RYU APPAREL INC West 2nd Avenue Vancouver, BC V6J 1H4 Telephone: (604)

Transcription

1 RYU APPAREL INC West 2nd Avenue Vancouver, BC V6J 1H4 Telephone: (604) NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 23, 2015 AND INFORMATION CIRCULAR November 23, 2015 This document requires immediate attention. If you are in doubt as to how to deal with the documents or matters referred to in this Information Circular, you should immediately contact your advisor.

2 RYU APPAREL INC West 2nd Avenue Vancouver, BC V6J 1H4 Telephone: (604) NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS TO THE SHAREHOLDERS OF RYU APPAREL INC.: NOTICE IS HEREBY GIVEN that the annual general meeting (the Meeting ) of shareholders of RYU Apparel Inc. (the Company ) will be held at the law offices of Clark Wilson LLP, West Georgia Street, Vancouver, British Columbia, on Wednesday, December 23, 2015, at the hour of 10:00 a.m. (Vancouver time) for the following purposes: 1. to receive the audited financial statements of the Company for the financial period ended December 31, 2014, and accompanying report of the auditors; 2. to appoint Dale Matheson Carr Hilton Labonte LLP, Chartered Accountants, as the auditors of the Company for the financial year ending December 31, 2015; 3. to authorize the directors of the Company to fix the remuneration to be paid to the auditors for the financial year ending December 31, 2015; 4. to set the number of directors of the Company for the ensuing year at four (4); 5. to elect, individually, Marcello Leone, Bill Marcus, Martino Ciambrelli and Maria Leone as the directors of the Company to serve until the next annual general meeting of the shareholders; 6. to consider, and if thought fit, to approve an ordinary resolution to ratify the adoption of the Advance Notice Bylaws for the nomination of directors by shareholders in certain circumstances, all as described in the accompanying Information Circular; and 7. to transact such further or other business as may properly come before the Meeting and any adjournment or postponement thereof. The accompanying Information Circular provides additional information relating to the matters to be dealt with at the Meeting and is supplemental to, and expressly made a part of, this Notice of Meeting. The board of directors of the Company has fixed November 16, 2015 as the record date for the determination of shareholders entitled to notice of and to vote at the Meeting and at any adjournment or postponement thereof. Each registered holder of common shares at the close of business on that date is entitled to such notice and to vote at the Meeting in the circumstances set out in the accompanying Information Circular. If you are a registered holder of common shares of the Company and are unable to attend the Meeting in person, please complete, date and sign the accompanying form of proxy and deposit it with the Company s transfer agent, Computershare Investor Services Inc., 510 Burrard Street, 3rd Floor, Vancouver, BC V6C

3 3B9, at least 48 hours (excluding Saturdays, Sundays and holidays recognized in the Province of British Columbia) before the time and date of the Meeting or any adjournment or postponement thereof. If you are a non registered shareholder of the Company and received this Notice of Meeting and accompanying materials through a broker, a financial institution, a participant, a trustee or administrator of a self administered retirement savings plan, retirement income fund, education savings plan or other similar self administered savings or investment plan registered under the Income Tax Act (Canada), or a nominee of any of the foregoing that holds your securities on your behalf (an Intermediary ), please complete and return the materials in accordance with the instructions provided to you by your Intermediary. DATED at Vancouver, British Columbia, this 23 rd day of November, By Order of the Board of Directors of RYU APPAREL INC. /s/marcello Leone Marcello Leone President, Chief Executive Officer and Director PLEASE VOTE. YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY FORM AND PROMPTLY RETURN IT IN THE ENVELOPE PROVIDED. ii

4 RYU APPAREL INC West 2nd Avenue Vancouver, BC V6J 1H4 Telephone: (604) INFORMATION CIRCULAR November 23, 2015 INTRODUCTION This Information Circular accompanies the Notice of Annual General Meeting of Shareholders (the Notice ) and is furnished to the holders (each, a Shareholder ) of common shares (each, a Share ) in the capital of RYU Apparel Inc. (the Company ) in connection with the solicitation by the management of the Company of proxies to be voted at the annual general meeting (the Meeting ) of the Shareholders to be held at 10:00 a.m. on Wednesday, December 23, 2015 at the law offices of Clark Wilson LLP, West Georgia Street, Vancouver, British Columbia, or at any adjournment or postponement thereof. All references to Shareholders in this Information Circular are to registered Shareholders unless specifically stated otherwise. Date and Currency The date of this Information Circular is November 23, Unless otherwise indicated, all dollar amounts referred to herein are in US dollars. Management Solicitation PROXIES AND VOTING RIGHTS The solicitation of proxies by management of the Company will be conducted by mail and may be supplemented by telephone or other personal contact and such solicitation will be made without special compensation granted to the directors, regular officers and employees of the Company. The Company does not reimburse shareholders, nominees or agents for costs incurred in obtaining, from the principals of such persons, authorization to execute forms of proxy, except that the Company has requested brokers and nominees who hold stock in their respective names to furnish this Information Circular and related proxy materials to their customers, and the Company will reimburse such brokers and nominees for their related out of pocket expenses. No solicitation will be made by specifically engaged employees or soliciting agents. The cost of solicitation will be borne by the Company. No person has been authorized to give any information or to make any representation other than as contained in this Information Circular in connection with the solicitation of proxies. If given or made, such information or representations must not be relied upon as having been authorized by the Company. The delivery of this Information Circular shall not create, under any circumstances, any implication that there has been no change in the information set forth herein since the date of this Information Circular. This Information Circular does not constitute the solicitation of a proxy by anyone in any jurisdiction in which such solicitation is not authorized, or in which the person making such solicitation is not qualified to do so, or to anyone to whom it is unlawful to make such an offer of solicitation.

5 Appointment of Proxy Registered Shareholders are entitled to vote at the Meeting. Each Shareholder is entitled to one vote for each Share that such Shareholder holds on November 16, 2015, (the Record Date ) on the resolutions to be voted upon at the Meeting, and any other matter to properly come before the Meeting. The persons named as proxyholders (the Designated Persons ) in the enclosed form of proxy are proposed directors and/or officers of the Company. Each Shareholder has the right to appoint a person or corporation (who need not be a Shareholder) to attend and act for or on behalf of that Shareholder at the Meeting, other than the Designated Persons named in the enclosed form of proxy. Each Shareholder may exercise this right by striking out the printed names and inserting the name of such other person and, if desired, an alternate to such person, in the blank space provided in the form of proxy. In order to be voted, the completed form of proxy must be received by the Company s registrar and transfer agent, Computershare Investor Services Inc. (the Transfer Agent ), at its offices located at 510 Burrard Street, 3rd Floor, Vancouver, BC V6C 3B9, or by the Company at the address set forth above, by mail or fax, at least 48 hours (excluding Saturdays, Sundays and holidays recognized in the Province of British Columbia) prior to the scheduled time of the Meeting, or any adjournment or postponement thereof. A proxy may not be valid unless it is dated and signed by each Shareholder who is giving it or by that Shareholder s attorney in fact duly authorized by that Shareholder in writing or, in the case of a corporation, dated and executed by a duly authorized officer or attorney in fact for the corporation. If a form of proxy is executed by an attorney in fact for an individual Shareholder or joint Shareholders or by an officer or attorney in fact for a corporate Shareholder, the instrument so empowering the officer or attorney in fact, as the case may be, or a notarially certified copy thereof, should accompany the form of proxy. Revocation of Proxies Each Shareholder who has given a proxy may revoke it at any time, before it is exercised, by an instrument in writing: (a) executed by that Shareholder or by that Shareholder s attorney in fact authorized in writing or, where the Shareholder is a corporation, by a duly authorized officer of, or attorney in fact for, the corporation; and (b) delivered either: (i) to the Company at the address set forth above, at any time up to and including the last business day preceding the day of the Meeting or, if adjourned or postponed, any reconvening thereof, or (ii) to the Chairman of the Meeting prior to the vote on matters covered by the proxy on the day of the Meeting or, if adjourned or postponed, any reconvening thereof, or (iii) in any other manner provided by law. A proxy will automatically be revoked by either: (i) attendance at the Meeting and participation in a poll or ballot by a Shareholder, or (ii) submission of a subsequent proxy in accordance with the foregoing procedures. A revocation of a proxy does not affect any matter on which a vote has been taken prior to any such revocation. 2

6 Voting of Shares and Proxies and Exercise of Discretion by Designated Persons Each Shareholder may indicate the manner in which the Designated Persons are to vote with respect to a matter to be voted upon at the Meeting by marking the appropriate space on the proxy. If the instructions as to voting indicated in the proxy are certain, the Shares represented by the proxy will be voted or withheld from voting in accordance with the instructions given in the proxy. If the Shareholder specifies a choice in the proxy with respect to a matter to be acted upon, then the Shares represented will be voted or withheld from the vote on that matter accordingly. The Shares represented by a proxy will be voted or withheld from voting in accordance with the instructions of the Shareholder on any ballot that may be called for and if the Shareholder specifies a choice with respect to any matter to be acted upon, the Shares will be voted accordingly. If no choice is specified in the proxy with respect to a matter to be acted upon, the proxy confers discretionary authority with respect to that matter upon the Designated Persons named in the form of proxy. It is intended that the Designated Persons will vote the Shares represented by the proxy in favour of each matter identified in the proxy, including the vote for the election of the nominees to the Company s board of directors (the Board ), the appointment of the auditors and other matters as described in this Information Circular. The enclosed form of proxy confers discretionary authority upon the persons named therein with respect to other matters which may properly come before the Meeting, including any amendments or variations to any matters identified in the Notice, and with respect to other matters which may properly come before the Meeting. At the date of this Information Circular, management of the Company is not aware of any such amendments, variations or other matters to come before the Meeting. In the case of abstentions from, or withholding of, the voting of the Shares on any matter, the Shares that are the subject of the abstention or withholding will be counted for the determination of a quorum, but will not be counted as affirmative or negative on the matter to be voted upon. NON REGISTERED HOLDERS Only registered Shareholders, or duly appointed proxyholders, are permitted to vote at the Meeting. Most Shareholders are non registered Shareholders because the Shares they own are not registered in their names but are instead registered in the name of the brokerage firm, bank or trust company through which they purchased the Shares. More particularly, a person is not a registered Shareholder in respect of Shares which are held on behalf of that person (the Non Registered Holder ) but which are registered either: (a) in the name of an intermediary (an Intermediary ) that the Non Registered Holder deals with in respect of the Shares (Intermediaries include, among others, banks, trust companies, securities dealers or brokers and trustees or administrators of self administered RRSP s, RRIF s, RESPs and similar plans); or (b) in the name of a clearing agency (such as CDS Clearing and Depositary Services Inc. ( CDS )) of which the Intermediary is a participant. In accordance with the requirements set out in National Instrument of the Canadian Securities Administrators ( NI ), the Company has distributed copies of the Notice of Meeting, this Information Circular and the form of proxy (collectively, the Meeting Materials ) to the clearing agencies and Intermediaries for onward distribution to Non Registered Holders. Intermediaries are required to forward the Meeting Materials to Non Registered Holders unless a Non Registered Holder has waived the right to receive them. Very often, Intermediaries will use service companies to forward the Meeting Materials to Non Registered Holders. Generally, Non Registered Holders who have not waived the right to receive Meeting Materials will either: 3

7 (a) (b) be given a form of proxy which has already been signed by the Intermediary (typically by a facsimile, stamped signature), which is restricted as to the number of Shares beneficially owned by the Non Registered Holder but which is otherwise not completed. Because the Intermediary has already signed the form of proxy, this form of proxy is not required to be signed by the Non Registered Holder when submitting the proxy. In this case, the Non Registered Holder who wishes to submit a proxy should otherwise properly complete the form of proxy and deposit it with the Transfer Agent as provided above; or more typically, be given a voting instruction form which is not signed by the Intermediary, and which, when properly completed and signed by the Non Registered Holder and returned to the Intermediary or its service company, will constitute voting instructions (often called a proxy authorization form ) which the Intermediary must follow. Typically, the proxy authorization form will consist of a one page pre printed form. Sometimes, instead of a one page pre printed form, the proxy authorization will consist of a regular printed proxy form accompanied by a page of instructions, which contains a removable label containing a bar code and other information. In order for the form of proxy to validly constitute a proxy authorization form, the Non Registered Holder must remove the label from the instructions and affix it to the form of proxy, properly complete and sign the form of proxy and return it to the Intermediary or its service company in accordance with the instructions of the Intermediary or its service company. In either case, the purpose of this procedure is to permit a Non Registered Holder to direct the voting of the Shares which they beneficially own. Should a Non Registered Holder who receives one of the above forms wish to vote at the Meeting in person, the Non Registered Holder should strike out the names of the Designated Persons named in the form and insert the Non Registered Holder s name in the blank space provided. In either case, Non Registered Holders should carefully follow the instructions of their Intermediary, including those regarding when and where the proxy or proxy authorization form is to be delivered. There are two kinds of beneficial owners those who object to their name being made known to the issuers of securities which they own (called OBOs for Objecting Beneficial Owners) and those who do not object to the issuers of the securities they own knowing who they are (called NOBOs for Non Objecting Beneficial Owners). Pursuant to NI , issuers can obtain a list of their NOBOs from Intermediaries for distribution of proxy related materials directly to NOBOs. These Meeting Materials are being sent to registered Shareholders and Non Registered Holders. If you are a Non Registered Holder, and the Company or its agent has sent these materials directly to you, your name and address and information about your holdings of Shares have been obtained in accordance with applicable securities regulatory requirements from the Intermediary holding on your behalf. All references to Shareholders in this Information Circular are to registered Shareholders, unless specifically stated otherwise. VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES The Company is authorized to issue an unlimited number of Shares without par value and an unlimited number of preference shares without par value. As of the Record Date, determined by the Board to be 4

8 the close of business on November 16, 2015, a total of 79,430,419 Shares were issued and outstanding. Each Share carries the right to one vote at the Meeting. Only registered Shareholders as of the Record Date are entitled to receive notice of, and to attend and vote at, the Meeting or any adjournment or postponement of the Meeting. At the Meeting, the votes of holders of Shares will be aggregated on all matters to be approved at the Meeting. To the knowledge of the directors or executive officers of the Company, no person or company beneficially owns, or controls or directs, directly or indirectly, Shares carrying 10% or more of the voting rights attached to the Shares. NUMBER OF DIRECTORS The Articles of the Company provide for the Board to consist of no fewer than three directors and no greater than a number as fixed or changed from time to time by majority approval of the holders of shares carrying the right to vote at annual meetings of the Company s shareholders. At the Meeting, Shareholders will be asked to pass an ordinary resolution to set the number of directors of the Company for the ensuing year at four (4). The number of directors will be approved if the affirmative vote of holders of at least a majority of Shares present or represented by proxy at the Meeting, on a combined basis, and entitled to vote thereat are voted in favour of setting the number of directors at four (4). Management recommends the approval of an ordinary resolution to set the number of directors of the Company at four (4). ELECTION OF DIRECTORS The directors of the Company are elected at each annual meeting and hold office until the next annual meeting or until their successors are duly elected or appointed in accordance with the Company s Articles, or until such director s earlier death, resignation or removal. In the absence of instructions to the contrary, the enclosed form of proxy will be voted for the nominees listed in the form of proxy, all of whom are presently members of the Board. Management of the Company proposes to nominate each of the following persons for election as a director. Information concerning such persons, as furnished by the individual nominees, is as follows: Name Province/State Country of Residence and Position(s) with the Company (1) Marcello Leone British Columbia, Canada President, CEO and Director Principal Occupation Business or Employment for Last Five Years (1) Mr. Leone has been involved with the Company since mid 2011, initially as an investor and from December 4, 2014, a director and officer of the Company. On March 26, 2012, Mr. Leone founded Naturo Group Investments Inc. Naturo is the owner of the Trace Blackwater brands, nutritional water beverages that are distributed in over 2,000 locations. From 2009 to 2015, Mr. Leone was instrumental in operating one of Canada s largest and most successful independent specialty stores known as LEONE. LEONE, located in Vancouver, British Columbia, represented over 30,000 square feet of luxury brands. LEONE S contemporary division known Periods during which Nominee has Served as a Director Number of Shares Owned (1)(2) December 4, 2014 (4) 7,396,970(8) to present 5

9 Name Province/State Country of Residence and Position(s) with the Company (1) Principal Occupation Business or Employment for Last Five Years (1) as L2 represented contemporary designers. Mr. Leone was responsible for the development of new product lines, guiding the buying team, and daily operational duties for LEONE and L2. Led by Mr. Leone and its management team, LEONE was recognized as one of North America s leading retailers as quoted in Vogue Italy. Periods during which Nominee has Served as a Director Number of Shares Owned (1)(2) Bill Marcus (3) Illinois, USA Director Martino Ciambrelli (3) British Columbia, Canada Director Maria Leone British Columbia, Canada Director Mr. Marcus is Senior Managing Director of both Asset Alliance Corporation and its affiliate Hedgeharbor, Inc. Prior to this, Mr. Marcus was Executive Vice President, Head of Sales North America for Newedge Group since At Newedge, Mr. Marcus led sales, business development and coordination between the global offices, as well as between several of its parent banking groups. Mr. Marcus directly managed top global relationships with financial institutions including: asset managers, hedge funds, CTAs, investors, professional trading groups, corporations, governments and family offices. Mr. Ciambrelli has over 25 years experience in sales development and management of consumer brands with a focus on the food and beverage industry. Since March 2013, he has been President of Naturo Group Investments Inc., a nutritional beverage and food company. From July 2011 to February 2013, he was Director of Business Development, Pacific at AirSprint Inc., a company that specializes in private aviation solutions. From March 2001 to July 2011, he was Regional Manager, Western Canada at Johnvince Foods, which owns the right to the Mr. Peanut brand in Canada. Former Vice President of LEONE. In the early 1970s, in partnership with her husband, Mrs. Leone played an integral part in opening a chain of successful boutiques in Vancouver s most prestigious shopping malls. In 1987, they consolidated all the individual boutiques to open LEONE, a 30,000 square foot high end fashion retail store in downtown Vancouver at the historic Sinclair Centre. As the former Vice President of LEONE, she was instrumental in the fashion, operation and growth of the well known retailer for 27 years until During this time, Mrs. Leone traveled extensively to Milan, Paris and New York attending fashion shows, purchasing new product lines and researching new designers. LEONE was recognized as one of North America s premiere fashion destinations offering world class designer labels. December 4, 2014 to present (5) 735,000 (9) December 4, 2014 to present (6) 30,000 (10) December 4, 2014 to present (7) 791,666 (11) (1) (2) (3) (4) (5) (6) (7) Information has been furnished by the respective nominees individually. The information as to Shares beneficially owned, or over which a nominee exercises control or direction, directly or indirectly, not being within the knowledge of the Company, has been furnished by the respective nominees as at November 16, Member of the Audit Committee of the Company. Mr. Leone was appointed as President, Chief Executive Officer and Director on December 4, Mr. Marcus was appointed as a director on December 4, Mr. Ciambrelli was appointed as a director on December 4, Ms. Leone was appointed as a director on December 4,

10 (8) (9) (10) (11) Consists of 7,162,627 Shares held directly and 234,343 Shares held indirectly by minor children. Does not include (i) warrants held directly to purchase 5,720,114 Shares of the Company, (iii) warrants held indirectly by minor children to purchase 144,865 Shares of the Company and (iv) options to purchase 1,600,000 Shares of the Company. Does not include options to purchase 150,000 Shares of the Company. Does not include options to purchase 200,000 Shares of the Company. Does not include options to purchase 150,000 Shares of the Company. Management does not contemplate that any of its nominees will be unable to serve as directors. If any vacancies occur in the slate of nominees listed above before the Meeting, then the Designated Persons intend to exercise discretionary authority to vote the Shares represented by proxy for the election of any other persons as directors. Management recommends the approval of each of the nominees listed above for election as directors of the Company for the ensuing year. Corporate Cease Trade Orders To the best of management s knowledge, no proposed director of the Company is, or within the ten (10) years before the date of this Information Circular has been, a director, chief executive officer or chief financial officer of any company that: (a) (b) was subject to an order that was issued while the proposed director was acting in the capacity as director, chief executive officer or chief financial officer; or was subject to an order that was issued after the proposed director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer. Bankruptcies To the best of management s knowledge, no proposed director of the Company has; (i) within ten (10) years before the date of this Information Circular, been a director or 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 was subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold its assets; or (ii) within ten (10) years before the date of this Information Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver manager or trustee appointed to hold the assets of the proposed director. Penalties and Sanctions To the best of management s knowledge, no proposed director of the Company has been subject to: (a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with securities regulatory authority; or (b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a proposed director. 7

11 STATEMENT OF EXECUTIVE COMPENSATION General For the purpose of this Statement of Executive Compensation: compensation securities includes stock options, convertible securities, exchangeable securities and similar instruments including stock appreciation rights, deferred share units and restricted stock units granted or issued by the Company or one of its subsidiaries (if any) for services provided or to be provided, directly or indirectly to the Company or any of its subsidiaries (if any); NEO or named executive officer means: (a) (b) (c) (d) each individual who served as chief executive officer ( CEO ) of the Company, or who performed functions similar to a CEO, during any part of the most recently completed financial year, each individual who served as chief financial officer ( CFO ) of the Company, or who performed functions similar to a CFO, during any part of the most recently completed financial year, the most highly compensated executive officer of the Company or any of its subsidiaries (if any) other than individuals identified in paragraphs (a) and (b) at the end of the most recently completed financial year whose total compensation was more than $150,000 for that financial year, and each individual who would be an NEO under paragraph (c) but for the fact that the individual was neither an executive officer of the Company or its subsidiaries, nor acting in a similar capacity, at the end of that financial year; plan includes any plan, contract, authorization or arrangement, whether or not set out in any formal document, where cash, compensation securities or any other property may be received, whether for one or more persons; and underlying securities means any securities issuable on conversion, exchange or exercise of compensation securities. Director and Named Executive Officer Compensation, excluding Compensation Securities The following table sets forth all direct and indirect compensation paid, payable, awarded, granted, given or otherwise provided, directly or indirectly, by the Company or any subsidiary thereof to each NEO and each director of the Company, in any capacity, including, for greater certainty, all plan and nonplan compensation, direct and indirect pay, remuneration, economic or financial award, reward, benefit, gift or perquisite paid, payable, awarded, granted, given or otherwise provided to the NEO or director for services provided and for services to be provided, directly or indirectly, to the Company or any subsidiary thereof: 8

12 Name and Position Year Salary, Consulting Fee, Retainer or Commission Bonus ($) Committee or Meeting Fees ($) Value of Perquisites ($) Value of all other Compensation ($) Total Compensation ($) ($) Marcello Leone (1) President, CEO and Director Jameel Vaghela (2) Former CFO Craig Brod (3) Former CEO and Director Jim Nowodworski (4) Former CFO Martino Ciambrelli (5) Director Maria Leone (6) Director Peter Pan (7) Director Bill Marcus (8) Director Michelle Sibley (9) Director ,693 N/A 31,828 N/A 104, , ,919 63,326 N/A N/A N/A N/A N/A N/A 56,693 N/A N/A ,067 N/A N/A 51,000 (10) 155,611 12,250 (10) 117,301 15,000 (11) 174,919 3,395 (11) 66,721 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) Marcello Leone was appointed as President, CEO and a director on December 4, 2014 and the President of the Company s subsidiary on May 23, 2014 and CEO of the Company s subsidiary on August 1, Jameel Vaghela was appointed as CFO and Secretary of the Company on December 4, 2014, the Secretary of the Company s subsidiary on September 1, 2014 and the CFO and Treasurer of the Company s subsidiary on September 2, 2014 and resigned as CFO on October 13, 2015 and Robert Payment was appointed as CFO on October 14, Craig Brod was the CEO of the Company s subsidiary from April 30, 2013 until August 1, Jim Nowodworski was the CFO of the Company s subsidiary from June 21, 2013 until September 1, 2014 Martino Ciambrelli was appointed a director of the Company on December 4, 2014 and of the Company s subsidiary on March 11, Maria Leone was appointed a director of the Company on December 4, 2014 and of the Company s subsidiary on May 26, Peter Pan was appointed a director of the Company on December 4, 2014 and of the Company s subsidiary on May 26, 2014 and resigned as a director on October 21, Bill Marcus was appointed a director of the Company on December 4, 2014 and of the Company s subsidiary on December 19, Michelle Sibley was appointed a director of the Company on December 4, 2014 and of the Company s subsidiary on March 11, 2014 and resigned as a director on October 18, Housing allowance and furniture rental provided under the terms of Craig Brod s employment agreement and medical benefits paid by the Company s subsidiary. Medical benefits paid by the Company s subsidiary. Stock Options and Other Compensation Securities The following table sets out all compensation securities granted or issued to each director and NEO by the Company or any subsidiary thereof in the year ended December 31, 2014 for services provided, or to be provided, directly or indirectly, to the Company or any subsidiary thereof: 9

13 Name and Position Marcello Leone President, CEO and Director Jameel Vaghela Former CFO Martino Ciambrelli Director Maria Leone Director Peter Pan Director Bill Marcus Director Michelle Sibley Director Type of Compensation Security Number of RYU Date of Issue Options, Number of or Grant Shares and Percentage of Class (1) Stock Options 1,600,000 RYU Options (2) 1,600,000 Shares 2.8% (3) Stock Options 300,000 RYU Options (4) Stock Options Stock Options Stock Options 300,000 Shares 0.5% (3) 200,000 RYU Options 200,000 Shares (5) 0.3% (3) 150,000 RYU Options 150,000 Shares (6) 0.3% (3) 300,000 RYU Options 300,000 Shares (7) 0.2% (3) Stock Options 50,000 RYU Options (8) 50,000 Shares 0.1% (3) Stock Options 50,000 RYU Options (8) 50,000 Shares 0.1% (3) Issue, Conversion or Exercise Price ($) Closing Price of Security or Underlying Security on Date of Grant Closing Price of Security or Underlying Security at Year End Expiry Date August 18, 2014 $0.30 $0.35 $0.20 August 18, 2024 August 18, 2014 $0.30 $0.35 $0.20 August 18, 2024 August 18, 2014 $0.30 $0.35 $0.20 August 18, 2024 August 18, 2014 $0.30 $0.35 $0.20 August 18, 2024 August 18, 2014 $0.30 $0.35 $0.20 August 18, 2024 August 18, 2014 $0.30 $0.35 $0.20 August 18, 2024 August 18, 2014 $0.30 $0.35 $0.20 August 18, 2024 (1) (2) (4) (5) (6) (7) (8) The Company has only issued RYU Options as compensation securities. These RYU Options vest when the following condition has been satisfied: The Company reports positive net cash from operating activities and net income, as shown on either its interim or annual financial statements as filed with the Securities and Exchange Commission. (3) Calculated on a partially diluted basis, based on 55,336,750 RYU Shares outstanding as at the date of grant. These RYU Options vest as follows: (i) 30,000 on August 18, 2015, (ii) 50,000 on August 18, 2016 and (iii) 220,000 upon the Company reporting positive net cash from operating activities and net income, as shown on either its interim or annual financial statements as filed with the Securities and Exchange Commission. These RYU Options vest as follows: (i) 50,000 on August 18, 2014, (ii) 50,000 on February 28, 2015, (iii) 50,000 on August 18, 2015 and (iv) 50,000 on August 18, These RYU Options vest as follows: (i) 37,500 on August 18, 2014, (ii) 37,500 on February 28, 2015, (iii) 37,500 on August 18, 2015 and (iv) 37,500 on February 18, These RYU Options vest as follows: (i) 75,000 on August 18, 2014, (ii) 75,000 on February 28, 2015, (iii) 75,000 on August 18, 2015 and (iv) 75,000 on February 18, These RYU Options vest as follows: (i) 12,500 on August 18, 2014, (ii) 12,500 on February 28, 2015, (iii) 12,500 on August 18, 2015 and (iv) 12,500 on February 18, Exercise of Compensation Securities by Directors and NEOs No director or NEO exercised any compensation securities, being solely comprised of stock options, during the year ended December 31, Stock Option Plans and Other Incentive Plans On June 10, 2011, the Board adopted the 2011 Incentive Award Plan (the 2011 Plan ) and on May 18, 2012, the Board approved certain revisions to the 2011 Plan, resulting in our 2012 Stock Option (the 2012 Plan ) whereby the aggregate number of securities reserved for issuance was revised to 4,243,963 Shares. On June 7, 2013, the Board approved certain revisions to the 2012 Plan, resulting in the 2013 Stock Option Plan (the 2013 Plan ), whereby the aggregate number of Shares reserved for 10

14 issuance was revised to 5,851,213. On June 9, 2014, the Board approved certain revisions to the 2013 Stock Option Plan, resulting in the Company s 2014 Stock Option Plan (the 2014 Plan ) whereby the aggregate number of Shares reserved for issuance set aside and made available for issuance under the 2014 Plan was revised from (i) 5,851,213 Shares at the time of granting the options (including all options granted by the Company to date) to (ii) 8,090,512 Shares. On December 18, 2014, the Board approved certain revisions to the 2014 Stock Option Plan, resulting in the Company s Revised 2014 Stock Option Plan (the Revised 2014 Plan ) whereby the aggregate number of Shares reserved for issuance set aside and made available for issuance under the Revised 2014 Plan was revised from (i) 8,090,512 Shares at the time of granting the options (including all options granted by the Company to date) to (ii) 11,058,357 Shares. The Revised 2014 Plan is a fixed stock option plan, whereby the aggregate number of Shares reserved for issuance under the Revised 2014 Plan, including any other plan or agreement of the Company, shall not exceed 20% of the issued and outstanding Shares on January 27, The purpose of the Revised 2014 Plan is to advance the interests of our company and its shareholders by attracting, retaining and motivating the performance of selected directors, officers, employees or consultants of our company of high caliber and potential and to encourage and enable such persons to acquire and retain a proprietary interest in our company by ownership of its stock. Summary of the Revised 2014 Plan Terms If the Shares are listed on the TSX Venture Exchange (the Exchange ), the following terms apply to the Company s Revised 2014 Plan: the number of Shares which may be reserved in any 12 month period for issuance to any one individual upon exercise of all stock options held by that individual may not exceed 5% of the issued and outstanding Shares of the Company at the time of the grant; the number of Shares which may be reserved in any 12 month period for issuance to any one consultant may not exceed 2% of the issued and outstanding Shares and the maximum number of Shares which may be reserved in any 12 month period for issuance to all persons engaged in investor relations activities may not exceed 2% of the issued and outstanding Shares of the Company; options granted to any person engaged in investor relations activities will vest in stages over 12 months with no more than ¼ of the stock options vesting in any three month period; stock options granted to optionees engaged in investor relations activities on behalf of the Company expire 30 days after such optionees cease to perform such investor relations activities for the Company; and the exercise price of any stock options granted under the 2014 Plan shall be determined by the board of directors, but may not be less than the closing price of the Shares on the Exchange on the last trading day immediately preceding the date of the grant of such stock options (less any discount permissible under Exchange rules) The Revised 2014 Plan will be administered by the Board or a special committee of directors, either of which will have full and final authority with respect to the granting of all stock options thereunder. Stock options may be granted under the Revised 2014 Plan to such directors, officers, employees or consultants of the Company, as the board of directors may from time to time designate. 11

15 The term of any stock options granted under the Revised 2014 Plan shall be determined at the time of grant but, subject to earlier termination in the event of termination or in the event of death, the term of any stock options granted under the Revised 2014 Plan may not exceed ten years. Options granted under the Revised 2014 Plan are not to be transferable or assignable other than by will or other testamentary instrument or pursuant to the laws of succession. Subject to certain exceptions, in the event that an employee, or consultant ceases to act in that capacity in relation to the Company, stock options granted to such employee, consultant or management company employee under the Revised 2014 Plan will expire one year after such individual or entity ceases to act in that capacity in relation to the Company, other than for cause, death, or disability. Options granted to an employee or consultant that ceases to act in that capacity in relation to the Company are terminated immediately upon the employee or consultant being terminated for cause. In the event of death of an option holder, options granted under the Revised 2014 Plan expire one year from the date of the death of the option holder. The Revised 2014 Plan was approved by the Shareholders at the Special Meeting held on January 27, A copy of the Revised 2014 Plan is available for review on the Company s profile at and at the office of the Company at 1672 West 2nd Avenue, Vancouver, British Columbia, V6J 1H4 or at the registered offices of the Company, at West Georgia Street, Vancouver, British Columbia, V6C 3H1 during normal business hours up to and including the date of the Meeting. Employment, Consulting and Management Agreements Other than as disclosed below, the Company has not entered into any agreement or arrangement under which compensation was provided during the most recently completed financial year or is payable in respect of services provided to the Company or any of its subsidiaries that were (a) performed by a director or NEO, or (b) performed by any other party but are services typically provided by a director or a NEO. On September 23, 2014, the Company s subsidiary entered into an executive employment agreement with Marcello Leone to serve as Chief Executive Officer of the Company in exchange for the following: (a) (b) (c) plans. a base salary of $170,000 per year; the granting of up to 3.9 million options to purchase common shares; and eligibility to participate in the Company s bonus and other incentive compensation The agreement has a three year term. It may be terminated by Mr. Leone by providing at least 60 days notice. The Company may terminate the agreement by providing 90 days notice prior to September 16, 2016 or 120 days notice thereafter. On September 2, 2014, the Company s subsidiary entered into an executive employment agreement with Jameel Vaghela to serve as Chief Financial Officer of the Company in exchange for the following: (a) (b) a base salary of $108,000 per year; the granting of 300,000 options to purchase common shares; and 12

16 (c) eligibility to participate in the Company s bonus and other incentive compensation plans. The agreement may be terminated by Mr. Vaghela by providing at least four weeks notice. The Company may terminate the agreement by providing the employee with his entitlements pursuant to the Employment Standards Act of British Columbia. On July 18, 2013, the Company signed an employment agreement with Craig Brod, Ph.D., its former chief executive officer, effective as of May 1, The Company agreed to pay the sum of $168,000 per year and a lump sum of $36,000 to Dr. Brod, which lump sum was payable on or before January 6, The Company also agreed to grant options to purchase up to 900,000 shares of our common stock at an exercise price of $0.35 per share. The Company also granted the executive a reasonable housing allowance up to a maximum of $1,800 a month and standard benefits. The employment agreement shall terminate on December 31, 2013 and shall be automatically extended by one year unless either party gives ninety (90) days prior written notice. The employment agreement was extended until December 31, The agreement was terminated upon Mr. Brod s resignation on August 1, Pursuant to the agreement the Company paid Dr. Brod $39,000 in severance. The Company s former chief financial officer does not have any written employment agreement other than the agreed upon terms outlined in his initial offer letter. Under the initial offer letter to Jim Nowodworski, the Company agreed to provide him with a base salary of $150,000 on an annual basis and deferred compensation of $30,000 payable annually on January 31 (for 2013, the amount was prorated to $15,000 and payable on January 31, 2014). In addition, the Company granted him options to purchase 450,000 shares of our common stock at an exercise price of $0.21 with an expiration date of September 5, Mr. Nowodworski is also eligible for a short term bonus plan beginning with the 2014 year with a target payout of 30% bonus and expected to be paid in early 2015 and we also granted him the standard benefits. The employment agreement with Mr. Nowodworski was terminated on September 1, Mr. Nowodworski was retained in a consultant capacity until December 31, Oversight and Description of Director and NEO Compensation During the year ended December 31, 2014, fees paid to directors for their services as directors were determined by the directors of the Company. The Board has not created or appointed a compensation committee given the Company s current size and stage of development. All tasks related to developing and monitoring the Company s approach to the compensation of the Company s NEOs and directors are performed by the members of the Board. The compensation of the NEOs, directors and the Company s employees or consultants, if any, is reviewed, recommended and approved by the Board without reference to any specific formula or criteria. Executive officers compensation is currently composed of two major components: base salary and stock options. Interested executives do not participate in reviews, discussions or decisions of the Board regarding this remuneration. The base salary for each executive is determined having regard to the executive s responsibilities individual performance factors, overall corporate performance, and the assessment of the Board of such matters as are presented to them by management. The second component of the executive officers compensation is stock options. The Company may from time to time grant stock options to executive officers under the stock option plan. Grants of stock 13

17 options are intended to align the interests of the executive officers with those of the shareholders over the longer term. There was no significant changes to the Company s compensation policies that were made during or after the fiscal year ended December 31, 2014 that could or will have an effect on director or executive officer compensation. Pension Plan Benefits The Company has no pension, defined benefit or defined contribution plans in place. SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS The following table sets forth, as of the end of the Company s most recently completed financial year, the number of securities to be issued upon exercise of outstanding stock options, the weighted average exercise price and the number of securities remaining to be issued under equity compensation plans approved and not approved by the Shareholders: Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders 7,674,335 $ ,177 Equity compensation plans not approved by security holders N/A Total 7,674,335 $ ,177 The Revised 2014 Plan, which was adopted by the Board on December 18, 2014, replaced the 2014 Plan, which was adopted by the Board on June 26, The Revised 2014 Plan is a fixed stock option plan, whereby the aggregate number of Shares reserved for issuance under the Revised 2014 Plan, including any other plan or agreement of the Company, shall not exceed 11,067,350 Shares. The purpose of the Revised 2014 Plan is to advance the interests of the Company and its shareholders by attracting, retaining and motivating the performance of selected directors, officers, employees or consultants of the Company of high caliber and potential and to encourage and enable such persons to acquire and retain a proprietary interest in the Company by ownership of its stock. See Statement of Executive Compensation Stock Option Plans and Other Incentive Plans for a full description of the terms of the Revised 2014 Plan. INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS No current or former director, executive officer or employee, proposed nominee for election to the Board, or associate of such persons is, or has been, indebted to the Company since the beginning of the most recently completed financial year of the Company and no indebtedness remains outstanding as at the date of this Information Circular. None of the directors or executive officers of the Company is or, at any time since the beginning of the most recently completed financial year, has been indebted to the Company. None of the directors or executive officers indebtedness to another entity is, or at any time since the beginning of the most recently completed financial year, has been the subject of a guarantee, support agreement, letter of 14

18 credit or other similar arrangement or understanding provided by the Company. INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS Except as otherwise disclosed herein, no: (a) director or executive officer of the Company; (b) person or company who beneficially owns, directly or indirectly, Shares, or who exercises control or direction of Shares, or a combination of both, carrying more than ten percent of the voting rights attached to the Shares outstanding (an Insider ); (c) director or executive officer of an Insider; or (d) associate or affiliate of any of the directors, executive officers or Insiders, has had any material interest, direct or indirect, in any transaction since the commencement of the Company s most recently completed financial year or in any proposed transaction which has materially affected or would materially affect the Company, other than an interest arising solely from the ownership of Shares where such person or company will receive no extra or special benefit or advantage not shared on a pro rata basis by all Shareholders. APPOINTMENT OF AUDITOR It is proposed that Dale Matheson Carr Hilton Labonte LLP, Chartered Accountants, ( DMCL ), of 1140 West Pender Street, Vancouver, BC V6E 4G1, be appointed as auditor of the Company for the ensuring year. Management terminated the engagement of Marcum, the previous auditor of the Company, effective September 30, Pursuant to Section 204(4) of the Business Corporations Act (British Columbia), the directors are entitled to fill any causal vacancy in the office of auditor. Effective September 30, 2014, the directors appointed DMCL to the position of auditor for the Company until the Meeting. Shareholders will be asked to approve the appointment of DMCL, as the auditor of the Company, to hold office until the next annual general meeting of the shareholders at remuneration to be fixed by the Board. Included with this Information Circular as Schedule A is a Reporting Package which consists of (a) the Form 8 K and (b) letter addressed to certain securities regulators from Marcum. At the Meeting, shareholders will be asked to vote for the appointment of DMCL, Chartered Accountants, to serve as auditor of the Company for the Company s fiscal year ending December 31, 2015, at a remuneration to be fixed by the Company s Board. Management recommends shareholders vote for the appointment of DMCL LLP, Chartered Accountants, as the Company s auditors for the Company s fiscal year ending December 31, 2015 at a remuneration to be fixed by the Board. AUDIT COMMITTEE DISCLOSURE Under National Instrument Audit Committees ( NI ), a reporting issuer is required to provide disclosure with respect to its Audit Committee, including the text of the Audit Committee Charter, information regarding composition of the Audit Committee, and the fees paid to the external auditor. The Company provides the following disclosure with respect to its Audit Committee: Audit Committee Charter The Company adopted an audit committee charter on April 18, The text of the audit committee charter is as follows: 15