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 2018

Commission File Number:  001-32929

POLYMET MINING CORP.
(Translation of registrant's name into English)

100 King Street, Suite 5700 
Toronto, ON Canada M5X 1C7 

(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): [                 ]

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): [                 ]

EXPLANATORY NOTE

This report on Form 6-K and attached exhibit are incorporated by reference into Registration Statement No. 333-192208 and this report on Form 6-K shall be deemed a part of such registration statement from the date on which this report on Form 6-K is filed, to the extent not superseded by documents or reports subsequently filed or furnished by PolyMet Mining Corp. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

 



SUBMITTED HEREWITH

Exhibits
 
 
 
 
 
 
 
 
 
 
 
 
 
  99.3 Omnibus Plan
     
 
 
 
 
 
 
 
 
 
     
     
     




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.

 
 
PolyMet Mining Corp.
 
 
(Registrant)
 
 
 
Date: May 18, 2018
By:
/s/ Jonathan Cherry
 
 
Jonathan Cherry
 
Title:
President and CEO




Exhibit 99.1
 

 
 
 
 
 

 
 

POLYMET MINING CORP.
NOTICE OF ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 27, 2018
 
Dear Shareholder:
 
You are receiving this notification as PolyMet Mining Corp. (“PolyMet”) has elected to use the notice and access model for delivery of meeting materials to its shareholders. Under notice and access, shareholders still receive a proxy or voting instruction form enabling them to vote at the shareholders’ meeting. However, instead of a paper copy of the Management Information Circular, shareholders receive this notice along with information on how they may access such materials electronically. The use of this alternative means of delivery is more environmentally friendly as it will help reduce paper use and also will reduce the cost of printing and mailing materials to shareholders.
 
NOTICE IS HEREBY GIVEN that the 2018 Annual General and Special Meeting (the “Meeting”) of shareholders of PolyMet will be held on Wednesday, June 27, 2018 at 10:00 a.m . (Toronto Time), at The Osgoode Room, Hilton Toronto, 145 Richmond Street West, Toronto, Ontario, for the following purposes:
 
  1.
to receive the 2017 Annual Information Form, including the audited consolidated financial statements for the eleven months ended December 31, 2017 and the report of the auditor on those financial statements;
   
  2.
to elect nine directors to hold office until the close of the next annual meeting of shareholders;
   
  3.
to appoint PricewaterhouseCoopers LLP as the auditor to hold office until the close of the next annual meeting of shareholders and to authorize the Board of Directors to fix the remuneration to be paid to the auditor;
   
  4.
to consider, and if thought fit, approve PolyMet’s amended Omnibus Share Compensation Plan (the “Omnibus Plan”) as approved by the shareholders in 2007 and as amended, restated, and confirmed from time to time most recently by shareholders in 2015; and
   
  5.
to transact such other business as may properly come before the Meeting or any adjournment or postponement thereof.
 
Further information regarding the matters to be considered at the Meeting is set out in the accompanying Management Information Circular.
 
The Board of Directors has fixed the close of business on May 2, 2018 as the record date for determining shareholders entitled to receive notice of and to vote at the Meeting.  Only the registered shareholders as of the close of business on May 2, 2018 will be entitled to vote, in person or by proxy, at the Meeting.
 
Whether or not you plan to attend the Meeting, PolyMet urges you to, as promptly as possible, complete and return the form of proxy, or vote by proxy online, mail or telephone, as instructed in the Management Information Circular.  To be effective, your form of proxy must be received by Broadridge, 51 Mercedes Way, Edgewood, NY, 11717, no later than Monday June 25, 2018 at 11:59 p.m. (Eastern Time) or, if the Meeting is adjourned or postponed, no later than 48 hours (excluding Saturdays, Sundays and holidays) prior to the time to which the Meeting is adjourned or postponed. Proxies received by Broadridge after this time will not be accepted; however, the Chair of the Meeting may determine, in the Chair’s sole discretion, to accept a proxy that is delivered in person to the Chair at the Meeting as to any matter in respect of which a vote has not already been cast.
 
If you are a beneficial shareholder and hold your common shares through an intermediary, such as a brokerage firm, bank, clearing agency, securities dealer or other similar organization, you should follow the voting procedures provided by: (a) Broadridge, if you have given permission to your intermediary to disclose your share ownership information to PolyMet; or (b) your intermediary, if you have objected to your intermediary’s disclosure of such information.
 
Beneficial shareholders may request that a paper copy of the meeting materials be sent to them by postal delivery at no cost to them. Requests may be made up to one year from the date the Management Information Circular was filed on SEDAR. Such requests may be made online by going to www.proxyvote.com and entering the 12-digit control number located on the voting instruction form or notification letter provided to beneficial shareholders and following the instructions provided. Alternatively, such requests may be made by telephone at any time prior to the meeting by dialing 1-800-690-6903 and entering the 12-digit control number provided on the voting information form or notification letter provided to beneficial shareholders and following the instructions provided. 
 
To receive meeting materials in advance of the proxy deposit date and meeting date, requests for printed copies must be received at least fourteen business days in advance of the Annual General and Special Meeting and time set out in the proxy or voting instruction form.

 
VOTING
 
Beneficial shareholders are asked to return their voting instruction form using the following methods at least two business days in advance of the proxy deposit date noted on your voting instruction form:
 
 
ONLINE:
www.proxyvote.com
     
 
TELEPHONE:
1-800-690-6903
     
 
FACSIMILE:
1-866-623-5305 (For Canadian Shareholders only)
     
 
MAIL:
Broadridge Financial c/o Vote Processing, 51 Mercedes Way, Edgewood NY 11707
 
 
  By Order of the Board of Directors  
     
 
signed “Jonathan Cherry”  
  Jonathan Cherry  
  President & Chief Executive Officer  
     

 
 
Toronto, Ontario
May 3, 2018
Exhibit 99.2


 

 
POLYMET MINING CORP.
 
MANAGEMENT INFORMATION CIRCULAR FOR THE
ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 27, 2018
 
Unless the context otherwise requires, in this Management Information Circular all references to “PolyMet” and the “Company”, refer to PolyMet Mining Corp. and its subsidiaries.  Unless otherwise stated, information in this Management Information Circular is given as at May 2, 2018.  All references in this Management Information Circular to “$” or to “US$” are to U.S. dollars.  Any references to “C$” are to Canadian dollars.
 
INFORMATION ABOUT THIS MANAGEMENT INFORMATION CIRCULAR AND
THE 2018 ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS
 
Why did I receive this Management Information Circular?
 
PolyMet has sent this Notice of Annual General and Special Meeting and Management Information Circular or Notice of the Meeting, together with the form of proxy (the “Form of Proxy”), because the Board of Directors is soliciting your proxy to vote at the 2018 Annual General and Special Meeting (the “Meeting”) of shareholders.  This Management Information Circular contains information about the matters to be voted on at the Meeting and important information about PolyMet.  As many of the shareholders are expected to be unable to attend the Meeting in person, proxies are solicited by mail to give each shareholder an opportunity to vote on all matters that will properly come before the Meeting.  References in this Management Information Circular to the Meeting include any adjournments or postponements of the Meeting.
 
PolyMet intends to mail a Notice of the Meeting on or about May 18, 2018 to all of the shareholders entitled to vote at the Meeting.
 
Delivery of Management Information Circular
 
The Canadian Securities Administrators have adopted amendments to National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer and National Instrument 51-102 – Continuous Disclosure Obligations , which allow the use of a “notice and access” system for the delivery of proxy related materials, annual financial statements and related management’s discussion and analysis (the “Annual Materials”).
 
Under this system, reporting issuers are permitted to deliver the Annual Materials by posting them on System for Electronic Document Analysis and Retrieval (“SEDAR”) as well as a website other than SEDAR and sending a notice package to each shareholder receiving the Annual Materials under this system.  The notice package must include (i) the relevant form of proxy or voting instruction form; (ii) basic information about the meeting and the matters to be voted on; (iii) instructions on how to obtain a paper copy of the Annual Materials; and (iv) a plain-language explanation of how the notice and access system works and how the Annual Materials can be accessed online.  Where prior consent has been obtained, a reporting issuer can send this notice package to shareholders electronically.  This notice package must be mailed to shareholders for whom consent to electronic delivery has not been received.
 
PolyMet has elected to send the Annual Materials to Beneficial Shareholders using the notice and access system.   As such, PolyMet will send the above mentioned notice package to beneficial shareholders which will include instructions on how to access PolyMet’s Annual Materials online and how to request a paper copy.  Distribution of the Annual Materials under this system not only reduces printing and mailing costs, but it also reduces PolyMet’s impact on the environment.
1

 
What is the date, time and place of the Meeting?
 
The Meeting will be held in The Osgoode Room, Hilton Toronto,   145 Richmond Street West, Toronto, Ontario, on Wednesday, June 27, 2018, at 10:00 a.m. (Toronto Time).
 
Who can vote at the Meeting?
 
Only registered shareholders as at the close of business on May 2, 2018 will be entitled to vote at the Meeting.  As at May 2, 2018, there are 320,402,029 common shares without par value of PolyMet (“Common Shares”) issued and outstanding.  Each person voting at the Meeting has one vote in a vote by show of hands.  If a ballot is taken, each person voting at the Meeting will have one vote for each Common Share held.
 
Registered Shareholder: Common Shares Registered in Your Name
 
If on May 2, 2018, your Common Shares were registered directly in your name with the registrar and transfer agent, Computershare Investor Services Inc., then you are a registered shareholder.  As a registered shareholder, you may vote in person at the Meeting or vote by proxy.  Whether or not you plan to attend the Meeting, PolyMet urges you to, as promptly as possible, complete and return the Form of Proxy, or vote by proxy online, as instructed below to ensure your vote is counted.
 
Beneficial Shareholder: Common Shares Registered in the Name of an Intermediary such as a Brokerage Firm, Bank, Dealer or other Similar Organization
 
If on May 2, 2018, your Common Shares were held in an account with an intermediary, such as a brokerage firm, bank, dealer or other similar organization, then you are a beneficial shareholder and your Common Shares are   held in “street name”.   The intermediary holding your account, or a clearing agency (such as CDS Clearing and Depositary Services Inc. in Canada or Depositary Trust Company in the United States) of which the intermediary is a participant, is considered the registered shareholder for purposes of voting at the Meeting.  As a beneficial shareholder, you have the right to direct the intermediary or clearing agency on how to vote the Common Shares registered in their name.  You are also invited to attend the Meeting; however, since you are not the registered shareholder, you will not be able to vote your Common Shares registered in the name of the intermediary or clearing agency unless you have been appointed as a proxyholder by the intermediary or clearing agency.
 
What am I voting on at the Meeting?
 
At the Meeting, the shareholders will be asked to vote on the following resolutions:
 
 
·
to elect nine directors to hold office until the close of the next annual meeting of shareholders;
     
 
·
to appoint PricewaterhouseCoopers LLP as the auditor to hold office until the close of the next annual meeting of shareholders and to authorize the Board of Directors to fix the remuneration to be paid to the auditor; and
     
 
·
to consider, and if thought fit, approve PolyMet’s amended Omnibus Share Compensation Plan (the “Omnibus Plan”) as approved by the shareholders in 2007 and as amended, restated, and confirmed from time to time most recently by shareholders in 2015.
 
How does the Board recommend that I vote?
 
The Board of Directors believe that the election of management’s nine nominees to the Board of Directors, the appointment of PricewaterhouseCoopers LLP as the auditor and the approval of the amended Omnibus Plan are each in the best interests of PolyMet and the shareholders and, accordingly, recommends that each shareholder vote his or her shares “ FOR ” each of the named management nominees for election to the Board of Directors and “ FOR ” each of the other matters.
2

What vote is required in order to approve each proposal?
 
Directors are elected by a plurality of votes cast by proxy or in person at the Meeting, which means that those nominees for election to the Board of Directors who receive the largest number of favourable votes will be elected directors, up to the maximum number of directors set by ordinary resolution.  Shareholders are not entitled to cumulative votes for the election of directors.  Abstention from voting on the election of directors will have no impact on the outcome of this proposal since no vote will have been cast in favour of any nominee.
 
A simple majority of the votes cast by proxy or in person at the Meeting is required to approve the appointment of PricewaterhouseCoopers LLP as the auditor and independent registered public accounting firm.
 
A simple majority of the votes of the disinterested shareholders (the votes of securities not held directly or indirectly by insiders who hold current outstanding stock options or other Awards under the Omnibus Plan and their associates) cast by proxy or in person at the Meeting is required to approve the resolution amending and re-approving the Omnibus Plan.
 
Proxies returned by intermediaries as “non-votes” because the intermediary has not received instructions from the beneficial shareholder with respect to the voting of certain of the Common Shares or, under applicable stock exchange or other rules, the intermediary does not have the discretion to vote those Common Shares on one or more of the matters that come before the Meeting, will be treated as not entitled to vote on any such matter and will not be counted as having been voted in respect of any such matter.  Common Shares represented by such broker “non-votes” will, however, be counted in determining whether there is a quorum for the Meeting.
 
How do I vote?
 
Registered Shareholder: Common Shares Registered in Your Name
 
If you are a registered shareholder you may vote by proxy or in person at the Meeting.  Whether or not you plan to attend the Meeting, PolyMet urges you to vote by proxy to ensure your vote is counted.  You may still attend the Meeting and vote in person if you have already voted by proxy.
 
 
·
To vote in person at the Meeting , please come to the Meeting and you will receive an attendance card when you arrive.
     
 
·
To vote by proxy over the telephone , please call 1-800-690-6903 up until 11:59 p.m. Eastern Time on Monday June 25, 2018.
     
 
·
To vote using a Form of Proxy , please complete, sign, date and return your Form of Proxy in accordance with the instructions on the Form of Proxy.
     
 
·
To vote by proxy online, go to www.proxyvote.com   and follow the online voting instructions and refer to your holder account number and proxy access number provided on the Form of Proxy.
 
Whether you are voting by paper or online proxy, your proxy must be received by Broadridge, Attention:  Vote Processing, 51 Mercedes Way, Edgewood, NY, 11717 no later than June 25, 2018 at 11:59 p.m. (Eastern Time) or, if the Meeting is adjourned or postponed, no later than 48 hours (excluding Saturdays, Sundays and holidays) prior to the time to which the Meeting is adjourned or postponed.  Proxies received by Broadridge after this time will not be accepted; however, the Chair of the Meeting may determine, in the Chair’s sole discretion, to accept a proxy that is delivered in person to the Chair at the Meeting as to any matter in respect of which a vote has not already been cast.
 
If the instructions you give in your proxy are clear, and if the proxy is properly completed and delivered as described above and has not been revoked, the Common Shares represented by your proxy will be voted or withheld from voting on any poll that may be called for and, if you specify a choice with respect to any matter to be acted upon, the Common Shares will be voted on any poll in accordance with your instructions.
 
You have the right to appoint another person to attend and act on your behalf at the Meeting other than the persons named in the Form of Proxy.  To exercise this right, please insert the name of your nominee in the blank space provided.  A person appointed as a proxyholder need not be a shareholder.
3

 
Beneficial Shareholder: Common Shares Registered in the Name of an Intermediary such as a Brokerage Firm, Bank, Dealer or other Similar Organization
 
PolyMet has two kinds of beneficial shareholders – those who have given permission to their intermediary to disclose their ownership information to PolyMet, otherwise referred to as “non-objecting beneficial owners”, and those who have objected to their intermediary’s disclosure of this information, otherwise referred to as “objecting beneficial owners”.  As allowed under Canadian provincial securities laws, PolyMet has obtained a list of the non-objecting beneficial owners from intermediaries and has used that list to distribute proxy-related materials directly to non-objecting beneficial owners.
 
If you are a non-objecting beneficial owner, then you will receive a voting instruction form from Broadridge.  If you are an objecting beneficial owner, then you will receive a voting instruction form from your intermediary.
 
The voting instruction form that you will receive is similar to the proxy that PolyMet provides to the registered shareholders. However, its purpose is limited to instructing your intermediary or clearing agency, as the registered shareholder, on how to vote on your behalf.  No person will be admitted at the Meeting to vote by presenting a voting instruction form.
 
 
·
To vote using the voting instruction form , simply complete and return the voting instruction form in accordance with its instructions.
     
 
·
To vote in person at the Meeting , you must instruct Broadridge if you are a non-objecting beneficial owner, or your intermediary if you are an objecting beneficial owner, to appoint you as proxyholder.
 
If you have any questions, contact Broadridge if you are a non-objecting beneficial owner, or your intermediary if you are an objecting beneficial owner.
 
How will proxies be exercised?
 
The proxyholder will vote according to instructions in the proxy on any ballot, which may be called for and for which a choice has been specified.  Unless otherwise indicated by you on the proxy, your Common Shares will be voted “FOR” the election of management’s nine nominees for election to the Board of Directors and “FOR” each of the other motions proposed to be made at the Meeting as stated in the proxy.
 
The proxy also confers upon the proxyholder discretionary authority to vote all Common Shares represented by the proxy with respect to amendments or variations to matters identified in the Notice of Meeting and any other matter that properly comes before the Meeting.  The Board of Directors knows of no such amendment, variation or other matter that is to be presented for action at the Meeting.  However, if any other matters which are not now known to the Board of Directors should properly come before the Meeting, the proxies will be voted, or withheld, by the proxyholder in his or her discretion.
 
What is the quorum for the Meeting?
 
A quorum of shareholders must be present at the commencement of the Meeting, either in person or by proxy.  Under PolyMet’s Articles, the quorum for the Meeting is two shareholders present in person or by proxy holding or representing at least 5% of the Common Shares.  If a quorum is not present at the commencement of the Meeting or within a reasonable period of time thereafter, the shareholders present in person or by proxy may adjourn the Meeting to a fixed time and place but may not transact any other business at the Meeting.
 
What does it mean if I receive more than one set of proxy materials?
 
This means that you own Common Shares that are registered under different names.  For example, you may own some Common Shares directly as a registered shareholder and other Common Shares as a beneficial shareholder through an intermediary, or you may own Common Shares through more than one such organization.  In these situations, you will receive multiple sets of proxy materials.  It is necessary for you to, as promptly as possible, complete and return all paper proxies, or vote by proxy online, and complete and return all voting instruction forms in order to vote all of the Common Shares you own.  Each paper proxy you receive will come with its own return envelope.  If you vote by mail, please make sure you return each paper proxy in the return envelope that accompanies that proxy.
4

 
Can I revoke my proxy?
 
Yes, if you are a registered shareholder and have voted by paper or online proxy, you may revoke your proxy by delivering a duly executed proxy by paper or online with a later date or a form of revocation of proxy. Your proxy may be revoked by an instrument in writing signed by you or by your attorney duly authorized in writing and, if you are a corporation or association, the instrument in writing should bear the seal of the corporation or association and must be executed by an officer or by an attorney duly authorized in writing, and deposited at the Company’s registered office at Farris, Vaughan, Wills & Murphy LLP, 25 th Floor, 700 West Georgia Street, Vancouver, British Columbia, V7Y 1B3, Attention: Denise Nawata, at any time up to and including the last business day preceding the day of the Meeting or any adjournment thereof.
 
Alternatively, you may revoke your proxy and vote in person, by delivering a form of revocation of proxy to the Chair of the Meeting at the Meeting, or any adjournments or postponements of the Meeting thereof, before the taking of a vote in respect of which the proxy is to be used.  You may also revoke your proxy in any other manner permitted by law.
 
If you are a non-objecting beneficial owner, you should contact Broadridge in order to obtain instructions regarding the procedures for revoking any voting instructions that you previously provided to Broadridge.  Similarly, if you are an objecting beneficial owner, you should contact the intermediary that holds your Common Shares in order to obtain instructions regarding the procedures for revoking any voting instructions that you previously provided to your intermediary.
 
Who pays the cost of the proxy solicitation?
 
PolyMet will pay the cost of soliciting these proxies, including the printing, handling and mailing of the proxy materials.  Copies of these materials will be given to brokerage firms, banks, dealers or other similar organizations that hold Common Shares for beneficial shareholders.  PolyMet will reimburse these brokerage firms, banks, dealers or other similar organizations for their reasonable out of pocket expenses in forwarding proxy materials to beneficial shareholders.  In addition, proxies may be solicited by certain directors, executive officers and employees personally or by telephone, mail, facsimile or e-mail.  No additional compensation will be paid to directors, officers or other employees for soliciting proxies.  PolyMet may, if determined advisable, retain at its cost an agency to solicit proxies in Canada and in the United States.
 
How can I make a shareholder proposal for PolyMet’s 2019 Annual Meeting?
 
If you want to propose a matter for consideration at the 2019 Annual Meeting, then that proposal must be submitted to PolyMet at the Company’s registered office at Farris, Vaughan, Wills & Murphy LLP, 25 th Floor, 700 West Georgia Street, Vancouver, British Columbia, V7Y 1B3, Attention: Denise Nawata, 90 days before the anniversary date of the Notice of Meeting for the 2018 Annual Meeting.  To be eligible to submit a proposal, a person:
 

 
·
must be, for at least the six-month period immediately before the day on which the shareholder submits the proposal, the registered holder or the beneficial owner of the number of Common Shares:
 
-
that is equal to at least 1% of the total number of outstanding Common Shares, as of the day on which the shareholder submits the proposal; or
 
-
whose fair market value, as determined at the close of business on the day before the shareholder submits the proposal, is at least $2,000; or
 
·
must have the support of persons who, in the aggregate, and not-including the person that submits the proposal, have been, for at least the six-month period immediately before the day on which the shareholder submits the proposal, the registered holders, or the beneficial owners of the number of Common Shares:
 
-
that is equal to at least 1% of the total number of outstanding Common Shares, as of the day on which the shareholder submits the proposal; or
 
5

-
whose fair market value, as determined at the close of business on the day before the shareholder submits the proposal, is at least $2,000.
 
For a proposal to be valid, it must, subject to the Business Corporations Act (British Columbia), contain:
 
·
the name and address of the person and of the person’s supporters, if applicable; and
 
·
the number of Common Shares held or owned by the person and the person’s supporters, if applicable, and the date the Common Shares were acquired.

What if I have any questions regarding the Meeting?
 
If you have any questions regarding the Meeting, please contact either Broadridge or PolyMet as follows:
 
Broadridge
 
·
by phone :
1-800-693-6903, or
     
·
by mail :
51 Mercedes Way, Edgewood, New York 11717
 
PolyMet
 
·
by phone :
1-416-915-4149;
     
·
by email :
info@polymetmining.com , or
     
·
by mail :
First Canadian Place, 100 King Street West, Suite 5700, Toronto, Ontario M5X 1C7
 
How can I find out the results of the voting at the Meeting?
 
Preliminary voting results will be announced at the Meeting.  Final voting results will be filed with the Canadian provincial securities regulatory authorities and be available online at www.sedar.com and will also be furnished to the United States Securities and Exchange Commission published in a report on Form 6-K and be available online at www.sec.gov .
 
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
 
As of May 2, 2018, to the knowledge of the directors and executive officers, no one person beneficially owns, controls or directs, directly or indirectly, more than 10% of the issued and outstanding Common Shares, other than Glencore AG, which holds 29% of the outstanding Common Shares.
 
BUSINESS TO BE CONDUCTED AT THE MEETING
 
1.      Presentation of Financial Statements
 
The audited consolidated financial statements of the Company for the eleven months ended December 31, 2017, together with the report of the auditors thereon, will be placed before the Meeting.  Copies of the financial statements and management discussion and analysis (“MD&A”) can be obtained by contacting the Corporate Secretary of PolyMet in writing at First Canadian Place, 100 King Street West, Suite 5700, Toronto, Ontario M5X 1C7 or by e-mail at info@polymetmining.com.  Copies of such documents will be provided to shareholders free of charge.  These documents are also available online at www.sedar.com   and www.sec.gov .
 
2.     Election of Directors
 
Director Nominees for Election
 
The Board of Directors have passed a resolution to set the number of directors to be elected at nine.  All current directors intend to stand for re-election to the Board of Directors.  Management has put forward the names of the directors as nominees as outlined below.

6

PolyMet has a majority voting policy in respect of our election of directors.  In an uncontested election of directors of the Company, each director should be elected by the vote of a majority of the shares represented in person or by proxy at the shareholders' meeting convened for such election of directors.   If any nominee receives a greater number of votes "withheld" from his or her election than votes "for'' such election, that director shall promptly tender his or her resignation to the chair of the Board following the meeting. In this policy, an "uncontested election" means an election where the number of nominees for election as a director equals the number of directors to be elected.

The Nominating and Corporate Governance Committee (the "Committee") shall consider any such offer of resignation and recommend to the Board whether or not to accept it.  Any director who has tendered his or her resignation shall not attend or participate in the deliberations of either the Committee or the Board. The Committee shall recommend to the Board to accept the resignation of the director, absent exceptional circumstances. For the purposes of the policy “exceptional circumstances” may include: (i) the effect such resignation may have on the Company’s ability to comply with any applicable commercial or corporate governance agreements, governance rules and policies or applicable corporate or securities laws; (ii) the director is a member of an established and active special committee which has a defined term or mandate (such as a strategic review) and accepting the resignation of such director may jeopardize the achievement of the special committee’s mandate; (iii) majority voting was used for a purpose inconsistent with the policy objectives of the Toronto Stock Exchange’s majority voting requirement; or (iv) any other factors that the members of the Committee consider relevant.

The Board shall act on the Committee's recommendation within 90 days following the applicable shareholders' meeting and announce its decision through a press release, after considering the factors identified by the Committee and any other factors that the members of the Board consider relevant. For greater clarity, the Board will accept the resignation of the director absent exceptional circumstances. If the Board declines to accept the resignation, it should include in the press release the reasons for its decision.

Forms of proxy provided for use at any shareholders meeting where directors are to be elected should enable the shareholders to vote in favour of, or to withhold from voting in respect of, each nominee separately. The results of the vote will be filed on SEDAR and EDGAR.

Subject to any applicable corporate law restrictions or requirements, if a resignation is accepted, the Board may leave the resulting vacancy unfilled until the next annual general meeting. Alternatively, it may fill the vacancy through the appointment of a new director whom the Board considers to merit the confidence of the shareholders, or it may call a special meeting of shareholders at which there will be presented a management nominee or nominees to fill the vacant position or positions.
 
The term of each present director expires at the conclusion of the Meeting.  Each director elected at the Meeting will hold office until the conclusion of the next annual meeting of shareholders or until his or her successor is duly elected or appointed, unless he or she resigns, is removed or becomes disqualified in accordance with PolyMet’s Articles or the Company’s governing legislation.
 
PolyMet is not aware that any of the nominees will be unable or unwilling to serve as one of the directors; however, should PolyMet become aware of such an occurrence before the election of directors takes place at the Meeting and if the persons named in the accompanying Form of Proxy are appointed as proxyholder, it is intended that the discretionary power granted under such proxy will be used to vote for any substitute nominee or nominees whom the Board of Directors in its discretion, may select.
 
The persons named in the management’s proxy intend to vote the Common Shares represented by proxies for which either of them is appointed proxyholder “ FOR ” each named nominee.
 
The Board of Directors recommends a vote “FOR” each named nominee.
7

Information about Nominees for Directors
 
The following table provides certain information regarding management’s nominees for election to the Board of Directors. The respective nominees have provided this information to PolyMet as of May 2, 2018.
 
Name, Province/State and Country of Residence
 
Director Since
 
Position with PolyMet
 
Number of Common Shares Beneficially Owned, Controlled or Directed, Directly or Indirectly (1)
 
Dennis M. Bartlett (5, 6)
Arizona, United States
July 19, 2017
Director
Nil
Jonathan Cherry (5, 6)
Minnesota, United States
July 16, 2012
Director,
President & Chief Executive Officer
1,108,279
Mike Ciricillo (5, 6)
Arizona, United States
July 19, 2017
Director
Nil
Dr. David Dreisinger (3, 4, 5, 6)
British Columbia, Canada
October 3, 2003
Director
440,171
W. Ian L. Forrest (2, 3, 4)
Vaud, Switzerland
October 3, 2003
Director, Chairman
2,862,141
Helen Harper (3, 4, 5, 6)
Ontario, Canada
July 13, 2016
Director
10,000
Alan R. Hodnik (2, 4, 5)
Minnesota, United States
March 9, 2011
Director
233,141
Stephen Rowland (2, 4)
Connecticut, United States
October 30, 2008
Director
232,641
Michael M. Sill (2, 3)
Minnesota, United States
March 9, 2011
Director
496,175

Notes: (1) The information as to the number of Common Shares owned, controlled or directed, directly or indirectly, has been based upon information provided by each of the proposed nominees for director and reports filed on the System for Electronic Disclosure by Insiders (SEDI) at www.sedi.ca .
 
(2)
Member of the Compensation Committee.  Stephen Rowland is a non-voting participant of this committee.
 
(3)
Member of the Audit Committee.  Helen Harper is a non-voting participant of this committee.
 
(4)
Member of the Nominating and Corporate Governance Committee.  Helen Harper and Stephen Rowland are non-voting participants of this committee.
 
(5)
Member of the H ealth, Safety, Environment and Communities Committee.
 
(6)
Member of the Technical Steering Committee.
 
The following is a brief profile of each of the nominees for election to the Board of Directors:
 
Dennis M. Barlett has served as a member of the board of directors since July 2017.  He is also a member of our Technical Steering and Health, Safety, Environment and Communities committees. Mr. Bartlett is the Executive Director and a founding partner in Cupric Canyon Capital, a private company that is developing a large copper mine in Botswana.  His mining career spans more than 40 years, where he began as an engineer for Phelps Dodge Mining Company in 1977. He served in various planning, operations, construction, start-up and leadership capacities at large copper mining operations in Chile, Peru, New Mexico and Arizona, eventually leading all of the company’s North and South American mining operations as senior vice president, mining operations. He later served as senior vice president, development, for Phelps Dodge Mining Company and, subsequently, Freeport-McMoRan Mining Company. He had instrumental leadership roles in the expansion of the Cerro Verde copper mine in Peru, construction of a new copper mine in Safford, Arizona, and initial development of the Tenke Fungarume copper mine in Africa.  Mr. Bartlett holds a Bachelor of Science degree in Mining Engineering as well as a Masters degree in Business Administration.  Mr. Bartlett currently resides in Arizona, United States.
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Jonathan Cherry has served as the President and Chief Executive Officer and as a member of the board of directors since July 2012.  He is the Chair of the Health, Safety, Environment and Communities committee and is also a member of the Technical Steering committee. Mr. Cherry has been involved in the mining industry since 1990 and prior to joining the Company in 2012, Mr. Cherry’s career spanned more than 20 years with Rio Tinto where he worked in a number of positions, including general manager, where he was responsible for permitting and the initial development of the Eagle Mine in Michigan’s Upper Peninsula. His last position was Vice President with Rio Tinto, responsible for strategic direction in environmental permitting and compliance, legal matters and external relations related to mine development of the Resolution Copper project in Arizona. Mr. Cherry is a licensed Professional Engineer.   Mr. Cherry currently resides in Minnesota, United States.
 
Mike Ciricillo   has served as a member of the board of directors since July 2017. He is also a member of our Technical Steering and Health, Safety, Environment and Communities committees. Mr. Ciricillo began his career at INCO Ltd in Ontario Canada, before joining Phelps Dodge/Freeport McMoRan in various operating positions of increasing responsibility in the United States, Chile, The Netherlands and Democratic Republic of Congo.  He joined Glencore Peru in 2014 and is currently responsible for all copper industrial assets at Glencore. Mr. Ciricillo currently resides in Arizona, United States.
 
Dr. David Dreisinger   has served as a member of the board of directors since October 2003.  He is the Chair of the Technical Steering committee and is also a member of the Health, Safety, Environment and Communities, the Audit and Nominating and Corporate Governance committees.  Since 1988, Dr. Dreisinger has been a member of the faculty at the University of British Columbia in the Department of Materials Engineering and is currently Professor and Chairholder of the Industrial Research and Chair in Hydrometallurgy.  He has published over 300 papers and has been extensively involved as a process consultant in industrial research programs with metallurgical companies. Dr. Dreisinger has participated in 21 U.S. patents for work in areas such as pressure leaching, ion exchange removal of impurities from process solutions, use of thiosulfate as an alternative to cyanide in gold leaching, and leach-electrolysis treatment of copper recovery from sulfide ores, and the Sepon Copper Process for copper recovery from sulfidic-clayey ores.     Dr. Dreisinger serves as a director of Search Minerals, Inc., LeadFX Inc., and as Vice President – Metallurgy for each of Camrova Resources Inc. and Search Minerals Inc.  Dr. Dreisinger currently resides in British Columbia, Canada.
 
W. Ian L. Forrest   has served as a member of the board of directors since October 2003 and Chairman since July 2012.  Mr. Forrest was previously the Chairman of the board from May 2004 to February 2008 and Co-Chairman from January 2011 to July 2012.  He is the Chair of the Nominating and Corporate Governance committee and is also a member of the Audit and Compensation committees. Mr. Forrest played an important role in our revival in 2003.  Mr. Forrest is a member of the Institute of Chartered Accountants of Scotland.  Mr. Forrest has more than 40 years of experience with public companies in the resource sector.  His experience encompasses the areas of promotion, financing, exploration, production and company management.  He has also participated in several notable projects including Gulfstream's North Dome gas discovery, Qatar, Reunion Mining's Scorpion zinc, Namibia, which was subsequently developed by Anglo American, and Ocean Diamond Mining, which pioneered the independent diamond dredging industry off the west coast of southern Africa.  He also served as a director of Tanager Energy Inc. (formerly MGold Resources Inc.) until October 2011 and Belmore Resources (Holdings) plc until July 2011 when it was acquired by Lundin Mining Ltd.   He was a director of Viatrade plc, which was put into receivership in August 2009.  He also served on the boards of Georex SA and Poros SAS, companies in the oil sector. Mr. Forrest currently resides in Vaud, Switzerland.
 
Helen Harper has served as a member of the Board of Directors since July 2016.  She is also a member of our Technical Steering, the Health, Safety, Environment and Communities, the Audit committee, as a non-voting participant and the Nominating and Corporate Governance committee, as a non-voting participant.  Ms. Harper serves as Technical Director, North America for Glencore’s copper group.  She began her career as a process metallurgist at Outotec before moving into a variety of technical and business-oriented roles at Xstrata and subsequently Glencore.  Ms. Harper holds degrees in metallurgical engineering and business and is a member of the Chartered Professional Accountants of Ontario.  Ms. Harper currently resides in Ontario, Canada.

Alan R. Hodnik has served as a member of the board of directors since March 2011.  He is the Chair of the Compensation committee and is also a member of the Nominating and Corporate Governance and the Health, Safety, Environment and Communities committees.  Mr. Hodnik was named President of ALLETE Inc. in May 2009, CEO in May 2010, and named ALLETE Board Chairman in May 2011.  Since joining ALLETE in 1982, Mr. Hodnik has served as Vice President-Generation Operations, Senior Vice President of Minnesota Power Operations, and Chief Operating Officer.  As Chief Operating Officer, he provided leadership to BNI Coal Mining-North Dakota, Superior Water Light & Power-Wisconsin and transmission, distribution, generation, engineering, customer service for all aspects of Minnesota Power.  Minnesota Power is the region’s power supplier, including serving all large industrial mining and paper producers within the mineral district where PolyMet’s proposed mill is located. Mr. Hodnik was elected and served as Mayor of the City of Aurora, Minnesota from 1987-1998.  The cities of Aurora-Hoyt lakes co-host our PolyMet Erie Mine site location.  Mr. Hodnik maintains very strong working relationships with government, business, labor, education and community stakeholders in the State of Minnesota.  Mr. Hodnik serves on the Edison Electric Institute (EEI), as well as, the Essentia Health Systems Boards of Directors.  Mr. Hodnik currently resides in Minnesota, United States.
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Stephen Rowland   has served as a member of the board of directors since October 2008.  He is also a member of the Nominating and Corporate Governance and Compensation committees, as a non-voting participant on both.  Mr. Rowland has been an executive with Glencore, a diversified natural resources company, since 1988. Mr. Rowland has held various positions with responsibility for international trading in metals and minerals in London, Switzerland, and the United States.  Mr. Rowland currently resides in Connecticut, United States.
 
Michael M. Sill   has served as a member of the board of directors since March 2011. He is the Chair of the Audit committee and is also a member of the Compensation committee.  Since 1994, Mr. Sill has served as the CEO of Road Machinery & Supplies Co., a distributor of construction, mining and forestry equipment.  Educated at Dartmouth College and J.L. Kellogg Graduate School of Management, Mr. Sill started his career as a financial analyst and commercial lending officer with The Northern Trust Company.  He serves on the board of Reviva Corporation and Dunwoody College of Technology, and has previously served on the Twin Cities Regional Board of US Bank and numerous industry association boards.  Mr. Sill currently resides in Minnesota, United States.
 
To the knowledge of PolyMet’s management, except for Mr. Forrest’s directorships as noted below, no directors: (i) are, at the date hereof, or have been, during the 10 years prior to the date hereof, a director or executive officer of any company that, while that person was acting in that capacity or within a year of that person ceasing to act in that capacity became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or became subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver-manager or trustee appointed to hold assets of the director; or (ii) have, within the 10 years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangements or compromises with creditors, or had a receiver, receiver manager or trustee appointed to hold assets of the director. Viatrade plc, an investment company of which Mr. Forrest was a director, went into administration in August 2009.  Georex SA, an oil services company of which Mr. Forrest was a director, is in the process of filing for administration in France on account of its business model no longer being sustainable.  Poros SAS, an associated company of Georex SA of which Mr. Forrest was also a director, has ceased to be active since France banned oil shale fracking.
 
3.      Appointment of Auditors
 
PricewaterhouseCoopers LLP has served as PolyMet’s auditor since April 2006.  Upon the recommendation of the Audit Committee, management proposes that PricewaterhouseCoopers LLP be appointed as the auditor to hold office until the close of the next annual meeting of shareholders and that the Board of Directors be authorized to fix the remuneration to be paid to the auditor.  If the resolution is not adopted, the Business Corporations Act (British Columbia) provides that the current auditor, PricewaterhouseCoopers LLP, will continue to act for PolyMet until such time as the shareholders approve an alternative auditor.
 
A simple majority of the votes cast by proxy or in person at the Meeting is required to approve the proposed appointment of PricewaterhouseCoopers LLP.
 
The persons named in the management’s proxy intend to vote the Common Shares represented by proxies for which either of them is appointed proxyholder “ FOR ” the appointment of PricewaterhouseCoopers LLP as the auditor to hold office until the close of the next annual meeting of shareholders and that the Board of Directors be authorized to fix the remuneration to be paid to the auditor.
 
The Board of Directors recommends a vote   “FOR” appointing PricewaterhouseCoopers LLP.
 
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4.     Approval of PolyMet’s amended Omnibus Share Compensation Plan (“Omnibus Plan”)

Pursuant to the policies of the TSX, security based compensation arrangements, which do not have a fixed maximum aggregate of securities issuable, must be approved every three years by the shareholders of the listed issuer. The Omnibus Plan, as most recently approved by shareholders at the annual general and special meeting held on July 15, 2015, reserves for issuance an aggregate number of share options, restricted shares and restricted share units and other share based awards limited to 10% of the issued and outstanding Common Shares.  This excludes 2,500,000 common shares underlying options granted pursuant to the exemption under section 613(c) of the TSX Company Manual to Jonathan Cherry as an inducement to Mr. Cherry entering into full time employment with PolyMet, which was approved by the TSX.

As of the date of this Management Information Circular, the maximum number of securities issuable under the Omnibus Plan was 32,040,202 or 10.0% of the number of PolyMet’s securities outstanding with 27,564,199 or 8.6% outstanding securities granted under the Omnibus Plan and 4,476,003 or 1.4% remaining securities available for granting under the Omnibus Plan.

As of December 31, 2017 (PolyMet’s financial year-end), the maximum number of securities issuable under the Omnibus Plan was 31,930,309 or 10.0% of the number of PolyMet’s securities outstanding with 26,080,032 or 8.2% outstanding securities granted under the Omnibus Plan and 5,850,277 or 1.8% remaining securities available for granting under the Omnibus Plan.

The Board of Directors amended and re-approved the Omnibus Plan on May 14, 2018, subject to regulatory and shareholder approval, to update the Omnibus Plan by: (1) making general housekeeping changes to conform and bring the Omnibus Plan up to date; (2) amending certain provisions to bring the Omnibus Plan in line with current best practices and more similar to industry-peers; and (3) amending certain provisions to reflect the practical implementation of the Omnibus Plan, (collectively, the “Proposed Amendments”).  For a summary description of the Plan as proposed to be amended, see “ Omnibus Plan ”.

Proposed Amendments
 
In additional to general housekeeping changes to conform and bring the Omnibus Plan current, the key Proposed Amendments to the Omnibus Plan, subject to regulatory and shareholder approval, include the following:
 
·
the removal of Stock Appreciation Rights (SARs) as a type of Award available under the Omnibus Plan. The Company has never granted any SARs and has no intention of granting SARs settled with shares in the future;
   
·
the addition of Deferred Stock Units (DSUs) and Performance Stock Units (PSUs) as a type of Award available under the Omnibus Plan.  The purpose of adding these types of Awards is to keep the Company’s compensation-based awards similar with industry-peers and clarify the Omnibus Plan description for Restricted Share Unit Awards with deferred delivery and Performance Awards;
   
·
increasing the discretion of the Compensation Committee, subject to the policies and guidelines of the PolyMet Board, to determine the benefits under the Omnibus Plan;
   
·
increasing the maximum aggregate number of Common Shares available for U.S. Qualified Incentive Stock Options, U.S. Nonqualified Stock Options and Other U.S. Awards from 25 million to 100 million, subject to adjustment, which is a pro rata increase based on the increase of the Company’s current market capitalization compared to where the Company’s market capitalization was in 2007, when the Omnibus Plan was first approved;
   
·
setting the number of Common Shares reserved for issuance within any one year period to any one Participant at 1% of the total number of Outstanding Common Shares and increasing the aggregate number of Options which may be granted during any calendar year to any one Participant from 1.5 million to 3 million;
   
·
for Participants whose employment is terminated without Cause, or who cease to be employed due to permanent disability, retirement or death, all Awards (including Options) will vest immediately;
   
·
the addition of an amendment provision that allows the Compensation Committee to amend any amendment provision of the Omnibus Plan with prior shareholder approval; and
   
·
the addition of a clause specifically stating that PolyMet does not provide financial assistance to Participants with respect to any Award.

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The Omnibus Plan is subject to TSX acceptance. Thereafter, notice of any awards granted under the Omnibus Plan must be given to the TSX.

Under the policies of the TSX, the Omnibus Plan must be approved by PolyMet’s shareholders, excluding the votes of Common Shares held by insiders who are eligible to participate in the Omnibus Plan. An aggregate of 5,790,281 Common Shares are held by insiders who are eligible to participate in the Omnibus Plan and whose votes will be excluded in determining the number of votes cast in respect of the resolution to re-approve the Omnibus Plan.

If the resolution to approve the amended Omnibus Plan is not approved, all unallocated options or other awards under the Omnibus Plan will be cancelled and PolyMet will not be permitted to grant further options or other awards under the Omnibus Plan until such time as renewal approval is obtained. In such a case, all outstanding options and other awards under the Omnibus Plan will remain outstanding and be unaffected, however any outstanding options or other awards that expire unexercised, are cancelled or are otherwise terminated shall not be available for regranting.

Accordingly, at the Meeting, shareholders will be asked to consider the following resolution:

“BE IT RESOLVED as an ordinary resolution THAT:

1.                Subject to the approval of the TSX and all other applicable regulatory authorities, the PolyMet Omnibus Share Compensation Plan (the “Omnibus Plan”) and any unallocated entitlements thereunder, as most recently approved by shareholders at the annual general and special meeting held on July 15, 2015 and amended and re-approved by the Board of Directors on May 14, 2018, be and is hereby approved and adopted as the Omnibus Plan of the Company;

2.                PolyMet has the ability to continue granting securities under the Omnibus Plan until June 27, 2021, that is until the date that is three years from the date of this Meeting or any adjournment or postponement thereof, where approval of the holders of common shares is being sought;

3.                Notwithstanding that this resolution has been passed by the shareholders of PolyMet, the Board of Directors of PolyMet may revoke such resolution at any time before it has been effected without further action by the shareholders; and

4.                Any director or officer of PolyMet be and is hereby authorized, for and on behalf of PolyMet, to execute and deliver all documents and instruments and take such other actions, including making all necessary filings with applicable regulatory bodies and stock exchanges, as such director or officer may determine to be necessary or desirable to implement this ordinary resolution and the matter authorized hereby, such determination to be conclusively evidenced by the execution and delivery of any such document or instrument and the taking of any such action.”

The persons named in the management’s proxy intend to vote the Common Shares represented by proxies for which either of them is appointed proxyholder “FOR” the amendment and re-approval of the Omnibus Plan.
 
The Board of Directors recommends a vote “FOR” approval of PolyMet’s amended Omnibus Share Compensation Plan.
 
5.
Other Business
 
Management knows of no other matters to come before the Meeting other than those referred to in the Notice of Meeting.  However, if any other matters which are not now known to PolyMet shall properly come before the said Meeting, the Form of Proxy given pursuant to the solicitation by management will be voted on such matters in accordance with the best judgment of the persons voting the proxy.
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STATEMENT OF EXECUTIVE COMPENSATION
 
In this Management Proxy Circular, a “Named Executive Officer” (“NEO”) means: (i) the Chief Executive Officer; (ii) the Chief Financial Officer; (iii) the three other most highly compensated executive officers at the end of the financial year; and (iv) each individual who would be an NEO but for the fact that the individual was neither an executive officer, nor serving in a similar capacity as the end of the financial year.  For the financial year ended December 31, 2017, PolyMet had six NEO’s, namely Messrs. Jonathan Cherry, Douglas Newby, Patrick Keenan, Bradley Moore, Ryan Vogt and Andrew Ware.  Mr. Newby resigned as Chief Financial Officer and ceased to be a NEO on June 15, 2017.  Mr. Keenan was appointed Chief Financial Officer and a NEO on June 15, 2017.  Mr. Ware is not an executive officer (for the purposes of applicable securities legislation) but constitutes an NEO.
 
Compensation Committee
 
The Compensation Committee is responsible for making recommendations to the Board of Directors regarding the compensation to be paid to each of the executive officers of PolyMet.  In addition, the Compensation Committee makes recommendations regarding compensation programs and policies and the granting of options and other stock-based awards under the Omnibus Plan and Share Bonus Plan.
 
Composition of the Compensation Committee
 
During the year ended December 31, 2017, the following individuals served as members of the Compensation Committee: Alan R. Hodnik, W. Ian L. Forrest and Michael M. Sill, each of whom were directors of PolyMet during the time they served and all of whom are non-management and were deemed to be independent during the year.  Stephen Rowland participated in the Compensation Committee meetings as a non-voting member as he was not deemed independent during the year.  Each of the members of the Compensation Committee has extensive experience in corporate management in either the mining industry or in businesses located in Minnesota.  Mr. Hodnik serves as Chairman, President and CEO of Allete Inc., a Minnesota-based utility, where he has overall responsibility for approximately 1,400 employees, many of whom are skilled engineers, environmental specialists or experienced in project development and finance, and many of whom work in northeastern Minnesota.  Mr. Forrest has more than thirty years of experience in senior corporate management and board oversight primarily in the global natural resources industries.  Mr. Sill serves as the CEO of Road Machinery & Supplies Co., a Minnesota-based distributor of construction, mining and forestry equipment, where he has overall responsibility for approximately 330 employees.
 
PolyMet has utilized a compensation consultant, The Human Well, since August 2012 to assist the Compensation Committee and Board of Directors in determining salaries, director compensation, cash incentives and share based incentives and to assess the effectiveness of PolyMet’s incentive plans in contributing to corporate performance. The Compensation Committee used this data to ensure PolyMet has the ability to attract, retain and motivate directors and key executives.  Compensation is intended to be competitive with similar positions in the comparator group.  The comparator group includes publicly held companies of similar size and market capitalization in Canada and the United States and other companies operating in the mining industry in North America.  PolyMet uses comparator group information as a general guide to assist in comparing and reviewing compensation levels and establishing compensation arrangements.  PolyMet does not rely solely on specific benchmarks relative to the comparator group or any particular company in the comparator group but does consider this information when setting the overall compensation strategy.
 
PolyMet paid the following fees to The Human Well for these services for the years ended December 31, 2017 and January 31, 2017.

Year Ended
 
 
Executive Compensation Related Fees
(US$)
 
 
All Other Fees
(US$)
 
 
December 31, 2017
 
35,870
 
Nil
 
 
January 31, 2017
 
67,170
 
38,580
 
 
The Human Well will continue to provide PolyMet with compensation consulting services for the current fiscal year.
13

 
No members of the Compensation Committee are officers or employees or were former officers or employees of PolyMet or any subsidiaries within the last three years, had or has any relationship that requires disclosure hereunder in respect of indebtedness owed to PolyMet or any interest in material transactions involving PolyMet.  In addition, executive officers have not served on the Compensation Committee (or in the absence of such committee the entire Board of Directors) of another issuer whose executive officer is a member of the Compensation Committee or Board of Directors. The Compensation Committee met four times during the year, all of which were in camera sessions.  All meetings of the Compensation Committee are documented in the form of meeting minutes.
 
Objectives of Executive Compensation.
 
Due to the competitive nature of the industry, executive talent has significant career mobility and, as a result, the competition for experienced executives is great. The existence of this competition along with the need for talented and experienced executive officers to realize business objectives underlies the design and implementation of all compensation programs.
 
The Compensation Committee endeavours to ensure that PolyMet’s compensation policies:
 
 
·
align the short-term and long-term interests of its management team with those of its shareholders;
     
 
·
attract and retain highly qualified executives;
     
 
·
motivate performance and recognize and reward contribution to the success of PolyMet as measured by the accomplishment of specific performance objectives; and
     
 
·
ensure that a significant proportion of compensation is at risk and directly linked to the success of PolyMet.
 
The Compensation Committee has adopted share ownership guidelines for directors and other key personnel.   To be in compliance, directors must achieve ownership levels equal to five (5) times the annual base director fee and the President & Chief Executive Officer must achieve ownership levels equal to three (3) times the annual base salary within five (5) years.  As of May 2, 2018, the Compensation Committee was satisfied that these goals are being met in a timely fashion.
 
Risks Associated with PolyMet’s Compensation Policies and Practices
 
The Company’s compensation program is structured in a way that does not encourage excessive risk-taking by employees.  Performance targets are designed to measure a mixture of financial and non-financial measures and to balance short-term and longer-term objectives.  No single metric or objective can significantly impact executive compensation in a given year.
 
The compensation mix between base salary and at-risk pay (long-term incentives), and the balance between short-term (paid in cash and stock) and long-term incentives (paid in stock options, restricted stock, and restricted stock units), are designed to ensure that executive officers do not take inappropriate or excessive risks in the performance of their duties.  Before recommending the compensation mix to the Board, the Compensation Committee undertakes an annual review of the compensation policies and programs and considers the implications and risks associated with such policies and programs.  Based on its most recent review, the Compensation Committee did not identify any risks from the compensation policies and practices that are reasonably likely to have a material adverse effect on the Company.
 
Policy Against Hedging
 
No executive officer or director is permitted to purchase financial instruments that are designed to offset a decrease in market value of equity securities that are granted as compensation held directly or indirectly.
 
Structure of Executive Compensation
 
PolyMet’s compensation program for executive officers is designed to reward commitment and achievement with respect to overall financial and operating performance of PolyMet, the overall assessment of each executive officer’s individual performance, and each executive officer’s contribution towards meeting corporate objectives, levels of responsibility and length of service.   PolyMet has structured long-term incentives to ensure that compensation is closely aligned with shareholder interests and that a significant proportion of compensation is at risk and linked to PolyMet’s success.
14

 
Elements of Executive Compensation
 
PolyMet’s compensation package for its executive officers consists of base salary, short-term incentives, long-term incentives, and customary employment benefits.  See the “Summary Compensation Table" for disclosure of total direct compensation (as such term is defined in Form 51-102F6 – Statement of Executive Compensation) paid to the NEO’s during the three most recently completed fiscal years ended December 31, 2017, January 31, 2017, and January 31, 2016.
 
The Compensation Committee believes that the elements of executive compensation, when combined, form an appropriate mix of compensation.  The elements provide competitive salary, link executive compensation to corporate and individual performance (which rewards behavior that creates long-term value for shareholders and other stakeholders), and encourage retention with time-based vesting attached to long-term incentives.
 
For the Company’s executive officers, the compensation mix is established with an emphasis on variable (or “at risk”) pay, which is not guaranteed, including a strong equity-linked component.  The total value is weighted towards “at-risk” variable compensation, which is based on performance and ties total direct compensation to the achievement of current and longer-term corporate objectives and strategies.
 
Base Salary

Base salary levels reflect the fixed component of pay that compensates the NEO’s for fulfilling their roles and responsibilities and assists in the attraction and retention of highly qualified executives.  Base salaries are reviewed on an annual basis for each individual and adjusted where it is deemed necessary.  In order to ensure that base salaries are competitive relative to similar positions within the mining industry, industry salary surveys are reviewed.  Other considerations taken into account when examining base salaries include:  years of experience, the contribution which the individual can make and has made to the success of the Company, the level of responsibility and authority inherent in the individual’s job, and leadership qualities of the individual.
 
Annual and Long-Term Incentives
 
The Company has an Annual or Short-Term Incentive Plan (“STIP”) and Long-Term Incentive Plan (“LTIP”) developed by the Compensation Committee and approved by the Board, pursuant to which key employees are eligible for a bonus calculated as a percentage of their annual base salary if certain performance criteria prescribed by the STIP and LTIP are satisfied.  Incentives are based on two factors, namely (i) the achievement of specific corporate objectives, and (ii) the individual’s performance.  The weighting is based on the individual’s level in the Company.  The evaluation of PolyMet’s corporate performance is based on achievement of specific targets such as achievement of environmental review and permitting milestones, operating expenditures, and safety. The individual performance component is more subjective and is based on individual goals established at the beginning of the year for each individual, which are linked to the achievement of the Company’s goals.
 
PolyMet’s incentive compensation policy provides for targets for short-term and long-term incentive compensation as a percentage of base salary.  These targets are then multiplied by a performance factor to arrive at a final bonus as a percentage of salary. The performance factor is designed to provide the flexibility to recognize exceptional performance of an individual and is determined by the Compensation Committee with respect to the Chief Executive Officer, and jointly by the Compensation Committee and the Chief Executive Officer for other individuals. The performance factor, together with the targets, create a limit (the “maximum permissible bonus”) on the incentive compensation as a percentage of base salary.
 
Ultimately, the Compensation Committee uses its discretion at the end of the year when comparing actual achievements against the performance criteria prescribed by the STIP and LTIP. The Compensation Committee believes that rigid formulas can occasionally lead to an unwarranted result that does not accurately reflect performance and believes that the discretion of the Board should be the ultimate determinant of final, overall compensation within the context of pre-determined guidelines. See “Summary Compensation Table” in this Circular for actual amounts paid and value granted to Named Executive Officers for the fiscal year ended December 31, 2017.
15

 
Common Share Performance Graph
 
PolyMet’s Common Shares trade on the Toronto Stock Exchange (the “TSX”) under the symbol “POM”.   The Common Shares also trade on the NYSE American (“NYSE”) under the symbol “PLM”.  Assuming an initial investment of $100, the following graph illustrates the comparison between the cumulative total shareholder return on the Common Shares (based upon the trading prices on the TSX) relative to the cumulative total return on the S&P/TSX Composite Index and S&P TSX Composite Index – Metals and Mining for the period of February 1, 2013 to December 31, 2017.
 
CUMULATIVE VALUE OF A $100 INVESTMENT ASSUMING REINVESTMENT OF DIVIDENDS
 
 
The S&P/TSX Composite Index is an index of the share prices of the largest companies on the TSX as measured by market capitalization. Stocks included in this index cover all sectors of the economy, and the S&P/TSX Composite Index has traditionally been heavily weighted towards financial stocks.
 
The S&P/TSX Composite Index – Metals & Mining is comprised of the world’s leading mining companies with holdings and projects all over the globe. Stocks included in this index provide diverse geographic exposure to mining companies and broad exposure to metals and minerals.
 
As such, it is difficult to directly compare the NEO compensation with the trends reflected in the graph above.  However; it is important to note that following several management changes in recent years, including the hiring of a new CEO in July 2012, the slope of the share price performance line has changed such that the Company has outperformed the Metals & Mining index.
 
The Company is of the view that compensation levels for the executive officers cannot and should not be directly compared to year-over-year relative share price performance. Global commodity prices and general market conditions are significant factors affecting the Company’s share price and these are beyond the control of the Company’s executive officers.
16

 
The Company’s executive compensation package is designed to attract and retain top quality managers for the longer-term to manage and grow the business through both adverse and favorable economic cycles. During the eleven months ended December 31, 2017, a significant portion of executive officer compensation was based on long-term incentives with the ultimate value received tied directly to the Company’s share price performance.
 
Recent highlights include:
 
·
In June 2017, the Company appointed Patrick Keenan as Chief Financial Officer;
   
·
In August 2017 and September, the Minnesota Department of Natural Resources (“MDNR”) released six draft water appropriation permits and two draft dam safety permits for 30-days of public review and comment which have all closed;
   
·
In September 2017, the Company issued and committed to issue to Glencore secured debentures with a total principal amount of $20 million;
   
·
In October 2017, the Company entered into an agreement with EIP Credit Co., LLC (“EIP Credit”) to reserve wetland bank credits for the NorthMet Project;
   
·
In November 2017, the U.S. House of Representatives approved bipartisan legislation introduced by Rep. Rick Nolan, D-MN-8 directing the Secretary of Agriculture to move forward with the land exchange between PolyMet and the U.S. Forest Service.  This bill has been advanced to the US Senate for consideration;
   
·
In January 2018, the MDNR released the draft Permit to Mine for public review and comment which has closed;
   
·
In January 2018, the Minnesota Pollution Control Agency (“MPCA”) released the draft water quality permit, draft section 401 certification, and draft air emissions permit for public review and comment which have all closed;
   
·
In February 2018, the final public hearings on the draft permits were completed;
   
·
In March 2018, the Company and Glencore agreed to extend the term of outstanding debentures until March 31, 2019, reduce the interest rate on the outstanding debentures, and make available $80 million in additional debentures during 2018 to complete pre- and post-permitting work, including detailed engineering and environmental cleanup, and to purchase wetland credits; and
   
·
In March 2018, the Company issued an Updated Technical Report under NI 43-101 incorporating process improvements, project improvements, and environmental controls described in the Final EIS and draft permits.  The update also included detailed capital costs, operating costs, and economic valuation for the mine plan being permitted as well as an assessment of potential future opportunities.
 
In determining executive compensation, the Compensation took into consideration corporate performance and individual performance.  Although individual performance of the executives met performance objectives on a number of fronts, corporate performance had its mixture of successes and challenges.

Summary Compensation Table
 
The following table provides a summary of compensation awarded, earned, paid, or payable during the fiscal years ended December 31, 2017, the financial years January 31, 2017 and 2016 to the NEO’s.  Note the results for the year ended December 31, 2017 are for 11 months:
17

 
Name
and
principal
position
Year Ended
Salary
(US$)
Share-
based
awards
(US$) (1)
Option-
based
awards
(US$) (2)
Non-equity Annual
incentive
plans (US$)
Pension
value
(US$) (3)
All other
compensation
(US$)
Total
compensation
(US$)
Jonathan Cherry
President and Chief Executive Officer
Dec 2017
Jan 2017
Jan 2016
377,700
396,900
362,500
Nil
590,600
Nil
Nil
625,800
Nil
412,000
421,000
450,000
14,600
15,900
15,900
Nil
Nil
Nil
804,300
2,050,200
828,400
Douglas Newby (4)
Former Chief Financial Officer
Dec 2017
Jan 2017
Jan 2016
135,500
255,700
252,500
Nil
249,200
Nil
Nil
264,000
Nil
Nil
132,300
114,800
4,100
7,700
7,600
Nil
Nil
Nil
139,600
908,900
374,900
Patrick Keenan (5)
Chief Financial Officer
Dec 2017
Jan 2017
Jan 2016
173,300
Nil
Nil
200,000
Nil
Nil
200,000
Nil
Nil
100,500
Nil
Nil
8,000
Nil
Nil
Nil
Nil
Nil
681,800
Nil
Nil
Bradley Moore
Executive Vice President, Environmental and Governmental Affairs
Dec 2017
Jan 2017
Jan 2016
199,300
210,700
205,000
Nil
236,200
Nil
Nil
249,100
Nil
114,100
111,800
150,200
12,000
12,600
12,300
16,600
Nil
Nil
342,000
820,400
367,500
Andrew Ware
Chief Geologist
Dec 2017
Jan 2017
Jan 2016
145,900
154,900
152,300
Nil
67,600
Nil
Nil
71,900
Nil
99,500
81,100
73,400
8,700
9,300
9,200
Nil
Nil
Nil
254,100
384,800
234,900
Ryan Vogt
Corporate Controller
Dec 2017
Jan 2017
Jan 2016
163,200
172,600
166,000
Nil
99,300
Nil
Nil
105,600
Nil
71,200
55,900
53,800
9,800
10,400
9,500
Nil
Nil
Nil
244,200
443,800
229,300
 
Notes:  
(1)
Balances represent shares valued using the Company’s share price the day prior to the grant.  Although the Company’s practice is to grant long term equity-based awards at the start of each calendar year, due to blackouts, awards for 2016 were granted February 1, 2016, awards for 2017 were granted January 5, 2017, and awards for 2018 were granted March 30, 2018.  This resulted in no awards being reflected in the years ending January 31, 2016 or December 31, 2017 but two awards being reflected in the year ended January 31, 2017.
 
       
   
On February 1, 2016, Mr. Cherry was granted 392,442 restricted share units valued at $298,200 with vesting on February 1, 2018.  On January 5, 2017, Mr. Cherry was granted 389,815 restricted share units valued at $292,400 with vesting on January 5, 2019.
 
       
   
On February 1, 2016 Mr. Newby was granted 166,788 restricted stock units valued at $126,700 with vesting on February 1, 2018.  On January 5, 2017, Mr. Newby was granted 163,310 restricted share units valued at $122,500 with vesting on January 5, 2019.
 
       
   
On June 15, 2017, Mr. Keenan was granted 327,869 restricted share units valued at $200,000 with 109,290 vesting on June 15, 2018, 109,290 vesting on June 15, 2019, and 109,289 vesting on June 15, 2020.
 
       
   
On February 1, 2016 Mr. Moore was granted 174,593 restricted stock units valued at $132,700 with vesting on February 1, 2018.  On January 5, 2017, Mr. Moore was granted 138,056 restricted share units valued at $103,500 with vesting on January 5, 2019.
 
       
   
On February 1, 2016 Mr. Vogt was granted 62,500 restricted stock units valued at $47,500 with vesting on February 1, 2018.  On January 5, 2017, Mr. Vogt was granted 69,012 restricted share units valued at $51,800 with vesting on January 5, 2019.
 
       
   
On February 1, 2016 Mr. Ware was granted 39,254 restricted stock units valued at $29,800 with vesting on February 1, 2018.  On January 5, 2017, Mr. Ware was granted 50,366 restricted share units valued at $37,800 with vesting on January 5, 2019.
 
       
  
(2)
The fair value of each option is estimated as at the date of grant using the Black-Scholes pricing model. Although the Company’s practice is to grant long term equity-based awards at the start of each calendar year, due to blackouts, awards for 2016 were granted February 1, 2016, awards for 2017 were granted January 5, 2017, and awards for 2018 were granted March 30, 2018.  This resulted in no awards being reflected in the years ending January 31, 2016 or December 31, 2017 but two awards being reflected in the year ended January 31, 2017.
 
       
 
On February 1, 2016, Mr. Cherry was granted 1,147,000 stock options with immediate vesting.   These options expire February 1, 2021 and have an exercise price of $0.7600.  The fair value of $304,800 was determined using the following key assumptions:  risk free interest rate of 1.01%, expected dividend yield of zero, expected forfeiture rate of zero, expected volatility of 55.87%, and estimated life of 2.50 years.  On January 5, 2017, Mr. Cherry was granted 1,212,000 stock options with immediate vesting.   These options expire January 5, 2022 and have an exercise price of $0.7500.  The fair value of $321,000 was determined using the following key assumptions:  risk free interest rate of 1.30%, expected dividend yield of zero, expected forfeiture rate of zero, expected volatility of 56.08%, and estimated life of 2.50 years.
 
       
 
On February 1, 2016, Mr. Newby was granted 487,000 stock options with immediate vesting.   These options expire February 1, 2021 and have an exercise price of $0.7600.  The fair value of $129,400 was determined using the following key assumptions:  risk free interest rate of 1.01%, expected dividend yield of zero, expected forfeiture rate of zero, expected volatility of 55.87%, and estimated life of 2.50 years.  On January 5, 2017, Mr. Newby was granted 508,000 stock options with immediate vesting.   These options expire January 5, 2022 and have an exercise price of $0.7500.  The fair value of $134,600 was determined using the following key assumptions:  risk free interest rate of 1.30%, expected dividend yield of zero, expected forfeiture rate of zero, expected volatility of 56.08%, and estimated life of 2.50 years.
 
18

 
 
On June 15, 2017, Mr. Keenan was granted 300,000 stock options vesting on June 15, 2018.  These options expire June 15, 2023 and have an exercise price of $0.6100.  The fair value of $65,820 was determined using the following key assumptions:  risk free interest rate of 1.42%, expected dividend yield of zero, expected forfeiture rate of zero, expected volatility of 57.06%, and estimated life of 2.50 years.  On June 15, 2017, Mr. Keenan was granted 300,000 stock options vesting on June 15, 2019.  These options expire June 15, 2023 and have an exercise price of $0.6100.  The fair value of $65,820 was determined using the following key assumptions:  risk free interest rate of 1.42%, expected dividend yield of zero, expected forfeiture rate of zero, expected volatility of 57.06%, and estimated life of 2.50 years.  On June 15, 2017, Mr. Keenan was granted 300,000 stock options vesting on June 15, 2020.  These options expire June 15, 2023 and have an exercise price of $0.6100.  The fair value of $68,400 was determined using the following key assumptions:  risk free interest rate of 1.49%, expected dividend yield of zero, expected forfeiture rate of zero, expected volatility of 53.91%, and estimated life of 3.0 years.
 
       
 
On February 1, 2016, Mr. Moore was granted 510,000 stock options with immediate vesting.   These options expire February 1, 2021 and have an exercise price of $0.7600.  The fair value of $135,500 was determined using the following key assumptions:  risk free interest rate of 1.01%, expected dividend yield of zero, expected forfeiture rate of zero, expected volatility of 55.87%, and estimated life of 2.50 years.  On January 5, 2017, Mr. Moore was granted 429,000 stock options with immediate vesting.   These options expire January 5, 2022 and have an exercise price of $0.7500.  The fair value of $113,600 was determined using the following key assumptions:  risk free interest rate of 1.30%, expected dividend yield of zero, expected forfeiture rate of zero, expected volatility of 56.08%, and estimated life of 2.50 years.
 
       
 
On February 1, 2016, Mr. Vogt was granted 183,000 stock options with immediate vesting.   These options expire February 1, 2021 and have an exercise price of $0.7600.  The fair value of $48,600 was determined using the following key assumptions:  risk free interest rate of 1.01%, expected dividend yield of zero, expected forfeiture rate of zero, expected volatility of 55.87%, and estimated life of 2.50 years.  On January 5, 2017, Mr. Vogt was granted 215,000 stock options with immediate vesting.   These options expire January 5, 2022 and have an exercise price of $0.7500.  The fair value of $57,000 was determined using the following key assumptions:  risk free interest rate of 1.30%, expected dividend yield of zero, expected forfeiture rate of zero, expected volatility of 56.08%, and estimated life of 2.50 years.
 
       
 
On February 1, 2016, Mr. Ware was granted 115,000 stock options with immediate vesting.   These options expire February 1, 2021 and have an exercise price of $0.7600.  The fair value of $30,600 was determined using the following key assumptions:  risk free interest rate of 1.01%, expected dividend yield of zero, expected forfeiture rate of zero, expected volatility of 55.87%, and estimated life of 2.50 years.  On January 5, 2017, Mr. Ware was granted 156,000 stock options with immediate vesting.   These options expire January 5, 2022 and have an exercise price of $0.7500.  The fair value of $37,800 was determined using the following key assumptions:  risk free interest rate of 1.30%, expected dividend yield of zero, expected forfeiture rate of zero, expected volatility of 56.08%, and estimated life of 2.50 years.
 
       
 
(3)
Balances represent Company contributions under 401K pension plan.
 
       
 
(4)
Mr. Newby resigned as Chief Financial Officer on June 15, 2017.
 
       
 
(5)
Mr. Keenan was appointed Chief Financial Officer on June 15, 2017.
 

 
Incentive Plan Awards
 
PolyMet employs both short-term and long-term incentive plans to award its employees for individual and company performance.  Short-term incentives consist of cash and vested stock.  Long-term incentives consist of stock options, restricted stock, restricted stock units, deferred stock units, performance stock units and other stock-based awards.  Option-based and stock-based awards are governed by the Omnibus Plan, described in detail below.
 
Omnibus Plan
 
PolyMet’s Omnibus Plan was approved by shareholders at the 2007 Annual and Special Meeting held on June 27, 2007, reapproved by shareholders at the 2010 Annual General and Special Meeting held on July 7, 2010, further amended and reapproved by shareholders at the 2012 Annual General and Special Meeting held on July 10, 2012, reapproved by shareholders at the 2015 Annual General and Special Meeting held on July 15, 2015, and further amended and proposed for reapproval by shareholders at the 2018 Annual General and Special Meeting being held on June 27, 2018  and is administered by the Compensation Committee.
 
The Omnibus Plan provides the flexibility to issue many types of incentive awards, including stock options, restricted stock, restricted stock units, deferred stock units, performance stock units, and other stock-based awards.
 
Stock options are rights to purchase a specified number of shares of PolyMet at a pre-determined exercise price.  Because the exercise price of a stock option is fixed, a stock option becomes more valuable as the price of the shares increase.  Thus, stock option grants focus management’s attention on long-term growth in shareholder value and share price appreciation.  Stock options also are a valuable retention tool because stock option grants typically become exercisable (or vest) over a period of time and, with limited exceptions, stock options are forfeited if the recipient’s employment with PolyMet terminates.
19

 
General Provisions of the Omnibus Plan
 
The following is a summary of important provisions of the Omnibus Plan and the amended terms as contemplated are also detailed below.  A shareholder or any other interested party may obtain a copy of the current Omnibus Plan by contacting the Corporate Secretary of the Company or by accessing it online at ww w.sedar.com and www.sec.gov .
 
Purpose.  The purpose of the Omnibus Plan is to promote the interests and long-term success by (i) furnishing certain directors, officers, employees or consultants of the Company with greater incentive to further develop and promote the business and financial success of the Company, (ii) furthering the identity of persons to whom awards may be granted with those of the shareholders of the Company, and (iii) assisting the Company in attracting, retaining and motivating its directors, officers, employees and consultants.
 
Eligible Participants.  The Compensation Committee can, from time to time, recommend Awards to any director, officer, employee or any individual, company or other person engaged to provide ongoing valuable services to PolyMet (a “Consultant”), or to a person otherwise approved by the Compensation Committee (any such person or company is called an “Eligible Person”).
 
Number of Securities Issued or Issuable. The maximum number of Common Shares issuable under the Omnibus Plan will be 10% of all issued and outstanding Common Shares; of which 3,640,000 Common Shares are reserved for issuance as Bonus Shares .   A further 2,500,000 common shares are reserved for issuance pursuant to an exemption under Section 613(c) of the TSX Company Manual as an inducement to Mr. Cherry entering into full time employment with PolyMet.
 
Maximum Grant to Insiders. The aggregate number of Common Shares issuable to all Participants that are insiders in any one year period cannot exceed 10% of the total number of outstanding Common Shares (on a non-diluted basis) excluding those Common Shares issuable under PolyMet’s existing Share Bonus Plan.
 
Maximum Grant to Independent Directors . The aggregate number of Common Shares issuable to any one Participant that is an independent director of PolyMet cannot exceed 1% of the total number of outstanding Common Shares (on a non-diluted basis), excluding Common Shares reserved for issuance to such Participant at a time when such Participant was not an independent director of PolyMet and excluding those Common Shares issuable under PolyMet’s existing Share Bonus Plan.
 
Maximum Grant to Any One Participant.  Subject to the restrictions set forth above, the aggregate number of Common Shares issuable to any one Participant in any one year period, cannot exceed, in aggregate, 5% of the total number of outstanding Common Shares.
 
Notwithstanding any other granting provision, the aggregate number of Common Shares issuable under the Omnibus Plan for U.S. Qualified Incentive Stock Options and other U.S. Awards cannot exceed 100 million Common Shares, subject to adjustment provision s in the Omnibus Plan and subject to the provisions of section 422 and 424 of the U.S. Internal Revenue Code.
 
Exercise Price of Options.  The exercise price per Common Share for options is fixed by the Compensation Committee.  Under no circumstances can the exercise price at the time of grant be less than the closing United States dollar trading price of the Common Shares on the NYSE American on the previous day of the date of grant.
 
Vesting of Options.  Vesting is at the discretion of the Compensation Committee.   However, if a Participant’s employment is terminated by PolyMet without cause, or a Participant’s contract as a consultant is terminated by PolyMet before its normal termination date without cause, or a change of control of PolyMet occurs then all unvested Options will vest on the date of termination or change of control, as the case may be.
 
Term of Options. The term of options granted will be determined by the Compensation Committee and specified in the option agreement pursuant to which such option is granted, provided that the date cannot be later than the earlier of (i) the date which is the 10th anniversary of the date on which such option is granted, and (ii) the latest date permitted under the applicable rules and regulations of all regulatory authorities to which PolyMet is subject. Where the expiry date for an option occurs during or within 9 business days following the end of a Blackout Period, the expiry date shall be extended to the date which is 10 business days following the end of such Blackout Period.
20

 
Exercise of Options.  Options may be exercised by a Participant: (i) upon payment of the exercise price; (ii) by arrangements made between PolyMet and a broker chosen by the Participant by which the broker pays PolyMet the exercise price of the Options that are exercised upon the sale of the Common Shares issued upon the exercise of the Options; or (iii) with the approval of the Compensation Committee, at the election of the Participant, by payment by PolyMet to the Participant of an amount equal to the difference between the exercise price and the Market Price of the Common Shares to be issued on the exercise of the Option or by the issue of Common Shares to the Participant having a Market Price equal to the difference between the exercise price and the Market Price of the Common Shares to be issued on the exercise of the Option.
 
Restricted Stock.   The Compensation Committee is authorized to grant Restricted Stock to Eligible Persons under the Omnibus Plan. The Common Shares of restricted stock will be subject to such restrictions as the Compensation Committee may impose (including, without limitation, a restriction on or prohibition against the right to receive any dividend or other right or property with respect thereto), which restrictions may lapse separately or in combination at such time or times, in such instalments or otherwise as the Compensation Committee determines.
 
Restricted Stock Unit. The Compensation Committee is authorized to grant Restricted Stock Units to Eligible Persons under the Omnibus Plan. A Restricted Stock Unit Award will be subject to a Restricted Stock Unit Award agreement containing such terms and conditions, not inconsistent with the provisions of the Omnibus Plan, as the Compensation Committee determines.
 
Deferred Stock Unit. The Compensation Committee is authorized to grant Deferred Stock Units to Eligible Persons under the Omnibus Plan. A Deferred Stock Unit Award will be subject to a Deferred Stock Unit Award agreement containing such terms and conditions, not inconsistent with the provisions of the Omnibus Plan, as the Compensation Committee determines.
 
Performance Stock Unit. The Compensation Committee is authorized to grant Performance Stock Units to Eligible Persons under the Omnibus Plan.  A Performance Stock Unit granted under the Omnibus Plan (i) may be denominated or payable in cash, Common Shares, other securities, other Awards, and (ii) will confer on the holder thereof the right to receive payments, in whole or in part, upon the achievement of such performance goals during such performance periods as the Compensation Committee establishes.
 
Other Stock-Based Awards.  The Compensation Committee is authorized to grant to an Eligible Person, subject to the terms of the Omnibus Plan, such Other Stock-Based Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Common Shares (including, without limitation, securities convertible into Common Shares), as are deemed by the Compensation Committee to be consistent with the purpose of the Omnibus Plan.
 
Termination of Options.  Except as may be determined by the Compensation Committee or the Board of Directors; (i) if a Participant resigns or a Participant’s contract as a consultant terminates at its normal termination date, then all Options granted to such Participant expire 30 days after the date of resignation or termination; (ii) if a Participant’s employment is terminated by PolyMet without cause, or a Participant’s contract as a Consultant is terminated by PolyMet before its normal termination date without cause, then the Option will expire 180 days after the date of termination; (iii) if a Participant’s employment is terminated by PolyMet for cause, or a Participant’s contract as a consultant is terminated by PolyMet before its normal termination date for cause, then the Option will expire on the eighth day following the date of termination; (iv) if a Participant’s contract as a consultant is frustrated before its normal termination date due to permanent disability, then the Option will expire 180 days after the date of frustration; (v) if a Participant’s employment ceases due to permanent disability, then the Option will continue to become exercisable until the Expiry Date; (vi) if a Participant retires upon attaining the mandatory or early retirement age established by PolyMet from time to time, then the Option will expire on the Expiry Date; and (vii) if a Participant dies, then the Option will continue to become exercisable during the period ending on the earlier of (i) 12 months after the death of the Participant and (ii) the Expiry Date.
21

 
Termination of Restricted Stock, Restricted Stock Units, Deferred Stock Units, Performance Stock Units and Other Stock-Based Awards.   Except as otherwise determined by the Compensation Committee and as set forth in the applicable Award Agreement, upon a Participant’s termination of employment (as determined under criteria established by the Compensation Committee) during the applicable restriction period, all applicable Common Shares of Restricted Stock, Restricted Stock Units, Deferred Stock Units, Performance Stock Units and Other Stock-Based Awards at such time subject to restriction shall be forfeited and reacquired by the Company; provided, however, that the Compensation Committee may, when it finds that a waiver would be in the best interest of the Company, waive in whole or in part any or all remaining restrictions with respect to Common Shares of Restricted Stock or Restricted Stock Units.
 
Change in Status.  A change in the status, office, position or duties of a Participant from the status, office, position or duties held by such Participant on the date on which the Award was granted to such Participant will not result in the termination of the Award granted to such Participant provided that such Participant remains an Eligible Person.
 
Assignability.  Awards granted under the Omnibus Plan are non-transferable and non-assignable to anyone other than to a “permitted assign” as defined in the Omnibus Plan.
 
Procedure for Amending.  The Compensation Committee has the right at any time to amend the Omnibus Plan or any Award agreement under the Omnibus Plan provided that shareholder approval has been obtained by ordinary resolution, including any amendment that would: (i) increase the number of Common Shares, or rolling maximum percentage, reserved for issuance under the Omnibus Plan; (ii) reduce the exercise price per Common Share under any option or cancel any option and replace such option with an option with a lower exercise price per Common Share; (iii) extend the term of an Award beyond its original expiry time; (iv) increase the limit on the participation by independent directors in the Omnibus Plan; (v) permit an Award to be transferable or assignable to any person other than in accordance with the Omnibus Plan; or (vi) amend any amendment provision of the Omnibus Plan.   Notwithstanding the foregoing , the Compensation Committee has the right at any time to amend the Omnibus Plan or any Award agreement under the Omnibus Plan without shareholder approval for: (i) amendments of a clerical nature; (ii) amendments to reflect any requirements of any regulatory authorities to which the Company is subject, include the TSX and NYSE American; (iii) amendments to any vesting provisions of any Award (other than to Insiders); (iv) amendments to the expiration date of an Option (other than to Insiders) that does not extend the term of an Award past the original date of expiration for such Award; and (v) any amendments to implement or modify a cashless exercise feature for Awards, whether such feature provides for payments in cash or securities, so long as any such feature provides for the full deduction of the number of underlying Common Shares from the total number of Common Shares available under the Omnibus Plan.
 
Financial Assistance.  PolyMet does not provide financial assistance to Participants with respect to any Award.
 
Adjustments to Awards.  Appropriate adjustments to the Omnibus Plan and to Awards granted thereunder are to be made to give effect to adjustments in the number and type of Common Shares (or other securities or other property) resulting from subdivisions, consolidations, substitutions, or reclassifications of Common Shares, payment of stock dividends or other changes in PolyMet’s capital. In the event of any merger, acquisition, amalgamation, arrangement or other scheme of reorganization that results in a change of control, the Compensation Committee will, in an appropriate and equitable manner: (i) determine the purchase price or exercise price with respect to any Award, provided, however , that the number of Common Shares covered by any Award or to which such Award relates is always a whole number; or (ii) determine the manner in which all unexercised option rights granted under the Omnibus Plan will be treated; (iii) offer any Participant the opportunity to obtain a new or replacement option over any securities into which the Common Shares are changed or are convertible or exchangeable, on a basis proportionate to the number of Common Shares under option and the exercise price (and otherwise substantially upon the terms of the option being replaced, or upon terms no less favourable to the Participant); or (iv) commute for or into any other security or cash, any option that is still capable of being exercised, upon giving to the Participant to whom the Award has been granted at least 30 days written notice of its intention to commute the option, and during such period of notice, the option, to the extent it has not been exercised, can be exercised by the Participant without regard to any vesting conditions attached thereto, and on the expiry of such period of notice, the unexercised portion of the option will lapse and be cancelled.
 
Control Change.   In addition to the foregoing, in the event of a transaction that, if completed could result in a change of control (including a take over bid), a Participant may exercise all Options granted to the Participant, but only for the purposes of participating in such transaction.
22

 
Share Bonus Plan (reserved for issuance under the Omnibus Plan)
 
In 2003, PolyMet established the Share Bonus Plan for its directors and key employees and consultants (the “Key Employees”). The directors and Key Employees are collectively referred to as the “Share Bonus Plan Participants”. The Share Bonus Plan provides for the Common Shares to be issued to the Share Bonus Plan Participants upon PolyMet reaching certain identifiable milestones in its business plan, and is intended to reward the Share Bonus Plan Participants for their unique expertise and experience in achieving these milestones. The Board of Directors is of the view that, from a corporate governance perspective, it is more appropriate to provide a reward mechanism of this nature than to provide incentives to its Key Employees exclusively in the form of incentive stock options or other awards granted under the Omnibus Plan, since the share price can vary in accordance with a range of external factors not related to the performance of management and its Key Employees.
 
The Share Bonus Plan was initially adopted by the Board of Directors on November 5, 2003 and was approved by 98.42% of the disinterested shareholders at the Annual General and Special Meeting held on May 28, 2004.
 
On November 4, 2004, PolyMet adopted, and the shareholders approved, revisions to the existing Share Bonus Plan which limited the aggregate number of shares that may be issued under the Share Bonus Plan and PolyMet’s Incentive Stock Option plan to not more than 20% of the issued shares from time to time. As a result, at that time, the number of shares issuable under the Share Bonus Plan was limited to Milestones l and 2, for an aggregate number of 2,890,000 Common Shares.  Milestone 1 and Milestone 2 have been reached and the 2,890,000 shares issuable upon the achievement of Milestone 1 and Milestone 2 have been issued.
 
At the Annual General and Special Meeting held on June 21, 2006, 98.82% of the disinterested shareholders approved the issue of a total of 2,350,000 shares to the Share Bonus Plan Participants upon the attainment of Milestone 3 - completion of a bankable feasibility study which indicates that production from the NorthMet Property is commercially feasible.  Milestone 3 was met on October 24, 2006 and the 2,350,000 shares issuable upon the achievement of Milestone 3 have been issued.
 
At the Annual General and Special Meeting held on June 27, 2007, 97.83% of the disinterested shareholders approved PolyMet’s Omnibus Plan.  The Omnibus Plan provided for the issuance of a total of 5,940,000 common shares under the Share Bonus Plan, of which 3,640,000 common shares remain to be issued upon achievement of Milestone 4.
 
At the Annual General and Special Meeting held on June 17, 2008, 84.13%   of the disinterested shareholders approved the issuance of 3,640,000 shares of PolyMet under the Share Bonus Plan upon PolyMet reaching Milestone 4 – commencement of commercial production for the NorthMet Property.
 
Annual Burn Rate
The table below sets out the burn rates of the awards granted under the Company’s Omnibus Plan for the three most recently completed fiscal years. The burn rate is calculated as the number of securities granted under the arrangements during the applicable fiscal year, divided by the weighted average number of securities outstanding for such period.

 
December 2017
Burn Rate
January 2017 Burn Rate
January 2016
Burn Rate
Omnibus Plan
1.0%
2.6%
0.1%
 
23

 
Outstanding share-based awards and option-based awards to NEO’s
 
The following table provides a summary of outstanding share-based awards and option-based awards as at December 31, 2017 for the NEO’s:
 
 
Option-based Awards
 
Share-based Awards
Name and Principal Position
Number of securities
underlying unexercised
options (#)
 
Option
exercise
price (US$)
Option
expiration
date
Value of vested
unexercised in-the-money
options (US$) (1)
Number of shares or units
of shares
that have not
vested (#) (2)
Market or payout value
of share-based
awards that have not vested (US$)
Unvested               Vested
Jonathan Cherry
President and Chief Executive Officer
833,333
Nil
Nil
Nil
Nil
1,666,667
562,000
502,000
1,147,000
1,212,000
0.7613
0.9800
1.0700
0.7600
0.7500
Jun. 21, 2022
Jan. 17, 2024
Jan. 5, 2020
Feb. 1, 2021
Jan. 5, 2022
164,500
Nil
Nil
114,700
133,300
782,257
672,700
Douglas Newby
Former Chief Financial Officer
 
 
Nil
Nil
Nil
Nil
Nil
Nil
200,000
100,000
219,000
213,000
487,000
508,000
1.0318
 0.7977
 0.9800
 1.0700
 0.7600
 0.7500
Mar. 8, 2022
Jan. 7. 2023
Jan. 17, 2024
Jan. 5, 2020
Feb. 1, 2021
Jan. 5, 2022
Nil
6,230
Nil
Nil
48,700
55,900
Nil
Nil
Patrick Keenan
Chief Financial Officer
 
300,000
300,000
300,000
Nil
Nil
Nil
 0.6100
 0.6100
 0.6100
Jun. 15, 2023
Jun. 15. 2023
Jun. 15, 2023
Nil
Nil
Nil
327,869
282,000
Bradley Moore
Executive Vice President, Environmental and Governmental Affairs
Nil
Nil
Nil
Nil
Nil
Nil
300,000
100,000
160,000
138,000
510,000
429,000
1.8816
1.0318
0.9800
1.0700
0.7600
0.7500
Jan. 25, 2021
Mar. 8, 2022
Jan. 17, 2024
Jan. 5, 2020
 Feb. 1, 2021
Jan. 5, 2022
Nil
Nil
Nil
Nil
51,000
47,200
312,649
268,900
Ryan Vogt
Corporate Controller
Nil
Nil
Nil
Nil
Nil
Nil
100,000
50,000
85,000
72,000
183,000
215,000
1.0058
0.8671
0.9800
1.0700
0.7600
0.7500
Apr. 2, 2022
Jul. 25, 2022
Jan 17, 2024
Jan. 5, 2020
Feb. 1, 2021
Jan. 5, 2022
Nil
Nil
Nil
Nil
18,300
23,700
131,512
113,100
Andrew Ware
Chief Geologist
Nil
Nil
Nil
Nil
Nil
100,000
85,000
109,000
115,000
156,000
0.9972
0.9800
1.0700
0.7600
0.7500
Apr. 3, 2023
Jan. 17, 2024
Jan. 5, 2020
 Feb. 1, 2021
Jan. 5, 2022
Nil
Nil
Nil
11,500
17,200
89,620
77,100
Notes:        (1)      Represents the cumulative value of unexercised in-the-money options at December 31, 2017 for each NEO.   
(2)
Represents Restricted Stock and Restricted Stock Units.
 
 Incentive plan awards - value vested or earned during the year to NEO’s
 
The following table represents the aggregate dollar value that would have been realized if the stock options under the option based award had been exercised on the vesting date by taking the difference between the market price of the common shares of the Company and the exercise price of the stock options under the option based award on the vesting date:
 
Name and Principal Position
Option-based awards - Value
vested during the year (US$)
Share-based awards -Value
vested during the year (US$)
Non-equity incentive plancompensation -Value earnedduring the year (US$)
Jonathan Cherry
President and Chief Executive Officer
Nil
Nil
Nil
Douglas Newby
Former Chief Financial Officer
Nil
228,800
Nil
Patrick Keenan
Chief Financial Officer
Nil
Nil
Nil
Bradley Moore
Executive Vice President, Environmental and Governmental Affairs
Nil
Nil
16,600
Ryan Vogt
Corporate Controller
Nil
Nil
Nil
Andrew Ware
Chief Geologist
Nil 
Nil
Nil
 
24

Employment Contracts and Termination and Change in Control Entitlements
 
 
PolyMet believes that severance and change of control benefits are necessary in order to attract and retain high caliber executive talent and to protect the Company’s interests.  Severance and change in control benefits are negotiated and set with regard to the experience level of the individual, the complexity of the position and other relevant market factors.
 
With respect to change in control benefits, PolyMet provides compensation if an NEO is terminated in connection with a change of control transaction on a “double trigger” basis, meaning that before such executive can receive compensation: (i) a change in control must occur; and (ii) within 90 days of such change of control, the NEO’s employment must be terminated for good reason or without cause.  Change of control benefits are granted to motivate the NEO’s to act in the best interests of the shareholders by removing the distraction of post-change of control uncertainties faced by executive officers with regard to their continued employment and compensation.  PolyMet believes that the “double trigger” change of control compensation is consistent with market practices and is attractive in maintaining continuity and retention of key management personnel.
 
The following table shows the amount payable for NEO’s with a severance or change of control benefit on December 31, 2017 had the following triggering event occurred on December 31, 2017:
 
Named Executive Officer
Title
Termination Without
Cause (US$)
Termination Change in
Control (US$)
Jonathan Cherry
President and Chief Executive Officer
1,697,900
1,697,900
Patrick Keenan
Chief Financial Officer
794,500
794,500
Bradley Moore
Executive Vice President, Environmental and Governmental Affairs
734,900
734,900
 
Severance benefits are appropriate, particularly with respect to a termination without cause, since this provides PolyMet with certainty and the flexibility to make a changes in executive management if such change is in the shareholders’ best interests.
 
Below is a summary of the agreement for severance and change of control benefits for each of the NEO’s as of December 31, 2017.
 
Jonathan Cherry is President and Chief Executive Officer.  The agreement with Mr. Cherry contains provisions for payments on termination of his employment without cause or in connection with a change in control and contains conventional non-competition provisions.  The termination payment is equal to 2.99 times the highest annual salary based on the highest monthly salary during the previous 36 months, pro rata bonus using the highest annual bonus during the previous two years or average annual bonus during the previous three years, and health insurance benefits.
 
Patrick Keenan is Executive Vice President and Chief Financial Officer.  The agreement with Mr. Keenan contains provisions for payments on termination of his employment without cause or in connection with a change in control and contains conventional non-competition provisions.  The termination payment is equal to 2 times the highest annual salary based on the highest monthly salary during the previous 36 months, pro rata bonus using the highest annual bonus during the previous two years or average annual bonus during the previous three years, and health insurance benefits.
 
Bradley Moore is Executive Vice President, Environmental and Governmental Affairs.  The agreement with Mr. Moore contains provisions for payments on termination of his employment without cause or in connection with a change in control and contains conventional non-competition provisions.  The termination payment is equal to 2 times the highest annual salary based on the highest monthly salary during the previous 36 months, 2 times the highest annual bonus during the previous two years or average annual bonus during the previous three years, and health insurance benefits.
 
Ryan Vogt is the Corporate Controller.  Mr. Vogt does not have an agreement containing provisions for payments on termination of his employment without cause or in connection with a change in control or contain non-competition provisions.
 
Andrew Ware is the Chief Geologist.  Mr. Ware does not have an agreement containing provisions for payments on termination of his employment without cause or in connection with a change in control or contain non-competition provisions.
25

 
Director Compensation
 
The following table sets forth all annual compensation awarded, earned, paid, or payable to directors of PolyMet during the year ended December 31, 2017, other than Mr. Jonathan Cherry whose compensation as a director is fully reflected in the summary compensation table for NEO’s.
 
Director Name
Fees Earned
(US$)
Option
Awards (#)
Option
Awards
(US$) (1)
Share-based
Awards
(US$)
All other Compensation
(US$)
Total (US$)
W. Ian L. Forrest
53,750
Nil
Nil
30,000
Nil
83,750
Dennis Bartlett
22,500
250,000
79,600
30,000
Nil
132,100
Mike Ciricillo
22,500
Nil
Nil
Nil
Nil
22,500
Matt Daley
21,300
Nil
Nil
Nil
Nil
21,300
Dr. David Dreisinger
43,800
Nil
Nil
30,000
Nil
73,800
Helen Harper
43,800
Nil
Nil
30,000
Nil
73,800
Alan R. Hodnik
47,500
Nil
Nil
30,000
Nil
77,500
Stephen Rowland
43,800
Nil
Nil
30,000
Nil
73,800
Michael M. Sill
47,500
Nil
Nil
30,000
Nil
77,500

Notes:              (1)      The fair value of each option is estimated as at the date of grant using the Black-Scholes pricing model.
 
Outstanding share-based awards and option-based awards to directors
 
The following table provides a summary of outstanding share-based awards and option-based awards as at December 31, 2017 for the directors:
 

Director Name
Number of securities
underlying unexercised
options (#)
Option
exercise
price
(US$)
Option
expiration
date
Value of vested
unexercised in-the-money
options
(US$) (1)
Number of shares or units
of shares
that have not
vested (#) (2)
Market or payout value
of share-based
awards that have not vested
(US$)
Unvested
Vested
Dennis Bartlett
Nil
250,000
0.6600
July 20, 2027
Nil
Nil
Nil
Mike Ciricillo
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Dr. David Dreisinger
Nil
Nil
Nil
150,000
150,000
300,000
0.7110
0.7977
0.9800
Feb. 17, 2019
Jan. 7, 2023
Dec. 16, 2023
25,400
12,400
Nil
59,935
51,600
W. Ian L. Forrest
Nil
Nil
150,000
 300,000
0.7110
0.9800
Feb. 17, 2019
Dec. 16, 2023
25,400
Nil
59,935
51,600
Helen Harper
Nil
250,000
0.7600
Jul. 14, 2026
30,000
30,865
26,600
Alan R. Hodnik
Nil
Nil
Nil
250,000
200,000
300,000
1.7689
1.0318
0.9800
Mar. 10, 2021
Mar. 8, 2022
Dec. 16, 2023
Nil
Nil
Nil
59,935
51,600
Stephen Rowland
Nil
Nil
Nil
250,000
300,000
200,000
1.0318
0.9800
0.9300
Mar. 8, 2019
Dec. 16, 2023
Jan. 9, 2024
Nil
Nil
Nil
59,935
51,600
Michael M. Sill
Nil
Nil
Nil
250,000
200,000
300,000
1.7689
1.0318
0.9800
Mar. 10, 2021
Mar. 8, 2022
Dec. 16, 2023
Nil
Nil
Nil
59,935
51,600

Notes:        (1)      Represents the cumulative value of unexercised in-the-money options at December 31, 2017 for each director.   
 
(2)
Represents Restricted Stock Units.
 
26

Incentive plan awards - value vested or earned during the year for directors
 
The following table represents the aggregate dollar value that would have been realized if the stock options under the option based award had been exercised on the vesting date by taking the difference between the market price of the common shares of the Company and the exercise price of the stock options under the option based award on the vesting date:
 
Director Name
Option-based awards - Value
vested during the year
(US$)
Share-based awards -Value
vested during the year
(US$)
Non-equity incentive plan
compensation -Value earned
during the year
(US$)
Dennis Bartlett
 
Nil
Nil
Nil
Mike Ciricillo
Nil
 
Nil
Nil
Dr. David Dreisinger
Nil
 
Nil
Nil
W. Ian L. Forrest
Nil
 
Nil
Nil
Helen Harper
Nil
 
Nil
Nil
Alan R. Hodnik
Nil
 
Nil
Nil
Stephen Rowland
Nil
 
Nil
Nil
Michael M. Sill
Nil
 
Nil
Nil
 

Securities Authorized for Issuance Under Equity Compensation Plans
 
The following table provides an aggregate summary of information with respect to the compensation plans under which equity securities are authorized for issuance in effect as of December 31, 2017:
 
Plan Category
Number of securities to be issued upon exercise of outstanding options and rights under compensation plans as at December 31, 2017
Weighted-average exercise price of outstanding options and rights under compensation plans as at December 31, 2017
(US$)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column) under compensation plans as at December 31, 2017 (4)
Equity compensation plans approved by securityholders (1)
 
22,249,032
0.99
 
5,850,277
Equity compensation plans approved by securityholders (2)
 3,640,000
N/A
Nil
Equity compensation plans not approved by securityholders ( 3)
2,500,000
0.76
Nil
Total
28,389,032
N/A
5,850,277

Notes:
(1)
Includes the Omnibus Plan.
     
 
(2)
Includes the Share Bonus Plan.
     
 
(3)
On June 21, 2012, Mr. Cherry was granted 2,500,000 options pursuant to the exception under section 613(c) of the TSX Company Manual.  833,334 options vested on June 21, 2012, 833,333 options vested December 6, 2013; and 833,333 options will vest upon receipt of permits needed to commence construction of the NorthMet Project.
     
 
(4)
Based on 10% of the Company’s issued and outstanding shares as at December 31, 2017 less options, bonus shares, restricted shares and restricted share units as at December 31, 2017.  2,500,000 options are excluded pursuant to the exception under section 613(c) of the TSX Company Manual.
 
 
27

STATEMENT ON CORPORATE GOVERNANCE
 
PolyMet’s Corporate Governance Disclosure in the form required by the National Instrument 58-101 - Disclosure of Corporate Governance Practices is set out in Schedule “A” to this Management Information Circular.
 
The Common Shares are listed on NYSE American (formerly the NYSE Amex). Section 110 of the NYSE American Company Guide permits NYSE American to consider the laws, customs and practices of a non-U.S. issuer in relaxing certain NYSE American listing criteria, and to grant exemptions from NYSE American listing criteria based on these considerations. PolyMet has obtained relief under this provision. Section 123 of the NYSE American Company Guide requires a quorum of not less than 33-1/3 of a listed company's shares issued and outstanding entitled to vote at a meeting of shareholders.  Under PolyMet’s Articles, the quorum for the Meeting is two of the shareholders present in person or by proxy holding or representing more than 5% of the Common Shares.
 
AUDIT COMMITTEE
 
In addition, PolyMet is subject to National Instrument 52-110 - Audit Committees , which has been adopted in various Canadian provinces and territories and which prescribes certain requirements in relation to audit committees and defines the meaning of independence with respect to directors. These reflect current regulatory guidelines of the Canadian Securities Administrators (CSA) as well as certain U.S. initiatives under the Sarbanes-Oxley Act of 2002 and adopted corporate governance rules of the NYSE and NASDAQ National Market.
 
The Audit Committee consists of Michael M. Sill (Chair), Dr. David Dreisinger and W. Ian L. Forrest, all of whom are independent directors.  Helen Harper is a non-voting participant of the Audit Committee and is not deemed independent.  Mr. Forrest meets the criteria of an “Audit Committee Financial Expert” under the applicable rules and regulations of the SEC and such designation has been ratified by the Board of Directors.
 
The Audit Committee oversees auditing procedures, receives and accepts the reports of the independent registered public accounting firm, oversees the internal systems of accounting and management controls, and makes recommendations to the Board of Directors as to the selection and appointment of the auditors.
 
The Audit Committee meets four times a year, at a minimum, and has access to all officers, management and employees of the Company and may engage advisors or counsel as deemed necessary to perform its duties and responsibilities as a committee.
 
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
 
No director, executive officer, proposed nominee for election as a director, nor any of their respective associates or affiliates is or has been at any time since the beginning of the last completed financial year indebted to PolyMet.
 
DIRECTOR AND OFFICER INDEMNIFICATION AND INSURANCE
 
Indemnification of Directors or Officers
 
There is no indemnification payable this financial year to directors or officers of PolyMet.
 
Directors’ and Officers’ Liability Insurance
 
In accordance with the Company’s Articles, PolyMet maintains Director & Officer Liability insurance policies to provide insurance against possible liabilities incurred by directors and officers in their capacity as directors and officers of the Company.  The current annual premium of US$148,000 is paid by the Company which provides coverage in the aggregate amount of US$30 million per policy period.
28

 
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
 
Other than as disclosed herein, PolyMet is not aware of any material interest, direct or indirect, involving any director or executive officer or proposed nominee for election as a director or any shareholder who holds more than 10% of the outstanding voting securities, or any associate or affiliate of any of the foregoing, which has been entered into since the commencement of the last completed financial year or in any proposed transaction which, in either case, has materially affected or will materially affect PolyMet or any of PolyMet’s subsidiaries.
 
ADDITIONAL INFORMATION
 
Additional information relating to PolyMet may be found on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and on the Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”) at www.sec.gov under the company name “PolyMet”.
 
Additional financial information is provided in the audited consolidated financial statements and MD&A for the most recently completed financial year.  Copies of the financial statements and MD&A can be obtained by contacting the Corporate Secretary of PolyMet in writing at First Canadian Place, 100 King Street West, Suite 5700, Toronto, Ontario M5X 1C7 or by e-mail at info@polymetmining.com.  Copies of such documents will be provided to shareholders free of charge.
 
APPROVAL
 
The contents and the sending of this Management Information Circular have been approved by the Board of Directors of PolyMet.
 
DATED at Toronto, Ontario, as of the 3 rd day of May, 2018.
 
  By Order of the Board of Directors  
     
 
signed “Jonathan Cherry”  
  Jonathan Cherry  
  President & Chief Executive Officer  
     
 
 
29

 
SCHEDULE “A”
 
POLYMET MINING CORP.
CORPORATE GOVERNANCE DISCLOSURE

CORPORATE GOVERNANCE DISCLOSURE
REQUIREMENT
 
CORPORATE
GOVERNANCE PRACTICES
 
1.
 
Board of Directors
 
 
 
 
(a)
Disclose the identity of directors who are independent.
 
The Board of Directors have determined that Dennis Bartlett, Dr. David Dreisinger, W. Ian L. Forrest, Alan R. Hodnik and Michael M. Sill are “independent”.
Under the Canadian Securities Administrators’ National Instrument 58-101 – Disclosure of Corporate Governance Practices , a director is “independent” if he or she has no direct or indirect material relationship with the Company that could, in the view of the Board of Directors, be reasonably expected to interfere with the exercise of that director’s independent judgment.
 
 
 
(b)
Disclose the identity of directors who are not independent, and describe the basis for that determination.
 
The Board of Directors has determined that Jonathan Cherry, Mike Ciricillo, Helen Harper   and Stephen Rowland are not independent.  Mr. Cherry serves as the President and Chief Executive Officer. Mr. Ciricillo, Mrs. Harper and Mr. Rowland are representatives of Glencore and the Board of Directors has chosen to deem them not independent at this time.
 
 
 
(c)
Disclose whether or not a majority of directors are independent.
 
 
A majority of the Directors are independent.
 
 
(d)
If a director is presently a director of any other issuer that is a reporting issuer (or the equivalent) in a jurisdiction or a foreign jurisdiction, identify both the director and the other issuer.
 
 
The Directors who are directors of other reporting issuers (or the equivalent) are:
 
Name
Reporting Issuer
 
Dr. David Dreisinger
Search Minerals, Inc.
LeadFX Inc.
 
Alan R. Hodnik
ALLETE, Inc.
 
 
 
(e)
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. If the independent directors do not hold such meetings, describe what the board does to facilitate open and candid discussion among its independent directors.
 
The independent directors meet without management and non-independent directors present, at each in person meeting of the Board and such other times as the independent directors deem necessary. Other than in person, meetings may also take place formally or informally over the telephone or electronically by way of e-mail.  During the period from February 1, 2017 to December 31, 2017, the independent directors met in person without management and the non-independent directors three times.
 
 
A - 1

 
     
CORPORATE GOVERNANCE DISCLOSURE
REQUIREMENT
   
CORPORATE
GOVERNANCE PRACTICES
 
 
(f)
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 or her role and responsibilities. If the board has neither a chair that is independent nor a lead director that is independent, describe what the board does to provide leadership for its independent directors.
 
The Chairman of the Board, W. Ian L. Forrest is an independent director.
The roles and responsibilities of the Chairman are to provide effective Board leadership, oversee all aspects of the Company’s direction and administration and ensure that the Board carries out its responsibilities effectively and build a healthy corporate governance culture.
 
 
(g)
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 attendance record of each of the present directors for all Board of Directors meetings for the period February 1, 2017 to December 31, 2017 is as follows:
 
   
 
 
Name
Attendance
 
   
 
 
Dennis Bartlett
4/7 (appointed July 19, 2017)
 
   
 
 
Jonathan Cherry
7/7
 
   
 
 
Mike Ciricillo
3/7 (appointed July 19, 2017)
 
   
 
 
Dr. David Dreisinger
7/7
 
   
 
 
Helen Harper
7/7
 
   
 
 
W. Ian L. Forrest
7/7
 
   
 
 
Alan R. Hodnik
7/7
 
   
 
 
Stephen Rowland
6/7
 
   
 
 
Michael Sill
7/7
 
2.
 
Board Mandate – Disclose the text of the board’s written mandate. If the board does not have a written mandate, describe how the board delineates its role and responsibilities.
 
A copy of the Board Mandate can be found on the Company’s website at www.polymetmining.com .
 
3.
 
(a)
Position Descriptions
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 position.
 
 
The Board of Directors have developed a written position for the Chair and the committee Chairs.  The Charter of each committee sets out the responsibilities, duties and authority of all committee members.
 
 
A - 2

 

     
CORPORATE GOVERNANCE DISCLOSURE
REQUIREMENT
   
CORPORATE
GOVERNANCE PRACTICES
 
 
(b)
Disclose whether or not the board and Chief Executive Officer have developed a written position description for the Chief Executive Officer. If the board and Chief Executive Officer have not developed such a position description, briefly describe how the board delineates the role and responsibilities of the Chief Executive Officer.
 
The Board of Directors and the Chief Executive Officer have developed a written position description of the Chief Executive Officer.
 
4.
 
(a)
Orientation and Continuing Education
Briefly describe what measures 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.
 
 
New directors receive orientation, commensurate with their previous experience, on the business, technology and industry and on the responsibilities of directors.  In addition, they also receive a manual, which includes the Company’s charters, mandates, codes and policies (the “Manual”).
Orientation as to the nature and operation of the issuer’s business occurs through various means, including presentations by management and employees to give the directors additional insight into the business.
 
 
 
(b)
Briefly describe 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 for them to meet their obligations as directors.
 
Continuing education is provided to the directors through the following means: 1) review and supply of revisions to the Manual; 2) regular updates on the Company’s business; 3) notifications of changes in regulatory environment or director roles and responsibilities; 4) encouragement and funding to attend courses and conferences that will increase their own and the Board of Directors’ effectiveness.
W. Ian L. Forrest is a member of the Institute of Chartered Accountants of Scotland.
 
 
5.
 
(a)
Ethical Business Conduct
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:
 
 
The Board of Directors have adopted a written Code of Business Conduct and Ethics, (the “Code”), for its directors, officers and employees.
 
   
(i)        disclose how an interested party may obtain a copy of the written code.
 
A copy of the Code can be found on the Company’s website at www.polymetmining.com .
 
   
(ii)        describe how the board monitors compliance with its code, or if the board does not monitor compliance, explain whether and how the board ensures compliance with its code; and
 
The Board monitors compliance with the Code through its Audit Committee and the Corporate Secretary.  In addition to answering questions or concerns regarding the Code, the Corporate Secretary is responsible for: investigating possible violations of the Code (in conjunction with the Audit Committee) and ensuring that new directors, officers and employees are given a copy of the Code including any referenced policies.
 
A - 3

 

     
CORPORATE GOVERNANCE DISCLOSURE
REQUIREMENT
   
CORPORATE
GOVERNANCE PRACTICES
 
   
 (iii)              provide a cross-reference to any material change report(s) 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.
 
 
No material change reports have been filed by the Company since February 1, 2017, the beginning of the most recently completed financial year, that pertain to any conduct of a director or executive officer that constitutes a departure from the Code.
 
 
(b)
Describe any steps the board takes to ensure directors exercise independent judgement in considering transactions and agreements in respect of which a director or executive officer has a material interest.
 
The Board of Directors takes measures to exercise independent judgment in considering transactions and agreements in respect of which any of the directors or executive officers may have a material interest.  Where appropriate, directors absent themselves from portions of a meeting of the Board of Directors or of a board committee to allow independent discussion of points in issue.
The Company complies with the relevant provisions under the Business Corporations Act (British Columbia) dealing with conflict of interest situations. Through directors’ and officers’ questionnaires and other systems, the Company gathers and monitors relevant information in relation to potential conflicts of interest a director or officer may have.
 
 
(c)
Describe any other steps the board takes to encourage and promote a culture of ethical business conduct.
 
The Board evaluates and ensures the integrity of the Chief Executive Officer and other executive officers, and ensures that the Chief Executive Officer and other executive officers create a culture of integrity and conduct themselves in an ethical manner and in compliance with applicable laws and rules, audit and accounting principles, and governing policies.
The directors, officers and employees are reminded on an annual basis that they are responsible for reading, understanding and complying with the Code and related policies and, in the case of directors, also with the Board Mandate.
 
6.
 
(a)
Nomination of Directors
Describe the process by which the board identifies new candidates for board nomination.
 
The Nominating and Corporate Governance Committee has the primary responsibility for identifying, evaluating, reviewing and recommending qualified candidates to serve on the Board, including consideration of any potential conflicts of interest as well as applicable independence and experience requirements.
In making its recommendations to the Board of Director nominees, the Nominating and Corporate Governance Committee considers what competencies and skills the Board as a whole should possess, it assesses what competencies and skills each existing director possesses, and then it assesses what competencies and skills each nominee will bring to the Board and whether such nominee is independent and can devote sufficient time and resources to his or her duties as a Board member.
 
 
A - 4


     
CORPORATE GOVERNANCE DISCLOSURE
REQUIREMENT
   
CORPORATE
GOVERNANCE PRACTICES
 
 
(b)
Disclose whether or not the board has a nominating committee composed entirely of independent directors. If the board does not have a nominating committee composed entirely of independent directors, describe what steps the board takes to encourage an objective nomination process.
 
The Nominating and Corporate Governance Committee consists of Dr. David Dreisinger, W. Ian L. Forrest and Alan R. Hodnik, all of whom are independent directors.  Helen Harper and Stephen Rowland are also non-voting participants of the Nominating and Corporate Governance Committee and are deemed non-independent.
The Nominating and Corporate Governance Committee provides the Board with recommendations of each nominee and specify qualifications, including personal qualities, characteristics, skills, experience, accomplishments, reputation, current knowledge in the countries and communities in which PolyMet operates business, as well as consider the ability to commit adequate time and resources to the Company.
 
 
 
(c)
If the board has a nominating committee, describe the responsibilities, powers and operation of the nominating committee.
 
A copy of the Nominating and Corporate Governance Committee Charter can be found on the Company’s website at www.polymetmining.com
The Nominating and Corporate Governance Committee has full access to Company books, facilities, records and personnel to allow it to discharge its responsibilities, and may retain the advice and assistance of those internal or external legal, accounting or other advisors it deems necessary or appropriate.
 
 
7.
 
(a)
Compensation
Describe the process by which the board determines the compensation for your company’s directors and officers.
 
Compensation for directors and officers is determined by the Compensation Committee.  In determining compensation for the directors, the Compensation Committee internally reviews director compensation paid by companies with a comparable profile to PolyMet.   In determining compensation for officers, the Compensation Committee utilizes the process described in the Management Information Circular under the heading “Statement of Executive Compensation - Objectives Executive Compensation”.
 
 
(b)
Disclose whether or not the board has a compensation committee composed entirely of independent directors. If the board does not have a compensation committee composed entirely of independent directors, describe what steps the board takes to ensure an objective process for determining such compensation.
 
The Compensation Committee is composed of independent directors. The members of the Committee are W. Ian L. Forrest, Alan R. Hodnik and Michael Sill.  Stephen Rowland is also a non-voting participant of the Compensation Committee and is deemed non-independent.
The Compensation Committee provides the Board with recommendations regarding the appointment, performance, succession and remuneration of officers, succession and leadership plans, remunerations and compensation policies.
 
A - 5


     
CORPORATE GOVERNANCE DISCLOSURE
REQUIREMENT
   
CORPORATE
GOVERNANCE PRACTICES
 
 
(c)
If the board has a compensation committee, describe the responsibilities, powers and operation of the compensation committee.
 
A copy of the Compensation Committee Charter can be found on the Company’s website at www.polymetmining.com
The Compensation Committee has full access to Company books, facilities, records and personnel to allow it to discharge its responsibilities, and may retain the advice and assistance of those internal or external legal, accounting or other advisors it deems necessary or appropriate.
 
 
(d)
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.
 
 
 
Compensation consultant, The Human Well, has been retained since August, 2012 to assist the Compensation Committee and Board of Directors in determining salaries, director compensation, cash incentives and share based incentives and to assess the effectiveness of PolyMet’s incentive plans in contributing to corporate performance.  The Human Well will continue to provide PolyMet with these similar compensation consulting services for the current fiscal year.
 
 
 
8.
 
Other Board Committees - If the board has standing committees other than the audit, compensation and nominating committees identify the committees and describe their function.
 
The Company has a Health, Safety, Environment and Communities Committee whose purpose is to ensure that PolyMet conducts its activities in a way that will promote sustainable development, protect human life and the preservation of the environment.  A copy of the charter can be found on the Company’s website at www.polymetmining.com
The members of the Health, Safety, Environment and Communities Committee are Dennis Bartlett, Jonathan Cherry, Mike Ciricillo, Dr. David Dreisinger, Helen Harper and Alan R. Hodnik.
The Company also has a Technical Steering Committee whose purpose is to oversee the development of production of PolyMet mining projects.  The Committee reviews and assess the mine plan, financial model, project construction and operations.
The members of the Technical Steering Committee are Dennis Bartlett, Jonathan Cherry, Mike Ciricillo, Dr. David Dreisinger and Helen Harper.
 
 
A - 6

 
CORPORATE GOVERNANCE DISCLOSURE
REQUIREMENT
CORPORATE
GOVERNANCE PRACTICES
9.
 
Assessments – 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. If assessments are not regularly conducted, describe how the board satisfies itself that it, its committees, and individual directors are performing effectively.
 
The Nominating and Corporate Governance Committee is mandated to ensure that the contributions of Board members, committees of the Board, and the Board as a whole, are reviewed on an annual basis.  To facilitate this annual assessment, the Board reviews an Annual Assessment Report and Questionnaires for the Board and each of its committees.
 
10.
 
Director Term Limits and Other Mechanisms of Board Renewal - 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 the Board of Directors. The Nominating and Corporate Governance Committee considers a number of factors when re-nominating incumbent directors or nominating new directors, including (i) personal qualities, characteristics, skills, experiences, accomplishments and reputation in the business community; (ii) current knowledge and contacts relevant to the Company's business; (iii) ability and willingness to commit adequate time and resources to Board and committee matters; and (iv) compliance with all legal and regulatory requirements of a Board member.
 
 
11.
 
Policies Regarding the Representation on the Board
 
 
 
 
(a)
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.
 
 
The Company has not adopted a written policy relating to the identification and nomination of women directors.  The Nominating and Corporate Governance Committee recommends Board nominations based on qualifications, regardless of gender.  The Company values the diversity of the Board and are committed to providing equal opportunity in all aspects of the Company.
 
 
(b)
If an issuer has adopted a policy referred to in (a), disclose the following in respect of the policy: (i) a short summary of its objectives and key provisions, (ii) the measures taken to ensure that the policy has been effectively implemented, (iii) annual and cumulative progress by the issuer in achieving the objectives of the policy, and
(iv) whether and, if so, how the board or its nominating committee measures the effectiveness of the policy.
 
 
N/A
 
A - 7

 
CORPORATE GOVERNANCE DISCLOSURE
REQUIREMENT
CORPORATE
GOVERNANCE PRACTICES
12.
 
Consideration of the Representation of Women in the Director Identification and Selection Process - 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 re-election 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.
 
The Nominating and Corporate Governance Committee recommends Board nominations based on qualifications, regardless of gender.  The Company values the diversity of the Board and are committed to providing equal opportunity in all aspects of the Company.
 
13.
 
Consideration Given to the Representation of Women in Executive Officer Appointments - 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.
 
Officer appointments are based on qualifications, regardless of gender.  The Company values diversity and are committed to providing equal opportunity in all aspects of the Company.
 
14.
 
Issuer’s Targets Regarding the Representation of Women on the Board and in Executive Officer Positions –
 
 
 
   
For purposes of this Item, a “target” means a number or percentage, or a range of numbers or percentages, adopted by the issuer of women on the issuer’s board or in executive officer positions of the issuer by a specific date.
 
 
 
 
(a)
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.
 
The Company does not have a “target” regarding women on its Board.  Board appointments are based on qualifications, regardless of gender.  The Company values diversity and is committed to providing equal opportunity in all aspects of the Company.
 
 
 
(b)
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.
 
The Company does not have a “target” regarding of women in executive officer positions.  Officer appointments are based on qualifications, regardless of gender.  The Company values diversity and is committed to providing equal opportunity in all aspects of the Company.
 
 
(c)
If the issuer has adopted a target referred to in either (b) or (c), disclose: (i) the target, and (ii) the annual and cumulative progress of the issuer in achieving the target.
 
N/A
 
 
A - 8


CORPORATE GOVERNANCE DISCLOSURE
REQUIREMENT
CORPORATE
GOVERNANCE PRACTICES
15.
 
Number of Women on the Board and in Executive Officer Positions
 
 
(a)
Disclose the number and proportion (in percentage terms) of directors on the issuer’s board who are women.
 
One out of nine (11%)
 
(b)
Disclose the number and proportion (in percentage terms) of executive officers of the issuer, including all major subsidiaries of the issuer, who are women.
 
One out of five (20%)

A - 9

Exhibit 99.3
 
 

 
                                                                                                                                                                                        

POLYMET MINING CORP.
OMNIBUS SHARE
COMPENSATION PLAN
 
 
(as approved by the directors of the Company on the 25th day of May, 2007 and confirmed by the shareholders of the Company on the 27th day of June, 2007 and as amended, restated, and confirmed from time to time most recently by the directors on the 14th day of May, 2018 and subject to approval of the shareholders on the 27th day of June, 2018)
 
 

 

                                                                                                                                                                                        

TABLE OF CONTENTS
 
1.
PURPOSE OF THE PLAN
1
     
2.
 DEFINITIONS AND INTERPRETATION
1
     
3.
 EFFECTIVE DATE OF THE PLAN
5
     
4.
 ADMINISTRATION OF THE PLAN
5
     
5.
 COMMON SHARES AVAILABLE AND ACCOUNTING
7
     
6.
 GRANT OF AWARDS AND LIMITATIONS
7
     
7.
ELIGIBILITY
8
     
8.
 OPTIONS
8
     
9.
  RESTRICTED STOCK
10
     
10.
  RESTRICTED STOCK UNITS
11
     
11
.  DEFERRED STOCK UNITS
12
     
12.
 PERFORMANCE STOCK UNITS
13
     
13.
 OTHER STOCK-BASED AWARDS
14
     
14.
 GENERAL TERMS OF AWARDS
15
     
15.
CHANGE IN STATUS
15
     
16.
 NON-TRANSFERABILITY OF AWARDS
16
     
17.
 REPRESENTATIONS AND COVENANTS
16
     
18.
 U.S. QUALIFIED INCENTIVE STOCK OPTION PROVISIONS
17
     
19.
 WITHHOLDING TAX
18
     
20.
 CONDITIONS
19
     
21.
 SUSPENSION, AMENDMENT OR TERMINATION OF PLAN
19
     
22.
ADJUSTMENTS
20
     
23.
 GENERAL
 23
 

1.0
PURPOSE OF THE PLAN
 
PolyMet Mining Corp. (the “Company” ) established the Omnibus Share Compensation Plan (the “Plan” ) to promote the interests and long-term success of the Company by (i) furnishing certain directors, officers, employees or consultants of the Company or its affiliates, or other persons with greater incentive to further develop and promote the business and financial success of the Company; (ii) furthering the identity of persons to whom awards may be granted with those of the shareholders of the Company; and (iii) assisting the Company in attracting, retaining and motivating its directors, officers, employees and consultants.
 
The Company believes that these purposes may best be achieved by granting awards and affording such persons the opportunity to acquire an interest in the Company.
 
2.0
DEFINITIONS AND INTERPRETATION
 
2.1      Definitions.   In this Plan, the terms below have the following meanings:
 
(a)
Affiliate ” means any Person that directly or indirectly controls, is controlled by, or is under common control with the Company.  The term “control” (including with correlative meaning, the terms “ controlled by ” and “ under common control with ”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting or other securities, by contract or otherwise.
 
(b)
Award   means any Option, Restricted Stock, Restricted Stock Unit, Deferred Stock Unit, Performance Stock Unit or Other Stock-Based Awards granted pursuant to the Plan.
 
(c)
Award Agreement   means the agreement (whether in written or electronic form) or other instrument or document evidencing any Award granted pursuant to the Plan.
 
(d)
Blackout Period ” means an interval of time during which the Company has determined that one or more Participants may not trade any securities of the Company.
 
(e)
Board   or “ Board of Directors ” means the board of directors of the Company.
 
(f)
Bonus Shares   means the Common Shares that remain issuable pursuant to the Company’s bonus share incentive plan adopted by the Board of Directors on November 5, 2003, and approved by disinterested shareholders for its directors and key employees and consultants.
 
(g)
Business Day ” means a day on which the Toronto Stock Exchange (for as long as the Common Shares are listed and traded on the Toronto Stock Exchange) is open and on which banks are open for business in Vancouver, British Columbia and Toronto, Ontario.
 
(h)
Cause ”, with respect to any Participant (i) has the meaning, if any, set forth in the employment or service agreement then in effect, if any, between such Participant and the Company or any Affiliate, or (ii) if there is no such meaning set forth in such employment or service agreement, or there is no such employment or service agreement then in effect, means a circumstance that would entitle the Company to terminate the employment or services of such Participant at law without notice or compensation as a result of such termination.
 
(i)
Common Shares ” means the common shares without par value of the Company represented by a certificate or certificates in physical or electronic form.
 
(j)
Company ” means PolyMet Mining Corp. and any successor company thereto.
 
(k)
Compensation Committee ” has the meaning ascribed thereto by Section 4.1.
 
1

 
(l)
Consultant ” means any individual, company or other Person, other than a director, officer or employee, engaged, to provide ongoing valuable services to the Company or any Affiliate on a full-time or part-time basis, or otherwise, for a period of at least twelve (12) months.
 
(m)
Control Change ” means in the case of a particular Award, unless the applicable Award Agreement (or any employment or service agreement between the Participant and the Company or an Affiliate) states otherwise, the first to occur of any of the following events: (i) the dissolution or liquidation of the Company; (ii) a reorganization, merger, amalgamation, arrangement, consolidation or business combination of the Company with one or more other Persons as a result of which the shareholders of the Company, as a group, as they were immediately prior to such event, will hold less than a majority of the Outstanding Common Shares of the surviving corporation; (iii) a sale of all or substantially all of the Company’s assets to a Person that was not an Affiliate immediately prior to such event; or (iv) a sale to one Person (or two or more Persons acting in concert), other than to the Company or an Affiliate immediately prior to such event, of equity securities of the Company resulting in such Person or Persons holding Common Shares representing at least fifty percent (50%) of the aggregate voting power of all outstanding equity securities of the Company.  For the purposes of subsection (iii), a sale of all or substantially all of the Company’s assets means a sale determined as a sale of all or substantially all of the Company’s assets by the Board, for the purpose and with specific reference to the Plan.  Notwithstanding any other provision of this section, a Control Change shall not be deemed to have occurred if such Control Change results solely from (a) the Company effecting a transaction solely to change the Company’s domicile, or (b) the issuance, in connection with a bona fide financing or series of financings by the Company or any of its Affiliates, of voting securities of the Company or any of its Affiliates or any securities convertible into or exchangeable for voting securities of the Company or any of its Affiliates.
 
(n)
Date of Termination ” means the date of termination of the Participant’s employment or service, by the Participant or the Company, whether by Retirement, Permanent Disability or death of the Participant, and in the case of a Participant who is a Consultant, the date the Participant’s contract as a Consultant is terminated before its normal termination date.
 
(o)
Deferred Stock Unit ” means any deferred stock unit granted under Section 11.
 
(p)
Effective Date ” has the meaning set out in Section 3.
 
(q)
Eligible Person ” means a director, officer, employee or Consultant of the Company or any Affiliate or a Person otherwise determined by the Compensation Committee to be an Eligible Person.
 
(r)
Exercise Price ” means the price per Common Share at which a Participant may purchase Common Shares pursuant to an Option, provided that if such price is adjusted pursuant to Section 22.1, “ Exercise Price ” thereafter means the price per Common Share at which such Participant may purchase Common Shares pursuant to such Option after giving effect to such adjustment.
 
(s)
Expiry Date ” means the date set by the Compensation Committee pursuant to Section 8.2, representing the last day in which an Option under this Plan may be exercised.
 
(t)
Insider ” means “ reporting insider ” as defined in National Instrument 55-104 – Insider Reporting Requirements and Exemptions and includes any associate or affiliates as defined in Part I of the TSX Company Manual.
 
(u)
Market Price   of Common Shares at any relevant date means   the closing price of the Common Shares on the NYSE American on the previous day.
 
(v)
NYSE American ” means NYSE American LLC, a national securities exchange registered with the Securities Exchange and Commission.
 
2

 
(w)
Option ” or “ Options ” means any stock option granted under Section 8.
 
(x)
Other Stock-Based Award   means any other stock-based award granted under Section 13.
 
(y)
Outstanding Common Shares ” at the time of any issuance of Common Shares or grant of Awards means the number of Common Shares that are outstanding immediately prior to the share issuance or grant of Awards in question, on a non-diluted basis, or such other number as may be determined under the applicable rules and regulations of all regulatory authorities to which the Company is subject.
 
(z)
Participant ” means an Eligible Person to whom an Award has been granted under the Plan.
 
(aa)
Performance Stock Units   means any right granted under Section 12.
 
(bb)
Permanent Disability ” means mental or physical impairment of the Participant which is expected to result in death or which has lasted or is expected to last for a continuous period of 12 months or more and which causes the Participant to be unable to be engaged in any substantial gainful activity and shall be deemed to have occurred on the first day after the Company and two independent physicians have furnished their opinion of permanent disability to the Compensation Committee.
 
(cc)
Permitted Assign ” means:
 
(i)
a trustee, custodian or administrator acting on behalf of, or for the benefit of, a Participant;
 
(ii)
a holding entity of a Participant;
 
(iii)
a Registered Retirement Savings Plan (“ RRSP ”) or Registered Retirement Income Fund (“ RRIF ”) of a Participant;
 
(iv)
a spouse of a Participant;
 
(v)
a trustee, custodian or administrator acting on behalf of, or for the benefit of, the spouse of a Participant;
 
(vi)
a holding entity of the spouse of a Participant; or
 
(vii)
a RRSP or RRIF of the spouse of a Participant.
 
(dd)
Person ” means and includes any individual, corporation, limited partnership, general partnership, joint stock company, limited liability corporation, joint venture, association, company, trust, bank, trust company, pension fund, business trust or other organization, whether or not a legal entity.
 
(ee)
Plan ” means this PolyMet Mining Corp. Omnibus Share Compensation Plan (formerly known as the PolyMet Mining Corp. 2007 Omnibus Share Compensation Plan), including any amendments hereto.
 
(ff)
Restricted Stock   means any Common Share granted under Section 9.
 
(gg)
Restricted Stock Unit ” means any unit granted under Section 10.
 
(hh)
Retirement   means a termination due to age and approved by the Compensation Committee.
 
(ii)
Securities Act   means the Securities Act , R.S.B.C. 1996, c.418, as amended from time to time.
 
(jj)
Stock Exchanges ” means the Toronto Stock Exchange or NYSE American, or such other stock exchanges or other organized markets on which the Common Shares are listed or posted for trading.
 
3

 
(kk)
Take-over bid ” has the same meaning as stated in the Securities Act.
 
(ll)
Tax Act ” means the Income Tax Act (Canada), as amended from time to time.
 
(mm)
U.S. Exchange Act ” means the U.S. Securities Exchange Act of 1934, as amended from time to time and any successor thereto.  Reference in the Plan to any section of the U.S. Exchange Act shall be deemed to include any rules, regulations or other interpretative guidance under such section or rule, and any amendments or successor provisions to such section, rules, regulations or other interpretative guidance.
 
(nn)
U.S. Internal Revenue Code ” means the United States Internal Revenue Code of 1986, as amended from time to time and any successor thereto.  Reference to any section of the U.S. Internal Revenue Code shall be deemed to include any regulations or other interpretative guidance under such section and any amendments or successors thereto.
 
(oo)
U.S. Nonqualified Stock Option ” means an Option to purchase Common Shares other than a U.S. Qualified Incentive Stock Option.
 
(pp)
U.S. Participant ” means a Participant who is a citizen or resident of the United States or whose compensation under the Plan is subject to income taxation under the U.S. Internal Revenue Code.
 
(qq)
U.S. Qualified Incentive Stock Option ” means an Option to purchase Common Shares with the intention that it qualify as an “incentive stock option” as that term is defined in Section 422 of the U.S. Internal Revenue Code.
 
2.2        Interpretation . In this Plan, except as otherwise expressly provided:
 
(a)
“this Plan” means this agreement as amended from time to time;
 
(b)
any reference in this Plan to a designated “Section” or other subdivision is a reference to the designated Section or other subdivision to this Plan;
 
(c)
the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Plan as a whole and not to any particular Section or other subdivision to this Plan;
 
(d)
the headings are for convenience only and do not form a part of this Plan and are not intended to interpret, define or limit the scope, extent or intent of this Plan;
 
(e)
words importing the singular number only shall include the plural and vice versa and words importing the use of any gender shall include any other gender, the word “or” is not exclusive and the word “including” is not limiting whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto;
 
(f)
unless otherwise provided, all amounts are stated and are to be paid in U.S. dollars; a reference to CDN$ is to an amount stated in and to be paid in Canadian dollars;
 
(g)
references to days or dates are based on calendar days or dates unless a reference to Business Day is used; and
 
(h)
where the time for doing an act falls or expires on a day, which is not a Business Day, the time for doing such act is extended to the next Business Day.

4

 
3.0           EFFECTIVE DATE OF PLAN
 
The Plan shall be effective as of the date the Plan is approved by shareholders of the Company (the “Effective Date”).  In accordance with the requirements of the Toronto Stock Exchange, any unallocated Awards under the rolling 10% maximum allowed under Section 5.1 will require the further approval of the Board of Directors and shareholders of the Company at least once during each three year period that has elapsed from the Effective Date.
 
4.0
ADMINISTRATION OF PLAN
 
4.1          Delegation to Compensation Committee.
 
(a)
The Board of Directors may at any time appoint a committee of the Board of Directors (the “ Compensation Committee ”) to, among other things, interpret, administer and implement this Plan on behalf of the Board of Directors in accordance with such terms and conditions as the Board of Directors may prescribe, consistent with this Plan (provided that if at any such time such a committee has not been appointed by the Board of Directors, this Plan will be administered by the Board of Directors, and in such event references herein to the Compensation Committee shall be construed to be a reference to the Board of Directors).  The Board of Directors will take such steps that in its opinion are required to ensure that the Compensation Committee has the necessary authority to fulfil its functions under this Plan.
 
(b)
Notwithstanding anything herein to the contrary, and insofar as the Board of Directors determines that it is necessary in order for compensation recognized by Participants pursuant to the Plan to be fully deductible to the Company for income tax purposes, each member of the Compensation Committee also shall be an “outside director” (as defined in regulations or other guidance issued by the U.S. Internal Revenue Service under Section 162(m) of the U.S. Internal Revenue Code).
 
4.2        Powers of Compensation Committee. The Compensation Committee is authorized, subject to the provisions of this Plan; to establish from time to time such rules and regulations, make such determinations and to take such steps in connection with this Plan as in the opinion of the Compensation Committee are necessary or desirable for the proper administration of this Plan.  For greater certainty, without limiting the generality of the foregoing, the Compensation Committee will have the power, where consistent with the general purpose and intent of this Plan and subject to the specific provisions of this Plan and any approvals or requirements of any regulatory authorities to which the Company is subject:
 
(a)
to delegate such duties and powers as the Compensation Committee may see fit with respect to this Plan (including, for greater certainty, the powers set out in Sections 4.2(c) through (q) below, pursuant to guidelines approved by the Compensation Committee, and in such event and in respect of those powers so delegated, references herein to the Compensation Committee shall be construed to be a reference to those Persons to whom such powers have been so delegated);
 
(b)
to interpret and construe this Plan and any Award Agreement and to determine all questions arising out of this Plan and any Award Agreement, and any such interpretation, construction or determination made by the Compensation Committee will be final, binding and conclusive for all purposes;
 
(c)
to determine Persons who are Eligible Persons;
 
(d)
to grant Awards to Eligible Persons;
 
(e)
to determine the type or types of Awards to be granted to each Eligible Person;
 
(f)
to determine the time or times when Awards will be granted;
 
5

 
(g)
to determine the number of Common Shares covered by each Award (or the then method by which payments, related instruments or other rights under an Award are to be determined);
 
(h)
to determine whether and to what extent and under what circumstances Awards may be exercised or settled, as applicable, for cash, Common Shares, other securities, or other Awards, or cancelled, forfeited or suspended;
 
(i)
to enter into an Award Agreement evidencing each Award which will incorporate such terms as the Compensation Committee in its discretion deems consistent with this Plan;
 
(j)
to prescribe the form of the instruments relating to the grant, exercise and other terms and conditions of an Award;
 
(k)
to determine the Exercise Price for each Option, subject to Section 8.1;
 
(l)
to determine the time or times when Awards will vest and be exercisable or settled, as applicable, and to determine when it is appropriate to accelerate the vesting and/or exercise conditions of Awards;
 
(m)
to determine if the Common Shares that are subject to an Award will be subject to any restrictions or repurchase rights upon the exercise of such Award including, where applicable, the endorsement of a legend on any certificate representing Common Shares acquired on the exercise of any Award to the effect that such Common Shares may not be offered, sold or delivered except in compliance with the applicable securities laws and regulations of Canada, the United States or any other country and if any rights or restrictions exist they will be described in the applicable Award Agreement;
 
(n)
to determine the Expiry Date for each Option;
 
(o)
to take such steps and require such documentation from each Eligible Person which in its opinion are necessary or desirable to ensure compliance with the rules and regulations of the Stock Exchanges and all applicable laws;
 
(p)
to adopt such modifications, procedures and subplans as may be necessary or desirable to comply with the provisions of the laws of Canada, the United States and other countries in which the Company or any Affiliate may operate to ensure the viability and maximization of the benefits from the Awards granted to Participants residing in such countries and to meet the objectives of this Plan; and
 
(q)
to do all such other matters as provided for herein.
 
Unless otherwise expressly provided in this Plan, all designations, determinations, interpretations and other decisions under or with respect to this Plan or any Award shall be within the sole discretion of the Compensation Committee, subject to the policies and guidelines provided by the Board, and may be made at any time and shall be final, conclusive and binding upon any Eligible Person and any holder or beneficiary of, or any claimant with respect to any Award.  Benefits under the Plan will be recognized only if the Compensation Committee decides in its discretion that the Eligible Person or any holder or beneficiary of, or any claimant with respect to any Award, is entitled to them.
 
4.3        Compensation Committee Governance if U.S. Registrant. If and so long as the Common Shares are registered under Section 12(b) or 12(g) of the U.S. Exchange Act, the Board of Directors will consider in selecting the members of the Compensation Committee, with respect to any Persons subject or likely to become subject to Section 16 of the U.S. Exchange Act, the provisions regarding “non-employee directors” as contemplated by Rule 16b‑3 under the U.S. Exchange Act.
6

 
5.0
COMMON SHARES AVAILABLE AND ACCOUNTING
 
5.1        Common Shares Available.  Subject to adjustment as provided in Section 22, the aggregate number of Common Shares that may be issuable pursuant to the Plan shall be 10% of the number of issued and outstanding Common Shares at such time, of which 3,640,000 Common Shares are reserved for issuance as Bonus Shares.
 
Notwithstanding the foregoing, or any other provisions of this Plan to the contrary, the aggregate number of Common Shares available for U.S. Qualified Incentive Stock Options, U.S. Nonqualified Stock Options, and Other U.S. Awards shall in no event exceed 100,000,000 Common Shares, subject to adjustment pursuant to Section 22.
 
5.2        Accounting for Awards.   For purposes of Section 5.1 and subject to Section 5.3, if an Award entitles the holder thereof to receive or purchase Common Shares, the number of Common Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such Award against the aggregate number of Common Shares available for granting Awards under the Plan.
 
5.3        Other Accounting for Awards.  Any Common Shares related to an Award which terminates by expiration, forfeiture, cancellation or otherwise without the issuance of such Common Shares shall again be available for issuance under the Plan.  Common Shares shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash.
 
5.4        Reservation of Shares.  The Board of Directors will reserve for allotment from time to time out of the authorized but unissued Common Shares, sufficient Common Shares to provide for issuance of all Common Shares which are issuable under all outstanding Awards or Bonus Shares.
 
5.5        No Fractional Shares.  No fractional Common Shares may be purchased or issued under this Plan.

 
6.0
GRANT OF AWARDS AND LIMITATIONS
 
6.1        Granting.  Subject to the rules set out below, the Compensation Committee (or in the case of any proposed Participant who is a member of the Compensation Committee, the Board of Directors) may from time to time grant to any Eligible Person one or more Awards as the Compensation Committee deems appropriate. A Participant, who holds any Award at the time of granting an Award, may hold more than one type of Award.
 
6.2          Date Award Granted. The date on which an Award will be deemed to have been granted under this Plan will be the date on which the Compensation Committee authorizes the grant of such Award or, other than in the case of Awards of Options, of such other future date as may be specified by the Compensation Committee at the time of such authorization and sets forth the relevant terms of the Award.
 
6.3        Award Agreements.   Each Award will be evidenced by an Award Agreement which incorporates such terms and conditions as the Compensation Committee in its discretion deems appropriate and consistent with the provisions of this Plan (and the execution and delivery by the Company of an Award Agreement with a Participant shall be conclusive evidence that such Award Agreement incorporates terms and conditions determined by the Compensation Committee and is consistent with the provisions of this Plan).  Each Award Agreement will be executed by the Participant to whom the Award is granted and on behalf of the Company by any designated signing officer of the Company.
 
6.4        Number of Common Shares/Maximum Grant.  The number of Common Shares that may be purchased under any Award or the amount of any Award that shall be granted in any form that may result in the issuance of Common Shares will be determined and fixed by the Compensation Committee at the date of grant, provided that:
 
(a)
the number of Common Shares reserved for issuance within any one year period to any one Participant pursuant to this Plan shall not exceed 5% of the total number of Outstanding Common Shares;
 
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(b)
the number of Common Shares reserved for issuance within any one year period to any one Participant that is an independent director of the Company pursuant to this Plan, shall not, exceed 1% of the total number of Outstanding Common Shares;
 
(c)
the number of Common Shares reserved for issuance within any one year period to all Participants that are Insiders pursuant to this Plan, shall not, exceed 10% of the total number of Outstanding Common Shares;
 
(d)
notwithstanding anything contained herein to the contrary but subject to this Section, the aggregate number of Common Shares to which Awards may be granted during any calendar year to any one Participant shall not exceed 1% of the total number of Outstanding Common Shares; and
 
(e)
notwithstanding anything contained herein to the contrary but subject to this Section, the aggregate number of Options which may be granted during any calendar year to any one Participant shall not exceed 3,000,000 Common Shares upon exercise of such Options.
 
7.0
ELIGIBILITY
 
Any Eligible Person shall be eligible to be designated a Participant.  In determining which Eligible Person shall receive an Award and the terms of any Award, the Compensation Committee may take into account the nature of the services rendered by the respective Eligible Person, their present and potential contributions to the success of the Company, or such other factors as the Compensation Committee, in its discretion, shall deem relevant.  Notwithstanding the foregoing, a U.S. Qualified Incentive Stock Option may only be granted to employees (which term as used herein includes, officers and directors who are also employees), and a U.S. Qualified Incentive Stock Option shall not be granted to an employee of an Affiliate unless such Affiliate is also a “subsidiary corporation” of the Company within the meaning of Section 424(f) of the U.S. Internal Revenue Code (including any Affiliate and “subsidiary corporation that becomes such after the Effective Date”).

 
8.0
OPTIONS
 
The Compensation Committee is hereby authorized to grant Options to an Eligible Person with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Compensation Committee shall determine.
 
8.1        Exercise Price. The Exercise Price per Common Share of each Option shall be not less than the Market Price of the Common Shares at the time of grant, expressed in terms of money.
 
8.2        Term of Options.   Subject to Section 8.3, each Option will expire (the “Expiry Date” ) on the earlier of:
 
(a)
the date determined by the Compensation Committee and specified in the Award Agreement pursuant to which such Option is granted, provided that such date may not be later than the earlier of: (i) the date which is the tenth (10 th ) anniversary of the date on which such Option is granted, and (ii) the latest date permitted under the applicable rules and regulations of all regulatory authorities to which the Company is subject, including the Stock Exchanges;
 
(b)
if a Participant resigns from his or her employment (other than in the circumstances described in (c), or a Participant’s contract as a Consultant terminates at its normal termination date, then only the portion of the Option that is exercisable at the date of resignation or termination may be exercised by the Participant and any such exercise must be during the period ending on the earlier of (i) 30 days after the date of resignation or termination and (ii) the Expiry Date, after which period the Option will expire;
 
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(c)
if a Participant’s employment is terminated by the Company or an Affiliate without Cause, including a constructive dismissal, or a Participant’s contract as a Consultant is terminated by the Company or an Affiliate before its normal termination date without Cause, the Option shall vest immediately and will continue to be exercisable by the Participant after the Date of Termination and any exercise of the Option must be during the period ending on the earlier of (i) 180 days after the Date of Termination and (ii) the Expiry Date, after which period the Option will expire;
 
(d)
if a Participant’s employment is terminated by the Company or an Affiliate for Cause, or a Participant’s contract as a Consultant is terminated by the Company or an Affiliate before its normal termination date for Cause, including where a Participant resigns from his or her employment or terminates his or her contract as a Consultant after being requested to do so by the Company or an Affiliate as an alternative to being terminated for Cause, the Option will expire on the tenth (10 th ) day following the Date of Termination;
 
(e)
if a Participant’s employment ceases due to Permanent Disability, or a Participant’s contract as a Consultant is frustrated before its normal termination date due to Permanent Disability, for so long as the Participant remains permanently disabled, the Option will continue to vest in accordance with the original vesting terms and be exercisable pursuant to Section 8.2(a) and will expire on the Expiry Date;
 
(f)
if a Participant’s employment ceases due to Retirement, the Option will continue to vest in accordance with the original vesting terms, to be exercisable pursuant to Section 8.2(a) and will expire on the Expiry Date; and
 
(g)
if a Participant dies, the Option shall vest immediately and will continue to be exercisable after the death of the Participant during the period ending on the earlier of (i) 12 months after the death of the Participant and (ii) the Expiry Date, after which period the Option will expire.  Any exercise of the Option must be carried out by a legal representative of the Participant’s estate or by a Person who acquires the Participant’s rights under the Option by bequest or inheritance;
 
provided, however, that the foregoing clauses (a) - (g) above are subject to the right of:
 
(i)
the Compensation Committee to set, at the time the Award is granted, shorter or longer periods for exercise (not later than the Expiry Date) with respect to a particular Participant or group of Participants; and
 
(ii)
the Board to set, after the time the Award is granted, shorter (with the consent of the Participant) or longer periods for exercise (not later than the Expiry Date) with respect to a particular Participant or group of Participants.
 
8.3        Blackout Extension. Where the Expiry Date for an Option occurs during or within 9 business days following the end of a Blackout Period, the Expiry Date for such Option shall be extended to the date which is 10 business days following the end of such Blackout Period.
 
8.4        Vesting and Other Restrictions. Subject to the terms and conditions of this Plan, the Compensation Committee may impose such limitations or conditions on the exercise or vesting of any Option as the Compensation Committee in its discretion deems appropriate, including limiting the number of Common Shares for which any Option may be exercised during any period and which number of Common Shares for which such Option may be exercised in any period will be specified in the Award Agreement with respect to such Option.
 
8.5        Exercise of Options.   Each Award Agreement will provide that the Option granted thereunder may be exercised only by notice (“Notice of Exercise”) delivered to the Company in the form attached to the Award Agreement, or alternative form acceptable to the Company, and signed by the Participant, or the legal representative or committee or attorney, as the case may be, of the Participant (the “Legal Representative” ), and accompanied by full payment for the Common Shares being purchased.  Such consideration may be paid in any combination of the following:
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(a)        bank draft, certified cheque or wire transfer; or
 
(b)
such other consideration as the Compensation Committee may permit consistent with applicable laws.
 
As soon as practicable after any exercise of an Option, a certificate in physical or electronic form representing the Common Shares in respect of which such Option is exercised will be delivered by the Company to the Participant or the Legal Representative of the Participant.
 
8.6        Cashless Exercise.  With the approval of the Compensation Committee, a Participant may elect “cashless” exercise in a Notice of Exercise if the Common Shares issuable on exercise of an Option are to be immediately sold. In such case the Participant will not be required to deliver to the Corporation the bank draft, certified cheque or wire transfer referred to in Section 8.6(a). Instead the following procedure will be followed, as detailed in a Cashless Exercise Instruction Form to be provided by the Corporation and completed by the Participant;
 
(a)
the Participant will instruct a broker selected by the Participant to sell through a Stock Exchange the Common Shares issuable on exercise of an Option as soon as possible and at the applicable bid price for the Common Shares;
 
(b)
on the settlement date for the trade, the Company will direct its registrar and transfer agent to issue a certificate in the name of the broker (or as the broker may otherwise direct) for the number of Common Shares issued on exercise of the Option, against payment by the broker to the Company or the Exercise Price for such Common Shares; and
 
(c)
the broker will deliver to the Participant the remaining proceeds of sale, net of the brokerage commission.
 
8.7        Alternative Exercise. With the approval of the Compensation Committee, a Participant may, rather than exercise an Option which the Participant is entitled to exercise under the Plan, elect to surrender the Option in whole or in part and, in lieu of receiving the Common Shares to which the surrendered Option relate, receive the number of Common Shares, disregarding fractions, which, when multiplied by the Market Price of the Common Shares to which the surrendered Option relate, have a value equal to the product of the number of Common Shares to which the surrendered Option relate multiplied by the difference between the Market Price and the Exercise Price of the Common Shares to which the surrendered Option relate, less any required withholding taxes.  A Participant may also elect, subject to the approval of the Compensation Committee, to surrender the Option in whole or in part and, in lieu of receiving the Common Shares to which the surrendered Option relate, receive cash equal to the product of the number of Common Shares to which the surrendered Option relate multiplied by the difference between the Market Price and the Exercise Price of the Common Shares to which the surrendered Option relate, less any required withholding taxes.  For the purpose of determining the aggregate number of Common Shares that may be subject to Awards granted pursuant to the Plan, the number of Common Shares in respect of Options that are surrendered shall be considered as if such Options had been exercised, and such Options may not be reissued.
 
9.0
RESTRICTED STOCK
 
The Compensation Committee is hereby authorized to grant Restricted Stock to an Eligible Person evidencing the right for such Eligible Person to receive a Common Share upon satisfaction of vesting conditions.
 
9.1        Restrictions.   Common Shares of Restricted Stock shall be subject to such restrictions as the Compensation Committee may impose (including a restriction on or prohibition against the right to receive any dividend or other right or property with respect thereto), which restrictions lapse separately or in combination at such time or times, in such instalments or otherwise as the Compensation Committee may deem appropriate and which shall be set out in an Award Agreement containing such terms and conditions.
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9.2        Stock Certificates.  Any Restricted Stock granted under the Plan shall be evidenced by the issuance of a share certificate, which shall be held by the Company.  Such certificate shall be registered in the name of the Participant and shall bear an appropriate legend referring to the applicable Award Agreement and possible forfeiture of such shares of Restricted Stock.  Upon the issuance of the share certificate or share certificates for the Restricted Stock, the holder thereof shall have all rights of a shareholder of record with respect to such Common Shares, including the right to vote.  The Common Shares of Restricted Stock shall vest when all vesting restrictions and vesting contingencies lapse, including the lapse of any rights of forfeiture.  Until such time, the Compensation Committee may require that such Common Shares be held by the Company together with a stock power duly endorsed in blank by the holder.
 
9.3        Term of Award.   Except as otherwise determined by the Compensation Committee, and as set forth in the applicable Award Agreement, upon a Participant’s termination of employment or consulting contract (as determined under criteria established by the Compensation Committee) during the applicable restriction period, the following shall apply:
 
(a)
if a Participant resigns from his or her employment or a Participant’s contract as a Consultant terminates at its normal termination date, all unvested Restricted Stock will be forfeited;
 
(b)
if a Participant’s employment is terminated by the Company or an Affiliate without Cause, including a constructive dismissal, or a Participant’s contract as a Consultant is terminated by the Company or an Affiliate before its normal termination date without Cause, Restricted Stock shall vest immediately and share certificates will be released within 30 days after the date of termination;
 
(c)
if a Participant’s employment is terminated by the Company or an Affiliate for Cause, or a Participant’s contract as a Consultant is terminated by the Company or an Affiliate before its normal termination date for Cause, including where a Participant resigns from his or her employment or terminates his or her contract as a Consultant after being requested to do so by the Company or an Affiliate as an alternative to being terminated for Cause, all Restricted Stock will be forfeited;
 
(d)
if a Participant’s employment ceases due to Permanent Disability, or a Participant’s contract as a Consultant is frustrated before its normal termination date due to Permanent Disability, for so long as the Participant remains permanently disabled, the Restricted Stock will continue to vest in accordance with the original vesting terms;
 
(e)
if a Participant’s employment ceases due to Retirement, the Restricted Stock will continue to vest in accordance with the original vesting terms; and
 
(f)
if a Participant dies, the Restricted Stock shall vest immediately and share certificates will be released within 12 months after the death of the Participant to a legal representative of the Participant’s estate or by a Person who acquires the Participant’s rights under the Restricted Stock by bequest or inheritance;
 
provided, however, that the Compensation Committee may, when it finds that a waiver would be in the best interest of the Company, waive in whole or in part any or all remaining restrictions with respect to Common Shares of Restricted Stock.
 
10.0
RESTRICTED STOCK UNITS
 
The Compensation Committee is hereby authorized to grant Restricted Stock Units to an Eligible Person evidencing the right for such Eligible Person to receive a Common Share (or cash payment equal to the Market Price of a Common Share) upon satisfaction of vesting conditions.
 
10.1        Restrictions.   A Restricted Stock Unit will be subject to an Award Agreement containing such terms and conditions, not inconsistent with the provisions of the Plan, as the Compensation Committee shall determine.  Restricted Stock Units shall be settled in Common Shares, unless the Company offers the Participant the right to receive cash in lieu of Common Shares and the Participant, in its discretion, so elects.
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10.2          Term of Award.   Except as otherwise determined by the Compensation Committee and as set forth in the applicable Award Agreement, upon a Participant’s termination of employment (as determined under criteria established by the Compensation Committee) during the applicable restriction period, the following shall apply:
 
(a)
if a Participant resigns from his or her employment or a Participant’s contract as a Consultant terminates at its normal termination date, all Restricted Stock Units will be forfeited;
 
(b)
if a Participant’s employment is terminated by the Company or an Affiliate without Cause, including a constructive dismissal, or a Participant’s contract as a Consultant is terminated by the Company or an Affiliate before its normal termination date without Cause, Restricted Stock Units shall vest immediately and be settled within 30 days after the date of termination;
 
(c)
if a Participant’s employment is terminated by the Company or an Affiliate for Cause, or a Participant’s contract as a Consultant is terminated by the Company or an Affiliate before its normal termination date for Cause, including where a Participant resigns from his or her employment or terminates his or her contract as a Consultant after being requested to do so by the Company or an Affiliate as an alternative to being terminated for Cause, all Restricted Stock Units will be forfeited;
 
(d)
if a Participant’s employment ceases due to Permanent Disability, or a Participant’s contract as a Consultant is frustrated before its normal termination date due to Permanent Disability, for so long as the Participant remains permanently disabled, the Restricted Stock Units will continue to vest in accordance with the original vesting terms;
 
(e)
if a Participant’s employment ceases due to Retirement, the Restricted Stock Units will continue to vest in accordance with the original vesting terms; and
 
(f)
if a Participant dies, the Restricted Stock Units shall vest immediately and will be settled within 12 months after the death of the Participant to a legal representative of the Participant’s estate or by a Person who acquires the Participant’s rights under the Restricted Stock Units by bequest or inheritance;
 
provided, however, that the Compensation Committee may, when it finds that a waiver would be in the best interest of the Company, waive in whole or in part any or all remaining restrictions with respect to Restricted Stock Units.
 
11.0
DEFERRED STOCK UNITS
 
The Compensation Committee is hereby authorized to grant Deferred Stock Units (essentially Restricted Stock Units with deferred delivery) to an Eligible Person evidencing the right for such Eligible Person to receive a Common Share (or cash payment equal to the Market Price of a Common Share) upon satisfaction of vesting conditions and retirement, termination, or death.
 
11.1          Restrictions.  A Deferred Stock Unit will be subject to an Award Agreement containing such terms and conditions, not inconsistent with the provisions of the Plan, as the Compensation Committee shall determine.  Deferred Stock Units shall be settled in Common Shares, unless the Company offers the Participant the right to receive cash in lieu of Common Shares and the Participant, in its discretion, so elects.
 
11.2          Term of Award.  Except as otherwise determined by the Compensation Committee and as set forth in the applicable Award Agreement, upon a Participant’s termination of employment (as determined under criteria established by the Compensation Committee) during the applicable restriction period, the following shall apply:
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(a)
if a Participant resigns from his or her employment or a Participant’s contract as a Consultant terminates at its normal termination date, all unvested Deferred Stock Units will be forfeited;
 
(b)
if a Participant’s employment is terminated by the Company or an Affiliate without Cause, including a constructive dismissal, or a Participant’s contract as a Consultant is terminated by the Company or an Affiliate before its normal termination date without Cause, or a Participant who is a director is either not re-elected by shareholders at the annual general meeting of the Company or is asked to step down, all unvested Deferred Stock Units shall vest immediately and be settled within 30 days after the date of termination;
 
(c)
if a Participant’s employment is terminated by the Company or an Affiliate for Cause, or a Participant’s contract as a Consultant is terminated by the Company or an Affiliate before its normal termination date for Cause, including where a Participant resigns from his or her employment or terminates his or her contract as a Consultant after being requested to do so by the Company or an Affiliate as an alternative to being terminated for Cause, all unvested Deferred Stock Units will be forfeited;
 
(d)
if a Participant’s employment ceases due to Permanent Disability, or a Participant’s contract as a Consultant is frustrated before its normal termination date due to Permanent Disability, for so long as the Participant remains permanently disabled, all unvested Deferred Stock Units will continue to vest in accordance with the original vesting terms;
 
(e)
if a Participant’s employment ceases due to Retirement, all unvested Deferred Stock Units shall vest immediately and be issued within 30 days after the date of termination; and
 
(f)
if a Participant dies, all unvested Deferred Stock Units shall vest immediately and will be settled within 12 months after the death of the Participant to a legal representative of the Participant’s estate or by a Person who acquires the Participant’s rights under the Deferred Stock Units by bequest or inheritance;
 
provided, however, that the Compensation Committee may, when it finds that a waiver would be in the best interest of the Company, waive in whole or in part any or all remaining restrictions with respect to Deferred Stock Units.
 
12.0
PERFORMANCE STOCK UNITS
 
The Compensation Committee is hereby authorized to grant Performance Stock Units to an Eligible Person evidencing the right for such Eligible Person to receive a Common Share (or other form of settlement) upon satisfaction of vesting conditions.
 
12.1          Restrictions.  A Performance Stock Unit granted under the Plan (i) may be denominated or payable in cash, Common Shares, other securities, or other Awards, and (ii) shall confer on the holder thereof the right to receive payments, in whole or in part, upon the achievement of such performance goals during such performance periods as the Compensation Committee shall establish.  Subject to the terms of the Plan, the performance goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Stock Unit granted, the amount of any payment or transfer to be made pursuant to any Performance Stock Unit and any other terms and conditions of the Performance Stock Unit shall be determined by the Compensation Committee.
 
12.2          Term of Award.  Except as otherwise determined by the Compensation Committee and as set forth in the applicable Award Agreement, upon a Participant’s termination of employment (as determined under criteria established by the Compensation Committee) during the applicable restriction period, the following shall apply:
 
(a)
if a Participant resigns from his or her employment or a Participant’s contract as a Consultant terminates at its normal termination date, all unvested Performance Stock Units will be forfeited;
 
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(b)
if a Participant’s employment is terminated by the Company or an Affiliate without Cause, including a constructive dismissal, or a Participant’s contract as a Consultant is terminated by the Company or an Affiliate before its normal termination date without Cause, Performance Stock Units shall vest immediately and be settled within 30 days after the date of termination;
 
(c)
if a Participant’s employment is terminated by the Company or an Affiliate for Cause, or a Participant’s contract as a Consultant is terminated by the Company or an Affiliate before its normal termination date for Cause, including where a Participant resigns from his or her employment or terminates his or her contract as a Consultant after being requested to do so by the Company or an Affiliate as an alternative to being terminated for Cause, all Performance Stock Units will be forfeited;
 
(d)
if a Participant’s employment ceases due to Permanent Disability, or a Participant’s contract as a Consultant is frustrated before its normal termination date due to Permanent Disability, for so long as the Participant remains permanently disabled, the Performance Stock Units will continue to vest in accordance with the original vesting terms;
 
(e)
if a Participant’s employment ceases due to Retirement, the Performance Stock Units will continue to vest in accordance with the original vesting terms; and
 
(f)
if a Participant dies, the Performance Stock Units shall vest immediately and will be settled within 12 months after the death of the Participant to a legal representative of the Participant’s estate or by a Person who acquires the Participant’s rights under the Performance Stock Units by bequest or inheritance;
 
provided, however, that the Compensation Committee may, when it finds that a waiver would be in the best interest of the Company, waive in whole or in part any or all remaining restrictions with respect to Performance Stock Units.
 
13.0
OTHER STOCK-BASED AWARDS
 
13.1        Grant of Stock-Based Awards.  The Compensation Committee is hereby authorized to grant to an Eligible Person, pursuant to the powers delegated by the Compensation Committee Charter, subject to the terms of the Plan, such Other Stock-Based Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Common Shares including securities convertible into Common Shares.
 
13.2        Term of Award.  Except as otherwise determined by the Compensation Committee and as set forth in the applicable Award Agreement, upon a Participant’s termination of employment (as determined under criteria established by the Compensation Committee) during the applicable restriction period, the following shall apply:
 
(a)
if a Participant resigns from his or her employment or a Participant’s contract as a Consultant terminates at its normal termination date, all unvested Other Stock-Based Awards will be forfeited;
 
(b)
if a Participant’s employment is terminated by the Company or an Affiliate without Cause, including a constructive dismissal, or a Participant’s contract as a Consultant is terminated by the Company or an Affiliate before its normal termination date without Cause, Other Stock-Based Awards shall vest immediately and be settled within 30 days after the date of termination;
 
(c)
if a Participant’s employment is terminated by the Company or an Affiliate for Cause, or a Participant’s contract as a Consultant is terminated by the Company or an Affiliate before its normal termination date for Cause, including where a Participant resigns from his or her employment or terminates his or her contract as a Consultant after being requested to do so by the Company or an Affiliate as an alternative to being terminated for Cause, all Other Stock-Based Awards will be forfeited;
 
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(d)
if a Participant’s employment ceases due to Permanent Disability, or a Participant’s contract as a Consultant is frustrated before its normal termination date due to Permanent Disability, for so long as the Participant remains permanently disabled, the Other Stock-Based Awards will continue to vest in accordance with the original vesting terms;
 
(e)
if a Participant’s employment ceases due to Retirement, the Other Stock-Based Awards will continue to vest in accordance with the original vesting terms; and
 
(f)
if a Participant dies, the Performance Stock Units shall vest immediately and will be settled within 12 months after the death of the Participant to a legal representative of the Participant’s estate or by a Person who acquires the Participant’s rights under the Other Stock-Based Award by bequest or inheritance;
 
provided, however, that the Compensation Committee may, when it finds that a waiver would be in the best interest of the Company, waive in whole or in part any or all remaining restrictions with respect to Other Stock-Based Award.
 
14.0
GENERAL TERMS OF AWARDS
 
14.1        Consideration for Awards.   Awards may be granted for no cash consideration or for any cash or other consideration as determined by the Compensation Committee, subject to applicable law.
 
14.2        Awards May Be Granted Separately or Together. Awards may, in the discretion of the Compensation Committee, be granted either alone, in addition to, or in tandem with any other Award or any award granted under any plan of the Company or any Affiliate.  Awards granted in addition to or in tandem with other Awards or in addition to or in tandem with awards granted under any such other plan of the Company or any Affiliate may be granted either at the same time as or at a different time from the grant of such other Awards or awards.
 
14.3        Forms of Payment under Awards.   Subject to the terms of the Plan, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise or payment of an Award may be made in such form or forms as the Compensation Committee shall determine (including cash, Common Shares, promissory notes provided, however, that the acceptance of such promissory notes does not conflict with Section 402 of the Sarbanes-Oxley Act of 2002 (if applicable), other securities, other Awards or other property or any combination thereof), and may be made in a single payment or transfer, in instalments or on a deferred basis, in each case in accordance with rules and procedures established by the Compensation Committee.  Such rules and procedures may include provisions for the payment or crediting of reasonable interest on instalment or deferred payments or the grant or crediting of dividend equivalents with respect to instalment or deferred payments.
 
14.4        Restrictions, Securities Exchange Listing. All Common Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Compensation Committee may deem advisable under the Plan, applicable United States federal or state, Canadian provincial or foreign securities laws and regulatory requirements, and applicable Canadian corporate laws, and the Compensation Committee may direct appropriate stop transfer orders and cause other legends to be placed on the certificates for such Common Shares or other securities to reflect such restrictions.  If the Common Shares or other securities are traded on a securities exchange, the Company shall not be required to deliver any Common Shares or other securities covered by an Award unless and until such Common Shares or other securities have been admitted for trading on such securities exchange.
 
15.0          CHANGE IN STATUS
 
A change in the status, office, position or duties of a Participant from the date on which the Award was granted to such Participant will not result in the termination of the Award granted to such Participant provided that such Participant remains an Eligible Person.
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16.0
NON-TRANSFERABILITY OF AWARDS
 
Each Award Agreement will provide that the Award granted thereunder is not transferable or assignable to anyone other than a Permitted Assign.  The Award Agreement will also provide that the Award granted thereunder may only be exercised by the Participant or a Permitted Assign or in the event of:
 
(a)
the death of the Participant or a Permitted Assign; or
 
(b)
the appointment of a committee or duly appointed attorney of the Participant or a Permitted Assign on the grounds that the Participant or a Permitted Assign is incapable, by reason of physical or mental infirmity, of managing their affairs;
 
may be exercised by the Participant’s or a Permitted Assign’s Legal Representative.
 
17.0
REPRESENTATIONS AND COVENANTS
 
17.1        Representations and Covenants. Each Award Agreement will be deemed to contain representations and covenants of the Participant that:
 
(a)
the Participant is a director, officer, employee, or Consultant of the Company or its Affiliates or a Person otherwise determined as an Eligible Person under this Plan by the Compensation Committee;
 
(b)
the Participant has not been induced to enter into such Award Agreement by the expectation of employment or continued employment with the Company or its Affiliates;
 
(c)
the Participant is aware that the grant of the Award and the issuance by the Company of Common Shares thereunder are exempt from the obligation under applicable securities laws to file a prospectus or other registration document qualifying the distribution of the Award or the Common Shares to be distributed thereunder under any applicable securities laws;
 
(d)
upon each exercise of an Option, the Participant, or the Legal Representative of the Participant, as the case may be, will, if requested by the Company, represent and agree in writing that the Person is, or the Participant was, a director, officer, employee or Consultant of the Company or its Affiliates or a Person otherwise determined as an Eligible Person under this Plan by the Compensation Committee and has not been induced to purchase the Common Shares by expectation of employment or continued employment with the Company or its Affiliates, with the exception of the executive shareholding requirements, and that such Person is not aware of any commission or other remuneration having been paid or given to others in respect of the granting of the Award; and
 
(e)
if the Participant or the Legal Representative of the Participant exercises an Option or an Award held by such person vests and is eligible to be settled, the Participant or the Legal Representative, as the case may be, will prior to and upon any sale or disposition of any Common Shares purchased pursuant to the exercise of an Option or issued upon settlement of any other Award, as applicable, comply with all applicable securities laws and all applicable rules and regulations of all regulatory authorities to which the Company is subject, including the Stock Exchanges, and will not offer, sell or deliver any of such Common Shares, directly or indirectly, in the United States or to any citizen or resident of, or any company, partnership or other entity created or organized in or under the laws of, the United States, or any estate or trust the income of which is subject to United States federal income taxation regardless of its source, except in compliance with the securities laws of the United States.
 
17.2            Provisions Relating to Common Share Issuances under an Option. Each Award Agreement in respect of an Option will contain such provisions as in the opinion of the Compensation Committee are required to ensure that no Common Shares are issued pursuant to an Option unless the Compensation Committee is satisfied that the issuance of such Common Shares will be exempt from all registration or qualification requirements of applicable securities laws and will be permitted under the applicable rules and regulations of all regulatory authorities to which the Company is subject, including the Stock Exchanges. In particular, if required by any regulatory authority to which the Company is subject, including the Stock Exchanges, an Award Agreement in respect of an Option may provide that shareholder approval must be obtained prior to issuance of Common Shares pursuant to an Option or to the amendment of an Option.
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18.0
U.S. QUALIFIED INCENTIVE STOCK OPTION PROVISIONS
 
To the extent required by Section 422 of the U.S. Internal Revenue Code, U.S. Qualified Incentive Stock Options shall be subject to the following additional terms and conditions and if there is any conflict between the terms of this Section and other provisions under this Plan, the provisions under this Section shall prevail:
 
18.1          Eligible Employees. All classes of employees of the Company or one of its parent companies or subsidiary companies may be granted U.S. Qualified Incentive Stock Options.  U.S. Qualified Incentive Stock Options shall only be granted to U.S. Participants who are, at the time of grant, officers, key employees or directors of the Company or one of its parent companies or subsidiary companies (provided, for purposes of this Section 18 only, such directors are then also employees of the Company or one of its parent companies or subsidiary companies). For purposes of this Section 18 only, “parent company” and “subsidiary company” shall have the meanings attributed to those terms for the purposes of Section 422 of the U.S. Internal Revenue Code.  Any director of the Company who is a U.S. Participants shall be ineligible to vote upon the granting of such Option; and for greater certainty, Consultants of the Company or one of its parents or subsidiary companies may not be granted U.S. Qualified Incentive Stock Options.
 
18.2        Dollar Limitation. To the extent the aggregate fair market value (determined as of the grant date) of Common Shares with respect to which U.S. Qualified Incentive Stock Options are exercisable for the first time by a U.S. Participant during any calendar year (under this Plan and all other stock option plans of the Company and any parent or subsidiary companies) exceeds U.S. $100,000, such portion in excess of U.S. $100,000 shall be treated as a U.S. Nonqualified Stock Option.  In the event the U.S. Participant holds two or more such Options that become exercisable for the first time in the same calendar year, such limitation shall be applied on the basis of the order in which such Options are granted.
 
18.3          Term of U.S. Qualified Incentive Stock Options; No Issuance of U.S. Qualified Incentive Stock Options More than 10 Years after Plan Adopted.  A U.S. Qualified Incentive Stock Option will terminate and no longer be exercisable no later than 10 years after the date on which the U.S. Qualified Incentive Stock Option was granted.  No U.S. Qualified Incentive Stock Option may be granted more than 10 years after the earlier of (a) the date on which this Plan is adopted or approved by the Board of Directors; or (b) the date on which this Plan is approved by the shareholders of the Company.
 
18.4        10% Shareholders. If any U.S. Participant to whom a U.S. Qualified Incentive Stock Option is to be granted under this Plan at the time of the grant of such U.S. Qualified Incentive Stock Option is the owner of shares possessing more than ten percent (10%) of the total combined voting power of all classes of shares of the Company and any parent or subsidiary companies, then the following special provisions shall be applicable to the U.S. Qualified Incentive Stock Option granted to such individual:
 
(a)
the Exercise Price (per Common Share) subject to such U.S. Qualified Incentive Stock Option shall not be less than one hundred ten percent (110%) of the fair market value of one Common Share at the time of grant; and
 
(b)
for the purposes of this Section 18 only, the option exercise period shall not exceed five (5) years from the date of grant.
 
The determination of ten percent (10%) ownership shall be made in accordance with Section 422 of the U.S. Internal Revenue Code.
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18.5        Exercisability. To qualify for U.S. Qualified Incentive Stock Option tax treatment, an Option designated as a U.S. Qualified Incentive Stock Option must be exercised within three months after termination of employment for reasons other than death or total disability, except that, in the case of termination of employment due to death or total disability, such Option within one year after such termination. Employment shall not be deemed to continue beyond the first three months of a leave of absence unless the U.S. Participant’s reemployment rights are guaranteed by statute or contract. For purposes of this Section, “total disability” shall mean a mental or physical impairment of the U.S. Participant which is expected to result in death or which has lasted or is expected to last for a continuous period of 12 months or more and which causes the U.S. Participant to be unable, to be engaged in any substantial gainful activity. Total disability shall be deemed to have occurred on the first day after the Company and two independent physicians have furnished their opinion of total disability to the Compensation Committee.
 
18.6        Taxation of U.S. Qualified Incentive Stock Options. In order to obtain certain tax benefits afforded to U.S. Qualified Incentive Stock Options under Section 422 of the U.S. Internal Revenue Code, the U.S. Participant must hold the Common Shares issued upon the exercise of a U.S. Qualified Incentive Stock Option for two years after the date of grant of the U.S. Qualified Incentive Stock Option and one year from the date of exercise. A U.S. Participant may be subject to U.S. alternative minimum tax at the time of exercise of a U.S. Qualified Incentive Stock Option. The Compensation Committee may require a U.S. Participant to give the Company prompt notice of any disposition of shares acquired by the exercise of a U.S. Qualified Incentive Stock Option prior to the expiration of such holding periods.
 
18.7        Non-Transferability of U.S. Qualified Incentive Stock Options. No U.S. Qualified Incentive Stock Option granted under this Plan may be assigned or transferred by the U.S. Participant other than by will or by the laws of descent and distribution, and during the U.S. Participant’s lifetime, such U.S. Qualified Incentive Stock Option may be exercised only by the U.S. Participant.
 
18.8          Exercise Price.   Notwithstanding Section 8.1, no U.S. Qualified Incentive Stock Option granted under the Plan shall have an Exercise Price less than the fair market value of the underlying Common Shares at the date of grant of such Option, as determined at such time in good faith by the Board or the Compensation Committee, as the case may be. For purposes of this section, unless otherwise determined by the Board, fair market value shall mean the closing price of one Common Share as reported on the NYSE American, or such other market on which the Common Shares are listed or posted for trading, on the date of grant of such Option.
 
18.9          Approval by Shareholders.   No U.S. Qualified Incentive Stock Option granted to a U.S. Participant under this Plan shall become exercisable unless and until this Plan has been approved by the shareholders of the Company within 12 months of adoption by the Board of Directors of the Company.
 
19.0
WITHHOLDING TAX
 
The Participant will be solely responsible for paying any applicable withholding taxes arising from the grant, vesting, exercise or settlement of any Award and payment is to be made in a manner satisfactory to the Company.  Notwithstanding the foregoing, the Company will have the right to withhold from any Award or any Common Shares issuable pursuant to an Award or from any cash amounts otherwise due or to become due from the Company to the Participant, an amount equal to any such taxes.
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20.0           CONDITIONS
 
Notwithstanding any of the provisions contained in this Plan or in any Award Agreement, the Company’s obligation to issue Common Shares to a Participant pursuant to an Award or the granting of any Award will be subject to, if applicable:
 
(a)
completion of such registration or other qualification of such Common Shares or obtaining approval of such governmental authority as the Company will determine to be necessary or advisable in connection with the authorization, issuance or sale thereof;
 
(b)
the receipt from the Participant of such representations, agreements and undertakings, including as to future dealings in such Common Shares, as the Company or its counsel determine to be necessary or advisable in order to safeguard against the violation of the securities laws of any jurisdiction; and
 
(c)
change or modify any Award to U.S. Participants that would result in a violation of Section 409A of the U.S. Internal Revenue Code.

 
21.0
SUSPENSION, AMENDMENT OR TERMINATION OF PLAN
 
21.1        Suspension, Amendment or Termination of Plan. The Compensation Committee will have the right at any time to suspend or terminate this Plan and, subject to Section 21.2:
 
(a)
with the prior approval of shareholders of the Company by ordinary resolution make any amendment to any Award Agreement or the Plan, including any amendment that would:
 
(i)
increase the number of Common Shares, or rolling maximum, reserved for issuance under the Plan as set out in Section 5.1;
 
(ii)
reduce the Exercise Price per Common Share under any Option or cancel any Option and replace such Option with a lower Exercise Price per Common Share under such replacement Option;
 
(iii)
extend the term of an Option beyond its original expiry time;
 
(iv)
increase the limit on participation by independent directors;
 
(v)
permit an Award to be transferable or assignable to any Person other than in accordance with Section 16 or Section 22; or
 
(vi)
amend any amendment provision of the Plan.
 
(b)
without the prior approval of shareholders of the Company make the following amendments to any Award Agreement or the Plan:
 
(i)
amendments of a clerical nature, including the correction of grammatical or typographical errors or clarification of terms;
 
(ii)
amendments to reflect any requirements of any regulatory authorities to which the Company is subject, including the Stock Exchanges;
 
(iii)
amendments to any vesting provisions of any Award (other than to Insiders);
 
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(iv)
amendments to the expiration date of an Option (other than to Insiders) that does not extend the term of an Option past the original date of expiration for such Option; or
 
(v)
amendments to implement or modify a cashless exercise feature for Awards, whether such feature provides for payments in cash or securities, so long as any such feature provides for the full deduction of the number of underlying Common Shares from the total number of Common Shares available under the Plan.
 
Notwithstanding the foregoing, all procedures and necessary approvals required under the applicable rules and regulations of all regulatory authorities to which the Company is subject shall be complied with and obtained in connection with any such suspension, termination or amendment to the Plan or amendments to any Award Agreement.
 
21.2        Limitations.  In exercising its rights pursuant to Section 21.1, the Compensation Committee will not have the right to:
 
(a)
affect in a manner that is materially adverse to, or that materially impairs, the benefits and rights of any Participant under any Award previously granted under this Plan (except: (i) with the consent of such Participant; (ii) as permitted pursuant to Section 21; or (iii) for the purpose of complying with the requirements of any regulatory authorities to which the Company is subject, including the Stock Exchanges); or
 
(b)
change or adjust any outstanding U.S. Qualified Incentive Stock Option without the consent of the Participant if such change or adjustment would constitute a “modification” that would cause such U.S. Qualified Incentive Stock Option to fail to continue to qualify as a U.S. Qualified Incentive Stock Option.
 
21.3        Powers of Compensation Committee Survive Termination.  The full powers of the Compensation Committee as provided for in this Plan will survive the termination of this Plan until all Awards have been exercised in full, settled in full, or have otherwise expired.

 
22.0
ADJUSTMENTS
 
22.1        Adjustments.   Adjustments will be made to (i) the Exercise Price of an Option, (ii) the number of Common Shares delivered to a Participant upon exercise of an Option or settlement of an Award other than an Option, as applicable, and/or (iii) the maximum number of Common Shares that, pursuant to Section 5.1, may at any time be reserved for issuance pursuant to Awards granted under the Plan in the following events and manner, subject to any required regulatory approvals and the right of the Board to make such other or additional adjustments as the Board considers to be appropriate in the circumstances:
 
(a)
upon (i) a subdivision of the Common Shares into a greater number of Common Shares, (ii) a consolidation of the Common Shares into a lesser number of Common Shares or (iii) the issue of a stock dividend to holders of the Common Shares (excluding a stock dividend paid in lieu of a cash dividend in the ordinary course), the Exercise Price of an Option will be adjusted accordingly and the Company will deliver upon exercise of an Option or settlement of an Award other than an Option, as applicable, in addition to or in lieu of the number of Common Shares in respect of which the right to purchase is being exercised, such greater or lesser number of Common Shares as result from the subdivision, consolidation or stock dividend;
 
(b)
upon (i) a capital reorganization, reclassification or change of the Common Shares, (ii) a consolidation, amalgamation, arrangement or other form of business combination of the Company with another Person or Company or (iii) a sale, lease or exchange of all or substantially all of the property of the Company, the Exercise Price of an Option will be adjusted accordingly and the Company will deliver upon exercise of an Option or settlement of an Award other than an Option, as applicable, in lieu of the Common Shares in respect of which the right to purchase is being exercised, the kind and amount of shares or other securities or property as results from such event;
 
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(c)
upon the distribution by the Company to holders of the Common Shares of (i) shares of any class (whether of the Company or another Company) other than Common Shares, (ii) rights, options, or warrants, (iii) evidences of indebtedness or (iv) cash (excluding a cash dividend paid in the ordinary course), securities or other property or assets, the Exercise Price of an Option will be adjusted accordingly but no adjustment will be made to the number of Common Shares to be delivered upon exercise of an Option or settlement of an Award other than an Option, as applicable;
 
(d)
upon the occurrence of an event described in (a) or (b) above, the maximum number of Common Shares that, pursuant to Section 5.1, may at any time be reserved for issuance pursuant to Awards granted under the Plan will be adjusted in a manner consistent with other holders of rights, options, or warrants;
 
(e)
adjustments to the Exercise Price of an Option will be rounded up to four decimal places and adjustments to the number of Common Shares delivered to a Participant upon exercise of an Option or settlement of an Award other than an Option and the maximum number of Common Shares that, pursuant to Section 5.1, may at any time be reserved for issuance pursuant to Awards granted under the Plan will be rounded down to the nearest whole Common Share; and
 
(f)
an adjustment will take effect at the time of the event giving rise to the adjustment, and the adjustments provided for in this section are cumulative.
 
22.2        Control Change – Actions by Compensation Committee.  Subject to the approval of the Toronto Stock Exchange and any other applicable regulatory authority, in the event of a Control Change or a transaction or a proposed transaction which, in the opinion of the Compensation Committee could, if completed, result in a Control Change:
 
(a)
the Compensation Committee shall, in a manner determined by them to be appropriate and equitable, determine any adjustment to the number and type of Common Shares (or other securities or other property) that shall be made the subject of Awards to be granted at some future date;
 
(b)
the Compensation Committee shall, in a manner determined by them to be appropriate and equitable and upon terms no less favourable to the Participant, determine the number, type, purchase price or exercise price, as applicable, with respect to any Award outstanding; provided , however , that the number of Common Shares covered by any Award or to which such Award relates shall always be a whole number;
 
(c)
the Compensation Committee shall, in a manner determined by them to be appropriate and equitable and upon terms no less favourable to the Participant, determine the manner in which all Awards granted under this Plan will be treated; provided , however , that all Awards outstanding with restriction (excluding, for the avoidance of doubt, Awards with performance-based restrictions) may be exercised by the Participant (in the case of an Option) or vest and be settled by the Company in accordance with the terms of this Plan, (in the case of an Award other than an Option) without regard to any vesting conditions upon a Control Change;
 
(d)
the Compensation Committee or any Person which is or would be the successor to the Company or which may issue securities in exchange for Common Shares upon the Control Change becoming effective may offer any Participant the opportunity to obtain a new or replacement Award over any securities into which the Common Shares are changed or are convertible or exchangeable, on a basis proportionate to the number of Common Shares under option, the Exercise Price, or Award type, and with terms no less favourable to the Participant; and in such event, the Participant shall, if he accepts such offer, be deemed to have released his Award and such Award shall be deemed to have lapsed and be cancelled; and
 
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(e)
the Compensation Committee may substitute or exchange any Award into any other security or cash with terms no less favourable to the Participant upon giving to the Participant to whom such Award has been granted at least 30 days written notice of its intention to substitute or exchange such Award, and during such period of notice, the Award, to the extent it has not been exercised (in the case of an Option) or vested and settled by the Company in accordance with the terms of this Plan (in the case of an Award other than an Option), may be exercised by the Participant (in the case of an Option) or vest and be settled by the Company in accordance with the terms of this Plan, (in the case of an Award other than an Option) without regard to any vesting conditions attached thereto, and on the expiry of such period of notice, the unexercised or unsettled portion of the Award shall lapse and be cancelled.
 
Subsections (a) through (e) of this Section 22.2 may be utilized independently of, successively with, or in combination with each other and Section 22.1, and nothing therein contained shall be construed as limiting or affecting the ability of the Compensation Committee to deal with Awards in any other manner upon terms no less favourable to the Participant.  All determinations by the Compensation Committee under this Section 22 will be final, binding and conclusive for all purposes.
 
22.3        Control Change – Exercise to Participate in Transaction.  On the occurrence of a Control Change, notwithstanding Section 22.2, a Participant may exercise an Option or settle an Award, other than an Option, if applicable, as to any of the Common Shares in respect of which the Option has vested and not been exercised or the Award has vested and not been settled, and
 
(a)
If a Take-over Bid made by any Person for the voting securities of the Company would, if successful, result in a Control Change, then:
 
(i)
the Company will promptly notify the Participant of the take-over bid and the rights of the Participant under this Section;
 
(ii)
the Participant may exercise an Option as to any of the Common Shares in respect of which the Option has vested and not been exercised or settle an Award (other than an Option), if applicable, as to any of the Common Shares in respect of which the Award has vested and not been settled, during the period ending on the earlier of the expiration of the take-over bid and the Expiry Date; and
 
(iii)
exercise of any such Option or settlement of such Award (other than an Option), if applicable, shall only be for the purpose of depositing the Common Shares pursuant to the take-over bid;
 
(b)
in any other case, only for the purpose of participating in such transaction provided that the Compensation Committee may take such steps and require such documentation from the Participant which in its opinion are necessary to ensure that such Common Shares that are issued upon the exercise of the Option or settlement of such Award (other than an Option), if applicable, are purchased only for the purpose of participating in such transaction.
 
If such Control Change does not occur then the Participant shall promptly return the Common Shares (or the portion that are not exercised and paid for or that are not settled and paid for) to the Company for cancellation, the Option respecting such Common Shares shall be deemed not to have been exercised and the Award respecting such Common Shares shall be deemed not to have been settled, and the Common Shares shall be deemed not to have been issued. With respect to Options, the Company shall refund to the Participant the aggregate Exercise Price for the Common Shares (unless the Participant elected cashless exercise).
 
22.4        Cancellation Following Capital Stock Transaction.   The Compensation Committee may, in its discretion, cancel any or all outstanding Awards and pay to the holders of any such Awards notwithstanding any restrictions which may be specified in the Award Agreement, in cash, the value of such Awards based upon the price per share of capital stock received or to be received by other shareholders of the Company in such event, provided that if and to the extent required by U.S. Internal Revenue Code Section 409A and applicable guidance thereunder, this sentence shall not apply to any Award that is subject to U.S. internal Revenue Code Section 409A if the cancellation would result in a violation of Section 409A.
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22.5        No Limitation.  The grant of any Awards under this Plan will in no way affect the Company’s right to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, amalgamate, reorganize, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets or engage in any like transaction.
 
22.6        No Fractional Shares.  No adjustment or substitution provided for in this Section 22 will require the Company to issue a fractional share in respect of any or other Awards and the total substitution or adjustment with respect to each Award will be limited accordingly.
 
23.0
GENERAL
 
23.1        No Rights as Shareholder.   Nothing herein or otherwise shall be construed to confer on any Participant any rights as a shareholder of the Company or Affiliate with respect to any Common Shares reserved for the purpose of any Award.
 
23.2        No Effect on Employment.   Nothing in this Plan or any Award Agreement will confer upon any Participant any right to continue in the employ of or under contract with the Company or its Affiliates or affect in any way the right of the Company or any such Affiliate to terminate his or her employment at any time or terminate his or her consulting contract, nor will anything in this Plan or any Award Agreement be deemed or construed to constitute an agreement, or an expression of intent, on the part of the Company or any such Affiliate to extend the employment of any Participant beyond the time that he or she would normally be retired pursuant to the provisions of any present or future retirement plan of the Company or its Affiliates or any present or future retirement policy of the Company or its Affiliates, or beyond the time at which he or she would otherwise be retired pursuant to the provisions of any contract of employment with the Company or its Affiliates.  Neither any period of notice nor any payment in lieu thereof upon termination of employment shall be considered as extending the period of employment for the purposes of the Plan.
 
23.3          Financial Assistance.   No financial assistance shall be given to any Participant with respect to any Award granted hereunder.
 
23.4          Directors’ Discretion.   Nothing contained in this Plan will restrict or limit or be deemed to restrict or limit the right or power of the Board of Directors in connection with any allotment and issuance of Common Shares which are not allotted and issued under this Plan including with respect to other compensation arrangements.
 
23.5          Applicable Law.   The Plan and any Award Agreement granted hereunder will be governed, construed and administered in accordance with the laws of the Province of British Columbia, the laws of Canada, and other laws applicable therein.
 
23.6          Interpretation.  References herein to any gender include all genders and to the plural includes the singular and vice versa.  The division of this Plan into Sections and the insertion of headings are for convenience of reference only and will not affect the construction or interpretation of this Plan.
 
23.7            Compliance with Code Section 409A.   Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A of the U.S. Internal Revenue Code (“Section 409A”), except as otherwise determined in the discretion of the Compensation Committee, and will be construed and interpreted in accordance with such intent.  To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Section 409A, the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Section 409A, such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A.
 
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Exhibit 99.4
 

 
 

  Important Notice Regarding the Availability of Proxy Materials for the Annual General and Special Meeting:
Annual Report and Information Circular/Proxy Statement are available at www.proxyvote.com.
 
 
 
 
 
 
 
E48267-P10554

Exhibit 99.5
 
Exhibit 99.6