INFORMATION CIRCULAR
This circular is
provided in connection with the solicitation by Management of New Island
Resources Inc. (the "Corporation") of proxies for the Annual Meeting
of Shareholders of the Corporation (the "Meeting") to be held on the
14th day of December, 2006, at 2:30 p.m. (local time) in the
Columbus Suite, The Fairmont Hotel,
Management does
not contemplate a solicitation of proxies otherwise than by mail. The cost thereof will be borne by the Corporation.
The persons named in the enclosed form of proxy (“Proxy”) are directors
of the Corporation. A shareholder has
the right to designate a person (who need not be a shareholder) other than the
management designees to represent him or her at the Meeting. Such right may be exercised by striking out
the names of the management designees and inserting in the space provided for
that purpose the name of the person to be designated.
If this Proxy is to be utilized,
it must be dated and signed by the shareholder or the shareholder's attorney
authorized in writing or, if the shareholder is a corporation, under its
corporate seal by an officer or attorney thereof duly authorized with proof of
such authorization attached. If this
Proxy is not dated in the space provided, it will be deemed to bear the date on
which it was mailed. A proxy is valid
only at the Meeting in respect of which it is given or any adjournment thereof
if completed and delivered to CIBC Mellon Trust Company in the envelope
provided, or deposited at the office of the Corporation, Suite 602 TD Place,
140 Water Street, St. John's, Newfoundland A1C 6H6 not less than 48 hours (excluding
Saturdays, Sundays, and holidays) before the time for the holding of the Meeting or any
adjournment thereof.
A shareholder has the power to revoke a Proxy at any time insofar as it
has not been exercised. In addition to
revocation in any other manner permitted by law, a Proxy may be revoked in
writing executed by the shareholder or the shareholder's attorney authorized in
writing, with proof of such authorization attached, and deposited either (a) at
the registered office of the Corporation at any time up to and including the
last business day preceding the day of the Meeting, or any adjournment thereof,
at which the Proxy is to be used, or (b) with the chairman of the Meeting on
the day of the Meeting, or any adjournment thereof.
Common shares
represented by proxy in favour of management nominees shall be voted on any
ballot at the Meeting, and where the shareholder specified a choice with
respect to any matter to be acted upon, the shares shall be voted on any ballot
in accordance with the specification so made.
IN THE ABSENCE OF
SUCH SPECIFICATION, SHARES WILL BE VOTED IN FAVOUR OF THE MATTERS TO BE ACTED
UPON. THE PERSONS APPOINTED UNDER THE
INSTRUMENT OF PROXY FURNISHED BY THE CORPORATION ARE CONFERRED WITH
DISCRETIONARY AUTHORITY WITH RESPECT TO AMENDMENTS OR VARIATIONS OF THOSE MATTERS
SPECIFIED IN THE PROXY AND NOTICE OF ANNUAL AND SPECIAL MEETING. AT THE TIME OF PRINTING THIS INFORMATION
CIRCULAR, MANAGEMENT OF THE CORPORATION KNOWS OF NO SUCH AMENDMENT, VARIATION
OR OTHER MATTER.
ADVICE TO BENEFICIAL SHAREHOLDERS
Shareholders who do not hold their Common Shares in their own name
(referred to herein as “Beneficial Shareholders”) are advised that only Proxies
from shareholders of record can be recognized and voted upon at the Meeting.
The Proxy supplied to Beneficial Shareholders is substantially similar to that
provided to registered shareholders.
However, its purpose is limited to instructing the registered
shareholder (usually a brokerage house) how to vote on behalf of the Beneficial
Shareholder. Every intermediary
(brokerage house) has its own mailing procedure and provides its own return
instructions, which should be carefully followed.
All references
to shareholders in this Management Information Circular and the accompanying
Proxy and Notice of Meeting are to shareholders of record unless specifically
stated otherwise.
The Record Date
has been set for November 10, 2006. The
date for determination of the shareholders entitled to receive Notice of the
Meeting or any adjournment thereof shall be as of the Record Date. Any shareholder of record as at the close of
business of the transfer agent of the Corporation in Calgary, Alberta, on the
Record Date, who either personally attends the Meeting or has completed and
delivered a Form of Proxy in the manner and subject to the provisions set out
in the heading APPOINTMENT AND REVOCATION OF PROXIES will be entitled to
vote or to have his or her shares voted at the Meeting, except to the extent
that a shareholder has transferred his or her shares after that day and the transferee
of those shares produces proof that he or she owns the shares and demands not
later than ten days before the Meeting that his or her name be included in the
list before the Meeting, in which case the transferee shall be entitled to vote
these shares at the Meeting.
As at the date
hereof, 40,511,675 common shares without nominal or par value of the
Corporation are issued and outstanding - each such share carrying the right to
one vote at the Meeting.
To the knowledge of the Directors
and Senior Officers of the Corporation, no person or company beneficially owns,
directly or indirectly, or exercises control or direction over, voting shares
carrying more than 10% of the voting rights attached to the common shares
except Newfoundland Goldbar Resources Inc., of St. John's, Newfoundland, which
beneficially owns 3,748,687 common shares, representing 9.28% of all issued and
outstanding shares of the Corporation. Atlantis
Corporation Limited of
CORPORATE GOVERNANCE
The following is
the disclosure required by Form 58-101F2 of National Instrument 58-101 Disclosure
of Corporate Governance Practices.
Board of
Directors
The Board of
Directors presently has seven directors, six of whom are independent. The definition of independence used by the
Company is that used by the Canadian Securities Administrators as set out in
section 1.4 of Multilateral Instrument 52-110 Audit Committees (“MI 52-110”). A director is “independent” if he has no
direct or indirect material relationship with the Company. A “material relationship” is a relationship
which could, in the view of the Board of Directors, be reasonably expected to
interfere with the exercise of the directors independent judgement. Criteria for determining material
relationships are outlined in section 1.4 of MI 52-110.
James O’Reilly,
William Warren, Ronald Jones, Roger Pike, Eric Jerrett and Tarik Elsaghir are
considered to be independent directors.
The Board
believes that the principal objective of the Company is to generate economic
returns with the goal of maximizing shareholder value, and that this is to be
accomplished by the Board through the stewardship of the Company. In fulfilling
its stewardship function, the Board’s responsibilities will include strategic
planning, appointing and overseeing management, risk identification and
management, environmental oversight, overseeing financial and corporate
issues. Directors are involved in the
supervision of management.
The Chair is not
independent. Pursuant to the Business
Corporations Act (
Other
Directorships
The following
directors of the Company are also directors of other reporting issuers:
|
Current
Director/Nominee |
Directorships
of Other Reporting Issuers |
|
Eric Jerrett |
Newfoundland
Goldbar Resources Inc. |
|
|
Newfoundland
Goldbar Resources Inc. |
Orientation and
Continuing Education
New Directors of
the Company are provided with pertinent information about the Company including
written information about the duties and obligations of directors, the business
and operations of the Company and documents from recent Board meetings. Specific details of the orientation of each
new director are tailored to that individual’s needs and areas of interest.
The Company also
provides continuing education to directors by way of management presentations
to ensure that their knowledge and understanding of the Company’s business
remains current. The Company’s financial
and legal advisers are also available to the Company’s directors.
Ethical Business
Conduct
The Company has
adopted a Corporate Code of Conduct (the “Code”), which is intended to document
the principles of conduct and ethics to be followed by the Company’s directors,
officers and employees. The purpose of
the Code is to:
§
Promote integrity and deter wrongdoing
§
Promote honest and ethical conduct, including the
ethical handling of actual or apparent conflicts of interest.
§
Promote avoidance of absence of conflicts of interest.
§
Promote full, fair, accurate, timely and
understandable disclosure in public communications made by the Company.
§
Promote compliance with applicable governmental laws,
rules and regulations.
§
Promote a safe and healthy work environment
§
Promote equal opportunity employment and deter
discrimination
§
Promote and provide a mechanism for the prompt,
internal reporting of departures from the Code
§
Promote accountability for adherence to the Code
§
Provide guidance to the Company’s directors, officers
and employees to help them recognize and deal with ethical issues
§
To help foster a culture of integrity, honesty and
accountability throughout the Company.
A copy of the
Code of Conduct is available from the Company’s offices. In the Board’s regular meetings, the Board
considers the Company’s operations and business activities in light of the Code
of Conduct. The Board expects management
to operate the business of the Company in a manner that enhances shareholder
value and is consistent with the highest level of integrity.
Nomination of
Directors
The Company does
not have a formal process or committee for proposing new nominees for election
to the Board of Directors. The nominees
are generally the result of recruitment efforts by the Board members, including
both formal and informal discussions among Board members.
Compensation
The Company does
not have a compensation committee. At
this time, the directors and officers of the Company are compensated by the
issuance of stock options. The stock
options are granted according the Company’s stock option plan, which is
approved by the shareholders of the company and reviewed on an annual basis.
Other Board
Committees
Standing
committees of the Board are the Corporate Governance Committee and the Audit
Committee.
Assessments
There is no
formal committee with the responsibility for assessing the effectiveness of the
Board, its committees or individual directors. Board members are subject to the
terms disclosed in the Corporate Code of Conduct and the Charter of
the Board of Directors.
AUDIT COMMITTEE
The following is
disclosure required by Form 52-110F2 of MI 52-110.
General
The Audit
Committee is a committee of the Board, the primary function of which is to
assist the Board in fulfilling its financial oversight responsibilities, which
will include monitoring the quality and integrity of the Company’s financial
statements and the independence and performance of the Company’s external
auditor, acting as liaison between the Board and the Company’s external
auditor, reviewing the financial information that will be publicly disclosed
and reviewing all audit processes and the systems of internal controls management
and the Board have established.
Audit Committee
Charter
The Board has
adopted an Audit Committee Charter, which sets out the Audit Committee’s
mandate and responsibilities. The Audit Committee’s Charter is attached to this
Information Circular as Appendix “A”.
Composition
The Audit
Committee consists of the following directors:
|
Name of Member |
Independent (1) |
Financially
Literate (2) |
|
Eric Jerrett |
Yes |
Yes |
|
James O’Reilly |
Yes |
Yes |
|
William Warren |
Yes |
Yes |
Notes
(1)
As per MI 52-110, “Independent” means that the member
has no direct or indirect material relationship with the issuer.
(2)
As per MI 52-110, “Financially Literate” means that
the member is able to read and understand financial statements and the
associated accounting issues relevant to the issuer.
Audit Committee
Oversight
Since the
commencement of the Company’s most recently completed financial year, there
have been no recommendations of the Audit Committee to nominate or compensate
an external auditor which was not adopted by the Board.
Reliance on
Certain Exemptions
Since the
commencement of the Company’s most recently completed financial year, the
Company has not relied on the exemption in section 2.4 (De Minimis Non-audit
Services) of MI 52-110 or an exemption from MI 52-110, in whole or in part,
granted under Part 8 (Exemptions) of MI 52-110.
Pre-Approval
Policies and Procedures
The Audit
Committee has not adopted specific policies and procedures for the engagement
of non-audit services, however, as provided for in MI 52-110 the Audit Committee
must pre-approve all non-audit services to be provided to the Company or its
subsidiaries, unless otherwise permitted by MI 52-110.
External
Auditor Service Fees (By Category)
|
Financial Year Ending |
Audit Fees (1) |
Audit Related Fees (2) |
Tax Fees (3) |
All Other Fees (4) |
|
June 30, 2006 |
16,500 |
9,900 |
-- |
3,300 |
|
June 30, 2005 |
15,000 |
-- |
-- |
-- |
Notes:
(1)
The aggregate fees billed by the Company’s auditor for
audit fees
(2)
The aggregate fees billed for assurance and related
services by the Company’s auditor that are reasonably related to the
performance of the audit or review of the Company’s financial statements and
are not disclosed in the ‘Audit Fees’ column.
(3)
The aggregate fee billed for professional services
rendered by the Company’s auditor for tax compliance, tax advice and tax
planning.
(4)
The aggregate fees billed for professional services
other that those listed in the other three columns.
Exemption
Pursuant to
section 6.1 of MI 52-110, the Company is exempt from the requirements of Part 3
Composition of the Audit Committee and Part 5 Reporting Obligations
of MI 52-110 because it is a venture issuer.
Since
the date of the last Annual Meeting of Shareholders of the Corporation, none of
the Directors or Senior Officers of the Corporation has been indebted to the
Corporation nor are any transactions contemplated pursuant to which such
indebtedness will arise.
STATEMENT OF
EXECUTIVE COMPENSATION
The following
table shows remuneration paid to the fiscal year ended June 30, 2006 to
Directors and Senior Officers of the Corporation.
Nature of Remuneration
|
||||
|
|
From Office
or Employment (Aggregate) |
Cost of
Pension Benefits
(Aggregate) |
Other
(Aggregate) |
|
|
Directors
(Total 5) |
Nil |
Nil |
Nil |
|
|
Senior Officers
(Total 1) |
$42,000 |
Nil |
Nil |
|
Mr.
The following
Option Agreements are in place with Officers, Directors and Consultants of the
Corporation under the terms of the Corporation’s Stock Option Plan:
|
|
Number of Options |
Exercise Price |
Expiry Date |
Number of Options |
Exercise Price |
Expiry Date |
Total Outstanding |
|
|
150,000 |
0.15 |
23-Jan-09 |
500,000 |
0.22 |
31-Jan-11 |
650,000 |
|
Ronald Jones |
150,000 |
0.15 |
23-Jan-09 |
50,000 |
0.22 |
31-Jan-11 |
200,000 |
|
Erik Jerrett |
-- |
0.15 |
23-Jan-09 |
50,000 |
0.22 |
31-Jan-11 |
50,000 |
|
William Warren |
150,000 |
0.15 |
23-Jan-09 |
50,000 |
0.22 |
31-Jan-11 |
200,000 |
|
Lorna Smith |
75,000 |
0.15 |
23-Jan-09 |
25,000 |
0.22 |
31-Jan-11 |
100,000 |
|
|
50,000 |
0.15 |
23-Jan-09 |
25,000 |
0.22 |
31-Jan-11 |
75,000 |
|
James O’Reilly |
-- |
|
-- |
150,000 |
0.22 |
31-Jan-11 |
150,000 |
|
Tarik Elsaghir |
-- |
|
-- |
1,000,000 |
0.22 |
31-Jan-11 |
1,000,000 |
|
Noble House |
-- |
|
-- |
200,000 |
0.27 |
31-Jan-08 |
200,000 |
|
Total Options Outstanding to Officers, Directors and Consultants |
2,625,000 |
||||||
To the knowledge
of the Corporation's Directors, the only matters to be brought before the
Meeting are those set forth in the accompanying Notice of Meeting relating to
receiving the financial statements of the Corporation for the year ended June
30, 2006; the Auditor's report thereon; the election of the Board of Directors;
the appointment of the Auditors for the ensuing year and authorizing the
Directors to fix their remuneration; and the annual approval of the
Corporation’s Stock Option Plan. IT IS THE INTENTION OF THE MANAGEMENT
DESIGNEES, IF NAMED AS PROXY, TO VOTE FOR THE APPROVAL OF ALL OF THE FOREGOING.
Each Director of
the Corporation is elected and holds office until the next Annual Meeting of
the shareholders unless that person ceases to be a Director prior to that
date. Management does not contemplate
that any of the nominees will be unable to serve as a director. In the absence of instructions to the
contrary, the shares represented by proxy will be voted for the nominees herein
listed.
The
Management nominees for the Board of Directors and information concerning them
as furnished by the individual nominees are as follows:
|
Name and Address |
Office |
Principal Occupation |
Date First
appointed as a Director |
Common Shares Beneficially Owned as of Record date |
|
Tarik G. Elsaghir |
-- |
Director, Source Petroleum |
31/01/06 |
355,000 |
|
Bay Roberts, NL |
-- |
Past President of E.K. Jerrett & Associates Ltd.
- retired |
07/03/94 |
112,500 |
|
James P. O’Reilly(1) |
-- |
Businessman Consultant |
14/12/05 |
20,000 |
|
Harold L. Wareham |
President, Chairman & CEO |
Chairman and C.E.O. of Atlantis Corporation Limited. |
11/11/91 |
235,039 |
|
William Warren(1) |
-- |
President, Island Industrial |
18/12/03 |
375,000 |
(1)Member of Audit
Committee
All of
the proposed nominees for Directors are ordinarily resident in
Shareholders
will be asked to approve the appointment of Deloitte & Touche LLP as
Auditors of the Corporation for the ensuing year at remuneration to be set by
the Directors.
Pursuant to Policy 4.4 of the TSX Venture
Exchange (the “Policy”), Corporations that have a rolling stock option plan
reserving a maximum of 10% of the issued and outstanding shares of the
Corporation must receive yearly shareholder approval of the Stock Option Plan
(the “Plan”). Accordingly, shareholders
are being requested to approve the Plan, attached as Appendix “B”, and
authorize the Board of Directors to grant options in the capital stock of the
Corporation pursuant to and in accordance with the provisions of the Plan.
PARTICULARS
OF OTHER MATTERS TO BE ACTED ON
Management
knows of no other matters to come before the meeting of shareholders other than
those referred to in the notice of meeting, however, should any other matters
properly come before the meeting, the shares represented by the proxy solicited
hereby will be voted on such matters in accordance with the best judgement of
the persons voting the shares presented by the proxy.
EFFECTIVE DATE
Unless
otherwise stated, information contained herein is given as of the 10th
day of November, 2006.
CERTIFICATE
The
contents of and the sending of this Information Circular have been approved by
the Directors of the Corporation.
The
foregoing contains no untrue statements of a material fact and does not omit to
state a material fact that is required to be stated or that is necessary to
make a statement not misleading in the light of the circumstances in which it
was made.
Dated
as of the 10th day of November 2006.
Harold
L. Wareham
Appendix
“A”
NEW
ISLAND RESOURCES INC.
This Charter establishes the
responsibilities of the Audit Committee (“Committee”) of the Board of Directors
(“Board”) of New Island Resources Inc. (“
The Committee shall consist of a minimum
of two members, all of whom shall be directors of the Company and meet the
requirements for independence as defined in Multilateral Instrument 52-110 Audit
Committees. Members of the Committee
and the Chair of the Audit Committee will be appointed by the Board for a
one-year term and may serve any number of consecutive terms
Committee members must meet the criteria
for being financially literate which is defined as having the ability to read
and understand a set of financial statements that present a breadth and level
of complexity of accounting issues that are generally comparable to the breadth
and complexity of the issues that can reasonably be expected to be raised by
the Company’s financial statements.
The Committee will have the authority,
independent of the Board and management, to retain counsel, advisors or
consultants as required in the course of discharging its duties. The Committee will have unrestricted access
to the Company’s records, full cooperation of its employees and will
communicate directly with the Company’s external auditor.
The Committee will meet no less than 4
times per year, at least once during each quarter and additional meetings will
be called if deemed necessary. Members
of the Committee may attend meetings by conference call. The CEO, CFO, and other directors or
officers, may be invited to attend and participate in meetings at the
discretion of the Committee. Minutes of
the meetings will be recorded to accurately reflect the business of the meeting
and will detail any decisions reached.
Copies of the minutes will be available to the Board, CEO, CFO and
external auditors.
Ø Review this
charter on an annual basis and when deemed necessary, make recommendations to
the Board to modify it.
Ø Maintain free
and open communications between directors, officers, management and the
external auditors of the Company.
Ø Assess managements
systems of internal control and obtain reasonable assurance that such systems
are reliable and operating effectively for the Company. This will include testing of controls and
review of same with management and the external auditor.
Ø Review and assess
any proposed changes in major accounting policies or controls.
Ø Review any
significant matters identified during audits or quarterly reviews.
Ø Establish
procedures for the receipt and treatment of complaints received regarding
accounting, internal controls, or auditing matters and also for the
confidential, anonymous submission by employees of concerns regarding
questionable accounting matters.
Ø Review and
assess the Company’s financial risk exposures and the processes in place for
the management and control of those risks.
Ø Review and
approve for presentation to the Board and dissemination to the public, all
material financial information required to be disclosed according to securities
laws and stock exchange regulations.
This will include all quarterly and annual financial statements,
management discussion and analysis, news releases or any other document
containing information extracted from the financial statements.
Ø Review the
Company’s financial reporting procedures and internal controls to ensure adequate
procedures are in place for the review of the Company’s disclosure of financial
information extracted or derived from its financial statements, other than the
disclosure described in the previous paragraph and must periodically assess the
adequacy of those procedures.
The external auditor must report directly to the Audit Committee. The Audit Committee is responsible for overseeing the work of the external auditor engaged for the purpose of preparing or issuing an auditors report or performing other audit, review or attest services, including resolution of disagreements with management and the external auditor regarding financial reporting.
Duties
of the Audit Committee concerning its relationship with the external auditor
include:
Ø Review and
discussion with the external auditor of any relationships or services that may
affect the objectivity or independence of the external auditor and obtaining a
written notice from the external auditor each year confirming their independence.
Ø Establishing
that the external auditor must report directly to the Audit Committee and
meeting with the external auditor, independent of management, on a regular
basis.
Ø Recommending to
the Board that the external auditor be nominated for the purpose of issuing an
auditors report or performing other audit or review services.
Ø Recommending to
the Board the compensation for the external auditor
Ø Pre-approving
all non-audit services to be provided by the external auditor, together with
estimated fees. Non-audit services include but are not limited to: bookkeeping
related to the Company’s accounting records or financial statements, financial
information systems design and implementation, appraisal or valuation services,
fairness opinions, management functions, human resources, legal services, tax
planning and consulting. The Committee
may delegate the authority for pre-approval of non-audit services to one or
more of its independent directors but delegation may not be made to
management. The pre-approval of any
non-audit service by a designated independent committee member must be
presented to the Audit Committee at its first scheduled meeting following the
pre-approval.
Ø Reviewing with
the external auditor and if necessary, legal counsel, any matters that would
have a material effect upon the financial position of the Company and the
manner in which they are disclosed in the financial statements.
Procedure for receipt of Complaints and
Submissions Relating to Accounting Matters
Any
director, officer or employee who has any concern or complaint regarding
accounting, internal accounting controls, questionable auditing or accounting
matters or potential violations of law may make an anonymous submission to any
member of the Audit Committee. All
complaints or submissions, as well as the identity of the complainant will be
kept confidential and a record of any complaints or submission will be kept for
five years. The Audit Committee, upon
receipt of a submission or complaint will discuss the matters presented and
take any action that the Audit Committee might deem appropriate.
Limitation on the Oversight Role of the Audit Committee
Nothing
in this Charter is intended, or may be construed, to impose on any member of
the Committee a standard of care or diligence that is in any way more onerous
or extensive than the standard to which all members of the Board are subject.
Each
member of the Committee shall be entitled, to the fullest extent permitted by
law, to rely on the integrity of those persons and organizations within and
outside the Corporation from whom he or she receives financial and other
information, and the accuracy of the information provided to the Corporation by
such persons or organizations.
While
the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Corporation’s financial statements and disclosures are
complete and accurate and in accordance with generally accepted accounting
principles in
Appendix “B”
NEW ISLAND RESOURCES INC.
STOCK OPTION PLAN
1.
Purpose of Plan
The purpose of this plan (the
"Plan") is to develop the interest of bona fide Officers, Directors,
Employees, Management Company Employees, and Consultants of New Island
Resources Inc. and its subsidiaries (collectively, the "Corporation")
in the growth and development of the Corporation by providing them with the
opportunity through stock options to acquire an increased proprietary interest
in the Corporation.
2. Administration
The Plan shall be administered by the
Board of Directors of the Corporation, or if appointed, by a special committee
of Directors appointed from time to time by the Board of Directors of the
Corporation (such committee, or if no such committee is appointed, the Board of
Directors of the Corporation, is hereinafter referred to as the
"Committee") pursuant to rules of procedure fixed by the Board of
Directors.
3. Granting of Options
The Committee may from time to time
designate bona fide Directors, Officers, Employees, Management Company
Employees and Consultants of the Corporation (or in each case their personal
holding companies) (collectively, the "Optionees"), to whom options
("Options") to purchase common shares ("Common Shares") of
the Corporation may be granted, and the number of Common Shares to be optioned
to each, provided that:
(a) the total number of Common Shares issuable pursuant to the Plan shall not exceed 10% of the issued and outstanding Common Shares, subject to adjustment as set forth herein, and further subject to the applicable rules and regulations of all regulatory authorities to which the Corporation is subject, including the TSX Venture Exchange (the "Exchange");
(b) the number of Common Shares reserved for issuance, within a one-year period, to any one Optionee shall not exceed 5% of the Outstanding Common Shares;
(c) the number of Common Shares reserved for issuance, within a one-year period, to any one Consultant of the Corporation may not exceed 2% of the Outstanding Common Shares;
(d) the aggregate number of Common Shares reserved for issuance, within a one-year period, to Employees or Consultants conducting Investor Relations Activities may not exceed 2% of the Outstanding Common Shares; and
(e) unless the Plan has been approved by the shareholders of the Corporation at a meeting thereof by a majority of the votes cast at the meeting, other than votes attaching to securities beneficially owned by Insiders of the Corporation to whom Common Shares may be issued pursuant to the Plan, and Associates of any such Insiders:
(i) the maximum number of Common Shares reserved for issuance pursuant to Options granted to Insiders at any time may not exceed 10% of the number of Outstanding Common Shares;
(ii) the maximum number of Common Shares which may be issued to Insiders, within a one-year period, may not exceed 10% of the number of Outstanding Common Shares; and
(iii) the maximum number of Common Shares which may be issued to any one Insider and the Associates of such Insider, within a one-year period, may not exceed 5% of the number of Outstanding Common Shares;
provided that for the
purposes of paragraphs (i), (ii), and (iii) above, an entitlement granted prior
to the grantee becoming an Insider may be excluded in determining the number of
Common Shares issuable to Insiders.
4. Vesting
The Committee may, in its sole
discretion, determine the time during which Options shall vest and the method
of vesting.
5. Exercise Price
The exercise price of any Option shall be
fixed by the Committee when such Option is granted, provided that such price
shall not be less than the Discounted Market Price of the Common Shares, or
such other price as may be determined under the applicable rules and
regulations of all regulatory authorities to which the Corporation is subject,
including the Exchange.
In the event that the Corporation
proposes to reduce the exercise price of Options granted to an Optionee who is
an Insider of the Corporation at the time of the proposed amendment, said
amendment shall not be effective until disinterested shareholder approval has
been obtained in respect of the exercise price reduction.
6. Option Terms
The period during which an Option is
exercisable shall, subject to the provisions of the Plan requiring acceleration
of rights of exercise, be such period as may be determined by the Committee at
the time of grant, but subject to the rules of any stock exchange or other
regulatory body having jurisdiction.
Each Option shall, among other things, contain provisions to the effect
that the Option shall be personal to the Optionee and shall not be assignable
or transferable. In addition, each Option shall provide that:
(a) upon the death of the Optionee, the Option shall terminate on the date determined by the Committee, which date shall not be later than the earlier of the expiry date of the Option and one year from the date of death (the "Termination Date");
(b) if the Optionee shall no longer be a Director or Officer of, be in the employ of, or be providing ongoing management or consulting services to the Corporation, the Option shall terminate on the earlier of the expiry date of the Option and the expiry of the period (the "Termination Date"), not in excess of 90 days prescribed by the Committee at the time of grant, following the date that the Optionee ceases to be a Director, Officer or Employee of the Corporation, or ceases to provide ongoing management or consulting services to the Corporation, as the case may be; and
(c) if the Option is granted to an Optionee who is engaged in Investor Relations Activities on behalf of the Corporation, the Option shall terminate on the earlier of the expiry date of the Option and the expiry of the period (the "Termination Date"), not in excess of 30 days prescribed by the Committee at the time of grant, following the date that the Optionee ceases to provide ongoing Investor Relations Activities;
provided
that the number of Common Shares that the Optionee (or his heirs or successors)
shall be entitled to purchase until the Termination Date shall be the number of
Common Shares which the Optionee was entitled to purchase on the date of death
or the date the Optionee ceased to be an Officer, Director or Employee of, or
ceased providing ongoing management or consulting services to, the Corporation,
as the case may be.
7. Exercise of Option
Subject to the provisions of the Plan, an
Option may be exercised from time to time by delivery to the Corporation at its
head office, or such other place as may be specified by the Corporation, of a
written notice of exercise specifying the number of Common Shares with respect
to which the Option is being exercised and accompanied by payment in full of
the purchase price of the Common Shares then being purchased.
8.
Mergers, Amalgamation and
If the Corporation shall become merged
(whether by plan of arrangement or otherwise) or amalgamated within or with
another corporation or shall sell the whole or substantially the whole of its
assets and undertakings for shares or securities of another corporation, the
Corporation shall, subject to this Section 8, make provision that, upon
exercise of an Option during its unexpired period after the effective date of
such merger, amalgamation or sale, the Optionee shall receive such number of
shares of the continuing successor corporation in such merger or amalgamation
or the securities or shares of the purchasing corporation as the Optionee would
have received as a result of such merger, amalgamation or sale if the Optionee
had purchased the shares of the Corporation immediately prior thereto for the
same consideration paid on the exercise of the Option and had held such shares
on the effective date of such merger, amalgamation or sale and, upon such
provision being made, the obligation of the Corporation to the Optionee in
respect of the Common Shares subject to the Option shall terminate and be at an
end and the Optionee shall cease to have any further rights in respect thereof.
9. Termination of Option in the Event of Take-Over Bid
In the event a take-over bid (as defined
in the Securities Act (Alberta), which is not exempt from the take-over
bid requirements of Part 13 (132(1) of the Securities Act (Alberta) (or
its replacement or successor provisions) shall be made for the Common Shares of
the Corporation, the Corporation may in the agreement providing for the grant
of Options herein provide that the Corporation may require the disposition by
the Optionee and the termination of any obligations of the Corporation to the
Optionee in respect of any Options granted by paying to the Optionee in cash
the difference between the exercise price of unexercised Options and the fair
market value of the securities to which the Optionee would have been entitled
upon exercise of the unexercised Options on such date, which determination of
fair market value shall be conclusively made by the Committee, subject to
approval by the stock exchanges upon which the Common Shares are then listed,
if required by such exchanges. Upon
payment as aforesaid, the Options shall terminate and be at an end and the
Optionee shall cease to have any further rights in respect thereof.
10. Alterations in Shares
Appropriate adjustments in the number of
Common Shares optioned and in the Exercise Price, as regards Options granted or
to be granted, may be made by the Committee in its discretion to give effect to
adjustments in the number of Common Shares of the Corporation resulting
subsequent to the approval of the Plan by the Committee from subdivisions,
consolidations or reclassifications of the Common Shares of the Corporation,
the payment of stock dividends by the Corporation, or other relevant changes in
the capital of the Corporation.
11. Option Agreements
A written agreement will be entered into
between the Corporation and each Optionee to whom an Option is granted
hereunder, which agreement will set out the number of Common Shares subject to
Option, the exercise price, provisions as to vesting and expiry, and any other
terms approved by the Committee, all in accordance with the provisions of this
Plan. The agreement will be in such form as the Committee may from time to time
approve, or authorize the officers of the Corporation to enter into, and may
contain such terms as may be considered necessary in order that the Option will
comply with this Plan, any provisions respecting Options in the income tax or
other laws in force in any country or jurisdiction of which the person to whom
the Option is granted may from time to time be a resident or citizen, and the
rules of any regulatory body having jurisdiction over the Corporation.
12. Regulatory Authorities Approvals
The Plan shall be subject to the
approval, if required, of any stock exchange on which the Common Shares are
listed for trading. Any Options granted prior to such approval shall be
conditional upon such approval being given, and no such Options may be
exercised unless such approval, if required, is given.
13. Amendment or Discontinuance of the Plan
The Committee may amend or discontinue
the Plan at any time, provided that no such amendment may, without the consent
of the Optionee, alter or impair any Option previously granted to an Optionee
under the Plan, and provided further that any amendment to the Plan will
require the prior consent of the Exchange, or such other or additional stock
exchange on which the Common Shares are listed for trading.
14. Common Shares Duly Issued
Common Shares issued upon the exercise of
an Option granted hereunder will be validly issued and allotted as fully paid
and non-assessable upon receipt by the Corporation of the Exercise Price
therefor in accordance with the terms of the Option, and the issuance of Common
Shares thereunder will not require a
resolution or approval of the Board of Directors of the Corporation.
15. Definitions
(a) In this Plan, capitalized terms used herein that are not otherwise defined herein shall have the meaning ascribed thereto in the Corporate Finance Manual of the Exchange, and in particular, in policies 1.1 and 4.4 of said Corporate Finance Manual.
(b) "Outstanding Common Shares" at the time of any share issuance or grant of Options means the number of Common Shares that are outstanding immediately prior to the share issuance or grant of Options in question on a non-diluted basis, or such other number as may be determined under the applicable rules and regulations of all regulatory authorities to which the Corporation is subject, including the Exchange.
16. Effective Date
This Plan is effective from December 18, 2003.