Management Information Circular
Notice of Annual General and Special Meeting of Shareholders
To be held on May 4, 2016
PURE TECHNOLOGIES LTD.
NOTICE OF ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, MAY 4, 2016
The annual general and special meeting of the shareholders of Pure Technologies Ltd.
(the “Corporation”) will be held on Wednesday, May 4, 2016 at 3:00 p.m. (MST) at Hôtel Le
Germain, located at 899 Centre Street SW, Calgary, Alberta, Canada for the following purposes:
1.
to receive our audited consolidated financial statements for the year ended December 31,
2015, together with the report of the auditors;
2.
to fix the number of directors to be elected at the meeting at eight (8);
3.
to elect the directors for the ensuing year;
4.
to appoint auditors and authorize the directors to fix their remuneration as such;
5.
to confirm the amended and restated By-Law No. 1 of the Corporation, as more particularly
described in the information circular accompanying this notice; and
6.
to transact such other business as may be properly brought before the meeting or any
adjournment thereof.
The specific details of the matters proposed to be put before the meeting are set forth in the
information circular accompanying this notice.
Only shareholders of record as of the close of business on March 21, 2016 are entitled to receive
notice of and to vote at the meeting, unless that shareholder has transferred any common shares
after that date and the transferee shareholder establishes a right to vote at the meeting by
providing evidence of ownership of common shares and demands that his or her name be placed
on the list of shareholders entitled to vote at the meeting.
Registered shareholders who are unable to attend the meeting in person are requested to
complete, date and sign the accompanying form of proxy and return it our transfer agent,
Computershare Proxy Department, located at 135 West Beaver Creek, PO Box 300, Richmond
Hill, Ontario, L4B 4R5, not less than 48 hours (excluding Saturdays, Sundays and holidays) before
the time of the meeting or vote by proxy on the internet or by the telephone in accordance with
the instructions set forth in the information circular. Non-registered beneficial shareholders should
refer to the instructions in the information circular to vote.
March 16, 2016
BY ORDER OF THE BOARD
(signed) “John F. Elliott”
John F. Elliott
President & Chief Executive Officer
TABLE OF CONTENTS
NOTICE OF MEETING.......................................................................................................................... I
MANAGEMENT INFORMATION CIRCULAR ...................................................................................... 1
COMMUNICATING WITH THE BOARD .............................................................................................. 2
ADDITIONAL INFORMATION .............................................................................................................. 2
VOTING AND PROXY INFORMATION ............................................................................................... 3
Registered Shareholder Voting ........................................................................................................ 3
Beneficial Shareholder Voting .......................................................................................................... 3
Appointment and Revocation of Proxies .......................................................................................... 3
Exercise of Discretion by Proxy Holders .......................................................................................... 3
Voting Securities and Principal Holders ........................................................................................... 4
Approval Requirements .................................................................................................................... 5
BUSINESS OF THE MEETING ............................................................................................................ 5
Item #1 – Receipt of Financial Statements ...................................................................................... 5
Item #2 – Fixing the Number of Directors to be Elected at the Meeting ........................................... 5
Item #3 – Election of the Board of Directors .................................................................................... 5
Item #4 – Appointment of Auditors ................................................................................................. 11
Item #5 – Confirmation of Amended and Restated By-Law No.1 .................................................. 12
Other Business ............................................................................................................................... 13
EXECUTIVE COMPENSATION ......................................................................................................... 14
DIRECTOR COMPENSATION........................................................................................................... 24
DSU Plan ....................................................................................................................................... 24
Ownership Guidelines for Non-Executive Directors ....................................................................... 24
Non-Executive Director Compensation Tables .............................................................................. 25
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS .......... 27
INTEREST OF CERTAIN PERSONS AND COMPANIES IN MATTERS TO BE ACTED UPON ...... 27
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS .................................................. 28
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS ........................................ 28
APPENDIX A – BY-LAW NO. 1 ........................................................................................................ A-1
APPENDIX B – CORPORATE GOVERNANCE DISCLOSURE ...................................................... B-1
APPENDIX C – BOARD CHARTER................................................................................................. C-1
APPENDIX D – DESCRIPTION OF SECURITY BASED COMPENSATION ARRANGEMENTS ... D-1
MANAGEMENT INFORMATION CIRCULAR
We are sending you this management information circular because you are a shareholder of
record of common shares (“Common Shares”) of Pure Technologies Ltd. (“Pure” or
the “Corporation”) on March 21, 2016. You are invited to attend the annual general and special
meeting (including all postponements and adjournments thereof, the “Meeting”) of shareholders
of Pure, to be held on Wednesday, May 4, 2016 at 3:00 p.m. (MST) at Hôtel Le Germain, located
at 899 Centre Street SW, Calgary, Alberta for the purposes indicated in the attached notice of
annual general and special meeting.
The information in this circular is as of March 16, 2016 unless otherwise noted. All dollar figures
are in Canadian dollars unless otherwise noted. Our shares trade under the symbol “PUR” on
the Toronto Stock Exchange (the “TSX”).
Management of the Corporation is soliciting proxies from shareholders for the Meeting. In addition
to solicitation by mail, proxies may be solicited by personal interview, telephone or other means
of communication and by directors, officers and employees of the Corporation, who will not be
specifically remunerated therefore. Solicitation of proxies by management will be primarily by mail,
but may also be in person or by telephone. The cost of solicitation will be borne by the Corporation.
Pure Technologies Ltd. – 2016 Management Information Circular
-2COMMUNICATING WITH THE BOARD
Our board of directors (the “Board” or “Board of Directors”) values open dialogue and welcomes
advice from our shareholders. Shareholders may communicate directly with the board or any
board
member(s)
by
sending
an
email
to
our
Corporate
Secretary
at:
[email protected]. If you prefer, you can also send your correspondence in
writing to the Corporate Secretary at our corporate headquarters.
ADDITIONAL INFORMATION
We file our annual report and annual information form with Canadian securities regulators.
Financial information is provided in our comparative annual financial statement and
management’s discussion and analysis for the most recently competed financial year. A copy of
our annual report, including our annual financial statements and notes and management’s
discussion and analysis, the annual information form and this circular will be provided on request
to shareholders. You can also obtain copies by accessing our public filings at www.sedar.com. If
you prefer, you can send an email request for documents to: [email protected]
or address a written request for documents to Investor Relations at our corporate headquarters,
located at:
Pure Technologies Ltd.
300, 705 – 11th Avenue S.W.
Calgary, Alberta, T2R 0E3
Further information concerning the audit committee of the Board, including the text of the audit
committee charter, is included in the annual information form of the Corporation for the year ended
December 31, 2015 dated March 15, 2016. A copy of the annual information form is available on
SEDAR at www.sedar.com.
REPORTING CONCERNS AND WHISTLEBLOWER HOTLINE
The Board of Directors, through the oversight of its audit committee (“Audit Committee”), has a
whistleblower policy providing options for employees, contractors, shareholders, and other
stakeholders to call or contact the Audit Committee with respect to accounting irregularities,
ethical violations, concerns, complaints or any other matters that one may wish to bring to the
attention of the board. You may contact the Chair of the Audit Committee in the following ways:
• In writing by sending your correspondence to the corporate headquarters (Attention: Chair,
Audit Committee)
• Accessing our confidential, third party whistleblower Internet-based hotline as follows:
Through the web interface: www.openboard.info/pur/
By sending an email to:
[email protected]
Pure Technologies Ltd. – 2016 Management Information Circular
-3VOTING AND PROXY INFORMATION
Registered Shareholder Voting
Beneficial Shareholder Voting
You are a registered shareholder if your
Common Shares are held in your name. You
may:
You are a beneficial shareholder if your
Common Shares are held in a nominee’s
name. That is, your certificate was deposited
with a bank, trust company, securities broker,
trustee or other institution. You may:
I
2
(
:
Vote in Person. Join us at our
Meeting. When you arrive at the
Meeting, please register with our
registrar
and
transfer
agent,
Computershare Trust Company of
Canada.
Vote by Proxy. Whether or not you
attend the meeting, you can appoint
someone else to attend and vote as
your proxy holder. Use the enclosed
proxy form (“Proxy”) to do this. If you
have voted by proxy, you may not vote
in person at the meeting, unless you
properly revoke your proxy. Return
your completed proxy in the envelop
provided so that it arrives by 3:00 p.m.
(Mountain time) on May 2, 2016 or if
the meeting is adjourned, at least 48
hours (excluding weekends and
holidays) before the time set for the
meeting to resume.
Vote by telephone.
See
enclosed Proxy for instructions.
the
Vote over the Internet. See the
enclosed Proxy for instructions.
I
Vote in Person.
To vote your
Common Shares in person at the
meeting, you must: (i) appoint yourself
as the proxy holder by writing your
own name in the space provided on
the request for voting instructions form
(“Voting
Instructions
Form”)
provided by your nominee. Do not
complete the voting section on the
request for voting instructions as your
vote will be taken at the Meeting; and
(ii) return the Voting Instructions Form
to the nominee in the envelope
provided or by the facsimile number
provided.
2
Vote through your Nominee. To
vote your Common Shares through
your nominee you should follow the
instructions on the Voting Instructions
Form provided by your nominee.
(
Vote by telephone. See enclosed
Voting Instruction Form.
:
Vote over the Internet.
See
enclosed Voting Instruction Form.
Appointment and Revocation of Proxies
The persons named in the Proxy are members of management of Pure.
A shareholder submitting a proxy has the right to appoint a person or company to
represent him or her at the meeting other than the persons designated in the form of proxy
furnished by the corporation. To exercise this right, the shareholder should insert the
name of the desired representative in the blank space provided in the form of proxy and
strike out the other names or submit another appropriate proxy.
Exercise of Discretion by Proxy Holders
All Common Shares represented at the Meeting by properly executed proxies will be voted. Where
a choice with respect to any matter to be acted upon has been specified in the instrument of proxy,
Pure Technologies Ltd. – 2016 Management Information Circular
-4the Common Shares represented by the proxy will be voted or withheld from being voted in
accordance with such specification. In the absence of such specification, such common shares
will be voted FOR all of the matters set forth in the circular.
The enclosed form of proxy confers discretionary authority upon the persons named therein with
respect to amendments or variations to matters identified in the notice of Meeting and with respect
to other matters which may properly come before the Meeting. At the time of printing of the
circular, management of the Corporation knows of no such amendment, variation or other matter.
Notice-and-Access
The Corporation has elected to use the "notice-and-access" provisions under National Instrument
54-101 - Communications with Beneficial Owners of Securities of a Reporting Issuer (the "Noticeand-Access Provisions") for the Meeting in respect of mailings to its beneficial shareholders
(“Beneficial Shareholders”) but not in respect of mailings to its registered holders of Common
Shares ("Registered Shareholders"). The Notice-and-Access Provisions are a set of rules
developed by the Canadian Securities Administrators that reduce the volume of materials that
must be physically mailed to shareholders by allowing a reporting issuer to post an information
circular in respect of a meeting of its shareholders and related materials online.
The Corporation anticipates that notice-and-access will directly benefit the Corporation through
substantial reductions in postage and printing costs. The Corporation believes that notice-andaccess is also environmentally responsible to the extent that it decreases the large volume of
paper documents generated by printing proxy-related materials.
Shareholders with questions about notice-and-access can call Broadridge at +1-800-887-2244.
In order to receive a paper copy of this information circular and other relevant information,
requests by shareholders may be made up to one year from the date the information circular was
filed on the SEDAR by: (i) mailing a request to the Corporation at Suite 300, 705 – 11th Avenue
S.W. Calgary, Alberta, T2R 0E3; (ii) calling the Corporation toll free at +1-855-280-PURE (7873);
(iii) by emailing a request to [email protected]; or (iv) online at the following
websites: www.puretechltd.com and www.sedar.com. The Corporation estimates that a
shareholder's request for paper copies of the circular and other relevant information will need to
be received five days prior to the Meeting in order for such shareholder to have sufficient time to
receive and review the materials requested and return the completed form of proxy by the due
date.
Voting Securities and Principal Holders
The Corporation is authorized to issue an unlimited number of common shares, and as at the date
of this circular, there were 53,327,122 Common Shares issued and outstanding.
Shareholders at the close of business on March 21, 2016 (the “Record Date”) are entitled to
receive notice of the Meeting and to vote thereat on the basis of one vote for each Common Share
held, except to the extent that: (i) a registered holder of Common Shares has transferred the
ownership of any Common Shares subsequent to the Record Date; and (ii) the transferee of those
Common Shares produces properly endorsed certificates for such Common Shares, or otherwise
establishes that such transferee owns the Common Shares and demands, at any time before the
Meeting, that the name of such transferee be included on the shareholder list for the Meeting, in
which case, the transferee shall be entitled to vote the Common Shares at the Meeting.
Pure Technologies Ltd. – 2016 Management Information Circular
-5To the knowledge of the directors and executive officers of the Corporation, no person or
company, beneficially owns, or controls or directs, directly or indirectly, voting securities carrying
10% or more of the voting rights of the Corporation.
Approval Requirements
All of the matters to be considered at the Meeting, other than the election of directors, are ordinary
resolutions requiring approval by more than 50% of the votes cast in respect of the resolution by
or on behalf of shareholders present in person or represented by proxy at the Meeting.
BUSINESS OF THE MEETING
Item #1 – Receipt of Financial Statements
The audited consolidated financial statements of the Corporation as at and for the year ended
December 31, 2015 have been mailed to shareholders and are available to be viewed on SEDAR
at www.sedar.com.
No formal action will be taken at the Meeting to approve such financial statements, which have
already been approved by the Board of Directors. If any shareholder has questions regarding
such financial statements, such questions may be brought forward at the Meeting.
Item #2 – Fixing the Number of Directors to be Elected at the Meeting
Management of the Corporation will seek shareholder approval of an ordinary resolution fixing
the number of directors to be elected at the Meeting at eight (8). The persons named in the
accompanying Proxy intend to vote FOR fixing the number of directors at eight (8).
Item #3 – Election of the Board of Directors
The Board of Directors currently consists of Messrs. John F. Elliott, James E. Paulson, Peter O.
Paulson, Michael M. Kanovsky, Charles W. Fischer, David H. McDermid, Raymond D. Crossley,
Sara C. Elford and Scott MacDonald. Scott MacDonald has decided not to stand for re-election
due to other significant business commitments.
With the exception of Sara C. Elford, all of the directors were elected at the last annual general
meeting of the shareholders. The terms of office of each of the incumbent directors expire at
Meeting. Shareholders will be voting for each individual director rather than a slate of directors.
The Board has adopted a majority voting policy (“Majority Voting Policy”) that requires that any
nominee for director who receives a greater number of votes WITHHELD than votes FOR his or
her election as a director shall submit his or her resignation to the corporate governance and
nominating committee of the Board (the “Governance and Nominating Committee”) for
consideration promptly following the Meeting. The Governance and Nominating Committee shall
consider the resignation and shall provide a recommendation to the Board, which will determine
whether or not to accept the resignation within 90 days of the applicable meeting. The Corporation
shall then issue a news release announcing the Board’s determination. A director who tenders
his or her resignation will not participate in any meetings to consider whether the resignation shall
be accepted. This policy only applies to uncontested elections. As a result of the Majority Voting
Policy, a WITHHOLD vote is effectively the same as a vote against a director nominee in an
uncontested election.
Management of the Corporation proposes to nominate, and in the absence of instructions
to the contrary, the persons named in the accompanying Proxy intend to vote FOR, the
Pure Technologies Ltd. – 2016 Management Information Circular
-6election of the persons named below as directors of the Corporation to hold office until
the next annual meeting of the shareholders, or until his successor is duly elected or
appointed.
Management of the Corporation does not contemplate that any of the nominees will be unable to
serve as a director, but if that should occur for any reason prior to the Meeting, the persons named
in the enclosed Instrument of Proxy reserve the right to vote for another nominee in their
discretion, unless specifically instructed otherwise. Each nominee elected as a director will hold
office until the next annual meeting of the Shareholders or until his successor is duly elected or
appointed.
The information provided in the charts below, the notes thereto and in the statement below as to
security holdings has been provided by the individual nominees.
As of the date hereof, 6,514,067 Common Shares were beneficially owned or controlled, directly
or indirectly, by the directors and officers as a group, representing 12% of the issued and
outstanding Common Shares.
Pure Technologies Ltd. – 2016 Management Information Circular
-7Director Nominee Information:
James E. Paulson
Meeting Attendance
Board of Directors (Executive
Chairman)
8 of 8
100%
Voting Results
Year
Votes in Favour
2015
31,410,222
Votes Withheld
91.15%
3,048,821
8.85%
Securities Held
Calgary, Alberta, Canada
Director and Executive Chairman
since: December 21, 1996
Age: 67
Non-Independent
Peter O. Paulson
Common Shares
Options
PSUs
3,413,927*
200,000
15,000
Value of Securities
(1)
$16,386,000
*Of this amount, 3,236,600 common shares are held by Yellowbird Products Ltd., a private company
owned by Mr. James Paulson and Mr. Peter Paulson. As a result, these shares appear in the total
common shares held by Mr. James Paulson and Mr. Peter Paulson.
Bio
Mr. James E. Paulson is the Executive Chairman of the Corporation, a position he has held
since 1996. Mr. Paulson has been the President or Vice President of Yellowbird Products
Ltd., a private holding company, since 1976. Yellowbird Products Ltd. is a holding
company with interests in real estate, oil and gas, technology and financial investments.
Mr. Paulson is also an officer and director of various private companies. Mr. Paulson
received his Bachelor of Commerce from the University of Calgary and his Masters of
Business Administration from the Ivey Business School.
Meeting Attendance
Board of Directors
8 of 8
100%
Voting Results
Year
Votes in Favour
2015
31,661,094
Votes Withheld
91.88%
2,797,949
8.12%
Securities Held
Common Shares
Options
PSUs
3,545,107*
200,000
15,000
Value of Securities
(1)
$17,009,000
*Of this amount, 3,236,600 common shares are held by Yellowbird Products Ltd., a private company
owned by Mr. James Paulson and Mr. Peter Paulson. As a result, these shares appear in the total
common shares held by Mr. James Paulson and Mr. Peter Paulson.
Calgary, Alberta, Canada
Chief Technology Officer
Director since:
December 21, 1996
Age: 69
Non-Independent
Bio
Mr. Peter O. Paulson is the Chief Technology Officer of the Corporation and has held this
position since 1996. Previous to this, Mr. Paulson also held the position of Chief Executive
Officer of the Corporation from 1997 to 2014. Mr. Paulson has been the President or Vice
President of Yellowbird Products Ltd., a private holding company, since 1976. He has
developed and/or patented new technologies or products in several different industries.
Yellowbird Products Ltd. is a holding company with interests in real estate, oil and gas,
technology and financial investments. Mr. Paulson is the inventor or co-inventor of the
Corporation’s patented and patent-pending technologies. Mr. Peter Paulson received his
Bachelor of Science (Physics) from the University of Calgary.
Pure Technologies Ltd. – 2016 Management Information Circular
-8John F. Elliott
Meeting Attendance
Board of Directors
8 of 8
100%
Voting Results
Year
Votes in Favour
2015
31,662,894
Votes Withheld
91.89%
2,796,149
8.11%
Securities Held
Common Shares
Options
PSUs
275,315
175,000
18,750
Value of Securities
(1)
$1,422,000
Bio
Calgary, Alberta, Canada
Director since:
May 13, 2014
Age: 64
Non-Independent
Michael M. Kanovsky
Mr. John F. Elliott is the President and Chief Executive Officer of the Corporation. Mr.
Elliott was appointed the Chief Executive Officer of the Corporation May 13, 2014 and prior
thereto held the positions of President and Chief Operating Officer of the Corporation since
2006. Prior thereto, Mr. Elliott was General Manager of Structural Diagnostics Limited,
Operations Manager and General Manager of CCD Western Limited and Operations
Manager for Cana Construction Limited. Mr. Elliott is a Past President of the American
Concrete Institute (Alberta Chapter). Mr. Elliott is a professional engineer with a degree in
civil engineering from National University of Ireland (Cork).
Meeting Attendance
Board of Directors
8 of 8
100%
Audit Committee
4 of 4
100%
Governance and Nominating
Committee
4 of 4
100%
Voting Results
Year
Votes in Favour
2015
27,171,420
Votes Withheld
78.85%
7,284,623
21.15%
Securities Held
Calgary, Alberta, Canada
Director since:
May 14, 2003
Age: 67
Independent
Other Public Company
Directorships:
Devon Energy Corporation
Bonavista Energy Corporation
Seven Generations Energy Ltd.
Common Shares
Options
DSUs
1,470,000
100,000
7,351
Value of Securities
(1)
$7,054,000
Bio
Mr. Kanovsky is a professional engineer. He was Vice President of Corporate Finance for
Western Canada for a large Canadian investment dealer, prior to co-founding Northstar
Energy Corporation in 1978. Mr. Kanovsky served on Northstar Energy Corporation’s board
of directors until it was acquired by Devon Energy Corporation in 1998. Mr. Kanovsky has
been the President of Sky Energy Corp., a private energy and investment company since
1993. He is currently a director of a number of publicly traded companies, including Devon
Energy Corporation, Bonavista Energy Corporation and Seven Generations Energy Ltd.
Mr. Kanovsky received his degree in Mechanical Engineering from Queen’s University and
his Masters of Business Administration from the Ivey Business School.
Pure Technologies Ltd. – 2016 Management Information Circular
-9Sara C. Elford
Meeting Attendance
Board of Directors
2 of 2
100%
Voting Results
Not applicable. Ms. Elford was appointed to the Board of Directors on November 5,
2015.
Securities Held
Common Shares
Options
DSUs
20,200
-
1,480
Value of Securities
(1)
$103,000
Bio
Victoria, British Columbia,
Canada
Director since:
November 5, 2015
Age: 46
Independent
After a more than 20 year career, Ms. Elford retired from the capital markets industry in
2015. She was a sell-side equity research analyst for Canaccord Genuity Inc. from 1998
to 2015 where she followed a broad range of industries and business models. Ms. Elford
is now a corporate director and has a consulting and advisory practice. She sits on the
boards of two other publicly traded companies: Carmanah Technologies Corporation and
Hydrogenics Corporation. Ms. Elford is a member of the FTSE Environmental Markets
Committee. She has been a CFA Charterholder since 1997 and completed the academic
requirements for the directors’ education program with the Institute of Corporate Directors
in 2015. She holds a BBA in Finance and Economics from Bishop’s University.
Other Public Company
Directorships:
Carmanah Technologies
Corporation
Hydrogenics Corporation
David H. McDermid
Meeting Attendance
Board of Directors
8 of 8
100%
Audit Committee
1 of 1
100%
Human Resources and
Compensation Committee
2 of 2
100%
Governance and Nominating
Committee
4 of 4
100%
Voting Results
Year
Votes in Favour
2015
Calgary, Alberta, Canada
31,668,926
Votes Withheld
91.90%
2,790,117
8.10%
Securities Held
Director since:
May 14, 2008
Common Shares
Options
DSUs
271,800
100,000
13,067
Value of Securities
(1)
$1,402,000
Age: 73
Independent
Bio
Mr. McDermid practiced law with Bennett Jones LLP and was a partner and Chief Operating
Partner of that firm at the time of his retirement in 2000. He is now President and a major
shareholder in Ghost River Investments Ltd., a private holding company with interests in a
diverse portfolio of public and private investments. Mr. McDermid received his Bachelor of
Arts and LLB from the University of Alberta and his LLM from the London School of
Economics.
Pure Technologies Ltd. – 2016 Management Information Circular
- 10 Charles W. Fischer
Meeting Attendance
Board of Directors
8 of 8
100%
Audit Committee
4 of 4
100%
Human Resources and
Compensation Committee
(Chair)
2 of 2
100%
Voting Results
Year
Votes in Favour
2015
31,732,926
Votes Withheld
92.09%
2,726,117
7.91%
Securities Held
Calgary, Alberta, Canada
Director since:
May 14, 2009
Age: 65
Independent
Other Public Company
Directorships:
Enbridge Income Fund
Holdings Inc.
Enbridge Inc.
Enbridge Pipelines Inc.
Raymond D. Crossley
Common Shares
Options
DSUs
250,000
100,000
7,351
Value of Securities
(1)
$1,235,000
Bio
Mr. Fischer is an independent business person. Mr. Fischer was the President and Chief
Executive Officer of Nexen Inc., from 2001 to 2008. Since 1994, Mr. Fischer held various
executive positions within Nexen Inc., including the positions of Executive Vice President &
Chief Operating Officer in which he was responsible for all Nexen’s conventional oil and gas
business in Western Canada, the US Gulf Coast and all international locations, as well as
oil sands, marketing and information systems activities worldwide. Prior thereto, Mr. Fischer
held positions with Dome Petroleum Ltd, Hudson’s Bay Oil & Gas Ltd., Bow Valley Industry
Ltd., Sproule Associates Ltd. and Encor Energy Ltd. Other public and private company
board memberships include Enbridge Inc., Enbridge Commercial Trust (a subsidiary of
Enbridge Income Fund), Enbridge Income Fund Holdings Inc. and Alberta
Innovates - Energy and Environment Solutions. Mr. Fischer also sits on several non-profit
boards. Mr. Fischer holds a degree in Chemical Engineering from the University of Calgary
and a Masters of Business Administration from the University of Calgary.
Meeting Attendance
Board of Directors
7 of 7
100%
Audit Committee (Chair)
3 of 3
100%
Human Resources and
Compensation Committee
2 of 2
100%
Voting Results
Year
Votes in Favour
2015
32,154,515
Votes Withheld
93.31%
2,304,528
6.69%
Securities Held
Calgary, Alberta, Canada
Director since:
March 12, 2015
Age: 56
Independent
Other Public Company
Directorships:
Penn West Petroleum Ltd.
(Audit Committee Chair)
Common Shares
Options
DSUs
1,000
-
30,649
Value of Securities
(1)
$150,000
Bio
Mr. Crossley is a charted accountant and corporate director. Mr. Crossley retired in 2015 from
the professional services firm of PwC after more than 33 years of service. From 2011 to 2013,
Mr. Crossley was Managing Partner, Western Canada. From 2005 to 2011, Mr. Crossley was
the Managing Partner of PwC’s Calgary office and from 2001 to 2005 he served as an elected
member of the Partnership Board (PwC’s governing body). After joining the firm in Toronto in
1981, Mr. Crossley also worked in London and New York becoming a partner in 1996. Mr.
Crossley has served as a member of the Financial Review Committee of the Alberta Securities
Commission and the Commission’s Financial Advisory Committee. Mr. Crossley is also a
member of the board of directors of PennWest Petroleum and the Canada West Foundation.
Mr. Crossley is a member of the Chartered Professional Accountants of Alberta and holds the
ICD.D designation from the Institute of Corporate Directors. He graduated from the University
of Western Ontario with a degree in Economics and Political Science.
Pure Technologies Ltd. – 2016 Management Information Circular
- 11 Note:
1.
The value of the Common Shares has been determined by multiplying the number of Common Shares by the closing price
of the Common Shares on the TSX on March 16, 2016, being $4.75. The value of the “in-the-money” stock options has
been determined by subtracting the exercise price of the stock options from the closing price of the Common Shares on
March 16, 2016 being $4.75. The value of the DSUs (as defined herein) has been determined by multiplying the number
of DSUs by the closing price of the Common Shares on the TSX on March 16, 2016, being $4.75.
Cease Trade Orders, Bankruptcies, Penalties or Sanctions
None of the directors are, as at the date of this circular, nor have been, within ten years before
the date of this circular: (a) a director, chief executive officer or chief financial officer of any
company that was subject to a cease trade, an order similar to a cease trade order or an order
that denied the relevant company access to any exemption under securities legislation, which
order was in effect for a period of more than 30 consecutive days that was issued while the director
was acting in the capacity as director, chief executive officer or chief financial officer, or after such
person ceased to be a director, chief executive officer or chief financial officer and which resulted
from an event that occurred while that person was acting in such a capacity.
None of the directors are, as at the date of this circular, nor have been, within ten years before
the date of this circular, a director or executive officer of any company that, while that person was
acting in that capacity, or within a year of that person ceasing to act in that capacity, became
bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was
subject to or instituted any proceedings, arrangement or compromise with creditors or had a
receiver, receiver manager or trustee appointed to hold its assets.
None of the directors have, within the ten years before the date of this circular, become bankrupt,
made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to
or instituted any proceedings, arrangement or compromise with creditors, or had a receiver,
receiver manager or trustee appointed to hold the assets of the director.
None of the directors have been subject to any penalties or sanctions imposed by a court relating
to securities legislation or by a securities regulatory authority or has entered into a settlement
agreement with a securities regulatory authority, or any other penalties or sanctions imposed by
a court or regulatory body that would likely be considered important to a reasonable securityholder
in deciding whether to vote for a proposed director.
Item #4 – Appointment of Auditors
The independent auditors of the Corporation are KPMG LLP, Chartered Accountants, who have
served in that capacity since 1997. The Corporation has requested that KPMG LLP, Chartered
Accountants, act as independent auditors for the Corporation, subject to shareholder approval.
The resolution appointing the auditors must be passed by a simple majority of the votes cast with
respect to the resolution by shareholders present in person or by proxy at the Meeting.
The following table summarizes the audit and other fees charged by KPMG LLP for their services
during each of the 2015 and 2014 fiscal years:
Financial Year
End
(1)
Audit Related
(2)
Fees
Tax and Tax
(3)
Related Fees
2015
$366,500
-
2014
$325,000
-
Audit Fees
Pure Technologies Ltd. – 2016 Management Information Circular
(4)
Total
$138,200
-
$504,700
$27,750
-
$352,750
All Other Fees
- 12 Notes:
1.
2.
3.
4.
“Audit Fees” means the aggregate fees billed by the Corporation’s external auditor in each of the last two fiscal years for audit
services.
“Audit-Related Fees” means the aggregate fees billed in each of the last two fiscal years for assurance and related services by
the Corporation’s external auditor that are reasonably related to the performance of the audit or review of the issuer’s financial
statements and are not reported under the column Audit Fees in the chart above.
“Tax Fees” means the aggregate fees billed in each of the last two fiscal years for professional services rendered by the
Corporation’s external auditor for tax return preparation.
“All Other Fees” means the aggregate fees billed in each of the last two fiscal years for products and services provided by the
Corporation’s external auditor, other than the services reported under Audit Fees, Audit-Related Fees and Tax Fees in the chart
above.
Unless otherwise directed, the persons named in the Instrument of Proxy intend to vote
FOR the appointment of KPMG LLP, Chartered Accountants, of Calgary, Alberta as
auditors of the Corporation to hold office until the close of the next annual meeting of
shareholders at remuneration to be determined by the Board of Directors.
Item #5 – Confirmation of Amended and Restated By-Law No.1
The Board approved the adoption of the amended and restated By-Law No. 1 relating generally
to the transaction of the business and affairs of the Corporation and including procedures relating
to the advance notice of nominations of directors of the Corporation (“Advance Notice
Procedures”), the full text of which is reproduced in Appendix A to this information circular. No
person shall be eligible for election as a director of the Corporation unless nominated in
accordance with the Advance Notice Procedures.
Among other things, the Advance Notice Procedures set a deadline by which shareholders must
submit a notice of director nominations to the Corporation prior to an annual or special meeting
of shareholders as well as the information required in the notice for it to be valid. To be timely, a
shareholder must give valid notice to the Corporation:
•
Annual Meeting: not less than 30 days prior to the date of such annual meeting of
shareholders; provided, however, that, if an annual meeting of shareholders is to be held
on a date that is less than 50 days after the date on which the first public announcement
of the date of the meeting was made, notice shall be made not later than the 10th day
following the date of such first public announcement;
•
Special Meeting (not also an Annual Meeting): called for the purpose of electing
directors (whether or not called for other purposes), not later than the 15th day following
the date of the first public announcement; and
•
Notice and Access Delivery: in the case of a meeting of shareholders of the type
contemplated by either instance above for which notice-and-access is to be used for the
delivery of the applicable proxy-related materials and for which the date of the first public
announcement is not less than 50 days prior to the date of such meeting of shareholders,
not less than 40 days prior to the date of such meeting of shareholders.
An adjournment or postponement of a meeting of shareholders or the announcement thereof shall
commence a new time period for the giving of such notice.
The Advance Notice Procedures allow the Corporation and its shareholders to receive adequate
prior notice of director nominations, as well as sufficient information on all the nominees. The
Corporation and its shareholders will thus be able to evaluate the proposed nominees'
qualifications and suitability as directors. The Advance Notice Procedures will also facilitate an
orderly and efficient meeting process. The Board may, however, in its sole discretion, waive any
requirement in the Advance Notice Procedures.
Pure Technologies Ltd. – 2016 Management Information Circular
- 13 The Advance Notice Bylaw does not affect nominations made pursuant to shareholder proposals
or the requisition of a meeting of shareholders, in each case made in accordance with the
provisions of the Business Corporations Act (Alberta) (“ABCA”).
Other amendments to By-Law No. 1 include revised language in respect of providing notice to
capture delivery by electronic means and to allow for the use of notice-and-access provisions.
Proposed Resolution and Board Recommendation
At the Meeting, shareholders will be asked to consider and, if deemed advisable, pass the
following resolution:
"BE IT RESOLVED, as an ordinary resolution, that:
1.
Bylaw No. 1 relating generally to the transaction of the business and affairs of the
Corporation and including procedures relating to the advance notice of nominations of
directors of the Corporation adopted by the board of directors of the Corporation on March
15, 2016, the text of which is reproduced in Appendix A to the information circular of the
Corporation dated March 21, 2016, be ratified and confirmed as a bylaw of the
Corporation; and
2.
any director or officer of the Corporation is hereby authorized to execute and deliver,
whether under corporate seal or otherwise, the document referred to above and any other
agreements, instruments, notices, consents, acknowledgements, certificates and other
documents (including any documents required under applicable laws or regulatory
policies), and to perform and do all such other acts and things, as any such director or
officer in his or her discretion may consider to be necessary or advisable from time to time
in order to give effect to this resolution."
Shareholder approval of the amended and restated By-law No. 1 is required under the ABCA. To
pass, the resolution must be approved by a simple majority of the votes cast by all shareholders
present in person or by proxy at the Meeting. Pursuant to the ABCA, if By-law No. 1 is not
confirmed by shareholders at the Meeting, it will cease to be effective from and after the date of
the Meeting.
The Board believes that the amended and restated By-Law No. 1 is in the best interests of the
Corporation and its shareholders as it would modernize the Corporation’s notice procedures and
provide for a fair, transparent and orderly procedure for future elections of directors. Accordingly,
the Board recommends that you vote FOR the ordinary resolution to ratify and confirm the
amended and restated Bylaw No. 1.
Other Business
Management has no knowledge, as at the date hereof, of any business other than that mentioned
in the Notice of Meeting, to be presented for action by the Corporation at the Meeting. However,
the proxy solicited hereunder confers upon the proxyholder the discretionary right to exercise the
powers conferred thereunder upon any other matters and proposals that may properly come
before the Meeting.
Pure Technologies Ltd. – 2016 Management Information Circular
- 14 EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
For 2015, the named executive offices (the “Named Executive Officers” or “NEOs”) are John F.
Elliott, Chief Executive Officer, Geoffrey D. Krause, Chief Financial Officer, Peter O. Paulson,
Chief Technology Officer, James E. Paulson, Executive Chairman and Mark W. Holley, Chief
Operating Officer.
Compensation Committee
The Human Resources and Compensation Committee (the “Compensation Committee”) reports
to the Corporation’s Board of Directors (the “Board”). The Compensation Committee is currently
comprised of four (4) independent directors: Charles W. Fischer (Chair), David H. McDermid,
Raymond D. Crossley and Scott I. MacDonald. Each member of the Compensation Committee
has relevant education and experience relating to compensation practices.
Charles W. Fischer:
Mr. Fischer graduated from the University of Calgary with a degree in Chemical Engineering in
1971, and again with a Masters of Business Administration in 1982. Mr. Fischer was the President
and Chief Executive Officer of Nexen Inc. from 2001 to 2008. Since 1994, Mr. Fischer held
various executive positions within Nexen Inc., including the positions of Executive Vice President
& Chief Operating Officer in which he was responsible for all Nexen’s conventional oil and gas
business in Western Canada, the US Gulf Coast and all international locations, as well as oil
sands, marketing and information systems activities worldwide. Prior thereto, Mr. Fischer held
positions with Dome Petroleum Ltd, Hudson’s Bay Oil & Gas Ltd., Bow Valley Industry Ltd.,
Sproule Associates Ltd. and Encor Energy Ltd. Other public and private company Board
memberships include Enbridge Inc., Enbridge Commercial Trust (a subsidiary of Enbridge Income
Fund), Enbridge Income Fund Holdings Inc., Enbridge Pipelines Inc. and Alberta
Innovates - Energy and Environment Solutions. Mr. Fischer also sits on several non-profit Boards.
David H. McDermid:
Mr. McDermid received his BA and LLB from the University of Alberta and LLM from the London
School of Economics. He practised law with Bennett Jones LLP and was a partner and chief
operating partner of that firm at the time of his retirement in 2000. He is now President and a
major shareholder in Ghost River Investments Ltd. a private holding company with interests in a
diverse portfolio of public and private investments. He is an officer and director of various private
companies.
Raymond D. Crossley:
Mr. Crossley is a charted accountant and corporate director. Mr. Crossley retired in 2015 from
the professional services firm of PwC after more than 33 years of service. From 2011 to 2013,
Mr. Crossley was Managing Partner, Western Canada. From 2005 to 2011, Mr. Crossley was
the Managing Partner of PwC’s Calgary office and from 2001 to 2005 he served as an elected
member of the Partnership Board (PwC’s governing body). After joining the firm in Toronto in
1981, Mr. Crossley also worked in London and New York becoming a partner in 1996. Mr.
Crossley has served as a member of the Financial Review Committee of the Alberta Securities
Commission and the Commission’s Financial Advisory Committee. Mr. Crossley is also a
member of the board of directors of PennWest Petroleum and the Canada West Foundation. Mr.
Crossley is a member of the Chartered Professional Accountants of Alberta and holds the ICD.D
Pure Technologies Ltd. – 2016 Management Information Circular
- 15 designation from the Institute of Corporate Directors. He graduated from the University of
Western Ontario with a degree in Economics and Political Science.
Scott I. MacDonald:
Mr. MacDonald is a co-founder of McRock Capital Corporation, a venture capital firm investing in
Intelligent Infrastructure companies across North America. He was previously a partner with
Emerald Technology Ventures Inc. and previously served as Chairman of RuggedCom Inc. and
SynapSense Corporation and was a director for the Pressure Pipe Inspection Company Ltd.,
SoftSwitching Technologies Inc., Solicore Inc, WatrHub Inc., and Vaperma Inc. Prior to joining
Emerald, Mr. MacDonald held the position of Managing Director in the venture capiral subsidiary
of Ontario Power Generation, a large North American electrical utility. Mr. MacDonald is not
standing for re-election this year due to other significant business commitments hence will not be
on this committee after the Meeting.
The Compensation Committee’s mandate includes annual approval of the corporate goals and
objectives applicable to the compensation of the CEO, annual review of the CEO in light of those
goals and objectives. In respect of directors and executive officers, the Compensation Committee
is responsible for the review and recommendation to the Board of the complete compensation
programs applicable to them. The Compensation Committee also reviews and makes
recommendations to the Board regarding the Corporation’s incentive compensation plans, equitybased compensation plans, employee benefit plans and the executive compensation program.
The Compensation Committee meets at least twice a year to fulfill its mandate. In 2015, the
Compensation Committee held two formal meetings and members spent additional time
evaluating changes to the director and executive compensation programs, as further described
herein.
See also “Appendix B – Corporate Governance Disclosure – Human Resources and
Compensation Committee.”
Managing Compensation Risk
An integral part of the Compensation Committee’s responsibility is to evaluate the risk in the
context of the Corporation’s compensation programs, policies and practices. The Compensation
Committee believes that the Corporation’s compensation risk is managed by: (i) having a
balanced compensation program comprised of short, medium and long term incentives; (ii)
continuing to align compensation with measurable performance targets; (iii) periodically reviewing
external compensation practices and levels to ensure the Corporation is able to attract and retain
talent; and (iv) the 2015 implementation of a corporate policy preventing directors, executive
officers and senior management from hedging the Corporation’s stock.
Compensation Consultant Review
In September 2014, the Corporation retained Meridian Compensation Partners, Inc. (“Meridian”)
to provide advice and assistance to the Corporation respecting director and executive
compensation. As a result of this engagement and resulting recommendations, in 2015, the
Compensation Committee:
1. Approved a compensation peer group to be used for benchmarking executive compensation.
The peer group is comprised of companies in broadly similar businesses to the Corporation,
generally ranging from ¼ to 4X the Corporation’s size with the Corporation positioned at
approximately the median of the peer group. The companies in the peer group are:
Pure Technologies Ltd. – 2016 Management Information Circular
- 16 Allied Motion Technologies
Axia NetMedia Corp.
Badger Daylighting Ltd.
Badger Meter Inc.
Ballard Power Systems Inc.
Titan Logix Corp.
Computer Modelling Group Ltd.
CUI Global Inc.
Ecosynthetix Inc.
Energy Recovery Inc.
High Arctic Energy Services
Hydrogenics Corp.
Logan International Inc.
Mesa Laboratories Inc.
Steel Excel Inc.
Tesla Exploration Ltd.
2. Benchmarked executive compensation for senior executives, relative to the peer group.
3. Benchmarked Director Compensation relative to the peer group and implemented changes to
director compensation for 2015.
4. Re-designed the long-term incentive program with the addition of the Performance and
Restricted Share Unit Plan (“PRSU Plan”) pursuant to which performance share units (“PSUs”)
and restricted share units (“RSUs”) may be issued by the Corporation.
Meridian was retained on September 12, 2014. The fees paid to Meridian for advisory services
related to executive, director and equity-based compensation in the last two (2) financial years
are as follows:
Financial Year End
Executive
CompensationRelated Fees
All Other Fees
2015
$22,500
-
2014
$37,000
-
Elements of Executive Compensation
For the purposes of this section, when we refer to executive compensation, we are referring to
compensation to those at the Senior Vice-President level or above as a group. When we refer to
our “Named Executive Officers” or “NEOs”, we are referring to the Chief Executive Officer, the
Chief Financial Officer and the three most highly compensated executive officers whose total
salary and annual incentive compensation exceeded $150,000. For 2015, our Named Executive
Officers are John F. Elliott, Chief Executive Officer, Geoffrey D. Krause, Chief Financial Officer,
Peter O. Paulson, Chief Technology Officer, James E. Paulson, Executive Chairman and Mark
Holley, Chief Operating Officer.
The Corporation’s executive compensation program has been designed to attract highly qualified
and motivated individuals, and to provide fair and competitive compensation in accordance with
industry standards and with the individual’s expertise and experience. Through 2015, the
Corporation compensated its executive officers through a combination of base salary, annual
incentive and PSUs, the components of total compensation are reflected below and depicts that
approximately 43% of NEO compensation is considered “at risk”. For the purpose of the graph
below, all NEOs have been included in light of there not being material differences in NEO
compensation.
Pure Technologies Ltd. – 2016 Management Information Circular
- 17 -
Other,
11%
Annual
IncentivePlan
23%
Salary,46%
PSUs,20%
Base Salary
The base salary provides fixed cash compensation to executive officers. Base salaries of the
executive officers are recommended to the Board by the Compensation Committee and take into
account the applicable executive officer’s responsibilities, experience, expertise and
performance. In 2014, Meridian performed a competitive analysis on a select group of the
Corporation’s executive officers and, subject to certain exceptions, compensation was at or above
the 50th percentile ranking of peer group companies. In 2015, NEO salaries increased by 5.9%,
on average.
Annual Incentive Plan
The annual incentive plan encourages and rewards exceptional performance over the financial
year. Annual incentives are related to performance and may form a greater or lesser part of the
entire compensation package in any given year. Executive officers may receive an annual
incentive an amount up to 50% of base salary and the CEO and COO, up to 100% of base salary.
The annual incentive amount is based on the Board’s assessment of the Corporation’s general
performance and the relative contribution of each of the executive officers. In particular, the Board
takes into account: (i) the Corporation’s financial performance for the prior year including a
comparison of budget to actual; (ii) the performance of the Corporation at a divisional or regional
level for which the applicable executive is accountable for; and (iii) the individual performance of
the executive officers as it relates to achieving the Corporation’s strategic objectives. Safety, risk
management, special projects and initiatives and progress with new products and markets are
also considered.
For 2015, in view of the Corporation’s financial performance, the variable compensation pool has
decreased by almost 40%. Employees and mid-management with little direct or significant
influence on financial performance may be entitled to their full variable compensation subject to
personal performance. However, the majority of the senior management team have received
between 50% and 75% of their variable compensation entitlement. With the exception of Geoff
Krause, Chief Financial Officer, who received 75% of his variable compensation entitlement, the
remaining NEOs received 50% of their variable compensation entitlement. The Summary
Compensation Table on page 21 shows the annual incentive for Named Executive Officers.
Stock Options
The Board grants stock options from time to time based on its assessment of the appropriateness
of doing so in light of the long term strategic objectives of the Corporation, its current stage of
development, the need to retain or attract particular key personnel, the number of stock options
Pure Technologies Ltd. – 2016 Management Information Circular
- 18 already outstanding and overall market conditions. Stock options ensure that the executive
officers are motivated to achieve long term growth of the Corporation and maximize shareholder
value.
In 2015, the Board revised the long-term component of its executive compensation program in
response to shareholder feedback and market trends. As a result, starting in 2015, executive
officers’ long-term incentive award is weighted approximately 50% in value in the form of options,
and 50% in the form of PSUs (described below). The range of options granted to executive
officers was from 30,000 to 75,000 options per executive officer.
See also “Appendix D – Description of Security Based Compensation Arrangements.”
Performance Share Units (PSUs)
As referred to above, the Corporation’s long-term component of the executive compensation
program was revised and approximately 50% of an executive officer’s long-term incentive award
is in the form of PSUs. In 2015, shareholders approved the Corporation’s Performance and
Restricted Share Unit Plan (the “PRSU Plan”) pursuant to which the Board granted PSUs to
executive officers. These PSUs cliff vest at the end of three years and are based 75% on EBITDA
per share growth and 25% based on revenue growth, as approved by the Compensation
Committee. The PSUs will vest at 0% of target if performance is below threshold, at 50% of target
for threshold performance, at 100% of target if target performance is achieved and at 150% of
target for performance at or above maximum. In 2015, the target was an average annual 20%
revenue growth and annual 20% EBITDA per share over the three year vesting period. See also
“Appendix D – Description of Security Based Compensation Arrangements.”
Other Employee Compensation Elements
Restricted Share Units
Certain employees are eligible to receive restricted share units which will be based on individual
performance. RSUs will be granted to such employees as a percentage of base salary. As at
the date hereof, no RSUs have been granted.
Employee Share Purchase Plan
The employee share purchase plan (the “ESPP”) permits each eligible permanent employee of
the Corporation to contribute up to 10% of his or her base salary to purchase Common Shares.
Up to December 31, 2015, the Corporation matched the employee contribution up to 10%.
Effective January 1, 2016, the Corporation reduced its matching amount from 10% to 5% in order
for the ESPP to be scaleable with the Corporation’s growth and to bring the ESPP into alignment
with the market. The Common Shares purchased under the ESPP are acquired on the open
market through the facilities of a brokerage house. The ESPP is administered by the Board of
Directors.
Performance Graph
The following performance graph shows the yearly change in the cumulative total shareholder
return on the Common Shares compared with the S&P/TSX Composite Index, from December 31,
2010 to December 31, 2015. The performance of the Common Shares as set out in the graph
below is based on historical data and is not indicative of, nor is it intended to forecast, the future
performance of the Common Shares.
Pure Technologies Ltd. – 2016 Management Information Circular
- 19 -
Dec. 31,
2010
Dec. 31,
2011
Dec. 31,
2012
Dec. 31,
2013
Dec. 31,
2014
Dec. 31,
2015
S&P/TSX Composite Index
$100
$89
$92
$101
$109
$97
Pure Technologies Ltd.
$100
$60
$99
$140
$161
$103
Notes:
1.
2.
The graph reflects the total cumulative return, assuming the reinvestment of all dividends, of $100 invested on December 31,
2010 in each of Common Shares and the S&P/TSX Composite Index.
The year-end values of each investment shown on the graph are based on the share price appreciation plus dividend
reinvestment.
As indicated by the Performance Graph above, the cumulative total shareholder return for the
Corporation was approximately 3% over the period ending December 31, 2010 to the period
ending December 31, 2015. Total compensation for the named executive officers is affected by
increases and decreases in the price of the Common Shares as the value of stock options and
PSUs change with the Corporation’s share price. Changes in base salary are determined based
on competitive market conditions and are generally less affected by movement in the price of
Common Shares. While NEO compensation has increased while the stock performance has
decreased, the Corporation is satisfied that such increases are aligned with the market for these
positions.
Summary Compensation Table
The following table sets forth, for the periods indicated, the compensation paid by the Corporation
to its Named Executive Officers (defined above) during the financial year ended December 31,
2015.
Name and
Principal
Position
John F. Elliott
Chief Executive
(1)
Officer
Year
Salary
($)
Sharebased
Awards
(4)
($)
Optionbased
Awards
(5)
($)
Annual NonEquity
Incentive
Plans ($)
All Other
Compensation
(6)
($)
Total Compensation
($)
2015
330,352
152,813
-
171,426
40,885
695,476
2014
288,545
-
138,569
292,852
31,855
751,821
2013
273,438
-
88,172
275,652
29,143
666,405
Pure Technologies Ltd. – 2016 Management Information Circular
- 20 -
Year
Salary
($)
Sharebased
Awards
(4)
($)
Optionbased
Awards
(5)
($)
Annual NonEquity
Incentive
Plans ($)
All Other
Compensation
(6)
($)
Total Compensation
($)
Geoffrey D.
Krause
Chief Financial
(2)
Officer
2015
255,625
122,250
-
96,563
32,241
506,679
2014
114,583
-
133,876
93,750
42,833
385,043
Peter O.
Paulson
Chief
Technology
(1)
Officer
2015
299,449
122,250
-
150,819
36,847
609,365
2014
288,567
-
92,380
292,852
31,857
705,656
2013
273,438
-
88,172
275,652
29,144
666,405
James E.
Paulson
Executive
(1)
Chairman
2015
299,449
122,250
-
150,819
36,847
609,365
2014
288,545
-
92,380
292,852
31,855
705,632
2013
273,438
-
88,172
275,652
29,144
666,405
Mark W. Holley
Chief Operating
(3)
Officer
2015
281,188
122,250
-
141,625
188,110
733,173
2014
269,693
-
92,380
275,000
147,931
785,004
2013
235,494
-
61,721
112,399
29,609
443,525
Name and
Principal
Position
Notes:
1.
2.
3.
4.
5.
6.
Messrs. Elliott, Paulson and Paulson do not receive any compensation for their roles as directors of the Corporation.
Mr. Krause was appointed as the Corporation’s Chief Financial Officer on July 10, 2014. In 2014, Mr. Krause's annual base
salary was $250,000 and he also received a signing bonus of $30,000 which is reflected under the column "All Other
Compensation".
Mr. Holley's compensation for the first half of 2014 was paid in USD. Amounts paid have been converted into CDN at the yearend conversion rate, being 1.1627, 1.0697, and 0.9969. In 2014 Mr. Holley was paid a USD$99,840 relocation allowance which
has been converted into CDN and reflected under the column “All Other Compensation”.
The fair value of each PSU is estimated on the date of grant in accordance with IFRS 2, Share-based payments. The value of
each PSUs was determined to be $8.15, based on the fair value of the PSU on the date of issuance calculated with reference to
management's estimate of meeting the performance conditions.
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model and was
calculated in accordance with IFRS 2, Share-based payments. The value of the stock options was determined using an expected
life of 3 to 4 years, risk free interest rate of 1% and expected volatility of between 30% and 42%.
These amounts represent annual purchases under the employee stock purchase plan, the employer cost of the corporate benefit
plan and parking allowances. In respect of Mr. Holley, the amounts for 2013 and 2014 include a vehicle allowance prior to his
relocation and the amount for 2015 includes a lump sum payment of $153,182 for interest, penalties and foreign exchange
incurred by Mr. Holley as a result of the Corporation underreporting options exercised on Mr. Holley’s W2 Form (US Wage and
Tax Statement).
Outstanding Option-Based Awards and Share-Based Awards
The following table sets forth certain information concerning outstanding option-based awards
and share based awards held by the NEOs at December 31, 2015, whether granted during 2015
or prior thereto.
Option-Based Awards
Name
John F. Elliott
Number of
Securities
Underling
Unexercised
Options
(#)
Option
Exercise
Price
($)
50,000
4.25
50,000
75,000
Share-Based Awards
Option
Expiration
Date
Value of
Unexercised
in-the-money
(1)
Options
($)
Number of
Units that
have not
vested
(#)
Market or payout value of
units that have
(2)
not vested
($)
Nov. 22, 2017
21,000
18,750
87,562
5.90
Nov. 8, 2018
-
7.62
Nov. 16, 2019
21,000
Pure Technologies Ltd. – 2016 Management Information Circular
- 21 Option-Based Awards
Name
Geoffrey D. Krause
Number of
Securities
Underling
Unexercised
Options
(#)
Option
Exercise
Price
($)
35,000
35,000
Share-Based Awards
Option
Expiration
Date
Value of
Unexercised
in-the-money
(1)
Options
($)
Number of
Units that
have not
vested
(#)
Market or payout value of
units that have
(2)
not vested
($)
7.38
July 14, 2019
-
15,000
70,050
7.62
Nov. 16, 2019
15,000
70,050
15,000
70,050
15,000
70,050
Peter O. Paulson
50,000
3.28
Nov. 10, 2016
69,500
50,000
4.25
Nov. 22, 2017
21,000
50,000
5.90
Nov. 8, 2018
-
50,000
7.62
Nov. 16, 2019
90,500
James E. Paulson
50,000
3.28
Nov. 10, 2016
69,500
50,000
4.25
Nov. 22, 2017
21,000
50,000
5.90
Nov. 8, 2018
-
50,000
7.62
Nov. 16, 2019
90,500
Mark Holley
35,000
3.28
Nov. 10, 2016
48,650
35,000
4.25
Nov. 22, 2017
14,700
35,000
5.90
Nov. 8, 2018
-
50,000
7.62
Nov. 16, 2019
63,350
Notes:
1.
2.
The value of the unexercised “in-the-money” stock options has been determined by subtracting the exercise price of the stock
options from the closing price of the Common Shares on December 31, 2015 of $4.67, on the TSX, and multiplying by the number
of Common Shares that may be acquired upon the exercise of the stock options.
The market or payout value of units that have not vested is determined by multiplying the number of PSUs outstanding by closing
price of the Common Shares on December 31, 2015 of $4.67.
Incentive Plan Awards – Value Vested or Earned during the Year
The following table sets forth certain information respecting the value vested or earned during the
fiscal year ended December 31, 2015, with respect to incentive plan awards as at December 31,
2015 for the NEOs.
Option-based Awards - Value
(1)
Vested During the Year
($)
Share-based Awards - Value
(2)
Vested During the Year
($)
Non-equity Incentive Plan
Compensation - Value Earned
During the Year
($)
7,333
-
171,426
-
-
96,563
Peter O. Paulson
7,333
-
150,819
James E. Paulson
7,333
-
150,819
Mark Holley
7,333
-
141,625
Name
John F. Elliott
Geoffrey D. Krause
Notes:
1.
2.
Options granted on November 23, 2012 were granted at an exercise price of $4.25 and one-third of the stock options vested on
November 20, 2015 at a fair market value of $4.69 per share, the previous day’s closing share price. Options granted in
subsequent years that vested are out-of-the-money.
PSUs were granted on March 12, 2015 and cliff vest after three (3) years.
Pure Technologies Ltd. – 2016 Management Information Circular
- 22 Employment Agreements – Termination and Change of Control Benefits
John F. Elliott
On October 28, 2005, the Corporation entered into an employment agreement with John F. Elliott,
for the provision of services formerly as Vice President and General Manager which has evolved
into his current position of Chief Executive Officer of the Corporation. The agreement commenced
on the same date and continues for an indefinite term. The Corporation is able to terminate the
agreement for just cause or following the payment of a cash amount equal to two (2) times the
annual compensation of the executive plus an allowance of 15% of his annual base salary in lieu
of benefits and reimbursement of up to $15,000 for relocation or other employment counseling.
Where Mr. Elliott has “Good Reason” which is defined as a change of control, change of reporting
relationship or change in location for his role, he may terminate his employment within 30 days of
such an event and would be compensated at the same level as previously stated. In 2015,
Mr. Elliott’s salary in accordance with the agreement was $342,851.
Geoffrey D. Krause
On April 1, 2015, the Corporation entered into an employment agreement with Geoffrey D.
Krause, for the provision of services as Chief Financial Officer of the Corporation. The agreement
commenced on the same date and continues for an indefinite term. The Corporation is able to
terminate the agreement for just cause or following the payment of a cash amount equal to one
(1) times the annual compensation of the executive plus one additional month of monthly
compensation for each completed year of service to the Corporation to a maximum of two (2)
times his annual compensation and reimbursement of up to $15,000 for relocation or other
employment counseling. Mr. Krause may also terminate his employment in the event of a material
adverse change to his employment that would amount to constructive dismissal in a Canadian
court (a “Triggering Event”) in which case he would be entitled to the compensation noted above.
In the event of a change of control, Mr. Krause may terminate his employment provided that in
addition to the change of control, a Triggering Event occurred within one year of the change of
control. In 2015, Mr. Krause’s salary in accordance with the agreement was $257,500.
Peter O. Paulson
On May 29, 2014, the Corporation entered into an employment agreement with Peter O. Paulson,
for the provision of services as Chief Executive Officer, and now Chief Technology Officer, of the
Corporation. The agreement commenced on the same date and continues for an indefinite term.
The Corporation is able to terminate the agreement for just cause or following the payment of a
cash amount equal to one (1) times the annual compensation of the executive plus one additional
month of monthly compensation for each completed year of service to the Corporation to a
maximum of two (2) times his annual compensation and reimbursement of up to $15,000 for
relocation or other employment counseling. Mr. Paulson may also terminate his employment in
the event of a Triggering Event in which case he would be entitled to the compensation noted
above. In the event of a change of control, Mr. Paulson may terminate his employment provided
that in addition to the change of control, a Triggering Event occurred within one year of the change
of control. In 2015, Mr. Paulson’s salary in accordance with the agreement was $301,637.
James E. Paulson
On May 29, 2014, the Corporation entered into an employment agreement with James E.
Paulson, for the provision of services as Executive Chairman of the Corporation. The agreement
commenced on the same date and continues for an indefinite term. The Corporation is able to
terminate the agreement for just cause or following the payment of a cash amount equal to two
Pure Technologies Ltd. – 2016 Management Information Circular
- 23 (2) times his annual compensation. Mr. Paulson may also terminate his employment within 30
days of a Triggering Event or within 90 days of a change of control, in which case he would be
entitled to the compensation noted above. In 2015, Mr. Paulson’s salary in accordance with the
agreement was $301,637.
Mark W. Holley
On July 28, 2014, the Corporation entered into an updated employment agreement with Mark W.
Holley, for the provision of services as Chief Operating Officer of the Corporation, replacing the
previously entered into agreement with Mr. Holley dated August 15, 2012 for the provision of
services as President of Pure Technologies U.S. Inc. The agreement commenced on the same
date and continues for an indefinite term. The Corporation is able to terminate the agreement for
just cause or following the payment of a cash amount equal to one (1) times the annual
compensation of the executive plus one additional month of monthly compensation for each
completed year and reimbursement of up to $15,000 for relocation or other employment
counseling. Mr. Holley may also terminate his employment in the event of a Triggering Event in
which case he would be entitled to the compensation noted above. In the event of a change of
control, Mr. Holley may terminate his employment provided that in addition to the change of
control, a Triggering Event occurred within one year of the change of control. In 2015, Mr. Holley’s
salary in accordance with the agreement was $283,250.
The following table sets forth, for each Named Executive Officer, the amount such person would
have been entitled to receive as of December 15, 2015 in the event that: (1) the Corporation
terminates their employment without cause; or (2) the NEO terminates his employment in
accordance with the terms of his employment agreement as described above.
Termination Payments
Up to 2
Times Annual
Compensation
($)
Option-based
Awards
(1)
($)
Share-based
Awards
(2)
($)
All Other
Compensation
(3)
($)
Total Compensation
($)
John F. Elliott
1,278,511
-
87,562
15,000
1,381,073
James E. Paulson
1,120,637
-
70,050
-
1,190,687
Peter O. Paulson
1,120,639
-
70,050
15,000
1,205,689
Mark W. Holley
993,694
-
70,050
15,000
1,078,744
Geoffrey D.
Krause
454,880
-
70,050
15,000
539,930
Name
Notes:
1.
2.
3.
The value of unvested equity awards is calculated using the number of all unvested stock options valued at the price of the
Common Shares on December 31, 2015 of $4.67, on the TSX. None of the unvested stock options were in the money at
December 31, 2015.
The market or payout value of units that have not vested is determined by multiplying the number of PSUs outstanding by closing
price of the Common Shares on December 31, 2015 of $4.67.
Relocation and/or employment counselling reimbursement.
Other
No consulting fees and/or remuneration has been paid by the Corporation to any promoter, officer,
director or other insider of the Corporation or any associate or affiliate thereof nor was any
remuneration paid by the Corporation to any party for any work performed for public/investor
relations.
Pure Technologies Ltd. – 2016 Management Information Circular
- 24 DIRECTOR COMPENSATION
Director compensation was also reviewed by Meridian and, based on Meridian’s
recommendations, the current fees payable to each director of the Corporation are as follows:
Annual Board Retainer
$35,000
Payable in cash with option to elect payment in the form of DSUs
$45,000
Payable in the form of DSUs
Annual Committee Chair Retainers
$15,000 Audit Committee
Payable in cash with option to elect payment in the form of DSUs
$5,000 Compensation Committee
payable in cash with option to elect payment in the form of DSUs
$5,000 Corporate Governance Committee
payable in cash with option to elect payment in the form of DSUs
Other
Reimbursement for reasonable expenses
DSU Plan
The Corporation adopted the DSU Plan (the “DSU Plan”), effective March 12, 2015, which: (i)
encourages the directors of the Corporation to own Common Shares of the Corporation and to
facilitate such Common Share ownership; and (ii) provides directors of the Corporation with
incentives in the form of deferred share units in order to allow the Corporation to reduce its
reliance on stock options and other long-term incentive plans for the same purposes, so as to
conform with current best practices regarding directors’ and executive officers’ compensation.
The DSU Plan is administered by the Compensation Committee.
Pursuant to the DSU Plan, directors may elect to receive all or part of their retainer in deferred
share units (“DSUs”) having a market value equal to the portion of the retainer to be received in
that form, subject to such limits as the Compensation Committee may impose. The Compensation
Committee may also grant to any director in each year, DSUs having a market value not greater
than the total compensation payable to such director for that year. The number of DSUs to be
issued is determined by dividing the amount of the retainer determined as the basis for the award
by the volume-weighted average trading price of a Common Share for the 5 trading days
immediately preceding the date the DSUs are awarded. The vesting schedule of the DSUs is
determined at the discretion of the Compensation Committee, but generally in the case of DSUs
granted to directors in lieu of director retainers, the DSUs vest immediately on the award date.
Each DSU is redeemed for a cash payment equal to the market value of one Common Share on
the date of redemption (the “Redemption Value”), after deduction of applicable taxes and other
source deductions required by applicable laws.
DSUs may be redeemed in shares on the day following the director’s separation date from the
Corporation and no later than December 15 of the calendar year following the calendar year in
which the separation date occurs.
Ownership Guidelines for Non-Executive Directors
On March 12, 2015, the Corporation implemented the Non-Executive Director Share Ownership
Guidelines, which requires that non-executive directors own Common Shares and DSUs, both
vested or unvested, which in the aggregate have a value equal to three times their cash retainer,
with such target to be achieved within five years of the later of the date they are elected or
Pure Technologies Ltd. – 2016 Management Information Circular
- 25 appointed to the Board and March 12, 2015. The determination date of compliance with the
guidelines is January 2nd of each year based on the closing price of the Common Shares as
reported on the TSX for the fiscal year ended immediately prior to such date.
Failure to meet or show sustained progress toward meeting the ownership requirements set forth
in the Non-Executive Director Share Ownership Guidelines may result in a reduction in future
short and long term incentive grants to the non-executive director and/or the requirement to retain
all shares obtained through the vesting or exercise of equity grants.
The Non-Executive Director Share Ownership Guidelines also contains a provision that should
there be a significant reduction in share value caused by market fluctuations that results in a
previously met ownership criteria dropping below the ownership guideline, the subject director will
have a reasonable opportunity to rectify the share position to conform to the guidelines, as
reasonably determined by the Compensation Committee.
Non-Executive Director Compensation Tables
The following table sets forth the compensation paid to each of the non-executive directors of the
Corporation during the financial year ended December 31, 2015.
Name
(1)
Raymond Crossley
Sara Elford
(4)
Charles Fischer
Michael Kanovsky
Scott MacDonald
David McDermid
(5)
(5)
(4)
Retainer Fees
Earned
Committee Chair
Retainer Fees
Earned
Share-Based
(2)
Awards
All Other
(3)
Compensation
Total
($)
($)
($)
($)
($)
28,195
5,811
238,252
2,385
272,258
5,421
-
6,971
-
12,392
35,000
5,000
45,000
278
85,278
35,000
5,439
45,000
278
85,717
-
-
85,000
525
85,525
-
-
80,000
395
80,395
Notes:
1.
2.
3.
4.
5.
Messrs. John Elliott, Peter Paulson and James Paulson did not receive any compensation in their capacity as directors of the
Corporation. For their executive compensation, please refer to “Executive Compensation”.
The value of the DSUs has been determined by taking the number of DSUs held by each director times the market value of the
DSU on December 31, 2015, on the TSX. Raymond Crossley received an onboarding grant of $202,002 payable in the form of
DSUs.
Represents dividend equivalents earned on the outstanding DSUs.
Raymond Crossley was appointed to the Board on March 12, 2015 and as Chair of the Audit Committee on May 12, 2015. Sara
Elford was appointed to the Board on November 5, 2015.
Messrs. MacDonald and McDermid elected to receive their retainers in DSUs which is reflected under Share-Based Awards.
Pure Technologies Ltd. – 2016 Management Information Circular
- 26 Directors’ Outstanding Option-Based Awards and Share-Based Awards
The following table sets forth certain information concerning outstanding option-based awards
and share-based awards held by the directors at December 31, 2015, whether granted during
2015 or prior thereto.
Option-Based Awards
Name
Raymond Crossley
Number of
Securities
Underling
Unexercised
Options
(#)
Option
Exercise
Price
($)
-
-
Share-Based Awards
Option
Expiration
Date
Value of
Unexercised
in-the-money
(1)
Options
($)
Number of
Units that
have not
vested
(#)
Market or payout value of
units that have
(2)
not vested
($)
-
-
31,086
145,171
1,480
6,911
5,008
23,387
7,406
34,586
13,987
65,319
13,164
61,475
Sara Elford
-
-
-
-
Charles Fischer
25,000
3.28
Nov.10, 2016
34,750
25,000
4.25
Nov. 22, 2017
10,500
25,000
5.90
Nov. 8, 2018
-
25,000
7.62
Nov. 16, 2019
45,250
Michael Kanovsky
25,000
3.28
Nov. 10, 2016
34,750
25,000
4.25
Nov. 22, 2017
10,500
25,000
5.90
Nov. 8, 2018
-
25,000
7.62
Nov. 16, 2019
45,250
Scott MacDonald
25,000
4.25
Nov. 22, 2017
10,500
25,000
5.90
Nov. 8, 2018
-
25,000
7.62
Nov. 16, 2019
-
David McDermid
25,000
3.28
Nov. 10, 2016
34,750
25,000
4.25
Nov. 22, 2017
10,500
25,000
5.90
Nov. 8, 2018
-
25,000
7.62
Nov. 16, 2019
-
45,250
Notes:
1.
2.
The value of the unexercised “in-the-money” stock options has been determined by subtracting the exercise price of the stock
options from the closing price of the Common Shares on December 31, 2015 of $4.67, on the TSX, and multiplying by the number
of Common Shares that may be acquired upon the exercise of the stock options.
The market or payout value of units that have not vested is based on the closing price of the Common Shares on December 31,
2015 of $4.67 times the number of DSUs held.
Pure Technologies Ltd. – 2016 Management Information Circular
- 27 Directors’ Incentive Plan Awards – Value Vested or Earned during the Year
The following table sets forth certain information respecting the value vested or earned during the
fiscal year ended December 31, 2015, with respect to incentive plan awards of directors as at
December 31, 2015.
Name
Option-based Awards - Value
(1)
Vested During the Year
($)
Share-based Awards - Value
(2)
Vested During the Year
($)
-
-
Raymond Crossley
-
-
Michael Kanovsky
3,667
-
Charles Fischer
3,667
-
Scott MacDonald
3,667
-
David McDermid
3,667
-
Sara Elford
Notes:
1.
2.
Options granted on November 23, 2012 were granted at an exercise price of $4.25 and one-third of the stock options vested on
November 20, 2015 at a fair market value of $4.69 per share, the previous day’s closing share price. Options granted in
subsequent years that vested are out-of-the-money.
In accordance with the DSU Plan, DSUs do not vest until the retirement from the Board.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The Corporation’s equity compensation plans consist of the Stock Option Plan and the PRSU
Plan. See also “Appendix D – Description of Security Based Compensation Arrangements.”
The following table sets forth information in respect of securities authorized for issuance under
the Stock Option Plan and the PRSU Plan as at December 31, 2015.
Plan
Equity compensation plans
approved by security holders
Number of securities to be
issued upon exercise of
outstanding options
Weighted-average exercise
price of outstanding options
4,351,070
$5.70
Number of securities
remaining available for future
issuance under equity
compensation plans
903,298
(1)
Notes:
1.
2.
Includes securities available for issuance under the PRSU Plan.
As at December 31, 2015, pursuant to the PRSU Plan, 118,750 PSUs were held by certain officers and management.
INTEREST OF CERTAIN PERSONS AND COMPANIES IN MATTERS TO BE ACTED UPON
Management of the Corporation is not aware of any material interest, direct or indirect, by way of
beneficial ownership of securities or otherwise, of any director, or executive officer who has held
office as such since the beginning of the Corporation’s last financial year, any nominee for election
as a director or any associate or affiliate of any of the foregoing in any matter to be acted on at
the Meeting, other than the election of directors or the appointment of auditor, except as disclosed
herein.
Pure Technologies Ltd. – 2016 Management Information Circular
- 28 INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
No current or former directors, executive officers or employees of the Corporation are indebted to
the Corporation or another entity for which the Corporation or any of its subsidiaries have provided
a guarantee, support agreement, letter of credit or other similar arrangement or understanding.
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
No informed person of the Corporation, proposed director, any associate or affiliate of any
informed person or proposed director, or any associate or affiliate of any informed person or
proposed director, has or has had any material interest, direct or indirect, in any transaction since
the commencement of the Corporation’s last financial year or in any proposed transaction that
has materially affected or would materially affect the Corporation or any of its subsidiaries.
Pure Technologies Ltd. – 2016 Management Information Circular
A-1
APPENDIX A – BY-LAW NO. 1
A by-law relating generally to
the transaction of the business
and affairs of
PURE TECHNOLOGIES LTD.
(the “Corporation”)
ARTICLE 1
INTERPRETATION
1.1
Definitions
In the by-laws of the Corporation, unless the context otherwise requires:
1.2
(a)
“Act” means the Business Corporations Act (Alberta), Revised Statutes of Alberta
2000, Chapter B-9 as from time to time amended, re-enacted or replaced;
(b)
“Applicable Securities Laws” means the applicable securities legislation of each
relevant province and territory of Canada, as amended from time to time, the rules,
regulations, and forms made or promulgated under any such statute and the
published national instruments, multilateral instruments, policies, bulletins and
notices of the securities commission and similar regulatory authority of each
province and territory of Canada;
(c)
“articles” means the articles of the Corporation as defined in the Act;
(d)
“board” means the board of directors of the Corporation;
(e)
“meeting of shareholders” means an annual meeting of shareholders or a special
meeting of shareholders; and
(f)
“public announcement” means disclosure in a press release reported by a
national news service in Canada, or in a document publicly filed by the Corporation
under its profile on the System of Electronic Document Analysis and Retrieval at
www.sedar.com.
Interpretation. In this by-law and all other by-laws of the Corporation words importing the
singular number only include the plural and vice versa; words importing any gender
include all genders; words importing persons include individuals, corporations, limited and
unlimited liability companies, general and limited partnerships, associations, trusts,
unincorporated organizations, joint ventures and governmental authorities; terms that are
not otherwise defined in this by-law have the meanings attributed to them in the Act.
ARTICLE 2
DIRECTORS
2.1
Place of meetings. Meetings of the board may be held at any place within or outside of
the Province of Alberta.
Pure Technologies Ltd. – 2016 Management Information Circular
A-2
2.2
Meetings by telephonic or electronic means. A meeting of the directors may be held by
means of a telephonic, electronic or other communication facility that permits all
participants to communicate adequately with each other during the meeting.
2.3
Calling of and notice of meetings. Meetings of the board will be held on such day and at
such time and place as the Chair of the board, the President of the Corporation, the
Secretary of the Corporation or any two directors may determine. Notice of meetings of
the board will be given to each director not less than 24 hours before the time when the
meeting is to be held. Each newly elected board may without notice hold its first meeting
for the purposes of organization and the appointment of officers immediately following the
meeting of shareholders at which such board was elected.
2.4
Quorum. A majority of the directors in office constitutes a quorum at any meeting of
directors.
2.5
Votes to govern. At all meetings of the board every question will be decided by a majority
of the votes cast on the question; and in case of an equality of votes the chair of the
meeting will not be entitled to a second or casting vote.
2.6
Interest of directors and officers generally in contracts. No director or officer will be
disqualified by his or her office from contracting with the Corporation nor will any contract
or arrangement entered into by or on behalf of the Corporation with any director or officer
or in which any director or officer is in any way interested be liable to be voided nor will
any director or officer so contracting or being so interested be liable to account to the
Corporation for any profit realized by any such contract or arrangement by reason of such
director or officer holding that office or of the fiduciary relationship thereby established
provided that, in each case, the director or officer has complied with the provisions of the
Act.
2.7
Advance Notice for Nomination of Directors.
(a)
Only individuals who are nominated in accordance with the procedures set out in
this Section 2.7 and who, at the discretion of the board, satisfy the qualifications of
a director as set out in the Act and the by-laws of the Corporation shall be eligible
for election as directors of the Corporation at any meeting of shareholders of the
Corporation. Nominations of individuals for election to the board may be made at
any annual meeting of shareholders or at any special meeting of shareholders if
one of the purposes for which the special meeting was called was the election of
directors: (i) by or at the direction of the board, including pursuant to a notice of
meeting; (ii) by or at the direction or request of one or more shareholders pursuant
to a proposal made in accordance with the Act or a requisition of the shareholders
made in accordance with the Act; or (iii) without limiting (i) or (ii), by any person (a
“Nominating Shareholder”) who: (A) at the close of business on the date of the
giving of the notice provided for below in this Section 2.7 and on the record date
for notice of such meeting, is a registered holder of shares carrying the right to vote
at such meeting on the election of directors; and (B) complies with the notice
procedures set forth in this Section 2.7.
(b)
In addition to any other applicable requirements, for a nomination to be made by a
Nominating Shareholder, the Nominating Shareholder must have given timely
notice thereof and in proper written form to the Secretary of the Corporation at the
principal executive offices of the Corporation in accordance with this Section 2.7.
Pure Technologies Ltd. – 2016 Management Information Circular
A-3
(c)
To give “timely notice”, a Nominating Shareholder must give notice to the
Secretary: (a) in the case of an annual meeting of shareholders, not less than
30 days prior to the date of such annual meeting of shareholders; provided,
however, that, if an annual meeting of shareholders is to be held on a date that is
less than 50 days after the date on which the first public announcement of the date
of the meeting was made (each such date being the “Notice Date”), notice by the
Nominating Shareholder may be made not later than the 10th day following the
applicable Notice Date; (b) in the case of a special meeting (which is not also an
annual meeting) of shareholders called for the purpose of electing directors
(whether or not called for other purposes), not later than the 15th day following the
applicable Notice Date; and (c) in the case of a meeting of shareholders of the type
contemplated by (a) or (b) above for which notice-and-access is to be used for the
delivery of the applicable proxy-related materials and for which the Notice Date is
not less than 50 days prior to the date of such meeting of shareholders, not less
than 40 days prior to the date of such meeting of shareholders.
An adjournment or postponement of a meeting of shareholders or the
announcement thereof shall commence a new time period for the giving of such
notice.
(d)
To be in “proper written form”, a Nominating Shareholder’s notice to the
Secretary must set forth:
(i)
as to each person whom the nominating Shareholder proposes to nominate
for election as a director: (A) the name, age, business address and
residential address of the person; (B) the principal occupation or
employment of the person for the last five years; (C) the status of such
person as a “resident Canadian” as defined in the Act; (D) the class or
series and number of shares in the capital of the Corporation which are
controlled or which are owned beneficially or of record by the person as of
the record date for the meeting of shareholders (if such date shall then have
been made publicly available and shall have occurred) and as of the date
of such notice; and (E) any other information relating to the person that
would be required to be disclosed in a dissident’s proxy circular in
connection with solicitations of proxies for election of directors pursuant to
the Act and applicable securities laws; and
(ii)
as to the Nominating Shareholder giving the notice any information relating
to such Nominating Shareholder that would be required to be made in a
dissident’s proxy circular in connection with solicitation of proxies for
election of directors pursuant to the act and applicable securities laws.
(e)
All information to be provided in a timely notice pursuant to Section 2.7(d) above
shall be provided as of the date of such notice. If requested by the Corporation,
the Nominating Shareholder shall update such information forthwith so that it is
true and correct in all material respects as of the record date for the meeting of
shareholders.
(f)
No individual shall be eligible for election as a director of the Corporation unless
nominated in accordance with the provisions of the by-laws of the Corporation;
provided, however, that nothing in this Section 2.7 shall preclude discussion by a
shareholder or proxy holder (as distinct from the nomination of directors) at a
Pure Technologies Ltd. – 2016 Management Information Circular
A-4
meeting of shareholders of any matter in respect of which it would have been
entitled to submit a proposal pursuant to the provisions of the Act. The chair of the
meeting shall have the power and duty to determine whether a nomination was
made in accordance with the procedures set forth in the foregoing provisions and,
if any proposed nomination is not in compliance with such foregoing provisions, to
declare that such defective nomination shall be disregarded. A duly appointed
proxy holder of a Nominating Shareholder shall be entitled to nominate at a
meeting of shareholders the directors nominated by the Nominating Shareholder,
provided that all of the requirements of this Section 2.7 have been satisfied. If the
Nominating Shareholder or its duly appointed proxy holder does not attend at the
meeting of shareholders to present the nomination, the nomination shall be
disregarded notwithstanding that proxies in respect of such nomination may have
been received by the Corporation.
(g)
In addition to the provisions of this Section 2.7, a Nominating Shareholder and any
individual nominated by the Nominating Shareholder shall also comply with all of
the applicable requirements of the Act, applicable securities laws and applicable
stock exchange rules regarding the matters set forth herein.
(h)
Notwithstanding any other provision of the Corporation’s by-laws, notice given to
the Secretary of the Corporation by a Nominating Shareholder pursuant to this
Section 2.7 may only be given by personal delivery (at the principal executive
offices of the Corporation) or by e-mail (at the e-mail address set out in the
Corporation’s issuer profile on SEDAR), and shall be deemed to have been given
and made only at the time it is so served by personal delivery to the Secretary of
the Corporation or sent by e-mail to such e-mail address (provided that receipt of
confirmation of such transmission has been received); provided that if such
delivery or electronic communication is made on a day which is a not a business
day or later than 5:00 p.m. (Calgary time) on a day which is a business day, then
such delivery or electronic communication shall be deemed to have been made on
the next following day that is a business day.
(i)
Notwithstanding the foregoing, the board may, in its sole discretion, waive any
requirement in this Section 2.7. For clarity, nothing in this Section 2.7 shall limit the
right of the directors to fill a vacancy among the directors in accordance with
Section 2.10.
2.8
Chair and Secretary. The chair of any meeting of the board shall be the Chair of the board,
if present, and, if the Chair of the board is not present or if he or she declines or is unable
to act, the directors present shall choose one of their number to be chair. The Secretary
of the Corporation shall act as secretary at any meeting of the board and, if the Secretary
of the Corporation is not present or if he or she declines or is unable to act, the chair of
the meeting shall appoint a person who need not be a director to act as secretary of the
meeting.
2.9
Remuneration and Expenses. The directors shall be paid such remuneration for their
services as the board may from time to time determine. The directors shall also be entitled
to be reimbursed for travelling and other expenses properly incurred by them in attending
meetings of shareholders or of the board or any committee thereof or otherwise in the
performance of their duties. Nothing herein contained shall preclude any director from
serving the Corporation in any other capacity and receiving remuneration therefor.
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2.10
Vacancies. Subject to the Act, a quorum of the board may fill a vacancy in the board,
except a vacancy resulting from an increase in the minimum number of directors or from
a failure of the shareholders to elect the minimum number of directors. .If the vacancy has
arisen from a failure of the shareholders to elect the minimum number of directors or from
an increase in the minimum number of directors, the board shall forthwith call a special
meeting of the shareholders to fill the vacancy. If the board fails to call such a meeting
within 14 days of the director’s position becoming vacant, or if there are no such directors
then in office, any shareholder may call the meeting.
ARTICLE 3
COMMITTEES
3.1
Committee of Directors. The board shall establish an audit committee and may, from time
to time, establish (or dissolve) other committee(s) of directors, however designated. The
board may appoint and remove the members of each committee subject to the
requirements of the Act. The board may delegate to such committee or committees any
of the powers and duties of the board, subject to the limitations on such delegation
contained in the Act.
3.2
Transaction of Business. Subject to the Act, the board may delegate to any such
committee or committees the powers of the directors.
3.3
Procedure. The board shall appoint a chair of each such committee to serve at the
pleasure of the board. Subject to the Act and unless otherwise determined by resolution
of the board, a majority of the members of a committee shall constitute a quorum for
meetings of committees, and in all other respects, each such committee shall have the
power to determine its own rules of procedure.
ARTICLE 4
SHAREHOLDERS’ MEETINGS
4.1
Place and Time of Meetings. Meetings of shareholders may be held at any place within
or outside of the Province of Alberta on such date and time as may be determined by the
board. To the extent permitted by the Act, meetings of shareholders may be held entirely
by means of a telephonic, electronic or other communication facility, including
teleconferencing, video conferencing, computer link, webcasting and other similar means.
4.2
Meeting by Telephonic, Electronic or Other Means. If authorized by the board in its sole
discretion, and subject to the Act and such guidelines and procedures as the board may
adopt, shareholders and proxy holders not physically present at a meeting of shareholders
may participate in a meeting of shareholders by means of a telephonic, electronic or other
communication facility that permits all participants to communicate adequately with each
other during the meeting, if the Corporation makes available such a communication facility,
and shall be deemed for the purposes of the Act to be present in person at the meeting of
shareholders whether such meeting is to be held at a designated place or solely by means
of a telephonic, electronic or other communication facility.
4.3
Notice of Meetings. Notice of the time and place (if any) of every meeting of shareholders
shall be sent, not less than 21 days and not more than 50 days before the date on which
the meeting is to be held, to each director, the auditor of the Corporation, and to each
person who on the applicable record date for notice appears in the securities register of
the Corporation as the holder of one or more shares carrying the right to vote at the
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meeting or as the holder of one or more shares which are otherwise entitled to receive
notice of the meeting.
4.4
Chair and Secretary. The Chair of the board or, if the Chair of the board is not present or
if he or she declines or is unable to act, the Chief Executive Officer or, if the Chief
Executive Officer is not present or if he or she declines or is unable to act, any director; in
each case unless another person is or has been designated by the board to act as chair
of such meeting and such person is present and willing to act as chair at such meeting, in
which case the person so designated shall preside as chair. The Secretary of the
Corporation shall act as secretary at any meeting of shareholders or, if the Secretary of
the Corporation is not present or if he or she declines or is unable to act, the chair of the
meeting shall appoint some person, who need not be a shareholder, to act as secretary
of the meeting. If desired, one or more scrutineers, who need not be shareholders, may
be appointed by the chair of the meeting.
4.5
Persons Entitled to be Present. The only persons entitled to be present at a meeting of
shareholders shall be those entitled to vote thereat, the directors and the auditor of the
Corporation and others who, although not entitled to vote are entitled or required under
any provision of the Act or the articles or the by-laws to be present at the meeting. Any
other person may be admitted only on the invitation of the chair of the meeting or with the
consent of the meeting.
4.6
Quorum. At any meeting of shareholders a quorum will be two persons present in person
or by means of a telephonic, electronic or other communication facility that permits all
participants to communicate adequately with each other during the meeting and each
entitled to vote at the meeting and holding or representing by proxy not less than 25% of
the votes entitled to be cast at the meeting.
4.7
Proxies. A shareholder is entitled to vote in person or by proxy or, if a body corporate or
an association, by any individual duly authorized by a resolution of the directors or
governing body of the body corporate or association. To the extent permitted by the Act,
the directors may provide for the depositing and tabulation of proxies by telephonic,
electronic or other communication means.
4.8
Procedures at Meetings. The board may determine the procedures to be followed at any
meeting of shareholders including, without limitation, the rules of order. Subject to the
foregoing, the chair of a meeting may determine the procedures of the meeting in all
respects.
4.9
Votes to Govern. At any meeting of shareholders every question shall, unless otherwise
required by the articles or by-laws or by law, be determined by a majority of the votes cast
on the question, whether by a show of hands, or by ballot, as the case may be. In case of
an equality of votes either upon a show of hands or upon a ballot, the chair of the meeting
shall not be entitled to a second or casting vote.
4.10
Show of Hands. Subject to the provisions of the Act, any question at a meeting of
shareholders shall be decided by a show of hands unless a ballot thereon is required or
demanded as hereinafter provided. Upon a show of hands every person who is present
and entitled to vote shall have one vote. Whenever a vote by show of hands shall have
been taken upon a question, unless a ballot thereon is so required or demanded, a
declaration by the chair of the meeting that the vote upon the question has been carried
or carried by a particular majority or not carried and an entry to that effect in the minutes
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of the meeting shall be prima facie evidence of the fact without proof of the number or
proportion of the votes recorded in favour of or against any resolution or other proceeding
in respect of such question, and the result of the vote so taken shall be the decision of the
shareholders upon such question.
4.11
Ballots. On any question proposed for consideration at a meeting of shareholders, and
whether or not a vote by show of hands has been taken thereon, a ballot may be required
by the chair of the meeting or demanded by any shareholder or proxyholder entitled to
vote at the meeting. A ballot so required or demanded shall be taken in such manner as
the chair of the meeting shall direct. A requirement or demand for a ballot may be
withdrawn at any time prior to the taking of the ballot. If a ballot is taken each person
present shall be entitled, in respect of the shares which he or she is entitled to vote at the
meeting upon the question, to that number of votes provided by the Act or the articles, and
the result of the ballot so taken shall be the decision of the shareholders upon such
question.
4.12
Postponement or Cancellation of Meetings. A meeting of shareholders may be postponed
or cancelled by the board at any time prior to the date of the meeting.
ARTICLE 5
PROTECTION OF DIRECTORS, OFFICERS AND OTHERS
5.1
Conflict of Interest. A director or officer who is a party to, or who is a director or officer of,
or has a material interest in, any person who is a party to, a material contract or transaction
or proposed material contract or transaction with the Corporation, shall disclose in writing
to the Corporation or request to have entered in the minutes of the meetings of the board
the nature and extent of his or her interest at the time and in the manner provided by the
Act. Any such contract or transaction or proposed contract or transaction (excluding, for
clarity, any retail consumer contract with the Corporation to which such director or officer
is a party) shall be referred to the board for approval even if such contract or transaction
is one that in the ordinary course of the Corporation’s business would not require approval
by the board, and a director interested in a contract or transaction so referred to the board
shall not attend any part of a meeting of directors during which the contract or transaction
is discussed and shall not vote on any resolution to approve the same except as permitted
by the Act. If no quorum exists for the purpose of voting on such a resolution only because
a director is not permitted to be present at the meeting due to a conflict of interest, the
remaining directors shall be deemed to constitute a quorum for the purposes of voting on
the resolution. Where all of the directors are required to make a disclosure under this
Section 5.1, the contract or transaction may only be approved by the shareholders.
5.2
Indemnification of Directors and Officers. The Corporation will indemnify any director or
officer of the Corporation, any former director or officer of the Corporation or any individual
who acts or acted at the Corporation’s request as a director or officer, or in a similar
capacity, of another entity, and his or her heirs and legal representatives to the extent
permitted by the Act and will, subject to the terms of any indemnification agreement
between the indemnified party and the Corporation, advance moneys to the indemnified
party for costs, charges and expenses reasonably incurred by the indemnified party in
respect of any proceeding in which the indemnified party is, or has been or may be
involved or is or may be liable for or in respect of a judgment, penalty or fine by reason of
or arising, in whole or in part, out of or in connection with or incidental to (a) the fact the
indemnified party: (i) is or was a director or officer of the Corporation; (ii) is or was acting
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at the Corporation’s request as a director or officer, or in a similar capacity, of any entity;
or (b) anything done or not done by the indemnified party in any such capacity. Such
advance of moneys will be made by the Corporation only to the extent the Corporation
receives a written demand from the indemnified party which must include: (a) affirmation
of the indemnified party’s good faith belief that he or she is entitled to indemnification by
the Corporation hereunder together with particulars of the costs to be covered by the
advance of moneys by the Corporation; and (b) an undertaking from the indemnified party
to repay all such advances if and to the extent that it is determined pursuant to a final
judicial determination (as to which all rights of appeal therefrom have been exhausted or
lapsed) by a court of competent jurisdiction that the indemnified party was not entitled to
indemnification hereunder or that the payment of such costs, charges or expenses was
prohibited by applicable law.
5.3
Indemnity of Others. Except as otherwise required by the Act and subject to Section 5.5,
the Corporation may from time to time indemnify and save harmless any person who was
or is a party or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation) by reason of the fact that he or she is or
was an employee or agent of the Corporation, or is or was serving at the request of the
Corporation as an employee, agent of or participant in another entity, against expenses
(including legal fees), judgments, fines and any amount actually and reasonably incurred
by him or her in connection with such action, suit or proceeding if he or she acted honestly
and in good faith with a view to the best interests of the Corporation or, as the case may
be, to the best interests of the other entity for which he or she served at the Corporation’s
request and, with respect to any criminal or administrative action or proceeding that is
enforced by a monetary penalty, had reasonable grounds for believing that his or her
conduct was lawful. The termination of any action, suit or proceeding by judgment, order,
settlement or conviction will not, of itself, create a presumption that the person did not act
honestly and in good faith with a view to the best interests of the Corporation or other
entity and, with respect to any criminal or administrative action or proceeding that is
enforced by a monetary penalty, had no reasonable grounds for believing that his or her
conduct was lawful.
5.4
Right of Indemnity not Exclusive. The provisions for indemnification contained in the bylaws of the Corporation will not be deemed exclusive of any other rights to which any
person seeking indemnification may be entitled under any agreement, vote of
shareholders or directors or otherwise, both as to action in his or her official capacity and
as to action in another capacity, and will continue as to a person who has ceased to be a
director, officer, employee or agent and will inure to the benefit of that person’s heirs and
legal representatives.
5.5
No Liability of Directors or Officers for Certain Matters. To the extent permitted by law, no
director or officer for the time being of the Corporation will be liable for the acts, receipts,
neglects or defaults of any other director or officer or employee or for joining in any receipt
or act for conformity or for any loss, damage or expense happening to the Corporation
through the insufficiency or deficiency of title to any property acquired by the Corporation
or for or on behalf of the Corporation or for the insufficiency or deficiency of any security
in or upon which any of the moneys of or belonging to the Corporation will be placed out
or invested or for any loss or damage arising from the bankruptcy, insolvency or tortious
act of any person, firm or body corporate with whom or which any moneys, securities or
other assets belonging to the Corporation will be lodged or deposited or for any loss,
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conversion, misapplication or misappropriation of or any damage resulting from any
dealings with any moneys, securities or other assets belonging to the Corporation or for
any other loss, damage or misfortune whatever which may happen in the execution of the
duties of his or her respective office or trust or in relation thereto unless the same will
happen by or through his or her failure to act honestly and in good faith with a view to the
best interests of the Corporation and in connection therewith to exercise the care,
diligence and skill that a reasonably prudent person would exercise in comparable
circumstances. If any director or officer of the Corporation is employed by or performs
services for the Corporation otherwise than as a director or officer or is a member of a firm
or a shareholder, director or officer of a body corporate which is employed by or performs
services for the Corporation, the fact that the person is a director or officer of the
Corporation will not disentitle such director or officer or such firm or body corporate, as the
case may be, from receiving proper remuneration for such services.
5.6
Insurance. Subject to the Act, the Corporation may purchase and maintain insurance for
the benefit of any person referred to in the preceding section against any liability incurred
by him in his capacity as a director or officer of the Corporation or of anybody corporate
where he acts or acted in that capacity at the Corporation’s request.
ARTICLE 6
BANKING ARRANGEMENTS, CONTRACTS, ETC.
6.1
Banking Arrangements. The banking business of the Corporation, or any part thereof, will
be transacted with such banks, trust companies or other financial institutions as the board
may designate, appoint or authorize from time to time and all such banking business, or
any part thereof, will be transacted on the Corporation’s behalf by one or more officers or
other persons as the board may designate, direct or authorize from time to time.
6.2
Execution of Instruments. Contracts, documents or instruments in writing requiring
execution by the Corporation will be signed by hand by [any one officer or director of
the Corporation] [any person so authorized by the board from time to time] and all
contracts, documents or instruments in writing so signed will be binding upon the
Corporation without any further authorization or formality. The board is authorized from
time to time by resolution:
(a)
to appoint any officer or any other person on behalf of the Corporation to sign by
hand and deliver either contracts, documents or instruments in writing generally or
to sign either by hand or by facsimile or mechanical signature or otherwise and
deliver specific contracts, documents or instruments in writing, and
(b)
to delegate to any two officers of the Corporation the powers to designate, direct
or authorize from time to time in writing one or more officers or other persons on
the Corporation’s behalf to sign either by hand or by facsimile or mechanical
signature or otherwise and deliver contracts, documents or instruments in writing
of such type and on such terms and conditions as such two officers see fit.
Contracts, documents or instruments in writing that are to be signed by hand may be
signed electronically. The term “contracts, documents or instruments in writing” as used
in this by-law includes without limitation deeds, mortgages, charges, conveyances, powers
of attorney, transfers and assignments of property of all kinds (including specifically but
without limitation transfers and assignments of shares, warrants, bonds, debentures or
other securities), proxies for shares or other securities and all paper writings.
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ARTICLE 7
NOTICES
7.1
Notice to Directors, Officers and Auditors. Whenever under the Act, the regulations, the
articles or these by-laws any notice, document or other information is required to be sent
to a director, officer, auditor or member of a committee of the board, such notice may be
sent either: (a) by hand delivery, through the mail, or by a nationally recognized overnight
delivery service for next day delivery; or (b) by means of fax, e-mail or other form of
electronic transmission. A notice to a director, officer, auditor or member of a committee
of the board will be deemed to be received as follows (i) if given by hand delivery, when
actually received by the director, officer, auditor or member of a committee of the board,
(ii) if sent through the mail addressed to the director, officer, auditor or member of a
committee of the board at such individual’s address appearing on the records of the
Corporation, at the time it would be delivered in the ordinary course of mail, (iii) if sent for
next day delivery by a nationally recognized overnight delivery service addressed to the
director, officer, auditor or member of a committee of the board at such individual’s
address appearing on the records of the Corporation, when delivered to such service, (iv)
if sent by fax, when sent to the fax number for such director, officer, auditor or member of
a committee of the board appearing on the records of the Corporation and evidence of
delivery confirmation is received by sender’s fax device, (v) if sent by e-mail, when sent to
the e-mail address for such director, officer, auditor or member of a committee of the board
appearing on the records of the Corporation, or (vi) if sent by any other form of electronic
transmission, when sent to the address, location or number (as applicable) for such
director, officer, auditor or member of a committee of the board appearing on the records
of the Corporation.
7.2
Notice to Shareholders. Unless the Act provides otherwise, any notice, document or other
information required or permitted by the Act, the regulations, the articles or these by-laws
to be sent to a shareholder, may be sent by any one of the following methods: (a) by hand
delivery, through the mail, or by a nationally recognized overnight delivery service for next
day delivery; (b) by means of fax, e-mail, or other form of electronic transmission; (c) by
providing or posting the notice, document or other information on or making it available
through a generally accessible electronic source and providing notice of the availability
and location of the notice, document or other information to the shareholder via any of the
methods specified in (a) and (b) above, including by mail, delivery, fax, e-mail or other
form of electronic transmission; or (d) by any other method permitted by applicable law. A
notice to a shareholder shall be deemed to be received as follows: (i) if given by hand
delivery, when actually received by the shareholder; (ii) if sent through the mail addressed
to the shareholder at the shareholder’s address appearing on the share register of the
Corporation, at the time it would be delivered in the ordinary course of mail; (iii) if sent for
next day delivery by a nationally recognized overnight delivery service addressed to the
shareholder at the shareholder’s address appearing on the share register of the
Corporation, when delivered to such service; (iv) if faxed, when sent to a number at which
the shareholder has consented to receive notice and evidence of delivery confirmation is
received by sender’s fax device; (v) if by e-mail, when sent to an e-mail address at which
the shareholder has consented to receive notice; (vi) if sent by any other form of electronic
transmission, when sent to the shareholder; (vii) if sent by posting it on or making it
available through a generally accessible electronic source referred to in clause c above,
on the day such person is sent notice of the availability and location of such notice,
document or other information is deemed to have been sent in accordance with (i) through
(vi) above; or (vii) if sent by any other method permitted by applicable law, at the time that
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such person is deemed to have received such notice pursuant to applicable law. If a
shareholder has consented to a method for delivery of a notice, document or other
information, the shareholder may revoke such shareholder’s consent to receiving any
notice, document or information by fax or e-mail by giving written notice of such revocation
to the Corporation.
7.3
Change of Registered Address. The Secretary may change or cause to be changed the
recorded address of any shareholder, director, officer, auditor or member of a committee
of the board in accordance with any information believed by him or her to be reliable.
7.4
Notice to Joint Shareholders. All notices with respect to shares registered in more than
one name shall, if more than one address appears on the records of the Corporation in
respect of such joint holdings, be given to all of such joint shareholders at the first address
so appearing, and notice so given shall be sufficient notice to the holders of such shares.
ARTICLE 8
MISCELLANEOUS
8.1
Invalidity of Any Provisions of this By-Law. The invalidity or unenforceability of any
provision of this by-law will not affect the validity or enforceability of the remaining
provisions of this by-law.
8.2
Omissions and Errors. The accidental omission to give any notice to any shareholder,
director, officer or auditor or the non-receipt of any notice by any shareholder, director,
officer or auditor or any error in any notice not affecting its substance will not invalidate
any action taken at any meeting to which the notice related or otherwise founded on the
notice.
ARTICLE 9
REPEAL
9.1
Repeal. All previous by-laws of the Corporation are repealed as of the coming into force
of this by-law provided that such repeal will not affect the previous operation of any by-law
so repealed or affect the validity of any act done or right, privilege, obligation or liability
acquired or incurred under or the validity of any contract or agreement made pursuant to
any such by-law prior to its repeal. All officers and persons acting under any by-law so
repealed will continue to act as if appointed by the directors under the provisions of this
by-law or the Act until their successors are appointed.
The foregoing By-Law No. 1 was made by resolution of the directors of the Corporation on March
15, 2016.
The foregoing By-Law No. 1 was confirmed by ordinary resolution of the shareholders of the
Corporation on ●, 2016.
___________________________________
Nicole D. Springer
Corporate Secretary
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APPENDIX B – CORPORATE GOVERNANCE DISCLOSURE
The Corporation has adopted and intends to continue to engage in corporate governance
practices which comply, in all material respects, with the governance rules and guidelines of the
Canadian Securities Administrators and applicable securities legislation, as amended, from time
to time. As corporate governance policies will continue to develop over time, Pure and its Board
of Directors intends to continue to evaluate and enhance its corporate governance practices by
monitoring regulatory developments and adopt, where appropriate, such corporate governance
policies and best practices disclosure to enhance its existing practice.
Board Of Directors
Pure’s Board is currently comprised of nine directors, six of whom are independent according to
the definition of “independent” set out in National Instrument 52-110 – Audit Committees
(“NI 52-110”) as it applies to the Board. John Elliott, James Paulson and Peter Paulson are
executive directors and are not considered to be independent director. As James Paulson is the
Chairman of the Board and not an independent director, the Board has appointed Michael
Kanovsky as the Lead Independent Director.
To ensure the independence of the Board of Directors in the discharge of its responsibilities, all
of the committees of the Board of Directors are currently comprised of independent directors. The
Board of Directors also affords the independent directors the opportunity, at every meeting, to
meet without management present in sessions to discuss any procedural or substantive issues.
Board Charter
The Board of Directors updated its Charter in 2015. A copy of the Board Charter is attached to
this Circular as Appendix C and is also available on Pure’s website. The mandate of the Board
of Directors is to supervise the management of the business and affairs of the Corporation. In
fulfilling its mandate the Board of Directors as a whole oversees the development and application
of policies regarding corporate governance and dealing with corporate governance issues.
Position Descriptions
In 2015, upon recommendation of the Corporate Governance and Nominating Committee, the
Board approved position descriptions for the Executive Chair of the Board, the chair of each Board
committee and the CEO.
Orientation And Continuing Education
It is the Board’s intention that when a new nominee for election or appointment is identified, it will
ensure that a full program of orientation provided for the nominee, including (but not limited to)
provision of a complete corporate history as well as information regarding the Corporation’s
business and operations.
Senior management makes regular presentations to the Board on the main areas of the
Corporation’s business.
The Audit Committee is constantly updated on changes in accounting rules and their application
to the Corporation.
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Ethical Business Conduct
The Board has adopted a Code of Conduct (the “Code”) and updated the Code in 2015 to reflect
the current business landscape. The Code applies to Pure Technologies Ltd. and its subsidiary
companies and their employees which includes directors, officers, contractors, consultants and
agents. A copy of the Code is available on www.SEDAR.com and Pure’s website.
Pure’s Code holds employees to a high standard of ethical conduct, placing a “zero tolerance
policy” for demeaning, offensive, harassing or discriminatory behaviour and commits to a safe
and healthy working environment. Employees must ensure that no conflict exists between their
personal interests and those of Pure and conducts business affairs in Pure’s best interests. Pure
and its employees also commit to act honestly and with integrity in relationships with each other
and business relationships with competitors, partners, suppliers, customers and government
officials. Pure’s Code emphasizes compliance with laws, insider trading regulations and
emphasizes the importance of honest and accurate financial reporting and encourages the
reporting of potential violations of the Code. Any waiver of compliance with the Code must be
granted by a senior executive officer of Pure, reviewed by the Audit Committee and reported to
the Board.
In order to facilitate the reporting of complaints, the Audit Committee has established a
Whistleblower Policy with procedures for the receipt, retention and treatment of complaints
regarding actual or apparent violations of the Code. The Whistleblower Policy is available on
Pure’s website. Pursuant to the policy, anonymous submissions may be made by anyone
regarding questionable accounting or auditing matters, unethical behaviour and violations of the
Code. The Whistleblower Policy confirms that there will be no retaliation for reports or complaints
regarding suspected violations made in good faith.
Another important aspect of Pure’s governance program that emphasizes ethical business
conduct is Pure’s Anti-Corruption and Anti-Bribery Program. In 2015, upon recommendation of
the Corporate Governance and Nominating Committee, the Board approved a formal AntiCorruption and Anti-Bribery Policy, pursuant to which specific guidelines have been rolled out and
will continue to expand. Pure’s Anti-Corruption and Anti-Bribery Program includes training, from
time to time, of international business partners, all executives and employees in roles dealing with
public officials. It also includes an appropriate level of due diligence and the agreement third
parties with whom Pure conducts business of Pure’s Anti-Corruption and Anti-Bribery Program
and Code of Conduct.
Nomination Of Directors
Under the mandate of the Governance and Nominating Committee, the committee, which is
comprised solely of independent directors, shall identify and review possible candidates for Board
membership consistent with criteria approved by the Board, and annually recommend qualified
candidates for a slate of nominees to be proposed for election to the Board at the annual meeting
of the Corporation’s shareholders. The Governance and Nominating Committee shall consider
the appropriate size of the Board with a view to facilitating effective decision making. In the event
of a vacancy on the Board between annual meetings of the Corporation’s shareholders, the
Governance and Nominating Committee may identify, review and recommend qualified
candidates for Board of Director membership to the Board for consideration to fill such vacancies,
if the Board determines that such vacancies will be filled.
When formulating these
recommendations, the Governance and Nominating Committee shall seek and consider advice
and recommendations from management, and may seek or consider advice and
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recommendations from consultants, outside counsel, accountants, or other advisors as it or the
Board may deem appropriate. See also “Governance and Nominating Committee.”
Audit Committee
Pure has an Audit Committee comprised entirely of independent and financially literate directors
within the meaning of NI 52-110. The members are Raymond D. Crossley (Chair), Charles W.
Fischer and Sara C. Elford. The Audit Committee is primarily responsible for overseeing the
accounting and financial reporting processes of the Corporation and its subsidiaries and all audits
and external reviews of the financial statements of the Corporation on behalf of the Board, and
has general responsibility for oversight of internal controls, accounting and auditing activities of
the Corporation and its subsidiaries.
Additional information relating to the Audit Committee of the Corporation, required to be disclosed
pursuant to National Information Form 52-110F1 Audit Committee Information in an AIF, can be
found under the heading “Audit Committee Information” in the annual information form of the
Corporation dated March 15, 2016. A copy of the Audit Committee Charter is also available on
Pure’s website.
Human Resources and Compensation Committee
The Board has formed a Human Resources and Compensation Committee (“Compensation
Committee”) comprised entirely of independent directors. The Corporation’s Compensation
Committee is comprised of Charles W. Fischer (Chair), David H. McDermid, Raymond D.
Crossley and Scott I. MacDonald.
The Compensation Committee has a charter that describes its roles and responsibilities. The
Compensation Committee is responsible for the Corporation’s executive compensation policies
and annually reviews the various aspects of the Corporation’s executive compensation program
to ensure the effectiveness of the program and whether it adequately reflects the Corporation’s
business objective. It also makes recommendations to the Board regarding the form and
adequacy of compensation for directors and the executive officers. The review is conducted
taking into account the implications of risks associated with the Corporation’s executive
compensation program. A copy of the Compensation Committee Charter is also available on
Pure’s website.
See also “Compensation Discussion and Analysis”.
Corporate Governance and Nominating Committee
The Corporate Governance and Nominating Committee (“Governance Committee”) is
composed entirely of independent directors. The members are Sara C. Elford (Chair), Michael
Kanovsky, David H. McDermid, and Scott I. MacDonald. Under its charter, the Governance
Committee is responsible for proposing new nominees, when deemed appropriate, for
appointment or election to the Board and recommending the new Board of Director nominees at
the next annual meeting of shareholders. As well, the Governance Committee has the
responsibility in general for developing and monitoring the Corporation’s approach to corporate
governance issues such as: (i) the Corporation’s response to applicable rules, policies and
guidelines respecting corporate governance matters; (ii) assessing the effectiveness of the Board
as a whole, the committees of the Board and the contribution of individual directors on a periodic
basis, which will include monitoring the quality of the relationship between management and the
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Board and recommending any improvements, if necessary; (iii) ensuring that, where necessary,
appropriate structures and procedures are in place to ensure that the Board can function
independently of management; (iv) periodically examining the size of the Board, with a view to
determining the impact of the number of directors upon effectiveness, and making
recommendations where appropriate to the Board as to any programs the Governance Committee
determines to be appropriate to reduce or increase the number of directors to a number which
facilitates more effective decision making; and (v) proposing new nominees, when deemed
appropriate, for appointment or election to the Board and recommending the new Board of
Director nominees at the next annual meeting of shareholders.
Term Limits
The Company does not impose term limits on its directors as it takes the view that term limits are
an arbitrary mechanism for removing directors which can result in valuable, experienced directors
being forced to leave the Board solely because of length of service. Instead, the Company
believes that directors should be assessed based on their ability to continue to make a meaningful
contribution. The annual elections by the shareholders is a more meaningful way to evaluate the
performance of directors and to make determinations about whether a director should be removed
due to under-performance.
Board and Executive Diversity
The Governance Committee believes that having a diverse Board and senior management team
offers a depth of perspective and enhances Board and management operations. The Governance
Committee identifies candidates to the Board and management of the Company that possess
skills with the greatest ability to strengthen the Board and management and the Company is
focused on continually increasing diversity within the Company.
The Governance Committee does not specifically define diversity, but values diversity of
experience, perspective, education, race, gender and national origin as part of its overall annual
evaluation of director nominees for election or re-election as well as candidates for management
positions. Gender and geography are of particular importance to the Company in ensuring
diversity within the Board and management. Recommendations concerning director nominees
are, foremost, based on merit and performance, but diversity is taken into consideration, as it is
beneficial that a diversity of backgrounds, views and experiences be present at the Board and
management levels.
At the senior management level, two executives of the Company (20%) are female. There is one
female director (12.5%). The Company does not have a formal policy on the representation of
women on the Board or senior management of the Company. The Governance Committee
already takes gender into consideration as part of its overall recruitment and selection process in
respect of its Board and senior management. However, the Board does not believe that a formal
policy will necessarily result in the identification or selection of the best candidates. As such, the
Company does not see any meaningful value in adopting a formal policy in this respect at this
time as it does not believe that it would further enhance gender diversity beyond the current
recruitment and selection process carried out by the Governance Committee. However, the Board
is mindful of the benefit of diversity on the Board and management of the Company and the need
to maximize the effectiveness of the Board and management and their respective decisionmaking abilities. Accordingly, in searches for new directors, the Governance Committee will
consider the level of female representation and diversity on the Board and management and this
will be one of several factors used in its search process. This will be achieved through
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continuously monitoring the level of female representation on the Board and in senior
management positions and, where appropriate, recruiting qualified female candidates as part of
the Company’s overall recruitment and selection process to fill Board or senior management
positions, as the need arises, through vacancies, growth or otherwise. Where a qualified female
candidate can offer the Company a unique skill set or perspective (whether by virtue of such
candidate’s gender or otherwise), the Governance Committee anticipates that it would typically
select such a female candidate over a male candidate. Where the Governance Committee
believes that a male candidate and a female candidate each offer the Company substantially the
same skill set and perspective, such Committee anticipates that it will consider numerous other
factors beyond gender and the overall level of female representation in deciding which candidate
to offer a position to. Due to the size of the Company and its activities, the Company has not yet
set measurable objectives for achieving gender diversity. The Company will consider establishing
measureable objectives in the future.
Assessments
Ensuring the effectiveness of the Board, including the Executive Chairman of the Board, the
committees and their respective chairs and individual directors has been assigned to the
Governance and Nominating Committee. The Governance and Nominating Committee, in
conjunction with the Lead Director, annually assess the performance and effectiveness of the
Board and each Board member individually. The assessments are presented to the Board for
discussion and analysis with a focus on continuous improvement. As part of the annual Board
and committee assessments, the Board and the respective committees review and consider any
proposed changes to their respective mandates or terms of reference.
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APPENDIX C – BOARD CHARTER
1.
Purpose and Goal of the Board
The Board of Directors directly, and through its committees, oversees the management of, and
provides stewardship over, the Company's affairs. The Board's primary goal is to act in the best
interests of the Company to enhance long-term shareholder value while considering interests of
the Company's various stakeholders including employees, customers, suppliers and the
community. The Board is obligated to act honestly and in good faith with a view to the best
interests of the Company. In discharging its duties and responsibilities, the Board will act in
accordance with applicable law and is also committed to the principles of good corporate
governance and practices set out in National Policy 58-201 - Corporate Governance Guidelines.
2.
Responsibilities
2.1
The Board’s responsibilities include:
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)
to the extent feasible, satisfying itself of the integrity of the CEO and that the CEO and
management create a culture of integrity throughout the Company, its subsidiaries
and affiliates;
the establishment of an appropriate system of corporate governance, including
practices to ensure that the Board functions independently of management;
the adoption of a strategic planning process, the review and approval of a strategic
plan which takes into account, among other things, the nature of the Company and
the opportunities and risks associated with the business of the Company and the
businesses of its subsidiaries, and the annual monitoring, review, and updating of the
strategic plan;
the identification of the principal business risks of the Company and the
implementation of appropriate systems to manage these risks;
the oversight of the human resources and compensation matters of the Company;
the selection, appointment, evaluation and, if necessary, termination of the CEO;
succession planning, including appointing, counselling and monitoring the
performance of executive officers;
the annual review of the executive compensation disclosure of the Company in its
information circular, and be satisfied that the overall compensation philosophy and
policy for senior officers is adequately disclosed and describes in sufficient detail the
rationale for salary levels, incentive payments, stock grants, stock options, pensions
and all other components of executive compensation;
having regard to the advice and input of the Audit Committee, the oversight of
compliance with applicable audit, accounting and reporting requirements and the
approval of annual operating and capital budgets;
having regard to the advice and input of the Audit Committee, the review and being
satisfied that appropriate controls are in place with respect to applicable certification
requirements regarding the Company’s financial and other disclosure;
having regard to the advice and input of the Audit Committee, the review and being
satisfied with the integrity of the Company’s internal control and management
information systems;
having regard to the advice and input of the Audit Committee, the designation of
nominees for appointment or re-appointment as external auditors of the Company,
the final decision with respect thereto to be made by the shareholders of the
Company;
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m)
n)
o)
p)
q)
the development of measures for receiving feedback from shareholders and other
stakeholders;
establishing the level and form of compensation for the Board and Committee
members;
the adoption and annual review of the Company’s Disclosure Policy which, among
other matters, (i) promotes consistent disclosure practices aimed at accurate,
informative, timely and broadly disseminated disclosure of material information to the
markets, (ii) addresses how the Company interacts with analysts and the public, and
(iii) contains measures to avoid selective disclosure;
having regard to the advice and input of the Corporate Governance and Nominating
Committee, the adoption of a Code of Conduct and Business Ethics (the “Code”) for
directors, officers, employees and contractors of the Company and its subsidiaries
and affiliates;
Decisions with regard to:
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
Material acquisitions and divestitures in excess of the approved budgetary
amounts;
debt or equity financings of the Company;
establishing and amending the policies of the Company for distributing and
loaning funds and establishing a dividend policy, if appropriate;
appointments or removals of senior officers;
submitting to the shareholders of the Company, as applicable, any question or
matter requiring their respective approval;
issuing securities and purchasing, redeeming, or otherwise acquiring securities
issued by the Company;
approving the annual audited financial statements and related management
discussion and analysis, and the interim unaudited financial statements and
related management discussion and analysis, management proxy circulars,
takeover bid circulars, directors’ circulars, prospectuses, annual information
forms and other disclosure documents required to be approved by the directors
of the Company under securities law, regulations or rules of any applicable stock
exchange; and
adopting, amending or repealing the by-laws of the Company.
2.2
In the event that the external auditors (or former external auditors) of the Company inform
the Board of what the external auditors consider to be a material error or misstatement in a
financial statement of the Company that the external auditor (or former external auditor) has
reported on, the Board will be satisfied that either revised financial statements are prepared
and issued to the shareholders of the Company or that the shareholders of the Company
are otherwise informed of such error or misstatement.
2.3
In the event that a director of the Company becomes aware of any error or misstatement in
a financial statement of the Company that the external auditor (or a former external auditor)
has reported on, such director will notify the Audit Committee and the external auditor of
any such error or misstatement.
3.
Composition and Effectiveness of the Board
3.1
The Board will:
a)
be composed of a majority of independent directors in accordance with applicable
law.
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b)
c)
d)
e)
having regard to the advice and input of the Corporate Governance and Nominating
Committee, approve the number of directors to be elected and the nominees for
election by the shareholders of the Company;
be satisfied that all new directors receive a comprehensive orientation and that
appropriate continuing education opportunities are provided for all directors; and
consider the report of the Corporate Governance and Nominating Committee with
respect to the evaluation and effectiveness of the Board, its members and its
committees and their members;
where the Chair is not independent, appoint a Lead Independent Director who will
provide independent leadership to the Board, facilitate the functioning of the Board
independently of management and, together with the Chair of the Corporate
Governance and Nominating Committee, promote high standards of corporate
governance.
4.
Board Committees
4.1
The Board will have the following standing committees:
a)
b)
c)
Audit Committee;
Human Resources and Compensation Committee; and
Corporate Governance and Nominating Committee.
4.2
The composition and responsibilities of these committees will be as set forth in the
mandates for these committees as prescribed from time to time by the Board, which
mandates will be reviewed annually by the Board. The Board may constitute additional
standing committees or special committees with special mandates as may be required or
appropriate from time to time.
4.3
At each meeting of the Board, committees of the Board will report any recent developments
or activities undertaken by the respective committees.
4.4
Appointment of members to standing committees will be the responsibility of the Board,
having received the recommendation of the Corporate Governance and Nominating
Committee. In this regard, consideration will be given to rotating committee members from
time to time and to the special skills of particular directors. Committee chairs will be selected
by the Board or, in the event of its failure to do so, by the Committee’s members. At the
recommendation of the Governance and Nomination Committee, the Board will regularly
review the position descriptions for the chair of each committee.
4.5
In discharging his or her obligations, an individual director may engage outside advisors, at
the expense of the Company, in appropriate circumstances and subject to the approval of
the Corporate Governance and Nominating Committee. In addition, any committee of the
Board has the authority to engage outside advisors without prior approval of the Corporate
Governance and Nominating Committee.
5.
Chair of the Board
The Board will be responsible for the selection of a Chair of the Board following receipt of the
recommendation of the Corporate Governance and Nominating Committee. At the
recommendation of the Corporate Governance and Nominating Committee, the Board will
regularly review the position descriptions for the Chair of the Board.
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6.
Board Meetings
6.1
The Board will meet four times a year at such times and places as it deems necessary to
fulfill its responsibilities. Notice of every meeting will be given to each Board member. At
least seven days' notice of a meeting is required, unless such notice is waived or shortened
with the consent of all members of the Board.
6.2
Information and data that is important to the Board’s understanding of the businesses of the
Company should be distributed to and reviewed by the Board on a timely basis in advance
of the meetings. Management should make every attempt to see that this material is as brief
as possible while still providing the information relevant to proposed Board discussion. Care
should be taken to ensure that the Board is not called upon too late in the decision making
process.
6.3
As a general rule, presentations on specific subjects should be sent to the Board members
in advance so that Board meeting time may be conserved and discussion time focused on
questions that the Board has arising from the material.
6.4
Senior management should be invited to attend the Board meetings as appropriate to
expose the directors to key members of management to each other and to provide additional
insight into the items being considered by the Board.
6.5
The Board will hold an in camera session of the directors, without non-independent directors
and management members or representatives present, at every Board meeting.
7.
Whistleblower Policy
The Board will, in conjunction with the Audit Committee, establish a Whistleblower Policy for the
Company, allowing Company employees, officers, directors and other stake holders, including
the public, to raise, anonymously or not, questions, complaints or concerns about the Company’s
practices, including fraud, policy violations and illegal or unethical conduct and any Company
accounting, auditing or internal control matters. The Board will ensure that any questions
complaints or concerns are adequately received, reviewed, investigated, documented and
resolved.
8.
Shareholder Communication
Any shareholder may contact the Board by e-mail or in writing to the Board c/o the Corporate
Secretary. Matters relating to the Company’s or the Company’s accounting, internal accounting
controls or auditing matters will be referred to the Audit Committee. Other matters will be referred
to the Chair of the Board. Shareholders may also directly contact the Chair of the Board.
Pure Technologies Ltd. – 2016 Management Information Circular
D-1
APPENDIX D – DESCRIPTION OF SECURITY BASED COMPENSATION ARRANGEMENTS
The Corporation has two Security Based Compensation Arrangements as defined by the TSX: (i)
the Stock Option Plan; and (ii) the PRSU Plan.
The aggregate number of Common Shares that may be reserved for issuance under the
Corporation’s Security Based Compensation Arrangements is 10% of the Corporation’s issued
and outstanding Common Shares.
Based on the 53,327,122 Common Shares issued and outstanding as at March 16, 2016, the
Corporation may reserve up to 5,332,711 Common Shares for issuance pursuant to its Security
Based Compensation Arrangements. Under the Stock Option Plan, 3,557,291 Common Shares
have been reserved for issuance pursuant to options granted under the Stock Option Plan which
is equal to approximately 6.7% of the Corporation’s issued and outstanding Common Shares.
Under the PRSU Plan, 118,750 Common Shares have been reserved for issuance pursuant to
PSUs and RSUs granted under the PRSU Plan which is equal to approximately 0.2% of the
Corporation’s issued and outstanding Common Shares. Cumulatively under the Security Based
Compensation Arrangements, 3,676,041 Common Shares have been reserved for issuance
which is equal to approximately 6.9% of the Corporation’s issued and outstanding Common
Shares. Therefore, 1,656,670 Common Shares, or approximately 3.1% of the Corporation’s total
issued and outstanding Common Shares are available to be reserved for issuance pursuant to
the Corporation’s Security Based Compensation Arrangements.
Below are summaries of the principal terms of the Stock Option Plan and PRSU Plan which are
provided pursuant to the requirements of Section 613 of the TSX Company Manual.
Stock Option Plan
Subject to the limitations of the Stock Option Plan, the Board of Directors has the authority to
issue stock options to Eligible Employees (as defined below). The purpose of the Stock Option
Plan is to advance the interests of the Corporation by encouraging the directors, officers,
employees and key consultants of the Corporation or its subsidiaries to acquire Common Shares,
thereby: (i) increasing the proprietary interests of such persons in the Corporation; (ii) aligning the
interests of such persons with the interests of the Shareholders generally; (iii) encouraging such
persons to remain associated with the Corporation; and (iv) furnishing such persons with an
additional incentive in their efforts on behalf of the Corporation.
Eligibility
All of the directors, officers, employees and key consultants of the Corporation (and its direct and
indirect subsidiaries) (the “Eligible Employees”) are eligible to participate in the Stock Option
Plan.
Stock Options
Each stock option provides the holder with an option to purchase Common Shares at a price not
less than the “Fair Market Value” of the Common Shares on the date of the grant. The Stock
Option Plan defines “Fair Market Value” as the weighted average trading price of a Corporation
Share on the TSX during the previous five trading days. Stock options have realizable value only
if the price of the Common Shares increases after the stock options are granted. In the event of
a change of control pursuant to which the Common Shares are converted into or exchanged for
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D-2
securities of another entity, the stock options outstanding under the Stock Option Plan shall be
substituted or replaced for stock options in the continuing entity on substantially the same terms
and conditions.
Administration
Unless otherwise determined by the Board, the Stock Option Plan is administered by the
Compensation Committee. The Compensation Committee shall affect the grant of stock options
under the Stock Option Plan, in accordance with determinations made by the Board pursuant to
the provisions of the Stock Option Plan.
Maximum Issuable to One Person and Insiders
The aggregate number of Common Shares issuable as an inducement to employment to any one
individual shall not exceed 2% of the issued and outstanding Common Shares. The proportion
of Common Shares reserved for issuance under the Stock Option Plan in any one fiscal year to
any one individual shall not exceed 25% of the Common Shares so reserved for issuance under
the Stock Option Plan during such fiscal year. The aggregate number of Common Shares
reserved for issuance under the Stock Option Plan and all of our other security-based
compensation arrangements that may be issued to our insiders shall not exceed 10% of the
issued and outstanding Common Shares and the aggregate number of Common Shares issued
to our insiders, within any one year period, under the Stock Option Plan and all of our other
security-based compensation arrangements shall not exceed 10% of the issued and outstanding
Common Shares.
Vesting and Term
Unless otherwise provided at the time of grant, each stock option granted under the Stock Option
Plan will have a five year term from its original grant date and vest 1/3 on the first anniversary of
the date of the grant, 1/3 on the second anniversary of the date of the grant and 1/3 on the third
anniversary of the date of the grant. A stock option must be exercised or surrendered within five
years from the date of the grant (or such shorter period of time as the Board may determine and
specify in connection with the grant of the stock option), or the stock option will expire immediately
after the applicable period. Subject to the rules of the TSX, if a stock option may not be exercised
due to the holder of such stock option being prohibited from trading in securities of the Corporation
by a corporate policy of the Corporation at any time within the 3 business day period prior to the
normal expiry date of such stock option, the expiry date of such stock option shall be extended
for a period of 7 business days following the end of such prohibition (or such longer period as
permitted by the TSX and approved by the Board).
Exercise or Surrender of Options
As an alternative to the exercise of stock options for Common Shares, the holder is entitled, at
his or her election, to surrender for cancellation, unexercised, any vested stock options which are
otherwise then exercisable and, in consideration for such surrender for cancellation, receive a
cash payment in an amount equal to the positive difference, if any, obtained by subtracting the
aggregate exercise price of the surrendered stock options from the then current Fair Market Value
of the Common Shares subject to the surrendered stock options, less applicable source
withholdings. The Board has the sole discretion to consent or disapprove of the holder’s election
to so surrender any vested stock option.
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D-3
Termination of Employment
Should the holder cease to be an Eligible Employee for disability or leave of absence before the
expiry of a stock option, then such stock option shall continue to vest in accordance with its terms
and may be exercised or surrendered until the normal expiry of such stock option in accordance
with its terms. Should the holder cease to be an Eligible Employee for reason of retirement before
the expiry of a stock option, then such stock option shall continue to vest in accordance with its
terms and may be exercised or surrendered at any time within 24 months of the date of the
retirement of such Eligible Employee unless otherwise provided in the terms of a particular stock
option.
If, before the expiry of a stock option, the holder shall cease to be an Eligible Employee for
voluntary resignation, the unvested part of such stock option shall be cancelled and the vested
part of such stock option may be exercised or surrendered at any time within 30 days of the date
of the voluntary resignation of such Eligible Employee.
If, before the expiry of a stock option, the holder shall cease to be an Eligible Employee for
termination without cause, such stock option shall continue to vest in accordance with its terms
and may be exercised (if fully vested) or surrendered at any time within 90 days of the date such
Eligible Employee was terminated.
If, before the expiry of a stock option in accordance with the terms thereof, a change of control
shall occur and the holder shall cease to be a director, officer, employee or key consultant of the
Corporation or any of its subsidiaries (the “Employer”) by reason of termination: (a) by the
Employer or by the entity that has entered into a valid and binding agreement with the Corporation
and/or other members of the Corporation to effect the control change at any time after such
agreement is entered into or during the control period and such termination was for any reason
other than for cause; or (b) by the holder within 30 days after an act of constructive dismissal,
provided such act of constructive dismissal occurs during the control period, the holder’s stock
options shall become fully vested and may be exercised or surrendered by the holder at any time
within 90 days of the date of the holder’s termination.
Substitution Event
Upon the occurrence of a change of control pursuant to which the Common Shares are converted
into or exchanged for other property, whether in the form of securities of another entity, cash or
otherwise or upon the occurrence of a reorganization pursuant to which the shareholdings remain
substantially the same upon completion of such reorganization, the outstanding stock options
shall, under certain circumstances, become fully vested and may be exercised or surrendered by
the holder at any time after the holder receives written notice from the Board of such accelerated
vesting and prior to the occurrence of such change of control or permitted reorganization,
provided, however, that such vesting, exercise or surrender shall be, unless otherwise determine
in advance by the Board, effective immediately prior to, and shall be conditional on, the
consummation of such change of control or permitted reorganization.
Adjustments
Appropriate adjustments in the number of Common Shares subject to the Stock Option Plan and,
with respect to stock options granted or to be granted, in the respective numbers of Common
Shares optioned and in the respective exercise prices, shall be made by the Board to give effect
to adjustments in the number of Common Shares resulting from subdivisions or consolidations of
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the Common Shares or the payment of dividends in kind of Common Shares by the Corporation
(other than dividends in kind of Common Shares paid in lieu of cash dividends in the ordinary
course) or to give effect to reclassifications or conversions of the Common Shares or any other
relevant changes in the authorized or issued capital of the Corporation or any other event in
respect of which, in the opinion of the Board, such an adjustment would be necessary to preserve
the holder’s rights under Stock Option Plan and under the stock options, in all such cases which
occur subsequent to the approval of the Stock Option Plan by the Board; provided that no stock
option shall be adjusted to result in the issuance of a fractional Common Share and all fractions
shall be rounded down and provided further that a stock option, which is intended to be exempt
from Section 409A of the U.S. Internal Revenue Code of 1986, as amended, shall be adjusted in
accordance with Section 409A in order to remain exempt.
Assignability
The assignment or transfer of the stock option or any other benefits under the Stock Option Plan
is not permitted other than by operation of law.
Amendment
The Stock Option Plan may be amended or terminated at any time by the Board, except as to
rights already accrued by the Eligible Employees, without approval of the Shareholders, but
subject to any required regulatory approval. Approval of the Shareholders will be required to,
among other things, (i) increase the maximum number of Common Shares reserved for issuance
under the Stock Option Plan, (ii) reduce the exercise price in respect of any stock option, and (iii)
extend the period of time during which a stock option must be exercised or surrendered.
PRSU Plan
Purpose
The purpose of the PRSU Plan is to: (i) support the achievement of the Corporation’s performance
objectives; (ii) ensure that interests of key persons are aligned with the success of the
Corporation; (iii) provide compensation opportunities to attract, retain and motivate senior
management critical to the long-term success of the Corporation; and (iv) provide compensation
incentives that do not promote excessive risk-taking by the Corporation’s key employees.
Administration
The PRSU Plan is administered by the Compensation Committee in accordance with its mandate,
The Compensation Committee has the sole and absolute discretion to recommend to the Board
the employees of the Corporation to whom grants of PSUs or restricted share units (“RSUs”)
(PSUs and RSUs are collectively referred to as “Share Units”) should be made and the number
of Share Units to be granted; interpret and administer the PRSU Plan; establish conditions to the
vesting of Share Units; set, waive, and amend performance targets; and make any other
determinations that the Compensation Committee deems necessary or desirable for the
administration of the PRSU Plan. Any decision of the Compensation Committee with respect to
the administration and interpretation of the PRSU Plan will be conclusive and binding on the
participants.
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Mechanics
The Board may award Share Units to any eligible employee (a “Participant”), subject to Board
approval, and an eligible employee may elect to defer compensation to be received under the
Corporation’s annual incentive program in the form of RSUs, by delivering to the Corporation an
election notice not later than December 31 of the year preceding the first date of any period of
services over which any compensation to be received under the annual incentive program would
be earned. An eligible person who makes such an election will be awarded the number of RSUs
determined by dividing the dollar amount of incentive compensation to be deferred by the “Fair
Market Value” (as defined below) as at the award date.
Each Share Unit granted to a Participant under the PRSU Plan will be credited to the Participant’s
share unit account. From time to time, a Participant’s share unit account will be credited with
dividend share units in the form of additional PSUs (“Dividend PSUs”) or additional RSUs
(“Dividend RSUs”) (Dividend PSUs and Dividend RSUs are collectively referred to as “Dividend
Share Units”), as applicable, in respect of outstanding PSUs or RSUs, as applicable, on each
dividend payment date in respect of which normal cash dividends are paid on Common Shares.
Such Dividend PSUs and Dividend RSUs will be computed as the amount of the dividend declared
and paid per Common Share multiplied by the number of PSUs and RSUs, as applicable,
recorded in the participant’s share unit account on the date for the payment of such dividend,
divided by the Fair Market Value as at the dividend payment date. Dividend Share Units are not
paid out until the underlying vested RSU or PSU, as applicable, is paid out.
“Fair Market Value” for these purposes means the volume weighted average trading price of a
Common Share on the principal stock exchange on which the Common Shares are traded for the
five trading days immediately preceding the applicable day (calculated as the total value of
Common Shares traded over the five day period divided by the total number of Common Shares
traded over the five day period on that exchange).
Participants may elect at any time to redeem vested Share Units on any date or dates after the
date the Share Units become vested and on or before the expiry date. A participant who does
not elect an early redemption date as specified under the PRSU Plan shall have vested Share
Units redeemed on their expiry date. The expiry date for Share Units shall be determined by the
Compensation Committee for each applicable grant.
The Corporation will redeem each Share Unit elected to be redeemed by a participant on the
applicable redemption date by (i) issuing to the participant the number of Common Shares equal
to one Common Share for each whole vested Share Unit elected to be redeemed and delivering
(A) such number of Common Shares; less (B) the number of Common Shares with a Fair Market
Value equal to the Applicable Withholdings (as defined in the PRSU Plan); or (ii) at the election
of the participant and subject to the consent of the Corporation, paying the participant an amount
in cash equal to: (A) the number of vested Share Units elected to be redeemed multiplied by
(B) the Fair Market Value minus (C) Applicable Withholdings; or (iii) a combination of (i) and (ii).
Rights respecting Share Units and Dividend Share Units are not transferable or assignable other
than by will or the laws of descent and distribution.
No financial assistance will be provided by the Corporation to any Participant in connection with
any award of Share Units.
Pure Technologies Ltd. – 2016 Management Information Circular
D-6
Vesting Provisions
Each RSU will vest on the date or dates designated in the applicable grant agreement or such
earlier date as is provided for in the PRSU Plan or is determined by the Compensation Committee,
conditional on the satisfaction of any additional vesting conditions established by the
Compensation Committee.
Each PSU will vest on the date or dates designated in the applicable grant agreement or such
earlier date as is provided in the PRSU Plan or is determined by the Compensation Committee,
conditional on the satisfaction of any additional vesting conditions established by the
Compensation Committee. The number of PSUs which will vest on a vesting date will be the
number of PSUs and Dividend PSUs scheduled to vest on such vesting date multiplied by the
applicable Adjustment Factor set out and defined in the relevant grant agreement. The
Adjustment Factor, currently contemplated to range from 0.0 to 1.5, will be determined based on
the Corporation’s financial or market performance, as described in the applicable grant
agreement.
Restrictions on the Award of Share Units
Pursuant to the terms of the PRSU Plan: (i) the number of Common Shares reserved for issuance
pursuant to Share Units and/or other units or stock options and/or under the PRSU Plan and any
other security based compensation arrangement of the Corporation to any one person shall not
exceed 5% of the issued and outstanding securities of the Corporation; (ii) the number of Common
Shares issued to any insider or that insider’s associates under the PRSU Plan and/or under any
other security-based compensation arrangement of the Corporation shall not exceed 5% of the
issued and outstanding securities of the Corporation within a 12-month period; and (iii) the
aggregate number of Common Shares issued to insiders of the Corporation within any 12-month
period, or issuable to insiders of the Corporation at any time, under the PRSU Plan and any other
security-based compensation arrangement of the Corporation, may not exceed 10% of the total
number of issued and outstanding Common Shares of the Corporation at such time.
Termination, Retirement and Other Cessation of Employment
In the event a participant’s employment is terminated due to resignation by the participant or by
the Corporation for just cause, the participant will forfeit all rights, title and interest with respect to
Share Units and the related Dividend Share Units which are not vested at the participant’s
termination date. All vested Share Units will be redeemed as at the participant’s termination date.
In the event a participant’s employment is terminated by the Corporation without just cause, a
pro-rata portion of the participant’s unvested PSUs and Dividend PSUs will vest immediately prior
to the participant’s termination date, based on the number of complete months from the first day
of the performance period to the applicable termination date divided by the number of months in
the performance period and using an Adjustment Factor of the lower of: (i) one (1); and (ii) the
Adjustment Factor calculated as at the end of the most recently completed financial year in the
performance period. Similarly, if the participant’s employment is terminated by the Corporation
without just cause, a pro-rata portion of the participant’s unvested RSUs and Dividend RSUs will
vest immediately prior to the participant’s termination date, based on the number of months from
the first day of the grant term to the termination date divided by the number of months in the grant
term. The participant’s vested PSUs and RSUs will be redeemed as at the participant’s
termination date.
Pure Technologies Ltd. – 2016 Management Information Circular
D-7
In the event a participant’s employment is terminated by the death or disability of the participant
or the participant ceases to be employed due to retirement, all of the participant’s PSUs and RSUs
and related Dividend PSUs and Dividend RSUs, as applicable, will vest immediately prior to the
date of such event, for purposes of PSUs using an Adjustment Factor of the lower of: (i) one (1);
and (ii) the Adjustment Factor calculated as at the end of the most recently completed financial
year in the performance period, and will be redeemed as at that date.
In the event that employment of a participant is terminated by the Corporation without just cause
or if the participant resigns in circumstances constituting constructive termination, in each case,
within twelve months following a Change of Control (as such term is defined under the PRSU
Plan) which includes, among other things the acquisition of 50% or more of the Common Shares,
sale of all or substantially all of the assets of the Corporation or a significant change in directors
of the Corporation, all of the participant’s Share Units and related Dividend Share Units as
applicable will vest immediately prior to the participant’s termination date, for purposes of PSUs
using an Adjustment Factor of one (1), and will be redeemed as at that date.
Amendment, Suspension or Termination of PRSU Plan
The Board may amend, suspend or terminate the PRSU Plan, or any portion thereof, at any time,
subject to those provisions of applicable law (including, without limitation, the rules, regulations
and policies of the TSX), if any, that require the approval of shareholders or any governmental or
regulatory body. The Board may make any amendments to the PRSU Plan without seeking
shareholder approval and the Compensation Committee may correct any defect or supply any
omission or reconcile any inconsistency in the PRSU Plan and to the extent the Compensation
Committee deems, in its sole and absolute discretion, necessary or desirable. However,
shareholder approval (by a majority of votes cast) will be required for:
(i)
amendments to the number of Common Shares issuable under the PRSU Plan;
(ii)
any amendment expanding the categories of eligible person which would have the
potential of broadening or increasing insider participation;
(iii)
any amendment extending the term of a Share Unit or any rights pursuant thereto held by
an insider beyond its original expiry date;
(iv)
the addition of any other provision which results in participants receiving Common Shares
while no cash consideration is received by the Corporation;
(v)
amendments which would permit awards to be transferred or assigned other than for
normal estate planning purposes; and
(vi)
amendments to the amending provision within the PRSU Plan.
The Board may amend or modify any outstanding Share Unit in any manner to the extent that the
Board would have had the authority to initially grant the award as so modified or amended,
provided that, where such amendment or modification is adverse to the holder, the consent of the
holder is required to effect such amendment or modification.
No new awards of Share Units may be made under the PRSU Plan after March 12, 2025, being
the tenth anniversary of the PRSU Plan’s effective date.
Pure Technologies Ltd. – 2016 Management Information Circular
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The Board reserves the right to alter any terms of or not proceed with the PRSU Plan at any time
prior to the Meeting if the Board determines that it would be in the best interests of the Corporation
and its shareholders to do so, in light of subsequent developments.
Pure Technologies Ltd. – 2016 Management Information Circular