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 MAY, 2017
Commission File Number: 0-55139
QUATERRA RESOURCES INC.
(Translation of registrant's name into English)
1100-1199 West Hastings Street
Vancouver, BC V6E 3T5 Canada
(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.
[ x ] Form 20-F [ ] 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): [ ]
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): [ ]
SUBMITTED HEREWITH
Exhibits
99.1 | Notice of Annual General Meeting | |
99.2 | Information Circular | |
99.3 | Form of Proxy | |
99.4 | Financial Statements Request Form |
SIGNATURES
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.
QUATERRA RESOURCES INC. | ||
(Registrant) | ||
Date: May 23, 2017 | By: | /s/ Lei Wang |
Lei Wang | ||
Title: | Chief Financial Officer |
NOTICE OF 2017 ANNUAL GENERAL MEETING OF SHAREHOLDERS
TAKE NOTICE that the 2017 Annual General Meeting of the shareholders of QUATERRA RESOURCES INC. (hereinafter called the "Company") will be held at Suite 1100, 1199 West Hastings Street, Vancouver, British Columbia V6E 3T5 on
Thursday, June 22, 2017
at the hour of 10:00 oclock in the morning (Vancouver time) for the following purposes:
1. |
to receive the financial statements of the Company for the fiscal year ended December 31, 2016 and the report of the auditor thereon; |
2. |
to appoint an auditor for the ensuing year; |
3. |
to determine the number of directors and to elect directors; |
4. |
to approve the Companys 2017 Rolling Incentive Stock Option Plan described in the Information Circular; and |
5. |
transact any other business that may properly come before the Meeting and any adjournment thereof. |
An Information Circular and a form of Proxy accompany this Notice. The Information Circular provides additional information relating to the matters to be dealt with at the Meeting and forms part of this Notice.
Registered shareholders are entitled to vote at the Meeting in person or by proxy. Registered shareholders who are unable to attend the Meeting, or any adjournment thereof, in person, are requested to read, complete, sign and return the form of Proxy accompanying this Notice in accordance with the instructions set out in the form of Proxy and in the Information Circular accompanying this Notice. Unregistered shareholders who received the form of Proxy accompanying this Notice through an intermediary must deliver the Proxy in accordance with the instructions given by such intermediary.
DATED at Vancouver, British Columbia, this 15th day of May 2017.
BY ORDER OF THE BOARD OF DIRECTORS
OF QUATERRA
RESOURCES INC.
Thomas Patton
Thomas Patton
Chief Executive Officer
QUATERRA RESOURCES INC.
1100 1199 West Hastings
Street, Vancouver, B.C. V6E 3T5
Telephone: (604) 681-9059 Fax: (604)
641-2740
www.quaterra.com
MANAGEMENT INFORMATION CIRCULAR
AS AT AND DATED
MAY 15, 2017
(Unless otherwise noted;
All $ references in US dollars)
This Management Information Circular (Information Circular) accompanies the Notice of the 2017 Annual General Meeting (Notice of Meeting) of holders of common shares (shareholders) of Quaterra Resources Inc. (the Company) scheduled to be held on Thursday, June 22, 2017 (the Meeting), and is furnished in connection with a solicitation of proxies for use at that Meeting and at any adjournment or postponement thereof.
PERSONS OR COMPANIES MAKING THE SOLICITATION
THE FORM OF PROXY ACCOMPANYING THIS INFORMATION CIRCULAR
IS
BEING SOLICITED BY MANAGEMENT OF THE COMPANY
Solicitations will be made by mail and possibly supplemented by telephone, electronic means or other personal contact to be made without special compensation by directors, officers and employees of the Company. The Company may reimburse shareholders nominees or agents for the cost incurred in obtaining from their principals authorization to execute forms of proxy. It is not anticipated that any solicitation will be made by specially engaged employees or soliciting agents. The cost of solicitation will be borne by the Company.
No person has been authorized to give any information or to make any representation other than as contained in this Information Circular in connection with the solicitation of proxies. If given or made, such information or representations must not be relied upon as having been authorized by the Company. The delivery of this Information Circular shall not create, under any circumstances, any implication that there has been no change in the Information set forth herein since the date of this Information Circular. This Information Circular does not constitute the solicitation of a proxy by anyone in any jurisdiction in which such solicitation is not authorized, or in which the person making such solicitation is not qualified to do so, or to anyone to whom it is unlawful to make such an offer of solicitation.
APPOINTMENT OF PROXYHOLDER
Only registered shareholders or duly appointed proxyholders are permitted to vote at the Meeting. Those shareholders so desiring may be represented by proxy at the Meeting. The persons named in the form of proxy accompanying this Information Circular are directors and/or officers of the Company (Management Appointees). A shareholder has the right to appoint a person or company (who need not be a shareholder) to attend and act on the shareholders behalf at the Meeting other than the Management Appointees. To exercise this right, the shareholder must either insert the name of the desired person in the blank space provided in the form of proxy accompanying this Information Circular and strike out the names of the Management Appointees or submit another proper form of proxy.
NON-REGISTERED SHAREHOLDERS
Only shareholders whose names appear on the records of the Company (registered shareholders) or duly appointed proxyholders are permitted to vote at the Meeting. Most shareholders of the Company are not registered shareholders because the shares they own are not registered in their names. More particularly, a person is not a registered shareholder in respect of shares which are held on behalf of that person (the Non-Registered Holder) but which are registered either (a) in the name of an intermediary (an Intermediary) that the Non-Registered Holder deals with in respect of the shares including, among others, banks, trust companies, securities dealers or brokers and trustees or administrators of self-administered RRSPs, RRIFs, RESPs and similar plans; or (b) in the name of a clearing agency such as The Canadian Depository for Securities Limited (CDS) of which the Intermediary is a participant. In accordance with current securities regulatory policy, the Company has distributed proxy-related materials for the Meeting (collectively, the Meeting Materials) to the clearing agencies and Intermediaries.
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Current securities regulatory policy requires Intermediaries to forward the Meeting Materials to, and to seek voting instructions from, Non-Registered Holders unless a Non-Registered Holder has waived the right to receive them. Intermediaries will often use service companies to forward the Meeting Materials to Non-Registered Holders. Generally, Non-Registered Holders who have not waived the right to receive Meeting Materials will either:
(a) |
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 shares beneficially owned by the Non-Registered Holder but which is otherwise not completed. Because the Intermediary has already signed the form of proxy, this form of proxy is not required to be signed by the Non -Registered Holder when submitting the proxy. In this case, the Non - Registered Holder who wishes to submit a proxy should otherwise properly complete this form of proxy and submit it to the Company, c/o Computershare Investor Services Inc., 9th Floor, 100 University Avenue, Toronto, Ontario M5J 2Y1, fax number 416-263-9261; or | |
(b) |
more typically, be given a voting instruction or proxy authorization form which is not signed by the Intermediary, and which, when properly completed and signed by the Non - Registered Holder and returned to the Intermediary or its service company, (such as Broadridge Financial Solutions Inc.), will constitute voting instructions (often called a proxy authorization form) which the Intermediary must follow. Typically, the proxy authorization form will consist of a one page pre-printed form. Sometimes, instead of the one page pre- printed form, the proxy authorization form will consist of a regular printed proxy form accompanied by a page of instructions which contains a removable label containing a bar- code and other information. In order for this proxy form to validly constitute a proxy authorization form, the Non-Registered Holder must remove the label from the instructions and affix it to the proxy form, properly complete and sign the proxy form and return it to the Intermediary or its service company, or otherwise communicate voting instructions to the Intermediary or its service company (by way of telephone or the Internet, for example) in accordance with the instructions of the Intermediary or its service company. A Non- Registered Holder cannot use a proxy authorization form to vote shares directly at the Meeting. |
In either case, the purpose of this procedure is to permit Non-Registered Holders to direct the voting of the shares which they beneficially own.
The Meeting Materials are being sent to both registered and non-registered owners of shares. If you are a Non-Registered Holder and the Company or its agent has sent the Meeting Materials directly to you as a non-objecting beneficial owner under National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer (NI 54-101), your name and address and information about your holdings of securities have been obtained in accordance with applicable securities regulatory requirements from the Intermediary holding shares on your behalf. By choosing to send the Meeting Materials to you directly, the Company (and not the Intermediary holding shares on your behalf) has assumed responsibility for (i) delivering the Meeting Materials to you, and (ii) executing your proper voting instructions. Please return your voting instructions as specified in the request for voting instructions.
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Management of the Company intends to pay for Intermediaries to forward to objecting beneficial owners under NI 54-101 the Meeting Materials and Form 54-101F7 Request for Voting Instructions Made by Intermediary.
Non-Registered Holders cannot be recognized at the Meeting for purposes of voting their shares in person or by way of depositing a form of proxy. If you are a Non-Registered Holder and wish to vote in person at the Meeting, please see the voting instructions you received or contact your Intermediary well in advance of the Meeting to determine how you can do so.
Non-Registered Holders should carefully follow the voting instructions they receive, including those on how and when voting instructions are to be provided, in order to have their shares voted at the Meeting.
DEPOSIT AND VOTING OF PROXIES
To be effective, the instrument of proxy must be dated and signed and, together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy thereof, deposited either at the office of Computershare Investor Services Inc., 9th Floor, 100 University Avenue, Toronto, Ontario M5J 2Y1, or at the office of the Company at Suite 1100, 1199 West Hastings Street, Vancouver, BC V6E 3T5, not less than 48 hours, excluding Saturdays, Sundays, and holidays, prior to the time of the holding of the Meeting or any adjournment or postponement thereof. Late proxies may be accepted or rejected by the Chairman of the Meeting in the Chairmans discretion, and the Chairman is under no obligation to accept or reject any particular late proxy.
THE SHARES REPRESENTED BY A PROPERLY EXECUTED AND DEPOSITED PROXY WILL BE VOTED OR WITHHELD FROM VOTING ON EACH MATTER REFERRED TO IN THE NOTICE OF MEETING IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN (PROVIDED SUCH INSTRUCTIONS ARE CERTAIN) ON ANY BALLOT THAT MAY BE CALLED FOR AND, IF A CHOICE IS SPECIFIED WITH RESPECT TO ANY MATTER TO BE ACTED UPON AT THE MEETING, THE SHARES SHALL BE VOTED OR WITHHELD FROM VOTING ACCORDINGLY. WHERE NO CHOICE IS SPECIFIED IN RESPECT OF ANY MATTER TO BE ACTED UPON AND ONE OF THE MANAGEMENT APPOINTEES IS NAMED IN THE FORM OF PROXY TO ACT AS THE SHAREHOLDERS PROXYHOLDER, THE SHARES REPRESENTED BY THE PROXY WILL BE VOTED IN FAVOUR OF ALL SUCH MATTERS. THE FORM OF PROXY ACCOMPANYING THIS INFORMATION CIRCULAR GIVES THE PERSON OR COMPANY NAMED AS PROXYHOLDER DISCRETIONARY AUTHORITY REGARDING AMENDMENTS OR VARIATIONS TO MATTERS IDENTIFIED IN THE NOTICE OF MEETING AND OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING. IN THE EVENT THAT AMENDMENTS OR VARIATIONS TO MATTERS IDENTIFIED IN THE NOTICE OF MEETING ARE PROPERLY BROUGHT BEFORE THE MEETING OR ANY OTHER BUSINESS IS PROPERLY BROUGHT BEFORE THE MEETING, IT IS THE INTENTION OF THE MANAGEMENT APPOINTEES TO VOTE IN ACCORDANCE WITH THEIR BEST JUDGMENT ON SUCH MATTERS OR BUSINESS ON ANY BALLOT THAT MAY BE CALLED FOR. AT THE TIME OF PRINTING THIS INFORMATION CIRCULAR, MANAGEMENT KNOWS OF NO SUCH AMENDMENTS, VARIATIONS OR OTHER MATTERS WHICH MAY BE BROUGHT BEFORE THE MEETING.
REVOCABILITY OF PROXY
In addition to revocation in any other manner permitted by law, a proxy may be revoked by instrument in writing executed by the registered shareholder or the registered shareholders attorney authorized in writing, or if the registered shareholder is a corporation, by a duly authorized officer or attorney thereof, and deposited either at the registered office of the Company at any time up to and including the last business day preceding the day of the Meeting, or any adjournment or postponement thereof, or, as to any matter in respect of which a vote shall not already have been cast pursuant to such proxy, with the Chairman of the Meeting on the day of the Meeting, or any adjournment or postponement thereof, and upon either of such deposits the proxy is revoked.
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Only registered shareholders have the right to revoke a proxy. Non-Registered Holders who wish to change their vote must arrange for their Intermediaries to revoke the proxy on their behalf.
INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON
Except as otherwise disclosed, to the knowledge of the Company, no director or executive officer since the commencement of the Companys last completed fiscal year, and no proposed nominee for election as a director, or any associate or affiliate of the foregoing persons, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any of the matters to be acted upon at the Meeting other than the election of directors.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Company`s authorized share structure consists of an unlimited number of common shares without par value. There is one class of shares only and there are 200,969,314 common shares issued and outstanding. Shareholders of record as of May 15, 2017 will be entitled to receive notice of and to vote at the Meeting.
At a General Meeting of the Company, on a show of hands, every registered shareholder 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. Shares represented by proxy will only be voted as to the number of shares represented if a poll or ballot is called for. A poll or ballot may be requested by a registered shareholder or proxyholder present and entitled to vote at the Meeting or required because the number of votes attached to shares represented by proxies that are to be voted against a matter is greater than 5% of the votes attached to all shares that are entitled to be voted and to be represented at the Meeting.
To the knowledge of the directors and executive officers of the Company, as at the date of this Information Circular, no person or company beneficially owns, or controls or directs, directly or indirectly, voting securities carrying 10% or more of the outstanding voting rights of the Company.
ELECTION OF DIRECTORS
Each director of the Company is elected annually and holds office until the next Annual General Meeting of the shareholders unless that person ceases to be a director before then. Unless such authority is withheld, the Management Appointees intend to vote the shares represented by proxy for the election of the nominees herein listed on any poll or ballot that may be called for.
MANAGEMENT DOES NOT CONTEMPLATE THAT ANY OF THE NOMINEES HEREIN LISTED WILL BE UNABLE TO SERVE AS A DIRECTOR. IN THE EVENT THAT PRIOR TO THE MEETING ANY VACANCIES OCCUR IN THE SLATE OF NOMINEES HEREIN LISTED, IT IS INTENDED THAT DISCRETIONARY AUTHORITY SHALL BE EXERCISED BY THE MANAGEMENT APPOINTEES, IF NAMED IN THE PROXY, TO VOTE THE SHARES REPRESENTED BY PROXY FOR THE ELECTION OF ANY OTHER PERSON OR PERSONS AS DIRECTORS UNLESS THE SHAREHOLDER HAS SPECIFIED THAT THE SHARES REPRESENTED BY PROXY ARE TO BE WITHHELD FROM VOTING IN THE ELECTION OF DIRECTORS.
4
Management proposes that the number of directors for the Company be determined at five (5) for the ensuing year, subject to such increases as may be permitted by the Articles of the Company, and that each of the following persons be nominated for election as a director of the Company for the ensuing year. Information concerning these persons, as furnished by the individual nominees, is as follows:
Name, Jurisdiction of Residence and Position with the Company |
Principal Occupation,
Business or Employment |
Director Since
|
Number of Securities
Beneficially Owned, Directly or Indirectly, or Controlled or Directed |
Thomas C. Patton Washington, USA Chairman, CEO and Director |
Chairman and CEO of the Company | November 1998 | 5,214,762(1) |
Gerald Prosalendis British Columbia, Canada President, COO and Director |
President and COO of the Company | June 23, 2016 | 318,451 |
John Kerr British Columbia, Canada Director |
Geological Engineer | May 1993 | 103,334 |
LeRoy Wilkes Colorado, USA Director |
Retired Mining Executive | August 2006 | 115,428 |
Terrence Eyton British Columbia, Canada Director |
Chartered Accountant | March 2015 | 345,000(2) |
(1) |
Thomas Patton directly holds 3,114,762 common shares and indirectly has control over 2,100,000 common shares. |
(2) |
Terrence Eyton directly holds 135,000 common shares and indirectly has control over 210,000 common shares. |
The Companys Audit Committee is currently comprised of Terrence Eyton (Chair), John Kerr and LeRoy Wilkes. The current members of the Corporate Governance, Nomination and Compensation Committee are LeRoy Wilkes (Chair), Terrence Eyton and John Kerr. The Company also has a Safety, Health, Security and Environment Committee, the members of which are John Kerr (Chair), Thomas Patton and Terrence Eyton.
Unless otherwise instructed, the persons named in the accompanying form of proxy intend to vote FOR the election of the foregoing individuals as directors until the close of the next annual general meeting of the Shareholders or until their successors are otherwise elected or appointed.
Majority Voting
The Company has adopted a Majority Voting Policy in its Corporate Governance Principles. Pursuant to this Policy, any nominee proposed for election as a director in an uncontested election who receives, from the shares voted at the meeting in person or by proxy, a greater number of shares withheld than shares voted in favour of his or her election, must promptly tender his or her resignation to the Chairman of the Board. Any such resignation shall take effect upon acceptance by the Board. The Compensation and Nomination Committee will expeditiously consider the directors offer to resign and, unless there are extraordinary circumstances, will recommend to the Board to accept such resignation. The Board will have 90 days to make a final decision and announce such decision, including any reasons for not accepting a resignation, by way of a press release. The applicable director will not participate in any Committee or Board deliberations after the resignation offer. The Corporate Governance Committee charter is available on the Companys website at www.quaterra.com.
Cease Trade Orders, Penalties and Bankruptcies
Except as otherwise disclosed in this Information Circular, to the knowledge of the Company, no director:
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a. is, as at the date of this Information Circular, or has been, within 10 years before the date of this Information Circular, a director, chief executive officer or chief financial officer of any company (including the Company) that:
(i) |
was subject to an order that was issued while the proposed director was acting in the capacity as director, chief executive officer or chief financial officer; | |
(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 a director, chief executive officer or chief financial officer; |
b. is, as at the date of this Information Circular, or has been within 10 years before the date of this Information Circular, 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;
c. has within 10 years before the date of this Information Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director;
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 before December 31, 2000, the disclosure of which would likely be important to a reasonable securityholder in deciding whether to vote for a proposed director; | |
(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; or |
e. is to be elected under any arrangement or understanding between the proposed director and any other person or company, except the directors and executive officers of the Company acting solely in such capacity.
For the purpose of the paragraphs above, order means: (i) a cease trade order; (ii) an order similar to a cease trade order; or (iii) 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.
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APPOINTMENT OF AUDITORS
At the Meeting, shareholders will be requested to re-appoint PricewaterhouseCoopers LLP, Chartered Professional Accountants as auditors of the Company to hold office until the next annual meeting of shareholders or until a successor is appointed, and to authorize the Board of Directors to fix the auditors remuneration. PricewaterhouseCoopers LLP was first appointed auditors of the Company on October 7, 2016.
The person(s) designated by management of the Company in the enclosed form of proxy intend to vote FOR the re-appointment of PricewaterhouseCoopers LLP, Chartered Professional Accountants, as auditors of the Company to hold office until the next annual meeting of shareholders or until a successor is appointed and the authorization of the Board of Directors to fix the remuneration of the auditors.
STOCK OPTION PLAN
At the Meeting, the shareholders will be asked to approve the Companys stock option plan (the Plan) and the number of common shares reserved for issuance under the Plan in accordance with and subject to the rules and policies of the TSX Venture Exchange (TSXV).
The purpose of the Plan is to provide the directors, officers and key employees of, and certain other persons who provide services to the Company and its subsidiaries with an opportunity to purchase shares of the Company and benefit from any appreciation in the value of the Companys shares. This will provide an increased incentive for these individuals to contribute to the future success and prosperity of the Company, thus enhancing the value of the Companys shares for the benefit of all the shareholders and increasing the ability of the Company and its subsidiaries to attract and retain skilled and motivated individuals in the service of the Company.
The proposed Plan is a rolling plan that provides that the aggregate number of shares reserved for issuance under it, and all of the Companys other previously established and outstanding stock option plans or grants, will not exceed 10% of the Companys issued common shares at the time of the grant of a stock option under the proposed Plan.
The proposed Plan provides that the option exercise price, as determined by the Board of Directors with recommendations from the Companys Corporate Governance, Nomination and Compensation Committee, must not be less than the closing price of the Companys common shares on the TSXV on the day immediately preceding the date of grant, less the applicable discount permitted by the policies of the TSXV. The maximum term of the options granted under the Plan is ten years from the date of grant; however the normal term of the options is five years. The Board of Directors of the Company, with recommendations from the Companys Corporate Governance, Nomination and Compensation Committee, may determine the limitation period during which an option may be exercised and, notwithstanding that none may be required by the policies of the TSXV whether a particular grant will have a minimum vesting period. In the event of resignation or termination of an optionee, such optionee may exercise options held by such optionee for a period of 90 days following the effective date of such resignation or for a time as otherwise determined by a directors resolution at the time of the grant of the options. In the event of an optionees death, the stock option may be exercised by a qualified successor until the earlier of a period of one year from the date of such death and the expiry date of the stock option. Any amendment to the proposed Plan will require the approval of the TSXV and may require shareholder approval.
The granting of stock options under the proposed Plan is restricted as follows: (a) the number of options granted to a consultant in a 12-month period must not exceed 2% of the issued shares of the Company at the time of grant of the stock option; and (b) the aggregate number of options granted to employees involved in investor relations activities must not exceed 2% of the issued shares of the Company in any 12-month period, at the time of grant of the stock option.
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In accordance with the terms of the proposed Plan, it is subject to its acceptance for filing by the Exchange and the approval of the Companys shareholders. Under the policies of the TSXV, if
a. the grants of options under the proposed Plan to insiders of the Company, together with all of the Companys outstanding stock options, could result at any time in:
i. the number of shares reserved for issuance pursuant to stock options granted to insiders of the Company exceeding 10% of the issued common shares of the Company; or
ii. the grant to insiders of the Company, within a 12-month period, of a number of options exceeding 10% of the issued common shares of the Company; or
b. the number of shares reserved for issuance pursuant to stock options granted to any one optionee, within a 12-month period, exceeding 5% of the issued common shares of the Company;
such shareholder approval must be disinterested shareholder approval, but as the proposed Plan is restrictive as to these results, disinterest shareholder approval of the proposed Plan is not required.
The policies of the TSXV and the terms of the proposed Plan also provide that disinterested shareholder approval will be required for any agreement to decrease the exercise price of options previously granted to insiders of the Company but no such agreements are being brought before the Meeting.
The term disinterested shareholder approval means approval by a majority of the votes cast at the Meeting other than votes attaching to shares of the Company beneficially owned by insiders of the Company to whom options may be granted under the proposed Plan and associates of such persons. The term insiders is defined in the Securities Act (British Columbia) and generally includes directors and officers of the Company and its subsidiaries and holders of greater than 10% of the voting securities of the Company. The term associates is defined in the Securities Act (British Columbia).
If shareholder approval of the proposed Plan or a modified version thereof is not obtained, the Company will not proceed to implement the proposed Plan nor grant options under it. Even if approved, the directors may determine not to proceed with the proposed Plan.
The proposed Plan will be available for inspection at the Meeting. The directors recommend that the shareholders approve the proposed Plan.
The person(s) designated by management of the Company in the enclosed form of Proxy intend to vote FOR the adoption of the Stock Option Plan Resolution.
STATEMENT OF EXECUTIVE COMPENSATION
Compensation Discussion & Analysis
Named Executive Officers
CEO means each individual who acted as chief executive officer of the Company, or acted in a similar capacity, for any part of the most recently completed financial year.
CFO means each individual who acted as chief financial officer of the company, or acted in a similar capacity, for any part of the most recently completed financial year.
executive officer means an individual who is a chair, vice-chair or president of the Company, a vice-president in charge of a principal business unit, division or function including sales, finance or production of the Company and an individual who is performing a policy-making function in respect of the Company.
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NEO or Named Executive Officer means each of the following individuals:
(a) |
a CEO; | |
(b) |
a CFO; | |
(c) |
each of the three most highly compensated executive officers of the Company, including any of its subsidiaries, 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 C$150,000 for that financial year; and | |
(d) |
each individual who would be an NEO under (c) but for the fact that the individual was neither an executive officer of the Company or its subsidiaries, nor acting in a similar capacity, at the end of that financial year . |
As at December 31, 2016, the Companys Named Executive Officers were: Thomas Patton (CEO and Executive Chairman of the Board), Gerald Prosalendis (President and Chief Operating Officer), Steven Dischler (consultant, former President and Chief Executive Officer) and Lei Wang (CFO).
All currency references in this Statement of Executive Compensation are in US dollars unless otherwise noted Canadian dollars are referred as C$.
Corporate Governance, Nomination and Compensation Committee
The Corporate Governance, Nomination and Compensation Committee (the Governance Committee) of the Board was established to assist the Board in fulfilling its responsibilities relating to compensation matters, including the evaluation and approval of the Companys compensation plans, policies and programs.
One of the key roles of the Governance Committee is to assist the directors of the Company in attracting, evaluating and retaining key senior executive personnel through compensation and other appropriate performance incentives. It is the Governance Committees responsibility to ensure that the Company develops a compensation plan for its executive officers that is fair and competitive and consistent with the best interests of the Company. The role of management is to provide the Governance Committee with perspectives on the business strategy and individual performance of senior executive personnel in order to assist the Governance Committee in making recommendations regarding compensation.
The Governance Committee reviews the performance of the Companys NEOs against established performance goals and criteria and makes recommendations to the Board of the Company on appropriate compensation. Other than with respect to the CEO, the Governance Committee also considers the evaluations and recommendations of the CEO.
The Governance Committee has the responsibility for reviewing compensation policies, programs and procedures for the Companys NEOs, including a review of any proposed awards of stock options or any other equity plans and recommending same for approval by the full Board. The Governance Committee acts pursuant to the Governance, Nomination and Compensation Committee Charter (the Governance Charter) that has been approved by the Board of Directors.
The Governance Committee is composed of three directors, all of whom are independent within the meaning of National Instrument 58-101, being LeRoy Wilkes (Chair), Terrence Eyton and John Kerr. None of the members of the Governance Committee is an officer, employee or former officer of the Company. All of the members are experienced in matters of executive compensation and the Board believes that the Committee collectively has the knowledge, experience and background required to fulfill its mandate.
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The Governance Committee Charter can be viewed on the Companys website at www.quaterra.com. The Governance Committee reports to the Board of Directors which has final accountability for the Companys compensation policies and programs. The Governance Committee also seeks the views of the CEO when reviewing compensation for other executive officers because of his involvement with these officers. The Company does not currently benchmark.
Role of the Chief Executive Officer
The Chief Executive Officer (CEO) completes a review of each NEOs performance. The CEO makes a recommendation to the Governance Committee on compensation for each NEO which is taken into consideration by the Governance Committee in completing its review and ultimate recommendations to the Board.
Objectives of the Compensation Program
The general objectives of the Companys compensation strategy are to:
(a) |
compensate management in a manner that encourages and rewards a high level of performance and outstanding results with a view to increasing long term shareholder value; |
(b) |
provide a compensation package that is competitive with other comparable mineral exploration companies to enable the Company to attract and retain talent; and |
(c) |
ensure that the total compensation package is designed in a manner that takes into account the Companys present stage of development and its available financial resources. The Companys compensation packages have been designed to provide a non -cash stock option component in conjunction with a reasonable cash salary. |
Salaries for the NEOs are determined by evaluating the responsibilities inherent in the position held, and the individuals experience and past performance, as well as by reference to the competitive marketplace for management talent at other mineral exploration companies. Following the annual general meeting of shareholders, the Governance Committee reviews actual performance for the Company and the each of the NEOs for such year, including the quality and measured progress of the Companys exploration projects, raising of capital and similar achievements.
Elements of Compensation
During 2016, the Companys compensation program consisted of two elements (i) cash and (ii) incentive stock options administered under the Companys stock option plan. The Company does not presently have a long-term incentive plan. There is no policy or target regarding allocation between cash and non- cash elements of the Companys compensation program. The Board reviews annually the total compensation package of each of the Companys NEOs on an individual basis, against the backdrop of the competitive landscape and the compensation goals and objectives described above.
Salary - Base salaries for the NEOs for any given year are reviewed by the Governance Committee at its meeting in June. Increases or decreases in salary on a year over year basis are dependent on the Governance Committees assessment of the performance of the Company and the particular NEO. When considering the base salaries of each of the Companys NEOs, the Governance Committee reviews the qualifications and performance of, and salaries paid to executives of similar companies engaged in mining exploration and development. Recommendations for executive salaries are made by the Governance Committee to the full Board of Directors in consultation with the CEO.
10
Incentive Awards The Governance Committee believes that a significant portion of each NEOs compensation should be in the form of equity awards. Equity awards are made to the NEOs pursuant to the Companys stock option plan. The stock option plan provides for awards in the form of stock options. The Committee has generally followed a practice of issuing stock options to its NEOs on an annual basis in June of each year. The Committee retains the discretion to make additional awards to NEOs at other times, in connection with the initial hiring of a new executive, for retention purposes or otherwise. In determining the amount of stock options to be issued, the Governance Committee considers qualifications, performance, and option programs of similar companies.
Perquisites and Other Personal Benefits The Companys NEOs are not generally entitled to significant perquisites. The Company offers health care benefits, but there are no other perquisites which account for a material portion of the overall compensation paid to any NEO.
The board of directors did not consider the implications of the risks associated with the Companys compensation policies and practices. None of the NEOs or directors are permitted to purchase financial instruments that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by such NEOs or directors.
Employment Agreements, Termination and Change of Control
The Company has employment agreements with Thomas Patton, Gerald Prosalendis, and Lei Wang. The Governance Committee believes that these agreements will help to secure the continued employment and dedication of the Companys NEOs.
Thomas Patton In January 2010, Dr. Thomas Patton entered into an employment agreement with the Company and its subsidiary, Quaterra Alaska, Inc. for a period of five years relating to his role as President and CEO. On January 1, 2015 and January 1, 2016, Dr. Patton entered into new employment agreements relating to his role as Chairman and on April 14, 2016 Dr. Patton stepped down as President and entered into an amended and restated agreement relating to his role as CEO and Chairman. This agreement has been renewed for an additional year. The employment agreements each have a one year term but are otherwise substantially in the same form as his previous agreement. Under the employment agreement, Dr. Patton is entitled to receive an annual base salary of $150,000, which salary is to be reviewed annually with a view to its increase, giving consideration to the Companys financial position and the scope of its activities. Dr. Patton may be eligible to participate in future stock option grants. The Company may terminate the employment of Dr. Patton only for breach of the employment agreement or for cause. Dr. Patton is entitled to two months notice of such discharge. If Dr. Patton becomes disabled and unable to perform his regular duties, he shall be entitled to receive his full salary for two months. Upon a change of control, as defined in the employment agreement, Dr. Patton has the right to terminate the employment agreement and receive an amount of money equal to one hundred percent (100%) of the compensation which would have been paid to the employee during the unexpired terms of this agreement. If Dr. Patton terminated his employment agreement upon a change of control, and assuming the triggering event took place on the last business day of the Companys most recently completed financial year, the payment to Dr. Patton would be $43,750.
Gerald Prosalendis On April 14, 2016, Mr. Prosalendis entered into an employment agreement with the Company for a period of two years whereby Mr. Prosalendis receives an annual salary of C$225,000. After three months from the date of the employment agreement and every twelve months thereafter, the CEO will conduct a performance review of Mr. Prosalendis which shall include a general performance assessment and possible salary adjustments or bonus payments. Mr. Prosalendis may be eligible to participate in future stock option grants. The Company may terminate the employment of Mr. Prosalendis only for breach of the employment agreement or for cause. Mr. Prosalendis is entitled to two months notice of such discharge. If Mr. Prosalendis becomes disabled and unable to perform his regular duties, he shall be entitled to receive his full salary for two months. Upon a change of control, as defined in the employment agreement, Mr. Prosalendis has the right to terminate the employment agreement and receive an amount of money equal to his annual salary for two years. If Mr. Prosalendis terminated his employment agreement upon a change of control, and assuming the triggering event took place on the last business day of the Companys most recently completed financial year, the payment to Mr. Prosalendis would be C$450,000.
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Lei Wang Effective January 1, 2017, Lei Wang entered into an employment agreement with the Company for a period of one year, whereby Ms. Wang is entitled to an annual salary of CAD$90,000. Upon the expiration of one year following the date of the employment agreement, assuming the term is extended by mutual agreement, and each year thereafter, the Company will review Ms. Wangs salary with a view to its increase, giving consideration to the Companys financial position and the scope of its activities. Ms. Wang may be eligible to participate in future stock option grants. The Company may terminate the employment of Ms. Wang only for breach of the employment agreement or for cause. Ms. Wang is entitled to two months notice of such discharge. If Ms. Wang becomes disabled and unable to perform her regular duties, she shall be entitled to receive her full salary for two months. Upon a change of control, as defined in the employment agreement, Ms. Wang has the right to terminate the employment agreement and receive an amount of money equal to her annual salary for one year. If Ms. Wang terminated her employment agreement upon a change of control, and assuming the triggering event took place on the last business day of the Companys most recently completed financial year, the payment to Ms. Wang would be C$90,000.
Summary Compensation Table Named Executive Officers
The following table sets out information concerning the compensation earned from the Company and any of the Companys subsidiaries during the financial year ended December 31, 2016 by the Companys NEOs.
Name and principal position |
Year |
Salary ($) |
Share- based awards ($) |
Option- based awards ($)(6) |
Non-equity incentive
plan compensation ($) |
Pension Value ($) |
All other compens- ation ($) |
Total compensation ($) | |
Annual
Incentive plans |
Long-term
incentive plans | ||||||||
Thomas Patton(1) CEO & Chairman |
2016 2015 2014 |
150,000 150,000 150,000 |
N/A N/A N/A |
11,207 31,867 36,843 |
N/A N/A N/A |
N/A N/A N/A |
N/A N/A N/A |
Nil Nil Nil |
161,207 181,867 186,843 |
Gerald Prosalendis(2)
President & COO |
2016 |
119,531 |
N/A |
26,897 |
N/A |
N/A |
N/A |
Nil |
146,428 |
Steven Dischler(3)
Former CEO |
2016 2015 2014 |
135,000 208,333 250,000 |
N/A N/A N/A |
5,000 31,867 60,169 |
N/A N/A N/A |
N/A N/A N/A |
N/A N/A N/A |
Nil Nil Nil |
140,000 240,200 310,169 |
Lei Wang(4) CFO |
2016 |
61,250 |
N/A |
11,207 |
N/A |
N/A |
N/A |
Nil |
72,457 |
Scott Hean(5) Former CFO |
2015 2014 |
117,519 135,808 |
N/A N/A |
15,934 21,237 |
N/A N/A |
N/A N/A |
N/A N/A |
Nil Nil |
133,453 157,045 |
(1) |
Thomas Patton was appointed President and Chief Executive Officer on September 2, 2015 (upon the resignation of Steven Dischler) and resigned as President on April 14, 2016 (upon the appointment of Gerald Prosalendis). Dr. Patton has served as Chairman since July 31, 2013. |
(2) |
Gerald Prosalendis was appointed President and Chief Operating Officer on April 14, 2016. |
(3) |
Steven Dischler resigned as President and Chief Executive Officer on September 2, 2015. |
(4) |
Lei Wang was appointed CFO on January 1, 2016. |
(5) |
Scott Hean resigned as CFO and his employment agreement was cancelled effective December 31, 2015. |
(6) |
The Company calculated the stock-based compensation costs by using the Black -Scholes-Merton model assuming a risk free interest rate of 0.60% (2015 0.48%; 2014 1.25%), a dividend yield of 0% (2015 & 2014 0%), the expected annual volatility of the Companys share price of 141% (2015 143%; 2014 111%) and expected life of the option of 5 years (2015 & 2014 5 years). |
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Narrative Discussion
Thomas Patton is paid an annual salary of $150,000 pursuant to an employment agreement with the Company. Gerald Prosalendis is paid an annual salary of C$225,000 pursuant to an employment agreement with the Company.
As President and CEO, Steven Dischler was paid an annual salary of $250,000. Pursuant to a consulting agreement dated November 1, 2015 the Companys subsidiary, Singatse Peak Services LLC, pays Dischler Consulting LLC $11,250 per month for professional services.
Pursuant to an employment agreement effective January 1, 2016, Lei Wang was paid C$70,000 which was increased to C$90,000 on June 1, 2016.
Incentive Awards
The following table sets out information in respect of outstanding option-based awards* for the financial year ended December 31, 2016, for the Companys NEOs.
Option-based Awards | Share-based Awards | ||||||
Name |
Number of securities underlying unexercised options (#) |
Option exercise price (C$) |
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 ($) |
Thomas Patton |
160,000 450,000 400,000 400,000 400,000 250,000 |
$0.45 $0. 16 $0. 10 $0. 05 $0. 13 $0.065 |
June 28, 2017 September 19, 2018 June 25, 2019 December 31, 2019 July 16, 2020 April 14, 2021 |
Nil Nil Nil 8,000 Nil 2,500 |
N/A |
N/A |
N/A |
Gerald Prosalendis |
80,000 10,000 25,000 100,000 150,000 600,000 |
$0.45 $0. 16 $0. 10 $0. 05 $0. 13 $0.065 |
June 28, 2017 September 19, 2018 June 25, 2019 March 26, 2020 July 16, 2020 April 14, 2021 |
Nil Nil Nil 2,000 Nil 6,000 |
N/A |
N/A |
N/A |
Steven Dischler |
160,000 900,000 400,000 400,000 400,000 125,000 |
$0.45 $0. 16 $0. 10 $0. 05 $0.13 $0.065 |
June 28, 2017 September 19, 2018 June 25, 2019 December 31, 2019 July 16, 2020 April 14, 2021 |
Nil Nil Nil 8,000 Nil 1,250 |
N/A |
N/A |
N/A |
Lei Wang | 250,000 | $0.065 | April 14, 2021 | 2,5000 | N/A | N/A | N/A |
(1) |
In -the-money options means the excess of the market value of the Companys shares at the Companys most recently completed financial year on December 31, 2016 over the exercise price of the options. The last trading price of the Companys shares on the TSX Venture Exchange on December 31, 2016 was C$0.075. |
* |
Until a stock option has been exercised and the stock sold, the NEO does not receive any cash proceeds from the option and, accordingly, the amount shown is only the deemed paper gain of the option. |
Incentive plan awards value vested or earned during the year
The following table summarizes the value of each incentive plan award vested or earned by each NEO
13
during the Companys most recently completed financial year.
Name |
Option-based awards Value vested during the year (1) ($) |
Share-based awards Value vested during the year (1) ($) |
Non-equity incentive plan
compensation Value earned during the year ($) |
Thomas Patton | Nil | Nil | Nil |
Gerald Prosalendis | Nil | Nil | Nil |
Steven Dischler | Nil | Nil | Nil |
Lei Wang | Nil | Nil | Nil |
(1) |
Value vested during the year means the aggregate dollar value that would have been realized if the options under the option- based award had been exercised on the vesting date. This amount is calculated by determining the difference between the market price of underlying securities at exercise and the exercise or base price of the options under the option-based award on the vesting date. |
Pension Plan Benefits
The Company does not provide retirement benefits for its directors or executive officers.
Director Compensation
The Companys independent directors compensation program revolves around three key areas:
The directors compensation package provides for the fees below to be paid to non-executive directors:
Annual Retainer | (C$) |
Independent director | 10,000 |
Audit Committee Chair | 7,500 |
Other Committee Chairs | 5,000 |
Below is a summary of total compensation paid to the Directors (excluding NEOs) during 2016:
Name |
Fees earned (C$) |
Share- based awards (C$) |
Option- based awards (C$)(1) |
Non-equity incentive plan compensation (C$) |
Pension value (C$) |
All other compensation (C$) |
Total (C$) |
John Kerr | 15,000 | Nil | 12,000 | Nil | N/A | Nil | 27,000 |
LeRoy Wilkes | 15,000 | Nil | 12,000 | Nil | N/A | Nil | 27,000 |
Terrence Eyton | 17,500 | Nil | 12,000 | Nil | N/A | Nil | 29,500 |
(1) |
The Company calculated the stock-based compensation costs by using the Black-Scholes-Merton model assuming a risk free interest rate of 0.60%, a dividend yield of nil%, the expected annual volatility of the Companys share price of 141% and expected life of the option of 5 years. |
14
Outstanding share-based awards and option-based awards
The following table summarizes the outstanding share-based awards and option-based awards to the Non-Named Executive Officer Directors as at the Companys most recently completed financial year.
Option-based Awards | Share-based Awards | ||||||
Name |
Number of securities underlying unexercised options (#) |
Option exercise price (C$) |
Option expiration date |
Value of unexercised in-the- money options (C$)(1) |
Number of shares or units of shares that have not vested (#) |
Market or payout value of share-based awards that have not vested ($) |
Market or payout value of vested share-based awards not paid out or distributed ($) |
John Kerr |
80,000 180,000 200,000 200,000 200,000 |
$0.45 $0.16 $0.10 $0.13 $0.065 |
June 28, 2017 September 19, 2018 June 25, 2019 July 16, 2020 April 14, 2021 |
Nil Nil Nil Nil 2,000 |
N/A |
N/A |
N/A |
LeRoy Wilkes |
80,000 180,000 200,000 200,000 200,000 |
$0.45 $0.16 $0.10 $0.13 $0.065 |
June 28, 2017 September 19, 2018 June 25, 2019 July 16, 2020 April 14, 2021 |
Nil Nil Nil Nil 2,000 |
N/A |
N/A |
N/A |
Terrence Eyton |
100,000 200,000 200,000 |
$0.05 $0.13 $0.065 |
March 26, 2020 July 16, 2020 April 14, 2021 |
2,500 Nil 2,000 |
N/A |
N/A |
N/A |
(1) |
In-the-money options means the excess of the market value of the Companys shares at the Companys most recently completed financial year on December 31, 2016 over the exercise price of the options. The last trading price of the Companys shares on the TSX Venture Exchange on December 31, 2016 was $0.075. |
Incentive plan awards value vested or earned during the year
The following table summarizes the value of each incentive plan award vested or earned by each Non- Named Executive Officer Director during the Companys most recently completed financial year.
Name |
Option-based awards Value vested during the year(1) ($) |
Share-based awards Value vested during the year(1) ($) |
Non-equity incentive plan
compensation Value earned during the year ($) |
John Kerr | Nil | N/A | N/A |
LeRoy Wilkes | Nil | N/A | N/A |
Terrence Eyton | Nil | N/A | N/A |
(1) |
Value vested during the year means the aggregate dollar value that would have been realized if the options under the option-based award had been exercised on the vesting date. This amount is calculated by determining the difference between the market price of underlying securities at exercise and the exercise or base price of the options under the option-based award on the vesting date. |
Securities Authorized for Issuance under Equity Plans
The following table sets out the number of the Companys shares to be issued and remaining available for future issuance under the Companys Incentive Stock Option Plan at the end of the Companys most recently completed financial year:
15
Plan Category |
Number of Securities to be issued upon exercise of outstanding options (a) |
Weighted-average exercise price of outstanding options (b) |
Number of securities remaining
available for future issuance under incentive stock option plans (excluding securities reflected in column (a)) (c) |
Stock Option Plan approved by security holders | 15,710,000 | C$0.16 | 3,637,941 |
Equity compensation plans not approved by security holders | N/A | N/A | N/A |
Total | 15,710,000 | 3,637,941 |
INDEBTEDNESS TO COMPANY OF DIRECTORS AND EXECUTIVE OFFICERS
No director or executive officer, or any proposed director or any associate of any of them, is or, since the beginning of the last completed financial year of the Company, was indebted to the Company, or has been the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Company.
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
No insider of the Company, no management proposed nominee for election as a director of the Company and no associate or affiliate of any of these persons, has any material interest, direct or indirect, in any transaction since the commencement of the Company's last financial year or in any proposed transaction, which, in either case, has materially affected or will materially affect the Company or any of its subsidiaries other than as disclosed under the heading "Executive Compensation".
MANAGEMENT CONTRACTS
There are no management functions of the Company, which are, to any substantial degree, performed by a person other than the directors or executive officers of the Company.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The Companys corporate governance disclosure obligations are set out in National Instrument 58-101 Disclosure of Corporate Governance Practices (the National Instrument), National Policy 58-201 Corporate Governance Guidelines and National Instrument 52-110 Audit Committees. These instruments set out a series of guidelines and requirements for effective corporate governance, collectively the Guidelines. The National Instrument requires the Company to disclose its approach to corporate governance with reference to Guidelines.
Composition of the Board
The Board currently consists of five directors. The National Instrument defines an independent director as a director who has no direct or indirect material relationship with the Company. A material relationship is in turn defined as a relationship which could, in the view of the Board of Directors, be reasonably expected to interfere with such members independent judgment. The Board of Directors considers the factual circumstances of each director in the context of Guidelines.
The Board has determined that three (3) directors are independent for purposes of the Board members as provided in National Instrument 58-101. There are two (2) who are not independent for purposes of the Board members as provided in National Instrument 58-101. The Board has concluded that Dr. Thomas Patton and Mr. Gerald Prosalendis are not independent by virtue of their roles as executive officers of the Company. See Composition of the Board below.
16
Director Nominees | Independent | Non-Independent | Reason for Non Independence |
Thomas Patton | X | CEO and Chairman of the Board | |
Gerald Prosalendis | X | President and COO | |
John Kerr | X | ||
LeRoy Wilkes | X | ||
Terrence Eyton | X |
Participation of Directors in Other Reporting Issuers
Certain of the Companys directors are directors of other reporting issuers, as set out in the following table:
Director | Reporting Issuer | |
John Kerr | Bravada Gold Corporation | Eureka Resources Inc. |
Canyon Copper Corp. | ||
LeRoy Wilkes | Sabina Gold & Silver Corp. | Athena Silver Corporation |
Copper Mesa Mining Corporation | ||
(Formerly Ascendant Copper Corporation) |
Orientation and Continuing Education
Board members are provided with a policy and procedure manual and have access to technical data and financial information 24 hours a day through an internet-based software support system, essentially an electronic Boardroom. The Company does not provide formal continuing education to its Board members, but does encourage them to communicate with management, auditors and technical consultants. Board members are also encouraged to participate in industry related conferences, meetings and educational events.
Ethical Business Conduct
The Board has adopted a Code of Business Conduct and Ethics (the Code) that can be viewed at www.quaterra.com. The Code addresses honesty and integrity, fair dealing, discrimination and harassment, safety and security, and honest and accurate record keeping. The Code also addresses Ethical Business Conduct for financial managers.
Audit Committee
The Audit Committee is responsible for assisting directors to meet their responsibilities; providing better communication between directors and external auditors; enhancing the independence of the external auditor; increasing the credibility and objectivity of financial reports; and strengthening the role of the directors facilitating in-depth discussions among directors, management and the external auditor. The Audit Committee is responsible for the appointment, compensation, retention and oversight of the external auditor, as well as the pre-approval of all non-audit services provided by the external auditor, and for directing the auditors examination into specific areas of the Companys business. A full version of the Audit Committee Charter is available at www.quaterra.com.
Composition of the Audit Committee
The Audit Committee is comprised of three directors of the Company: Terrence Eyton (Chair), John Kerr and LeRoy Wilkes, all of whom are independent and financially literate within the meaning of NI 52-110.
17
To be considered to be independent, a member of the audit committee must not have any direct or indirect material relationship with the Company. A material relationship is a relationship which could, in the view of the board of directors of the Company, reasonably interfere with the exercise of a members independent judgment. To be considered financially literate, a member of the audit committee must have the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected in the Companys financial statements.
Mr. Eyton graduated from Lakehead University in 1967 in Business Administration. He obtained his Chartered Accountant designation in 1971 and was elected to Fellowship of the Institute of Chartered Accountants in 1983. He completed the Institute of Corporate Directors program in 2008 and obtained the designation of ICD.D. Mr. Eyton practiced the profession of accounting in both public practice and corporate entities. Currently Mr. Eyton is a Director and Chair of the Audit Committee for Quaterra Resources Inc. Mr. Eyton has also served as a director and chair of audit committees for other reporting issuers including, Sabina Gold and Silver Corp; Southern Silver Exploration Corp; Homestake Resource Corporation; Bravada Gold Corporation and Potash North Resource Corp. Mr. Eyton is currently retired from active employment and considered financially literate.
Mr. Kerr graduated from the University of British Columbia in 1964 with a BASc degree in Geological Engineering. Mr. Kerr has sat on several public company Boards and Audit Committees. In his positions, he would be responsible for receiving financial information relating to his Company and obtaining an understanding of the balance sheet, income statement and statement of cash flows and how these statements are integral in assessing the financial position of the Company and its operating results. Mr. Kerr is considered financially literate.
Mr. Wilkes was President of Washington Group Internationals mining business unit where he was responsible for the operating and financial performance of the units international operations in the coal, metals and industrial minerals markets. He has 38 years of mining experience in the precious metals, coal industrial metals, and base metals mining and processing. Prior to joining the Washington Group International, Mr. Wilkes served as executive vice-president and chief operating officer of Santa Fe Pacific Gold Corporation of Albuquerque, New Mexico from 1988 to 1995. Mr. Wilkes also previously served as executive vice-president of Washington Corporation of Missoula, Montana, responsible for merger and acquisition activities. He earlier served as vice-president and general manager of Kennecott Ridgeway Mining Company of Ridgeway, South Carolina, and director of business development of Anaconda Minerals Co. of Denver, Colorado. He has held management and supervisory positions at surface and underground mines producing molybdenum, copper, limestone, lead silver and zinc. Mr. Wilkes has a degree in mining engineering from the Montana School of Mines. Mr. Wilkes also serves as a director and chairman of the Board of Sabina Gold & Silver Corp. Mr. Wilkes is considered financially literate.
Pre-approved Policies and Procedures
All non-audited services are pre-approved by the Audit Committee. Before approval is given, the Audit Committee examines the independence of the external auditors in relation to the services to be provided and assesses the reasonableness of the fees to be charged for such services.
External Auditor Service Fees
Financial Year Ending |
Audit Fees(1) |
Audit Related Fees(2) |
Tax Fees |
All other Fees |
Total |
December 31, 2016 | C$42,500 | $Nil | $Nil | $Nil | C$42,500 |
December 31, 2015 | C$64,000 | $Nil | C$2,500 | $Nil | C$66,500 |
18
(1) |
The aggregate audit fees include the audit of the Company’s consolidated financial statements and the audit of ICFR. |
(2) |
The aggregate fees billed for audit related services that are reasonably related to the performance of the audit of the Companys consolidated financial statements, which are not included under the heading Audit Fees |
Corporate Governance, Nomination and Compensation Committee
The Corporate Governance, Nomination and Compensation Committee (Governance Committee) is appointed by and acts on behalf of the Board of Directors. The Governance Committee acts pursuant to the Corporate Governance Nomination Compensation Committee Charter (the Governance Charter) that has been approved by the board of directors. The Governance Charter can be viewed on the Companys website at www.quaterra.com. The Governance Committee is responsible for:
1) |
developing and recommending to the Board a set of corporate governance guidelines applicable to the Company and for periodically reviewing such guidelines; | |
2) |
identifying individuals qualified to become Board members; | |
3) |
recommending that the Board select the director nominees for the next annual meeting of shareholders; | |
4) |
overseeing the Boards annual evaluation of its performance, and | |
5) |
reviewing and recommending to the Board on major compensation plans, policies and programs of the Company. The Governance Committee approves the compensation of named executive officers and certain senior management, takes specific actions with respect to such compensation and has oversight responsibility over the Companys management development programs, performance assessment of senior executives and succession planning. |
The members of the Governance Committee are LeRoy Wilkes (Chair), Terrence Eyton and John Kerr, all of whom are independent directors, applying the definition set out in Section 1.4 of National Instrument 52-110.
Safety, Health, Security and Environment Committee
The Company has a Safety, Health, Security and Environment Committee (the SHSE Committee) that consists of John Kerr (Chair), Thomas Patton and Terrence Eyton.
The SHSE Committee has been established to assist the Board in fulfilling its responsibilities relating to health, safety, security and the environment. The SHSE Charter can be viewed on the Companys website at www.quaterra.com. The responsibilities of the Committee are as follows:
19
MANAGEMENT IS NOT AWARE OF ANY OTHER MATTER TO COME BEFORE THE MEETING OTHER THAN AS SET FORTH IN THE NOTICE OF MEETING. IF ANY OTHER MATTER PROPERLY COMES BEFORE THE MEETING, IT IS THE INTENTION OF THE MANAGEMENT APPOINTEES TO VOTE THE SHARES REPRESENTED BY THE FORM OF PROXY ACCOMPANYING THIS INFORMATION CIRCULAR ON ANY BALLOT THAT MAY BE CALLED FOR IN ACCORDANCE WITH THEIR BEST JUDGMENT ON SUCH MATTER.
ADDITIONAL INFORMATION
Additional information relating to the Company can be found at www.sedar.com and at the Companys website at www.quaterra.com. A copy of the following documents may be obtained, without charge, upon request to the Company at Suite 1100, 1199 West Hastings Street, Vancouver, B.C., V6E 3T5, Telephone: (604) 681-9059, Fax: (604) 641-2740:
(a) |
the comparative financial statements of the Company for the financial year ended December 31, 2016 together with the accompanying report of the auditor thereon and related Managements Discussion and Analysis and any interim financial statements of the Company for periods subsequent to December 31, 2016 and related Managements Discussion and Analysis; and | |
(b) |
this Information Circular. |
BY ORDER OF THE BOARD OF DIRECTORS
OF QUATERRA
RESOURCES INC.
Thomas Patton
Thomas Patton
Chief Executive Officer
20
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