Railpower Technologies Corp. - Governance and Human Resources Committee Charter

1. Purpose and Mandate

1.1

This Charter sets out the authority and responsibilities of the Governance and Human Resources Committee (the "Committee") of the Board of Directors (the "Board") of Railpower Technologies Corp. (the "Company") and the terms under which the Committee will fulfill its mandate.

1.2

The mandate of the Committee with respect to Human Resource matters is to:

  • assist the Board in discharging its responsibilities relating to human resources and compensation of the Company's executives,
  • review and approve the corporate goals and objectives relevant to the Chief Executive Officer's compensation,
  • evaluate the Chief Executive Officer's performance and determine and approve the compensation of the Chief Executive Officer and of the Company's other senior officers,
  • oversee and monitor the Company's human resources and compensation philosophy, plans, policies, programs, guidelines and practices, and
  • if required, approve such reports on executive compensation for inclusion in the Company's annual general meeting information circular, in accordance with applicable law, rules and regulations,

all in a manner which is in the best interests of the Company and consistent with its long term goals and objectives.

1.3

The mandate of the Committee with respect to Corporate Governance matters is to:

  • develop and make recommendations to the Board and assess, oversee and monitor the implementation of the Company's approach to governance issues and the corporate governance principles applicable to the Company,
  • identify, propose and recommend individuals for nomination as directors of the Company,
  • review the adequacy and form of the compensation of the Company's directors,
  • implement and oversee processes for assessing the effectiveness of the Board as a whole, its committees and individual directors, and
  • oversee the orientation and education programs for directors,

all in a manner which is in the best interests of the Company and its shareholders and consistent with the Company's long term goals and objectives.

2. Appointment, Removal and Qualifications of Committee Members

2.1 Membership

The Committee shall consist of not fewer than three directors and each member of the Committee shall at all times satisfy the criteria for unrelated, outside and independent directors under applicable legal, regulatory and stock exchange requirements.

2.2 Vacancies

Members of the Committee will be appointed by the Board, after considering the recommendation of the Committee, and serve at the pleasure of the Board. The Board has power to appoint, at any time and from time to time, additional members of the Committee, or to remove any person from membership on the Committee. Vacancies on the Committee resulting in the Committee consisting of fewer than three directors shall be filled by the Board as soon as practicable.

2.3 Remuneration

Members of the Committee will be entitled to receive such remuneration for acting as Committee members (and, in the case of the Committee Chairman, for acting as Chairman of the Committee) as the Board may from time to time determine. Members of the Committee may not receive any compensation from the Company, except for Board or Committee service. The members of the Committee will be reimbursed for their reasonable expenses in connection with attendance at or participation in meetings of the Committee.

3. Committee Structure, Operations and Reporting

3.1 Meetings

The Committee shall meet as often as it considers necessary, and subject to the terms hereof, otherwise govern itself as it sees fit in order to carry out its responsibilities.

3.2 Chairman

Unless the Board after considering the recommendation of the Committee appoints a Chairman of the Committee, the members of the Committee shall select a member of the Committee to act as Chairman of the Committee. Should the Chairman not attend any meeting, the members then in attendance should designate another person among them to act as chairman of that meeting. The chairman at each meeting of the Committee should designate a secretary (who need not be a director) to record the proceedings at every meeting.

3.3 Other Attendees

Any person may, with the permission of the Committee, attend meetings of the Committee.

3.4 Calling Meetings

Meetings of the Committee may be called by or on behalf of the Chairman or any other member of the Committee or by the Secretary of the Company at the request of the Chief Executive Officer (the "Chief Executive Officer") of the Company. Meetings will be held at such place and time and on such day as the person calling the meeting, or the Secretary of the Company, upon request of the person calling the meeting, may determine. The person calling any meeting of the Committee shall determine the nature and extent of information that should be provided to Committee members before the meeting.

3.5 Notice of Meetings

Notice of meetings of the Committee shall be given to each member of the Committee not less than 24 hours before the time the meeting is to be held. Notice may be given orally, personally or by telephone, or in writing, delivered personally or by prepaid first-class post, telecopy, facsimile, e-mail or any other method of transmitting writing, or any other means of communication which the member has consented to use. Where the Committee has established a fixed time and place for the holding of its meetings, no notice of meeting to be held at such fixed time and place need be given to any Committee member.

3.6 Quorum

A majority of the members of the Committee present in person or participating by means of a telephonic, electronic or other communications facility that permits all participants to communicate adequately with each other during the meeting shall constitute a quorum (provided that in no event shall a quorum be less than two members) and, notwithstanding any vacancy on the Committee, a quorum of the Committee may exercise all of the powers of the Committee.

3.7 Majority Vote Governs

Any decisions of the Committee should be decided by a majority vote of the Committee members, where each member attending or participating is entitled to one vote. In the event of an equality of votes, the Chairman, or acting Chairman, will have a second or casting vote. The Committee may also act by resolution in writing, signed by all of the members entitled to vote on such matter.

3.8 Minutes

The Committee shall keep or cause to be kept minutes of its meetings in which shall be recorded all actions and decisions taken by the Committee. The Committee Chairman will report to the Board regarding the Committee's activities as the Committee sees fit or at the request of the Board.

3.9 Meetings of Shareholders

The Chairman of the Committee shall attend at annual meetings of shareholders of the Company and, if required, be available to respond to questions regarding the activities of the Committee.

3.10 Access and Inspection of Records

The members of the Committee shall have the right, for the purposes of discharging the powers and responsibilities of the Committee, to inspect any relevant records of the Company and its subsidiaries. The Company and its officers, employees and advisors shall be directed to provide the members of the Committee and their authorized legal, financial and other advisors with full and free access to any information required by any member of the Committee, or their advisors, for the purposes of the Committee discharging its powers and responsibilities.

3.11 Delegation

The Committee may from time to time delegate to a subcommittee of its members such of its authority and responsibilities as the Committee may from time to time determine provided that the Committee shall not delegate to a subcommittee any power or authority required by any law, regulation or stock exchange rule, policy or requirement to be exercised by the Committee as a whole.

3.12 Execution of Instruments

The Committee may from time to time authorize any member of the Committee, or any officer or other director of the Company, to certify, or execute and deliver, all such statements, forms, instruments, certificates, notices, acknowledgements and other documents, and to do all such acts and things as the Committee may consider necessary or desirable in connection with the discharge of the powers and responsibilities of the Committee.

4. Authority, Goals and Responsibilities of the Committee

4.1 Compensation Matters

With respect to Human Resource matters, the Committee shall have authority to:

  1. General Authority - review, oversee and monitor the Company's human resources and executive compensation philosophy, plans, policies, programs, guidelines and practices, with a view to:
    1. fostering executive and employee development, productivity and creativity and supporting, reinforcing and promoting the Company's growth and success and overall strategic goals and objectives;
    2. assisting the Company in effectively attracting, rewarding, motivating and retaining key executive and employees;
    3. aligning the financial interests of executives and executive compensation with the Company's short and longer-term strategic, operational and financial objectives and the financial interests of the Company's shareholders; and
    4. providing competitive total compensation opportunities on a fair, reasonable and cost-effective basis, while enhancing the Company's ability to fulfill its goals and objectives;
  2. Compensation Criteria - reviewing, overseeing and monitoring the levels, general criteria and design, structure, competitiveness, adequacy, suitability and form of the total compensation of the executives senior officers of the Company, as the Committee may consider appropriate;
  3. Employment Arrangement - determine all matters relating to the compensation, benefits and perquisites of the Company's executives and other senior officers, including, without limitation, any employment contract or agreement proposed to be made with any current or former senior officer of the Company, (including any retirement, retention, deferred compensation, severance or termination arrangement, retiring allowance agreements, or agreement, arrangement or provision to take effect in the event of termination or change in control of the Company);
  4. Administration of Incentive Plans - subject to any specific direction by the Board, authorizing, approving, adopting and overseeing incentive, compensation or benefit plans, schemes or arrangements, including any share compensation plans, stock options, stock option plans, share purchase plans, pension, retirement, deferred compensation, savings and profit sharing plans, schemes or arrangements ("Plans") relating to the compensation or benefits of employees of the Company including: 1) determining employees eligible to participate under any such Plan; 2) approving, authorizing, making or granting any awards, options, rights, participation, interests or grants thereunder and determine or approve the terms thereof; 3) establishing or determining rules, regulations and guidelines relating to such Plans; 4) authorizing and approving alterations, changes, amendments, modifications or waivers to any such Plan or any such awards, options, rights, participation, interests or grants thereunder; and 5) administering and interpreting such Plans, and (vi) taking all such action which the Committee, in its discretion, considers necessary or desirable in relation to such Plans, other than such matters with respect to which the Board has reserved its authority or where delegation of the Board's authority would be in contravention of law;
  5. Oversight of Plans - overseeing and making recommendations to the Board with respect to incentive compensation and equity-based plans involving issuance by the Company of securities of the Company, and alterations, changes, amendments or modifications thereto;
  6. CEO Compensation - without limiting the generality of the foregoing, reviewing and approving the corporate goals and objectives of the Chief Executive Officer relevant to his compensation and benefits, evaluating and assessing the performance of the Chief Executive Officer in light of those goals and objectives and, either as a committee or together with the other independent directors, as may be directed by the Board, determine and approve the compensation of the Chief Executive Officer and reporting to the Board and providing feedback to the Chief Executive Officer regarding these matters;
  7. Executive Compensation - together with the Chief Executive Officer, reviewing the corporate goals and objectives of the Company of the other executives and senior officers of the Company and making recommendations to the Board with respect to such goals and objectives, reviewing and overseeing the assessments, recommendations and decisions of the Chief Executive Officer concerning the performance and compensation of other executives and senior officers of the Company and, when appropriate, approving such assessments, recommendations and decisions or reporting to the Board thereon;
  8. Oversight of Human Resources Policies - overseeing and monitoring the Company's human resources policies, practices and programs, including hiring, leadership and executive selection and development, employee morale, continuity, performance management, career management and succession plans, policies and programs for the appointment, training, promotion, development, evaluation and monitoring of the Company's senior management employees, personnel, employee relations, performance and skills evaluation, training, promotion, wellness and retirement policies, programs and plans;
  9. Organizational Structure - reviewing periodically the Company's management and organizational structure and staffing, including significant organizational changes affecting staffing, to determine if the Company's structures and staffing are appropriate to carry out the business, affairs, goals and objectives of the Company;
  10. Legal Compliance - in consultation with management of the Company, reviewing and monitoring the Company's compliance with laws, regulations, rules and policies of governmental bodies and stock exchanges having jurisdiction over the Company with respect to employment and compensation matters and management of human resources, including applicable legal, accounting, tax and securities regulatory requirements;
  11. Disclosure of Compensation Practices - if required, annually report to shareholders and reviewing the disclosure provided by the Company regarding the Company's compensation policies during the most recently completed financial year for determining compensation of the Company's executive officers, including the Chief Executive Officer, as required by applicable legal, regulatory and stock exchange requirements and the composition, mandate and functions of the Committee;
  12. Consultation with CEO - advising and consulting with the Chief Executive Officer with respect to any of the foregoing matters;
  13. Lending Practices - approve lending money to, or guaranteeing any obligation of, or rendering financial assistance to, any employee of the Company or a subsidiary of the Company, including adoption of any plan or program for or involving rendering financial assistance to such employees, and reviewing and approving all arrangements and compensation practices that could constitute loans or extensions of credit to executives;
  14. Insurance - periodically review and approve life or disability insurance policies or coverage for directors and officers under which the Company or any subsidiary pays any or part of the premium;
  15. performing such other duties and responsibilities as the Committee may consider are important to its mandate or that may be assigned to the Committee, from time to time, by the Board.

4.2 Assessment of CEO

As part of its evaluation of the performance of the Chief Executive Officer, the Committee shall obtain input from other committees of the Board concerning the Chief Executive Officer's performance as it considers appropriate, including input from the Audit Committee on matters relating to the Company's financial reporting and disclosure controls. The Committee will also review, consider and approve all non compensatory perquisites and benefits associated with the Chief Executive Officer's employment with the Company.

4.3 Corporate Governance Matters

With respect to Corporate Governance matters, the Committee shall have authority to:

  1. General Authority - develop, review and make recommendation to the Board and implement, assess and oversee the Company's overall approach to governance issues;
  2. Director Nominees - develop a process to review and prepare lists of candidates for possible election or appointment to the Board and recommending to the Board individuals for nomination for election as directors of the Company at annual meetings of shareholders;
  3. Director Vacancies - in the event of vacancies on the Board or newly created director positions, recommending to the Board individuals for appointment as directors of the Company to fill such vacancies or positions;
  4. Board Size and Composition - at least annually, reviewing and assessing the size and composition of the Board, in light of the opportunities and risks facing the Company, existing corporate governance trends, requirements imposed by law, regulation or stock exchange or guidelines or expectations which the Board has regarding contributions and commitments of Board and committee members, reporting to the Board regarding such review and assessment and making recommendations to modify the size or composition of the Board to facilitate more effective decision-making;
  5. Assessment of Board Members and Nominees - periodically reviewing and assessing the backgrounds, knowledge, competencies, skills, experience, expertise, integrity, abilities, independence, judgment and other qualities and contributions of the existing Board members and individuals proposed for election as directors of the Company, in light of the opportunities and risks facing the Company. This shall include a review of whether directors are related or unrelated, outside or independent, and other qualification criteria under applicable legal, regulatory and stock exchange requirements and assessing whether the Board reflects the appropriate balance of knowledge, competencies, skills, experience, expertise and diversity required for the Board as a whole and contains at least the minimum number or composition as may be required under applicable legal, regulatory and stock exchange requirements. The Committee shall advise and recommend to the Board any changes the Committee believes is necessary or desirable in order for the Board or Board committees to satisfy applicable legal, regulatory or stock exchange requirements, or which would facilitate more effective decision-making;
  6. Director Independence - developing and recommending to the Board criteria to assess the independence of directors or of any material relationships between a director and the Company or any business or other relationships which could, or could reasonably be perceived to, materially interfere with a director's ability to act with a view to the best interests of the Company;
  7. Governance Principles - developing and recommending to the Board the Company's approach to governance issues and an effective system and set of corporate governance principles and the Company's response to and compliance with corporate governance guidelines or recommendations of any regulatory authority or stock exchange on which any of the Company's securities are listed or traded, and, at least annually, reviewing and assessing whether such approach, system and principles are adequate and appropriate and comply with applicable laws, regulations and stock exchange requirements, whether the system and principles are being complied with and recommending to the Board any changes thereto which the Committee may consider appropriate;
  8. Management Assessment - in coordination with the CEO, overseeing and evaluating the management of the Company;
  9. Committee Structure - periodically reviewing and making recommendations to the Board regarding the Company's Board committee structure composition and responsibilities and assignments, the procedure for appointment and removal of committee members, including the Committee, and qualifications of committee members, and recommending to the Board the any changes in the Company's Board committee structure, as the Committee may consider necessary or desirable from time to time in order to address legal, ethical or other matters, issues or transactions that may from time to time arise;
  10. Committee Composition - identifying Board members qualified to become members of any committee of the Board and recommending to the Board for its approval, individuals for appointment to committees of the Board, considering such factors as the Committee considers appropriate, including, where applicable, legal, regulatory and stock exchange requirements;
  11. Communications with the Board - determining, or making recommendations to the Board regarding the manner in which committees of the Board, including the Committee, should communicate or report to the Board or its members;
  12. Codes of Conduct - reviewing and recommending for adoption by the Board a formal code of business ethics or business conduct for the Company developed in cooperation with management and monitoring, reviewing and overseeing compliance by the directors and officers of the Company of any such code, reporting to the Board regarding such compliance, and recommending to the Board any waivers from compliance for any directors and officers;
  13. Assessment of Board - on an ongoing basis, reviewing and assessing the performance and effectiveness of the Board as a whole, committees of the Board (including the Committee) and of individual directors and reporting its assessment to the Board;
  14. Directors' Compensation - reviewing and assessing, at least annually, the adequacy and form of the compensation and benefits for members of the Board and committees of the Board in their capacity as directors and making recommendations to the Board regarding such compensation and benefits, including expense reimbursement policies for directors, Board and committee retainers, meeting fees, equity-based compensation, benefits, perquisites, deferred compensation, incentive compensation, retirement plans and such other forms of compensation and benefits (including direct and indirect forms of compensation or payments to other entities in which a director is affiliated or consulting or similar arrangements) as the Committee may consider appropriate;
  15. Insurance and Indemnities - periodically reviewing the Company's directors' and officers' liability insurance and indemnity arrangements and whether such coverage and arrangements are adequate and appropriate;
  16. Strategic Plans - monitoring and overseeing the adoption by the Board of a strategic plan and the Company's process for the review and approval by the Board of a strategic plan;
  17. Internal Communications - overseeing and making recommendations to the Board regarding administration of the relationship between the Board and its committees and management and reviewing and assessing and making recommendations to the Board regarding the Company's structures, procedures and processes designed to facilitate and ensure that the Board can function independently of management, and the division of responsibilities between the Board, its committees and management;
  18. Director Orientation and Education - reviewing, approving and overseeing an orientation and education program for new members of the Board and continuing education programs and information dissemination for other members of the Board and periodically reviewing and assessing such programs and approving changes thereto as the Committee may consider necessary or appropriate;
  19. Legal Compliance - in consultation with management of the Company, reviewing and monitoring at least annually, the laws, regulations, rules and policies of governmental bodies and stock exchanges having jurisdiction over the Company with respect to corporate governance matters and the Company's compliance therewith;
  20. Disclosure of Governance Practice - in consultation with management of the Company, and the other committees of the Board, reviewing the disclosure provided to shareholders regarding the Company's system of corporate governance;
  21. Engagement of Advisors by Directors - consider and, if appropriate, approving any request by any individual director wishing to engage any outside advisor at the Company's expense;
  22. Disclosure Policies - reviewing and recommending for approval by the Board communication and disclosure policies for the Company to address how the Company interacts with its shareholders, regulatory authorities, analysts, investors, stakeholders and the public and complying with its continuous and timely disclosure obligations and monitoring compliance by directors and officers of the Company with such policies;
  23. Corporate Preparedness - reviewing periodically the Company's corporate preparedness plans for change of control transactions such as take-over bids or other forms of significant reorganization transactions;
  24. Shareholder Proposals - together with management of the Company, reviewing and evaluating any shareholder proposal submitted for inclusion in the Company's information circular and making recommendations to the Board as to how the Company should respond to any such proposal;
  25. Related Party Transactions - reviewing, authorizing and approving any related party transactions between the Company and its directors or senior management;
  26. Leadership and Succession Plans -overseeing and at least annually review the Company's management and leadership succession plans, policies and programs, including policies and contingency procedures for management succession in the event of an emergency, unexpected disability or retirement of the Company's Chief Executive Officer and assess whether the Company has sufficient depth, experience and organizational strength in management to achieve its short and long term objectives; and
  27. Corporate Governance - generally advising the Board in matters of corporate governance and considering and reviewing such other matters and issues relating to corporate governance as the Committee may consider suitable or the Board may specifically direct.

4.4 Special Director Nomination Rights

If the Company is legally required by contract or otherwise to provide third parties with the ability to nominate directors (for example, preferred share rights, shareholder agreements or management agreements), the selection and nomination of such directors need not be subject to the nominating committee process.

4.5 In Camera Sessions

The Chairman of the Committee may regularly call meetings of the independent directors of the Company, excluding management, as often as necessary for such other purposes as the Committee, or Chairman of the Committee, may consider necessary or desirable to assist the Committee in carrying out its responsibilities. The Chairman of the Committee shall designate the director who will preside over and act as chairman of such meetings.

5. Resources and Outside Advisors

5.1 General

The Committee shall have the resources and authority required to discharge its responsibilities hereunder.

5.2 Advisors

The Committee may conduct or authorize investigations into or studies of matters within the scope of the authority and responsibilities of the Committee. The Committee may request any director, officer or employee of the Company, the external auditors, the Company's outside legal counsel, or any other persons whose advice or counsel is sought by the Committee, to attend any meeting of the Committee or to meet with any members of, or advisors to, the Committee to provide such advice or information as the Committee may request. The Committee shall have the authority in their absolute discretion, to retain and terminate such consultants, legal counsel and other advisors, at the Company's expense, as the Committee may consider necessary to assist the Committee in carrying out its responsibilities. Any such consultant, counsel or advisor retained by the Committee may be any of the firms or persons which presently or in the past have represented the Company or may be any other independent person or firm qualified to advise the Committee with respect to the matters to be addressed. The Company shall pay all reasonable fees and disbursements of any person or firm retained by the Committee.

6. Evaluation

6.1 Committee Review

The Committee shall, not less frequently than annually, assess the effectiveness of the Committee, and the members of the Committee, under this Charter. In such evaluation, the Committee shall consider such factors that it considers relevant.

6.2 Review of Charter

The Committee shall review and assess the adequacy of this Charter on a regular basis and consider whether this Charter appropriately addresses the matters that are or should be within its scope. The Committee shall report to the Board regarding such review and assessment and, where appropriate, make recommendations for the alteration, modification or amendment of this Charter.

6.3 Amendments of Charter

This Charter may, at any time, and from time to time, be altered, modified or amended in such manner as may be approved by the Board.