/ /
/ X /
/X/
/ /
1) Title of each class of securities to which transaction applies:
Common Stock, par value $0.001 per share
(1) | Title of each class of securities to which transaction applies: |
2) Aggregate number of securities to which transaction applies:
(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) | Proposed maximum aggregate value of transaction: |
(5) | Total fee paid: |
3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
/__/ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1) | Amount Previously Paid: |
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
ENERGIZER RESOURCES INC.
1224 Washington Avenue, Miami Beach, FL 33139 USA
and
and 21, 201120102011 Annual and Special Meeting of Stockholders (the “Meeting”) of Energizer Resources Inc. (the “Company”) will be held at the Board of Trade of Metro Toronto, First Canadian Place, 3rdrd Floor, Toronto, Ontario, M5X 1C1 on Wednesday December 16, 201021, 2011 at 10:3011:00 a.m., local time for the following purposes:1.To elect eight directors of the Company, each to hold their offices until the next annual meeting of the Company’s stockholders or until their successors have been duly elected and qualified.2.To approve an increase of the Company’s authorized capital stock to 350,000,000 from 185,000,000, of which 340,000,000 will be deemed common shares and the remaining 10,000,000 will be deemed eligible to be divisible into classes, series and types as designated by the Board of Directors.3.To approve an amendment to the Company’s Amended and Restated 2006 Stock Option Plan to increase the authorized number of options for common shares of the Company authorized to be issued to 22,000,000 from 17,000,000.4.To approve a change to the Company’s Amended & Restated Bylaws, Article II - Meetings of Shareholders, Sections 2 & 3 reducing the required quorum for both a Regular and a Special General Meeting of Shareholders to ten percent of the shares outstanding from one-third of the shares outstanding.5.To ratify the appointment of MSCM LLP, Chartered Accountants, as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2011.6.To transact such other business as may properly come before the meeting.1. To elect six directors of the Company, each to hold their offices until the next annual meeting of the Company’s stockholders or until their successors have been duly elected and qualified or until his earlier resignation, removal or death. 2. To approve an amendment to the Company’s Amended and Restated 2006 Stock Option Plan to increase the authorized number of options for common shares of the Company authorized to be issued to 27,000,000 from 22,000,000. The Board of Directors recommends that the Stockholders vote “FOR” this Proposal at the Meeting. 3. To approve the Re-pricing of various existing Stock Options. The Board of Directors recommends that the Stockholders vote “FOR” this Proposal at the Meeting. 4. To ratify the appointment of MSCM LLP, Chartered Accountants, as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2012. The Board of Directors recommends that the Stockholders vote “FOR” this Proposal at the Meeting. 5. To transact such other business as may properly come before the Meeting. 8, 201021, 2011 at 5pm local time as the record date for the annual and special meeting. Only holders of record of the Company’s common stock on the close of business on that date are entitled to notice of, and to vote at, the meeting.8, 2010
and
ProposalsThe proxy cut-off date for shares to be Considered
At the annual and special meeting, we will ask holders of our common stock to consider and voteupon the following items:
(1)
Election of Directors
The electionvoted in advance of the Company’s directors, namely J.A. Kirk McKinnon, Richard Schler, John Sanderson, Julie Lee Harrs, Quentin Yarie, Peter Harder, Craig Scherba and Richard Quesnel. If elected, these directors will each serve until the next annual meeting of the Company’s stockholders or until there successors have been duly elected and qualified. Up to nine directors are allowed to serve at any one time.
(2)
Approve the increase of the authorized capital stock of the Company
To approve an increase of the Company’s authorized capital stock to 350,000,000 from 185,000,000, of which 340,000,000 will be deemed common shares and the remaining 10,000,000 will be deemed eligible to be divisible into classes, series and types as designated by the Board of Directors.
on Friday December 16, 2011 at 5pm, local time.
(3)
Approve the Amended and Restated 2006 Stock Option Plan
To approve an amendment to the Company’s Amended and Restated 2006 Stock Option Plan to increase the authorized number of options for common shares of the Company authorized to be issued to 22,000,000 from 17,000,000.
(4)
Approve change of quorum for Regular and Special Shareholder Meetings
To approve a change to the Company’s Amended & Restated Bylaws, Article II - Meetings of Shareholders, Sections 2 & 3 reducing the required quorum for both a Regular and a Special General Meeting of Shareholders to ten percent of the shares outstanding from one-third of the shares outstanding.
(5)
Ratification of the appointment of an Independent Registered Public Accounting Firm
The ratification of the appointment of MSCM LLP, Chartered Accountants, as our independent registered public accounting firm for the fiscal year ending June 30, 2011.
There are no cumulative voting rights. Votes cast by proxy or in person at the Meeting will be tabulated by the inspector of election appointed for the Meeting, who will determine whether or not a quorum is present.
Votes Required
Election of Directors
Approve the increase of the authorized capital stock of the Company
Approval of the proposal to increase the capital stock of the Company will require the affirmative vote of a majority of the votes cast. For purposes of this vote, votes who abstain will have the same effect as votes against the proposal, and broker non-votes will have no effect on the vote on the proposal.
(3)
Approve the Amended and Restated 2006 Stock Option Plan
(4)
Approve change of quorum for Regular and Special Shareholder Meetings
(5)
·
FORvoted in the election of persons put forth in this proxy to serve as directors of the Company;
·
FOR the approval to increase the authorized capital stock of the Company;
·
FOR the approval of the amendment to the Company’s Amended and Restated 2006 Stock Option Plan that increases the number of options for common shares of the Company authorized to be issued;
·
FOR the approval of a change to the Company’s Amended & Restated Bylaws reducing the quorum required for both Regular and Special Shareholder Meetings to ten percent from one-third of the outstanding capital stock of the Company;
·
FOR the ratification of the appointment of MSCM LLP, Chartered Accountants, as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2011; and
·
with respect to any other matter that may properly be brought before the Annual and Special Meeting in accordance with the judgment of the person or persons voting. We do not expect that any matter other than the matters described in this proxy statement to be brought before the Annual and Special Meeting.
· | FOR the election of persons put forth in this proxy to serve as directors of the Company; |
· | FOR the approval of the amendment to the Company’s Amended and Restated 2006 Stock Option Plan that increases the number of options for common shares of the Company authorized to be issued; |
· | FOR the approval of the re-pricing of certain existing stock options; |
· | FOR the ratification of the appointment of MSCM LLP, Chartered Accountants, as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2012; and |
· | with respect to any other matter that may properly be brought before the Meeting in accordance with the judgment of the person or persons voting. We do not expect that any matter other than the matters described in this proxy statement to be brought before the Meeting. |
·
Delivering to our Chairman and Chief Executive Officer, prior to the annual and special meeting, a written notice of revocation bearing a later date or time than the proxy;
·
Timely delivery of a valid, later dated proxy; or
·
Attending this Annual and Special Meeting and voting in person.
voted:
· | by delivering to our Chairman and Chief Executive Officer, prior to the Meeting, a written notice of revocation bearing a later date or time than the proxy; |
· | by timely delivery of a valid, later dated proxy; or |
· | by attending the Meeting and voting in person. |
behalf at the address on file with Empire Stock Transfer Inc.
- ELECTION OF DIRECTORS
Name | Age | Position |
|
|
|
J.A. Kirk McKinnon |
| Chairman, Chief Executive Officer |
|
|
|
Richard E. Schler |
| Vice-President, Chief Financial Officer and Director |
Craig Scherba |
| Vice President, Exploration and Director |
John Sanderson |
| Vice Chairman and Director |
|
|
|
V. Peter Harder |
| Director |
Quentin Yarie |
| Director |
The Board does not have a charter governing its nominating procedures, nor has it adopted a policy regarding the consideration of candidates to serve as directors.
Julie A. Lee Harrs, B.A. (Hons. Economics), LL.B (Toronto, Canada)
Ms. Lee Harrs was appointed President and Chief Operating Officer and a director of the Company on September 29, 2009. Ms. Lee Harrs was Senior Vice President, General Counsel and Corporate Secretary of Sherritt International Corporation (TSX: S) from April 2006 to October 2008 and Associate General Counsel and Assistant Secretary of Inco Limited (now part of NYSE: VALE) from March 2000 through January 2005. Before joining these mining companies, Ms. Lee Harrs was a corporate lawyer with Blakes, a national law firm in Canada. Ms. Lee Harrs received her B.A. (Honours, Economics) from McGill University in Montreal, Canada and her LL.B. from the University of Ottawa in Ottawa, Canada. Ms. Lee Harrs’ qualifications to serve as a director of the Company include her many years of senior management and legal experience.
TSX-VTSX Venture Exchange headquartered in Toronto, Canada. Before joining these companies, Mr. Schler held various senior management positions with noted corporations. He also has over 25 years of experience in the manufacturing sector. Mr. Schler is very experienced in financial management and business operations. Together with Mr. McKinn on,McKinnon, they have been very successful in raising funds in the capital markets. Mr. Schler’s qualifications to serve as a director of the Company include his many years of financial management and business operations experience.Craig Scherba, P.Geol. (Calgary, Canada)Mr. Scherba was appointed Vice President, Exploration and a director of the Company on January 1, 2010.Mr. Scherba has been a professional geologist with Taiga Consultants Ltd. (“Taiga”), a mining exploration consulting company since March 2003 and has been a managing partner of Taiga since January 2006. Mr. Scherba has been a geologist since 2000 and his expertise includes supervising large Canadian and international exploration operations. Mr. Scherba was an integral member of the exploration team that developed Nevsun Resources’ high grade gold, copper and zinc Bisha project in Eritrea. Mr. Scherba served as the Company's Country and Exploration Manager for the Green Giant Vanadium Project in Madagascar during its initial exploration stage. Mr. Scherba’s qualifications to serve as a director of the Company include his many years of senior management experience in the mining indu stry.Frasers”FMC”), a Canadian national law firm in Canada.firm. Prior to joining Frasers,FMC, Mr. Harder was a long-serving Deputy Minister in the Government of Canada. First appointed a Deputy Minister in 1991, he served as the most senior public servant in a number of federal departments including Treasury Board, Solicitor General, Citizenship and Immigration, Industry and Foreign Affairs and International Trade. At Foreign Affairs, Mr. Harder assumed the responsibilities of the Personal Representative of the Prime Minister to three G8 Summits (Sea Island, Gleneagles and St. Petersburg). Mr. Harder served as Co-Chair of the Canada China Strategic Working Group.
Mr. Harder’s qualifications to serve as a director of the Company include his many years of experience as a director and senior policy advisor.
Richard Quensel (Mont-St-Hilaire,
serve as a director of the Company include his many years of senior management experience in the mining industry.
the Audit Committee.
•
•
•
•
Company;
•
•
The following directors serve on the audit committee: John Sanderson, Richard Schler and Quentin Yarie. Richard Schler is not independent under the independence standards of NYSE Amex applicable to audit committee members. Mr. Schler qualifies as an audit committee financial expert within the meaning of the applicable SEC rules and regulations., although he is not independent.
10
·
Strategic Planning Process: given the Company's size, the strategic plan is elaborated directly by Management, with input from and assistance of the Board;
·
Managing Risk: the Board directly oversees most aspects of the business of the Company and thus, does not require the elaboration of “systems” or the creation of committees, other than the Audit Committee, Capital Projects Committee, Disclosure Policy Committee and Special Advisory Committee of the Board, to effectively monitor and manage the principal risks of all aspects of the business of the Company;
·
Appointing, Training, and Monitoring Senior Management: no elaborate system of selection, training and assessment of Management has been established, given the operations and size of the Company; however, the Board closely monitors Management's performance, which is measured against the overall strategic plan, through reports by and regular meetings with Management;
·
Communication Policy: it is and has always been the unwritten policy of the Board to communicate effectively with its shareholders, other stakeholders, and the public generally through statutory filings and mailings, as well as news releases; the shareholders are also given an opportunity to make comments or suggestions at shareholder meetings; these comments and suggestions are then factored into the Board's decisions; and
·
Ensuring the integrity of the Company's Internal Control and Management Information System: given the involvement of the Board in operations, the reports from and the meetings with Management, the Board can effectively track and monitor the implementation of approved strategies.
· | Strategic Planning Process: given the Company's size, the strategic plan is elaborated directly by Management, with input from and assistance of the Board; |
· | Managing Risk: the Board directly oversees most aspects of the business of the Company and thus, does not require the elaboration of “systems” or the creation of committees, other than the Audit Committee, Capital Projects Committee, Disclosure Policy Committee and Special Advisory Committee of the Board, to effectively monitor and manage the principal risks of all aspects of the business of the Company; |
· | Appointing, Training, and Monitoring Senior Management: no elaborate system of selection, training and assessment of Management has been established, given the operations and size of the Company; however, the Board closely monitors Management's performance, which is measured against the overall strategic plan, through reports by and regular meetings with Management; |
· | Communication Policy: it is and has always been the unwritten policy of the Board to communicate effectively with its shareholders, other stakeholders, and the public generally through statutory filings and mailings, as well as news releases; the shareholders are also given an opportunity to make comments or suggestions at shareholder meetings; these comments and suggestions are then factored into the Board's decisions; and |
· | Ensuring the integrity of the Company's Internal Control and Management Information System: given the involvement of the Board in operations, the reports from and the meetings with Management, the Board can effectively track and monitor the implementation of approved strategies. |
A Disclosure Committee has been established and tasked with the responsibility for all regulatory disclosure requirements, overseeing all of the Corporation's disclosure practices and developing and implementing this Disclosure Policy. This committee consists of the Chief Executive Officer, President, Chief Financial Officer, and the Vice President of Business Development. The majority of the Committee must physically sign off on all disclosure made by the Company with such majority being made up of at least two directors.
The Board remains sensitivecognizant to corporate governance issues and seeks to set up the necessary structures to ensure the effective discharge of its responsibilities without creating additional overhead costs or reducing the return on shareholders' equity. The Board remains committed to ensuring the long-term viability of the Company, as well as the well-being of its employeesconsultants and of the communities in which it operates. The Board has also adopted a policy of permitting individual directors under appropriate circumstances to engage legal, financial or other expert advisors at the Company’s expense.
The Board assesses, on an annual basis, the contribution of the Board as a whole and each of the individual directors, in order to determine whether each is functioning effectively. If prudent, changes are made.
The Company is looking to add a person to the Committee with expertise in mine construction and development.
12
| Annual Compensation | Long Term Compensation | ||||||
|
|
|
| Awards | Payouts | |||
Name & Principal Position | Fiscal Year | Salary | Bonus | Other Annual Compensation | Restricted Stock Award(s) | Securities Underlying Options/ SARs (#) | LTIP Payouts | All Other Compensation |
J.A. Kirk McKinnon, CEO and Director | 2009 | 134,200 | -- | 84,000(1) | -- | -- | -- | Nil |
2010 | 134,178(5) |
| 80,750(3) |
|
|
| 512,469(6) | |
|
|
|
|
|
|
|
|
|
Richard E. Schler, Vice-President, CFO and Director | 2009 | 124,275 | -- | 70,000(5) | -- | -- | -- | Nil |
2010 | 129,953(5) | -- | 76,500(3) | -- | -- | -- | 488,218(6) | |
|
|
|
|
|
|
|
|
|
Julie Lee Harrs, President, COO and Director(2) | 2009 | -- | -- | -- | -- | -- | -- | -- |
2010 | 93,252(5) | -- | 340,000(4) | -- | -- | -- | 429,698(6) |
Annual Compensation | Long Term Compensation | |||||||
Awards | Payouts | |||||||
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Other Annual Compensation ($) | Restricted Stock Award(s) | Securities Underlying Options/ SARs (#) | LTIP Payouts | All Other Compensation ($) |
J.A. Kirk McKinnon, CEO and Director | 2011 | 261,810 (1) | -- | -- | -- | -- | -- | -- |
2010 | 134,178 (4) | -- | 80,750 (2) | -- | -- | -- | 512,469 (6) | |
Richard E. Schler, Vice-President, CFO and Director | 2011 | 189,490 (1) | -- | -- | -- | -- | -- | -- |
2010 | 129,953 (4) | -- | 76,500 (2) | -- | -- | -- | 488,218 (6) | |
Julie Lee Harrs, Former President, COO and Director (2) | 2011 | 202,126 (1) | -- | -- | -- | -- | -- | -- |
2010 | 93,252 (5) | -- | 340,000 (3) | -- | -- | -- | 429,698 (6) |
Consulting fees paid and accrued for the fiscal year ended June 30, 2011.
(3) Represented by sharesShares valued at $0.17 per share based on quoted market price issued to these individuals and/or to companies controlled by them.
(4) Represented by shares
(5) Represent consulting
13
The outstanding
| |||||||||
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding Equity Awards at Fiscal Year-End | |||||||||
Option Awards | Stock Awards | ||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that have not Vested (#) | Market Value of Shares or Units of Stock that have not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not Vested (#) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not Vested ($) |
J.A. Kirk McKinnon, NEO | 280,000 425,000 720,000 975,000 225,000 1,150,000 | -- | -- | 0.15 0.15 0.15 0.15 0.352 0.395 | July 28, 2011 Nov. 26, 2011 March 4, 2012 July 11, 2012 Sep 2, 2013 May 11, 2014 | -- | -- | -- | -- |
Richard E. Schler, NEO | 690,000 875,000 200,000 1,100,000 | -- | -- | 0.15 0.15 0.352 0.395 | March 4, 2012 July 11, 2012 Sep 2, 2013 May 11, 2014 | -- | -- | -- | -- |
Julie Lee Harrs (former NEO) | 1,100,000 | -- | -- | 0.395 | May 11, 2014 | -- | -- | -- | -- |
On October 20, 2010,
$0.572.
14
| Number of Shares | Weighted average exercise price ($) | |
Outstanding, June 30, 2007 | 4,935,000 |
| 0.63 |
Granted | 4,020,000 |
| 0.50 |
Outstanding, June 30, 2008 | 8,955,000 |
| 0.63 |
Cancelled | (1,325,000) |
| 0.66 |
Outstanding June 30, 2009 | 7,630,000 |
| 0.15 |
Granted | 8,505,000 |
| 0.40 |
Exercised | (2,000,000) |
| 0.15 |
Cancelled | (515,000) |
| 0.42 |
Outstanding, June 30, 2010 | 13,620,000 |
| 0.30 |
Number of Shares | Weighted average exercise price ($) | ||
Outstanding, June 30, 2009 | 7,630,000 | 0.15 | |
Granted | 8,505,000 | 0.40 | |
Exercised | (2,000,000) | 0.15 | |
Expired / Cancelled | (515,000) | 0.42 | |
Outstanding June 30, 2010 | 13,620,000 | 0.30 | |
Granted | 1,100,000 | 0.25 | |
Expired / Cancelled | (590,000) | 0.57 | |
Outstanding, June 30, 2011 | 14,130,000 | 0.29 |
Exercise price | Outstanding | Exercisable | Outstanding | Exercisable | ||||||
Number of shares | Weighted average remaining life (years) | Weighted average exercise price | Number of shares | Weighted average exercise price | Number of shares | Weighted average remaining life (years) | Weighted average exercise price | Number of shares | Weighted average exercise price (US$) | |
$0.15 | 365,000 | 1.08 | $0.15 | 365,000 | $0.15 | 365,000 | 0.08 | $0.15 | 365,000 | $0.15 |
$0.15 | 650,000 | 1.41 | $0.15 | 650,000 | $0.15 | 650,000 | 0.41 | $0.15 | 650,000 | $0.15 |
$0.15 | 1,920,000 | 1.65 | $0.15 | 1,920,000 | $0.15 | 1,920,000 | 0.68 | $0.15 | 1,920,000 | $0.15 |
$0.15 | 2,695,000 | 2.03 | $0.15 | 2,695,000 | $0.15 | 2,695,000 | 1.03 | $0.15 | 2,695,000 | $0.15 |
$0.35 | 750,000 | 3.18 | $0.35 | 750,000 | $0.35 | 750,000 | 2.18 | $0.35 | 750,000 | $0.35 |
$0.57 | 590,000 | 3.33 | $0.57 | 590,000 | $0.57 | |||||
$0.39 | 6,650,000 | 3.87 | $0.40 | 6,650,000 | $0.40 | |||||
$0.40 | 6,650,000 | 2.87 | $0.40 | 6,650,000 | $0.40 | |||||
$0.25 | 1,100,000 | 3.31 | $0.25 | 1,100,000 | 0.25 | |||||
Total/Average | 13,620,000 |
| $0.30 | 13,620,000 | $0.30 | 14,130,000 | 2.11 | $0.28 | 14,130,000 | $0.28 |
On April 21, 2009,
· | On July 1, 2011, 5,175,000 stock options were issued at an exercise price of US $0.30 for a term of five years. |
· | On July 29, 2011, 365,000 stock options expired originally granted at an exercise price of US $0.15. |
· | On October 24, 2011, 1,850,000 stock options were issued at an exercise price of US $0.20 for a term of five years. |
· | A total of 1,600,000 stock options have been cancelled. Of this total, 200,000 stock options had an exercise price of US $0.15, 300,000 stock options had an exercise price of US $0.395 and 1,100,000 stock options had an exercise price of US $0.25. |
Long-Term Incentive Plan Awards Table
There are no Long-Term Incentive Plans in place atthe date of this time.
Proxy Statement.
Employment Agreements
Currently, the Company does not have an employment or consulting agreement with Messrs. McKinnon and Schler and Ms. Lee Harrs, but the Company has agreed to pay them a monthly stipend. Mr. McKinnon receives CDN$15,000 monthly, Mr. Schler receives CDN$14,000 monthly and Ms. Lee Harrs receives CDN$11,000 per month. In consultation with legal counsel, the Company intends to execute consulting arrangements with all key personnel.
15
Name of Director | Fees Earned or Paid in Cash ($) | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Nonqualified Deferred Compensation Earnings | All other Compensa-tion |
|
John Sanderson, Director(1) | -- | 12,750 | 162,055 | -- | -- | -- | 174,805 |
Quentin Yarie, Director(2) | -- | 17,000 | 196,341 | -- | -- | -- | 213,341 |
Peter Harder, Director(3) | --- | 17,000 | 179,416 | -- | -- | -- | 196,426 |
Craig Scherba, Director(4) | -- | -- | 168,004 | -- | -- | -- | 168,004 |
2011.
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All other Compensation ($) | Total ($) |
Craig Scherba, Director | 71,048 | -- | -- | -- | -- | -- | 71,048 |
John Sanderson, Director | -- | -- | -- | -- | -- | -- | -- |
Quentin Yarie, Director | -- | -- | -- | -- | -- | -- | -- |
Peter Harder, Director | -- | -- | -- | -- | -- | -- | -- |
Richard Quesnel, (former Director) (1) | -- | -- | 231,800 | -- | -- | -- | 231,800 |
(2) Quentin Yarie was awarded 25,000 shares valued at $0.68 on December 31, 2009. In addition he was awarded the following stock options of which the aggregate value attributed to them using the Black-Scholes option valuation method is noted in the table above: 50,000 stock options on September 2, 2009 at $0.35 per share, 30,000 stock options on October 27, 2009 at $0.57 per share, and 250,000 stock options on May 11, 2010 at $0.395 per share.
(3) Peter Harder was awarded 25,000 shares valued at $0.68 on December 31, 2009. In addition he was awarded the following stock options of which the aggregate value attributed to them using the Black-Scholes option valuation method is noted in the table above: 25,000 stock options on October 27, 2009 at $0.57 per share, and 200,000 stock options on May 11, 2010 at $0.395 per share.
(4) Craig Scherba was awarded the following stock options of which the aggregate value attributed to them using the Black-Scholes option valuation method is noted in the table above: 50,000 stock options on September 2, 2009 at $0.35 per share, 25,000 stock options on October 27, 2009 at $0.57 per share, and 200,000 stock options on May 11, 2010 at $0.395 per share. While Mr. Scherba did not receive any compensation from the Company other than the above, he is a partner in Taiga Consultants Ltd., which earned certain fees from the Company in the fiscal year ended June 30, 2010 for consulting services provided to the Company.
were subsequently cancelled.
Name and Address of Beneficial Owner | Number of Common Shares Beneficially Owned | Percentage of Outstanding Common Shares Beneficially Owned(1) |
Consolidated Thompson Iron Mines Limited 1155 Université Street, Suite 508 Montréal, Québec H3B 2A7 | 13,333,334 | 6.36% |
Dundee Corporation 1 Adelaide Street East, Suite 2800 Toronto, Ontario M5C 2V9 | 11,896,450 | 5.67% |
J.A. Kirk McKinnon, Chairman, CEO & Director 46 Ferndale Crescent Brampton, Ontario, Canada L6W 1E9(2)(9) | 9,850,000 | 4.70% |
Richard E. Schler, Vice President, CFO & Director 80 Greybeaver Trail, Toronto, Ontario, Canada M1C 4N5(3)(9) | 7,990,000 | 3.81% |
John Sanderson, Director 1721 – 27th Street West Vancouver, BC, Canada, V7H 4K9(5) (8) (9) | 625,000 | 0.30% |
Quentin Yarie, Director 520 – 141 Adelaide Street West Toronto, Ontario, Canada M5H 3L5(5) (8) (9) | 925,000 | 0.44% |
Peter Harder, Director 5538 Pattapiece Crescent Manotick, Ontario K4M 1C5(6) (8) (9) | 975,000 | 0.46% |
Craig Scherba, Director 1480 Willowdown Road, Oakville, ON L6L 1X3(7)(9) | 800,000 | 0.38% |
All directors and executive officers as a group (6 persons) (9) | 21,165,000 | 10.09% |
(2) Includesinto 1,000,000 warrantscommon shares and 3,700,000 common shares held in “Badger Resources Inc.”, a related company. These warrants are exercisable until April 26, 2013 at a price of $0.15 per share. Also includes 350,000 common shares and 3,775,000 stock options convertible into 4,225,000 common shares held directly exercisable between $0.15 to $0.40$0.57 per share with expiry dates between July 28, 2011 and May 11, 2014.
July 1, 2016.
July 1, 2016.
(5) Includes 250,000325,000 common shares and 250,000 stock options convertible into 275,000 common shares exercisable between $0.35$0.30 to $0.40$0.57 per share with expiry dates between September 2, 2013 to May 11, 2014.
(6)July 1, 2016.
(7)July 1, 2016.
(8)between September 2, 2013 to July 1, 2016.
(9) Member2014 to July 1, 2016.
(10) Includes 1,100,000 stock options exercisable at $0.25 per share with an expiry dateAudit Committee.
the total of “All directors and executive officers as a group (6 persons)”. (9) Included in the total for “all directors and executive officers as a group” noted above.
17
2011.
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) |
Equity compensation plans approved by security holders | -- | -- | -- |
Equity compensation plans not approved by security holders | 7,630,000 | $0.15 | 1,580,000 |
Plan Category | Number of securities to be issued upon exercise of outstanding options, and warrants | Weighted-average exercise price of outstanding options and warrants | Number of securities remaining available for future under equity compensation plans (excluding securities reflected in column (a) |
Equity compensation plans approved by security holders | -- | -- | -- |
Equity compensation plans not approved by security holders | 7,630,000 | $0.15 | 5,080,000 |
Except as otherwise set forth herein, based solely on review of the copies of such forms furnished to the Company, or written representations that no reports were required, the Company believes that for the fiscal year ended June 30, 2010,2011, beneficial owners and executives complied with Section 16(a) filing requirements applicable to them.
18
APPROVAL TO INCREASE THE AUTHORIZED CAPITAL STOCK OF THE COMPANY
To approve an increase of the Company’s authorized capital stock to 350,000,000 from 185,000,000, of which 340,000,000 will be deemed common shares and the remaining 10,000,000 will be deemed eligible to be divisible into classes, series and types as designated by the Board of Directors.
This increase is being requested in order to allow the Company the ability, if deemed appropriate, to issue shares in connection with equity financings, among other things.
Recommendation of the Board of Directors
The Board recommends a vote FOR the change of the Company’s capital stock to 350,000,000 from 185,000,000.
PROPOSAL 3
- APPROVAL OF AN AMENDMENTAMENDMENTS TO THE 2006 AMENDED AND RESTATED STOCK OPTION PLAN
To approve an amendment to
· | The purpose of the 2006 Plan is to advance the interests of the Company, by providing an additional incentive to attract, retain and motivate highly qualified and competent persons who are key to the Company, including key employees, consultants, independent contractors, Officers and Directors, and upon whose efforts and judgment the success of the Company and its Subsidiaries is largely dependent. |
· | The Board currently administers the 2006 Plan. |
· | There are currently 19,190,000 outstanding stock options (representing approximately 13% of the non-diluted, currently, issued and outstanding common shares of the Company). |
· | The Board, by resolution, will designate an exercise price for stock options as the prior day closing price on a stock exchange to which the Company’s shares trade. To date, the Company has solely used the prior day closing price as quoted on the OTCQB: Bulletin Board. |
· | Notwithstanding the amendment provisions included the 2006 Plan, the following may not be amended without approval of security holders: (a) a reduction in the exercise price or purchase price benefiting an Insider of the issuer; (b) an extension of the term benefiting an insider of the issuer; (c) any amendment to remove or to exceed the insider participation limit; (d) an increase to the maximum number of securities issuable, either as a fixed number or a fixed percentage of the listed issuer's outstanding capital represented by such securities; and (e) amendments to an amending provision within a security based compensation arrangement. |
· | Subject to the policies of the TSX, the Board may amend the 2006 Plan or any option without the consent or approval of the stockholders of the Company. This includes but is not limited to amendments: (a) of a housekeeping or administrative nature; (b) changes to vesting provisions; (c) changes to the termination provisions or terminating an option; (d) changes to terms and conditions of options not held by Insiders of the Company; (e) anti-dilution adjustments provided; and (f) amendments necessary to comply with applicable laws or regulatory requirements. |
· | Stock options may be issued for a period of up to 10 years. |
· | Stock options shall vest in accordance to the vesting schedule determined by the Board. |
· | Stock options are non-transferrable. |
· | Holders of stock options who cease to be associated with the Company without cause will retain their stock options, at the Board’s discretion, for up to one year. |
· | The Board may grant stock appreciation rights in tandem with options that have been or are granted under the 2006 Plan. A stock appreciation right shall entitle the holder to receive in cash, with respect to each share as to which the right is exercised, payment in an amount equal to the excess of the share’s fair market value on the date the right is exercised over its fair market value on the date the right was granted |
The purpose22,000,000”.
this resolution.
22,000,000.
3 - APPROVAL TO CHANGE THE REQUIRED QUORUM FOR BOTH REGULAR AND SPECIAL SHAREHOLDER MEETINGS TO 10% FROM ONE-THIRD OF THE OUTSTANDING SHARESRE-PRICING OF CERTAIN STOCK OPTIONS
To”). These stock options have an exercise price between US$0.30 and US$0.395 per share. They were originally granted in lieu of other forms of compensation. The Board is proposing that the revised exercise price of the existing stock options be based on the five day volume weighted average price on the OTCQB: Bulletin Board based on the day before the Board of Directors approve, a changeby resolution, the stock Option Re-pricing. The Board is required to and will provide notice to the Company’s Amended & Restated Bylaws, Article II - Meetings of Shareholders, Sections 2 & 3 reducingTSX with respect to the required quorum for both a Regular and a Special General Meeting of ShareholdersOption Re-pricing subject to ten percentratification by disinterested shareholders.
Name of Option holder | Number of Options | Exercise Price (US$) | Revised Exercise Price (US$) | Exercise Period |
Kirk McKinnon | 2,050,000 | $0.30 to $0.395 | Note 1 | September 2, 2013 to July 1, 2016 |
Richard Schler | 1,900,000 | $0.30 to $0.395 | Note 1 | September 2, 2013 to July 1, 2016 |
Quentin Yarie | 600,000 | $0.30 to $0.395 | Note 1 | September 2, 2013 to July 1, 2016 |
Peter Harder | 475,000 | $0.30 to $0.395 | Note 1 | May 11, 2014 to July 1, 2016 |
John Sanderson | 375,000 | $0.30 to $0.395 | Note 1 | September 2, 2013 to July 1, 2016 |
Craig Scherba | 600,000 | $0.30 to $0.395 | Note 1 | May 11, 2014 to July 1, 2016 |
Jacob McKinnon | 425,000 | $0.30 to $0.395 | Note 1 | September 2, 2013 to July 1, 2016 |
Total “insiders” as defined in Canadian security regulations (note 2) | 6,425,000 | |||
Brent Nykoliation | 925,000 | $0.30 to $0.395 | Note 1 | September 2, 2013 to July 1, 2016 |
Peter Liabotis | 600,000 | $0.30 to $0.395 | Note 1 | May 11, 2014 to July 1, 2016 |
Joseph Heng | 425,000 | $0.30 to $0.395 | Note 1 | September 2, 2013 to July 1, 2016 |
Julie Lee Harrs | 1,700,000 | $0.30 to $0.395 | Note 1 | May 11, 2014 to July 1, 2016 |
Total “insiders” as defined in United States security regulations (note 2) | 10,075,000 | |||
Certain other Consultants who are not defined as insiders | 2,300,000 | $0.30 to $0.395 | Note 1 | May 11, 2014 to July 1, 2016 |
Total | 12,375,000 |
existing stock options shall be based on the five day volume weighted average price on the OTCQB: Bulletin Board based on the day before the Board of Directors approve, by resolution, the stock Option Re-pricing.
this resolution.
Stock Options.
19
2011.
Meeting.
2012.
- Year ended June 30, 2010
2011
$50,925 CAD.
$24,690 CAD.
$nil.
The
·
any of our directors or officers;
·
any person proposed as a nominee for election as a director;
·
any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our outstanding shares of common stock;
·
any of our promoters;
·
any relative or spouse of any of the foregoing persons who has the same house as such person.
·
The following directors were independent under the independence standards of NYSE Amex during the past fiscal year: Richard Quesnel, Quentin Yarie, Peter Harder and John Sanderson. The following directors serve on the audit committee: John Sanderson, Richard Schler and Quentin Yarie. Of this list Richard Schler is not independent under the independence standards of NYSE Amex applicable to audit committee members.
2011. Any stockholder of the Company may obtain without charge additional copies of the Company’s Annual Report on Form 10-K for the You may write to our Secretary at one of the Company’s addresses as reported above to deliver the notices discussed above and to request a copy of the relevant By-law provisions regarding the requirements for making stockholder proposals and nominations of directors.2010.20102011 fiscal year, as filed with the Securities and Exchange Commission, by writing to:orthanAugustthan August 1, 2011,2012, and must otherwise comply with Rule 14a-8. While the Board will consider stockholder proposals, we reserve the right to omit from our proxy statement stockholder proposals that we are not required to include under the Exchange Act, including under Rule 14a-8.
21
Proposal 1 | For All | Withhold All | For All Except |
The election of the following individuals as Directors of the Company, each to serve a term of one year or until his or her successor is duly elected or appointed. ·J.A. Kirk McKinnon ·Richard E. Schler ·
·V. Peter Harder ·
·Craig Scherba | [_____] | [_____] | [_____] |
Proposal 2 | For | Against | Abstain |
|
|
|
|
|
|
|
|
|
|
|
|
To approve an amendment to the Company’s Amended and Restated 2006 Stock Option Plan to increase the authorized number of options for common shares of the Company authorized to be issued to | [_____] | [_____] | [_____] |
Proposal 3 | For | Against | Abstain |
To approve the re-pricing of various existing Stock Options | [_____] | [_____] | [_____] |
Proposal 4 | For | Against | Abstain |
|
|
|
|
|
|
|
|
To ratify the appointment of MSCM LLP, Chartered Accountants, as the Company’s independent registered public accounting firm for the fiscal year ending June 30, | [_____] | [_____] | [_____] |
Stockholders[ ]
Name of Stockholder (print exactly as it appears hereon)
Name of Stockholder (print exactly as it appears hereon)
Number of Shares Held
Date
EXHIBIT A
AMENDED AND RESTATED 2006 STOCK OPTION PLAN OF ENERGIZER RESOURCES INC.
(as of October, 2010)
1.
Purpose.
The purpose of this Plan is to advance the interests of Energizer Resources Inc, a Minnesota corporation (the “Company”), by providing an additional incentive to attract, retain and motivate highly qualified and competent persons who are key to the Company, including key employees, consultants, independent contractors, Officers and Directors, and upon whose efforts and judgment the success of the Company and its Subsidiaries is largely dependent, by authorizing the grant of options to purchase Common Stock of the Company and other related benefits to persons who are eligible to participate hereunder, thereby encouraging stock ownership in the Company by such persons, all upon and subject to the terms and conditions of this Plan.
2.
Definitions.
As used herein, the following terms shall have the meanings indicated:
(a)
“Board” shall mean the Board of Directors of the Company.
(b)
“Cause” shall mean any of the following:
(i)
a determination by the Company that there has been a willful, reckless or grossly negligent failure by the Optionee to perform his or her duties as an employee of the Company;
(ii)
a determination by the Company that there has been a willful breach by the Optionee of any of the material terms or provisions of any employment agreement between such Optionee and the Company;
(iii)
any conduct by the Optionee that either results in his or her conviction of a felony under the laws of the United States of America or any state thereof, or of an equivalent crime under the laws of any other jurisdiction;
(iv)
a determination by the Company that the Optionee has committed an act or acts involving fraud, embezzlement, misappropriation, theft, breach of fiduciary duty or material dishonesty against the Company, its properties or personnel;
(v)
any act by the Optionee that the Company determines to be in willful or wanton disregard of the Company’s best interests, or which results, or is intended to result, directly or indirectly, in improper gain or personal enrichment of the Optionee at the expense of the Company;
(vi)
a determination by the Company that there has been a willful, reckless or grossly negligent failure by the Optionee to comply with any rules, regulations, policies or procedures of the Company, or that the Optionee has engaged in any act, behavior or conduct demonstrating a deliberate and material violation or disregard of standards of behavior that the Company has a right to expect of its employees; or
(vii)
if the Optionee, while employed by the Company and for two years thereafter, violates a confidentiality and/or noncompete agreement with the Company, or fails to safeguard, divulges, communicates, uses to the detriment of the Company or for the benefit of any person or persons, or misuses in any way, any Confidential Information, provided however, that, if the Optionee has entered into a written employment agreement with the Company which remains effective and which expressly provides for a termination of such Optionee’s employment for “cause,” the term “Cause” as used herein shall have the meaning as set forth in the Optionee’s employment agreement in lieu of the definition of “Cause” set forth in this Section 2(b).
(c)
“Change of Control” shall mean the acquisition by any person or group (as that term is defined in the Exchange Act, and the rules promulgated pursuant to that act) in a single transaction or a series of transactions of thirty percent (30%) or more in voting power of the outstanding stock of the Company and a change of the composition of the Board of Directors so that, within two years after the acquisition took place, a majority of the members of the Board of Directors of the Company, or of any corporation with which the Company may be consolidated or merged, are persons who were not Directors or Officers of the Company or one of its Subsidiaries immediately prior to the acquisition, or to the first of a series of transactions which resulted in the acquisition of thirty percent (30%) or more in voting power of the outstanding stock of the Company.
(d)
“Code” shall mean the Internal Revenue Code of 1986, as amended.
(e)
“Committee” shall mean the stock option committee appointed by the Board or, if not appointed, the Board.
(f)
“Common Stock” shall mean the Company’s Common Stock, par value $0.001 per share.
(g)
“Consultant” means any person or corporation engaged to provide ongoing management or consulting services for the Company or any employee of such person or corporation, other than a Director or an Employee.
(h)
“Director” shall mean a member of the Board and Management Company Employees of the Company.
(i)
“Employee” shall mean any person, including Officers, Directors, Consultants and independent contractors, employed by the Company or any parent or Subsidiary of the Company within the meaning of Section 3401(c) of the regulations promulgated thereunder.
(j)
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
(k)
“Fair Market Value” of a Share on any date of reference shall be the Closing Price of a share of Common Stock on the business day immediately preceding such date, unless the Committee in its sole discretion shall determine otherwise in a fair and uniform manner. For this purpose, the “Closing Price” of the Common Stock on any business day shall be (i) if the Common Stock is listed or admitted for trading on any United States national securities exchange, or if actual transactions are otherwise reported on a consolidated transaction reporting system, the last reported sale price of the Common Stock on such exchange or reporting system, as reported in any newspaper of general circulation, (ii) if the common stock is listed for trading on the TSX, the last reported sale price of the common stock on such exchange, as reported in any newspaper of general circulation, (iii) if the Common Stock is quot ed on The Nasdaq Stock Market (“Nasdaq”), or any similar system of automated dissemination of quotations of securities prices in common use, the mean between the closing high bid and low asked quotations for such day of the Common Stock on such system, or (iv) if neither clause (i), (ii) nor (iii) is applicable, the mean between the high bid and low asked quotations for the Common Stock as reported by the National Quotation Bureau Incorporated if at least two securities dealers have inserted both bid and asked quotations for the Common Stock on at least five of the 10 preceding days. If the information set forth in clauses (i) through (iii) above is unavailable or inapplicable to the Company (e.g., if the Company’s Common Stock is not then publicly traded or quoted), then the “Fair Market Value” of a Share shall be the fair market value (i.e., the price at which a willing seller would sell a Share to a willing buyer when neither is acting under compulsion and when both have rea sonable knowledge of all relevant facts) of a share of the Common Stock on the business day immediately preceding such date as the Committee in its sole and absolute discretion shall determine in a fair and uniform manner.
(l)
“Incentive Stock Option” shall mean an incentive stock option as defined in Section 422 of the Code.
(m)
“Insider” means (i) a director or senior officer of the Company, (ii) a director or senior officer of a Company that is an Insider or subsidiary of the Company, (iii) a person that beneficially owns or controls, directly, or indirectly, voting shares carrying more than 10% of the voting rights attached to all outstanding voting shares of the Company, or the Company itself if it holds any of its own securities.
(n)
“Management Company Employee” means an individual employed by a person providing management services to the Company, which services are required for the ongoing successful operations of the business enterprise of the Company, but excluding a person engaged in Investor Relations Activities (as such term is defined in Policy 1.1 of the TSX Manual.)
(o)
“Non-Statutory Stock Option” or “Non-qualified Stock Option” shall mean an Option which is not an Incentive Stock Option.
(p)
“Officer” shall mean the Company’s chairman, president, principal financial officer, principal accounting officer (or, if there is no such accounting officer, the controller), any vice-president of the Company in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the Company. Officers of Subsidiaries shall be deemed Officers of the Company if they perform such policy-making functions for the Company. As used in this paragraph, the phrase “policy-making function” does not include policy-making functions that are not significant. Unless specified otherwise in a resolution by the Board, an “executive officer” pursuant to Item 401(b) of Regulation S-K (17 C.F.R. § 229.401(b)) shall be only such person designated as an “Officer” pursuant to the foregoing provisions of this paragraph.
(q)
“Option” (when capitalized) shall mean any stock option granted under this Plan.
(r)
“Optioned Shares” means the Shares which may be acquired on exercise of an Option.
(s)
“Optionee” shall mean a person to whom an Option is granted under this Plan or any person who succeeds to the rights of such person under this Plan by reason of the death of such person.
(t)
“Plan” shall mean this 2009 Stock Option Plan of the Company, which Plan shall be effective as of October 31, 2010 and continues the Company's pre-existing Amended and Restated 2006 Stock Option Plan.
(u)
“Share” or “Shares” shall mean a share or shares, as the case may be, of the Common Stock, as adjusted in accordance with Section 10 of this Plan.
(v)
“Subsidiary” shall mean any corporation (other than the Company) in any unbroken chain of corporations beginning with the Company if, at the time of the granting of the Option, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50 percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
(w)
“TSX” means the TSX Venture Exchange or any successor thereto, provided that if the Shares are or become listed on a senior stock exchange, then reference to “TSX” shall be a reference to such senior exchange.
(x)
“TSX Manual” means the Corporate Finance Manual of the TSX Venture Exchange or, if the Company graduates to a senior exchange, the Toronto Stock Exchange Company Manual, as such manuals may be updated from time to time.
3.
Shares and Options.
Subject to adjustment in accordance with Section 10 hereof, the Company may issue up to twenty two million (22,000,000) Options to acquire Shares held in the Company’s treasury or from authorized and unissued Shares through the exercise of Options issued pursuant to the provisions of this Plan. If any Option granted under this Plan shall terminate, expire, or be canceled, forfeited or surrendered as to any Shares, the Shares relating to such lapsed Option shall be available for issuance pursuant to new Options subsequently granted under this Plan. Upon the grant of any Option hereunder, the authorized and unissued Shares to which such Option relates shall be reserved for issuance to permit exercise under this Plan. Subject to the provisions of Section 14 hereof, an Option granted hereunder shall be either an Incentive Stock Option or a Non-Statutory Stock Option as determined by the Committee at the time of grant of such Option and shall clearly state whether it is an Incentive Stock Option or Non-Statutory Stock Option. All Incentive Stock Options shall be granted within 10 years from the effective date of this Plan.
4.
Limitations.
Options otherwise qualifying as Incentive Stock Options hereunder will not be treated as Incentive Stock Options to the extent that the aggregate Fair Market Value (determined at the time the Option is granted) of the Shares, with respect to which Options meeting the requirements of Code Section 422(b) are exercisable for the first time by any individual during any calendar year (under all stock option or similar plans of the Company and any Subsidiary), exceeds U.S. $100,000.
5.
Conditions for Grant of Options.
(a)
Each Option shall be evidenced by an option agreement that may contain any term deemed necessary or desirable by the Committee, provided such terms are not inconsistent with this Plan or any applicable law. Optionees shall be those persons selected by the Committee from the class of all regular Employees of the Company or its Subsidiaries, including Employees, Directors and Officers who are regular employees of the Company, Directors who are not regular employees of the Company, as well as Consultants to the Company. Any person who files with the Committee, in a form satisfactory to the Committee, a written waiver of eligibility to receive any Option under this Plan shall not be eligible to receive any Option under this Plan for the duration of such waiver.
(b)
For so long as the Shares are listed on the TSX, the Company covenants that all Employees, Consultants or Management Company Employees shall be bona fide Employees, Consultants or Management Company Employees as the case may be, of the Company or its Subsidaries.
(c)
In granting Options, the Committee shall take into consideration the contribution the prospective Optionee has made, or is expected to make, to the success of the Company or its Subsidiaries and such other factors as the Committee shall determine. The Committee shall also have the authority to consult with and receive recommendations from Officers and other personnel of the Company and its Subsidiaries with regard to these matters. The Committee may from time to time in granting Options under this Plan prescribe such terms and conditions concerning such Options as it deems appropriate, provided that such terms and conditions are not more favorable to an Optionee than those expressly permitted herein; provided further, however, that to the extent not cancelled pursuant to Section 9(b) hereof, upon a Change in Control, any Options that have not yet vested, may, in the sole discretion of the Committee, vest upon such Change in Control.
(d)
The Options granted to Employees under this Plan shall be in addition to regular salaries, pension, life insurance or other benefits related to their employment with the Company or its Subsidiaries. Neither this Plan nor any Option granted under this Plan shall confer upon any person any right to employment or continuance of employment (or related salary and benefits) by the Company or its Subsidiaries.
(e)
If and for so long as the Shares are listed on the TSX:
(i)
the number of Options granted to Insiders within a 12 month period may not exceed 10% of the number of issued and outstanding Shares, unless the Company has obtained Disinterested Shareholder Approval (as such term is defined in the TSX Manual) for such an issuance.
(ii)
the maximum aggregate number of Shares that may be reserved under the Plan for issuance to any one individual in any 12 month period shall not exceed 5% of the Outstanding Issue at the time of grant; unless the Company has obtained Disinterested Shareholder Approval (as such term is defined in the TSX Manual) for such an issuance.
(iii)
the maximum aggregate number of Shares that may be reserved under the Plan or other share compensation arrangements of the Company for issuance to any one Consultant during any 12 month period shall not exceed 2% of the issued and outstanding Shares at the time of grant;
(iv)
the maximum aggregate number of Shares that may be reserved under the Plan or other share compensation arrangement of the Company for issuance to persons who are employed in investor relations activities (as defined in the TSX Manual) during any 12 month period shall not exceed 2% of the issued and outstanding Shares at the time of grant;
(v)
The Board shall, through the establishment of the appropriate procedures, monitor the trading in the securities of the Company by all Optionees performing Investor Relations Activities.
(f)
Subject to the policies of the TSX, an Option shall vest and may be exercised (in each case to the nearest full Share) during the period for which the option is granted in accordance with a vesting schedule as the Board may determine in its discretion
(g)
Subject to TSX approval, the exercise price per Optioned Share under an Option may be reduced at the discretion of the Board or Committee if:
a.
at least six months has elapsed since the later of the date such Option was granted and the date the exercise price for such Option was last amended; and
b.
disinterested shareholder approval of the shareholders of the Company is obtained for any reduction in the exercise price under an Option held by an Insider of the Company;
provided that if the exercise price is reduced to the then Discounted Market Price (as such term is defined in the TSX Manual), the TSX four month hold period will apply from the date of the amendment and further provided that no such conditions will apply in the case of an adjustment made under subsection 10(a) hereof.)
6.
Exercise Price.
(a)
The exercise price per Share of any Option shall be any price determined by the Committee but in no event shall the exercise price per Share of any Option be less than the Fair Market Value of the Shares underlying such Option on the date such Option is granted and, in the case of an Incentive Stock Option granted to a 10% stockholder, the per Share exercise price will not be less than 110% of the Fair Market Value. Re-granted Options, or Options which are canceled and then re-granted covering such canceled Options, will, for purposes of this Section 6, be deemed to have been granted on the date of the re-granting.
(b)
If and for so long as the Shares are listed on the TSX, “Fair Market Value” must not be less than the Discounted Market Price (as such term is defined in Policy 1.1 of the TSX Manual) and must be, at a minimum, CDN $0.10 per incentive stock option.
7.
Deemed Exercise of Options.
(a)
An Option shall be deemed exercised when (i) the Company has received written notice of such exercise in accordance with the terms of the Option, (ii) full payment of the aggregate option price of the Shares as to which the Option is exercised has been made, (iii) the Optionee has agreed to be bound by the terms, provisions and conditions of any applicable stockholders’ agreement, and (iv) arrangements that are satisfactory to the Committee in its sole discretion have been made for the Optionee’s payment to the Company of the amount that is necessary for the Company or the Subsidiary employing the Optionee to withhold in accordance with applicable Federal, Provincial or state tax withholding requirements. Unless further limited by the Committee in any Option, the exercise price of any Shares purchased pursuant to the exercise of such Option shall be paid in cash, by certified or official bank check or by money order.
(b)
No Optionee shall be deemed to be a holder of any Shares subject to an Option unless and until a stock certificate or certificates for such Shares are issued to such person(s) under the terms of this Plan. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date such stock certificate is issued, except as expressly provided in Section 10 hereof.
8.
Exercise of Options.
Any Option shall become exercisable in such amounts, at such intervals, upon such events or occurrences and upon such other terms and conditions as shall be provided in an individual Option agreement evidencing such Option, except as otherwise provided in Section 5(c) or this Section 8.
(a)
The expiration date(s) of an Option shall be determined by the Committee at the time of grant, but in no event shall an Option be exercisable after the expiration of 10 years from the date of grant of the Option.
(b)
Unless otherwise expressly provided in any Option as approved by the Committee, notwithstanding the exercise schedule set forth in any Option, each outstanding Option, may, in the sole discretion of the Committee, become fully exercisable upon the date of the occurrence of any Change of Control, but, unless otherwise expressly provided in any Option, no earlier than six months after the date of grant, and if and only if Optionee is in the employ of the Company on such date.
(c)
The Committee may in its sole discretion accelerate the date on which any Option may be exercised and may accelerate the vesting of any Shares subject to any Option or previously acquired by the exercise of any Option.
9.
Termination of Option Period.
(a)
Unless otherwise expressly provided in any Option, the unexercised portion of any Option shall automatically and without notice immediately terminate and become forfeited, null and void at the time of the earliest to occur of the following:
(i)
three months after the date on which the Optionee’s employment is terminated for any reason other than by reason of (a) Cause, (b) the termination of the Optionee’s employment with the Company by such Optionee following less than 60 days’ prior written notice to the Company of such termination (an “Improper Termination”), (c) a mental or physical disability (within the meaning of Section 22(e) of the Code) as determined by a medical doctor satisfactory to the Committee, or (d) death;
(ii)
immediately upon (a) the termination by the Company of the Optionee’s employment for Cause, or (b) an Improper Termination;
(iii)
one year after the date on which the Optionee’s employment is terminated by reason of a mental or physical disability (within the meaning of Code Section 22(e)) as determined by a medical doctor satisfactory to the Committee or the later of three months after the date on which the Optionee shall die if such death shall occur during the one-year period specified herein; or
(iv)
the later of (a) one year after the date of termination of the Optionee’s employment by reason of death of the employee, or (b) three months after the date on which the Optionee shall die if such death shall occur during the one year period specified in Subsection 9(a)(iii) hereof.
(b)
The Committee in its sole discretion may, by giving written notice (“cancellation notice”), cancel effective upon the date of the consummation of any corporate transaction described in Subsection 10(d) hereof, any Option that remains unexercised on such date. Such cancellation notice shall be given a reasonable period of time prior to the proposed date of such cancellation and may be given either before or after approval of such corporate transaction.
(c)
Upon termination of Optionee’s employment as described in this Section 9, or otherwise, any Option (or portion thereof) not previously vested or not yet exercisable pursuant to Section 8 of this Plan shall be immediately canceled.
10.
Adjustment of Shares.
(a)
If at any time while this Plan is in effect or unexercised Options are outstanding, there shall be any increase or decrease in the number of issued and outstanding Shares through the declaration of a stock dividend or through any recapitalization resulting in a stock split, combination or exchange of Shares (other than any such exchange or issuance of Shares through which Shares are issued to effect an acquisition of another business or entity or the Company’s purchase of Shares to exercise a “call” purchase option), then and in such event:
(i)
appropriate adjustment shall be made in the maximum number of Shares available for grant under this Plan, so that the same percentage of the Company’s issued and outstanding Shares shall continue to be subject to being so optioned;
(ii)
appropriate adjustment shall be made in the number of Shares and the exercise price per Share thereof then subject to any outstanding Option, so that the same percentage of the Company’s issued and outstanding Shares shall remain subject to purchase at the same aggregate exercise price; and
(iii)
such adjustments shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive.
(b)
Subject to the specific terms of any Option, the Committee may change the terms of Options outstanding under this Plan, with respect to the option price or the number of Shares subject to the Options, or both, when, in the Committee’s sole discretion, such adjustments become appropriate by reason of a corporate transaction described in Subsection 10(d) hereof, or otherwise.
(c)
Except as otherwise expressly provided herein, the issuance by the Company of shares of its capital stock of any class, or securities convertible into or exchangeable for shares of its capital stock of any class, either in connection with a direct or underwritten sale, or upon the exercise of rights or warrants to subscribe therefor or purchase such Shares, or upon conversion of obligations of the Company into such Shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of or exercise price of Shares then subject to outstanding Options granted under this Plan.
(d)
Without limiting the generality of the foregoing, the existence of outstanding Options granted under this Plan shall not affect in any manner the right or power of the Company to make, authorize or consummate
(i)
any or all adjustments, reclassifications, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business;
(ii)
any merger or consolidation of the Company or to which the Company is a party;
(iii)
any issuance by the Company of debt securities, or preferred or preference stock that would rank senior to or above the Shares subject to outstanding Options;
(iv)
any purchase or issuance by the Company of Shares or other classes of common stock or common equity securities;
(v)
the dissolution or liquidation of the Company;
(vi)
any sale, transfer, encumbrance, pledge or assignment of all or any part of the assets or business of the Company; or
(vii)
any other corporate act or proceeding, whether of a similar character or otherwise.
(e)
The Optionee shall receive written notice within a reasonable time prior to the consummation of such action advising the Optionee of any of the foregoing. The Committee may, in the exercise of its sole discretion, in such instances declare that any Option shall terminate as of a date fixed by the Board and give each Optionee the right to exercise his or her Option.
11.
Transferability.
No Option or stock appreciation right granted hereunder shall be sold, pledged, assigned, hypothecated, disposed or otherwise transferred by the Optionee other than by will or the laws of descent and distribution and no Option or stock appreciation right shall be exercisable during the Optionee’s lifetime by any person other than the Optionee.
12.
Issuance of Shares.
As a condition of any sale or issuance of Shares upon exercise of any Option, the Committee may require such agreements or undertakings, if any, as the Committee may deem necessary or advisable to assure compliance with any such law or regulation including, but not limited to, the following:
(i)
a representation and warranty by the Optionee to the Company, at the time any Option is exercised, that he is acquiring the Shares to be issued to him for investment and not with a view to, or for sale in connection with, the distribution of any such Shares; and
(ii)
an agreement and undertaking to comply with all of the terms, restrictions and provisions set forth in any then applicable stockholders’ agreement relating to the Shares, including, without limitation, any restrictions on transferability, any rights of first refusal and any option of the Company to “call” or purchase such Shares under then applicable agreements, and
(iii)
any restrictive legend or legends, to be embossed or imprinted on Share certificates, that are, in the discretion of the Committee, necessary or appropriate to comply with the provisions of any securities law or other restriction applicable to the issuance of the Shares.
(iv)
if and for so long as the Shares are listed on the TSX, the exercise price is reduced to Discounted Market Price, Options will be subject to a four month hold period commencing from the date of grant and any Shares issued pursuant to the exercise of an Option prior to the expiry of the hold period will bear the following TSX legend:
“Without prior written approval of the TSX Venture Exchange and compliance with all applicable securities legislation, the securities represented by this certificate may not be sold, transferred, hypothecated or otherwise traded on or through the facilities of the TSX Venture Exchange or otherwise in Canada or to or for the benefit of a Canadian resident until [four months + 1 day from the date of grant.]”
13.
Stock Appreciation Rights.
The Committee may grant stock appreciation rights to Employees in tandem with Options that have been or are granted under the Plan. A stock appreciation right shall entitle the holder to receive, with respect to each Share as to which the right is exercised, payment in an amount equal to the excess of the Share’s Fair Market Value on the date the right is exercised over its Fair Market Value on the date the right was granted. Such payment will be made in cash. The Committee may establish a maximum appreciation value payable for stock appreciation rights.
14.
Administration of this Plan.
(a)
This Plan shall be administered by the Committee, which shall consist of not less than two Directors. The Committee shall have all of the powers of the Board with respect to this Plan. Any member of the Committee may be removed at any time, with or without cause, by resolution of the Board and any vacancy occurring in the membership of the Committee may be filled by appointment by the Board.
(b)
Subject to the provisions of this Plan, the Committee shall have the authority, in its sole discretion, to:
(i)
grant Options;
(ii)
determine the exercise price per Share at which Options may be exercised;
(iii)
determine the Optionees to whom, and time or times at which, Options shall be granted;
(iv)
determine the number of Shares to be represented by each Option;
(v)
determine the terms, conditions and provisions of each Option granted (which need not be identical) and, with the consent of the holder thereof, modify or amend each Option;
(vi)
defer (with the consent of the Optionee) or accelerate the exercise date of any Option; and
(vii)
make all other determinations deemed necessary or advisable for the administration of this Plan, including re-pricing, canceling and re-granting Options.
(c)
The Committee, from time to time, may adopt rules and regulations for carrying out the purposes of this Plan. The Committee’s determinations and its interpretation and construction of any provision of this Plan shall be final, conclusive and binding upon all Optionees and any holders of any Options granted under this Plan.
(d)
Any and all decisions or determinations of the Committee shall be made either
(i)
by a majority vote of the members of the Committee at a meeting of the Committee; or
(ii)
without a meeting by the unanimous written approval of the members of the Committee.
(e)
No member of the Committee, or any Officer or Director of the Company or its Subsidiaries, shall be personally liable for any act or omission made in good faith in connection with this Plan.
15.
Incentive Options for 10% Stockholders.
Notwithstanding any other provisions of this Plan to the contrary, an Incentive Stock Option shall not be granted to any person owning directly or indirectly (through attribution under Section 424(d) of the Code) at the date of grant, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company (or of its Subsidiary) at the date of grant unless the exercise price of such Option is at least 110% of the Fair Market Value of the Shares subject to such Option on the date the Option is granted, and such Option by its terms is not exercisable after the expiration of 10 years from the date such Option is granted.
16.
Interpretation.
(a)
This Plan shall be administered and interpreted so that all Incentive Stock Options granted under this Plan will qualify as Incentive Stock Options under Section 422 of the Code. If any provision of this Plan should be held invalid for the granting of Incentive Stock Options or illegal for any reason, such determination shall not affect the remaining provisions hereof, and this Plan shall be construed and enforced as if such provision had never been included in this Plan.
(b)
This Plan shall be governed by the laws of the Province of Ontario, Canada.
(c)
Headings contained in this Plan are for convenience only and shall in no manner be construed as part of this Plan or affect the meaning or interpretation of any part of this Plan.
(d)
Any reference to the masculine, feminine, or neuter gender shall be a reference to such other gender as is appropriate.
(e)
Time shall be of the essence with respect to all time periods specified for the giving of notices to the company hereunder, as well as all time periods for the expiration and termination of Options in accordance with Section 9 hereof (or as otherwise set forth in an option agreement).
17.
Amendment and Discontinuation of this Plan.
Subject to the policies of the TSX, either the Board or the Committee may from time to time amend this Plan or any Option without the consent or approval of the stockholders of the Company; provided, however, that, except to the extent provided in Section 9, no amendment or suspension of this Plan or any Option issued hereunder shall substantially impair any Option previously granted to any Optionee without the consent of such Optionee.
18.
Termination Date.
This Plan shall terminate ten years after the date of adoption by the Board of Directors.
32