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In addition to Messrs. Scott, Zink and Pickarts, three additional key employees have employment
agreements with the Company in a form similar to the Severance Compensation Agreement, with the same or
similar defined benefits upon a qualifying termination.
On January 11, 2016, Rare Element Resources, Inc., a wholly owned subsidiary of the Company, entered
into an Amendment to Severance Compensation Agreement with each of Messrs. Scott and Zink. On January 18,
2016, Rare Element Resources, Inc. entered into an Amendment to Employment Agreement with Mr. Pickarts.
Pursuant to each amendment, any potential severance compensation payable to the officer under the applicable
Severance Compensation Agreement or Employment Agreement as a result of a “qualifying termination” prior to a
“change in control” (in each case, as defined in the applicable Severance Compensation Agreement or Employment
Agreement) will be reduced by the amount of salary paid to such officer during his employment with the Company
in the first three months of 2016. This potential decrease in severance compensation would not reduce any
severance compensation payable as a result of a qualifying termination on or after a change in control, or if, in the
discretion of the Board of Directors, the Company achieves key objectives in the first quarter of 2016.
As further described in Note 14 to the Financial Statements,
Subsequent Events
, on March 18, 2016 the
Company notified certain executive officers, including Messrs. Pickarts and Zink, of their termination of
employment, subject to benefits contained within their Severance and Compensation Agreement or Employment
Agreement. Further, on March 18, 2016 the Company entered into a Second Amendment to Severance
Compensation Agreement with Randall J. Scott, the Company’s President and Chief Executive Officer, which
extended the term of his January 11, 2016 amendment through June 30, 2016.
Equity Plans
As of the date of this Annual Report, stock option grants are outstanding pursuant to two stock option
plans:
(1)
a fixed 20% stock option plan (the “Fixed Stock Option Plan”) pursuant to which there are currently
1,665,000 stock options outstanding, representing approximately 3% of the current outstanding
common shares of the Company. The Fixed Stock Option Plan expired upon the adoption of the
10% Rolling Stock Option Plan (as defined below), and the Company no longer grants any options
under the Fixed Stock Option Plan. However, the terms of the Fixed Stock Option Plan will
continue to govern all prior awards of stock options granted under that plan until such awards have
been cancelled, forfeited or exercised in accordance with the terms thereof; and
(2)
a rolling 10% stock option plan (the “10% Rolling Stock Option Plan”) pursuant to which there are
currently 2,790,000 stock options outstanding, representing approximately 6% of the current
outstanding common shares of the Company. Material terms of the 10% Rolling Stock Option Plan
are set out below.
The NCG&C Committee may, subject to ratification from the Board, from time to time grant to directors,
employees or consultants options to acquire shares of the Company under the 10% Rolling Stock Option Plan.
The maximum number of shares issuable under the 10% Rolling Stock Option Plan, together with the
number of shares issuable under the Fixed Stock Option Plan, shall not in the aggregate exceed 10% of the issued
and outstanding shares (calculated as at the award date of such options). The Company is prohibited from granting
options (i) to any one person where the grant would result in such person holding options to acquire shares in excess
of 5% of the issued and outstanding shares of the Company; or (ii) that will result in the number of shares issuable to
insiders of the Company at any time being in excess of 10% of the issued and outstanding shares as at the award
date or that will result in the number of shares issued to insiders of the Company within any one-year period being in
excess of 10% of the issued and outstanding shares as at the award date under the 10% Rolling Stock Option Plan or
when combined with all of the Company’s other security-based compensation arrangements.