UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE
13a-16 or 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of January 2016
Commission File Number 001-35001
AVALON RARE METALS
INC.
(Translation of registrant’s name into English)
130 Adelaide Street West
Suite #1901
Toronto, Ontario M5H 3P5
(Address of principal
executive offices)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F
Form 20-F [X] Form 40-F [
]
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Note: Regulation S-T Rule 101(b)(1) only permits the
submission in paper of a Form 6-K if submitted solely to provide an attached
annual report to security holders.
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
Note: Regulation S-T Rule 101(b)(7) only permits the
submission in paper of a Form 6-K if submitted to furnish a report or other
document that the registrant foreign private issuer must furnish and make public
under the laws of the jurisdiction in which the registrant is incorporated,
domiciled or legally organized (the registrant’s “home country”), or under the
rules of the home country exchange on which the registrant’s securities are
traded, as long as the report or other document is not a press release, is not
required to be and has not been distributed to the registrant’s security
holders, and, if discussing a material event, has already been the subject of a
Form 6-K submission or other Commission filing on EDGAR.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
AVALON RARE METALS INC.
| |
/s/ R. James
Andersen |
| Date: January 19, 2016 |
R. James Andersen |
| |
Chief Financial Officer and VP Finance
|
EXHIBIT INDEX
 |
Suite 1901 - 130 Adelaide Street West |
| Toronto, ON Canada M5H 3P5 |
| Telephone: (416) 364-4938 Fax: (416) 364-5162
|
| Email: ir@avalonraremetals.com |
| http://www.avalonraremetals.com
|
NOTICE OF ANNUAL AND
SPECIAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the annual and special meeting (the
"Meeting") of the shareholders of Avalon Rare Metals Inc. (the "Company") will
be held at The Toronto Board of Trade, Room A/B/C/D (located on the fourth
floor), 1 First Canadian Place, Toronto, Ontario, M5X 1C1 at 4:30 p.m. (Toronto
time) on Wednesday, February 24, 2016, for the following purposes:
| (1) |
to receive the audited financial statements of the
Company for the financial year ended August 31, 2015 together with the
report of the auditors thereon (the “Annual Financial
Statements”); |
| |
|
| (2) |
to elect the directors of the Company for the ensuing
year; |
| |
|
| (3) |
to appoint the auditors of the Company for the ensuing
year and to authorize the directors of the Company to fix the remuneration
of the auditors; |
| |
|
| (4) |
to consider and, if deemed advisable, to approve a
special resolution, with or without variation, authorizing the Company to
amend its articles to effect a change of name of the Company from “Avalon
Rare Metals Inc.” to “Avalon Advanced Materials Inc.”, or such other name
as the board of directors of the Company in its discretion may resolve and
as may be acceptable to applicable regulatory authorities, if
required; |
| |
|
| (5) |
to consider and, if deemed advisable, to adopt, with or
without variation, an ordinary resolution approving By-law No.2 of the
Company pertaining to advance notice for the nomination of directors of
the Company; and |
| |
|
| (6) |
to transact such other business as may properly be
brought before the Meeting or any adjournment
thereof. |
As described in the notice and access notification mailed to
non-registered shareholders of the Company, the Company has decided to deliver
the accompanying information circular to non-registered shareholders by posting
it to the website hosted by the Company’s transfer agent, TMX Equity
Transfer Services at
https://noticeinsite.tmxequity.com/AvalonRareMetalsASM2016. The use of
this alternative means of delivery is more environmentally friendly as it will
help reduce paper use and it will also reduce the Company’s printing and mailing
costs. Due to certain requirements of the Canada Business Corporations
Act, the Company is sending a paper copy of the complete proxy package,
including this notice of Meeting and accompanying information circular, and the
Annual Financial Statements and related management’s discussion and analysis to
registered shareholders. The accompanying information circular and the Annual
Financial Statements and related management’s discussion and analysis are also
available on SEDAR at www.sedar.com and on the Company’s web site at
http://www.avalonraremetals.com/investors/regulatory_filings/.
Shareholders may request paper copies of the accompanying
information circular at no cost on-line at
https://noticeinsite.tmxequity.com/AvalonRareMetalsASM2016 or by calling
toll-free at 1-844-559-4938.
Particulars of the foregoing matters are set forth in the
accompanying information circular. The directors of the Company have fixed the
close of business on January 12, 2016 as the record date for the determination
of the shareholders of the Company entitled to receive notice of, and to vote
at, the Meeting.
Shareholders who are unable to attend the Meeting in person are
requested to complete, date, sign and return the accompanying form of proxy in
the enclosed return envelope. All instruments appointing proxies to be used at
the Meeting or at any adjournment thereof must be deposited with TMX Equity
Transfer Services, 200 University Avenue, Suite 300, Toronto, Ontario, Canada
M5H 4H1, fax number: (416) 595-9593 not less than 48 hours, Saturdays,
Sundays and holidays excepted, prior to the time of the holding of the Meeting
or any adjournment thereof. Late proxies may be accepted or rejected by the
Chair of the Meeting in his or her discretion, and the Chair is under no
obligation to accept or reject any particular late proxy.
DATED at Toronto, Ontario this
12th day of January, 2016.
BY ORDER OF THE BOARD
 |
| Donald S. Bubar |
| President and Chief Executive Officer
|
 |
Suite 1901 - 130 Adelaide Street West |
| Toronto, ON Canada M5H 3P5 |
| Telephone: (416) 364-4938 Fax: (416) 364-5162 |
| Email: ir@avalonraremetals.com |
| http://www.avalonraremetals.com |
INFORMATION CIRCULAR
As at and dated January 12, 2016
(unless otherwise noted)
GENERAL PROXY INFORMATION
Solicitation of Proxies
This information circular (this “Information Circular”) is
furnished in connection with the solicitation of proxies by the management and
the directors of AVALON RARE METALS INC. (the "Company") for use at the annual
and special meeting of the shareholders of the Company (the "Meeting") to be
held at The Toronto Board of Trade, Room A/B/C/D (located on the fourth floor),
1 First Canadian Place, Toronto, Ontario, M5X 1C1 at 4:30 p.m. (Toronto time) on
Wednesday, February 24, 2016, and at all adjournments thereof for the purposes
set forth in the accompanying notice of the Meeting (the "Notice of Meeting").
The solicitation of proxies will be made primarily by mail, using notice and
access for Non-Registered Shareholders (as defined below), and may be
supplemented by telephone or other personal contact by the directors, officers
and employees of the Company. Directors, officers and employees of the Company
will not receive any extra compensation for such activities. The Company may
also retain, and pay a fee to, one or more professional proxy solicitation firms
to solicit proxies from the shareholders of the Company in favour of the matters
set forth in the Notice of Meeting. The Company may pay brokers or other persons
holding common shares of the Company in their own names, or in the names of
nominees, for their reasonable expenses for sending proxies and this Information
Circular to beneficial owners of common shares and obtaining proxies therefrom.
The cost of the solicitation will be borne directly by the Company.
No person is authorized to give any information or to make any
representation other than those contained in this Information Circular and, if
given or made, such information or representation should not be relied upon as
having been authorized by the Company. The delivery of this Information Circular
shall not, under any circumstances, create an implication that there has not
been any change in the information set forth herein since the date hereof.
Non-Registered Shareholders
Only registered shareholders of the Company, or the persons
they appoint as their proxies, are entitled to attend and vote at the Meeting.
However, in many cases, common shares beneficially owned by a person (a
"Non-Registered Shareholder") are registered either:
| (a) |
in the name of an intermediary (an "Intermediary") with
whom the Non-Registered Shareholder deals in respect of the common shares
(Intermediaries include, among others: banks, trust companies, securities
dealers or brokers, trustees or administrators of a self-administered
registered retirement savings plan, registered retirement income fund,
registered education savings plan and similar plans);
or |
| Avalon Rare
Metals Inc. |
Page 1
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| Information
Circular as of and dated January 12, 2016 |
|
| (b) |
in the name of a clearing agency (such as The Canadian
Depository for Securities Limited, in Canada, and the Depository Trust
Company, in the United States) of which the Intermediary is a
participant. |
In accordance with the requirements of National Instrument
54-101 (“NI 54-101”) of the Canadian Securities Administrators, the Company is
generally required to distribute copies of the Notice of Meeting, this
Information Circular and its form of proxy or voting instruction form, as
applicable, (collectively the "Meeting Materials") to the Intermediaries and
clearing agencies for onward distribution to Non-Registered Shareholders. The
Company has elected to deliver this Information Circular to Non-Registered
Shareholders by distributing a notification of meeting, along with the form of
proxy or voting instruction form, as applicable, (together, the “Mailed
Materials”) to the Intermediaries and clearing agencies for onward distribution
to Non-Registered Shareholders, and posting this Information Circular on the
website maintained by TMX Equity Transfer Services (“Equity”) at
https://noticeinsite.tmxequity.com/AvalonRareMetalsASM2016. See “Notice
and Access”, below, for further information. Intermediaries are required to
forward the Mailed Materials to Non-Registered Shareholders unless the
Non-Registered Shareholders have waived the right to receive them.
Intermediaries often use service companies to forward the Mailed Materials to
Non-Registered Shareholders. Notwithstanding the foregoing, there are two kinds
of Non-Registered Shareholders, namely: (i) those who object to their name being
made known to the issuers of the securities they own (called “OBOs” for
Objecting Beneficial Owners); and (ii) those who do not object to their name
being made known to the issuers of the securities they own (called “NOBOs” for
Non-Objecting Beneficial Owners). Subject to the provisions of NI 54-101,
issuers can request and obtain a list of their NOBOs from Intermediaries via
their transfer agents and use the NOBO list for distribution of proxy-related
materials directly to NOBOs. The Company intends to take advantage of those
provisions of NI 54-101 that permit it to deliver the Mailed Materials directly
to its NOBOs, through Equity, who have not waived the right to receive them. As
a result, NOBOs in Canada can expect to receive the Mailed Materials from
Equity. The voting instruction forms are to be completed and returned to Equity
in accordance with the instructions provided by Equity either in the envelope
provided by Equity or by facsimile. In this regard, Equity is required to follow
the voting instructions properly received from NOBOs. Equity will tabulate the
results of the voting instruction forms received from NOBOs with respect to the
common shares represented by the voting instruction forms they receive.
The Meeting Materials are being sent to both registered
shareholders and Non-Registered Shareholders. If you are a Non-Registered
Shareholder, and the Company or its agent has sent these materials directly to
you, your name and address and information about your holdings of common shares
have been obtained in accordance with applicable securities regulatory
requirements from the Intermediary holding the common shares on your behalf.
By choosing to send these materials to you directly, the
Company (and not the Intermediary holding the common shares on your behalf) has
assumed responsibility for (i) delivering these materials to you, and (ii)
executing your proper voting instructions. Please return your voting
instructions as specified in the request for voting instructions.
Generally, OBOs who have not waived the right to receive Mailed
Materials will either:
| (a) |
be given a voting instruction form which is not signed by
the Intermediary and which, when properly completed and signed by the OBO
and returned to the Intermediary or its service company, will constitute
voting instructions which the Intermediary must follow. Typically, the
voting instruction form will consist of a one page pre-printed form.
Sometimes, instead of the one page pre-printed form, the voting instruction form will consist
of a regular printed proxy form accompanied by a page of instructions which
contains a removable label with a bar-code and other information. In order for
the form of proxy to validly constitute a voting instruction form, the OBO must
remove the label from the instructions and affix it to the form of proxy,
properly complete and sign the form of proxy and submit it to the Intermediary
or its service company in accordance with the instructions of the Intermediary
or its service company; or |
| Avalon Rare Metals Inc.
|
Page 2 |
| Information Circular as of and dated
January 12, 2016 |
|
| (b) |
be given a form of proxy which has already been signed by
the Intermediary (typically by a facsimile, stamped signature), which is
restricted as to the number of common shares beneficially owned by the OBO
but which is otherwise not completed by the Intermediary. Because the
Intermediary has already signed the form of proxy, this form of proxy is
not required to be signed by the OBO when submitting the proxy. In this
case, the OBO who wishes to submit a proxy should properly complete the
form of proxy and deposit it with TMX Equity Transfer Services, 200
University Avenue, Suite 300, Toronto, Ontario, Canada M5H
4H1. |
The Company intends to pay for an Intermediary to deliver the
Mailed Materials to OBOs.
In either case, the purpose of these procedures is to permit
Non-Registered Shareholders to direct the voting of the common shares they
beneficially own. Should a Non-Registered Shareholder who receives either a
voting instruction form or a form of proxy wish to attend the Meeting and vote
in person (or have another person attend and vote on behalf of the
Non-Registered Shareholder), the Non-Registered Shareholder should strike out
the names of the persons named in the form of proxy and insert the
Non-Registered Shareholder's (or such other person's) name in the blank space
provided or, in the case of a voting instruction form, follow the directions
indicated on the form. In either case, Non-Registered Shareholders should
carefully follow the instructions of their Intermediaries and their service
companies, Equity or Broadridge, as applicable, including those regarding when
and where the voting instruction form or the proxy is to be delivered.
Notice and Access
Under the notice and access rules adopted by the Canadian
Securities Administrators, public companies are permitted to advise their
shareholders of the availability of this Information Circular on an
easily-accessible website, rather than mailing paper copies.
The use of this alternative means of delivery is more
environmentally friendly as it will help reduce paper use and the Company’s
carbon footprint, and it will also reduce the Company’s printing and mailing
costs. The Company has therefore decided to deliver this Information Circular to
Non-Registered Shareholders by posting it on Equity’s website at
https://noticeinsite.tmxequity.com/AvalonRareMetalsASM2016. This
Information Circular will also be available on SEDAR at www.sedar.com and
on the Company’s website at
http://www.avalonraremetals.com/investors/regulatory_filings/.
Non-Registered Shareholders who wish to receive paper copies of
this Information Circular may request paper copies on-line at
https://noticeinsite.tmxequity.com/AvalonRareMetalsASM2016 or by calling
toll-free at 1-844-559-4938.
Requests for paper copies must be received at least five
business days in advance of the Proxy Deposit Deadline (as defined below) in
order to receive this Information Circular in advance of the Proxy Deposit
Deadline and the Meeting. This Information Circular will be sent to such
shareholders within three business days of their request, if such requests are
made before the Proxy Deposit Deadline. Those shareholders with existing instructions on their account to
receive a paper copy of the Meeting Materials will receive a paper copy of this
Information Circular.
| Avalon Rare Metals Inc.
|
Page 3 |
| Information Circular as of and dated
January 12, 2016 |
|
Due to certain requirements of the Canada Business
Corporations Act (the “Act”), the Company is sending a paper copy of the
complete proxy package, including the Notice of Meeting, this Information
Circular, and the Annual Financial Statements and related management’s
discussion and analysis to registered shareholders. The Annual Financial
Statements and related management’s discussion and analysis are also available
on SEDAR at www.sedar.com and on the Company’s web site at
http://www.avalonraremetals.com/investors/regulatory_filings/.
Appointment and Revocation of Proxies
The persons named in the form of proxy accompanying this
Information Circular are directors and/or officers of the Company. A shareholder
of the Company has the right to appoint a person or company (who need not be a
shareholder), other than the persons whose names appear in such form of proxy,
to attend and act for and on behalf of such shareholder at the Meeting and at
any adjournment thereof. Such right may be exercised by either striking out the
names of the persons specified in the form of proxy and inserting the name of
the person or company to be appointed in the blank space provided in the form of
proxy, or by completing another proper form of proxy and, in either case,
delivering the completed and executed proxy to TMX Equity Transfer Services, 200
University Avenue, Suite 300, Toronto, Ontario, Canada M5H 4H1 in time for use
at the Meeting in the manner specified in the Notice of Meeting.
A registered shareholder of the Company who has given a proxy
may revoke the proxy at any time prior to use by: (a) depositing an instrument
in writing, including another completed form of proxy, executed by such
registered shareholder or by his or her attorney authorized in writing or by
electronic signature or, if the registered shareholder is a corporation, by an
officer or attorney thereof properly authorized, either: (i) at the principal
office of the Company, 130 Adelaide Street West, Suite 1901, Toronto, Ontario,
Canada M5H 3P5, not less than 48 hours, Saturdays, Sundays and holidays
excepted, prior to the time of the holding of the Meeting or any adjournment
thereof (the “Proxy Deposit Deadline”), (ii) with TMX Equity Transfer Services,
200 University Avenue, Suite 300, Toronto, Ontario, Canada M5H 4H1, by the Proxy
Deposit Deadline, or (iii) with the chair of the Meeting on the day of the
Meeting or any adjournment thereof; (b) transmitting, by telephone or electronic
means, a revocation that complies with paragraphs (i), (ii) or (iii) above and
that is signed by electronic signature, provided that the means of electronic
signature permits a reliable determination that the document was created or
communicated by or on behalf of such shareholder or by or on behalf of his or
her attorney, as the case may be; or (c) in any other manner permitted by law
including attending the Meeting in person. Late proxies may be accepted or
rejected by the Chair of the Meeting in his or her discretion, and the Chair is
under no obligation to accept or reject any particular late proxy.
A Non-Registered Shareholder who has submitted a proxy may
revoke it by contacting the Intermediary through which the Non-Registered
Shareholder's common shares are held and following the instructions of the
Intermediary respecting the revocation of proxies.
Exercise of Discretion by Proxies
The common shares represented by an appropriate form of proxy
will be voted or withheld from voting on any ballot that may be conducted at the
Meeting, or at any adjournment thereof, in accordance with the instructions of
the shareholder thereon, and if the shareholder specifies a choice on any matter
to be acted upon, the common shares of such shareholder will be voted
accordingly. In the absence of instructions, such common shares will be voted FOR each of the
matters referred to in the Notice of Meeting as specified thereon.
| Avalon Rare Metals Inc. |
Page 4 |
| Information Circular as of and dated January 12, 2016 |
|
The enclosed form of proxy, when properly completed and signed,
confers discretionary authority upon the persons named therein to vote on any
amendments to or variations of the matters identified in the Notice of Meeting
and on other matters, if any, which may properly be brought before the Meeting
or any adjournment thereof. At the date hereof, management of the Company knows
of no such amendments or variations or other matters to be brought before the
Meeting. However, if any other matters which are not now known to management of
the Company should properly be brought before the Meeting, or any adjournment
thereof, the common shares represented by such proxy will be voted on such
matters in accordance with the judgment of the person named as proxy therein.
Signing of Proxy
The form of proxy must be signed by the shareholder of the
Company or the duly appointed attorney of the shareholder of the Company
authorized in writing or, if the shareholder of the Company is a corporation, by
a duly authorized officer of such corporation. A form of proxy signed by the
person acting as attorney of the shareholder of the Company or in some other
representative capacity, including an officer of a corporation which is a
shareholder of the Company, should indicate the capacity in which such person is
signing and should be accompanied by the appropriate instrument evidencing the
qualification and authority to act of such person, unless such instrument has
previously been filed with the Company. A shareholder of the Company or his or
her attorney may sign the form of proxy or a power of attorney authorizing the
creation of a proxy by electronic signature provided that the means of
electronic signature permits a reliable determination that the document was
created or communicated by or on behalf of such shareholder or by or on behalf
of his or her attorney, as the case may be.
VOTING SECURITIES AND PRINCIPAL HOLDERS
THEREOF
Description of Share Capital
The Company is authorized to issue an unlimited number of
common shares without par value and 25,000,000 preferred shares without par
value. There are 160,339,206 common shares and no preferred shares of the
Company issued and outstanding as at January 12, 2016.
At an annual meeting of the Company, on a show of hands, every
registered holder of common shares present in person and entitled to vote and
every proxyholder duly appointed by a registered shareholder who would have been
entitled to vote shall have one vote and, on a poll, every registered
shareholder present in person or represented by proxy or other proper authority
and entitled to vote shall have one vote for each share of which such
shareholder is the registered holder. Common shares represented by proxy will
only be voted if a ballot is called for. A ballot may be requested by a
registered shareholder or proxyholder present at the Meeting or required because
the number of votes attached to common shares represented by proxies that are to
be voted against a matter is greater than 5% of the votes that could be cast at
the Meeting.
Record Date
The directors of the Company have fixed January 12, 2016 as the
record date for the determination of the shareholders of the Company entitled to
receive notice of, and to vote at, the Meeting. Shareholders of the Company of record at the close of business on January 12,
2016 will be entitled to vote at the Meeting.
| Avalon Rare Metals Inc.
|
Page 5 |
| Information Circular as of and dated
January 12, 2016 |
|
Ownership of Securities of the Company
To the knowledge of the directors and executive officers of the
Company, no person or company beneficially owns, directly or indirectly, or
exercises control or direction over, voting securities carrying more than 10% of
the outstanding voting rights of the Company.
The officers of the Company and the individuals nominated by
management for election as directors collectively own or control, directly or
indirectly, in the aggregate, 4,414,334 common shares of the Company,
representing approximately 2.75% of the outstanding common shares as at January
12, 2016.
PARTICULARS OF MATTERS TO BE ACTED
UPON
| 1. |
Presentation of Financial
Statements |
At the Meeting, the Chair of the Meeting will present to
shareholders the financial statements of the Company for the year ended August
31, 2015 and the auditors’ report thereon, which have been approved by the board
of directors of the Company (the “Board”). No vote of the shareholders of the
Company is required with respect to this item of business.
The Board currently consists of six directors. The table below
and the notes thereto state the names of the seven persons nominated by
management for election as directors, all other positions and offices with the
Company now held by them, their principal occupations or employment for the
preceding five years, the period or periods of service as directors of the
Company and the number of voting securities of the Company beneficially owned,
directly or indirectly, or over which control or direction is exercised by each
of them as of the date hereof.
Majority Voting Policy
The Board has adopted a policy providing that in an uncontested
election of directors, any nominee who receives a greater number of votes
‘‘withheld’’ than votes ‘‘for’’ will tender his or her resignation to the Chair
of the Board promptly following the shareholders’ meeting. The Compensation,
Governance and Nominating Committee (the “CGN Committee”) of the Board will
consider the offer of resignation and will make a recommendation to the Board on
whether to accept it. In considering whether or not to accept the resignation,
the CGN Committee will consider all factors deemed relevant by members of such
Committee. The CGN Committee will be expected to accept the resignation except
in situations where the considerations would warrant the applicable director
continuing to serve on the Board. The Board will make its final decision and
announce it in a press release within 90 days following the Meeting. A director
who tenders his or her resignation pursuant to this policy will not participate
in any meeting of the Board or the CGN Committee at which the resignation is
considered.
| Avalon Rare Metals Inc.
|
Page 6 |
| Information Circular as of and dated
January 12, 2016 |
|
Advance Notice By-Law
On January 12, 2016, the Board approved, effective upon
shareholder approval at the Meeting, the adoption by the Company of By-law No. 2
relating to the nomination of directors by shareholders of the Company in
certain circumstances.
Proxies received appointing directors and/or officers of the
Company will be voted FOR the election of the nominees named in the table below,
unless the shareholder has specified in the proxy that the common shares are to
be withheld from voting in respect thereof. Management has no reason to believe
that any of the nominees will be unable to serve as a director but, if a nominee
is for any reason unavailable to serve as a director, proxies appointing
directors and/or officers of the Company will be voted in favour of the
remaining nominees and may be voted for a substitute nominee, unless the
shareholder has specified in the proxy that the common shares are to be withheld
from voting in respect of the election of directors.
Name, Province/State
and Country of
Residence |
Position
with
the Company |
Present
Principal Occupation,
Business or Employment for
the Past Five
Years |
Director
Since |
Common
Shares
Beneficially
Owned, Directly
or Indirectly or
Controlled or
Directed* |
|
Donald Bubar Ontario, Canada |
President and CEO |
President and CEO of the Company |
February 17, 1995 |
3,275,600 |
|
Brian MacEachen (1)
Nova Scotia, Canada |
Director |
Business owner-operator, Executive Consultant and Chief
Financial Officer of Zonte Metals Inc.; Former President and Chief
Executive Officer of Linear Metals Corporation from January 2008 to April
2012 and Executive Vice President of Brigus Gold Corp. from October 2009
to July 2012 |
November 16, 1998 |
340,000 |
|
Alan Ferry (1)(2)
Ontario, Canada |
Director |
Self-employed businessperson, Lead Director of Guyana
Goldfields Inc. |
February 24, 2000 |
225,000 |
|
Peter McCarter (1)(2)
Ontario, Canada |
Director |
Retired mining executive |
November 16, 2007 |
80,000 |
|
Phil Fontaine
Ontario, Canada |
Director |
Retired; Special Advisor to the Royal Bank of Canada
since September 2009 and Senior Advisor to Norton Rose Fulbright LLP since
March 2010; prior thereto, National Chief of the Assembly of First Nations |
September 8, 2009 |
10,000 |
| Avalon Rare Metals Inc.
|
Page 7 |
| Information Circular as of and dated
January 12, 2016 |
|
Name, Province/State
and Country of
Residence |
Position with
the Company |
Present
Principal Occupation,
Business or Employment for
the Past Five
Years |
Director Since |
Common Shares
Beneficially
Owned, Directly
or Indirectly or
Controlled
or
Directed* |
|
Kenneth G. Thomas (2)
Ontario, Canada |
Director |
President, Ken Thomas & Associates Inc. since July
2012; Director, Continental Gold Limited since June 2012; and Director,
Candente Gold Corporation since December 2012; prior thereto, Senior Vice
President, Projects, Kinross Gold Corporation from December 2009 to June
2012 and Global Managing Director and Director, Hatch from November 2005
to November 2009 |
February 25, 2014 |
49,000 |
|
Jane Pagel
Ontario, Canada |
Not Applicable |
Self-employed businessperson; Interim President and CEO
Sustainable Development Technology Canada June 2014 - June 2015; President
and CEO Ontario Clean Water 2010-2014; SVP and Principal Jaques Whitford
2000-2009, acquired by Stantec, Principal 2009-2010 |
Not Applicable |
Nil |
Notes:
* As provided by the respective director as at
January 12, 2016.
(1) Member of the
Company’s Audit Committee.
(2) Member of the
Company’s CGN Committee. |
Each director elected at the Meeting will hold office until the
next annual meeting or until his or her successor is duly elected or appointed.
No proposed director (including any personal holding company of
a proposed director):
| (a) |
is, as at the date of this Information Circular, or has
been, within the preceding 10 years, a director, chief executive officer
or chief financial officer of any company (including the Company)
that: |
| |
(i) |
was the subject of a cease trade or similar order
(including a management cease trade order whether or not such person was
named in the order) or an order that denied the relevant company access to
any exemption under securities legislation, that was in effect for a
period of more than 30 consecutive days, (an “Order”) that was issued
while the proposed director was acting in the capacity as director, chief
executive officer or chief financial officer, other than Peter McCarter,
who was a director and officer of Compressario Corporation when it became
subject to cease trade orders that were issued in 2003 by the Ontario, British Columbia and Alberta
Securities Commissions for failure to file financial statements; or |
| Avalon Rare Metals Inc.
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| Information Circular as of and dated
January 12, 2016 |
|
| |
(ii) |
was subject to an Order that was issued after the
proposed director ceased to be a director, chief executive officer or
chief financial officer and which resulted from an event that occurred
while that person was acting in the capacity as director, chief executive
officer or chief financial officer. |
| (b) |
is, as at the date of this Information Circular, or has
been, within the preceding 10 years, 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 |
| |
|
| (c) |
has, within the 10 years before the date of this
Information Circular, became bankrupt, made a proposal under any
legislation relating to bankruptcy or insolvency or become subject to or
instituted any proceedings, arrangement or compromise with creditors or
had a receiver, receiver manager or trustee appointed to hold the assets
of the proposed director; or |
| |
|
| (d) |
has been subject to: |
| |
(i) |
since December 31, 2000, 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 |
| |
|
|
| |
(ii) |
any other penalties or sanctions imposed by a court or
regulatory body that would likely be considered important to a reasonable
securityholder in deciding whether to vote for a proposed
director; |
| 3. |
Appointment of Auditors |
Deloitte LLP have been the auditors of the Company since
December 16, 2013. Shareholders will be asked to consider and, if thought
advisable, to pass an ordinary resolution to appoint Deloitte LLP to serve as
auditors of the Company until the next annual meeting of shareholders and to
authorize the directors of the Company to fix their remuneration.
The appointment of Deloitte LLP as auditors of the Company
until the next annual meeting of the shareholders and the authorization of the
directors to fix their remuneration must be authorized and approved by an
ordinary resolution of the shareholders. An ordinary resolution is a resolution
passed by by at least a majority (50%+1) of the votes cast by shareholders who
voted by proxy or in person in respect of that resolution at the Meeting.
The Board unanimously recommends that shareholders vote FOR the
ordinary resolution to appoint the auditors and authorize the directors to fix
their remuneration. Unless the shareholder directs that his or her common shares
are to be withheld from voting in connection with the appointment of auditors,
the persons named in the enclosed form of proxy intend to vote FOR the
appointment of Deloitte LLP, to serve as auditors of the Company until the next
annual meeting of the shareholders and to authorize the directors to fix their
remuneration.
| Avalon Rare Metals Inc.
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Page 9 |
| Information Circular as of and dated
January 12, 2016 |
|
| 4. |
Approval of Name
Change |
At the Meeting, shareholders will be asked to consider and, if
deemed advisable, approve a special resolution, with or without variation,
authorizing the Company to amend its articles to effect a change of name of the
Company from “Avalon Rare Metals Inc.” to “Avalon Advanced Materials Inc.”, or
such other name as the Board in its discretion may resolve and as may be
acceptable to applicable regulatory authorities, including the Toronto Stock
Exchange (the “TSX), if required.
The Board feels that the current name of “Avalon Rare Metals
Inc.” is too closely associated with “rare earths” and fails to adequately
convey the Company’s diversified specialty metals and minerals asset base. Many
investors do not realize that the Company is no longer exclusively focused on
rare earths and that current activities are now focused on its other advanced
materials assets, notably lithium and tin-indium. The Company does not intend to
change the ticker symbol (“AVL”) under which its common shares are currently
listed on the TSX.
The amendment to the Company’s articles implementing the change
of the Company’s name must be authorized and approved by a special resolution of
the shareholders. A special resolution is a resolution passed by a majority of
not less than two-thirds (66⅔%) of the votes cast by shareholders who voted by
proxy or in person in respect of that resolution at the Meeting.
The Board may determine not to implement the special resolution
authorizing the name change at any time after the Meeting and after receipt of
necessary regulatory approvals, but prior to the name change becoming effective,
without further action on the part of the shareholders of the Company.
The Board unanimously recommends that shareholders vote FOR the
special resolution to change the Company’s name. Unless the shareholder
directs that his or her common shares are to be voted against the resolution
with respect to the change of the Company’s name, the persons named in the
enclosed form of proxy intend to vote FOR the resolution.
At the Meeting, shareholders will be asked to vote on the
following special resolution:
“Be it resolved as a special resolution that:
1. the name of the Company is hereby changed from “Avalon Rare
Metals Inc.” to “Avalon Advanced Materials Inc.”, or such other name that the
Board deems appropriate and as may be approved by applicable regulatory
authorities, including the TSX, if the Board considers it to be in the best
interests of the Company to implement such a name change, and that the articles
of the Company be amended to reflect such change, such amendment to take effect
once the Company’s Articles of Continuance are altered to reflect the name
change;
2. any director or officer of the Company is hereby authorized,
for or on behalf of the Company, to execute and deliver all documents and
instruments and to take such other actions as such director or officer may
determine to be necessary or desirable to implement this special resolution and
the matters authorized hereby, such determination to be conclusively evidenced
by the execution and delivery of any such documents or instruments and the
taking of any such actions; and
3. notwithstanding that this resolution has been duly passed by
the shareholders of the Company, the Board is hereby authorized and empowered,
if it decides not to proceed with this resolution, to revoke this resolution in whole or in part at any time prior to it being
given effect without further notice to, or approval of, the shareholders.”
| Avalon Rare Metals Inc.
|
Page 10 |
| Information Circular as of and dated
January 12, 2016 |
|
| 5. |
Approval of By-Law
No.2 |
On January 12, 2016, the Board approved the adoption by the
Company of By-law No. 2 relating to the provision of advance notice of
nominations of directors of the Company ("By-law No. 2"). A complete copy of
By-law No. 2 is attached as Schedule "B" hereto.
The Company believes that adopting By-law No.2 is considered to
be good corporate governance. ByLaw No.2 provides a clear process for
shareholders to follow for director nominations and sets out a reasonable time
frame for nominee submissions and the provision of accompanying information. The
purpose of By-law No.2 is to treat all shareholders fairly by ensuring that all
shareholders receive adequate notice of the nominations to be considered at a
meeting and can thereby exercise their voting rights in an informed manner. In
addition, By-law No.2 should assist in facilitating an orderly and efficient
meeting process. The full text of By-Law No.2 is set forth in Schedule "B"
attached hereto.
Pursuant to the provisions of the Act, By-Law No.2 will not
become effective unless approved by an ordinary resolution of the shareholders.
An ordinary resolution is a resolution passed by by at least a majority (50%+1)
of the votes cast by shareholders who voted by proxy or in person in respect of
that resolution at the Meeting.
The Board unanimously recommends that shareholders vote FOR the
adoption of By-law No.2. Unless the shareholder directs that his or her
common shares are to be voted against the resolution with respect to the
adoption of By-Law No.2, the persons named in the enclosed form of proxy intend
to vote FOR the resolution.
At the Meeting, the shareholders will be asked to consider and,
if deemed advisable, to adopt the following resolution in order to approve
By-law No. 2:
“Be it resolved that:
1. By-law No. 2 of the Company, in the form attached to the
Information Circular dated January 12, 2016, is hereby approved, ratified and
confirmed as a by-law of the Company; and
2. any director or officer of the Company is hereby authorized,
for or on behalf of the Company, to execute and deliver all documents and
instruments and to take such other actions as such director or officer may
determine to be necessary or desirable to implement the adoption of By-Law No.2
and the matters authorized hereby, such determination to be conclusively
evidenced by the execution and delivery of any such documents or instruments and
the taking of any such actions.”
OTHER MATTERS WHICH MAY COME BEFORE THE
MEETING
The management knows of no matters to come before the Meeting
other than as set forth in the Notice of Meeting. However, if other matters are
not known to the management should properly come before the Meeting, the
accompanying proxy will be voted on such matters in accordance with the best
judgment of the persons voting the proxy.
| Avalon Rare Metals Inc.
|
Page 11 |
| Information Circular as of and dated
January 12, 2016 |
|
STATEMENT OF EXECUTIVE COMPENSATION
| A. |
Named Executive
Officers |
For the purposes of this Information Circular, a named
executive officer (“Named Executive Officer”) of the Company means each of the
following individuals:
| (a) |
a chief executive officer (“CEO”) of the
Company; |
| |
|
| (b) |
a chief financial officer (“CFO”) of the
Company; |
| |
|
| (c) |
each of the Company’s three most highly compensated
executive officers, or the three most highly compensated individuals
acting in a similar capacity, other than the CEO and CFO, at the end of
the most recently completed financial year whose total compensation was
individually, more than $150,000, as determined in accordance with
subsection 1.3(6) of Form 51-102F6, for that financial year; and |
| |
|
| (d) |
each individual who would be a Named Executive Officer
under paragraph (c) above but for the fact that the individual was neither
an executive officer of the Company, nor acting in a similar capacity, at
the end of the financial year. |
For the fiscal year ended August 31, 2015, the Company had five
Named Executive Officers, namely, its CEO and President, Donald Bubar, its CFO
and Vice President, Finance, R. James Andersen, its Senior Vice President,
Metallurgy and Technology Development, David Marsh, its Vice President, Sales
and Marketing, Pierre Neatby, and its Vice President, Exploration, William
Mercer.
| B. |
Compensation Discussion and
Analysis |
Compensation, Governance and Nominating
Committee
The Compensation, Governance and Nominating Committee (the “CGN
Committee”) of the Board is responsible for making recommendations to the Board
with respect to the compensation of the executive officers of the Company as
well as, among other things, with respect to the Company’s stock option plan
(the “Stock Option Plan”) and any other employee benefits and/or plans and with
respect to directors’ compensation. The Board (exclusive of the CEO, who is also
a member of the Board) reviews such recommendations and gives final approval to
the compensation of the executive officers. See also Schedule A – Corporate
Governance Disclosure hereto.
The CGN Committee currently consists of Peter McCarter (Chair),
Alan Ferry and Kenneth G, Thomas, each of whom are independent, pursuant to
National Instrument 52-110 – Audit Committees. Each of Messrs. McCarter,
Ferry and Thomas has direct and extensive experience in corporate management and
compensation issues in either the mining industry and/or the financial industry.
Mr. McCarter was previously the Executive Vice-President, Corporate Affairs for
Aur Resources Inc. (“Aur”), a publicly listed international mining company, in
which role he had responsibility for managing Aur’s human resources matters. Mr.
Ferry is a member of the committee responsible for compensation matters of
Guyana Goldfields Inc. and GPM Metals Inc., which are publicly listed mineral
exploration or mining companies. Dr. Thomas served as Senior Vice President,
Projects, Kinross Gold Corporation from December 2009 to June 2012, Global
Managing Director and Director, Hatch from November 2005 to November 2009 and
Chief Operating Officer, Crystallex International Corporation from April 2003 to
October 2005. In addition he served in senior roles at Barrick Gold Corporation from 1987
to 2001, including Senior Vice President, Technical Services, during which times
he was responsible for determining the compensation of those employees whom he
directly and indirectly supervised, which numbered in excess of several dozen.
This experience relating to executive compensation matters collectively provides
members of the CGN Committee with a suitable perspective to make decisions on
the appropriateness of the Company’s compensation policies and practices.
| Avalon Rare Metals Inc.
|
Page 12 |
| Information Circular as of and dated
January 12, 2016 |
|
The CGN Committee has not to date felt it necessary to engage
any compensation consultant or advisor to assist it in the performance of its
duties.
Compensation Objectives and Structure
The overall compensation objective adopted by the CGN Committee
is to ensure that executive compensation is fair and reasonable, rewards
management performance and is, by being competitive, sufficient to attract and
retain experienced and talented executives. Due to the nature of the mineral
industry, executive talent has significant mobility and, as a result,
competition for experienced executives in the past has been great. The Company’s
compensation policies are designed to recognize the foregoing. The foregoing
objective also recognizes the fundamental value added by a motivated and
committed management team in accomplishing the Company’s principal corporate
objectives.
Historically, the compensation provided by the Company to its
executive officers, including the CEO, has had three components: base salary,
bonuses and long term incentive compensation in the form of stock options (see
“Stock Option Plan”). Bonus compensation is a cash component of management
compensation in order to permit the recognition of outstanding individual
efforts, performance, achievements and/or accomplishments by members of the
Company’s management team. Any specific bonus amounts are awarded on the
recommendation of the CGN Committee and ultimately at the discretion of the
Board, with bonus amounts for members of the Company’s management team other
than the CEO being based primarily on the recommendations of the CEO. The
appropriateness and amount of any bonuses to the CEO and/or management team
members has to date been considered annually by the CGN Committee and Board on a
discretionary basis as no formal bonus plan based on quantitative and/or
qualitative benchmarks has been established for the Company as yet.
Base salary is the principal component of each executive
officer’s overall compensation and reflects the fixed component of pay that
compensates the relevant executive officer for fulfilling his or her day to day
roles and responsibilities. The CGN Committee typically reviews the base salary
levels and considers the individual performance of the CEO and of each other
executive officer and historically has compared executive compensation for other
companies operating in the mineral industry. It is important that the Company’s
CEO and other members of its senior management team are paid competitive base
salaries that are in keeping with that offered by comparable companies within
the industry. The CGN Committee also noted that in the setting of base salaries
in prior years, companies operating in the rare earths industry have faced
unique and relatively difficult additional challenges that need to be addressed,
particularly in the financing, marketing and metallurgical processing areas,
than do other companies in the mining sector, such as gold and base metal
companies.
Historically, in setting the salary and bonus, if any, to be
awarded to the CEO for each year, the CGN Committee, in addition to reviewing
peer group data, has reviewed the achievements of the CEO for the prior year and
looked at the overall performance of the Company in terms of the achievement of
its corporate objectives, including the acquisition and advancement of projects.
Also typically included in such overall assessment are specific initiatives
undertaken in the year by the Company that have advanced the growth and progress of the Company and the
enhancement of shareholder value during the year, including the reflection of
such in the Company’s share price. In setting the compensation of the executive
officers of the Company, other than the CEO, the CGN Committee has historically
reviewed with the CEO, the CEO’s evaluation of each executive officer’s
performance during the year as well as the responsibilities, experience and
qualifications of such executive officer and comparable industry compensation
data. More recently, however, the overall financial condition of the Company and
the overall depressed nature of the junior resource sector in Canada and
elsewhere has significantly factored into the setting of the cash remuneration
levels of the Company’s senior management and, in particular, has resulted in
there being no or minimal increases in the cash remuneration of senior
management for the calendar years 2014 – 2016. Given the nature of the Company
as an exploration and development stage resource company without existing
mineral production and without any attendant revenues derived thereon,
compensation has in the past been generally based on comparative, qualitative or
subjective measures, rather than quantitative benchmarks. No specific
benchmarks, weights or percentages are assigned to any of the measures or
objectives upon which the executive compensation is generally based.
| Avalon Rare Metals Inc.
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Page 13 |
| Information Circular as of and dated
January 12, 2016 |
|
Annual salary adjustments, if any, have historically been made
on a calendar year basis, typically being determined towards the end of each
calendar year and made effective January 1 of the following year.
Compensation Risk Management
The CGN Committee evaluates the risks, if any, associated with
the Company’s compensation policies and practices. Implicit in the mandate of
the Board is that the Company’s policies and practices respecting compensation,
including those applicable to the Named Executive Officers, be designed in a
manner which is in the best interests of the Company and its shareholders.
In particular, the Company’s executive compensation policies
incorporate a balanced compensation program design (see “Compensation Objectives
and Structure”) and include elements of fixed and variable compensation and
short and longer term incentives.
The base salary component of the compensation provided by the
Company to its executive officers is set annually. The bonus component of the
compensation provided by the Company to its executive officers is discretionary,
is currently based on qualitative or subjective measures rather than
quantitative benchmarks, and is subject to the prior approval of the CGN
Committee. Discretionary assessment of the performance of executive officers by
the Committee ensures that bonus awards align with both perceived and actual
performance and the risks associated with such performance and any bonus award.
The stock option component of the compensation provided by the
Company to its executive officers is both “longer term” and “at risk” and,
accordingly, is directly linked to the achievement of longer term value
creation. Since the benefits of such compensation, if any, are generally not
realized by the executive officers until a significant period of time has passed
and that there are typically deferred vesting provisions attached to each option
grant (see “Stock Option Plan” below), the incentive for executive officers to
take inappropriate or excessive risks with regard to their compensation that are
financially beneficial to them at the expense of the Company and its
shareholders is limited.
The CGN Committee believes that it is unlikely that an
executive officer would take inappropriate or excessive risks at the expense of
the Company and its shareholders that would be beneficial to them with regard to
their short term compensation when their longer term compensation might be put
at risk from their actions. Due to the size of the Company, the CGN Committee is
able to monitor and consider any risks which may be associated with the Company’s compensation
policies and practices. Risks, if any, may be identified and mitigated through
regular meetings of the Board during which financial and other information
relating to the Company are reviewed, and which includes senior executive
compensation. The CGN Committee has not identified any risks arising from the
Company’s compensation policies and practices that it believes would be
reasonably likely to have a material adverse effect on the Company.
| Avalon Rare Metals Inc.
|
Page 14 |
| Information Circular as of and dated
January 12, 2016 |
|
Although the Company has not as yet adopted any specific
policies in this regard, in the event that a director or an executive officer
purchases financial instruments that are designed to hedge or offset a decrease
in the market value of the Company’s equity securities granted as compensation
or held, directly or indirectly by the director or the executive officer, such
purchases must be disclosed in insider reporting filings. To date, no such
purchases have been disclosed by any director or executive officer of the
Company.
Base Salary and Bonus
The CGN Committee, in respect of the setting of salaries for
the Named Executive Officers for 2015, recommended to the Board and the Board
determined that, there would be no salary increases for the Named Executive
Officers in 2015 or 2016. This determination recognized the then current
financial situation of the Company and the overall depressed nature of the
junior resource sector in Canada.
Further, each of the Named Executive Officers agreed, for the
seven month period commencing November 2014 through to May 2015, to be granted,
in lieu of receiving 20% of their respective salaries (25% in the case of Mr.
Bubar) during such period, additional stock options, being in the case of Mr.
Bubar, options to purchase 150,000 common shares of the Company, in the case of
Messrs. Andersen and Marsh, options to purchase 125,000 common shares and in the
case of Messrs. Mercer and Neatby, options to purchase 100,000 common shares.
All of the foregoing options were granted effective November 24, 2014, have an
exercise price of $0.22 per share, have a five year term and vested
immediately.
In addition, each of the Named Executive Officers has agreed,
for the seven month period commencing June 2015 through to December 2015, to be
granted, in lieu of receiving 20% of their respective salaries during such
period (25% in the case of Mr. Bubar), additional stock options or vacation
days, being in the case of Mr. Bubar, 38 vacation days, in the case of Messrs.
Andersen and Mercer, 30 vacation days, in the case of Mr. Marsh, 13 vacation
days and options to purchase 70,000 common shares and in the case of Mr. Neatby,
options to purchase 100,000 common shares. All of the foregoing options were
granted effective August 7, 2015, have an exercise price of $0.21 per share,
have a five year term and vested immediately.
In addition, each of the Named Executive Officers has agreed,
for the eight month period commencing January 2016 through to August 2016, to be
granted, in lieu of receiving 20% of their respective salaries during such
period (25% in the case of Mr. Bubar), additional stock options, being in the
case of Mr. Bubar, options to purchase 150,000 common shares of the Company, in
the case of Messrs. Andersen and Marsh, options to purchase 125,000 common
shares and in the case of Messrs. Mercer and Neatby, options to purchase 100,000
common shares. All of the foregoing options were granted effective January 12,
2016, have an exercise price of $0.12 per share, have a five year term and
vested immediately.
No discretionary bonuses were awarded to any Named Executive
Officers of the Company for 2015.
| Avalon Rare Metals Inc.
|
Page 15 |
| Information Circular as of and dated
January 12, 2016 |
|
Options
The CGN Committee is of the view that the granting of options
is an appropriate method of providing long-term incentives to senior management
of the Company and, in general, aligns the interests of senior management with
those of the shareholders by enabling senior management to participate in and be
rewarded by an increase in the market price of the Company’s common shares.
Participation in the Stock Option Plan also provides a significant incentive to
the participants to enter into and subsequently to continue their employment
with the Company, particularly when the Company may not have the financial
resources and/or pension and other benefit plans to attract and retain
experienced personnel. In addition, the CGN Committee is of the view that the
Company’s compensation mix must be consistent with industry norms which supports
the provision by the Company of a longer term compensation incentive. This
longer term compensation incentive is best realized by providing compensation
linked to share price performance such as options. The number and terms of
options previously granted to the named executives have been and are expected to
continue to be taken into account, as well as the number and terms of options
granted by peer group companies in determining whether and in what quantity new
option grants should be made in any year. Also, as discussed under “Base Salary
and Bonus” above, additional options have been granted to members of senior
management in lieu of receipt by them of certain specified cash salary amounts.
The Company’s current objective under the Stock Option Plan is
to allot to the CEO options to purchase 1,000,000 common shares, to the CFO and
Senior Vice President options to purchase 600,000 common shares and to officers
at the Vice President level options to purchase 400,000 common shares (the
“target allotments”). The foregoing allotments do not include the additional
options granted to the Named Executive Officers on November 24, 2014, August 7,
2015, and January 12, 2016, as described under “Base Salary and Bonus” above,
and the 150,000 options granted to the CEO and CFO on January 6, 2014 in lieu of
an annual salary increase for that year.
In the past, the Company had typically granted all of an
employee’s option allotment at the commencement of the employee’s employment,
with such options to vest periodically over the first four years of a five year
option term. During the 2012 calendar year, the Company switched to a
methodology of annual grants of one fifth of the employee’s target allotment (on
a discretionary basis). Accordingly, over the next two years, as the number of
options granted under the former methodology are exercised or expire, each
employee may have more or less than their target allotment at any given time.
Over the next two years, all stock options granted in the ordinary course to
each employee will gravitate toward the employee’s target allotment. The
methodology applied by the Company permits exceptions to be made, for example,
to recognize exceptional employee contributions and to permit flexibility in
negotiating employment contracts.
Circumstances Triggering Termination and
Change of Control Benefits
As noted below under the heading “Employment Contracts”, there
are certain circumstances that trigger payments and other benefits to the CEO
upon termination and change of control. The CGN Committee views such provisions
as not only being fair and necessary to protect the CEO, but also to encourage
the CEO to pursue those transactions such as mergers or take-overs that are
beneficial to the Company and its shareholders, but that may result in the
termination of the CEO’s employment with the Company.
| Avalon Rare Metals Inc.
|
Page 16 |
| Information Circular as of and dated
January 12, 2016 |
|
Stock Option Plan
The Stock Option Plan, approved by shareholders on February 25,
2014, is a fixed percentage plan that provides that the maximum number of
options which may be outstanding at any time under the Stock Option Plan and any
other compensation arrangement of the Company is 10% of the Company’s issued and
outstanding common shares. Eligible Participants under the Stock Option Plan
include insiders or employees of the Company or any of its subsidiaries, and any
other person or company engaged to provide ongoing management, consulting or
advisory services to the Company.
The Company maintains the Stock Option Plan in order to provide
effective incentives to directors, officers and senior management personnel of
the Company and to enable the Company to attract and retain experienced and
talented individuals in those positions by permitting such individuals to
directly participate in an increase in share value created for the Company’s
shareholders.
Incentive options granted under the Stock Option Plan entitle
the purchase of shares at a price and for the length of time determined by the
Board provided that the price cannot be lower than the market price of the
common shares on the Toronto Stock Exchange (the “TSX”) on the day prior to or
on the day of the grant and the expiry date cannot be more than 10 years after
the date of the grant. Further, the policies of the TSX also provide that the
said exercise price of any options so granted cannot be reduced without
shareholder approval.
Options under the Stock Option Plan are typically granted in
such numbers as reflect the level of responsibility of the particular optionee
and his or her contribution to the business and activities of the Company.
Options may also be granted under the Stock Option Plan to consultants. Options
granted under the Stock Option Plan typically have a five year term and are
typically made cumulatively exercisable by the holders thereof in equal
proportions of the aggregate number of shares subject to the options over
specified time periods. Historically, after an initial grant, options have been
re-granted upon such having been exercised. In the event a take-over bid (within
the meaning of the Securities Act (Ontario)) is made for the common
shares of the Company, then all unvested options thereupon become exercisable by
the holder. Options terminate immediately upon an optionee’s employment with the
Company being terminated (unless otherwise determined by the Board) or unless
such termination is a result of death, disability or retirement, in which case
termination occurs 12 months from the occurrence of the relevant event (subject
to the earlier expiry of the options in the normal course). The terms of the
Stock Option Plan further provide that the exercise price at which common shares
may be issued under the Stock Option Plan cannot be less than the current market
price of the common shares when the relevant options are granted.
As at January 12, 2016, 10,425,000 common shares, being 6.50%
of the currently issued common shares of the Company, were issuable pursuant to
unexercised options granted to such date under the Stock Option Plan.
Incentives to Participants under the Stock Option Plan may also
be provided by the granting of stock appreciation rights. Stock appreciation
rights, which can be attached to an option at the discretion of the Company at
any time, entitle a Participant in the Stock Option Plan to elect, in lieu of
exercising an outstanding Option, to receive the number of common shares
equivalent in value to the difference between his or her option exercise price
and the then existing market value of the shares multiplied by the number of
common shares over which he or she could otherwise exercise his or her option.
No stock appreciation rights have been granted under the Stock Option Plan to
date.
| Avalon Rare Metals Inc.
|
Page 17 |
| Information Circular as of and dated
January 12, 2016 |
|
The rules of the TSX require that all unallocated options,
rights or other entitlements under plans such as the Stock Option Plan must be
re-approved by a majority of the relevant issuer’s directors and by shareholders
every three years after institution of the relevant plan. Under the policies of
the TSX, if the Company wishes to make certain amendments to the Stock Option
Plan, it must obtain shareholder approval.
The following graph and table compares the yearly percentage
change in the cumulative total shareholder return of the common shares for the
period from August 31, 2010 to August 31, 2015 with the cumulative total return
of the S&P/TSX Composite Total Return Index for the same period. The graph
and table assume $100 invested in common shares on August 31, 2010 and in the
S&P/TSX Composite Total Return Index, which assumes dividend reinvestment.
Cumulative Total Return on $100
Investment
There is no direct correlation between the market performance
of the Company’s common shares and executive compensation except that any
increase in the market price of the common shares will increase the value of any
options held by the relevant executives. The CGN Committee and the Board
generally evaluate performance by reference to the achievement of corporate
objectives rather than by short term changes in the Company’s common share
price, which typically has in the past been significantly influenced by overall
economic, market and industry conditions. Indirectly, however, the Board
determined that there would be no salary increases for the Named Executive
Officers in 2015, in recognition of the then current financial situation of the
Company and the overall depressed nature of the junior resource sector in
Canada. See discussion under “Base Salary and Bonus” above for further
details.
Comparison of Cumulative Total Return
| Month / Year |
August
31, 2010 |
August
31, 2011 |
August
31, 2012 |
August
31, 2013 |
August
31, 2014 |
August
31, 2015 |
| Avalon Rare Metals Inc. |
$100.00 |
$142.48 |
$57.19 |
$27.12 |
$15.03 |
$5.56 |
| S&P/TSX Composite Total Return Index |
$100.00 |
$109.91 |
$105.96 |
$115.78 |
$147.19 |
$134.41 |
| Avalon Rare Metals Inc.
|
Page 18 |
| Information Circular as of and dated
January 12, 2016 |
|
| D. |
Summary Compensation
Table |
The table below contains a summary of the compensation paid to
the Named Executive Officers during the three most recently completed financial
years.
Name and
Principal
Position |
Year |
Salary ($) |
Share
based
awards
($) |
Option-
based
awards (1)
($) |
Non-Equity incentive
plan compensation
($)
|
Pension
Value (2)
($)
|
All other
compensation(3)
($)
|
Total
compensation
($)
|
|
|
|
Annual
incentive
plans |
Long-term
incentive
plans |
|
|
Donald Bubar(4)
President and CEO |
2015 |
316,667 |
Nil |
52,812 |
Nil |
Nil |
Nil |
1,023 |
370,502 |
| 2014 |
400,000 |
Nil |
137,373 |
Nil |
Nil |
Nil |
1,938 |
539,311 |
| 2013 |
400,000 |
Nil |
395,546 |
Nil |
Nil |
Nil |
923 |
796,469 |
R. James Andersen
CFO and VP, Finance |
2015 |
250,000 |
Nil |
30,761 |
Nil |
Nil |
Nil |
Nil |
280,761 |
| 2014 |
300,000 |
Nil |
79,283 |
Nil |
Nil |
Nil |
Nil |
379,283 |
| 2013 |
300,000 |
Nil |
211,521 |
Nil |
Nil |
Nil |
Nil |
511,521 |
David Marsh
Senior VP, Metallurgy
and Technology
Development |
2015 |
295,532 |
Nil |
36,602 |
Nil |
Nil |
Nil |
Nil |
332,134 |
| 2014 |
356,667 |
Nil |
51,263 |
Nil |
Nil |
Nil |
Nil |
407,930 |
| 2013 |
350,000 |
Nil |
Nil |
50,000(5) |
Nil |
Nil |
923 |
400,923 |
William Mercer
VP, Exploration |
2015 |
210,758 |
Nil |
18,048 |
Nil |
Nil |
Nil |
Nil |
228,806 |
| 2014 |
256,667 |
Nil |
33,869 |
Nil |
Nil |
Nil |
Nil |
290,536 |
| 2013 |
243,845 |
Nil |
Nil |
Nil |
Nil |
Nil |
923 |
244,768 |
Pierre Neatby
VP, Sales and Marketing |
2015 |
216,667 |
Nil |
30,279 |
Nil |
Nil |
Nil |
748 |
247,694 |
| 2014 |
256,667 |
Nil |
24,735 |
Nil |
Nil |
Nil |
748 |
282,150 |
| 2013 |
250,000 |
Nil |
141,014 |
Nil |
Nil |
Nil |
630 |
391,644 |
| Notes: |
| (1) |
These amounts represent the “grant date fair value” of
options granted to the respective Named Executive Officer, which have been
determined by using the Black-Scholes model, a mathematical valuation
model that ascribes a value to an option based on a number of factors in
valuing the option-based awards, including the exercise price of the
option, the price of the underlying security on the date the option was
granted, and assumptions with respect to the volatility of the price of
the underlying security and the risk-free rate of return. Calculating the
value of options using this methodology is very different from a simple
“in-the-money” value calculation. In fact, options that are well
out-of-the-money can still have a significant “grant date fair value”
based in a Black-Scholes valuation, especially where, as in the case of
the Company, the price of the common shares underlying the option is
highly volatile. Accordingly, caution must be exercised in comparing grant
date fair value amounts with cash compensation or an in-the-money option
value calculation. The same caution applies to the total compensation
amounts shown in the last column above, which are based in part the grant
date fair value amounts set out in the column for Option-based awards.
These values are consistent with the accounting values used in the
Company’s financial statements. The Company selected the Black-Scholes
model given its prevalence of use within North America. |
| (2) |
The Company does not have a pension plan. |
| (3) |
Medical expenses paid by the Company on behalf of the
respective Named Executive Officer. |
| (4) |
Mr. Bubar does not receive any additional compensation
for serving as a director of the Company. |
| (5) |
The Company paid Mr. Marsh a bonus of $50,000 in 2013
related to the completion of the feasibility study on the Company’s
Nechalacho Rare Earth Elements Project. |
| Avalon Rare Metals Inc.
|
Page 19 |
| Information Circular as of and dated
January 12, 2016 |
|
Bubar Employment
Agreement
The Company employs Donald Bubar as the Company’s President and
CEO pursuant to an employment agreement effective as of January 1, 2011 (the
“Bubar Agreement”). The Bubar Agreement is for an indefinite term and can be
terminated by either party. If the Bubar Agreement is terminated by Mr. Bubar,
Mr. Bubar must provide notice of at least 30 days and Mr. Bubar is entitled to
be paid the then current salary under the Bubar Agreement prorated until the end
of the notice period, and thereafter all obligations of the Company to Mr. Bubar
will terminate. If the Bubar Agreement is terminated by the Company without
cause, the Company will pay to Mr. Bubar a lump sum payment equal to three times
his annual base salary amount in effect at the time. In the event of a change of
control of the Company (as defined in the Bubar Agreement), and, if within one
year of the change of control, Mr. Bubar’s employment with the Company is
terminated by the Company or Mr. Bubar elects to terminate the Bubar Agreement,
the Company will be obligated to pay to Mr. Bubar a lump sum in cash equal to
three times his annual base salary amount in effect at the time.
Andersen Employment Agreement
The Company employs R. James Andersen as the Company’s
Vice-President, Finance and CFO pursuant to an employment agreement effective
January 1, 2011 (the “Andersen Agreement”). The Andersen Agreement is for an
indefinite term and can be terminated by either party. If the Andersen Agreement
is terminated by Mr. Andersen, Mr. Andersen must provide notice of at least 30
days and Mr. Andersen is entitled to be paid the then current salary under the
Andersen Agreement prorated until the end of the notice period, and thereafter
all obligations of the Company to Mr. Andersen will terminate. If the Andersen
Agreement is terminated by the Company without cause, the Company will pay to
Mr. Andersen a lump sum payment equal to three times his annual base salary
amount in effect at the time. In the event of a change of control of the Company
(as defined by the Andersen Agreement) and if within one year of the change of
control, Mr. Andersen’s employment with the Company is terminated or in the
event Mr. Bubar’s employment with the Company is terminated, Mr. Andersen can
elect to terminate the Andersen Agreement and the Company will be obligated to
pay to Mr. Andersen a lump sum in cash equal to three times his annual base
salary amount in effect at the time.
Marsh Employment Agreement
The Company employs David Marsh as the Company’s Senior
Vice-President, Metallurgy and Technology Development pursuant to an employment
agreement effective August 1, 2012 (the “Marsh Agreement”). The Marsh Agreement
is for an indefinite term and can be terminated by either party. If the Marsh
Agreement is terminated by Mr. Marsh, Mr. Marsh must provide notice of at least
30 days and Mr. Marsh is entitled to be paid the then current salary under the
Marsh Agreement prorated until the end of the notice period, and thereafter all
obligations of the Company to Mr. Marsh will terminate. If the Marsh Agreement
is terminated by the Company without cause, the Company will pay to Mr. Marsh a
lump sum payment equal to three months of salary plus one month of salary for
every full or partial year of employment, recognizing that Mr. Marsh’s
employment began on August 1, 2012, to a maximum of 12 months. In the event of a
change of control of the Company (as defined in the Marsh Agreement) and
if within one year of the change of control, Mr. Marsh’s employment with the
Company is terminated by the Company, the Company will pay to Mr. Marsh a lump
sum in cash equal to 12 months of salary plus an additional one month’s salary
for every full or partial year of employment, recognizing that Mr. Marsh’s
employment began on August 1, 2012, to a maximum of 24 months.
| Avalon Rare Metals Inc.
|
Page 20 |
| Information Circular as of and dated
January 12, 2016 |
|
Mercer Employment Agreement
The Company employs William Mercer as the Company’s
Vice-President Exploration pursuant to an employment agreement effective January
1, 2011 (the “Mercer Agreement”). The Mercer Agreement is for an indefinite term
and can be terminated by either party. If the Mercer Agreement is terminated by
Mr. Mercer, Mr. Mercer must provide notice of at least 30 days, and Mr. Mercer
is entitled to be paid the then current salary under the Mercer Agreement
prorated until the end of the notice period, and thereafter all obligations of
the Company to Mr. Mercer will terminate. If the Mercer Agreement is
terminated by the Company without cause, the Company will pay to Mr. Mercer a
lump sum payment equal to three months of salary plus one month of salary for
every full or partial year of employment, recognizing that Mr. Mercer’s
employment began on January 1, 2011, to a maximum of 24 months. In the event of
a change of control of the Company (as defined in the Mercer Agreement) and if
within one year of the change of control, Mr. Mercer’s employment with the
Company is terminated by the Company, the Company will pay to Mr. Mercer a lump
sum in cash equal to 12 months of salary plus an additional one month’s salary
for every full or partial year of employment, recognizing that Mr. Mercer’s
employment began on January 1, 2011, to a maximum of 24 months.
Neatby Employment Agreement
The Company employs Pierre Neatby as the Company’s
Vice-President, Sales and Marketing pursuant to an employment agreement
effective January 1, 2011 (the “Neatby Agreement”). The Neatby Agreement is for
an indefinite term and can be terminated by either party. If the Neatby
Agreement is terminated by Mr. Neatby, Mr. Neatby must provide notice of at
least 30 days, and Mr. Neatby is entitled to be paid the then current salary
under the Neatby Agreement prorated until the end of the notice period, and
thereafter all obligations of the Company to Mr. Neatby will terminate.
If the Neatby Agreement is terminated by the Company without cause, the Company
will pay to Mr. Neatby a lump sum payment equal to three months of salary plus
one month of salary for every full or partial year of employment, recognizing
that Mr. Neatby’s employment began on July 1, 2010, to a maximum of 24 months.
In the event of a change of control of the Company (as defined in the Neatby
Agreement) and if within one year of the change of control, Mr. Neatby’s
employment with the Company is terminated by the Company, the Company will pay
to Mr. Neatby a lump sum in cash equal to 12 months of salary plus an additional
one month’s salary for every full or partial year of employment, recognizing
that Mr. Neatby’s employment began on July 1, 2010, to a maximum of 24
months.
Severance Payments after Termination or
Termination after a Change of Control
If a severance payment triggering event had occurred on August
31, 2015, the severance payments that would be contractually payable to each of
the Named Executive Officers after termination and after termination following a
change of control would be approximately as follows:
| Name |
Termination
without a
change of control
of the Company ($) |
Termination
following a
change of control
of the Company ($) |
| Donald Bubar |
1,200,000 |
1,200,000 |
| R. James Andersen |
825,000 |
900,000 |
| David Marsh |
210,000 |
480,000 |
| William Mercer |
173,333 |
368,333 |
| Pierre Neatby |
195,000 |
390,000 |
| Total |
2,603,333 |
3,338,333 |
| Avalon Rare Metals Inc.
|
Page 21 |
| Information Circular as of and dated
January 12, 2016 |
|
Outstanding Option-Based and Share-Based
Awards
The following table sets out, for each Named Executive Officer,
the incentive options (option-based awards) and share-based awards, outstanding
as at August 31, 2015. The closing price of the Company’s shares on the TSX on
August 31, 2015 was $0.17.
| Name |
Option-Based Awards |
Share-Based Awards |
Number
of
securities
underlying
unexercised
options
(#) |
Option
exercise
price
($) |
Option
expiration
date
|
Value of
unexercised
in-the-
money
options(1)
($) |
Number
of
shares or
units of
shares that
have not
vested
(#) |
Market
or
payout
value of
share-based
awards that
have not
vested
($) |
Market
or
payout
value of
vested
share-
based
awards not
paid out or
distributed
($) |
| Donald Bubar |
300,000(3) |
8.62 |
Apr27/16 |
Nil |
Nil |
Nil |
Nil |
| 250,000(3) |
2.62 |
Nov28/16 |
| 200,000(2) |
1.75 |
Aug31/17 |
| 200,000(2) |
1.19 |
Feb28/18 |
| 150,000(3) |
0.59 |
Jan06/19 |
| 200,000(2) |
0.81 |
Mar04/19 |
| 150,000(4) |
0.22 |
Nov23/19 |
| 200,000(2) |
0.36 |
Feb29/20 |
| R. James Andersen |
150,000(3) |
4.07 |
Dec21/15 |
Nil |
Nil |
Nil |
Nil |
| 200,000(3) |
4.47 |
Aug31/16 |
| 120,000(2) |
1.75 |
Aug31/17 |
| 120,000(2) |
0.88 |
May31/18 |
| 150,000(3) |
0.59 |
Jan06/19 |
| 120,000(2) |
0.54 |
May31/19 |
| 125,000(4) |
0.22 |
Nov23/19 |
| 120,000(2) |
0.30 |
May31/20 |
| David Marsh |
400,000(2) |
1.54 |
Jul01/17 |
Nil |
Nil |
Nil |
Nil |
| 40,000(2) |
0.59 |
Jan06/19 |
| 120,000(2) |
0.54 |
May31/19 |
| 125,000(4) |
0.22 |
Nov23/19 |
| 120,000(2) |
0.30 |
May31/20 |
| 70,000(4) |
0.21 |
Aug06/20 |
| William Mercer |
400,000(3) |
1.59 |
Jun20/17 |
Nil |
Nil |
Nil |
Nil |
| 80,000(2) |
0.70 |
Dec01/18 |
| 100,000(4) |
0.22 |
Nov23/19 |
| Avalon Rare Metals Inc.
|
Page 22 |
| Information Circular as of and dated
January 12, 2016 |
|
| |
Option-Based Awards |
Share-Based Awards |
| Name |
Number of
securities
underlying
unexercised
options
(#) |
Option
exercise
price
($) |
Option
expiration
date |
Value of
unexercised
in-the-
money
options(1)
($) |
Number of
shares or
units of
shares that
have not
vested
(#) |
Market or
payout
value of
share-based
awards that
have not
vested
($) |
Market or
payout
value of
vested
share-
based
awards not
paid out or
distributed
($) |
| |
80,000(2) |
0.22 |
Nov30/19 |
|
|
|
|
| Pierre Neatby |
80,000(2) |
1.75 |
Aug03/17 |
Nil |
Nil |
Nil |
Nil |
| 80,000(2) |
0.88 |
May31/18 |
| 80,000(2) |
0.54 |
May31/19 |
| 50,000(4) |
0.22 |
Nov23/19 |
| 80,000(2) |
0.30 |
May31/20 |
| 100,000(4) |
0.21 |
Aug06/20 |
|
Notes:
(1) The value of the in-the-money options currently held by
each Named Executive Officer is based on the closing market price of the
Company’s common shares on the TSX as at August 31, 2015, being $0.17,
less the option exercise price.
(2) These options vest as
to 25% thereof on each of the first four anniversaries of the date of
grant thereof and have a term of five years.
(3) These
options vest as to 50% thereof on each of the date of grant and the first
anniversary thereof and have a term of five years.
(4)
These options were 100% vested on the date of grant and have a term of
five years.
|
Value Vested or Earned During the Year
The following table sets forth, for each Named Executive
Officer, the value of all incentive plan awards vested or earned during the year
ended August 31, 2015:
| Name |
Option-Based Awards-
Value vested during
the year
($) (1) |
Share-Based Awards-
Value vested during
the year
($) |
Non-Equity Incentive
Plan Compensation-
Value
earned during
the year
($) |
| Donald Bubar |
Nil |
Nil |
Nil |
| R. James Andersen |
Nil |
Nil |
Nil |
| David Marsh |
Nil |
Nil |
Nil |
| William Mercer |
Nil |
Nil |
Nil |
| Pierre Neatby |
Nil |
Nil |
Nil |
|
Note:
(1) The value of the options vested during the year for
each Named Executive Officer is based on the closing market price of the
Company’s common shares on the TSX on the vesting date less the option
exercise price.
|
| Avalon Rare Metals Inc.
|
Page 23 |
| Information Circular as of and dated
January 12, 2016 |
|
There are no pension plan benefits in place for the Named
Executive Officers.
| H. |
Termination and Change of Control
Benefits |
Except as set forth above under “Employment Contracts”, the
Company is not party to any compensatory plan, contract or arrangement where a
Named Executive Officer is entitled to receive any compensation from the
Company in the event of resignation, retirement or any other termination of
employment of such persons, change of control of the Company or a change in the
Named Executive Officer's responsibilities following a change of control.
The following table describes director compensation for
non-executive directors for the year ended August 31, 2015:
| Name(1) |
Fees
earned
($) |
Share-
based
awards
($)(2) |
Option-
based
awards
($)(3) |
Non-equity
incentive plan
compensation
($)(4) |
Pension
value
($)(5) |
All other
compensation
($)(6) |
Total
compensation
($) |
| Alan Ferry |
20,600 |
Nil |
4,283 |
Nil |
Nil |
Nil |
24,883 |
| Phil Fontaine |
17,800 |
Nil |
40,254 |
Nil |
Nil |
Nil |
58,054 |
| Brian MacEachen |
30,100 |
Nil |
5,139 |
Nil |
Nil |
Nil |
35,239 |
| Sergio
Marchi(7) |
3,000 |
Nil |
4,283 |
Nil |
Nil |
Nil |
7,283 |
| Peter McCarter |
24,350 |
Nil |
4,283 |
Nil |
Nil |
Nil |
28,633 |
| Kenneth G. Thomas |
20,600 |
Nil |
4,283 |
Nil |
Nil |
Nil |
24,883 |
|
Notes:
(1) This director compensation table does not include
information for Donald Bubar who is both a director and a Named Executive
Officer. The compensation paid to Mr. Bubar for the financial year ended
August 31, 2015 has been reflected in the Named Executive Officer summary
compensation table. The Company did not pay any additional compensation to
Mr. Bubar for serving as a director of the Company.
(2) The Company does not currently have any share-based
award plans.
(3) These amounts represent the “grant date fair value” of
options granted to the respective director, which have been determined by
using the Black-Scholes model, a mathematical valuation model that
ascribes a value to an option based on a number of factors in valuing the
option-based awards, including the exercise price of the option, the price
of the underlying security on the date the option was granted, and
assumptions with respect to the volatility of the price of the underlying
security and the risk-free rate of return. Calculating the value of
options using this methodology is very different from a simple
“in-the-money” value calculation. In fact, options that are well
out-of-the-money can still have a significant “grant date fair value”
based in a Black-Scholes valuation, especially where, as in the case of
the Company, the price of the common shares underlying the option is
highly volatile. Accordingly, caution must be exercised in comparing grant
date fair value amounts with cash compensation or an in-the-money option
value calculation. The same caution applies to the total compensation
amounts shown in the last column above, which are based in part the grant
date fair value amounts set out in the column for Option-based awards.
These values are consistent with the accounting values used in the
Company’s financial statements. The Company selected the Black-Scholes
model given its prevalence of use within North America.
(4) The Company does not have a non-equity incentive plan.
(5) The Company does not have any pension plans.
(6) The Company does not have any other benefit plans for
its directors.
(7) Mr. Marchi served as a director until February 24,
2015.
|
| Avalon Rare Metals Inc.
|
Page 24 |
| Information Circular as of and dated
January 12, 2016 |
|
Compensation of Directors
During calendar 2014, directors of the Company (excluding
Donald Bubar, who is an officer of the Company) were paid a base yearly fee of
$24,000 plus a fee of $800 per Board or Committee meeting attended in person or
by conference telephone. An additional fee of $6,000 was paid to each of the
Chair of the Board and the Chair of any other permanent committee of the
Board.
Commencing January 1, 2015, the ongoing directors’ fees were
halved with the result that the directors thereafter are paid a base yearly fee
of $12,000 plus a fee of $400 per Board or committee meeting attended in person
or by conference telephone. An additional fee of $3,000 will be paid to each of
the Chair of the Board and the Chair of any other permanent committee of the
Board. As partial compensation for this reduction, each director (other than Mr.
MacEachen and Mr. Bubar) was granted options to purchase 50,000 common shares of
the Company and Mr. MacEachen was granted options to purchase 60,000 common
shares. All of the foregoing options were granted effective November 24, 2014,
have an exercise price of $0.22 per share, have a five year term and vested
immediately. Commencing January 1, 2016, the directors’ base yearly fee was
reduced again to $10,000.
In addition, pursuant to the Stock Option Plan, the Company
typically grants options to purchase common shares to directors of the Company.
An aggregate of 485,000 options were granted to the directors during the year
ended August 31, 2015.
Directors are also reimbursed for their out-of-pocket expenses
incurred in attending directors’ and committee meetings.
The directors are indemnified by the Company against all costs,
charges and expenses reasonably incurred by such director in respect of any
action or proceeding to which such director is made a party by reason of being a
director of the Company, subject to the limitations in respect thereof contained
in the Act..
The Company maintains insurance coverage with respect of
directors’ and officers’ liability which is limited to $20,000,000 per claim and
$20,000,000 per policy period, subject to deductibles of $150,000 to $250,000 as
defined in the policy. The current policy is for a one-year term and expires on
July 20, 2016. The premium paid by the Company in respect of said insurance in
fiscal 2015 was $119,978.
Option-Based and Share-Based Awards to
Directors
The table below sets out for each non-officer director the
incentive options (option-based awards) and share-based awards outstanding as of
August 31, 2015. The closing price of the Company’s shares on the TSX on August
31, 2015 was $0.17.
| Avalon Rare Metals Inc.
|
Page 25 |
| Information Circular as of and dated
January 12, 2016 |
|
| Name(1)(2) |
Option-Based Awards |
Share-Based Awards |
Number
of
securities
underlying
unexercised
options
(#) |
Option
exercise
price
($) |
Option
expiration
date
|
Value of
unexercised
in-the-
money
options(3)
($) |
Number
of
shares or
units of
shares that
have not
vested
(#) |
Market
or
payout
value of
share-based
awards that
have not
vested
($) |
Market
or
payout
value of
vested
share-
based
awards not
paid out or
distributed
($) |
| Alan Ferry |
50,000(4) |
3.43 |
Dec01/16 |
Nil |
Nil |
Nil |
Nil |
| 50,000(4) |
1.99 |
Aug27/17 |
| 50,000(4) |
0.99 |
Apr29/18 |
| 50,000(4) |
0.84 |
Mar05/19 |
| 75,000(4) |
0.48 |
Jul14/19 |
| 50,000(5) |
0.22 |
Nov23/19 |
| Phil Fontaine |
50,000(4) |
3.43 |
Dec01/16 |
Nil |
Nil |
Nil |
Nil |
| 175,000(4) |
0.47 |
Sep03/19 |
| 50,000(5) |
0.22 |
Nov23/19 |
| Brian MacEachen |
50,000(4) |
3.43 |
Dec01/16 |
Nil |
Nil |
Nil |
Nil |
| 50,000(4) |
1.01 |
Apr19/18 |
| 50,000(4) |
0.99 |
Apr29/18 |
| 50,000(4) |
0.72 |
Mar12/19 |
| 75,000(4) |
0.48 |
Jul14/19 |
| 60,000(5) |
0.22 |
Nov23/19 |
| Peter McCarter |
50,000(4) |
3.43 |
Dec01/16 |
Nil |
Nil |
Nil |
Nil |
| 175,000(4) |
1.44 |
Nov27/17 |
| 50,000(5) |
0.22 |
Nov23/19 |
| Kenneth G. Thomas |
225,000(3) |
0.81 |
Mar04/19 |
Nil |
Nil |
Nil |
Nil |
| 50,000(5) |
0.22 |
Nov23/19 |
Notes:
(1) This table does not
include information for Donald Bubar who is both a director and a Named
Executive Officer. See “Incentive Plan Awards” above. The Company did not
pay any additional compensation to Mr. Bubar for serving as a director of
the Company.
(2) The value of unexercised in-the-money
options is calculated by determining the difference between the market
value of the underlying securities at August 31, 2015 and the exercise
price of the options. The closing market price of the Company's common
shares as at August 31, 2015 was $0.17 per common share.
(3) These options vest as to 25% thereof on each of the
first four anniversaries of the date of grant thereof and have a term of
five years.
(4) These options vest as to 50% thereof on
each of the date of grant and the first anniversary thereof and have a
term of five years.
(5) These options were 100% vested on
the date of grant and have a term of five years. |
| Avalon Rare Metals Inc.
|
Page 26 |
| Information Circular as of and dated
January 12, 2016 |
|
Value Vested or Earned During the Year
The following table sets forth, for each non-officer director,
the value of all incentive plan awards vested or earned during the year ended
August 31, 2015:
| Name(1) |
Option-Based
Awards-
Value vested during
the year
($)(2) |
Share-Based
Awards-
Value vested during
the year
($) |
Non-Equity
Incentive
Plan Compensation-
Value earned during
the year
($) |
| Alan Ferry |
Nil |
Nil |
Nil |
| Phil Fontaine |
Nil |
Nil |
Nil |
| Brian MacEachen |
Nil |
Nil |
Nil |
| Sergio Marchi(3) |
Nil |
Nil |
Nil |
| Peter McCarter |
Nil |
Nil |
Nil |
| Kenneth G. Thomas |
Nil |
Nil |
Nil |
Notes:
(1) This table does not
include information for Donald Bubar who is both a director and a Named
Executive Officer. See “Incentive Plans Awards” above. The Company did not
pay any additional compensation to Mr. Bubar for serving as a
(2) The value of the options vested during the year for
each director is based on the closing market price of the Company’s common
shares on the TSX on the vesting date less the option exercise price.
(3) Mr. Marchi served as a director until February 24,
2015. |
SECURITIES AUTHORIZED FOR ISSUANCE
UNDER EQUITY COMPENSATION PLANS
The following table provides information as at August 31, 2015
with respect to common shares issuable by the Company pursuant to the Stock
Option Plan, the only equity compensation plan of the Company:
| Plan Category |
Number
of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
(#) |
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
first
column)
(#) |
| Equity compensation plans approved by securityholders
(1) |
9,775,000 |
1.56 |
5,503,548 |
| Equity compensation plans not approved by securityholders |
N/A |
N/A |
N/A |
| Total |
9,775,000 |
1.56 |
5,503,548 |
Note:
(1) The Stock
Option Plan had 5,503,548 options available for issuance which, when added
to the 9,775,000 outstanding options, is equal to 10% of the Company’s
issued capital as at August 31, 2015. |
|
|
| Avalon Rare Metals Inc.
|
Page 27 |
| Information Circular as of and dated
January 12, 2016 |
|
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE
OFFICERS
There is no indebtedness of any director, executive officer,
employee, former directors, former executive officers or former employees, or
proposed nominee for election as a director of the Company to, or guaranteed or
supported by, the Company or any subsidiary thereof either pursuant to an
employee stock purchase program or any other programs of the Company or a
subsidiary or otherwise, nor has there been any such indebtedness of the Company
to, or guaranteed or supported by, the Company or any subsidiary during the
financial year ended August 31, 2015.
INTEREST OF CERTAIN PERSONS IN MATTERS TO
BE ACTED UPON
No person who has been a director or an executive officer of
the Company at any time since the beginning of its last financial year, no
person or company by whom, or on whose behalf, directly or indirectly,
solicitation has been made, no proposed nominee for election as a director of
the Company, nor any associate or affiliate of the aforementioned persons 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 Meeting, except
as disclosed in this Information Circular.
INTEREST OF INFORMED PERSONS IN MATERIAL
TRANSACTIONS
Other than as disclosed herein, no informed person (within the
meaning of National Instrument 51-102 – Continuous Disclosure
Obligations) of the Company, no proposed nominee for election as a director
of the Company, nor any associate or affiliate of any of the foregoing has or
had any material interest, direct or indirect, in any transaction since the
commencement of the Company’s most recently completed financial year or in any
proposed transaction which has materially affected or would materially affect
the Company or any of its subsidiaries.
STATEMENT OF CORPORATE GOVERNANCE
PRACTICES
National Instrument 58-101 – Disclosure of Corporate
Governance Practices (“NI 58-101”) requires that if management of an issuer
solicits proxies from its securityholders for the purpose of electing directors
that certain prescribed disclosure in respect of corporate governance matters be
included in its information circular. The TSX also requires listed companies to
provide, on an annual basis, the corporate governance disclosure which is
prescribed by NI 58-101.
The prescribed corporate governance disclosure for the Company
is that contained in Form 58-101F1 which is attached to NI 58-101 (“Form
58-101F1 Disclosure”). Schedule A attached hereto sets forth the corporate
governance practices of the Company, relative to Form 58-101F1 Disclosure.
ADDITIONAL INFORMATION
Additional information relating to the Company can be found at
www.sedar.com and on the Company’s website at
www.avalonraremetals.com. Financial information is provided in the
Company’s comparative financial statements and related management’s discussion
and analysis for the financial year ended August 31, 2015.
| Avalon Rare Metals Inc.
|
Page 28 |
| Information Circular as of and dated
January 12, 2016 |
|
A copy of the following documents may be obtained, without
charge, upon request to the Corporate Secretary of the Company at Suite 1901,
130 Adelaide Street West, Toronto, Ontario, Canada M5H 3P5, Telephone: (416)
364-4938, Fax: (416) 364-5162:
| (a) |
the comparative financial statements of the Company for
the financial year ended August 31, 2015 together with the accompanying
report of the auditors thereon and related management’s discussion and
analysis and any interim financial statements of the Company for periods
subsequent to August 31, 2015 and related management’s discussion and
analysis; and |
| |
|
| (b) |
this Information Circular. |
APPROVAL
The contents of this Information Circular and the sending
thereof to the shareholders of the Company have been approved by the directors
of the Company.
DATED at Toronto, Ontario this 12th day of January,
2016.
By ORDER of the Board of Directors
 |
| Donald S. Bubar |
| President and Chief Executive Officer |
| Avalon Rare Metals Inc.
|
Page 29 |
| Information Circular as of and dated
January 12, 2016 |
|
SCHEDULE A
CORPORATE GOVERNANCE DISCLOSURE
National Policy 58-201 – Corporate Governance Guidelines
establishes corporate governance guidelines which apply to all public
companies. The Company has reviewed its own corporate governance practices in
light of these guidelines and, as prescribed by NI 58-101, hereby discloses its
corporate governance practices.
|
Disclosure Requirements |
Comments |
|
Disclose the identity of directors who are independent. |
• Alan Ferry
• Phil Fontaine
• Brian MacEachen
• Peter McCarter
• Kenneth G. Thomas
• Jane Pagel (proposed
director)
For more information about each director, please refer to the
section entitled “Election of Directors” of this Information Circular. |
|
Disclose the identity of directors who are not
independent, and describe the basis for that determination. |
Donald Bubar, the President and Chief Executive Officer
of the Company, is considered not independent by virtue of his position
with the Company. |
|
Disclose whether or not a majority of directors are
independent. |
The Board is currently composed of six directors. After
consideration of the criteria set forth in applicable securities
legislation, the Board has concluded that five of the current directors
are independent. |
| Avalon Rare Metals Inc.
|
Page 30 |
| Information Circular as of and dated
January 12, 2016 |
|
| Disclosure Requirements |
Comments |
|
If a director is presently a director of another issuer
that is a reporting issuer (or the equivalent) in a jurisdiction or a
foreign jurisdiction, identify both the director and the other issuer. |
• Donald Bubar – Not applicable
• Alan Ferry – GPM Metals Inc., Guyana Goldfields Inc. and
Plateau Uranium Inc.
• Phil Fontaine – Chieftain Metals
Inc., Chieftain Metals Corp. and Plutonic Power Corporation
• Brian MacEachen – Not applicable
• Peter
McCarter – Not applicable
• Kenneth G. Thomas -
Continental Gold Inc. and Candente Gold Corporation
• Jane
Pagel (proposed director) – BluMetric Environmental Inc. |
|
Disclose whether or not the independent directors hold
regularly scheduled meetings at which non- independent directors and
members of management are not in attendance. If the independent directors
hold such meetings, disclose the number of meetings held since the
beginning of the issuer’s most recently completed financial year. |
The Board meets without management present (and therefore
without the presence of non- independent directors) at the end of Board
meetings. In the fiscal year ended August 31, 2015, five such in camera
meetings were held. |
|
Disclose whether or not the chair of the board is an
independent director. If the board has a chair or lead director who is an
independent director, disclose the identity of the independent chair or
lead director, and describe his role and responsibilities. |
Brian MacEachen is the Chair of the Board and is an
independent director. The Chair has the responsibility, among other
things, of ensuring that the Board discharges its responsibilities
effectively. The Chair acts as a liaison between the Board and the
President and CEO and chairs Board meetings. |
| Avalon Rare Metals Inc.
|
Page 31 |
| Information Circular as of and dated
January 12, 2016 |
|
|
Disclosure Requirements |
Comments |
|
Disclose the attendance record of each director for all
board meetings held since the beginning of the issuer’s most recently
completed financial year. |
The Board held six meetings in the financial year ended
August 31, 2015 with the attendance record of each director as follows:
• Alan Ferry – 6/6 board meetings
• Donald Bubar – 6/6
board meetings
• Phil Fontaine – 5/6 board meetings
•
Brian MacEachen – 6/6 board meetings
• Sergio Marchi – 0/3
board meetings1
• Peter McCarter – 6/6 board
meetings
• Kenneth G. Thomas – 5/6 board meetings
• Jane Pagel (proposed director) – N/A |
|
Disclose the text of the board’s written mandate. |
Refer to Appendix “A” following this section. |
|
Disclose whether or not the board has developed written
position descriptions for the chair and the chair of each board committee.
If the board has not developed written position descriptions for the chair
and/or the chair of each board committee, briefly describe how the board
delineates the role and responsibilities of each such positions. |
The Board has developed and adopted a written position
description for each of the following, as recommended by the CSA
Guidelines:
• Chair of the Board;
• Chair
of the Audit Committee; and
• Chair of the CGN Committee |
|
Disclose whether or not the board and CEO have developed
a written position description for the CEO. If the board and CEO have not
developed such a position description, briefly describe how the board
delineates the role and responsibilities of the CEO. |
The Board and the President and CEO have developed a
written position description for the President and CEO, and the Board has
adopted such position description. |
_____________________________________________
1
Mr. Marchi served as a director until February 24, 2015.
| Avalon Rare Metals Inc.
|
Page 32 |
| Information Circular as of and dated
January 12, 2016 |
|
| Disclosure Requirements |
Comments |
|
Briefly describe what measure the board takes to orient
new directors regarding:
(i) the role of the board, its committees and
its directors, and
(ii) the nature and operation of the issuer’s
business. |
The Company holds an orientation program for new
directors. For the fiscal year ended August 31, 2015, the Company did not
have any new directors. A manual enclosing copies of all corporate
policies and mandates is distributed to the new directors. The Company
distributes copies of corporate policies and mandates if and when updates
are undertaken. In addition, the Board as a whole and the Company
informally provide such orientation and education as required. The Board
has had significant input into the Company’s strategic plan, which has
resulted in a significant increase in the level of education provided to
the Board. In light of the Company’s size and scope of operations, the
Board believes this approach is practical and effective. |
|
Briefly discuss what measures, if any, the board takes to
provide continuing education for its directors. If the board does not
provide continuing education, describe how the board ensures that its
directors maintain the skill and knowledge necessary to meet their
obligations as directors. |
There is currently no formal continuing education program
in place. Each director is responsible for ensuring that he or she
maintains the skill and knowledge necessary to meet his or her obligations
as a director, and directors are entitled, at the Company’s expense, to
attend seminars they determine necessary to keep them up-to-date with
current issues relevant to their service as directors of the Company. |
| Avalon Rare Metals Inc.
|
Page 33 |
| Information Circular as of and dated
January 12, 2016 |
|
|
Disclosure Requirements |
Comments |
|
Disclose whether or not the board has adopted a written
code for the directors, officers and employees. If the board has adopted a
written code:
(i) disclose how a person or company may obtain a copy of
the code,
(ii) describe how the board monitors compliance with its
code, or if the board does not monitor compliance, explain whether and how
the board satisfies itself regarding compliance with its code, and
(iii) provide a cross-reference to any material change
report filed since the beginning of the issuer’s most recently completed
financial year that pertains to any conduct of a director or executive
officer that constitutes a departure from the code.
|
The Board has adopted a written Code of Business Conduct
and Ethics which is reviewed on a yearly basis by the Board. In the 2015
fiscal year no conflicts of interest were identified.
(i) the Company’s Code of Business Conduct and Ethics
referred to above can be viewed on the Company’s website at www.avalonraremetals.com or a copy may be obtained by
written request to the Company’s Corporate Secretary, at Suite 1901, 130
Adelaide Street West, Toronto, Ontario, Canada M5H 3P5.
(ii) the Board monitors compliance with its Code of
Business Conduct and Ethics by requiring that each director, officer and
employee annually affirm, in writing, that he or she has read and
understood the Code of Conduct and has agreed to abide by it in all
aspects.
(iii) none.
|
|
Describe any steps the board takes to ensure directors
exercise independent judgment in considering transactions and agreements
in respect of which a director or executive officer has a material
interest.
|
Each director and executive officer is required to fully
disclose his or her interest in respect of any transaction or agreement to
be entered into by the Company. Once such interest has been disclosed, the
Board as a whole determines the appropriate level of involvement the
director or executive officer should have in respect of the transaction or
agreement. |
| Avalon Rare Metals Inc.
|
Page 34 |
| Information Circular as of and dated
January 12, 2016 |
|
| Disclosure Requirements |
Comments |
|
Describe any other steps the board takes to encourage and
promote a culture of ethical business conduct. |
In addition to the Code of Business Conduct and Ethics,
the Board has also adopted a Sustainability Policy which has replaced the
Company’s former Safety and Environmental Policy that was adopted by the
Board in 2006. The Sustainability Policy builds on the measureable
framework concept that was included in the Company’s former Safety and
Environmental Policy and sets out more detailed action items for each of
the four categories of Health and Safety, Environment, Community and
People. The Company believes that sustainability means adopting leading
industry standards for the management of health, safety and the
environment, transparently engaging with local communities and
stakeholders, treating those with whom the Company works with respect and
creating a workplace where employees are valued, engaged and encouraged to
succeed.
A description of each of the four sustainability
categories follows:
• Health and Safety – As a core value, the
Company’s objective is to create an injury free workplace and to enhance
the wellbeing of employees, contractors and the communities in which it
operates.
• Environment - The preservation and
protection of the long term health, function and viability of the natural
environment is a key objective.
• Community – The Company is committed to
being a responsible corporate citizen and contributing to the social and
economic well- being of the communities associated with its activities.
• People - A workplace based on mutual
respect, fairness and integrity is a fundamental component of the
Company’s core values. The Company creates a workplace where employees are
encouraged to innovate and grow within the organization over the long
term. |
| Avalon Rare Metals Inc.
|
Page 35 |
| Information Circular as of and dated
January 12, 2016 |
|
|
Disclosure Requirements |
Comments |
|
Describe the process by which the board identifies new
candidates for board nomination. |
The CGN Committee is responsible for recommending
candidates for nomination to the Board, and governing the desirable
characteristics for directors. In making such recommendations, the CGN
Committee considers:
(a) the competencies and skills that the Board considers to
be necessary for the Board, as a whole, to possess; (b)
the competencies and skills that the Board considers each existing
director to possess; and
(c) the competencies and skills each new nominee will bring
to the boardroom. |
|
Disclose whether or not the board has a nominating
committee composed entirely of independent directors. |
The CGN Committee is composed of three directors, all of
whom are independent. |
|
If the board has a nominating committee, describe the
responsibilities, powers and operation of the nominating committee. |
The CGN Committee is responsible for, among other things,
identifying and recommending to the Board new candidates for the Board,
annually reviewing the credentials of existing Board members to assess
their suitability for re-election and ensuring that appropriate
orientation and continuing education programs for new Board members and
continuing education, as required, for all Board members are in place.
The
CGN Committee meets as often as is necessary to carry out its
responsibilities.
The CGN Committee is permitted access to all records and
corporate information that it determines are required in order to perform
its duties. The CGN Committee has the authority to engage independent
counsel and other advisors as it determines necessary to carry out its
duties and to set and pay the compensation for any advisors engaged by it. |
| Avalon Rare Metals Inc.
|
Page 36 |
| Information Circular as of and dated
January 12, 2016 |
|
|
Disclosure Requirements |
Comments |
|
Describe the process by which the board determines
compensation for the issuer’s directors and officers. |
The CGN Committee of the Board is responsible for
reviewing the compensation of the Company’s directors and officers and
making recommendations to the Board with respect thereto. See also
“Statement of Executive Compensation – B. Compensation Discussion and
Analysis” of this Information Circular. |
|
Disclose whether or not the board has a compensation
committee composed entirely of independent directors. |
The CGN Committee is composed of three directors, all of
whom are independent. |
|
If the board has a compensation committee, describe the
responsibilities, powers and operation of the compensation committee. |
The CGN Committee reviews compensation levels for all
officers and in particular compensation levels for the CEO. The CGN
Committee is responsible for, among other things, developing or approving
performance goals and corporate objectives which the President and CEO is
responsible for meeting, determining or recommending to the Board the
compensation of the President and CEO, and reviewing the adequacy and form
of compensation of the Board and members of the committees of the Board in
light of the responsibilities and risks involved in being a director, in
the case of the Board, and a Chair, in the case of Board committees.
The
CGN Committee meets as often as is necessary to carry out its
responsibilities. The CGN Committee is permitted access to all records and
corporate information that it determines are required in order to perform
its duties. The CGN Committee has the authority to engage independent
counsel and other advisors as it determines necessary to carry out its
duties and to set and pay the compensation for any advisors engaged by it. |
| Avalon Rare Metals Inc.
|
Page 37 |
| Information Circular as of and dated
January 12, 2016 |
|
|
Disclosure Requirements |
Comments |
|
If a compensation consultant or advisor has, at any time
since the beginning of the issuer’s most recently completed financial
year, been retained to assist in determining compensation for any of the
issuer’s directors and officers, disclose the identity of the consultant
or advisor and briefly summarize the mandate for which they have been
retained. If the consultant or advisor has been retained to perform any
other work for the issuer, state that fact and briefly describe the nature
of the work. |
Not applicable. |
|
If the board has standing committees other than the
audit, compensation and nominating committees, identify the committees and
describe their function. |
The governance responsibilities in the CGN Committee’s
mandate include:
• to develop and enforce policy in the area of corporate
governance and the practices of the Board in light of the Company’s
particular circumstances, the changing needs of investors and the Company,
and changes in corporate governance guidelines;
• to
prepare and recommend to the Board annually a statement of corporate
governance practices to be included in the Company’s information circular
and ensure that such disclosure is complete and provided in accordance
with the regulatory requirements;
• to monitor developments in
the area of corporate governance and the practices of the Board and advise
the Board accordingly; and
• to develop, implement and maintain appropriate policies
with respect to disclosure, confidentiality and insider trading.
|
| Avalon Rare Metals Inc.
|
Page 38 |
| Information Circular as of and dated
January 12, 2016 |
|
|
Disclosure Requirements |
Comments |
|
Disclose whether or not the board, its committees and
individual directors are regularly assessed with respect to their
effectiveness and contribution. If assessments are regularly conducted,
describe the process used for the assessments. |
The CGN Committee of the Board has implemented a process
for periodically assessing the effectiveness of the Board as a whole, as
well as its committees and individual directors. As part of the assessment
process, each director receives a comprehensive survey which covers, among
other matters, the overall functioning of the Board and each Board
committee, including its composition, structure and processes; the
management structure and reporting functions; the Company’s strategic
direction and commitment to sustainability; the Board’s operational
oversight, the Board’s relationship with management; and other relevant
aspects of the Board’s responsibilities and processes. The completed
surveys are then compiled into a report which is provided to the CGN
Committee. The CGN Committee reviews the results of the Board surveys and
puts forward any recommendations it feels appropriate to address any
comments or concerns expressed by directors. The report, along with the
recommendations of the CGN Committee, is then presented to the Board for
further discussion. |
|
|
|
|
If assessments are not regularly conducted, describe how
the board satisfies itself that the board, its committees, and its
individual directors are performing effectively. |
Historically, Board effectiveness has been assessed by
the Board as a whole, considering the operation of the committees of the
Board, the adequacy of information provided to the directors, the quality
of communication between the Board and management and the historic growth
and performance of the Company. The Board undertook a formal assessment
process in the 2015 fiscal year. |
| Avalon Rare Metals Inc.
|
Page 39 |
| Information Circular as of and dated
January 12, 2016 |
|
| Disclosure Requirements |
Comments |
| Disclose whether or not the issuer has adopted term limits
for the directors on its board or other mechanisms of board renewal and,
if so, include a description of those director term limits or other
mechanisms of board renewal. If the issuer has not adopted director term
limits or other mechanisms of board renewal, disclose why it has not done
so. |
The Company has not adopted term limits for
directors. The Company believes that in taking into account the nature and
size of the Board and the Company, it is more important to have relevant
experience than to impose set time limits on a director’s tenure, which
may create vacancies at a time when a suitable candidate cannot be
identified and as such would not be in the best interests of the Company.
In lieu of imposing term limits, the Company regularly encourages sharing
and new perspectives through regularly scheduled Board meetings, meetings
with only independent directors in attendance, as well as through
continuing education initiatives. The CGN Committee is responsible for
analyzing the skills and experience necessary for the Board and evaluating
the need for director changes to ensure that the Company has highly
knowledgeable and motivated Board members, while ensuring that new
perspectives are available to the Board. |
| Avalon Rare Metals Inc.
|
Page 40 |
| Information Circular as of and dated
January 12, 2016 |
|
|
Disclosure Requirements |
Comments |
|
Disclose whether the issuer has adopted a written policy
relating to the identification and nomination of women directors. If the
issuer has not adopted such a policy, disclose why it has not done so.
Disclose whether and, if so, how the board or nominating
committee considers the level of representation of women on the board in
identifying and nominating candidates for election or reelection to the
board. If the issuer does not consider the level of representation of
women on the board in identifying and nominating candidates for election
or re-election to the board, disclose the issuer’s reasons for not doing
so.
Disclose whether and, if so, how the issuer considers the
level of representation of women in executive officer positions when
making executive officer appointments. If the issuer does not consider the
level of representation of women in executive officer positions when
making executive officer appointments, disclose the issuer’s reasons for
not doing so.
Disclose whether the issuer has adopted a target
regarding women on the issuer’s board. If the issuer has not adopted a
target, disclose why it has not done so.
Disclose whether the issuer has adopted a target
regarding women in executive officer positions of the issuer. If the
issuer has not adopted a target, disclose why it has not done so.
Disclose the number and proportion (in percentage terms)
of directors on the issuer’s board who are women.
Disclose the number and proportion (in percentage terms)
of executive officers of the issuer, including all major subsidiaries of
the issuer, who are women. |
The Company has not adopted a written policy on the
identification and nomination of female executive officers or directors,
or a target for the number of women in these roles. The Company currently
has six directors and six executive officers, none of whom is female
(being 0% of the directors and 0% of the executive officers,
respectively). Of the Company’s seven officers, one is female (being
approximately 14% of the officers).
The Company does not believe that quotas, strict rules or
targets necessarily result in the identification or selection of the best
candidates for directors or officers of the Company. However, it is
mindful of the benefit of diversity in the workplace and on the Board, and
the need to maximize its effectiveness and the effectiveness of the Board
and the Board’s decision-making abilities. The CGN Committee is committed
to a merit-based system for Board composition, with an aim to retain the
most qualified candidates for the applicable position. The CGN Committee
and the Board are also committed to equality of opportunity and take
concrete steps to increase the representation of women in management
within the Company. |
| Avalon Rare Metals Inc.
|
Page 41 |
| Information Circular as of and dated
January 12, 2016 |
|
| Disclosure Requirements |
Comments |
|
The audit committee should be composed entirely of
independent directors and should have a specifically defined mandate. |
The Board has an Audit Committee composed of three
directors, each of whom is independent. (Messrs. MacEachen, Ferry and
McCarter). A copy of the Audit Committee Charter can be found on the
Company’s website. Additional information regarding the Audit Committee is
contained in the Company’s annual report on Form 20-F for the year ended
August 31, 2015 (the “Form 20-F”) under the heading “Committees – Audit
Committee”. The Form 20-F is available under the Company’s profile on
SEDAR at www.sedar.com. |
| Avalon Rare Metals Inc.
|
Page 42 |
| Information Circular as of and dated
January 12, 2016 |
|
APPENDIX A
AVALON RARE METALS INC.
(the “Company”)
MANDATE OF THE BOARD OF DIRECTORS
Mandate
The Board of Directors (the “Board”) of the Company is
responsible for, on behalf of the shareholders, the stewardship of the Company
and, in particular, for the supervision of the management of its business and
affairs.
The Board discharges its responsibilities directly and through
delegation to the various committees of the Board.
Directors of the Company are to exercise their business
judgement in a manner consistent with their fiduciary duties. In particular,
directors are required to act honestly and in good faith, with a view to the
best interests of the Company and to exercise the care, diligence and skill that
a reasonably prudent person would exercise in comparable circumstances.
Duties and Responsibilities
| 1. |
Managing the Affairs of the Board |
Subject to their legal obligations and to the Articles and
By-laws of the Company, the Board retains the responsibility for managing its
own affairs, including:
| |
a. |
planning its composition and size; |
| |
|
|
| |
b. |
selecting its Chair; |
| |
|
|
| |
c. |
nominating candidates for election to the
Board; |
| |
|
|
| |
d. |
creating committees and appointing the members of such
committees; determining director compensation; and |
| |
|
|
| |
e. |
determining director
compensation. |
| 2. |
Oversight of Management and Human
Resources |
Board has the responsibility for:
| |
a. |
the appointment and succession of the Chief Executive
Officer (the "CEO") and other officers of the Company, the monitoring of
the performance of the CEO and other officers of the Company, and the
providing of advice and counsel to the CEO and other officers of the
Company in the execution of their duties; |
| Avalon Rare Metals Inc.
|
Page 43 |
| Information Circular as of and dated
January 12, 2016 |
|
| |
b. |
approving decisions relating to senior management,
including: |
| |
i. |
the appointment of officers; |
| |
|
|
| |
ii. |
the compensation, including incentive compensation, of
the officers of the Company; |
| |
|
|
| |
iii. |
succession planning; and |
| |
|
|
| |
iv. |
the employment contracts, termination and other special
arrangements with executive officers, or other employee
groups; |
| |
c. |
approving and/or reviewing certain matters relating to
all employees, including: |
| |
i. |
annual salary policies and/or programs; |
| |
|
|
| |
ii. |
benefit and incentive
programs; |
| 3. |
Business Strategy and Objectives |
The Board has the responsibility to:
| |
a. |
participate with management in the development of, and
ultimately approve, the Company’s strategic plan and objectives; |
| |
|
|
| |
b. |
approve the entering into, or withdrawing from, areas of
business that are, or are likely to be, significant or material to the
Company; |
| |
|
|
| |
c. |
approve material investments, acquisitions and
divestitures by the Company; |
| |
|
|
| |
d. |
approve major transactions and contracts and other
arrangements or commitments that may have a significant or material impact
on the Company; and |
| |
|
|
| |
e. |
review management’s implementation of appropriate
community and environmental stewardship and safety and health management
systems and programs. |
| 4. |
Financial and Corporate Issues |
The Board has the responsibility to:
| |
a. |
approve the annual and quarterly financial statements of
the Company, including the notes thereto, and the release thereof by
management; |
| |
|
|
| |
b. |
under the auspices of the Audit
Committee: |
| |
i. |
oversee the processes implemented to ensure that the
financial performance and results of the Company are reported fairly,
accurately and in a timely manner in accordance with generally accepted
accounting standards and in compliance with legal and regulatory
requirements; and |
| |
|
|
| |
ii. |
monitor the implementation, reliability and integrity of
the Corporation’s internal control and management information
systems; |
| |
c. |
approve an annual budget and operating plan for the
Company and monitor the Company’s performance against such budget and
plan; and |
| |
|
|
| |
d. |
approve debt and equity financings, listings of
securities and other matters related to the capital of the
Company. |
| Avalon Rare Metals Inc.
|
Page 44 |
| Information Circular as of and dated
January 12, 2016 |
|
| 5. |
Business and Risk Management |
The Board has the responsibility to:
| |
a. |
review with management (a) the processes utilized by
management to identify, assess and manage risk and (b) review the
implementation by management of appropriate systems to manage such risks;
and |
| |
|
|
| |
b. |
receive regular reports from management on matters
relating to health, safety, community relations and the
environment. |
| 6. |
Policies and Procedures |
The Board has the responsibility to:
| |
a. |
direct management to ensure the Company operates at all
times within applicable laws and regulations and to the highest ethical
and moral standards and promote a culture of integrity throughout the
Company consistent with the Company’s Code of Business Conduct and
Ethics; |
| |
|
|
| |
b. |
review management’s implementation of appropriate
community and environmental stewardship and safety and health management
systems; |
| |
|
|
| |
c. |
develop the Company’s approach to corporate governance,
including developing a set of corporate governance principles and
guidelines that are applicable to the Company; and |
| |
|
|
| |
d. |
develop and/or approve all requisite or appropriate Board
charters, policies and procedures and review regularly the content
thereof. |
| 7. |
Compliance Reporting and Corporate
Communications |
The Board has the responsibility to:
| |
a. |
oversee the implementation of policies to foster the
timely disclosure of any developments that have a significant and/or
material impact on the value of the Company and/or its shares; |
| |
|
|
| |
b. |
approve the Management Proxy Circular, Annual Information
Form, Management’s Discussion and Analysis, the Annual Report and all
other corporate disclosure documents; |
| |
|
|
| |
c. |
ensure the Company has in place effective communication
processes with shareholders and other stakeholders, with financial,
regulatory and other recipients and with the media; and |
| |
|
|
| |
d. |
approve interaction with shareholders on all items
requiring shareholder response or approval. |
Approved by the Board of Directors on January 29, 2013.
| Avalon Rare Metals Inc.
|
Page 45 |
| Information Circular as of and dated
January 12, 2016 |
|
APPENDIX B
AVALON RARE
METALS INC.
(the “Company”)
PROPOSED BY-LAW #2
BE IT ENACTED AND IT IS HEREBY ENACTED as a by-law of Avalon
Rare Metals Inc. (the "Company") as follows:
ADVANCE NOTICE OF NOMINATION OF DIRECTORS
1. General By-law No. 1 of the by-laws
of the Company is hereby amended by adding thereto, following Section 3.04A,
following Section 3.04 of By-Law No. 1 and preceding the current Section 3.05 of
By-law No. 1:
“3.04A
Nomination of directors
Subject only to the Act and the
articles of the Company, only individuals who are nominated in accordance with
the following procedures shall be eligible for election as directors of the
Company. Nominations of individuals for election to the board may be made at any
annual meeting of shareholders, or at any special meeting of shareholders if one
of the purposes for which the special meeting was called was the election of
directors, (a) by or at the direction of the board or an authorized officer of
the Company, including pursuant to a notice of meeting, (b) by or at the
direction or request of one or more shareholders pursuant to a proposal made in
accordance with the provisions of the Act or a requisition of the shareholders
made in accordance with the provisions of the Act or (c) by any person (a
“Nominating Shareholder”) (i) who, at the close of business on the date of the
giving of the notice provided for below in this Section 3.04A and on the record
date for notice of such meeting, is entered in the securities register as a
holder of one or more shares carrying the right to vote at such meeting or who
beneficially owns shares that are entitled to be voted at such meeting and (ii)
who complies with the notice procedures set forth below in this Section 3.04A:
|
|
a) |
In addition to any other applicable requirements, for a
nomination to be made by a Nominating Shareholder, the Nominating
Shareholder must have given timely notice thereof in proper written form
to the secretary of the Company at the principal executive offices of the
Company in accordance with this Section 3.04A. |
|
|
|
|
|
|
b) |
To be timely, a Nominating Shareholder’s notice to the
secretary of the Company must be made (a) in the case of an annual meeting
of shareholders, not less than thirty (30) days prior to the date of the
annual meeting of shareholders; provided, however, that in the event that
the annual meeting of shareholders is called for a date that is less than
fifty (50) days after the date (the “Notice Date”) on which the first
public announcement of the date of the annual meeting was made, notice by
the Nominating Shareholder may be made not later than the close of
business on the tenth (10th) day following the Notice Date; and
(b) in the case of a special meeting (which is not also an annual meeting)
of shareholders called for the purpose of electing directors (whether or
not called for other purposes), not later than the close of business on
the fifteenth (15th) day following the day on which the first
public announcement of the date of the special meeting of shareholders was
made.. |
|
|
|
|
|
|
|
c)
|
To be in proper written form, a Nominating Shareholder’s
notice to the secretary of the Company must set forth (a) as to each
person whom the Nominating Shareholder proposes to nominate for election
as a director (i) the name, age, business address and residence address of
the person, (ii) the principal occupation or employment of the person,
(iii) the class or series and number of shares in the capital of the Company which are controlled or
which are owned beneficially or of record by the person as of the record date
for the meeting of shareholders (if such date shall then have been made publicly
available and shall have occurred) and as of the date of such notice, and (iv)
any other information relating to the person that would be required to be
disclosed in a dissident’s proxy circular in connection with solicitations of
proxies for election of directors pursuant to the Act and Applicable Securities
Laws (as defined below); and (b) as to the Nominating Shareholder giving the
notice, any proxy, contract, arrangement, understanding or relationship pursuant
to which such Nominating Shareholder has a right to vote any shares of the
Company and any other information relating to such Nominating Shareholder that
would be required to be made in a dissident’s proxy circular in connection with
solicitations of proxies for election of directors pursuant to the Act and
Applicable Securities Laws (as defined below). |
| Avalon Rare Metals Inc.
|
Page 46 |
| Information Circular as of and dated
January 12, 2016 |
|
| |
d) |
No person shall be eligible for election as a director of
the Company unless nominated in accordance with the provisions of this
Section 3.04A; provided, however, that nothing in this Section 3.04A shall
be deemed to preclude discussion by a shareholder (as distinct from
nominating directors) at a meeting of shareholders of any matter in
respect of which it would have been entitled to submit a proposal pursuant
to the provisions of the Act. The chairperson of the meeting shall have
the power and duty to determine whether a nomination was made in
accordance with the procedures set forth in the foregoing provisions and,
if any proposed nomination is not in compliance with such foregoing
provisions, to declare that such defective nomination shall be
disregarded. |
| |
|
|
| |
e) |
For purposes of this Section 3.04A, (i) “public
announcement” shall mean disclosure in a press release reported by a
national news service in Canada, or in a document publicly filed by the
Company under its profile on the System of Electronic Document Analysis
and Retrieval at www.sedar.com; and (ii) “Applicable Securities Laws”
means the applicable Securities Act of each relevant province and
territory of Canada, as amended from time to time, the rules, regulations
and forms made or promulgated under any such statute and the published
national instruments, multilateral instruments, policies, bulletins and
notices of the securities commission and similar regulatory authority of
each province and territory of Canada. |
| |
|
|
| |
f) |
Notwithstanding any other provision of the by-laws of the
Company, notice given to the secretary of the Company pursuant to this
Section 3.04A may only be given by personal delivery, facsimile
transmission or by email (at such email address as stipulated from time to
time by the secretary of the Company for purposes of this notice), and
shall be deemed to have been given and made only at the time it is served
by personal delivery, email (at the address as aforesaid) or sent by
facsimile transmission (provided that receipt of confirmation of such
transmission has been received) to the secretary at the address of the
principal executive offices of the Company; provided that if such delivery
or electronic communication is made on a day which is not a business day
or later than 5:00 p.m. (Toronto time) on a day which is a business day,
then such delivery or electronic communication shall be deemed to have
been made on the subsequent day that is a business day. |
| |
|
|
| |
g) |
Notwithstanding the foregoing, the board may, in its sole
discretion, waive any requirement in this Section
3.04A.” |
2. General By-law No. 1, as amended
from time to time, of the by-laws of the Company and this by-law shall be read
together and shall have effect, so far as practicable, as though all the
provisions thereof were contained in one by-law of the Company. All terms
contained in this by-law which are defined in General By-law No. 1, as amended
from time to time, of the by-laws of the Company shall, for all purposes hereof,
have the meanings given to such terms in the said General By-law No. 1 unless
expressly stated otherwise or the context otherwise requires.
| Avalon Rare Metals Inc.
|
Page 47 |
| Information Circular as of and dated
January 12, 2016 |
|
 |
200 University Ave., Suite 300
Toronto,
Ontario M5H 4H1
T 416.361.0930 F 416.361.0470 |
VIA ELECTRONIC TRANSMISSION
January 19, 2016
TO ALL APPLICABLE EXCHANGES AND COMMISSIONS:
| RE: |
AVALON RARE METALS INC |
We are pleased to confirm that copies of the following
proxy-related materials were mailed on January 18, 2016 to the registered
shareholders and the Non-Objecting Beneficial Owners ("NOBO"):
| |
1 |
Proxy with Request for Financial Statements -
Registered Shareholders |
| |
2 |
Voting Instruction Form with Request for
Financial Statements - NOBOs |
|
3 |
Notice of Meeting and Management Information
Circular (Including Financial Statements and MD & A) - Registered
Shareholders |
|
4 |
Notice of Meeting and Management Information
Circular- NOBO's Requesting Full Package |
| |
5 |
President's Letter- Registered Shareholders and
NOBO's Requesting Full Package |
| |
6 |
Proxy Return Envelope |
Yours truly,
TMX Equity Transfer Services
''Lori Winchester''
Senior Relationship Manager
Lori.Winchester@tmx.com
www.TMXEquityTransferServices.com
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