| RELATED PARTY TRANSACTIONS | NOTE
17. RELATED PARTY TRANSACTIONS Investments The
Company has entered into related party transactions and certain services agreements with its investees. Key management of the Company
has also entered into related party transactions with investees. Key management personnel are those persons having the authority and
responsibility for planning, directing and controlling the activities of the Company. The Board of Directors, Chairman, Chief Executive
Officer and Chief Financial Officer are key management personnel. The
following subsidiaries and associates are considered related parties:
(a) Stimunity
(b) iOx
(c) Saugatuck
(d) Intensity 18,003 20,285
(e) Portage
Development Services Transactions
between the parent company and its subsidiaries, which are related parties, have been eliminated in consolidation and are not disclosed
in this note. On
September 8, 2021, the Company, through SalvaRx, completed a settlement of loans (including interest) to and receivables from iOx
for services rendered in exchange for 23,772 ordinary shares of iOx at a price of £162. Simultaneously, the Company entered into
an agreement with Oxford Sciences Innovation, Plc (“OSI”), the holder of $0.15 million notes plus accrued interest under
which OSI exchanged the notes plus accrued interest for 820 shares of iOx. The Company followed the guidance provided by an
IFRS Discussion Group Public Meeting dated November 29, 2016, following the general tenets of IAS 39, “Financial Instruments: Recognition
and Measurement,” and IFRIC 19, “Extinguishing Financial Liabilities with Equity Instruments” and recorded the exchange
at historical cost. Additionally, no profit or loss was recorded in connection with the exchange. As a result of these transactions,
the Company, through SalvaRx, increased its ownership up from 60.49% to 78.32%. See Note 21(c), "Events After the Balance Sheet Date - Share Exchange Agreement - iOx" for a further discussion Employment
Agreements PDS
entered into a Services Agreement with its CEO effective December 15, 2021. The Services Agreement provides that the CEO will receive
a base salary of $ 618,000 Under
the Services Agreement, the CEO may terminate his employment at any time for Good Reason, as defined in the Services Agreement. We may
terminate the CEO’s employment immediately upon his death, upon a period of disability or without “Just Cause”, as
defined. In the event that the CEO’s employment is terminated due to his death or Disability, for “Good Reason” or
without “Just Cause,” he will be entitled to Accrued Benefits (accrued unpaid portion of base salary, accrued unused vacation
time and any unpaid expenses). Additionally, he may be entitled to Severance Benefits, which include his then current base salary and
the average of his annual bonus for the prior two completed performance years, paid over 12 monthly installments. Additionally, the CEO
will be entitled to life insurance benefits and medical and dental benefits for a period of 12 months at the same rate the CEO and the
Company shared such costs during his period of employment. Additionally,
all stock options (and any other unvested equity incentive award) held by the CEO relating to shares of the Company will be deemed fully
vested and exercisable on the Termination Date, as defined, and the exercise period for such stock options will be increased by a period
of two years from the Termination Date. If
the CEO’s employment by the Company is terminated by the Company or any successor entity without “Just Cause” (not
including termination by virtue of the CEO’s death or Disability) or by the CEO for Good Reason within twelve (12) months following
the effective date of a “Change in Control” (as defined), then in addition to paying or providing Executive with the Accrued
Obligations, the Company will provide the following “Change in Control Severance Benefits”:
(1) The
Company will pay the Base Salary continuation benefit for eighteen (18) months;
(2) The
Company will pay the life insurance benefit for eighteen (18) months;
(3) The
Company will pay an additional amount equivalent to the CEO’s target annual bonus calculated
using the Bonus Percentage for the performance year in which Executive’s termination
occurs. This bonus will be paid in twelve equal installments commencing on the first payroll
date that is more than sixty (60) days following the date of termination of Executive’s
employment, with the remaining installments occurring on the first day of the month for the
eleven (11) months thereafter;
(4) The
Company will provide the CEO with continued medical and dental benefits, as described above,
for eighteen (18) months; and
(5) All
stock options (and any other unvested equity incentive award) held by the CEO relating to
shares of the Company or its parent will be deemed fully vested and exercisable on the Termination
Date, as defined, and the exercise period for such stock options will be increased by a period
of two years from the Termination Date. PDS
entered into Services Agreements with each of our five other senior officers (individually, “Executive” and collectively,
“Executives”), three of which are dated as of December 1, 2021 and one of which is dated December 15, 2021 and one of which
is dated June 1, 2022. Each of the Services Agreements provides for an initial term of two years and are automatically renewed for one-year
periods (except two, which provide for an initial term of one year and is automatically renewed for one-year periods). The Services Agreements
initially provide for annual base salaries ranging from $175,000 to $ 348,000 The
Services Agreements can be terminated by the Company without “Just Cause”, by death or Disability, or by the Executive (except
one) for “Good Reason”. In such instances, the Services Agreements provide for the payment of Accrued Obligations (accrued
unpaid portion of base salary, accrued unused vacation time and any unpaid expenses). Additionally, Executives (except two) are entitled
to 50% of base salary plus 50% of average annual bonus earned over the prior two performance years, as well as prevailing life insurance
benefits for a period of six months and medical and dental benefits for a period of six months at the prevailing rate the Company and
the Executive were sharing such expenses. Additionally,
all stock options (and any other unvested equity incentive award) held by the Executives relating to shares of the Company will be deemed
fully vested and exercisable on the Termination Date, as defined, and the exercise period for such stock options will be increased by
a period of two years from the Termination Date. If
Executive’s employment by the Company is terminated by the Company or any successor entity without “Just Cause” (not
including termination by virtue of Executive’s death or Disability) or by the Executive (except one) for Good Reason within twelve
(12) months following the effective date of a “Change in Control” (as defined), then in addition to paying or providing Executive
with the Accrued Obligations, the Company will provide the following “Change in Control Severance Benefits” (except in two
cases in which Executive is entitled to Item (5) and 50% of Items (1) and (3) below):
(1) The
Company will pay the Base Salary continuation benefit for twelve (12) months;
(2) The
Company will pay the life insurance benefit for twelve (12) months;
(3) The
Company will pay an additional amount equivalent to Executive’s target annual bonus
calculated using the Bonus Percentage for the performance year in which Executive’s
termination occurs. This bonus will be payable in twelve equal installments commencing on
the first payroll date that is more than sixty (60) days following the date of termination
of Executive’s employment, with the remaining installments occurring on the first day
of the month for the eleven (11) months thereafter;
(4) The
Company will provide the Executive with continued medical and dental benefits, as described
above, for twelve (12) months; and
(5) All
stock options (and any other unvested equity incentive award) held by the Executive relating
to shares of the Company or its parent will be deemed fully vested and exercisable on the
Termination Date and the exercise period for such stock options will be increased by a period
of two years from the Termination Date. The
Services Agreements also include customary confidentiality, as well as provisions relating to assignment of inventions. The Services
Agreements also includes non-competition and non-solicitation of employees and customers provision that run during the Executive’s
employment with the Company and for a period of one year after termination of employment. Bonuses
& Board Compensation Arrangements In
December 2021, the Compensation Committee approved performance bonuses payable to senior management totaling $0.7 million. The bonuses
were paid in December 2021. In
addition, the Compensation Committee of the Board established board of director compensation. Effective January 1, 2022, each non-executive
board member will be entitled to receive cash board fees of $40,000 per annum, payable quarterly in arrears. Additionally, each non-executive
board member will be entitled to an annual grant of 6,900 options to purchase common shares, which would vest the first annual anniversary
of the date of grant. The Company incurred board fees totaling $75,000 during the three months ended June 30, 2022. There were no board
fees incurred during the three months ended June 30, 2021. Non-executive
Board chairpersons will be entitled to an annual cash fee of $30,000, payable quarterly in arrears. Additionally,
the chairperson of each of the Audit Committee, Compensation Committee and Nomination Committee will be entitled to annual fees of
$15,000, $12,000 and $8,000, respectively, payable quarterly in arrears. Members of those committees will be entitled to annual fees
of $7,500, $6,000 and $4,000, respectively, payable quarterly in arrears. |
