the nominees named in the most
recent management information circular of the Company for election to the Board
do not constitute a majority of the Board; or (vi) the Board adopts a resolution
to effect a change of control, as described above.
43
Term of Options. Options granted under the Share Option
Plan will have a maximum term of 10 years from their date of grant. If an option
which has been previously granted is set to expire during a period in which
trading in securities of the Company by the option holder is restricted by a
black-out, or within 48 hours of the expiry of a black-out period, the expiry
date of the Option will be extended to 10 business days after the trading
restrictions are lifted.
Termination of Exercise Right. If a participant ceases
to be an eligible person other than by death, each option will cease to be
exercisable 30 days after the termination date of the participant. In the event
of a participant’s death, any vested option held by the participant at the date
of death will be exercisable by the participant’s lawful representatives, heirs
or executors until the earlier of six months after the date of death and the
date of expiration of the term otherwise applicable to such option.
No Assignment. Subject to the provisions of the Share
Option Plan, all options will be exercisable only by the participant to whom
they are granted and will not be assignable or transferable.
Cashless Exercise. Participants may, subject to the
determination of the Board, when entitled to exercise an option, terminate the
option and in lieu of exercise instead receive a number of Common Shares that
have a total value when multiplied by the closing price of the Common Shares on
the day immediately prior to exercise equal to the product of that number of
Common Shares subject to the Option multiplied by the difference between the
closing price on the day immediately prior to the exercise and the Option
exercise price.
Amendments Requiring Shareholder Approval. Shareholder
approval is required for the following amendments to the Share Option Plan:
| |
(a) |
an increase in the maximum number of Common Shares that
may be reserved for issuance pursuant to Options granted under the Share
Option Plan; |
| |
|
|
| |
(b) |
an alteration or impairment to any existing options
granted to a participant in the Share Option Plan without the consent of
the participant; and |
| |
|
|
| |
(c) |
a material increase to the benefits under the Share
Option Plan. |
The Board has adopted amendments to the Share Option Plan
which, if approved, would expand the types of amendments that require
shareholder approval.
Amendments Requiring Disinterested Shareholder Approval.
In addition to the amendments that require shareholder approval described above,
the following amendments are subject to a vote of Shareholders who are not
insiders of the Company:
44
| |
(a) |
a decrease in the exercise price of an option granted to
an insider; |
| |
|
|
| |
(b) |
the extension of the term of an option granted to an
insider; and |
| |
|
|
| |
(c) |
if the Share Option Plan could result in the grant to
insiders during any twelve month period of a number of options exceeding
10% of the outstanding issued shares. |
Amendments Without Shareholder Approval. The Share
Option Plan may be amended without shareholder approval for the following:
| |
(a) |
Including or changing vesting provisions in the Share
Option Plan; |
| |
|
|
| |
(b) |
Changing the termination provisions in the Share Option
Plan which do not entail an extension beyond the original expiry date;
and |
| |
|
|
| |
(c) |
Adding a cashless exercise feature, payable in cash or
securities. |
General Amendments. Subject to the requirements of
applicable law and TSX Policies requiring shareholder or other approval the
Share Option Plan provides that the Board may amend the terms of any outstanding
option (including, without limitation, the cancellation of an Option or an
amendment to the date or dates on which an Option or a portion thereof vests and
so becomes exercisable), except that the Board may not undertake any such action
unless it first obtains the consent of the affected participant.
Equity Compensation Plan Information
The following table summarizes information, as at December 31,
2015, in relation to compensation plans under which equity securities of Great
Panther are authorized for issuance:
| Plan Category |
Number of securities
to
be issued upon exercise
of outstanding
options
and rights |
Weighted-average
exercise price of
outstanding options and
rights |
Number of
securities
remaining available for
future issuance
under
equity compensation
plans (excluding
securities reflected in
first column) (1)
|
Equity compensation plans
approved by
securityholders |
12,928,552 |
$1.10 |
1,242,708 |
|
|
Equity compensation plans
not
approved by
securityholders |
Nil |
Nil |
Nil |
|
|
| Total |
12,928,552 |
$1.10 |
1,242,708
|
Notes:
| (1) |
A maximum of 10% of the Company’s issued and outstanding
Common Shares at the time the Common Shares are reserved for issuance,
less any Common Shares reserved for issuance under other share
compensation arrangements, may be reserved for issuance under the Share
Option Plan. As of December 31, 2015, the maximum number of Common Shares
reserved for issuance under the Share Option Plan was 14,171,260 Common
Shares (being 10% of the 141,712,605 Common Shares then issued and
outstanding). |
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
No Executive Officers, Directors or employees, or former
Executive Officers, Directors or employees, nor any associate of such
individuals, is as at the date hereof, or has been since the beginning of the
financial year ended December 31, 2015, indebted to the Company or any of its
subsidiaries in connection with a purchase of securities or otherwise. In
addition, no indebtedness of these individuals to another entity has been the
subject of a guarantee, support agreement, letter of credit or similar
arrangement or understanding of the Company or any of its subsidiaries.
45
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
On May 27, 2015, the Company completed the acquisition of all
of the issued and outstanding common shares (the “Cangold Shares”) of
Cangold Limited (“Cangold”) pursuant to a court-approved plan of
arrangement under the Business Corporations Act (British Columbia) (the
“Cangold Arrangement”). Cangold is now a wholly-owned subsidiary of Great
Panther.
Under the Cangold Arrangement, each Cangold Share was exchanged
for 0.05 of a common share of Great Panther (the “Exchange Ratio”),
resulting in the issuance of 2,138,898 Great Panther Shares in exchange for
42,780,600 Cangold Shares. In addition, each outstanding option (“Cangold
Option”) and warrant (“Cangold Warrant”) to acquire Cangold Shares
now entitles the holder thereof to receive, upon the exercise thereof, 0.05
Great Panther shares in lieu of each Cangold Share, at a price adjusted in
accordance with the Exchange Ratio, and otherwise on the same terms and
conditions as the original option or warrant. As a result, the Company assumed
475,992 Cangold Warrants and 124,250 Cangold Options (after giving effect to the
Exchange Ratio). As of April 22, 2016 there are 47,500 outstanding Cangold
Options. All the Cangold Warrants assumed by the Company expired as of December
31, 2015.
The Cangold Arrangement was approved at Cangold’s special
meeting of shareholders held on May 22, 2015. Full details of the Cangold
Arrangement and certain other matters are set out in the management information
circular of Cangold dated April 20, 2015, which can be found under Cangold’s
profile on SEDAR at www.sedar.com.
The Cangold Arrangement was considered to be a ‘related party
transaction’ for Great Panther under Multilateral Instrument 61-101 –
Protection of Minority Security Holders in Special Transactions (“MI
61-101”) by virtue of the fact that each of Messrs. Robert A. Archer
(President and CEO and a Director of Great Panther), Kenneth Major (a Director
of Great Panther) and Robert F. Brown (VP Exploration of Great Panther) was also
a Director (and in the case of Messrs. Archer and Brown, also an officer) of
Cangold.
Messrs. Archer, Major and Brown held an aggregate of 3,315,100
Cangold Shares, 400,000 Cangold Options and 493,000 Cangold Warrants. The
Cangold Arrangement increased their Great Panther shareholdings as follows:
| |
|
|
Cangold Shares |
|
Total Great |
| Name and
Position |
|
Cangold Shares |
underlying |
Total Cangold |
Panther Shares |
| with Great
Panther |
Cangold Shares |
underlying |
Cangold |
Shares(2)
|
Issuable under |
| |
|
Cangold Options |
Warrants(1) |
|
the |
|
|
|
|
|
Arrangement(3) |
| Robert A. Archer
|
3,045,100 |
Nil |
378,000 |
3,423,100 |
171,155 |
| Director & CEO |
|
|
|
|
|
| Kenneth W. Major
|
40,000 |
150,000 |
20,000 |
210,000 |
10,500 |
| Director |
|
|
|
|
|
| Robert F. Brown
|
230,000 |
250,000 |
95,000 |
575,000 |
28,750 |
| VP Exploration |
|
|
|
|
|
| |
|
|
|
4,208,100 |
210,405 |
Notes:
|
(1) |
All Cangold Warrants expired as of December 31,
2015. |
|
(2) |
The number of total Cangold Shares held by each named
individual is on a fully-diluted basis. |
|
(3) |
The number of Great Panther Shares that each named
individual received under the Cangold Arrangement is based on the Exchange
Ratio on a fully-diluted basis. |
Other than the Cangold Arrangement, no informed person of the
Company, proposed Director of the Company, or any associate or affiliate of any
informed person or proposed Director, has had a material interest, direct or
indirect, in any transaction since the commencement of the Company’s most
recently completed financial year or has a material interest in any
proposed transaction which has materially affected or would affect the Company
or any of its subsidiaries.
46
The management functions of the Company are not to any
substantial degree performed by any person other than the senior officers and
the Board of the Company.
ADDITIONAL INFORMATION
Additional information relating to the Company, including the
Company’s audited consolidated financial statements and Management’s Discussion
and Analysis for the year ended December 31, 2015, can be found on SEDAR at
www.sedar.com. Copies are available upon request from the Company’s
Assistant Corporate Secretary at Suite 1330, 200 Granville Street, Vancouver,
British Columbia, telephone number 604-608-1766, toll Free: 1-888-355-1766, or
fax number 604-608-1768, or email info@greatpanther.com. Copies of these
documents will be provided free of charge to security holders of the Company.
The Company may require the payment of a reasonable charge from any person or
company who is not a security holder of the Company, who requests a copy of any
such document.
Financial information is provided in the Company’s audited
consolidated financial statements, the report of the auditor, and Management’s
Discussion and Analysis for the year ended December 31, 2015, which will be
placed before Shareholders at the Meeting.
As at the date of this Information Circular, management of
Great Panther is not aware of any other matters which may come before the
Meeting other than as set forth in the Notice of Meeting that accompanies this
Information Circular. If any other matter properly comes before the Meeting, it
is the intention of the persons named in the enclosed Proxy to vote the shares
represented thereby in accordance with their best judgment on such matter.
The contents of this Information Circular and its distribution
to Shareholders of Great Panther have been approved by the board of directors.
DATED at Vancouver, British Columbia on April 29, 2016.
BY ORDER OF THE BOARD OF DIRECTORS
“R.W. (Bob) Garnett”
R.W. (Bob) Garnett
Chair of the Board and Director
47
APPENDIX A
GREAT PANTHER SILVER LIMITED
(the "Company")
BOARD MANDATE
| Article 1. |
Introduction to the Board’s Mandate
|
The Company is committed to providing clear leadership and
vision to its directors, officers and employees. In furtherance of this
commitment and in recognition of the Board’s responsibility for the stewardship
of the Company, the Board of Directors (the "Board") has adopted this Board
mandate (the "Mandate"). The principles set out in this Mandate define the
parameters for the implementation and achievement of corporate goals and
objectives. This Mandate requires compliance from each Director in letter and
spirit. Each Director will execute his/her duties as a member of the Board in
accordance with the terms contained in this Mandate.
| Article 2. |
Composition and Functioning of the Board
|
| (a) |
Composition of the Board |
The Board will be composed of a majority of independent
directors. "Independent" will have the meaning given to it under applicable
securities legislation and stock exchange policy. Generally, an independent
director is one that does not have any direct or indirect material relationship
with the Company that could reasonably be expected to affect his or her
independent judgement.
| (b) |
Independent Directors |
"Independent director" means a person other than an executive
officer or employee of the company. No director qualifies as independent unless
the issuer's board of directors affirmatively determines that the director does
not have a relationship that would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director. The following is a
non-exclusive list of persons who shall not be considered independent:
| |
(a) |
a director who is, or during the past three years was,
employed by the company, other than prior employment as an interim
executive officer (provided the interim employment did not last longer
than one year); |
| |
|
|
| |
(b) |
a director who accepted or has an immediate family member
who accepted any compensation from the company in excess of $75,000 during
any period of twelve consecutive months within the three years preceding
the determination of independence, other than the
following: |
| |
(i) |
compensation for board or board committee
service; |
| |
|
|
| |
(ii) |
compensation paid to an immediate family member who is an
employee (other than an executive officer) of the
company; |
48
| |
(iii) |
compensation received for former service as an interim
executive officer (provided the interim employment did not last longer
than one year); or |
| |
|
|
| |
(iv) |
benefits under a tax-qualified retirement plan, or
non-discretionary compensation; |
| |
(c) |
a director who is an immediate family member of an
individual who is, or at any time during the past three years was,
employed by the company as an executive officer; |
| |
|
|
| |
(d) |
a director who is, or has an immediate family member who
is, a partner in, or a controlling shareholder or an executive officer of,
any organization to which the company made, or from which the company
received, payments (other than those arising solely from investments in
the company's securities or payments under non-discretionary charitable
contribution matching programs) that exceed 5% of the organization's
consolidated gross revenues for that year, or $200,000, whichever is more,
in any of the most recent three fiscal years; |
| |
|
|
| |
(e) |
a director who is, or has an immediate family member who
is, employed as an executive officer of another entity where at any time
during the most recent three fiscal years any of the issuer's executive
officers serve on the compensation committee of such other
entity; |
| |
|
|
| |
(f) |
a director who is, or has an immediate family member who
is, a current partner of the company's outside auditor, or was a partner
or employee of the company's outside auditor who worked on the company's
audit at any time during any of the past three years; or |
| |
|
|
| |
(g) |
a director who owns or controls 10% or more of a class of
the Company’s securities or is able to affect materially the control of
the Company (either alone or acting in concert with
others). |
| (c) |
Establishment of Board
Agenda |
The Chairman of the Board will establish an agenda for each
Board meeting. Each Director is encouraged to suggest items of business for the
agenda. The Chairman will act as the effective leader of the Board and ensure
that the Board’s agenda will enable the Board to successfully carry out its
duties.
| (a) |
Board Materials and
Presentations |
Except where not appropriate or impractical, the Company will
provide Directors with materials relating to agenda items and presentations in
advance of Board meetings.
| (e) |
Meetings of Independent
Directors |
Meetings of the independent Directors will typically occur
before or after a regularly scheduled Board meeting. In addition, meetings of
the independent directors may be held as need requires or circumstances dictate.
In any event, the independent directors will meet at least twice annually
without non-independent directors or other members of management present.
| (f) |
Management Attendance at Board
Meetings |
The Board welcomes the regular attendance of senior management
of the Company at each Board meeting. The Chairman or the Chief Executive
Officer (the "CEO") may, with the concurrence of the Board, include independent
advisors as attendees on an "as required" basis. In addition, the Board
encourages Directors to, from time to time, bring managers into Board meetings
who: (a) can provide additional insight into the items being discussed because
of personal involvement in these areas, and/or (b) are managers with future
potential that the senior management believes should be given exposure to the
Board.
| (g) |
Board Access to Management |
Directors will have access, as necessary, to all members of
management and employees of the Company.
49
| (h) |
Direct Board Access to Independent
Advisors |
Directors will have access, as necessary or appropriate, to
independent advisors.
| (i) |
Evaluating Board
Performance |
Each year the Board of Directors will conduct annual
self-assessments to determine whether it, the directors and the committees are
performing effectively. The Nominating and Corporate Governance Committee is
responsible for seeking comments from all Directors and reporting to the full
Board the collective assessment of the Board’s performance as well as the
performance of the committees and individual directors. Assessments of the Board
and its committees will consider the mandate and committee charter, as the case
maybe. Assessments of individual directors will consider the position
description and skills and competencies applicable to that individual. The full
Board will discuss the assessment reports to determine what, if any, action
should be taken to improve performance.
| Article 3. |
Functioning of Committees
|
The Board will have the following standing Committees: the
Audit Committee, the Compensation Committee and the Nominating and Corporate
Governance Committee. Except as limited by law or regulation, the Board may form
a new committee or disband an existing Committee as provided in the Articles or
By-Laws of the Company. Each Committee will have a written charter that is
periodically reviewed and updated as necessary. The committee chairs will report
the results and recommendations of their meetings to the full Board at the next
meeting of the Board following each meeting of the respective committees.
| (b) |
Committee Performance
Review |
The Chairman of the Board and Chief Executive Officer should
regularly consult with committee chairs to obtain their insights and to optimise
committee performance. In accordance with applicable listing standards, each
committee will conduct an annual performance review of its effectiveness.
The Board, in consultation with the Nominating and Corporate
Governance Committee, will define the criteria that all proposed candidates for
election to the Board will possess. The character of the proposed candidate must
be consistent with the values and guiding principles contained in this Mandate.
All Board members will be expected to:
| |
(a) |
develop and maintain an understanding of the Company’s
operations, strategies and industry within which the Company
operates; |
| |
|
|
| |
(b) |
develop and maintain an understanding of the regulatory,
legislative, business, social and political environment within which the
Company operates; |
| |
|
|
| |
(c) |
develop and maintain familiarity with the officers and
senior management of the Company; |
| |
|
|
| |
(d) |
attend board and, if applicable, committee meetings
regularly; |
| |
|
|
| |
(e) |
read advance materials prior to board or committee
meetings; |
| |
|
|
| |
(f) |
participate fully and actively in the discussions of the
board and any committee to which the individual belongs; |
| |
|
|
| |
(g) |
if absent from a meeting, keep up-to-date on discussions
missed; |
50
| |
(h) |
devote the necessary time and attention to Company issues
in order to make informed decisions; |
| |
|
|
| |
(i) |
if requested, participate on board committees; |
| |
|
|
| |
(j) |
remain knowledgeable of the written mandate of the board
and the charter of the committee or committees of which the director is a
member; and |
| |
|
|
| |
(k) |
participate in continuing director
education. |
| Article 5. |
Chairman of the Board and the Chief
Executive Officer |
The Chairman of the Board and the CEO are two separate
positions, but both positions may be held by the same person.
The Chairman of the Board will be elected from the members of
Board. At time of election, the candidate must have served on the Board for a
period of three years, or such other period as the Board may consider
appropriate in the circumstances. The candidate will have demonstrated during
his/her service on the Board that he/she supports the Board mandate, is an
independent thinker, has the leadership qualities to lead the Board and has
earned the respect and loyalty from the majority of the Directors through open
and honest communication at all times.
The performance of the CEO will be evaluated on an annual basis
by the Compensation Committee based on written objective criteria established by
the Compensation Committee, which will include reference to the financial
performance of the Company, establishment and implementation of strategies,
achievement of Company goals and objectives, adherence to the principles of
candour honesty and loyalty expected from a person in the position of CEO of a
publicly traded company.
The compensation of the CEO will be determined by the Board’s
Compensation Committee and the Committee may take into account advice from
independent compensation consultants as it may deem appropriate. The
compensation of the CEO will be linked with the financial performance of the
Company, the implementation of strategies and the achievement of the Company
goals and objectives.
The CEO will on a regular basis review succession planning with
the Nominating and Corporate Governance Committee.
| Article 6. |
Position Descriptions
|
The Board will develop clear position descriptions for the
Chairman of the Board, the chair of each committee and the CEO. The Board will
ensure that the CEO position description delineates the responsibilities of
management. In consultation with the Compensation Committee, the Board will
develop the corporate goals and objectives that the CEO is responsible for
meeting.
| Article 7. |
Orientation and Continuing Education
|
The Board will ensure that all new directors receive a
comprehensive orientation which will include education regarding the role of the
Board and its committees, the expectations of individual directors and the
nature and operation of the Company’s business. The Board will ensure that
directors are provided with continuing education opportunities to enhance their
skills and abilities and understanding of the Company’s business.
| Article 8. |
Corporate Governance, Integrity and the Code
of Business Conduct and Ethics |
The principles for conducting business with integrity are
contained in the Company’s Code of Business Conduct and Ethics (the "Code"). The
Code describes the conduct the Company expects from its directors, officers and
employees. Each Director is expected to comply with the letter and spirit of the
Code and the Audit Committee will monitor compliance with the Code. The Board
will ensure that the CEO and other executive officers conduct themselves with
integrity and create a culture of integrity
51
| Article 9. |
Strategic Planning |
The Board will adopt a strategic plan and, on an annual basis,
re-evaluate the strategic plan. The Board may in the exercise of its strategic
planning function utilize Company resources to the extent required and also rely
on such independent strategic advisors as the Board deems appropriate.
The strategic plan will include at least the following:
| |
(a) |
an evaluation of the opportunities and risks of the
business of the Company; |
| |
|
|
| |
(b) |
an analysis of the industry, including consideration of
its dominant economic features, strength of competitors and competitive
forces, changes in the competitive structure and changes in the business
environment. Consideration must also be given to the reasons for
strengthening and weakening of competitive forces, anticipation of the
strategic moves of competitors and key success factors for the achievement
of the Company’s goals and objectives. Strategic planning must involve an
analysis of the attractiveness of the industry and the ability to increase
profitability in the industry; |
| |
|
|
| |
(c) |
an analysis of the Company’s own position including the
influence and competitive factors relating to suppliers, customers,
substitute products, competitors, new and emerging competition and
existing rivalry between competitors. Consideration must be given to
determine the effectiveness of the existing strategy, the Company’s
strengths, weaknesses, opportunities and threats, the pricing policies and
the Company’s cost structures. In addition, the Company’s competitive
position relative to its major competitors must be considered and
strategic challenges must be identified; and |
| |
|
|
| |
(d) |
Consideration whether there is room for improvement of
the present strategic position. |
| Article 10. |
Risk Analysis |
Since business risks are an ongoing threat to the Company, it
is not sufficient to analyse risks on an annual basis when the strategic
position of the company is determined. The Board will implement a policy for
assessing the business risks in each area of the Company on an ongoing basis,
which must include a critical risk assessment of the Company’s supply chain,
technology, operations, sales and marketing, distribution and customer service.
The Board will establish a procedure for the identification and assessment of
the risks and the development and implementation of the mechanisms, processes
and procedures for assessing and, if necessary, changing current practices and
ensure effective implementation of risk avoidance measures and systems.
| Article 11. |
Succession Planning |
The Board will develop a policy for the appointment, training
and performance monitoring of senior management personnel. The policy will also
include the identification of successors of senior management, the development,
training and mentoring of the selected successors and implement the appropriate
retention initiatives and reward schemes to ensure that chosen successors remain
loyal to the Company.
| Article 12. |
Communication Policy
|
The Board will develop a policy that outlines the reporting
requirements, procedures and practices required under applicable securities laws
and stock exchange rules. In addition, the communication policy will define the
guidelines for communication with employees, the media, Shareholders, creditors,
political interest groups and government. The Communication Policy will ensure
that the Company’s strategic information is dealt with in compliance with all
statutes, regulations, bylaws, ordinances and other applicable legislation.
52
| Article 13. |
Internal Controls and Management Information
Systems |
The Board will, in conjunction with the Company’s Auditors or
other external advisors, establish a policy to ensure that sufficient internal
controls exist to monitor the financial performance of the Company, its separate
divisions and departments. The Board will ensure that management implements:
| |
(a) |
information systems that are capable of providing
accurate reports relating to efficiency, productivity, cost and
profitability; |
| |
|
|
| |
(b) |
internal controls relating to accounting, controlling and
finance; and |
| |
|
|
| |
(c) |
a management operating system to assist with forecasting,
planning, work assignment, follow- up and verification, feedback,
reporting evaluation and continuous improvement. |
The Audit Committee will utilize such available information to
report to the Board.
| Article 14. |
Reporting of Concerns
|
All stakeholders, including creditors, Shareholders and
employees, will be entitled to communicate any concerns about the Company’s
conduct or other matters directly to the Chairman of the Board.
| Article 15. |
Majority Voting Policy
|
Any director nominee who is elected to the Board in an
uncontested director election in circumstances where the number of votes
withheld against such director exceeds the number of votes cast in his or her
favour (an “Affected Director”) shall submit to the Chairman of the Nominating
and Corporate Governance Committee (with a copy to the Secretary of the Company)
a written resignation promptly after the Shareholder meeting at which the
election occurred. Such resignation shall take effect if accepted in accordance
with this Article 15.
The Nominating and Corporate Governance Committee of the Board
shall consider the Affected Director’s resignation. Unless there are
extraordinary circumstances, whether relating to the composition of the Board,
the voting results or otherwise having regard to the best interests of the
Company, the Nominating and Corporate Governance Committee shall recommend that
the independent directors of the Board accept the Affected Director’s
resignation, effective no more than 90 days following the Shareholder meeting at
which the election occurred. The Company shall promptly disclose in a press
release the determination made by the independent directors including, if
applicable, the reasons for rejecting an Affected Director’s resignation.
An Affected Director will not participate in the recommendation
of the Nominating and Corporate Governance Committee or the determination made
by the independent directors of the Board. If a quorum of the Nominating and
Corporate Governance Committee cannot be obtained due to the service on the
Nominating and Corporate Governance Committee of one or more Affected Directors,
the unaffected independent directors shall consider the resignation and make the
determination.
If the independent directors accept the resignation of the
Affected Director, they may (subject to applicable law):
| |
(a) |
leave the vacancy unfilled until the next annual meeting
of the Company; |
53
| |
(b) |
fill the vacancy through the appointment of a new
director (other than the Affected Director); or |
| |
|
|
| |
(c) |
call a special meeting of Shareholders at which a
director nominee (other than the Affected Director) will be proposed for
election by Shareholders. |
For greater certainty, this majority voting policy does not
apply in any case where the number of individuals nominated for election exceeds
the number of directors to be elected, including as a result of a proxy contest.
| (b) |
Disclosure of Detailed Voting
Results |
Promptly after a Shareholders’ meeting, the Company shall
publicly disclose the number and percentage of votes cast For and Withheld
against any director, as well as those cast For and Against each other matter
voted upon by Shareholders.
This Mandate may be amended by the Company’s Board, subject to
the disclosure and other provisions of the applicable corporate and securities
legislation and stock exchange rules.
Last reviewed and approved by the Board on October 1, 2014.
54
APPENDIX B
GREAT PANTHER SILVER LIMITED
(the “Company”)
AMENDED AND RESTATED INCENTIVE SHARE OPTION PLAN (2016)
| 1.1 |
For the purposes of the plan, the following terms shall
have the following meanings: |
| |
a. |
“Associate”, when used to indicate a relationship
with any person, means (i) an entity of which the person beneficially owns
or controls, directly or indirectly, voting securities entitling the
person to more than 10% of the voting rights attached to outstanding
voting securities of the entity, (ii) any partner of that person, (iii)
any trust or estate in which the person has a substantial beneficial
interest or in respect of which the person serves as trustee or executor
or in a similar capacity, or (iv) in the case of an individual, a relative
of that individual including a spouse of that individual, or a relative of
that individual’s spouse if the relative has the same home as that
individual; |
| |
b. |
“Board” means the Board of Directors of the
Company; |
| |
c. |
“Common Shares” means the common shares without
par value of the Company as constituted on the Effective Date of the
Plan; |
| |
d. |
“Company” means Great Panther Silver Limited, a
company continued under the Business Corporations Act (British
Columbia); |
| |
e. |
“Consultant” means a person, other than an
employee, executive officer or director of the Company or of a Related
Entity of the Company, that (i) is engaged to provide services to the
Company or a Related Entity other than services provided in relation to a
distribution, (ii) provides the services under a written contract with the
Company or a Related Entity of the Company, and (iii) spends or will spend
a significant amount of time and attention on the affairs and business of
the Company or a Related Entity of the Company, and includes, for an
individual Consultant, a corporation of which the individual Consultant is
an employee or shareholder, and a partnership of which the individual
Consultant is an employee or partner; |
| |
f. |
“Control” has the meaning ascribed to that term in
Part 2 Division 4 Employee, Executive Officer, Director and Consultant
Exemptions of National Instrument 45-106 Prospectus and
Registration Exemptions; |
| |
g. |
“Eligible Person” means any director, officer,
employee or Consultant of the Company or of a Related Entity of the
Company; |
| |
h. |
“Existing Options” means stock options granted
prior to the Effective Date pursuant to other Share Compensation
Arrangements and which have not been exercised or cancelled; |
| |
i. |
“Insider” means (i) an insider as defined in the
Securities Act (Ontario) other than a person who is an insider
solely by virtue of being a director or senior officer of a subsidiary of
the Company; and (ii) an Associate of any person who is an insider by
virtue of (i) above; |
| |
j. |
“Non-Employee Director” means any director of the
Company who is not also an officer, employee or Consultant of the Company
or of a Related Entity of the Company; |
| |
k. |
“Option” means a right to purchase Common Shares
granted to an Eligible Person pursuant to the Plan; |
| |
l. |
“Outstanding Issue” means the number of Common
Shares that are outstanding from time to time on a non-diluted
basis; |
| |
m. |
“Participant” means an Eligible Person to whom
Options have been granted; |
55
| |
n. |
“Permitted Assign” means, for an Eligible Person,
(i) a trustee, custodian, or administrator acting on behalf of, or for the
benefit of the person; (ii) a holding entity of the person; (iii) an RRSP
or an RRIF of the person; (iv) a spouse of the person; (v) a trustee,
custodian, or administrator acting on behalf of, or for the benefit of the
spouse of the person; (vi) a holding entity of the spouse of the person;
or (vii) an RRSP or an RRIF of the spouse of the person; |
| |
o. |
“Plan” means the Great Panther Silver Limited
Amended and Restated Incentive Share Option Plan (2016); |
| |
p. |
“Related Entity” means an entity that controls or
is controlled by the Company or that is controlled by the same person or
entity that controls the Company; |
| |
q. |
“Share Compensation Arrangement” means any stock
option, stock option plan, employee stock purchase plan or any other
compensation or incentive mechanism involving the issuance or potential
issuance of Common Shares; |
| |
r. |
“Termination Date” means the date on which a
Participant ceases to be an Eligible Person; |
| |
s. |
“TSX” means the Toronto Stock
Exchange. |
| 1.2 |
Words importing the singular number only shall include
the plural and vice versa and words importing the masculine shall include
the feminine. |
| |
|
| 1.3 |
Except as otherwise stated, the Plan and all matters to
which reference is made herein shall be governed by and interpreted in
accordance with the laws of British Columbia and the laws of Canada
applicable therein. |
The principal purposes of the Plan are to advance the interests
of the Company by (i) promoting a proprietary interest among Eligible Persons in
the success of the Company and its Related Entities; (ii) attracting and
retaining qualified directors, officers, employees and Consultants which the
Company and its Related Entities require; (iii) providing Eligible Persons with
additional incentive and encouraging share ownership by such Eligible Persons.
| 3.1 |
Administration of Plan |
| |
a. |
The Plan shall be administered by the Board or a
committee of the Board duly appointed for this purpose by the Board, and
consisting of not fewer than three Directors. If a committee is appointed
for this purpose, all references to the Board shall be deemed to be
references to the committee. |
| |
b. |
Subject to the limitations of the Plan, the Board shall
have the authority |
| |
(i) |
to determine which Eligible Persons are to be granted
Options; |
| |
(ii) |
to grant Options to Eligible Persons; |
| |
(iii) |
to determine the terms, limitations, restrictions and
conditions respecting such grants; |
| |
(iv) |
to interpret the Plan and to adopt, amend and rescind
such administrative guidelines and other rules and regulations relating to
the Plan as it shall from time to time deem advisable; |
| |
(v) |
to make all other determinations and to take all other
actions in connection with the implementation and administration of the
Plan including, without limitation, for the purpose of ensuring compliance
with Section 3.9 hereof, as it may deem necessary or
advisable. |
56
The Board’s guidelines, rules,
regulations, interpretations and determinations shall be conclusive and binding
upon the Company and all other persons.
| |
a. |
The aggregate maximum number of Common Shares which may
be reserved for issuance for all purposes under the Plan shall be equal to
10% of the Outstanding Issue at the time of an Option grant, or such
greater number or percentage as may be approved from time to time by the
shareholders of the Company. |
| |
b. |
The aggregate number of Common Shares reserved for
issuance to any one person pursuant to the grant of Options shall not
exceed 5% of the Outstanding Issue. |
| |
c. |
An Eligible Person may receive Options on more than one
occasion under the Plan and may receive separate Options on any one
occasion. |
| |
d. |
As of the Effective Date any Existing Options previously
granted by the Company which remain outstanding shall be deemed to have
been issued under the Plan. |
| |
e. |
Any Common Shares subject to an Option which expires or
for any reason is cancelled or terminated without having been exercised,
shall again be available for grant under the
Plan. |
| |
a. |
Options may be granted by the Board to any Eligible
Person, subject to the limitations set forth in Section 3.5. |
| |
b. |
Upon written notice from an Eligible Person, any Option
that might otherwise be granted to that Eligible Person will be granted,
in whole or in part, to a Permitted Assign of that
person. |
Nothing contained in this Plan shall prevent the Board from
adopting other or additional Share Compensation Arrangements, subject to
obtaining any required regulatory and shareholder approvals.
| 3.5 |
Limits With Respect to
Insiders |
| |
a. |
The aggregate number of Common Shares which may be
reserved for issuance pursuant to Options granted to Insiders under the
Plan and any other Share Compensation Arrangement shall not exceed 10% of
the Outstanding Issue. |
| |
b. |
The aggregate number of Common Shares issued to Insiders
pursuant to the exercise of Options and any other Share Compensation
Arrangement, within a one-year period, shall not exceed 10% of the
Outstanding Issue. The aggregate number of Common Shares issued to any one
Insider and such Insider’s Associates pursuant to the exercise of Options
and any other Share Compensation Arrangement, within a one-year period,
shall not exceed 5% of the Outstanding Issue. |
| |
c. |
Any entitlement to acquire Common Shares pursuant to
Options granted under the Plan or any other Share Compensation Arrangement
prior to the Participant becoming an Insider of the Company shall be
excluded for the purposes of the limits set out in (a) and (b)
above. |
| 3.6 |
Limits With Respect to Non-Employee
Directors |
| |
a. |
The total annual grant to any one Non-Employee Director
shall not exceed a grant value of $100,000 (based upon a Black-Scholes
calculation or such other similar and acceptable methodology, applied
consistently and appropriately as determined by the
Board). |
57
| 3.7 |
Amendment and
Termination |
| |
a. |
Subject to prior regulatory approval where required, the
Board may, without shareholder approval, amend, suspend or terminate the
Plan at any time, provided that the Board may not do any of the following
without obtaining the approval of the shareholders of the Company in the
same manner as set out in Subsection 3.9(b): |
| |
(i) |
increase the maximum number of Common Shares that may be
reserved for issuance pursuant to Options granted under the
Plan; |
| |
(ii) |
alter or impair any Existing Options granted to a
Participant without the consent of the Participant; |
| |
(iii) |
materially increase the benefits under the
Plan; |
| |
(iv) |
amend the definition of “Eligible Person” or otherwise
alter the conditions for eligibility for participation in the Plan to
permit the introduction or re-introduction of Non- Employee Directors on a
discretionary basis or amend the Plan to increase limits previously
imposed on Non-Employee Director participation; |
| |
(v) |
amend the Plan to permit Options granted under the Plan
to be transferrable or assignable other than as set forth in Section 4.6
hereof and for normal estate settlement purposes; |
| |
(vi) |
amend the exercise price of any Option issued under the
Plan where such amendment reduces the exercise price of such Option (for
this purpose, a cancellation or termination of an Option of a Participant
prior to its expiry for the purpose of re- issuing Options to the same
Participant with a lower exercise price shall be treated as an amendment
to reduce the exercise price of an Option); |
| |
(vii) |
extend the term of any Option issued under the Plan
beyond the original expiry date; or |
| |
(viii) |
amend this Subsection 3.7(a). |
If the Plan is terminated, the
provisions of the Plan and any rules and regulations adopted by the Board and in
force at the time of termination of the Plan shall continue in effect during
such time as an Option or any rights pursuant thereto remain outstanding.
| |
b. |
Without limiting the generality of the Board’s authority
set out in Subsection 3.7(a), the Board may, without shareholder approval,
amend the Plan by: |
| |
(i) |
including or changing vesting provisions in the
Plan; |
| |
(ii) |
changing the termination provisions of the Plan which do
not entail an extension beyond the original expiry date; and |
| |
(iii) |
adding a cashless exercise feature, payable in cash or
securities. |
| |
c. |
The Board may amend the terms of any outstanding Option
(including, without limitation, the cancellation of an Option or an
amendment to the date or dates on which an Option or a portion thereof
vests and so becomes exercisable), provided
that: |
| |
(i) |
any required regulatory approvals are obtained; |
| |
(ii) |
the Board would have had the authority to initially grant
the option under terms as so amended; and |
| |
(iii) |
the consent of the Participant is
obtained. |
| 3.8 |
Compliance with Legislation and Stock Exchange
Rules |
The Plan, the grant and exercise of Options under the Plan and
the Company’s obligation to issue Common Shares on exercise of Options shall be
subject to all applicable federal, provincial and foreign laws, rules and regulations, the rules and regulations of any
stock exchange on which the Common Shares are listed for trading and to such
approvals by any regulatory or governmental agency as may, in the opinion of
counsel to the Company, be required. The Company shall not be obliged by any
provision of the Plan or the grant of any Option hereunder to issue Common
Shares in violation of such laws, rules and regulations or any condition of such
approvals. No Option shall be granted and no Common Shares issued or sold
hereunder where such grant, issue or sale would require registration of the Plan
or of Common Shares under the securities laws of any foreign jurisdiction and
any purported grant of any Option or issue or sale of Common Shares hereunder in
violation of this provision shall be void. In addition, the Company shall have
no obligation to issue any Common Shares pursuant to the Plan unless such Common
Shares shall have been duly listed, upon official notice of issuance, with all
stock exchanges on which the Common Shares are listed for trading. Common Shares
issued to Participants pursuant to the exercise of Options may be subject to
limitations on sale or resale under applicable securities laws. In particular,
if Options are granted to any resident or citizen of the United States, the
Board and the Company will use their best efforts to ensure that all matters
pertaining to such Options shall be made in compliance with applicable United
States securities laws.
58
The Plan is subject to:
| |
a. |
approval by TSX and, if necessary, any other exchange on
which the Common Shares may be listed and posted for trading;
and |
| |
b. |
approval by the shareholders of the Company, given by the
affirmative vote of the holders of a majority of the voting securities of
the Company present, or represented and entitled to vote for this purpose,
at an annual or special meeting of shareholders held, among other things,
to consider and approve the Plan. |
| 3.10 |
Disinterested Shareholder
Approval |
Notwithstanding that the Plan has been approved by shareholders
of the Company under Subsection 3.9(b), the Company must obtain disinterested
shareholder approval:
| |
a. |
if the Company decreases the exercise price of Options
previously granted to Insiders or to participants who are Insiders at the
time of the proposed decrease; or |
| |
b. |
if the Company extends the term of Options previously
granted to Insiders or to participants who are Insiders at the time of the
proposed extension; or |
| |
c. |
if the Plan, together with all of the Company’s
previously established and outstanding stock option plans or grants, could
result at any time in the grant to Insiders, within a twelve-month period,
of a number of Options exceeding 10% of the Outstanding
Issue. |
Disinterested shareholder approval
must be given by a majority of the votes cast at a meeting of shareholders of
the Company other than votes attaching to Common Shares beneficially owned by
Insiders to whom Options may be granted and Common Shares may be issued under
the Plan and by Associates of such Insiders. Holders of non-voting and
subordinate voting shares of the Company must be given full voting rights on a
resolution that requires disinterested shareholder approval.
59
| 4.1 |
Exercise Price |
| |
|
|
The Board will establish the exercise price of an Option
at the time each Option is granted provided that such price shall not be
less than the closing price of the Common Shares on TSX (or, if the Common
Shares are not then listed and posted for trading on TSX, on such other
stock exchange on which the Common Shares are listed and posted for
trading as may be selected by the Board) on the last business day
immediately preceding the date of grant of such Option. If there is no
trading on that date, the exercise price shall not be less than the
weighted average of the bid and ask prices on the five consecutive trading
days preceding the date of grant. |
| |
|
| 4.2 |
Option Certificate |
| |
|
|
Upon the grant of an Option, the Company will deliver to
the Participant an Option certificate dated the date of grant, containing
the terms of the Option and executed by the Company. Upon such delivery
such Participant will be a Participant in the Plan and have the right to
purchase the Common Shares on the terms set out in the Option certificate
and in the Plan. |
| |
|
| 4.3 |
Time of Exercise |
| |
|
|
The Board may determine when any Option will become
exercisable and may determine that any Options shall vest and be
exercisable in installments. Options granted must be exercised no later
than 10 years after the date of grant or such lesser period as may be
determined by the Board. In the event that any Option expires during, or
within 48 hours after, a period during which directors, officers and
employees are prohibited from trading securities of the Company (referred
to as a self-imposed blackout period), such expiry date will become the
10th day following the end of the blackout period. |
| |
|
| 4.4 |
Early Expiry |
| |
a. |
If a Participant ceases to be an Eligible Person for any
reason whatsoever other than death, each Option held by the Participant
will cease to be exercisable 90 days after the Termination Date. If any
portion of an Option is not vested by the Termination Date, that portion
of the Option may not under any circumstances be exercised by the
Participant. Without limitation, and for greater certainty only, this
provision will apply regardless of whether the Participant, if an
employee, resigned or was dismissed with or without cause, or, if a
director or officer, was removed or not re-elected or re-appointed a
director or officer, or, if a Consultant, his services were terminated.
This provision will apply regardless of whether the Participant received
compensation in respect of termination or was entitled to a period of
notice of termination which would otherwise have permitted a greater
portion of the Option to vest with the Participant. |
| |
b. |
If a Participant dies, the legal representatives of the
Participant may exercise the Participant’s Options within six months after
the date of the Participant’s death, but only to the extent the Options
were, by their terms, exercisable on the date of
death. |
| 4.5 |
Acceleration on Change of
Control |
In the event of a Change of Control
(defined below), all Options outstanding shall be immediately exercisable,
notwithstanding any determination of the Board pursuant to Section 4.3 hereof,
if applicable.
Notwithstanding the prior paragraph,
if the Company completes a transaction constituting a Change of Control, and as
a result of such Change of Control the holders of Common Shares receive securities of another issuer (the “Continuing
Entity”) in full substitution or replacement for the Common Shares
(“Replacement Securities”), then any Options that have been granted after
June 9, 2016 will be adjusted so that the holder would receive such number of
Replacement Securities as he or she would have received as a result of such
Change of Control if the holder had exercised his or her Options to purchase
Common Shares prior to the completion of the Change of Control and had held such
Common Shares on the effective date of such Change of Control. However, if
within 12 months following such Change of Control a holder who was also an
officer or employee of, or consultant to, the Company prior to the Change of
Control has their employment or consulting agreement, or position, with the
Company or the Continuing Entity (as applicable), terminated, or altered in such
a way that the holder is effectively constructively dismissed from their
position with the Company, or the holder resigns from their position as an
officer or employee of the Company, then the Options shall immediately fully
vest and become exercisable and shall remain open for exercise until the earlier
of their Expiry Date and the date that is 90 days after such termination or
dismissal.
60
Furthermore, if: (i) the Continuing
Entity does not (or, upon the occurrence of the Change of Control, will not)
substitute or replace, or the nature of the Change of Control does not provide
for the full substitution or replacement of, the securities issuable upon the
exercise of Options outstanding under the 2016 Option Plan on the above
described terms; (ii) the Board determines, acting reasonably, that such
substitution or replacement is not practicable or impairs or does not
substantially preserve the rights of the holders of Options; (iii) the Board
determines, acting reasonably, that such substitution or replacement would give
rise to adverse tax results to holders of Options; or (iv) the Replacement
Securities are not (or, upon the occurrence of the Change of Control, will not
be) listed and posted for trading on a recognizable stock exchange; the
outstanding Options will become fully vested and may be exercised by the holder
prior to, but conditional upon the consummation of, the Change of Control. Any
Options that so vest and have not been exercised will be forfeited and cancelled
without compensation to the holder thereof upon the consummation of such Change
of Control. If for any reason such Change of Control is not consummated, any
Common Shares purchased by the Option holder upon the exercise of an Option for
the purposes of participating in the Change of Control or whose vesting has been
accelerated pursuant to these provisions will be cancelled and returned to the
Company, will be added back to the number of Common Shares, if any, remaining
unexercised under the Option, and the Company will refund to the Option holder
all consideration paid by it to exercise those Options.
“Change of Control” means the
occurrence of any one or more of the following events:
| |
a. |
a consolidation, merger, amalgamation, arrangement or
other reorganization or acquisition involving the Company or any Related
Entity and another corporation or other entity, as a result of which the
holders of Common Shares prior to the completion of the transaction hold
less than 50% of the outstanding shares of the successor corporation after
completion of the transaction; |
| |
b. |
the sale, lease, exchange or other disposition, in a
single transaction or a series of related transactions, of assets, rights
or properties of the Company and/or any of its subsidiaries (as defined in
the Securities Act (Ontario)) which have an aggregate book value
greater than 50% of the book value of the assets, rights and properties of
the Company and its subsidiaries on a consolidated basis to any other
person or entity, other than a disposition to a wholly-owned subsidiary of
the Company in the course of a reorganization of the assets of the Company
and its subsidiaries; |
| |
c. |
a resolution is adopted to wind-up, dissolve or liquidate
the Company; |
| |
d. |
any person, entity or group of persons or entities acting
jointly or in concert (an “Acquiror”) acquires or acquires control
(including, without limitation, the right to vote or direct the
voting) of Voting Securities of the Company which, when added to the
Voting Securities owned of record or beneficially by the Acquiror or which the
Acquiror has the right to vote or in respect of which the Acquiror has the right
to direct the voting, would entitle the Acquiror and/or the Acquiror’s
Associates and/or the Acquiror’s affiliated companies (as defined in the Securities Act (Ontario)) to cast or to direct the casting of 40% or more
of the votes attached to all of the Company’s outstanding Voting Securities
which may be cast to elect directors of the Company or the successor company
(regardless of whether a meeting has been called to elect directors); |
61
| |
e. |
as a result of or in connection with: (i) a contested
election of directors, or; (ii) a consolidation, merger, amalgamation,
arrangement or other reorganization or acquisitions involving the Company
or any of its Related Entities and another company or other entity, the
nominees named in the most recent management information circular of the
Company for election to the Board shall not constitute a majority of the
Board; or |
| |
f. |
the Board adopts a resolution to the effect that a Change
of Control as defined herein has occurred or is
imminent. |
For the purposes of this Section,
“Voting Securities” means Common Shares and any other shares entitled to
vote for the election of directors and shall include any security, whether or
not issued by the Company, which are not shares entitled to vote for the
election of directors but are convertible into or exchangeable for shares which
are entitled to vote for the election of directors including any options of
rights to purchase such shares or securities.
| 4.6 |
Prohibition on Transfer of
Options |
Options are personal to each Eligible
Person. Subject to Section 4.7, no Eligible Person or Permitted Assign may deal
with any Options or any interest in them or transfer any Options now or
hereafter held by the Eligible Person or Permitted Assign. If a Permitted Assign
is a holding entity and ceases to be controlled by the Participant, such
Participant will be deemed to have transferred any Options held by such holding
entity. A purported transfer of any Options in violation of the Plan will not be
valid and the Company will not issue any Common Shares upon the attempted
exercise of improperly transferred Options. “Transfer” includes any sale,
exchange, assignment, gift, bequest, disposition, mortgage, charge, pledge,
incumberance, grant of security interest or other arrangement by which
possession, legal title or beneficial ownership passes from one person to
another, or to the same person in a different capacity, whether or not voluntary
and whether or not for value, and any agreement to effect any of the foregoing.
| 4.7 |
Permitted Transferees |
Section 4.6 does not apply where a
transfer (i) is between an Eligible Person and the Permitted Assign of that
Eligible Person, or (ii) is between Permitted Assigns of that Eligible Person,
or (iii) the transfer is from a trustee, custodian or administrator acting on
behalf, or for the benefit of Eligible Persons, to an Eligible Person or
Permitted Assign of that Eligible Person, if the Option was acquired from an
Eligible Person or the Permitted Assign of that Eligible Person. For the
purposes of this Section, references to Eligible Person include a former
Eligible Person.
| 4.8 |
Right to Terminate Options on Sale of
Company |
Notwithstanding any other provision of
this Plan, if the Board at any time by resolution declares it advisable to do so
in connection with any proposed sale or conveyance of all or substantially all
of the property and assets of the Company or any proposed merger, consolidation,
amalgamation or offer to acquire all of the outstanding Common Shares
(collectively, the “Proposed Transaction”), the Company may give written
notice to all Participants advising that their respective Options, including
Options held by their Permitted Assigns, may be exercised only within 90 days after the date of the notice and not thereafter,
and that all rights of the Participants, and their Permitted Assigns under any
Options not exercised will terminate at the expiration of the 90-day period,
provided that the Proposed Transaction is completed within 180 days after the
date of the notice. If the Proposed Transaction is not completed within the
180-day period, no right under any Option will be affected by that notice,
except that the Option may not be exercised between the date of expiration of
the 90-day period and the day after the expiration of the 180-day period.
62
| 4.9 |
No Rights as Shareholder or To Remain Eligible
Person |
| |
a. |
The only rights as a shareholder of the Company which a
Participant will have with respect to an Option are with respect to those
of the Common Shares that the Participant has acquired through exercise of
the Option in accordance with its terms. |
| |
b. |
Nothing in this Plan or in any Option certificate shall
confer on any Participant any rights to remain as a director, officer,
employee or Consultant of the Company or any Related Entity of the Company
for any period. |
| 4.10 |
Adjustments to Common
Shares |
The number of Common Shares delivered
to a Participant upon exercise of an Option will be adjusted in the following
events and manner, subject to the right of the Board to make such other or
additional adjustments as are appropriate in the circumstances.
| |
a. |
Upon (i) a subdivision of the Common Shares into a
greater number of Common Shares, (ii) a consolidation of the Common Shares
into a lesser number of Common Shares or (iii) the issue of a stock
dividend to holders of the Common Shares, the Company will deliver upon
exercise of an Option, in addition to or in lieu of the number of Common
Shares in respect of which the right to purchase is being exercised and
without the Participant making any additional payment, such greater or
lesser number of Common Shares as result from the subdivision,
consolidation or stock dividend. |
| |
b. |
Upon the distribution by the Company to holders of the
Common Shares of (i) shares of any class (whether of the Company or
another corporation) other than Common Shares, (ii) rights, options or
warrants, (iii) evidences of indebtedness or (iv) securities or other
property or assets (other than dividends in the ordinary course), the
Company will deliver, subject to any prior approval of TSX and any other
applicable exchange on which the Common Shares may be listed and posted
for trading or any applicable regulatory authorities, upon exercise of an
Option, in addition to the number of Common Shares in respect of which the
right to purchase is being exercised and without the Participant making
any additional payment, such other securities, evidences of indebtedness
or assets as result from such distribution. |
| |
c. |
Upon a capital reorganization, reclassification or change
of the Common Shares, an amalgamation, arrangement or other form of
business combination of the Company with another corporation or a sale,
lease or exchange of all or substantially all of the property of the
Company, the Company will deliver upon exercise of an Option, in lieu of
the Common Shares in respect of which the right to purchase is being
exercised, the kind and amount of shares or other securities or property
as result from such event. |
| |
d. |
The adjustments provided for in this section are
cumulative. |
| |
e. |
The Company will not be required to issue fractional
Common Shares or other securities under the Plan and any fractional
interest in a Common Share or other security that would otherwise be
delivered upon the exercise of an Option will be
cancelled. |
63
A Participant who wishes to exercise
an Option may do so by delivering the following to the Company on or before the
expiry date of the Option:
| |
a. |
a notice in writing exercising the Option; and |
| |
b. |
a cheque (which need not be a certified cheque) or bank
draft payable to the Company for the aggregate exercise price for the
Common Shares being purchased. |
If the Participant is deceased, the
Option may be exercised by the legal personal representatives of the Participant
who, in addition to delivering to the Company the foregoing, must also deliver
to the Company evidence of their status as legal personal representatives.
| 5.2 |
Delivery of Share Certificate |
| |
|
|
Not later than 10 business days after receipt of the
notice exercising an Option and payment in full for the Common Shares
being acquired, the Company will direct its transfer agent to issue a
certificate in the name of the Participant (or, if deceased, his estate)
for the number of Common Shares purchased by the Participant (or his
estate), which will be issued as fully paid and non- assessable Common
Shares. |
| |
|
| 5.3 |
Cashless Exercise |
| |
|
|
A Participant may, if determined by the Board, have the
right (the “Right”), when entitled to exercise an Option, to
terminate such Option in whole or in part by notice in writing to the
Company and in lieu of receiving Common Shares pursuant to the exercise of
the Option, shall receive instead and at no cost to the Participant that
number of Common Shares, disregarding fractions which, when multiplied by
the closing price of the Common Shares on the day immediately prior to the
exercise of the Right, have a total value equal to the product of that
number of Common Shares subject to the Option multiplied by the difference
between the closing price on the day immediately prior to the exercise of
the Right and the Option exercise price. |
| |
|
| 5.4 |
Withholding Tax |
| |
|
|
When a Participant or other person becomes entitled to
receive Common Shares upon exercise of an Option, the Company shall have
the right to require the Participant or such other person to remit to the
Company an amount sufficient to satisfy any federal, provincial or other
law requiring withholding of tax or other required deductions relating to
the delivery of Common Shares. Unless otherwise prohibited by the Board or
by applicable law, satisfaction of such withholding obligations may be
accomplished by any of the following methods or by a combination of such
methods: |
| |
a. |
the tendering by the Participant of a cash payment to the
Company in an amount equal to the total withholding obligation;
or |
| |
b. |
the withholding by the Company, from the Common Shares
otherwise due to the Participant, such number of Common Shares having a
market price, determined as of the date the withholding obligation arises,
equal to the amount of the total withholding obligation, for purposes of
selling such withheld Common Shares in order to satisfy any applicable
withholding obligations, subject to applicable law; or |
| |
c. |
the withholding by the Company, from any cash payment
otherwise due to the Participant, such amount of cash as is equal to the
amount of the total withholding obligation, or such other manner acceptable to the Company, provided,
however, that the sum of any cash so paid or withheld and the market price of
any Common Shares so withheld is sufficient to satisfy the total withholding
obligation. |
64
| 6. |
EFFECTIVE DATE |
| |
|
|
The Plan has been approved by the Board on April 29,
2016. The Plan is effective on June 9, 2016, upon receipt of shareholder
approval (the “Effective Date”). On the Effective Date the Plan
supercedes and replaces all previous stock option plans and Existing
Options granted prior to the Effective Date under any other Share
Compensation Arrangement will become subject to the
Plan. |
Last reviewed and approved by the Board on April 29, 2016.
65
APPENDIX C
SUMMARY OF THE PRINCIPAL TERMS OF THE RIGHTS PLAN
This summary is qualified in its entirety by reference to the
text of the Shareholder Rights Plan, which is available upon request from the
Company at Suite 1330, 200 Granville Street, Vancouver, BC V6C 1S4
(604-608-1766). Capitalized terms used in this summary without express
definition have the meaning ascribed thereto in the Shareholder Rights Plan.
Issue of Rights
The Company will issue one right (a “Right”) in respect
of each common share outstanding at the close of business on June 29, 2012 (the
“Record Time”). The Company will issue Rights on the same basis for each
common share issued after the Record Time but prior to the earlier of the
Separation Time and the Expiration Time (both defined below).
Rights Certificates and Transferability
Before the Separation Time, the Right will be evidenced by
certificates for the common shares which are not transferable separate from the
common shares. From and after the Separation Time, the Rights will be evidenced
by separate Rights Certificates which will be transferable separate from and
independent of the common shares.
Exercise of Rights
Rights are not exercisable before the Separation Time. After
the Separation Time and before the Expiration Time, each Right entitles the
holder to acquire one common share for the Exercise Price of $50 (subject to
certain anti-dilution adjustments). This Exercise Price is a price in excess of
the estimated maximum value of the common shares during the term of the Rights
Plan as determined by the Board. Upon the occurrence of a Flip-In Event (defined
below) prior to the Expiration Time (defined below), each Right (other than any
Right held by an “Acquiring Person”, which will become null and void as a result
of such Flip-In Event) may be exercised to purchase that number of common shares
which have an aggregate Market Price equal to twice the Exercise Price of the
Rights for a price equal to the Exercise Price. Effectively, this means a
shareholder of the Company (other than the Acquiring Person) can acquire
additional common shares from treasury at half their Market Price.
Definition of “Acquiring Person”
Subject to certain exceptions, an Acquiring Person is a person
who is the Beneficial Owner (defined below) of 20% or more of the outstanding
common shares.
Definition of “Beneficial Ownership”
A person is a Beneficial Owner if such person or its affiliates
or associates or any other person acting jointly or in concert
| |
(a) |
owns the securities in law or equity; and |
| |
|
|
| |
(b) |
has the right to acquire (immediately or within 60 days)
the securities upon the exercise of any convertible securities or pursuant
to any agreement, arrangement or understanding. |
However, a person is not a Beneficial Owner under the Rights
Plan where:
| |
(c) |
the securities have been deposited or tendered pursuant
to a take-over bid, unless those securities have been taken up or paid
for; |
| |
|
|
| |
(d) |
by reason of the holders of such securities having agreed
to deposit or tender such securities to a take-over bid pursuant to a
Permitted Lock-Up Agreement; |
66
| |
(e) |
such person (including a fund manager, trust company,
pension fund administrator, trustee or non-discretionary client account of
registered brokers or dealer) is engaged in the management of mutual funds
or investment funds for others, as long as that
person: |
| |
(i) |
holds those common shares in the ordinary course of its
business for the account of others; |
| |
|
|
| |
(ii) |
holds not more than 30% of the common shares (in the case
of a pension fund administrator); and |
| |
|
|
| |
(iii) |
is not making a take-over bid or acting jointly or in
concert with a person who is making a take-over bid;
or |
| |
(f) |
such person is a registered holder of securities as a
result of carrying on the business of or acting as a nominee of a
securities depository. |
Definition of “Separation Time”
Separation Time occurs on the tenth trading day after the
earlier of:
| |
(a) |
Stock Acquisition Date; |
| |
|
|
| |
(b) |
the date of the commencement or announcement of the
intent of a person to commence a take-over bid (other than a Permitted Bid
or Competing Bid) or such later date as determined by the Board;
and |
| |
|
|
| |
(c) |
the date on which a Permitted Bid or Competing Bid ceases
to qualify as such or such later date as determined by the
Board. |
Definition of “Expiration Time”
Expiration Time occurs on the date being the earlier of:
| |
(a) |
the time at which the right to exercise rights is
terminated under the terms of the Rights Plan; and |
| |
|
|
| |
(b) |
the date immediately after the Company’s annual meeting
of shareholder to be held in 2019. |
Definition of a “Flip-In Event”
A Flip-In Event occurs when a person becomes an Acquiring
Person. Upon the occurrence of a Flip-In Event, any Rights that are beneficially
owned by an Acquiring Person or any of its related parties to whom the Acquiring
Person has transferred its Rights will become null and void as a result of which
the Acquiring Person’s investment in the Company will be greatly diluted if a
substantial portion of the Rights are exercised after a Flip-In Event
occurs.
Definition of “Permitted Bid”
A Permitted Bid is a take-over bid made by a person (the
“Offeror”) pursuant to a take-over bid circular that complies with the
following conditions:
| |
(a) |
the bid is made to all registered holders of common
shares (other than common shares held by the Offeror); |
| |
|
|
| |
(b) |
the Offeror agrees that no common shares will be taken up
or paid for under the bid for at least 105 days following the commencement
of the bid, or such shorter minimum period that a take-over bid (that is
not exempt from any of the requirements of Division 5 (Bid Mechanics) of
MI 62-104) must remain open for deposits of securities thereunder, in
the applicable circumstances at such time, pursuant to MI 62-104
and that no common shares will be taken up or paid for unless at such date more
than 50% of the outstanding common shares held by shareholders other than the
Offeror and certain related parties have been deposited pursuant to the bid and
not withdrawn; |
67
| |
(c) |
the Offeror agrees that the common shares may be
deposited to and withdrawn from the take-over bid at any time before such
common shares are taken up and paid for; and |
| |
|
|
| |
(d) |
if on the date specified for take-up and payment, the
condition in paragraph (b) above is satisfied, the bid shall remain open
for an additional period of at least 10 business days to permit the
remaining shareholders to tender their common
shares. |
Definition of “Competing Bid”
A Competing Bid is a take-over bid that:
| |
(a) |
is made while another Permitted Bid is in existence,
and |
| |
|
|
| |
(b) |
satisfies all the components of the definition of a
Permitted Bid, except that the requirements set out in Clause (ii) of the
definition of a Permitted Bid shall be satisfied if the Take-over Bid
shall contain, and the take up and payment for securities tendered or
deposited thereunder shall be subject to, an irrevocable and unqualified
condition that no Voting Shares shall be taken up or paid for pursuant to
the Competing Bid prior to the close of business on the date that is no
earlier than the date which is the last day of the minimum initial deposit
period that such Take-over Bid must remain open for deposits of securities
thereunder pursuant to MI 62-104 after the date of the Take-over Bid
constituting the Competing Permitted Bid, and only if at that date, more
than fifty percent (50%) of the then outstanding Voting Shares held by
Independent Shareholders have been deposited or tendered to the Competing
Bid and not withdrawn. |
Definition of “Permitted Lock-Up Agreement”
A Permitted Lock-Up Agreement is an agreement between a person
making a take-over bid and one or more shareholders (each a “Locked-up
Person”) under which the Locked-up Persons agree to deposit or tender their
common shares to such take-over bid and which provides:
| |
(a) |
(i) no limit on the right of the Locked-up Persons to
withdraw their shares in order to deposit them to another Take-over Bid
(or terminate the agreement in order to support another transaction) where
the price or value represented under the another Take-over Bid (or other
transaction) exceeds the price or value represented under the original
take-over bid; or (ii). limits such right to withdraw its shares in order
to deposit them to another Take-over Bid (or terminate the agreement in
order to support another transaction) unless the price or value
represented under another Take-over Bid (or other transaction) exceeds the
price or value represented under the original take-over bid by as much as
or more than an amount specified under the original take-over bid, and the
specified amount is not more than 7% of the price or value represented
under the original take-over bid; and |
| |
|
|
| |
(b) |
permits the Locked-up Person to withdraw their shares in
order to tender or deposit them to another Take-over Bid (or terminate the
agreement in order to support another transaction) if the number of shares
to be purchased under the other Take-over Bid or transaction exceeds the
number of Voting Shares offered to be purchased under the Lock-Up Bid by
as much or more than a specified number of Voting Shares (the
“Specified Number of Shares”) and the Specified Number of Shares is
not greater than 7% of the number of Voting Shares offered to be purchased
under the Lock-Up Bid, at an offering price for each share that is not
less, or provides a value for each share that is not less than, the
offering price or value represented by or proposed to be represented by
the Lock-up Bid; and |
68
| |
(c) |
for no “break-up” fee or “top-up” fee in excess of the
greater of: (i) 2.5% of the price or value payable under the original
take-over bid to Locked-up Persons; and (ii) 50% of the amount by which
the price or value payable to Locked-up Persons under another Take-over
Bid (or other transaction) exceeds the price or value payable to Locked-up
Persons under the original take-over bid, shall be payable by such
Locked-up Persons if any Locked-up Person fails to tender their common
shares under the original take-over bid or withdraws common shares
previously tendered under the original take-over bid in order to tender
such common shares under another Take-over Bid (or to support another
transaction). |
Redemption of Rights
The Rights may be redeemed by the Board at its option with the
prior approval of the shareholders at any time before a Flip-In Event occurs at
a redemption price of $0.00001 per Right. In addition, the Rights will be
redeemed automatically in the event of a successful Permitted Bid, Competing Bid
or a bid for which the Board has waived the operation of the Rights Plan.
Waiver
Before a Flip-In Event occurs, the Board may waive the
application of the Flip-In provisions of the Rights Plan to any prospective
Flip-In Event which would occur by reason of a take-over bid made by a take-over
bid circular to all registered holders of common shares. However, if the Board
waives the Rights Plan with respect to a particular bid, it will be deemed to
have waived the Rights Plan with respect to any other take-over bid made by
take-over bid circular to all registered holders of common shares before the
expiry of that first bid. Other waivers of the “Flip-In” provisions of the
Rights Plan will require prior approval of the shareholders of the Company. The
Board may also waive the “Flip-In” provisions of the Rights Plan in respect of
any Flip-In Event provided that the Board has determined that the Acquiring
Person became an Acquiring Person through inadvertence and has reduced its
ownership to such a level that it is no longer an Acquiring Person.
Term of the Rights Plan
Unless otherwise terminated, the Rights plan will expire at the
close of business on the date immediately after the Company’s annual meeting of
shareholder to be held in 2019.
Amending Power
Except for minor amendments to correct typographical errors and
amendments to maintain the validity of the Rights Plan as a result of change of
law, shareholder or rightsholder approval is required for amendments to the
Rights Plan.
Rights Agent
The Rights Agent is Computershare Investor Services Inc.
Rightsholder not a Shareholder
Until a Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of the Company.
69
