UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant X
Filed by a Party other than the
Registrant [ ]
Check the appropriate box:
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Preliminary Proxy Statement
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[ ]
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Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
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[X]
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Definitive Proxy Statement
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[ ]
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Definitive Additional Materials
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Soliciting Material Pursuant to
§240.14a-12
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SECURITIES DEVICES INTERNATIONAL
INC.
(Name of Registrant as specified in its charter)
(Name of Person(s) Filing Proxy Statement), if other than
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]
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No fee required.
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Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction
applies:
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Aggregate number of securities to which transaction
applies:
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(3)
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Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of
transaction:
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(5)
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Total fee paid:
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Fee paid previously with
preliminary materials.
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Check box if any of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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Filing Party:
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(4)
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Date Filed:
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SECURITY DEVICES INTERNATIONAL
INC.
2017 Annual and Special Meeting of
Stockholders
Proxy Statement
2
Contents
3
SECURITY DEVICES INTERNATIONAL INC.
107 Audubon Road,
Building 2, Suite 201
WAKEFIELD MA USA 01880
Notice of Annual and Special Meeting of
Stockholders
To all Stockholders of Security Devices International Inc.:
You are invited to attend the 2017 Annual and Special Meeting
of Stockholders (the Annual Meeting) of Security Devices International Inc.
(the Company or SDI). The Annual Meeting will be held at
Security Devices
International Inc.
, 107 Audubon Road, Building 2, Suite 201, Wakefield, MA
01880 USA
on
December 19
,
2017, at 10:00 am EST
. The
purposes of the Annual Meeting are:
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1.
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To receive the audited consolidated financial statements
of the Company of and for the fiscal year ended November 30,
2016.
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2.
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To elect four (4) directors of the Company (each a
Director and collectively, the Directors) to serve until the close of
the 2018 Annual Meeting of Stockholders.
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3.
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To ratify the appointment of Schwartz, Levitsky, Feldman,
LLP as independent registered public accountant (the auditors) for the
Company to hold office until the close of the 2018 Annual Meeting of
Shareholders and to authorize the Companys Board of Directors to fix the
auditors remuneration.
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4.
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To approve the extension of the consulting agreement
between the Company and Northeastern Industrial Partners LLC and the
issuance of Shares thereunder.
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5.
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To approve the issuance of Shares to Paul Jensen, the
Companys President and Chief Operating Officer, pursuant to an employment
agreement between the Company and Mr. Jensen.
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6.
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To approve a revised Stock Option Plan, including an
increase in the number of shares of common stock that may be reserved for
issuance thereunder.
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7.
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To transact such other business as may properly come
before the meeting or any adjournments or postponements
thereof.
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The Board of Directors has fixed November 10, 2017 as the
record date for the Annual Meeting. Only stockholders of the Company of record
at the close of business on that date will be entitled to notice of, and to vote
at, the Annual Meeting. A list of stockholders as of November 10, 2017 will be
available for inspection by any stockholder at our principal place of business,
107 Audubon Road, Building 2, Suite 201, Wakefield, MA 01880 USA starting
December 15, 2017, during normal business hours, and at the Annual Meeting.
Accompanying this notice of meeting is the management
information circular (the Circular). Please review the Circular carefully and
in full prior to voting in relation to the matters set out above as the Circular
has been prepared to help you make an informed decision on such matters.
Shareholders are invited to attend the Annual Meeting. Record
shareholders who are unable to attend the Annual Meeting in person are requested
to vote by mail by completing, dating and signing the enclosed form of proxy
(the Proxy Card) and send it in the enclosed envelope to the Company's
co-transfer agent, TSX Trust Company, 301-100 Adelaide Street West, Toronto, ON,
Canada M5H 4H1, or vote via the Internet, by going to www.voteproxyonline.com
and following the instructions on the website, or by fax to Proxy Department
416-595-9593. Non-record shareholders who receive these materials through their
broker or other intermediary should follow the instructions provided by their
broker or intermediary.
For your vote to be effective, your voting instructions must be
received by Broadridge Financial Solutions, Inc. (Broadridge) or by the
Companys transfer agent not later than 10:00 a.m. (Eastern Time) on December
15, 2017, or, in the case of any adjournment of the Annual Meeting, not less
than 48 hours, excluding Saturdays, Sundays and holidays, prior to the time of
the rescheduled meeting.
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The Chair of the Annual Meeting may, at his discretion, accept
late proxies or waive the time limit for deposit of proxies, but is under no
obligation to accept or reject any late proxy. If you have voted by proxy using
the Proxy Card, via fax or the Internet or by phone, any subsequent vote by
proxy through any of these methods will cancel any other proxy you may have
previously submitted in connection with the Annual Meeting, and only a later
dated proxy received prior to the deadline will be counted.
IMPORTANT
Whether or not you expect to attend the Annual Meeting, please
sign and return the enclosed proxy promptly. If you decide to attend the Annual
Meeting, you may, if you wish, revoke the proxy and vote your shares of common
stock in person.
By Order of the Board of Directors,
/s/
Dean Thrasher
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Secretary and Chief Executive Officer
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October 26,
2017
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SECURITY DEVICES INTERNATIONAL INC.
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107 AUDUBON ROAD, BUILDING 2, SUITE #210
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WAKEFIELD MA USA 01180
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Proxy Statement
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ANNUAL AND SPECIAL MEETING OF STOCKHOLDERS
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TO BE HELD ON DECEMBER 19, 2017
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Unless the context requires otherwise, references in this proxy
statement to SDI, the Company, we, us, or our refer to Security
Devices International Inc.
The Annual and Special Meeting of Stockholders (the Annual
Meeting) will be held at Security Devices International Inc., 107 Audubon Road,
Building 2, Suite #210, Wakefield, MA 01880 USA
, on December 19, 2017, at
10:00am EST
. We are providing the enclosed proxy materials and form of proxy
in connection with the solicitation by our Board of Directors (the Board) of
proxies for this Annual Meeting. This proxy statement (the Proxy Statement)
will first be mailed to holders of our voting stock on or about November 27,
2017.
Whether or not you plan to attend the Annual Meeting, please
promptly provide your voting instructions.
Your promptness in voting will
assist in the expeditious and orderly processing of the proxies and in ensuring
that a quorum is present. If you vote your proxy, you may nevertheless attend
the Annual Meeting and vote your shares in person if you wish. Please note,
however, that if your shares are held of record by a broker or other nominee and
you wish to vote in person at the Meeting, you must follow the instructions
provided to you by your broker or such other nominee. If you want to revoke your
instructions at a later time prior to the vote for any reason, you may do so in
the manner described in this Proxy Statement.
All dollar amounts referred to in this Proxy Statement are in
United States dollars, unless otherwise indicated.
QUESTIONS AND ANSWERS ABOUT PROXY MATERIALS AND VOTING
Why am I receiving this Proxy
Statement and proxy card?
You are receiving this Proxy Statement and proxy card because
you were a stockholder of record at the close of business on November 10, 2017,
and are entitled to vote at the Annual Meeting. This Proxy Statement describes
issues on which we would like you, as a stockholder, to vote. It provides
information on these issues so that you can make an informed decision. You do
not need to attend the Annual Meeting to vote your shares of common stock.
When you sign the proxy card you appoint Dean Thrasher, our
Chief Executive Officer, and if Mr. Thrasher is unavailable, Bryan Ganz, our
Executive Chairman, and if neither of them is available, Paul Jensen, our
President and Chief Operating Officer, as your representative at the Annual
Meeting. As your representatives, they will vote your shares of common stock at
the Annual Meeting (or any adjournments or postponements) as you have instructed
them on your proxy card. With proxy voting, your shares will be voted whether or
not you attend the Annual Meeting. Even if you plan to attend the Annual
Meeting, it is a good idea to complete, sign and return your proxy card in
advance of the Annual Meeting, just in case your plans change.
If an issue comes up for vote at the Annual Meeting (or any
adjournments or postponements) that is not described in this Proxy Statement,
your representative will vote your shares of common stock, under your proxy, at
their discretion, subject to any limitations imposed by law.
When is the record date?
The Board has fixed November 10, 2017, as the record date for
the Annual Meeting. Only holders of shares of our voting stock as of the close
of business on that date will be entitled to vote at the Annual Meeting.
How many shares are outstanding?
As of November 10, 2017, we had 57,230,522 shares of common
stock (a Share or the Shares) issued and outstanding.
What am I voting on?
You are being asked to vote on the following:
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1.
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the election of four (4) Directors to serve until the
close of the 2018 Annual Meeting of Stockholders (Proposal No.
1);
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2.
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the ratification of the appointment of Schwartz,
Levitsky, Feldman, LLP (SLF) as auditors for the Company to hold office
until the close of the 2018 Annual Meeting of Shareholders and to
authorization of the Companys Board of Directors to fix the auditors
remuneration (Proposal No. 2);
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3.
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to approve the extension of the Consulting Agreement
between Northeast Industrial Partners LLC and the issuance of Shares
thereunder pursuant to an Extension Agreement in the form annexed hereto
as Exhibit A (Proposal No. 3);
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4.
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to approve the issuance of Shares to Paul Jensen, the
Companys President and Chief Operating Officer, pursuant to an employment
agreement between the Company and Mr. Jensen (Proposal No. 4);
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5.
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to approve an amended Stock Option Plan in the form
annexed hereto as Exhibit B including an increase in the number of Shares
that may be reserved for issuance thereunder (Proposal No. 5);
and
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6.
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to transact such other business as may properly come
before the meeting or any adjournments or postponements
thereof.
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The Board recommends that you vote FOR each of the numbered
proposals listed above.
In addition, you may be asked to vote in respect of any other
matters that may properly be brought before the Meeting. As of the date of this
Proxy Statement, the Board is not aware of any such other matters.
How many votes do I get?
Each share of common stock is entitled to one vote. No
cumulative rights are authorized and dissenters rights are not applicable to
any of the matters being voted upon.
How do I vote?
The voting process is different depending on whether you are a
record (registered) or non-record shareholder.
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You are a record shareholder if
your name appears on your share certificate.
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You are a non-record shareholder if your shares are held
on your behalf by a bank, trust company, securities broker, trustee or
other intermediary. This means the shares are registered in your
intermediarys name, and you are the beneficial owner. Most shareholders
are non-record shareholders.
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If you are a non-record shareholder, your intermediary will
send you a voting instruction form or proxy form with this Proxy Statement. This
form will instruct the intermediary how to vote your shares at the Meeting on
your behalf. You should carefully follow the instructions provided by the
intermediary and contact the intermediary promptly if you need help. The Company
intends to pay for delivery of proxy materials to beneficial owners.
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If you are a non-registered owner, and the Company or its agent
has sent these materials directly to you, your name and address and information
about your holdings of securities, have been obtained in accordance with
applicable securities regulatory requirements from the intermediary holding on
your behalf.
By choosing to send these materials to you directly, the issuer
(and not the intermediary holding on your behalf) has assumed responsibility for
(i) delivering these materials to you, and (ii) executing your proper voting
instructions.
If you do not intend to attend the Meeting and vote in person,
mark your voting instructions on the voting instruction form or proxy form, sign
it, and return it as instructed by your intermediary. Your intermediary may have
also provided you with the option of voting by telephone or fax or through the
Internet.
If you wish to vote in person at the Meeting, follow the
instructions provided by your intermediary. Your intermediary may have also
provided you with the option of appointing yourself or someone else to attend
and vote on your behalf at the Meeting through the Internet. When you arrive at
the Meeting, please register with the Inspector of Elections.
Your intermediary must receive your voting instructions in
sufficient time for your intermediary to act on them prior to the deadline for
the deposit of proxies of 10:00 a.m. (Eastern Daylight Time) on December 15,
2017, or at least 48 hours (excluding Saturdays, Sundays and holidays) before
the time of the scheduled Meeting.
Record shareholders
If you are a record shareholder, a Proxy Card is enclosed with
this Proxy Statement to enable you to vote, or to appoint a proxyholder to vote
on your behalf, at the Meeting. Whether or not you plan to attend the Meeting,
you may vote your shares by proxy by any one of the following methods:
By mail
: Mark, sign and date
your Proxy Card and send to TSX Trust Company (TSX Trust) 301-100 Adelaide
Street West, Toronto, ON, Canada M5H 4H1. TSX Trust must receive your Proxy Card
not later than 10:00 a.m. (Eastern Daylight Time) on December 15, 2017 in order
for your vote to be counted. If the Meeting is adjourned or postponed, TSX Trust
must receive your Proxy Card at least 48 hours, excluding Saturdays, Sundays and
holidays, before the rescheduled Meeting.
By Facsimile:
Fax your Proxy
Card to the attention of the Proxy Department 416-595-9593.
Via the Internet
: Go to
www.voteproxyonline.com and follow the instructions on the website prior to
10:00 a.m. (Eastern Daylight Time) on December 15, 2017.
We provide Internet proxy voting to allow you to vote your
common stock online, with procedures designed to ensure the authenticity and
correctness of your proxy vote instructions. However, please be aware that you
must bear any costs associated with your Internet access, such as usage charges
from Internet access providers and telephone companies.
Can stockholders vote in person
at the Annual Meeting?
We will pass out written ballots to anyone who wants to vote at
the Annual Meeting. If you hold your shares of common stock through a brokerage
account but do not have a physical share certificate, or the shares are
registered in someone elses name, you must request a legal proxy from your
stockbroker or the registered owner to vote at the Annual Meeting.
What if I change my mind after I
return my proxy?
If you are a non-registered Shareholder, you can revoke your
prior voting instructions by providing new instructions on a voting instruction
form or proxy form with a later date, or at a later time in the case of voting
by telephone or through the Internet. Otherwise, contact your Intermediary if
you want to revoke your proxy or change your voting instructions, or if you
change your mind and want to vote in person. Any new voting instructions given
to intermediaries in connection with the revocation with proxies must be
received in sufficient time to allow intermediaries to act on such instructions
prior to the deadline for the deposit of proxies of 10:00 a.m. (Eastern Daylight
Time) December 15, 2017, or at least 48 hours (excluding Saturdays, Sundays and
holidays) prior to the time of the rescheduled Meeting.
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If you are a record shareholder, you may revoke any proxy that
you have given until the time of the Meeting by voting again over the Internet
as instructed above, by signing and dating a new Proxy Card and submitting it as
instructed above, by giving written notice of such revocation to the Corporate
Secretary of the Company at our address, by revoking it in person at the Annual
Meeting, or by voting by ballot at the Annual Meeting. If you choose to submit a
proxy multiple times whether by over the Internet or by mail, or a combination
thereof, only your latest vote, not revoked and received prior to 10:00 a.m.
(Eastern Daylight Time) on December 15, 2017 (or 48 hours, excluding Saturdays,
Sundays and holidays, before the rescheduled Meeting) will be counted. A record
shareholder participating in person, in a vote by ballot at the Meeting, will
automatically revoke any proxy previously given by that shareholder regarding
business considered by that vote. However, attendance at the Annual Meeting by a
registered shareholder who has voted by proxy does not alone revoke such proxy.
How many votes do you need to
hold the Annual Meeting?
To conduct the Annual Meeting, we must have a quorum, which
means that one-third of our outstanding voting shares as of the record date must
be present at the Annual Meeting. Based on 57,230,522 shares of common stock
issued and outstanding as of the Record Date, 18,886,072 shares of common stock
must be present, in person or by proxy, for a quorum to be present at the Annual
Meeting.
What if I abstain from voting?
Abstentions with respect to a proposal are counted for the
purposes of establishing a quorum. If a quorum is present, abstentions will not
be included in vote totals.
Since our bylaws provide that approval of a proposal at an
Annual Meeting of the stockholders is by the affirmative vote of a majority of
the voting shares present, in person or by proxy, at an Annual Meeting of the
stockholders, a properly executed proxy card marked
ABSTAIN
with respect
to a proposal will have the same effect as voting
AGAINST
that proposal.
However, as described below, election of Directors is by a plurality of the
votes cast at the Annual Meeting. A properly executed proxy card marked
WITHHELD
with respect to the election of Directors will not be voted and
will not count
FOR
any of the Nominees for which the vote was withheld.
What effect does a broker
non-vote have?
Brokers and other intermediaries, holding shares of common
stock in street name for their customers, are generally required to vote the
shares of common stock in the manner directed by their customers. If their
customers do not give any direction, brokers may vote the shares of common stock
on routine matters, but not on non-routine matters (a broker non-vote).
Proposal No. 1, No. 3, No. 4, No. 5, and No. 6 are non-routine matters.
Accordingly, if you have
not
provided your broker with voting directions
on these proposals, your broker will
not
be able to vote your shares with
respect to the election of directors or the approval of Proposals No. 3-6. The
ratification of the appointment of Schwartz Levitsky Feldman LLP as the
Companys independent registered public accounting firm
is
considered a
routine matter, and brokers will be able to vote your shares if you have not
provided voting directions with respect to Proposal No. 2.
Any shares of common stock represented at the Annual Meeting
but not voted (whether by abstention, broker non-vote or otherwise) will have no
impact in the election of Directors except to the extent that the failure to
vote for an individual results in another individual receiving a larger
proportion of votes cast. Any shares of common stock represented at the Annual
Meeting but not voted (whether by abstention, broker non-vote or otherwise) with
respect to Proposals No. 1-through 6 (except No. 2) will have the same effect as
a vote against such proposal.
In recognition of our desire to have every
stockholder vote count, we encourage our stockholders to instruct their brokers
to vote their shares.
How many votes are needed to
elect Directors and approve other proposals?
Proposal No. 1
: The Nominees for election as Directors
at the Annual Meeting will be elected by a plurality of the votes cast at the
Annual Meeting. The Nominees with the most votes will be elected. A properly
executed proxy card marked
WITHHELD
with respect to the election of
Directors will not be voted and will not count
FOR
or
AGAINST
any
of the Nominees.
Proposal No. 2
: The ratification of the appointment of
the independent registered public accountant will be approved if a majority of
the voting shares present at the Annual Meeting vote
FOR
the proposal. A
properly executed proxy card marked
ABSTAIN
with respect to this proposal
will have the same effect as a vote cast
AGAINST
this proposal.
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Proposal No. 3
: The approval of the extension of the
consulting agreement between the Company and Northeast Industrial Partners LLC
pursuant to an Extension Agreement and the issuance of shares thereunder will be
approved if a majority of the voting shares present at the Annual Meeting,
excluding votes attaching to shares beneficially owned by Northeast Industrial
Partners LLC or its associates, vote
FOR
the proposal. A properly
executed proxy card marked
ABSTAIN
with respect to this proposal will
have the same effect as a vote
AGAINST
this proposal. A copy of the
Extension Agreement is annexed hereto as
Exhibit A.
Proposal No. 4
: The issuance of Shares to Paul Jensen,
the Companys President and Chief Operating Officer, pursuant to an employment
agreement between the Company and Mr. Jensen, will be approved if a majority of
the voting shares present at the Annual Meeting, excluding votes attaching to
shares beneficially owned by Paul Jensen or his associates, vote
FOR
the
proposal. A properly executed proxy card marked
ABSTAIN
with respect to
this proposal will have the same effect as a vote
AGAINST
this
proposal.
Proposal No. 5
: The revised Stock Option Plan will be
approved if a majority of the voting shares present at the Annual Meeting vote,
excluding votes attaching to shares beneficially owned by directors, executive
officers, their associates and related parties described below,
FOR
the
proposal. A properly executed proxy card marked
ABSTAIN
with respect to
this proposal will have the same effect as a vote
AGAINST
this proposal.
A copy of the revised Stock Option Plan is annexed hereto as
Exhibit B.
Will my shares of common stock
be voted if I do not sign and return my Proxy Card?
If your shares of common stock are held through a brokerage
account, your brokerage firm, under certain circumstances, may vote your shares
of common stock. See What effect does a broker non-vote have? above for a
discussion of the matters on which your brokerage firm may vote your shares of
common stock.
If your shares of common stock are registered in your name, and
you do not sign and return your proxy card, your shares of common stock will not
be voted at the Annual Meeting, unless you attend the Annual Meeting and vote
your shares of common stock.
How are votes counted?
Your shares of common stock will be voted or withheld from
voting as you indicate on your proxy card.
If you just sign your proxy card
with no further instructions, your shares of common stock will be voted (a) FOR
each nominee for election to the Board for terms expiring at the next annual
meeting of stockholders, (b) FOR Proposal No. 2, (c) FOR Proposal No. 3, (d) FOR
Proposal No. 4, (e) FOR Proposal No. 5, and (f) FOR Proposal No. 6.
Voting results will be tabulated and certified by the Inspector
of Elections.
Where can I find the voting
results of the Annual Meeting?
We will publish the final results in a current report filing on
Form 8-K with the United States Securities and Exchange Commission (the SEC)
within four (4) business days of the Annual Meeting.
Who will pay for the costs of
soliciting proxies?
We will bear the cost of soliciting proxies. In an effort to
have as large a representation at the Annual Meeting as possible, our directors,
officers and employees may solicit proxies by telephone or in person in certain
circumstances. These individuals will receive no additional compensation for
their services other than their regular salaries. Additionally, we may hire a
proxy solicitor to help reach the quorum requirement. We will pay a reasonable
fee in relation to these services. Upon request, we will reimburse brokers,
dealers, banks, voting trustees and their nominees who are holders of record of
our common stock on the record date for the reasonable expenses incurred for
mailing copies of the proxy materials to the beneficial owners of such shares.
When are stockholder proposals
due for the 2018 Annual Meeting of Stockholders?
In order to be considered for inclusion in the 2018 proxy
statement, stockholder proposals must be submitted in writing to our Secretary,
Dean Thrasher, at Security Devices International Inc., 107 Audubon Road,
Building 2, Suite #201, Wakefield, MA 01880 USA, and received no later than
October 2, 2018, provided that this date may be changed in the event that the
date of the annual meeting of stockholders to be held in calendar year 2018 is
changed by more than 30 days from the date of this Annual Meeting.
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Are there any proposals
currently anticipated for the 2018 Annual Meeting of Stockholders?
There are no proposals currently anticipated for the 2018
Annual Meeting of Stockholders.
How can I obtain a copy of the
Annual Report on Form 10-K or our Audited Financial Statements?
Our Audited Financial Statements are included in our Annual
Report on Form 10-K and our other periodic and current reports are available on
the Companys website http://securitydii.com and on the SECs website at
http://www.sec.gov.
At the written request of any stockholder who owns shares
of common stock as of the Record Date, we will provide to such stockholder,
without charge, a paper copy of our Financial Statements as filed with the SEC,
but not including exhibits
. If requested, we will provide copies of the
exhibits for a reasonable fee. Requests for additional paper copies of the
Financial Statements should be mailed to: 107 Audubon Road, Building 2, Suite
#201, Wakefield, MA 01880 USA, Attention: Paul Jensen.
Additional information relating to the Company is also
available on SEDAR at www.sedar.com. Financial information concerning the
Company is provided in the comparative financial statements for the year ended
November 30, 2016 and Management Discussion & Analysis (MD&A) for that
financial year. Security holders may contact the Company to request copies of
the Companys financial statements and MD&A at the address set out above.
PROPOSAL 1 ELECTION OF DIRECTORS
General Questions
What is the current composition
of the Board?
Our current bylaws require the Board to have at least one (1)
and no more than ten (10) Directors. The current Board is composed of four (4)
Directors, of whom four (4) are standing for election at the Annual Meeting.
Donald Levantin, a current Director standing for election, was appointed to the
Board on August 1, 2017. In accordance with the Bylaws of the Company, the Board
of Directors intends to fix the number of Directors to four (4) following the
Annual Meeting.
Is the Board divided into
classes? How long is the term?
No, the Board is not divided into classes. All Directors serve
one-year terms until their successors are elected and qualified at the next
annual meeting of our stockholders.
Who is standing for election
this year?
The Board has nominated the following four (4) Nominees, for
election at the Annual Meeting, to hold office until the 2018 annual meeting of
stockholders:
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Dean Thrasher
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Bryan Ganz
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Karen Bowling
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Donald Levantin
What if a Nominee is unable or
unwilling to serve?
Should any one or more of these Nominees become unable or
unwilling to serve, which is not anticipated, the Board may designate substitute
nominees. In such event, the proxy representatives will vote proxies that
otherwise would be voted for the named Nominees for the election of such
substitute nominee or nominees.
How are Nominees elected?
Directors are elected by a plurality of the votes present in
person or represented by proxy and entitled to vote at the Annual Meeting.
11
The Board recommends a vote FOR each of the Nominees. All
proxies executed and returned without an indication of how shares of common
stock should be voted will be voted FOR the election of all Nominees.
Information On The Board, Executive Officers, And Key
Employees And Director Nominees
The following table and information that follows sets forth, as
of October 1, 2017, the names, and positions of our directors and executive
officers:
Name and Municipality of
Residence
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Current Office with
the
Company
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Principal Occupation
Last Ten Years
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Director Since
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Dean Thrasher
Oakville, Ontario, Canada
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Chief Executive Officer Director
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and CEO of the Company since June 2016; COO at SDI
October 2010 to June 2016, self-employed (investment banking) from
December 2007 to October 2014; Executive Vice President, Mint Technology
Corp. (TSX-V pre-paid credit cards) July 2002 to December 2007; President,
ecwebworks Inc. (e-commerce) from June 1999 to July 2002.
|
November 2013
|
Paul Jensen
Methuen, MA, USA
|
President and Chief Operating Officer
|
COO of the Company since October 1, 2017; Co- founded
HALO Maritime Defense Systems; Prior to his employment with HALO, Mr.
Jensen worked in senior management positions at Nypro Inc.
|
n/a
|
Rakesh Malhotra
Mississauga, Ontario, Canada
|
Chief Financial Officer and Treasurer
|
Chief Financial Officer appointed January 2007, a
Canadian CA in Ontario and a CPA in Illinois. His occupation is that of a
consultant to various private and public companies in Canada and the USA
and serving as CFO with various public companies.
|
n/a
|
Bryan Ganz
Boston, MA, USA
|
Executive Chairman
|
Chief Executive Officer of Northeast Industrial Partners
LLC, from January 2013 through current; CEO of Scudder Bay Capital LLC
March 2009 through current. CEO of Maine Industrial Tire, January 2010
through December 2012. Executive Chairman of GPX International Tire &
Rubber, January 2008 through December 2010. Co-CEO of GPX International
Tire & Rubber, January 2006 through December 2007. Director of
Arrhythmia Research Technologies, January 2016 through March 2016.
Director Boston CASA January 2013 through current.
|
July 2016
|
Donald Levantin
Westport, CT, USA
|
Director
|
Chief Executive Officer Amphora Inc. October 2013 through
current, Product Manager, KRT Sungard Financial Systems, Kiodex 2009-2013,
Product Manager, ICE Real Time at Intercontinental Exchange 2007-2009,
Co-Founder Commoditrack Inc. 2006-2007, Head of Global Implementation
& Product Manager, TradeCapture 1994-1998.
|
August 2017
|
Karen Bowling
Jacksonville Beach,
Jacksonville, FL USA
|
Director
|
President, Thrive Consulting August 2016 to Present,
Public Affairs Director at Foley & Lardner LLP, 2015 to 2016, Chief
Administration Officer for the City of Jacksonville, FL, 2011-2014, and
Co-Founder and CEO of the Solantic Walk-In Urgent Care Centers, 2001-2011.
Over a dozen board position 1993 to Present.
|
October 2016
|
The following is a description of the business background of
our directors, executive officers and director nominees.
12
Dean Thrasher
, 54, Mr. Thrasher has been CEO of the
Company since June 2016, prior to this he was COO of the Company since October
2010, and director of SDI since November 2013. Mr. Thrasher has been
self-employed in the investment banking sector dating from December 2007 to
October 2014, with varied consulting positions in capital raising, investor
relations, product development, public relations, and mergers & acquisition;
Executive Vice President and director of Mint Technology Corp. (TSX-V listed
company - pre-paid credit cards) July 2002 to December 2007; President, and
Chairman of ecwebworks Inc. (e-commerce) from June 1999 to July 2002, and
President of The Brew Store, a franchising corporation in the beer and wine
sectors throughout North America and internationally from 1989 to 1999.
Paul Jensen,
62 Mr. Jensen has an extensive background
in plastics contract manufacturing, the defense sector, technology licensing,
and managing multi-national programs. Mr. Jensen co-founded HALO Maritime
Defense Systems, a technology company specializing in advanced marine automated
security systems. For approximately 20 years Mr. Jensen worked for Nypro Inc., a
billion dollar plastics injection molding contract manufacturer, where he held
various senior management positions. Prior to his work with Nypro Inc., Mr.
Jensen held positions with Kodak and General Electric. A Distinguished Graduate
of the United States Military Academy at West Point (1977), Mr. Jensen received
his M.S. in Chemistry from M.I.T. (1979 Fannie and John Hertz Fellow) and
holds an M.B.A. with honors from Golden Gate University (1982). Mr. Jensen
served a total of nine years active duty in the United States Army, serving with
the 82nd Airborne Division and XVIIIth Airborne Corps at Ft. Bragg and Staff
& Faculty, United States Military Academy at West Point.
Rakesh Malhotra,
60, Mr. Malhotra has been SDI's Chief
Financial Officer since January 7, 2007. Mr. Malhotra is a certified public
accountant in Illinois, and a Canadian CPA, CA in Ontario. Mr. Malhotra
graduated with a Bachelor of Commerce (Honors) from the University of Delhi
(India), and has served as CFO for Pacific Copper Corp. (OTC-BB Mining
Exploration) from April 2007 to October 2013; Infrastructure Materials Corp.
(OTC-BB and TSX-V Mining Exploration) from October 2009 to present; Dynamic Fuel
Systems Inc. (TSX-V Manufacturing) from June 2009 to June 2011 and June 2013 to
July 2014; Uranium Hunter Corp. (OTC-BB Mining Exploration) from March 2007 to
March 2010; Yukon Gold Corporation Inc. (OTC-Pink Sheets Mining Exploration)
from November 2005 to August 2010 and November 2011 to present (filing on
SEDAR).
Bryan Ganz,
59 Mr. Ganz has been a director of the
Company since July 2016. Mr. Ganz has been the chief executive officer of
Northeast Industrial Partners LLC since 2013, the Chief Executive Officer of
Scudder Bay Capital LLC since March 2009 and a director of Boston CASA since
January 2013. Mr. Ganz served as Chairman of the Board and Chief Executive
Officer of Main Industrial Tire from January 2010 through December 2012. Mr.
Ganz served as the Executive Chairman of GPX International Tire & Rubber,
January 2008 through December 2010 and the Co-CEO of GPX International Tire
& Rubber, January 2006 through December 2007. Mr. Ganz was a Director of
Arrhythmia Research Technologies, January 2016 through March 2016.
Karen Bowling,
62, Ms. Bowling brings more than 25 years
of diverse executive management experience to the board of SDI. Some of her
skill-sets include; government affairs, lobbying, public relations, government
procurement, marketing, communications, operations, and local and state level
legislation. Ms. Bowling has also spent part of her career in the less-lethal
sector for a long-range acoustic hailing device company. Karens recent
positions include; Public Affairs Director at Foley & Lardner LLP, CEO at
WiseEye AI, (an artificial intelligence company focussed on the healthcare
sector for CT scan identification and classification), Chief Administration
Officer for the city of Jacksonville, FL (with a budget in excess of one billion
dollars and over 5,000 employees), and Co-Founder and CEO of the Solantic
Walk-In Urgent Care Centers. Ms. Bowling has sat on and chaired numerous boards
across a dozen sectors, and has recently been Gubernatorial appointed to the
board of the Florida State College in Jacksonville.
Donald Levantin,
53
,
Mr. Levantin is a senior
executive with a proven record of positioning companies for growth,
profitability and acquisition. He is currently the chief executive officer and a
board member of Amphora Inc., the leading global software solution and service
provider for energy and commodity trading, risk management, and logistics
execution. With over 30 years experience, he is an accomplished strategist in
conceptualizing, building and operating corporations on a global level in the
commodity sector. Prior to leading Amphora, he was a co-founder of Commoditrack,
a real-time mark-to-market and risk management platform for commodities, which
was acquired by the Intercontinental Exchange (ICE) and later by Sungard
Financial Systems. Prior to building and leading companies in the software
sector, Mr. Levantin was a commodity trader with Philipp Brothers Commodity
Corp. and Phibro Energy. He holds a BS in business and economics from Lehigh
University.
Relationships between Directors
and Officers
There are no family relationships between any officer or
director of SDI.
13
Arrangements between Directors
and Officers
To our knowledge, there is no arrangement or understanding
between any of our officers and any other person pursuant to which the officer
was selected to serve as an officer.
Legal Proceedings, Cease Trade
Orders and Bankruptcy
Except as noted below, to our knowledge, none of our directors,
executive officers or any of our stockholders holding more than 5% of any class
of our voting securities, or any associate of any such director, officer or
stockholder is a party adverse to us or any of our subsidiaries or has an
interest adverse to us or any of our subsidiaries. Except as listed below, none
of our directors or executive officers is, as of the date of this Proxy
Statement, or was within 10 years before the date of this Proxy Statement, a
director, chief executive officer or chief financial officer of any company
(including the Company), that:
(a)
|
was subject to a cease trade order, an order similar to a
cease trade order or an order that denied the relevant company access to
any exemption under securities legislation, for a period of more than 30
consecutive days, that was issued while the director or executive officer
was acting in the capacity as director, chief executive officer or chief
financial officer; or
|
|
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(b)
|
was subject to a cease trade order, an order similar to a
cease trade order or an order that denied the relevant company access to
any exemption under securities legislation, for a period of more than 30
consecutive days, that was issued after the director or executive officer
ceased to be a director, chief executive officer or chief financial
officer and which resulted from an event that occurred while that person
was acting in the capacity as director, chief executive officer or chief
financial officer.
|
Rakesh Malhotra, SDIs CFO, served as the CFO for Pacific
Copper Corp., a US reporting issuer from April 2007 to October 2013. On October
28, 2008, Pacific Copper Corp. received a cease trade order (the CTO) from the
British Columbian Securities Commission (the BCSC). By its terms, the CTO was
issued for not filing a technical report under Canadian National Instrument
43-101 Standards of Disclosure for mineral projects (NI 43-101) with respect
to its material copper oxide projects in Chile in support of mineral reserve and
mineral reserve estimates and results of a preliminary assessment, after having
made public disclosures regarding such properties. On May 8, 2009, the BCSC
revoked its CTO against the Company. In order to comply with legislation,
Pacific Copper Corp. filed technical reports under Canadian National Instrument
43-101 with respect to each of the mineral projects.
On March 8, 2012, Pacific Copper Corp. received an additional
CTO from the BCSC, the effect of which is limited to the Province of British
Columbia. The CTO was issued for failure to file comparative annual financial
statements for its financial year ended October 31, 2011 as required under Part
4 of National Instrument 51-102 Continuous Disclosure Obligations ("NI 51-102")
and section 5(b) of British Columbia Instrument 51-509 Issuers Quoted in the
U.S. Over-the-Counter Markets ("BCI 51-509"); a Form 51-102F1 Management's
Discussion and Analysis for the period ended October 31, 2011 as required under
Part 5 of NI 51-102 and section 5(b) of BCI 51-109; and a Form 51-102F2 Annual
Information Form for the year ended October 31, 2011 as required under section
5(c) of BCI 51-509. Pacific Copper Corp. filed its annual financial statements
for its financial year ended October 31, 2011, Form 51-102F1 Management's
Discussion and Analysis for period ended October 31, 2011, and Form 51-F2 Annual
Information Form for the year ended October 31, 2011. As a result, on March 15,
2012, the BCSC revoked the CTO issued on March 8, 2012.
To the best of Managements knowledge, except as listed below,
none of our directors or executive officers, and none of our stockholders
holding a sufficient number of our securities to affect materially the control
of the Company:
(a)
|
is, as at the date of this Proxy Statement, or has been
within the 10 years before the date of this annual report, a director or
executive officer of any company (including the 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;
or
|
|
|
(b)
|
has, within 10 years before the date of this Proxy
Statement, 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,
executive officer or stockholder; or
|
|
|
(c)
|
has, within 10 years before the date of this Proxy
Statement, been the subject of, or a party to, any U.S. federal or state
judicial or administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated, relating to
an alleged violation of: (i) any U.S. federal or state
securities or commodities law or regulation; or (ii) any law or regulation
respecting financial institutions or insurance companies including, but
not limited to, a temporary or permanent injunction, order of disgorgement
or restitution, civil money penalty or temporary or permanent
cease-and-desist order, or removal or prohibition order; or (iii) any law
or regulation prohibiting mail or wire fraud or fraud in connection with
any business entity; or
|
14
(d)
|
has, within 10 years before the date of this Proxy
Statement, been the subject of, or a party to, any sanction or order, not
subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the United States Exchange
Act of 1934, as amended (15 U.S.C.78c(a)(26))), any registered entity (as
defined in Section 1(a)(29) of the Commodity Exchange Act (7
U.S.C.1(a)(29))), or any equivalent exchange, association, entity or
organization that has disciplinary authority over its members or persons
associated with a member.
|
Bryan Ganz, a director of the Company served as the chief
executive officer of GPX International Tire &Wheel, Co. (GPX) In 2007
Titan Tire & Wheel and Bridgestone Tire filed an anti-dumping and
countervailing duty suit against GPX. The suit alleged that GPX was dumping
products produced in a Chinese factory and receiving subsidies from the Chinese
government. The Court of International Trade decided for the plaintiffs and
imposed a 44% duty on all GPX products coming into the United States. Although
GPX was ultimately successful in the Federal District Court and Federal Appeals
Court in overturning the decision of the Court, International Trade (CIT) (in a
unanimous decision in December of 2011), it was too late as the company had been
forced to file for bankruptcy protection when its lender group called the loan
at the time the CIT decision was originally rendered in mid-2009.
To the best of Managements knowledge, none of our directors,
executive officers nor any stockholder holding 5% or more of any of our
securities has been subject to:
(a)
|
any penalties or sanctions imposed by a court relating to
securities legislation or by a securities regulatory authority or has
entered into a settlement agreement with a securities regulatory
authority; or
|
|
|
(b)
|
any other penalties or sanctions imposed by a court or
regulatory body that would likely be considered important to a reasonable
investor in making an investment decision.
|
Indebtedness of Directors and
Executive Officers
Other than routine indebtedness as defined in National
Instrument 51-102 of the Canadian Securities Administrators, since the beginning
of our last fiscal year, none of our executive officers or Directors or any
proposed nominee for election as a Director or any of their respective
associates is or has been indebted to us or has been indebted to any other
entity where that indebtedness was the subject of a guarantee, support
agreement, letter of credit or other similar arrangement or understanding
provided by us.
CORPORATE GOVERNANCE
The Board Structure
General Structure
Our current bylaws require the Board to have at least one (1)
and no more than ten (10) Directors. The current Board is composed of four (4)
directors.
Director Independence
We have four (4) directors, including two independent
directors, as follows:
-
Dean Thrasher
-
Bryan Ganz
-
Karen Bowling (Independent)
-
Donald Levantin (Independent)
15
Following the Annual and Special Meeting of Shareholders, if
four directors are elected the Board intends to fix the size of the Board at
four members.
An independent director is a director whom the Board has
determined satisfies the requirements for independence under the Sarbanes-Oxley
Act of 2002, section 10A(m)(3) and under section 803A of the NYSE MKT LLC
Company Guide (note-our common shares are not currently listed on the NYSE-MKT
or any other national securities exchange and this reference is used for
definitional purposes only).
Board Leadership Structure
The Companys Board of Directors is responsible for overseeing
the business and affairs of the Company. Members of the Board are kept informed
of our business through discussions with the CEO and other officers, by
reviewing materials provided to them and by participating in meetings of the
Board and its committees.
The Board is currently comprised of Bryan Ganz, who serves as
our Executive Chairman, and three other members. We have two independent
directors and two directors who are not independent. The Board believes that
there is no single best organizational model that is the most effective in all
circumstances and that the shareholders interests are best served by allowing
the Board to retain the flexibility to determine the optimal organizational
structure for the Company at a given time.
Meetings Of The Board And Board
Member Attendance At Annual Meetings
During the fiscal year ended November 30, 2016, the Board held
18 meetings.
Board members are not required to attend the Annual
Meeting.
Communications To The Board
Stockholders who are interested in communicating directly with
members of the Board, or the Board as a group, may do so by writing directly to
the individual Board member c/o Secretary, Dean Thrasher, Security Devices
International Inc., 107 Audubon Road, Building 2, Suite #201, Wakefield, MA
01880 USA. Our Secretary will forward communications directly to the appropriate
Board member. If the correspondence is not addressed to the particular member,
the communication will be forwarded to a Board member to bring to the attention
of the Board. Our Secretary will review all communications before forwarding
them to the appropriate Board member.
Board Committees
Our Board has established four board committees: the Audit
Committee, the Compensation Committee, the Disclosure Committee, and the
Nominating Governance Committee.
The information below sets out the current members of our
Committees and summarizes the functions of each committee.
Audit Committee and Audit Committee
Financial Experts
Our Audit Committee is comprised of Bryan Ganz, Dean Thrasher,
and Donald Levantin. Mr. Levantin is an independent director, and Bryan Ganz and
Dean Thrasher are not independent, under Section 10A-3 of the Exchange Act, the
audit committee rules of the NYSE MKT LLC and National Instrument 52-110 of the
Canadian Securities Administrators.
Bryan Ganz is the Chairman of the Audit Committee. Mr. Ganz
satisfies the criteria for an audit committee financial expert under Item
407(d)(5) of Regulation S-K of the rules of the Securities and Exchange
Commission. Bryan Ganz, Dean Thrasher, and Donald Levantin are financially
literate for the purposes of National Instrument 52-110 of the Canadian
Securities Administrators. They acquired their financial literacy in the course
of their business experience (detailed under Information On The Board,
Executive Officers, And Key Employees And Director Nominees above) and not as a
result of any education relevant to the performance of his responsibilities as
an audit committee member.
16
The Audit Committee will meet with management and our external
auditors if necessary, to review matters affecting financial reporting, the
system of internal accounting and financial controls and procedures and the
audit procedures and audit plans. The Audit Committee reviews our significant
financial risks, will be involved in the appointment of senior financial
executives and will annually review our insurance coverage and any off-balance
sheet transactions.
The Audit Committee is mandated to monitor our audit and the
preparation of financial statements and to review and recommend to the Board all
financial disclosure contained in our public documents. The Audit Committee is
also mandated to appoint external auditors, monitor their qualifications and
independence and determine the appropriate level of their remuneration. The
external auditors report directly to management, the Audit Committee and to the
Board. The Audit Committee and the Board each have the authority to terminate
the external auditors engagement (subject to confirmation by stockholders). The
Audit Committee will also approve in advance any services to be provided by the
external auditors, which are not related to the audit.
During the fiscal year ended November 30, 2016, the Audit
Committee met four times. The Audit Committee expects to meet as needed during
the upcoming fiscal year.
Audit Committee Report
Our Audit Committee oversees our financial reporting process on
behalf of the Board. The Committee has three members, one of which is
independent as determined under Rule 10A-3 of the Exchange Act, and the rules
of the NYSE MKT LLC. The Committee operates under a written charter adopted by
the Board. Attached as Exhibit D is a copy of that charter.
The Committee assists the Board by overseeing (1) the integrity
of our financial reporting and internal control, (2) independence and
performance of our independent auditors, and (3) provides an avenue of
communication between management, the independent auditors, and the Board.
In the course of providing its oversight responsibilities
regarding the 2016 financial statements, the Audit Committee reviewed the 2016
audited financial statements with management and our independent auditors. The
Audit Committee reviewed accounting principles, practices, and judgments as well
as the adequacy and clarity of the notes to the financial statements.
The Audit Committee may meet with the independent auditors to
discuss their audit plans, scope and timing on a regular basis, with or without
management present. The Committee has received the written disclosures and the
letter from the independent auditors required by the Public Company Accounting
Oversight Board for independent auditor communications with Audit Committees
concerning independence.
The Audit Committee and the Board have recommended the
selection of Schwartz, Levitsky, Feldman, LLP as our independent auditors for
the fiscal year ending November 30, 2017.
Compensation Committee
Our Compensation Committee is comprised of Donald Levantin,
Bryan Ganz and Karen Bowling. The committee oversees remuneration of management
and the board of directors on behalf of the Board. The Committee has three
members, two of which are independent as determined under Rule 10A-3 of the
Exchange Act, and the rules of the NYSE MKT LLC (note-our common shares are not
currently listed on the NYSE-MKT or any other national securities exchange and
this reference is used for definitional purposes only).
The Committee operates under a written charter adopted by the
Board.
The Committees responsibilities include reviewing succession
and leadership plans and making appropriate recommendations to the Board at
least annually regarding the appointment, succession and remuneration of the
Companys senior officers (including the President and Chief Executive Officer).
The Committee reviews as necessary any recommendations of officer appointments
or terminations. The Committee also reviews at least annually the assessment of
the performance of the Companys senior officers.
During the fiscal year ended November 30, 2016, the
Compensation Committee met four (4) times. The Compensation Committee expects to
meet as needed during the upcoming fiscal year.
17
Governance and Nominating
Committee
Our Governance and Nominating Committee is comprised of Dean
Thrasher, Donald Levantin and Karen Bowling. The Committee has 3 members, 2 of
which are independent as determined under Rule 10A-3 of the Exchange Act and
the rules of the NYSE MKT LLC. The Committee operates under a written charter
adopted by the Board (note-our common shares are not currently listed on the
NYSE-MKT or any other national securities exchange and this reference is used
for definitional purposes only).
The committee oversees corporate governance matters and is
responsible for (1) identifying individuals qualified to become Directors and
recommending to the Board new nominees for election by shareholders or for
appointment by the Board; (2) providing recommendations to the Board regarding
the competencies and skills the Board, as a whole should possess, and the
qualifications of its Directors; (3) recommending for Board approval, if
appropriate, revisions to our corporate governance practices and procedures; (4)
reviewing the composition and mandate of the Board and each committee of the
Board.
During the fiscal year ended November 30, 2016, the Nominating
Governance Committee did not meet. The Nominating Governance Committee expects
to meet as needed during the upcoming fiscal year.
Disclosure Committee
Our Disclosure Committee is comprised of Dean Thrasher, Donald
Levantin and Karen Bowling. The Committee has 3 members, 2 of which are
independent as determined under Rule 10A-3 of the Exchange Act and the rules
of the NYSE MKT LLC. The Committee operates under a written charter adopted by
the Board (note-our common shares are not currently listed on the NYSE-MKT or
any other national securities exchange and this reference is used for
definitional purposes only).
The Disclosure Committee is responsible for ensuring timely and
proper disclosure of all material events, for reviewing all disclosures made,
and for ensuring adherence to the Companys Confidentiality & Securities
Trading Policy.
During the fiscal year ended November 30, 2016, the Disclosure
Committee did not meet. The Disclosure Committee expects to meet as needed
during the upcoming fiscal year.
Director Compensation
Agreements
Except as described under Executive Compensation Agreements
below, there are no service contracts with any of our directors and there is no
arrangement or agreement made or proposed to be made between us and any of our
directors pursuant to which a payment or other benefit is to be made or given by
way of compensation in the event of that officers resignation, retirement or
other termination of employment, or in the event of a change of control of us or
a change in the directors responsibilities following such change in control.
Compensation of Directors
The Compensation Committee will make recommendations of any
compensation to be paid to the board of directors for the fiscal year 2017.
Other Governance
Matters
The Role of the Board in Risk
Oversight
The understanding, identification and management of risk are
essential elements for the successful management of the Company.
Risk oversight begins with the Board and the Audit Committee.
The Audit Committee is chaired by Bryan Ganz, and one of three directors is
independent that sit on the Audit Committee.
The Audit Committee reviews and discusses policies with respect
to risk assessment and risk management. The Audit Committee also has oversight
responsibility with respect to the integrity of our financial reporting process
and systems of internal control regarding finance and accounting, as well as our
financial statements.
18
At the management level, an internal audit provides reliable
and timely information to the Board and management regarding our effectiveness
in identifying and appropriately controlling risks.
We also have a comprehensive internal risk framework, which
facilitates performance of risk oversight by the Board and the Audit Committee.
Our risk management framework is designed to:
|
Provide that risks are identified, monitored,
reported, and priced properly;
|
|
|
|
Define and communicate the types and amount of
risk the Company is willing to take; and
|
|
|
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Promote a strong risk management culture that
encourages a focus on risk-adjusted performance.
|
Code of Ethics
The Board has adopted a written code of business conduct and
ethics (the Code of Ethics) for our Directors, officers and employees that
sets out the Boards expectations for the conduct of such persons in their
dealings on behalf of the Company. Employees, officers and Directors are
required to maintain an understanding of, and ensure that they comply with, the
Code of Ethics.
Employees, officers and Directors are required to report
violations of the Code of Ethics to the Chief Executive Officer or the Chair of
the Board. The Board is not aware of any breach of the Code of Ethics by any
Director or officer during the period since its adoption on January 14, 2015.
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term
compensation awarded to or paid to the (i) the person serving as CEO of the
Company during 2016, (ii) the person serving as CFO of the Company during 2016,
and (iii) the other three most highly paid executive officers of the Company who
were serving as executive officers at November 30, 2016 (together, the Named
Executive Officers) for the fiscal years ended November 30, 2016 and 2015.
During the fiscal years ended November 30, 2016 and 2015, the
Board made grants of cash and grants of options to certain directors and
executives, the value of such grants of options and cash are indicated in the
compensation table below.
Name and Principal Position
|
Year
|
Salary
$
|
Bonus
$
|
Stock
Awards
$
|
Options
Option Awards
$
|
Non-Equity Incentive Plan
Non-Equity Incentive Compensation
$
|
Non-Qualified Deferred
Nonqualified Deferred Compensation Earnings $
|
All Other Compensation $
|
Total
|
Dean Thrasher,
CEO & Director
|
2016
2015
|
-
-
|
|
-
|
-
70,423
|
-
|
-
|
186,814
221,217
|
186,814
(1)
291,640
(1)
|
Bryan Ganz,
Executive
Chairman
|
2016
|
-
|
|
-
|
-
|
-
|
-
|
50,000
|
50,000
(2)
|
Gregory Sullivan,
Former CEO &
Director
|
2016
2015
|
-
|
|
-
|
-
131,482
|
-
|
-
|
151,454
135,966
|
151,454
(3)
267,448
(3)
|
Rakesh Malhotra,
CFO
|
2016
2015
|
-
-
|
|
-
-
|
40,132
|
-
-
|
-
-
|
32,064
35,717
|
32,064
(4)
75,849
(4)
|
Allen Ezer,
Past Executive
Vice-President &
Director
|
2016
2015
|
-
-
|
|
-
-
|
49,912
97,672
|
-
-
|
-
-
|
73,786
82,260
|
123,698
(5)
179,932
(5)
|
|
1.
|
A corporation that is 50% owned by Mr. Thrasher received
$186,814 in cash for its services rendered during the 2016 fiscal year and
$221,217 in cash for its services rendered in the 2015 fiscal year. In
2015, the Company extended the expiry date of warrants issued to the
corporation (800,000 warrants) in 2012 from original expiry date of
January 4, 2016 to September 23, 2019.
|
19
|
2.
|
Effective July 21, 2016, Bryan Ganz was elected as a
director of the Company. Prior to his appointment, effective May 1, 2016,
the Company executed a one-year consulting agreement with a Corporation in
which the said director has an ownership interest. The said Corporation
was paid cash of $25,000 in May, 2016 and $25,000 in June, 2016. In
September 2016, the Company issued 488,851 shares for services at deemed
price of $0.1023 for a total consideration of $50,000. In January 2017,
the Company issued 589,414 common shares at a deemed price of $0.1142 per
share to satisfy the payment of USD $50,000 due on November 15,
2016.
|
|
|
|
|
3.
|
For the 2016 fiscal year, $151,454 was paid in cash for
services rendered. For the 2015 fiscal year, $135,966 was paid in cash for
services rendered. In fiscal 2016 and 2015, Mr. Sullivan was granted nil
and 150,000 options respectively, which vested immediately. In 2015, the
Company extended the expiry date of warrants issued to Mr. Sullivan in
2010 from original expiry date of September 30, 2015 to September 23,
2019. Effective July 15, 2016, Mr. Sullivan resigned from the
Company.
|
|
|
|
|
4.
|
For the 2016 fiscal year $32,064 was paid in cash for
services rendered. For the 2015 fiscal year, $35,717 was paid in cash for
services rendered. For services, Mr. Malhotra was issued 50,000 options in
2015 which vested immediately. In 2015, the Company extended the expiry
date of 175,000 warrants issued to Mr. Malhotra in 2010 from original
expiry date of September 30, 2015 to September 23, 2019. Mr. Malhotra is
the CFO of the Corporation, and works on an hourly basis.
|
|
|
|
|
5.
|
A corporation that is under common control with Mr. Ezer
received $73,786 in cash for his services rendered during the 2016 fiscal
year and $82,260 in cash for services rendered during the 2015 fiscal
year. In 2016, the Company extended the expiry dates of warrants issued to
Mr. Ezer in 2012 from original expiry date of August 9, 2016 to August 7,
2020. Effective September 16, 2016, Mr. Ezer
resigned.
|
Executive Compensation
Agreements
As further described below, we are a party to a consulting
agreement which provides for the services of Dean Thrasher for 7 remaining
months, with renewal features at the expiry dates. The renewals are not
automatic. Pursuant to the agreement, compensation is payable for termination of
his agreement in certain circumstances, including termination without cause and
change of control. The agreement provides for the payment of compensation that
will be triggered by a termination of the agreement by either us or the
executive officer following a change of control of us, or by us at any time,
other than for cause.
1. The Company has
entered into a consulting agreement effective January 1, 2017 with Dean Thrasher
(Executive), and ending June 30, 2018. The agreement has the following
terms.
|
(a)
|
Upon a change in control, the Company may terminate
Executives employment under this Agreement at any time for any reason or
no reason whatsoever by delivering to the Executive, a payment of four (4)
months of pay in lieu of notice of all forms of his remuneration he is
earning or receiving at the time of his termination without cause. In the
event of a change of control, the Company shall deliver to Executive a
payment of four (4) months of pay of all forms of his remuneration he is
earning or receiving at the time of his termination without
cause.
|
|
|
|
|
(b)
|
Executive may voluntarily terminate his employment at any
time by giving the Company a notice of termination specifying the date of
termination forty-five (45) days following the date of delivery of the
notice of termination to the Company.
|
2. The Company
entered into a consulting agreement with Northeast Industrial Partners, LLC on
June 15, 2016 for a one year period. An extension was agreed to between the
parties on a quarter-by-quarter basis. The services of Northeast is payable
entirely by issue of Company stock, to be issued 15 days after the end of each
fiscal quarter. Each quarter Northeast is paid $62,500.
3. The Company has
entered into an employment agreement effective October 1, 2017 with Paul Jensen,
(Executive Jensen), and ending June 30, 2018. Executive Jensen will be
compensated at a rate of $200,000 per annum. From October 1, 2017 through June
30, 2018, the salary is payable entirely by issue of Company stock, to be issued
15 days after the end of each calendar quarter. Commencing July 1, 2018, the
Company will pay $10,000 per month in cash and the balance in Company stock. At
such time as the Company can pay the entire salary in cash and still be cash
positive on an operating basis, the entire monthly salary will be paid in cash.
20
Except as described above, there are no service contracts of
any of Named Executive Officers and there is no arrangement or agreement made or
proposed to be made between us and any of our Named Executive Officers pursuant
to which a payment or other benefit is to be made or given by way of
compensation in the event of that officers resignation, retirement or other
termination of employment, or in the event of a change of control of us or a
change in the Named Executive Officers responsibilities following such change
in control.
Outstanding Equity Awards
at Fiscal Year-End
The following table sets forth the stock options and stock
appreciation rights outstanding to our Named Executive Officers and directors,
which are outstanding as of November 30, 2016.
Option/Warrant Awards
|
Stock Awards
|
Name
|
Number of
securities
underlying
unexercised
options/
warrants
(#)
exercisable
|
Number of
securities
underlying
unexercised
options/
warrants
(#)
unexercisable
|
Equity
incentive
plan
awards:
Number of
securities
underlying
unexercised
unearned
options
(#)
|
Option/
Warrant
exercise
price
($)
|
Option/Warrant
expiration
date
|
Number
of shares
or
units
of stock
that
have
not
vested
(#)
|
Market
value of
shares
or
units
of
stock
that
have
not
vested
($)
|
Equity
incentive
plan
awards:
Number of
unearned
shares,
units or
other
rights
that have
not vested
(#)
|
Equity
incentive
plan
awards:
Market
or payout
value
of
unearned
shares,
units or
others
rights that
have
not
vested
($)
|
Gregory
Sullivan,
Former CEO
|
797,000
(1)
|
-
|
-
|
0.13 0.20
|
Sept. 2019
|
-
|
-
|
-
|
-
|
Rakesh
Malhotra,
CFO and
Treasurer
|
245,000
(2)
|
-
|
-
|
0.13 - 0.30
|
Sept. 2019-Oct
2020
|
-
|
-
|
-
|
-
|
Dean Thrasher,
CEO
|
800,000
(3)
|
-
|
-
|
0.13-0.28
|
Sept 2019
|
-
|
-
|
-
|
-
|
Allen Ezer
Executive
Vice-President
|
800,000
4)
|
-
|
-
|
0.13 0.30
|
Sept 2019 Oct,
2020
|
-
|
-
|
-
|
-
|
Keith
Morrison,
Director
|
1,000,000
(5)
|
-
|
-
|
0.28-0.30
|
May, 2019-Oct.,
2020
|
-
|
-
|
-
|
-
|
Karim Kanji,
Director
|
850,000
(6)
|
-
|
-
|
0.28-0.30
|
Sept., 2019-Oct.,
2020
|
-
|
-
|
-
|
-
|
David
Goodbrand,
Director
|
100,000
(7)
|
-
|
-
|
0.30
|
Oct., 2020
|
-
|
-
|
-
|
-
|
(1)
|
Mr. Sullivan holds 797,000 warrants. The strike price of
Mr. Sullivans options/warrants range from $0.13 to $0.20, with expiry
dates from September 23, 2019. Mr. Sullivan resigned effective July 15,
2016.
|
|
|
(2)
|
Mr. Malhotra holds 50,000 options and 195,000 warrants
with a strike price ranging from $0.13 - $0.30 and expiry dates ranging
from September 23, 2019 to October 19, 2020.
|
|
|
(3)
|
Level 4 Capital Corp., a company in which Mr. Thrasher
owns a 50% interest, was issued 800,000 options on September 11, 2014
(exercisable at $0.35 until September 10, 2019) and 800,000 compensation
warrants on January 4, 2012 (exercisable at $0.13 until September 23,
2019). Of the 800,000 options and 800,000 compensation warrants, Mr.
Thrasher is entitled to 50%.
|
21
(4)
|
Mr. Ezer holds 250,000 warrants and 550,000 options
through a company he owns (Lumina Global Partners Inc.). The strike price
of Mr. Ezers warrants/options range from $0.13 to $0.30, with expiry
dates from September 10, 2019 to October 20, 2020.
|
|
|
(5)
|
Mr. Morrison holds 1,000,000 stock options. The strike
price of Mr. Morrison's options range from $0.28 to $0.30, with expiry
dates from May 8, 2019 to October 19, 2020.
|
|
|
(6)
|
Mr. Kanji holds 850,000 stock options. The strike price
of Mr. Kanji's options range from $0.28 to $0.30, with expiry dates from
September 10, 2019 to October 19, 2020.
|
|
|
(7)
|
Mr. Goodbrand holds 100,000 stock options. The strike
price of Mr. Goodbrands at $0.30, with expiry dates from October 20,
2020.
|
Exercise of Compensation
Securities
During the year ended November 30, 2016, none of the officers
or directors of the Company exercised any compensation securities.
Retirement, Resignation or Termination Plans
We do not sponsor any plans, that would provide compensation or
benefits of any type to an executive upon retirement, or any plans that would
provide payment for retirement, resignation, or termination as a result of a
change in control of our Company or as a result of a change in the
responsibilities of an executive following a change in control of our Company,
except as described under Executive Compensation Agreements above.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following tables set forth information as of November 10,
2017 regarding the ownership of our common stock by:
-
each person who is known by us to own more than 5% of our shares of common
stock; and
-
each Named Executive Officer, each director and all of our directors and
executive officers as a group.
The number of shares beneficially owned and the percentage of
shares beneficially owned are based on shares of common stock outstanding as of
November 10, 2017.
For the purposes of the information provided below, shares
subject to options and warrants that are exercisable within 60 days following
November 10, 2017 are deemed to be outstanding and beneficially owned by the
holder for the purpose of computing the number of shares and percentage
ownership of that holder but are not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person. Except as indicated in
the footnotes to these tables, and as affected by applicable community property
laws, all persons listed have sole voting and investment power for all shares
shown as beneficially owned by them.
Principal Stockholders
22
Title of Class
|
Name of Beneficial Owner
(1)
|
Address of Beneficial
Owner
(1)
|
Amount and Nature
of Beneficial
Ownership Shares
|
Percent of Class
|
Common Stock
|
Alpha North Asset Management
|
333 Bay Street
Suite 630
Toronto,
Ontario
M5H 2R2 Canada
|
4,772,000
(1)
|
8.3%
|
Common Stock
|
Arthur Cohen
|
12 South Main Street
Suite 203
Norwalk,
CT 06854
|
3,787,878
|
6.6%
|
Common Stock
|
Joseph Healey
|
152 W 57th St 42nd
Floor New York, NY
10019
|
3,787,878
|
6.6%
|
(1)
|
Beneficial ownership is determined in accordance with the
United States Securities Act of 1933, as amended and the United States
Securities Exchange Act of 1934, as amended and includes voting and
investment power with respect to shares. Unless otherwise indicated, the
persons named in this table have sole voting and sole investment control
with respect to all shares beneficially owned. Figures shown are on a
non-diluted basis.
|
Security Ownership of Management
The following table sets forth, as of November 10, 2017,
certain information regarding the beneficial ownership of our common stock and
the percentage of shares beneficially owned by (i) the person serving as CEO of
the Company during 2016 (ii) the person serving as CFO of the Company during
2016 and (iii) the other three most highly paid executive officers of the
Company who were serving as executive officers at November 30, 2016 (together,
the Named Executive Officers) and each Director, and all current Directors and
current executive officers of the Company as a group. The mailing address for
each Named Executive Officer and Director is: c/o Security Devices
International, Inc. 107 Audubon Road, Building 2, Ste 201, Wakefield, MA 01880.
Title of Class
|
Name of Beneficial
Owner
(1)
|
Amount and Nature of
Beneficial
Ownership Shares
|
Percent of Class
|
Common Stock and Convertible Note
|
Bryan Ganz, Executive Chairman
|
3,151,546
(2)
|
4.2%
|
Common Stock, Options and Warrants
|
Dean Thrasher, Chief Executive
Officer and Secretary
|
1,583,333
(3)
|
2.8%
|
Options, Warrants
|
Rakesh Malhotra, Treasurer and
Chief Financial Officer
|
245,000
(4)
|
0.04%
|
Common Stock and Options
|
Donald Levantin, (Director)
|
229,467
(5)
|
0.04%
|
Options
|
Karen Bowling, Director
|
615,000
(6)
|
1.0%
|
|
Total for Officers and
Directors
|
5,824,346
|
8.1%
|
(1)
|
Beneficial ownership is determined in accordance with the
United States Securities Act of 1933, as amended and the United States
Securities Exchange Act of 1934, as amended and includes voting and
investment power with respect to shares. Unless otherwise indicated, the persons named in this table have
sole voting and sole investment control with respect to all shares
beneficially owned.
|
23
(2)
|
2,614,880 shares of common stock are held in the name of
Northeast Industrial Partners, LLC, an entity controlled by Mr. Ganz.
Northeast Industrial Partners, LLC also holds a convertible note which may
be converted into 416,666 shares of common stock.
|
|
|
(3)
|
Includes warrants exercisable to acquire 400,000 shares
of common stock. These securities are in the name of 2412457 Ontario Corp.
Mr. Thrasher controls this corporation. Also includes options to acquire
383,333 shares of common stock.
|
|
|
(4)
|
Includes options/warrants exercisable to acquire 245,000
shares of common stock.
|
|
|
(5)
|
Includes vested options exercisable to acquire 99,667
shares of common stock.
|
|
|
(6)
|
Includes vested options exercisable to acquire 615,000
shares of common stock.
|
We have no knowledge of any arrangements, including any pledge
by any person of our securities, the operation of which may at a subsequent date
result in a change in our control.
We are not, to the best of our knowledge, directly or
indirectly owned or controlled by another corporation or foreign government.
As of the Record Date, we had approximately 56 stockholders of
record listed on our stock ledger.
INTEREST OF CERTAIN PERSONS AND CORPORATIONS IN MATTERS TO
BE ACTED UPON
Except as described below, other than each director's and
officer's interest in the Company's Stock Option Plan, no person who has been a
director or executive officer of the Company since the beginning of the last
financial year and no associate or affiliate of any such director or executive
officer has any material interest, direct or indirect, by way of beneficial
ownership of securities or otherwise, in any matter to be acted upon at the
Annual Meeting.
Bryan Ganz, Executive Chairman of the Company who is standing
for election at the Annual Meeting, controls Northeast Industrial Partners LLC.
Shareholders are being asked to approve the extension of the consulting
agreement between the Company and Northeast and the issuance of Shares to
Northeast as consideration.
Shareholders are being asked to approve the issuance of Shares
to Paul Jensen, the Companys President and Chief Operating Officer, in
accordance with an employment agreement between Mr. Jensen and the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except for the transactions described below, none of our
directors, senior officers or principal stockholders, nor any associate or
affiliate of the foregoing have any interest, direct or indirect, in any
transaction, since the beginning of the fiscal year ended November 30, 2016, or
in any proposed transactions, in which such person had or is to have a direct or
indirect material interest.
Related party transactions are reviewed and approved by the
Board.
Purchases of Securities
During and subsequent to the fiscal year ending November 30,
2016, our officers, directors and 10% stockholders purchased our securities on
the following terms:
24
Officer, Director, 10%
Stockholder
|
Type of Security
|
Amount
|
Price of Security
|
Date of Purchase
|
Bryan Ganz
(1)
|
Shares
|
488,851
|
$0.1022
|
August 15, 2016
|
Bryan Ganz
(2)
|
Convertible Note
|
$100,000
|
$100,000
|
December 6, 2016
|
Bryan Ganz
(1)
|
Shares
|
589,414
|
$0.0848
|
January 13, 2017
|
Bryan Ganz
(1)
|
Shares
|
534,941
|
$0.0935
|
May 26, 2017
|
Bryan Ganz
(1)
|
Shares
|
498,423
|
$0.1003
|
September 11, 2017
|
(1)
|
These Shares were issued to Northeast Industrial
Partners, LLC, an entity controlled by Mr. Ganz. The Shares were issued as
compensation under the consulting agreement described in more detail under
Proposal 3 Approval Of The Extension Of The Consulting Agreement With
Northeast Industrial Partners.
|
(2)
|
The principal amount of the note is convertible into
Shares at a price of $0.24 per Share prior to repayment of the note. The
note matures on June 6, 2019 but may be redeemed by the Company prior to
that date. Other than compensatory arrangements described under Executive
Compensation and the transactions described above, we have had no other
transactions, directly or indirectly, during the past fiscal year with our
directors, senior officers or principal stockholders, or any of their
associates or affiliates in which they had or have a direct or indirect
material interest.
|
PROPOSAL 2 RATIFICATION OF APPOINTMENT OF THE AUDITOR
What am I voting on?
The Audit Committee has selected Schwartz, Levitsky, Feldman,
LLP to be the Companys Independent Registered Public Accounting Firm for the
current fiscal year ending November 30, 2017.
This proposal seeks stockholder ratification of the appointment
of Schwartz, Levitsky, Feldman, LLP.
Information About the Auditor
Schwartz, Levitsky, Feldman, LLP was the Independent Registered
Public Accounting Firm for the Company during the fiscal years ended November
30, 2015 and 2016.
If a representative of Schwartz, Levitsky, Feldman, LLP does
attend the Annual Meeting, they will be given an opportunity to make a
statement, should they choose to do so. We do not know if the representative, if
one does attend the Annual Meeting, would make himself or herself available for
questions at the Annual Meeting.
Auditor Fees
Audit Fees
The aggregate fees billed by our auditors for professional
services rendered in connection with the audit of our annual consolidated
financial statements for fiscal 2016 and 2015 included in our Forms 10-K for
fiscal 2016 and 2015 were $21,500 and $23,800 respectively.
Audit-Related Fees
The aggregate fees billed by our independent registered public
accounting firm for any additional fees for assurance and related services that
are reasonably related to the performance of the audit or review of our
financial statements including review of the quarterly financial statements for fiscal year 2016 and 2015
and are not reported under Audit Fees above were $11,300 and $11,110
respectively.
25
Tax Fees
The aggregate fees billed by our auditors for professional
services for tax compliance, tax advice, and tax planning for fiscal 2016 and
2015 were $0 and $0, respectively.
All Other Fees
The aggregate fees billed by our auditors for all other
non-audit services rendered to us, for fiscal 2016 and 2015 were $0 and $0,
respectively.
The Audit Committee does not have any formal pre-approval
policies and procedures for non-audit services undertaken by the registered
public accounting firm.
The Board recommends a vote FOR the ratification of the
appointment of the independent registered public accounting firm. All proxies
executed and returned without an indication of how shares of common stock should
be voted will be voted FOR the appointment of the independent registered public
accounting firm.
The text of the resolution which management intends to place
before the Annual Meeting for approval is as follows:
BE IT RESOLVED, that appointment of Schwartz, Levitsky,
Feldman LLP as the independent registered public accounting firm of the Company,
is hereby approved and that the Companys board of directors is authorized to
fix the auditors remuneration.
PROPOSAL 3 APPROVAL OF THE EXTENSION OF THE CONSULTING
AGREEMENT WITH NORTHEAST INDUSTRIAL PARTNERS
In June, 2016, the Company entered into a consulting agreement
(the Northeast Consulting Agreement) with Northeast Industrial Partners LLC
(Northeast), commencing as of May 15, 2016 for a one year period. Under the
Northeast Consulting Agreement, Northeast agreed to assist the Company with
sales and marketing, expansion of the Companys product range, review of
operations, implementation of cost control measures, development of strategic
alliances and financial oversight for a one-year term. The Northeast Consulting
Agreement was ratified at the Companys 2016 Annual and Special Meeting.
In May, 2017 the Company and Northeast agreed to extend the
Northeast Consulting Agreement pursuant to an Extension Agreement dated May 1,
2017 in the form attached hereto as Exhibit A (the Extension Agreement). Under
the terms of the Extension Agreement, Northeast was issued Shares for its
services on August 15, 2017 and, subject to stockholder approval of Proposal 3,
will be issued Shares quarterly thereafter while the Extension Agreement is in
effect, subject to approval of the TSX Venture Exchange (TSX-V) for each
subsequent year of the Extension Agreement. Payments will be prorated if the
Extension Agreement is terminated during any quarterly period. The Shares issued
under the Extension Agreement will be valued based upon the higher of (i) the
minimum price permitted by the TSX-V, and (ii) the volume weighted average
trading price per common share over the 20-day period preceding the due date.
The Extension Agreement will automatically renew each quarter and either party
may terminate such Agreement at any time.
Northeast is controlled and headed up by Mr. Bryan Ganz, who is
Companys Chairman of Board of Directors.
The first quarterly installment under the Extension Agreement
was due on August 15, 2017 and 498,423 common shares were issued at a price of
$0.1599 per share in September 2017. The volume weighted average trading price
per common share over the 20-day period preceding August 15, 2017.
The issuance of Shares to Northeast under the Extension
Agreement was subject to the approval of the TSX-V. The TSX-V approved the
issuance of the August, 2017 installment of common stock under the Extension
Agreement. However, the TSX-V made its approval of subsequent issuances of
common stock conditional upon disinterested shareholder approval. The reason for
this requirement was that (i) Northeast became an insider of the
Company upon Mr. Ganz appointment to the board of directors, and (ii) the TSX-V
has a policy of requiring disinterested shareholder approval if the issuance of
shares will constitute an issuance to an insider of greater than 1% of the
issued and outstanding shares during a twelve month period.
26
At the Annual Meeting, disinterested shareholders will be asked
to approve the Extension Agreement and the issuance of shares contemplated
thereunder. In order to obtain disinterested shareholder approval, neither
Northeast nor any of its affiliates or associates may vote on the resolution
concerning the Extension Agreement. To the knowledge of the Company, Northeast
and its associates and affiliates own 2,734,880 common shares of the Company,
being the Shares issued under their agreement and extension to the Extension
Agreement.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT
SHAREHOLDERS VOTE TO APPROVE THE EXTENSION AGREEMENT.
The text of the resolution which management intends to place
before the Annual Meeting for approval is as follows:
BE IT RESOLVED THAT the Extension Agreement dated May 1, 2017
between the Company and Northeast Industrial Partners LLC, and the issuances of
Shares to Northeast Industrial Partners LLC thereunder, are hereby approved.
PROPOSAL 4 APPROVAL OF THE ISSUANCE OF SHARES TO PAUL
JENSEN PURSUANT TO AN EMPLOYMENT AGREEMENT
Effective as of October 1, 2017, the Company entered into an
employment agreement (the Employment Agreement) with Paul Jensen pursuant to
which Mr. Jensen serves as President and Chief Operating Officer of the Company.
By the terms of the Employment Agreement, Mr. Jensen will receive an annual
salary of $200,000, payable as follows. For the period beginning on October 1,
2017 and ending on June 30, 2018, Mr. Jensen shall receive quarterly payments of
the Companys common stock, to be issued 15 days after the end of each
three-month quarter. The shares issued shall be valued based upon the weighted
average closing price of the Companys shares for the twenty (20) trading days
prior to the end of the applicable quarter. Commencing July 1, 2018, the Company
will pay $10,000 per month in cash and the balance in Company stock. At such
time as the Company can pay the entire salary in cash and be cash positive on an
operating basis, the entire monthly salary will be paid in cash.
Pursuant to the rules of the TSX-V, the Companys shareholders
must approve the issuance of Shares to Mr. Jensen. The reason for this
requirement was that (i) Mr. Jensen will be an insider of the Company, and (ii)
the TSX-V has a policy of requiring disinterested shareholder approval if the
issuance of shares will constitute an issuance to an insider of greater than 1%
of the issued and outstanding Shares during a twelve month period.
At the Annual Meeting, disinterested shareholders will be asked
to approve the issuance of shares contemplated under the Employment Agreement.
In order to obtain disinterested shareholder approval, neither Mr. Jensen nor
any of his associates may vote on the resolution concerning the Employment
Agreement. To the knowledge of the Company, Mr. Jensen and his associates do not
own any common shares of the Company.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT
SHAREHOLDERS VOTE TO APPROVE THE ISSUANCE OF SHARES TO MR. JENSEN AS
CONTEMPLATED IN THE EMPLOYMENT AGREEMENT.
The text of the resolution which management intends to place
before the Annual Meeting for approval is as follows:
BE IT RESOLVED THAT the issuance of Shares to Paul Jensen as
contemplated in his Employment Agreement is hereby approved.
PROPOSAL 5 APPROVAL OF THE AMENDED STOCK OPTION PLAN
The Board has unanimously approved a revised Stock Option Plan
(the Revised Stock Option Plan), subject to disinterested stockholder approval
at the Annual Meeting, that will increase the number of Shares reserved for
issuance under the stock option plan from 9,379,857 to 18,993,274. A copy of the
Revised Stock Option Plan is annexed hereto as
Exhibit B
.
27
The Board of Directors of the Company believes that increasing
the number of Shares available for issuance under the Revised Stock Option Plan
will better facilitate the Companys attraction and retention of the best
available personnel for positions of substantial responsibility, to provide
incentives to individuals who perform services to the Company and to promote the
success of the Companys business.
Background
Effective May 31, 2013, the Company adopted its incentive stock
option plan (the 2013 Stock Option Plan) which replaced the prior stock option
and stock bonus plans, as ratified by the Companys shareholders at the
Companys 2015 Annual Meeting of Shareholders. A maximum of 9,379,857 Shares
were reserved for issuance under the 2013 Stock Option Plan. This amount
represented 20% of the issued and outstanding Shares following (i) the
completion of the issuance of Shares under the offering arising from the
preliminary prospectus filed by the Company with the securities regulatory
authorities in the provinces of Alberta, British Columbia and Ontario on
February 21, 2013 and any final or amended final prospectus for that offering
plus (ii) the conversion of the convertible debentures of the Company prior to
the listing of the Shares on the Exchange.
As of October 6, 2017, the Company, in accordance with Section
228 and Section 242 of the Delaware General Corporate Law (the DGCL), amended
its Certificate of Incorporation by filing an Amendment to Certificate of
Incorporation dated October 6, 2017 (the Amendment) with the Delaware
Secretary of State. Article IV of the Certificate of Incorporation was amended
to increase the Companys authorized shares of common stock, par value $0.001,
from 100,000,000 shares to 200,000,000 shares. In accordance with the DGCL, a
copy of the Amendment is being furnished to you for informational purposes and
is annexed hereto as
Exhibit C
.
We have considered moving our stock exchange listing from the
TSX-V to the Canadian Securities Exchange (CSE). Sections 2.24 and 2.25 of
National Instrument 45-106 (NI 45-106) of the Canadian Securities
Administrators would govern our stock option plans if we move our stock exchange
listing to the CSE or if we decide not to have a stock exchange listing in
Canada. The Revised Stock Option Plan is intended to operate within the rules of
the TSX-V and NI 45-106 and the shareholder approval described below is intended
to satisfy the approval requirements of both the TSX-V and NI 45-106.
Overview of the Companys 2013 Stock Option Plan
We have not granted any options which are subject to
ratification by stockholders. The table below shows securities issued under our
2013 Stock Option Plan as of November 30, 2016.
|
Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants, and
rights
(a)
|
Weighted-average exercise
price
of outstanding
options, warrants and
rights
|
Number of securities
remaining
available for
future issuance under
equity
compensation
plans (excluding
securities reflected
in
column (a)
|
Equity compensation
plans
approved by security holders
(1)
|
7,119,000
|
$0.30
|
2,260,857
|
Equity compensation plans not
approved by security holders
|
--
|
--
|
--
|
(1) As a condition
precedent to the TSX-V issuing its final acceptance of listing of the common
stock on the TSX-V, all of the warrants previously issued by the Company as
payment for services (the Compensation Warrants), being warrants to purchase
4,212,045 shares of common stock, were counted as if they had been issued under
the 2013 Stock Option Plan, thereby reducing the number of options which may
otherwise be granted. As at November 10, 2017 there were 2,477,000 warrants to
purchase common stock still outstanding.
28
Who is eligible to participate
in the Companys 2013 Stock Option Plan?
Any employee, officer, director or consultant of or providing
services to us or any parent, affiliate, or subsidiary of us, or any company
wholly owned by that employee, officer, director or consultant, is eligible to
be designated a participant in the 2013 Stock Option Plan.
Currently, this includes, but is not limited to, the following
directors and executives:
|
Dean Thrasher, Chief Executive
Officer, Director
|
|
Rakesh Malhotra, Chief Financial
Officer
|
|
Paul Jensen, President
|
|
Bryan Ganz, Executive Chairman
|
|
Karen Bowling, Director
|
|
Donald Levantin, Director
|
In total there are approximately 7 officers, directors,
employees, and consultants eligible under the 2013 Stock Option Plan.
What benefit amounts are
outstanding under the 2013 Stock Option Plan?
The following is a summary of the current options outstanding
under our 2013 Stock Option Plan, to current officers and directors:
Directors & Officers
|
Number of options
granted
|
Number of vested
options
|
Dean Thrasher
|
1,150,000
|
383,333
|
Rakesh Malhotra
|
50,000
|
50,000
|
Karen Bowling
|
615,000
|
615,000
|
Donald Levantin
|
99,667
|
99,667
|
Overview of the Revised Stock Option Plan
A copy of the Revised Stock Option Plan is annexed hereto as
Exhibit B
. The material terms of the Revised Stock Option Plan are as
follows:
(a)
|
While the Shares are listed on the TSX-V, options may be
granted to employees, senior officers, directors and consultants of the
Company or a subsidiary of the Company and to corporations wholly-owned by
such an employee, senior officer, director or consultant. If the Revised
Stock Option Plan becomes subject to NI 45-106, options may be granted to
employees, executive officers, directors and consultants of the Company or
any parent or subsidiary of the Company and corporations controlled by
them.
|
|
|
(b)
|
The maximum number of common shares which can be issued
under the Revised Stock Option Plan will be 18,993,274: provided that, so
long as the Company is listed on the TSX-V, this maximum will be reduced
to 20% of the issued and outstanding common shares on the date of the
Annual Meeting.
|
|
|
(c)
|
The term of any option granted under the Revised Stock
Option Plan will be fixed by the board of directors at the time such
option is granted, provided that options will not be permitted to exceed a
term of ten years.
|
29
(d)
|
The exercise price of any options granted under the
Revised Stock Option Plan will be determined by the board of directors, in
its sole discretion, but shall not be less than the closing price of the
Shares on the stock exchange on the day preceding the day on which the
directors grant such options.
|
|
|
(f)
|
While the Shares are listed on the TSX-V, options will be
non-assignable and non-transferable. If the Revised Stock Option Plan
becomes subject to NI 45-106, options will be non-assignable and
non-transferable except to certain permitted assigns including a spouse, a
holding company of the option holder or spouse and a trustee, custodian or
administrator acting on behalf of the option holder or spouse.
|
|
|
(g)
|
So long as the Shares are listed on the TSX-V, options on
no more than 2% of the issued Shares may be granted to any one consultant,
or in aggregate to all persons performing investor relations activities,
in any 12 month period.
|
|
|
(h)
|
If the option holder ceases to be someone eligible to
receive a grant of options under the Revised Stock Option Plan, then that
holders existing options shall expire on the earlier of (i) the expiry
date fixed at the time of the option grant, and (ii) ninety days after the
date that the option holder ceases to be eligible to receive a grant of
options under the Revised Stock Option Plan.
|
|
|
(i)
|
So long as the Shares are listed on the TSX-V,
disinterested shareholder approval must be obtained for any reduction in
the exercise price of an outstanding option held by an insider.
|
|
|
(j)
|
Options will be adjusted in the event of any
consolidation, subdivision, conversion or exchange of the Shares, if the
Shares are reclassified, reorganized of otherwise changed, or if the
Company consolidates, merges or amalgamates with or into another
company.
|
Stockholder Approval
The Revised Stock Option Plan does not restrict the number of
Shares reserved for issuance to related persons (defined below). This means that
we must obtain disinterested shareholder approval of the Revised Stock Option
Plan in order to comply with the policies of the TSX-V and NI 45-106. For
purposes of the TSX-V, we use the term related person to mean an Insider of
the Company under the policies of the TSX-V, which includes a director or senior
officer of the Company, a director or senior officer of a corporation or other
entity that is an Insider or a subsidiary of the Company and anyone who
beneficially owns or controls, directly or indirectly, more than 10% of the
Shares. For purposes of NI-45-106, we use the term related person to mean a
related person of the Company as defined in NI 45-106, which includes a
director or executive officer of the Company, an associate of such a director or
executive officer and a corporation or other entity controlled by such a
director or senior officer.
The Revised Stock Option Plan requires disinterested
shareholder approval because it (a) permits the number of Shares reserved for
issuance under options granted to (i) related persons, to exceed 10% of the
outstanding Shares of the issuer, or (ii) a related person, to exceed 5% of the
outstanding Shares of the Company, and (b) permits the number of Shares issued
within 12 months to (i) related persons, to exceed 10% of the outstanding Shares
of the Company, or (ii) a related person and the associates of the related
person, to exceed 5% of the outstanding Shares of the Company.
Disinterested shareholder approval means that, in order to
become effective, the Revised Stock Option Plan must be approved by a majority
of the votes cast at the Annual Meeting other than votes attaching to Shares
beneficially owned by related persons to whom options may be issued under the
Revised Stock Option Plan. For this purpose, we will include both related
persons for TSX-V purposes and related persons under National Instrument 45-106.
To our knowledge, 3,664,680 Shares are beneficially owned by such related
persons and will be excluded from voting on the resolution.
The text of the resolution which management intends to place
before the Annual Meeting for approval is as follows:
BE IT RESOLVED THAT:
|
1.
|
The revised stock option plan in substantially the form
set out as Exhibit B to the Proxy Statement be, and hereby is, approved,
subject to the receipt of any required regulatory approvals (including any
stock exchange upon which the shares of the Company are listed and posted
for trading from time to time).
|
30
|
2.
|
The Board of Directors be, and hereby is authorized on
behalf of the Company to make any amendments to the revised stock option
plan as may be required by regulatory authorities or otherwise made
necessary by applicable legislation, without further approval of the
shareholders of the Company, in order to ensure the adoption and efficient
function of the revised stock option plan.
|
|
|
|
|
3.
|
Any Director or Officer of the Company be and hereby is
authorized and directed to do such things and to execute and deliver all
such instruments, deeds, and documents and any amendments thereto, as may
be necessary and advisable to give effect to the foregoing, and to
complete all transactions in connection with the implementation of the
revised stock option plan.
|
OTHER MATTERS
As of the date of this Proxy Statement, management does not
know of any other matter that will come before the Annual Meeting.
By Order of the Board of Directors,
/s/ Dean Thrasher
Chief Executive Officer and Secretary
October 25, 2017
31
EXHIBIT A
NORTHEAST INDUSTRIAL PARTNERS LLC
EXTENSION AGREEMENT
This
extension agreement is dated this 1st day of May, 2017 and is entered into
between Northeast Industrial Partners LLC (
NEIP
) and Security Devices
International Inc. (
SDI
).
RECITALS:
A.
|
NEIP and SDI entered into an agreement (the
Original
Agreement
) executed by NEIP on June 14, 2016 and executed by SDI on
June 15, 2016. Under the Original Agreement, NEIP agreed to provide
services as more particularly described in the Original Agreement and SDI
agreed to compensate NEIP.
|
|
|
B.
|
The parties have agreed to extend the Original Agreement
until such time as either of them may elect to terminate the Original
Agreement.
|
NOW
THEREFORE
for good and valuable consideration (the receipt and sufficiency
of which is hereby acknowledged), the parties agree with each other as follows:
1. Extension: NEIP
and SDI hereby agree that the Original Agreement is extended for that period of
time (the Extension) from and including May 1, 2017 until such date as either
of them terminates the Original Contract on not less than 15 days prior written
notice to the other of them.
2. President: During
the Extension, SDI shall appoint a designee of the Consultant (the Consultants
Designee) as SDIs President, who shall serve in such capacity without
additional compensation from SDI. Unless the parties otherwise agree in writing,
the Consultants Designee shall be Bryan S. Ganz.
3. Compensation: For
services rendered by NEIP during the Extension, SDI will pay NEIP USD$62,500
within 15 days following every consecutive three month period during the
Extension. For example, the first three month period will run from May 1, 2017
to July 31, 2017 and the payment for that period will be due on August 15, 2017.
If the Extension is terminated on a day other than the first day of any such
three-month period, the amount paid to NEIP for that three-month period shall be
prorated on a per diem basis and paid within 15 days following that termination.
4. Payment in Stock:
All payments of the consulting fee during the Extension shall be made by the
issuance of common shares in the capital of SDI (the Common Shares). The
number of Common Shares issued on a due date shall be calculated by dividing (i)
the amount which is due, by (ii) the volume weighted average trading price per
Common Share on the TSX Venture Exchange (the Stock Exchange) for the 20-day
period preceding the due date (calculated by dividing the aggregate trading
price of all Common Shares sold on the Stock Exchange during that 20-day period
by the aggregate number of common shares sold on the Stock Exchange during that
20-day period). If the volume weighted average trading price is less than the
minimum price permitted by the Stock Exchange, the price per Common Share used
to determine the number of Common Shares received by NEIP shall be increased to
the minimum amount permitted by the Stock Exchange.
The Issuance of Common Shares to NEIP under this agreement is
subject to Stock Exchange approval.
5. No Escrow: The
following sentence in the Original Agreement, under the heading Fee Structure,
shall be deleted from the Original Agreement during the Extension:
Certificates representing the stock
issued to NEIP under this agreement shall be held by SDI until the final
installment of stock is due, at which time the certificates will be released to
NEIP.
6. Consent to
Collection and Use of Information. NEIP agrees that SDI may collect information
about NEIP for the purposes of completing the issuance of Common Shares under
Section 4, which includes, without limitation, preparing and registering
certificates representing the Common Shares and completing filings required by
the securities commissions, Stock Exchange and/or other securities regulatory authorities. NEIP agrees that such
information may be disclosed by SDI to: (a) securities commissions, the Stock
Exchange and/or other securities regulatory authorities, (b) the Corporations
registrar and transfer agent, and (c) any of the other parties involved in the
issuance of the Common Shares. In the case of information provided to the
securities commissions and other securities regulatory authorities, such
information is being collected indirectly by them for the purpose of the
administration and enforcement of the applicable securities laws and NEIP
authorizes the indirect collection of such information by them. In the case of
the Stock Exchange, such information is being collected by them for the purposes
identified by them from time to time. NEIP consents to the foregoing collection,
use and disclosure of such information and to the collection, use and disclosure
of such information by the securities commissions, Stock Exchange and/or other
securities regulatory authorities. The title, business address and business
telephone number of the public official in Ontario who can answer questions
about the Ontario Securities Commissions indirect collection of the information
is the Administrative Assistant to the Administrative Support Clerk, Ontario
Securities Commission, Suite 1903, Box 55, 20 Queen Street West, Toronto,
Ontario M5H 3S8 (Telephone: 416-593-3684).
32
7. Legend: For
purposes of complying with securities laws and Stock Exchange rules, the
certificates representing the Common Shares issued to NEIP Section 4, shall bear
the following legends:
WITHOUT PRIOR WRITTEN APPROVAL OF THE
EXCHANGE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF THE TSX VENTURE
EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT
UNTIL [4 MONTHS PLUS ONE DAY FROM THE ISSUE DATE]
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE SECURITIES ACT), OR THE SECURITIES LAWS OF ANY STATE. THESE
SECURITIES HAVE BEEN ACQUIRED BY THE HOLDER THEREOF FOR INVESTMENT AND MAY NOT
BE SOLD, OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION UNDER THE SECURITIES ACT, AND COMPLIANCE WITH ANY APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO
COUNSEL FOR THE CORPORATION THAT THE TRANSACTION WILL NOT RESULT IN A VIOLATION
OF UNITED STATES FEDERAL OR STATE SECURITIES LAWS.
(continued)
33
8. Continuation: The
parties confirm that the Original Agreement continues in full force and effect
and unamended, except as amended by this agreement.
9. Enurement: This
agreement shall enure to the benefit and be binding upon the parties hereto and
their respective legal personal representatives, executors, successors and
assigns; provided that this agreement may not be assigned by either party.
IN WITNESS of which this agreement has been executed.
|
SECURITY DEVICES INTERNATIONAL INC.
|
|
|
|
|
|
|
________________________________________
|
By: _____________________________________
|
Witness
|
|
|
Title:
____________________________________
|
|
|
|
|
|
|
|
NORTHEAST INDUSTRIAL PARTNERS LLC
|
|
|
|
|
|
|
________________________________________
|
By: _____________________________________
|
Witness
|
|
|
Title:
____________________________________
|
34
EXHIBIT B
STOCK OPTION PLAN
WHEREAS SECURITY DEVICES INTERNATIONAL INC. (the
Issuer
) is a corporation subject to the laws of the State of Delaware;
AND WHEREAS the board of directors of the Issuer wishes to
replace its existing stock option plan;
NOW THEREFORE a stock option plan of the Issuer (the
Plan
) is hereby established on the terms and conditions set out below:
1. Definitions
In this Plan, the following terms shall have the following
meanings respectively:
Board
has the meaning given to that term in Section 4.
Company
means a corporation, incorporated association
or organization, body corporate, partnership, trust, association or other entity
other than an individual.
Eligible
Person
means:
so long as the Issuer is listed on the
Exchange, a person to whom options may be granted under a stock option plan of
the Issuer pursuant to Policy 4.4 of the Exchange; and
if the Issuer ceases to be listed on
the Exchange, a person to whom options may be granted under section 2.24 of NI
45-106.
Exchange
means the TSX Venture Exchange.
Expiry Date
has the meaning given to that term in
Section 9.
NI 45-106
means National Instrument 45-106 (Prospectus
Exemptions) of the Canadian Securities Administrators.
Optionee
means the recipient of a stock option granted
by the Issuer.
person
means an individual, corporation, incorporated
association or organization, body corporate, partnership, trust, association or
other entity.
Shares
means shares of common stock in the capital of
the Issuer.
2. Exchange
Definitions
So long as the Issuer is listed on the Exchange, the following
terms shall have the meaning assigned to them in the policies of the Exchange:
Consultant, Director, Employee, Investor Relations Activities, Insider
and Management Company Employee
3. Purpose
The purpose of this Plan is to advance the interests of the
Issuer by encouraging Eligible Persons to acquire Shares, thereby increasing
their proprietary interest in the Issuer, encouraging them to remain associated
with the Issuer and furnishing them with additional incentive in their efforts
on behalf of the Issuer.
35
4. Administration
The Plan shall be administered by the board of directors of the
Issuer or by a committee of the board of directors given responsibility to
administer the Plan (such committee or, if no such committee is appointed, the
board of directors of the Issuer, is hereinafter referred to as the
Board
).
Subject to the provisions of this Plan, the Board shall have
authority to construe and interpret this Plan and all options subject to this
Plan, to prescribe, amend and rescind rules and regulations relating to this
Plan and to make all other determinations necessary or advisable for the
administration of this Plan. All determinations and interpretations made by the
Board shall be binding and conclusive on all Eligible Persons and Optionees and
on their legal personal representatives and beneficiaries.
5. Stock Exchange
Requirements
All options which are granted under this Plan shall be subject
to, and must comply with, the rules and policies of the stock exchange on which
the Shares are listed and any other regulatory body having jurisdiction.
So long as the Shares are listed on the Exchange:
the aggregate number of options granted to any one Consultant
in a 12 month period must not exceed 2% of the issued Shares, calculated at the
date an option is granted to the Consultant;
the aggregate number of options granted to all persons retained
to provide Investor Relations Activities must not exceed 2% of the issued Shares
in any 12 month period, calculated at the date an option is granted to any such
person;
disinterested shareholder approval will be obtained for any
reduction in the exercise price of an option if the Optionee is an Insider of
the Issuer at the time of the proposed amendment; and
for stock options granted to Employees, Consultants or
Management Company Employees, the Issuer and the Optionee are responsible for
ensuring and confirming that the Optionee is a bona fide Employee, Consultant or
Management Company Employee, as the case may be.
6. Shares Offered
under the Plan
Subject to adjustment as provided in Section 15,
options granted under this Plan shall entitle the Optionee to
purchase Shares; and
the maximum number of Shares which may be reserved for issuance
pursuant to the exercise of options which are subject to this Plan (the
Plan
Reserve
) is 18,993,274; provided that, so long as the Company is listed on
the Exchange, this maximum will be reduced to 20% of the issued and outstanding
Shares on December 19, 2017.
If any options granted hereunder shall be cancelled or shall
expire without being exercised, the unpurchased Shares subject to those options
shall again be available for options granted under this Plan.
The Issuer shall at all times during the term of this Plan
reserve and keep available such numbers of Shares as will be sufficient to
satisfy the exercise of options subject to this Plan.
The Issuer had issued compensation warrants (the
Warrants
) to purchase 4,319,000 Shares at the time of its listing on
the Exchange. Any holder of Warrants shall be entitled to exchange those
Warrants for an option to purchase an equal number of Shares for the same price
and expiring on the same date as the Warrants. Until Warrants are exchanged for
options, the Plan Reserve shall be reduced by the number of Shares which may be
purchased under those Warrants.
36
7. Eligibility and
Participation
Options shall be granted only to Eligible Persons.
Subject to the terms of this Plan, the Board shall have full
and final authority to determine the persons who are to be granted options under
this Plan and the number of options granted to each such person, the terms and
provisions of each option agreement, and the time or times at which options
shall be granted, vested and expire.
8. Exercise Price
The exercise price of options shall be determined by the Board
at the time the options are granted. That exercise price shall not be lower than
the last closing price of the Shares on the stock exchange on which the Shares
are listed prior to the grant of the option.
Once the exercise price has been determined by the Board and
the options have been granted, the exercise price of the options may be reduced
upon receipt of Board approval, provided that, so long as the Issuer is listed
on the Exchange, in the case of options held by Insiders the exercise price of
the options may be reduced only if disinterested shareholder approval is
obtained in compliance with the policies of the Exchange.
9. Duration of
Options
Each option shall remain in effect for such option period as is
fixed by the Board and shall expire at 5:00 p.m. (Toronto time) on the last day
of that period (the
Expiry Date
), subject to earlier termination as
provided in this Plan. The maximum term of an option may not exceed 10 years
from the date of grant (subject to extension where the Expiry Date falls within
a Blackout Period, as provided for in Section 13).
10. Vesting and
Exercise
Options may be subject to such vesting restrictions as are
determined by the Board in its discretion; provided that, so long as the Shares
are listed on the Exchange, options granted to persons retained to provide
Investor Relations Activities must vest in stages over a period of not less than
12 months with no more than 1/4 of the options vesting in any three month
period.
Subject to any vesting restrictions, options may be exercised
in whole or in part at any time and from time to time prior to the expiry of
those options.
Except as otherwise specifically permitted under this Plan, no
option may be exercised unless the Optionee is at the time of such exercise an
Eligible Person.
The exercise of any option shall be contingent upon receipt by
the Issuer at its head office of (i) a written notice of exercise, specifying
the number of options being exercised, and (ii) payment in cash of the full
purchase price of the options being exercised under that notice of exercise.
11. Investor
Relations
So long as the Shares are listed on the Exchange, if the
Optionee performs Investor Relations Activities, then the Optionee shall report
all trading in the securities of the Issuer to the Secretary of the Issuer for
delivery to the Board, by submitting a report which details the dates of those
trades, the number of securities traded and the prices at which securities were
traded. That report shall be delivered to the Secretary of the Issuer no later
than the date on which an insider trading report would be required in respect of
that trade under the insider trading requirements of applicable securities
legislation as if the Optionee was an insider of the Issuer under that
legislation.
37
12. Ceasing to be
an Eligible Person
If an Optionee ceases to be an Eligible Person (including,
without limitation, by reason of death or termination with or without cause),
such Optionees options shall expire at 5:00 p.m. (Eastern Time) on the earlier
of (i) the Expiry Date, and (ii) the 90th day after the date on which the
Optionee ceases to be an Eligible Person (or such earlier date, if any, as is
determined by the Board when the Board grants the option).
Notwithstanding the foregoing, if an Optionee ceases to be an
Eligible Person for any reason such Optionees options may only be exercised if
and to the extent that the Optionee is entitled to exercise the options on the
date the Optionee ceases to be an Eligible Person.
Nothing contained in this Plan, or in any option granted
pursuant to this Plan, shall confer upon an Optionee any right to continue as an
employee, officer, director or consultant of the Issuer.
In the event of the death of a Optionee, the options granted to
that Optionee may be exercised by the person or persons to whom the Optionees
rights under the options shall pass by the Optionees will or the laws of
intestacy.
13. Blackout
Extensions
The Expiry Date of an option shall be automatically extended if
the Expiry Date falls within a period (a
Blackout Period
) during which
the Issuer prohibits Optionees from exercising their options; provide that:
The Blackout Period must be formally imposed by the Issuer
pursuant to its internal trading policies as a result of the bona fide existence
of undisclosed material information. For greater certainty, in the absence of
the Issuer formally imposing a Blackout Period, the expiry date of any options
will not be automatically extended in any circumstances.
The Blackout Period shall expire upon the general disclosure of
the undisclosed material information. The Expiry Date shall be extended to 5:00
p.m. (Eastern Time) on that day which follows the expiry of the Blackout Period
by the lesser of (i) ten business days, and (ii) the number of business days
falling within the Blackout Period. For this purpose, a business day means a day
which is not a Saturday, a Sunday or a date on which banks generally are closed
in the Optionees municipality of residence.
The automatic extension of an Optionees options will not be
permitted where the Optionee or the Issuer is subject to a cease trade order (or
similar order under applicable securities laws) in respect of the Issuers
securities.
14. Rights as a
Shareholder
No person entitled to exercise any option granted under this
Plan shall have any of the rights or privileges of a shareholder of the Issuer
in respect of any Share issuable upon exercise of such option until such Share
has been issued.
15. Adjustments
If there is any subdivision or consolidation of the Shares into
a greater or lesser number, and if this subdivision or consolidation occurs
during the term of any options, then upon exercise of those options by the
Optionee the Issuer shall deliver to the Optionee the number of Shares which the
Optionee would have held as a result of the subdivision or consolidation if on
the record date thereof the Optionee had been the registered holder of the
number of Shares in respect of which the Optionee is exercising the options.
Except as described in the preceding paragraph, if the Shares
are reclassified, reorganized or otherwise changed, or the Issuer consolidates,
merges or amalgamates with or into another Company, (any such event being a
Reorganization
), and if this Reorganization occurs during the term of
any options, then upon exercise of those options by the Optionee the Issuer, or
the Company resulting or continuing from the Reorganization, shall deliver the
number and kind of securities and/or other consideration that the Optionee would
have been entitled to receive as a result of the Reorganization, if on the record date of the Reorganization the Optionee had been the
registered holder of the number of Shares in respect of which the Optionee is
exercising the options.
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The securities and other consideration delivered to an Optionee
under this Section shall be in substitution for the Shares called for delivery
to the Optionee under the options and the exercise price of the options shall be
the consideration for the substitute securities and other consideration.
16.
Transferability
So long as the Issuer is listed on the Exchange, all options
shall be non-assignable and non-transferable. If the Issuer ceases to be listed
on the Exchange, all options shall be non-assignable and non-transferable except
to a permitted assign under NI 45-106.
All option agreements and Shares issued under options shall be
subject to, and legended with, such hold periods as may apply under applicable
securities laws or the requirements of any stock exchange on which the Shares
are listed. All Shares which are issued subject to such a hold period shall be
legended as required under applicable securities laws or the requirements of any
stock exchange on which the Shares are listed.
17. Tax
Withholding
To the extent the grant or exercise of an option gives rise to
any withholding tax obligation or other statutory withholding obligation
(including, without limitation, income and payroll withholding taxes imposed by
any jurisdiction), prior to the delivery of the option or Shares being acquired
upon the exercise of the option, as the case may be, the Issuer may:
require the Optionee to pay to the Issuer an amount, or
withhold an amount from any remuneration or consideration
whatsoever payable to the Optionee,
sufficient to pay any tax or other statutory withholding
obligation associated with the grant or exercise of the option, as the case may
be.
18. Amendment and
Termination of Plan
Subject to the approval of the Exchange (if required), the
Board may, at any time, suspend or terminate this Plan. Subject to any
applicable approval of the Exchange (if required), the Board may at any time
amend or revise the terms of this Plan; provided that no such amendment or
revision shall result in a material adverse change to the terms of any option
previously granted under this Plan.
19. Approvals
This Plan is subject to the acceptance of the Plan by the
Exchange and the approval of the Plan by the Issuers shareholders in compliance
with the requirements of the Exchange and NI 45-106. Options may be granted
under this Plan prior to the satisfaction of those conditions provided that no
such option may be exercised prior to the satisfaction of those conditions.
The ability of an Optionee to exercise options, and the
obligation of the Issuer to issue and deliver Shares under options, is subject
to any approvals which may be required from shareholders of the Issuer, the
Exchange and any regulatory authority having jurisdiction over the securities of
the Issuer. If any Shares cannot be issued to any Optionee as a result of the
failure to obtain that approval, the obligation of the Issuer to issue such
Shares shall terminate and any exercise price paid to the Issuer will be
returned to the Optionee.
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20. Effective Date
of Plan
This Plan shall take effect on such date as is approved by the
Board. On that date, this Plan shall replace and supercede the Issuers existing
stock option plan. All options which were issued under the Issuers existing
plan shall be deemed to have been properly issued under this Plan and shall be
subject to the terms of this Plan.
21. Interpretation
The Plan will be governed by and construed in accordance with
the laws of the Province of Ontario.
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EXHIBIT C
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
SECURITY
DEVICES INTERNATIONAL INC.
________________________________
THE
UNDERSIGNED Chief Executive Officer of SECURITY DEVICES INTERNATIONAL INC., a
corporation organized under and by virtue of the General Corporation Law of the
State of Delaware (the Corporation), DOES HEREBY CERTIFY:
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1.
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The certificate of incorporation of the Corporation is
hereby amended by changing the paragraph 4.A to read as
follows:
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4.A The authorized
capital stock of the Corporation shall consist of 200,000,000 shares of common
stock, $0.001 par value, and 5,000,000 shares of preferred stock, $0.001 par
value.
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2.
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This amendment was duly adopted by the board of directors
in accordance with Section 242 of the Delaware General Corporation Law and
approved by the written consent of the holders of a majority of the
outstanding shares of the common stock of the Corporation in accordance
with Sections 228 and 242 of the Delaware General Corporation
Law.
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IN WITNESS WHEREOF, I have hereunto signed this certificate of
amendment of the certificate of incorporation of the SECURITY DEVICES
INTERNATIONAL INC., this 6
th
day of October, 2017.
________________________________
Dean Thrasher, Chief Executive Officer
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EXHIBIT D
SECURITY DEVICES INTERNATIONAL INC.
(the
Corporation)
AUDIT COMMITTEE CHARTER
The audit committee is a committee of the board of directors to
which the board delegates its responsibilities for the oversight of the
accounting and financial reporting process and financial statement audits. The
external auditor shall report directly to the committee.
Responsibilities
The audit committee will:
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a)
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recommend to the board of directors:
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(i)
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the external auditor to be nominated for the purpose of
preparing or issuing an auditors report or performing other audit, review
or attest services for the Corporation, and
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(ii)
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the compensation of the external
auditor;
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b)
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oversee the work of the external auditor engaged for the
purpose of preparing or issuing an auditors report or performing other
audit, review or attest services for the Corporation, including the
resolution of disagreements between management and the external auditor
regarding financial reporting;
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c)
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review and report to the board of directors of the
Corporation on the following before they are published:
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(i)
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the financial statements and management discussion and
analysis (MD&A) of the Corporation;
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(ii)
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the auditors report, if any, prepared in relation to
those financial statements;
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d)
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review the Corporations annual and interim earnings
press releases before the Corporation publicly discloses this
information;
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e)
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satisfy itself that adequate procedures are in place for
the review of the Corporations public disclosure of financial information
extracted or derived from the Corporations financial
statements;
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f)
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pre-approve all non-audit services to be provided to the
Corporation or its subsidiaries by the Corporations external
auditor;
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g)
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establish procedures for:
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(i)
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the receipt, retention and treatment of complaints
received by the Corporation regarding accounting, internal accounting
controls, or auditing matters, and
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(ii)
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the confidential, anonymous submission by employees of
the Corporation of concerns regarding questionable accounting or auditing
matters;
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h)
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review and approve the Corporations hiring policies
regarding partners, employees and former partners and employees of the
present and former external auditor of the Corporation;
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i)
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annually, assess the performance of the committee and its
members and consider the need for any amendments to this
charter.
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Composition of the Committee
The committee will be composed of at least three directors from
the Corporations board of directors, a majority of whom shall not be officers
or employees of the Corporation or any of its affiliates.
Unless the board of directors appoints a chair of the
committee, the members of the committee shall elect a chair and a secretary from
among their members.
Meetings
Meetings may be convened at the request of any member of the
audit committee or at the request of the Corporations external auditor. The
committee shall meet regularly, but not less frequently than quarterly.
The quorum for meetings shall be a majority of the members of
the committee present in person or by telephone or other telecommunications
device that permits all persons participating in the meeting to speak and to
hear each other. The committee shall act on the affirmative vote of a majority
of the members present at a meeting at which there is a quorum. Without a
meeting, the committee may act by unanimous written resolution of all members.
The committee members shall, when deemed appropriate, meet in
private session with the external auditor; with management and as committee
members only to discuss matters relevant to the committees mandate. The
committee shall have access to such officers, consultants and employees of the
Corporation and to the Corporations external auditors, and to such information
respecting the Corporation, as it considers necessary or advisable in order to
perform its duties and responsibilities.
Authority
The external auditor shall report directly to the committee.
The committee has the authority to communicate directly with the external
auditor and the internal auditor, without management involvement.
The committee has the authority to engage independent counsel
and other advisors as it determines necessary to carry out its duties and the
committee will set the compensation for such advisors.
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