Annual and Special Meeting of
Shareholders
Management Information Circular
This Management Information Circular, or Circular, is furnished in connection with the solicitation of proxies by and on behalf of the management of Trillium Therapeutics Inc., or the Corporation, for use at our Annual and Special Meeting of shareholders of the Corporation to be held on May 27, 2016 at the time and place and for the purposes set out in the accompanying Notice of Annual and Special Meeting and any adjournment or postponement thereof.
No person has been authorized to give any information or make any representation in connection with any matters to be considered at the Annual and Special Meeting, other than as contained in this Circular and, if given or made, any such information or representation must not be relied upon as having been authorized.
April 15, 2016
TRILLIUM THERAPEUTICS INC.
Notice of Annual and Special Meeting of Shareholders
NOTICE IS HEREBY GIVEN that the Annual and Special Meeting of Shareholders, or the Meeting, of Trillium Therapeutics Inc., or the Corporation, will be held at the offices of the Corporation at 2488 Dunwin Drive, Mississauga, Ontario L5L 1J9, on May 27, 2016, at 1:00 pm (Toronto time), for the following purposes:
1. | to receive the audited consolidated financial statements of the Corporation for the year ended December 31, 2015, or the 2015 Financial Statements, together with the auditors’ report thereon; |
2. | to elect directors of the Corporation for the ensuing year; |
3. | to reappoint Ernst & Young, LLP, Chartered Professional Accountants, Licensed Public Accountants, as auditors of the Corporation for the ensuing year and to authorize the directors to fix the remuneration to be paid to the auditors; |
4. | to consider, and if deemed appropriate, approve the Corporation’s amended and restated stock option plan; |
5. | to consider and, if deemed appropriate, pass a resolution confirming, ratifying and approving an amendment to the general by-law of the Corporation to add an advance notice requirement for nominations of directors by shareholders in certain circumstances; and |
6. | to transact such other business as may properly come before the Meeting or any adjournment or postponement thereof. |
Particulars of the foregoing matters are set forth in the management information circular dated April 15, 2016, or the Circular. The Corporation has elected to use the notice-and-access provisions under National Instrument 51-102 -Continuous Disclosure Obligations and National Instrument 54-101 -Communication with Beneficial Owners of Securities of a Reporting Issuer, or collectively, the Notice-and-Access Provisions, adopted by the Canadian Securities Administrators for the Meeting to reduce its mailing costs and volume of paper with respect to the materials distributed for the purpose of the Meeting. The Notice-and-Access Provisions are a set of rules that permit the Corporation to post the Meeting materials, 2015 Financial Statements and accompanying management’s discussion and analysis, or MD&A, online rather than making a traditional physical delivery of such materials. Shareholders will still receive this Notice of Meeting, together with a form of proxy, or the Proxy Instrument, or voting instruction form, or VIF, as the case may be, and a financial statement request form. The Corporation will not use procedures known as “stratification” in relation to the use of the Notice-and-Access Provisions.
Shareholders are directed to read the Circular carefully and in full in evaluating the matters for consideration at the Meeting. Further disclosure on the matters set out above may be found in the Circular in the section entitled “Particulars of Matters to be Acted Upon”. The Circular, 2015 Financial Statements, MD&A and other relevant materials are available on the Corporation’s website atwww.trilliumtherapeutics.com, for a minimum of one year, and under the Corporation’s directory on the System for Electronic Document Analysis and Retrieval atwww.sedar.com. Any shareholder who wishes to receive a paper copy of such documents free of charge should contact the Corporation’s registrar and transfer agent, Computershare Investor Services Inc., 100 University Avenue, 8th Floor, Toronto, ON M5J 2Y1, or by calling toll-free at 1-866-962-0498 (North America only) or direct at 514-982-8716 (outside of North America). In order to be certain of receiving such materials in time to vote before the Meeting, the request should be received by Computershare Investors Services Inc. by May 17, 2016. Any shareholder wishing to obtain additional information about the Notice-and-Access Provisions can contact Computershare Investor Services Inc. by calling toll free at 1-866-964-0492.
The record date for the determination of shareholders of the Corporation entitled to receive notice of and to vote at the Meeting or any adjournment(s) or postponement(s) thereof, or the Record Date, is April 15, 2016. Shareholders of the Corporation whose names have been entered in the register of shareholders of the Corporation at the close of business on the Record Date will be entitled to receive notice of and to vote at the Meeting or any adjournment(s) or postponement(s) thereof.
If you are a registered shareholder of the Corporation, and are unable to attend the Meeting or any adjournment(s) or postponement(s) thereof in person, you must complete, date and sign the enclosed Proxy Instrument or other appropriate form of proxy and, in either case, (i) deliver the completed proxy to Computershare Investor Services Inc., 100 University Avenue, 8th Floor, Toronto, ON M5J 2Y1, or (ii) vote using the Internet at www.investorvote.com, or (iii) vote using the Telephone at 1-866-732-VOTE(8683) from a touch tone telephone, no later than 48 hours (excluding Saturdays, Sundays and holidays) preceding the date and time of the Meeting, or any adjournment or postponement thereof.
If you are not a registered shareholder of the Corporation, a VIF, instead of a form of proxy, may be enclosed. You must follow the instructions, including deadlines for submission, on the VIF in order to vote your shares.
DATEDas of the 15th day of April, 2016. | |
BY ORDER OF THE BOARD OF DIRECTORS | |
“Dr. Calvin Stiller” | |
Dr. Calvin Stiller | |
Chair |
MANAGEMENT INFORMATION CIRCULAR
TABLE OF CONTENTS
2488 Dunwin Drive,
Mississauga, Ontario
L5L 1J9
MANAGEMENT INFORMATION CIRCULAR
Except where indicated otherwise, the following information is dated as at April 15, 2016 and all dollar amounts are in Canadian dollars.
SOLICITATION OF PROXIES
The information contained in this Management Information Circular, or the Circular, is furnished in connection with the solicitation of proxies by the management of Trillium Therapeutics Inc., or the Corporation, for use at the Annual and Special Meeting, or the Meeting, of the holders, or the Shareholders, of our common shares, or Common Shares, to be held on May 27, 2016 at 1:00 pm (Toronto time) at our offices at 2488 Dunwin Drive, Mississauga, Ontario L5L 1J9, and at all adjournments or postponements thereof, for the purposes set forth in the Notice of Annual and Special Meeting of Shareholders, or the Notice.
The solicitation of proxies is being made by or on behalf of the management of the Corporation. It is expected that the solicitation of proxies will be primarily by mail, subject to the use of the Notice-and-Access Provisions (as defined below), but may be supplemented by telephone, facsimile or personal solicitation by our directors, officers, or other regular employees. The costs of solicitation will be borne by the Corporation. No additional compensation will be paid to directors, officers, or other regular employees for such services. None of the directors of the Corporation have informed management in writing that he or she intends to oppose any action intended to be taken by management at the Meeting.
Notice-and-Access
The Corporation has decided to use the notice-and-access model, or Notice-and-Access, provided for under National Instrument 51-102 -Continuous Disclosure Obligations, or NI 51-102 and National Instrument 54-101 -Communication with Beneficial Owners of Securities of a Reporting Issuer, or NI 54-101, for the delivery of the Meeting materials to its Shareholders. Under Notice-and-Access, instead of receiving printed copies of the Circular, Shareholders will receive the Notice containing instructions on how to access such materials electronically. Together with the Notice, Shareholders will receive a proxy (in the case of registered Shareholders) or voting instruction form (in the case of non-registered Shareholders), or collectively, the Printed Materials, enabling them to vote at the Meeting. The Corporation has not adopted a stratification procedure whereunder printed copies of the Meeting materials are delivered to certain shareholders and not to others.
Notice-and-Access Provisions means provisions concerning the delivery of proxy-related materials in Section 9.1.1 of NI 51-102, in the case of registered Shareholders, and Section 2.7.1 of NI 54-101, in the case of non-registered or beneficial Shareholders, which would allow an issuer to make available an information circular forming part of proxy-related materials to shareholders via certain specified electronic means provided that the conditions of NI 51-102 and NI 54-101 are met.
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The Notice-and-Access Provisions are a mechanism which allows reporting issuers other than investment funds to choose to deliver proxy-related materials to registered holders and beneficial owners of securities by posting such materials on the System for Electronic Document Analysis and Retrieval, or SEDAR, and on a non-SEDAR website (usually the reporting issuer’s website and sometimes the registrar and transfer agent’s website) rather than delivering such materials by mail. The Notice-and-Access Provisions can be used to deliver materials for both special and general meetings. Registered and beneficial Shareholders will be entitled to request delivery of a paper copy of the information circular at the reporting issuer’s expense. Reporting issuers may still choose to continue to deliver such materials by mail.
The use of the Notice-and-Access Provisions reduces paper waste and mailing costs to the Corporation. In order for the Corporation to utilize the Notice-and-Access Provisions to deliver proxy-related materials by posting the Meeting materials electronically on SEDAR and on a website that is not SEDAR, the Corporation must send a notice at least 30 days before the date of the Meeting to Shareholders, including beneficial Shareholders, indicating that the proxy-related materials have been posted and explaining how a Shareholder can access them or obtain from the Corporation, a paper copy of those materials. The Meeting materials have been posted under the Corporation’s SEDAR directory atwww.sedar.com and on the Corporation’s website atwww.trilliumtherapeutics.com.
In order to use Notice-and-Access Provisions, a reporting issuer must set the record date for notice of the meeting to be on a date that is at least 40 days prior to the meeting in order to ensure there is sufficient time for the Meeting materials to be posted on the applicable website and other materials to be delivered to shareholders. The requirements of that notice, which requires the Corporation to provide basic information about the Meeting and the matters to be voted on, to explain how a Shareholder can obtain a paper copy of the Circular and any related financial statements and management’s discussion and analysis, and to explain the Notice-and-Access Provisions process, have been built into the Notice forming part of the Printed Materials.
Copies of the Printed Materials are being sent by mail to those Shareholders entitled to receive notice of the Meeting. The Printed Materials will also be furnished to banks, securities dealers, and clearing agencies, or Intermediaries, holding in their names our Common Shares, beneficially owned by others to forward to such beneficial owners. We are not sending Printed Materials directly to non-registered holders who are non-objecting beneficial owners of Common Shares, but will make delivery through such Intermediaries. We will pay for Intermediaries to deliver Printed Materials to non-registered holders who are objecting beneficial owners of Common Shares.
APPOINTMENT OF PROXY HOLDERS
Shareholders may vote at the Meeting in person or by proxy.The persons named in the form of proxy included in the Printed Materials are directors or executive officers of the Corporation. A Shareholder has the right to appoint a person other than the persons specified in such form of proxy (who need not be a shareholder of the Corporation) to attend and act on behalf of the Shareholder at the Meeting. To exercise this right, a Shareholder may either insert the name of the desired person in the blank space provided in the form of proxy included in the Printed Materials, or complete another appropriate form of proxy.
Those Shareholders who wish to be represented by proxy at the Meeting, must complete, date and sign the enclosed form of proxy or other appropriate form of proxy and, in either case, (i) deliver the completed proxy toComputershare Investor Services Inc., 100 University Avenue, 8th Floor, Toronto, ON M5J 2Y1, or (ii) vote using the Internet at www.investorvote.com, or (iii) vote using the Telephone at 1-866-732-VOTE(8683) from a touch tone telephone, no later than 48 hours (excluding Saturdays, Sundays and holidays) preceding the date and time of the Meeting, or any adjournment or postponement thereof.
REVOCABILITY OF PROXY
A Shareholder who has given a proxy may revoke it by depositing an instrument in writing executed by the Shareholder or by his attorney, authorized in writing, or if the Shareholder is a body corporate, under its corporate seal or by an officer or attorney thereof duly authorized, to Computershare Investor Services Inc., by delivery to 100 University Avenue, 8thFloor, Toronto, ON M5J 2Y1, any time up to 4:30 pm (Toronto time) on the business day immediately preceding the date of the Meeting, or any adjournment or postponement thereof, or (ii) with the chair of the Meeting on the day of the Meeting, or any adjournment or postponement thereof, prior to the time of voting and, upon either of such deposits, the earlier proxy shall be revoked.
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VOTING OF SHARES REPRESENTED BY MANAGEMENT PROXIES
The executive officers named in the enclosed form of proxy will vote or withhold from voting the Common Shares for which they are appointed proxy holders in accordance with the instructions of the Shareholder indicated on the form of proxy.In the absence of such instructions, the executive officers named in the enclosed form of proxy intend to vote the Common Shares represented by the proxy IN FAVOUR of each motion put forth by management of the Corporation.
If a Shareholder appoints a person, other than the executive officers named in the form of proxy included in the Printer Materials to represent it, such person will vote the Common Shares for which they are appointed proxy holder in accordance with the instructions of the Shareholder indicated on the form of proxy. In the absence of such instructions, such person may vote the Common Shares for which they are appointed proxy holder at their discretion.
The form of proxy included with the Printed Materials confers discretionary authority upon the persons named therein with respect to amendments or variations of matters identified in the Notice, and with respect to any other matters, if any, which may properly come before the Meeting. At the time of printing of this Circular, management knows of no such amendments, variations or other matters to come before the Meeting. However, if any such amendments, variations or other matters which are not now known to management should properly come before the Meeting, the persons named in the form of proxy will vote on such other business in accordance with their best judgment.
VOTING SHARES AND THE PRINCIPAL HOLDERS THEREOF
The authorized share capital of the Corporation consists of an unlimited number of Common Shares, Class B shares, First Preferred Shares, Series I Non-Voting Convertible First Preferred Shares, or the Series I First Preferred Shares, and Series II Non-Voting Convertible Preferred Shares, or the Series II First Preferred Shares, in each case without nominal or par value.
As at April 15, 2016, or the Record Date, we have 7,814,883 Common Shares outstanding. Each Common Share carries one vote in respect of each matter to be voted upon at the Meeting. Only the holders of Common Shares of record at the close of business on Record Date, will be entitled to notice of, and to attend and vote at, the Meeting. Any transferee or person acquiring Common Shares after the Record Date may, on proof of ownership of such Common Shares, make a written demand, not later than 10 days before the Meeting, to be included in the list of Shareholders entitled to vote at the Meeting, in which case the transferee will be entitled to vote his or her Common Shares at the Meeting or any adjournment or postponement thereof.
A quorum for the transaction of business at any meeting of shareholders shall be two persons present in person, each being a shareholder entitled to vote at the meeting, or a duly appointed proxy or proxy holder for an absent shareholder so entitled, holding or representing in the aggregate not less than 331/3% of the issued and outstanding shares of the Corporation.
As at the date hereof, to the knowledge of our directors and executive officers, no person beneficially owns, directly or indirectly or exercises control or direction over more than 10% of our issued and outstanding Common Shares.
The First Preferred Shares shall be entitled to priority over the Common Shares and Class B Shares and all other shares ranking junior to the First Preferred Shares with respect to the payment of dividends and the distribution of our assets in the event of our liquidation, dissolution or winding up or other distribution of our assets among our shareholders for the purpose of winding up our affairs.
The First Preferred Shares of each series rank on a parity with the First Preferred Shares of every other series with respect to priority in the payment of dividends and in the distribution of our assets in the event of our liquidation, dissolution or winding up or other distribution of our assets among our shareholders for the purpose of winding up our affairs.
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During 2013, we created a new series of shares, our Series I First Preferred Shares. The holders of Series I First Preferred Shares are not entitled to vote at any meeting of our shareholders (except in limited circumstances provided for in theBusiness Corporations Act (Ontario), or the Act), and they are entitled to receive dividends as determined and declared at the discretion of our board of directors equally on a one-for-one basis with the holders of shares of the other series of First Preferred Shares. Each issued and fully paid Series I First Preferred Share may at any time be converted, at the option of the holder, into 1/30th of one common share, subject to adjustment. In the event of a take-over bid, that is a “formal bid”, the offeror of such bid shall make an offer to acquire the same percentage of outstanding Series I First Preferred Shares as the percentage of common shares for which the bid is made, on the same terms and for the same amount and kind of consideration.
During 2015, we created a new series of shares, our Series II First Preferred Shares. The holders of Series II First Preferred Shares are not entitled to vote at any meeting of our shareholders (except in limited circumstances provided for in the Act), and they are entitled to receive dividends as determined and declared at the discretion of our board of directors equally on a one-for-one basis with the holders of shares of the other series of First Preferred Shares. Each issued and fully paid Series II First Preferred Share may at any time be converted, at the option of the holder, into one common share, subject to adjustment. In the event of a take-over bid, that is a “formal bid”, the Offeror of such bid shall make an offer to acquire the same percentage of outstanding Series II First Preferred Shares as the percentage of common shares for which the bid is made, on the same terms and for the same amount and kind of consideration.
As at April 15 2016, we have 53,226,191 Series I First Preferred Shares outstanding convertible into 1,774,206 Common Shares, and 1,077,605 Series II Non-Voting Convertible Preferred Shares outstanding convertible into 1,077,605 Common Shares. No Class B shares are issued and outstanding as the date of this Circular.
ADVICE TO BENEFICIAL HOLDERS OF SECURITIES
The information set forth in this section is provided to beneficial holders of our Common Shares who do not hold their Common Shares in their own name, or Beneficial Shareholders. Beneficial Shareholders should note that only proxies deposited by Shareholders whose names appear on our records as the registered holders of Common Shares can be recognized and acted upon at the Meeting. If Common Shares are listed in an account statement provided to a Beneficial Shareholder by an Intermediary, then in almost all cases those Common Shares will not be registered in the Beneficial Shareholder’s name on our records. Such Common Shares will more likely be registered under the name of the Beneficial Shareholder’s Intermediary or an agent of that Intermediary. In Canada, the vast majority of such Common Shares are registered under the name of CDS & Co. (the registration name for CDS Clearing and Depository Services Inc., which acts as nominee for many Canadian brokerage firms). In the U.S., these Common Shares are registered under the name of Cede & Co. (the nominee of the Depository Trust Company, or DTC, that processes transfers of stock certificates on behalf of the DTC). Common Shares held by Intermediaries or their nominees can only be voted (for or against resolutions) upon the instructions of the Beneficial Shareholder. Without specific instructions, the Intermediaries or nominees are generally prohibited from voting Common Shares for their clients. We do not know for whose benefit the Common Shares registered in the name of CDS & Co. and Cede & Co. are held. Therefore, Beneficial Shareholders cannot be recognized at the Meeting for the purposes of voting the Common Shares in person or by way of proxy except as set forth below.
Applicable regulatory policy requires Intermediaries to seek voting instructions from Beneficial Shareholders in advance of shareholders’ meetings. Every Intermediary has its own mailing procedures and provides its own return instructions, which should be carefully followed by Beneficial Shareholders in order to ensure that their Common Shares are voted at the Meeting. Often, the form of proxy supplied to a Beneficial Shareholder by its Intermediary is identical to the form of proxy provided to registered Shareholders; however, its purpose is limited to instructing the registered Shareholder how to vote on behalf of the Beneficial Shareholder. The majority of Intermediaries now delegate responsibility for obtaining instructions from clients to Broadridge Investor Communication Solutions, or Broadridge, in the United States and Canada. Broadridge typically applies a special sticker to proxy forms, mails those forms to the Beneficial Shareholders and requests the Beneficial Shareholders to return the proxy forms to Broadridge. Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of Common Shares to be represented at the Meeting. A Beneficial Shareholder receiving a proxy from Broadridge cannot use that proxy to vote Common Shares directly at the Meeting as the proxy must be returned as directed by Broadridge well in advance of the Meeting in order to have the Common Shares voted.
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Although a Beneficial Shareholder may not be recognized directly at the Meeting for the purposes of voting Common Shares registered in the name of his or her Intermediary (or agent of the Intermediary), a Beneficial Shareholder may attend at the Meeting as proxyholder for the registered Shareholder and vote Common Shares in that capacity.
Beneficial Shareholders who wish to attend the Meeting and indirectly vote their Common Shares as proxyholder for the registered Shareholder should enter their own name in the blank space on the form of proxy provided to them and return the same to their Intermediary (or the Intermediary’s agent) in accordance with the instructions provided by such Intermediary (or agent), well in advance of the Meeting.
In addition, a proxy may be revoked by the Shareholder executing another form of proxy bearing a later date and depositing same at the offices of our Registrar and Transfer Agent within the time period set out under the heading “Revocability of Proxy”, or by the Shareholder personally attending the Meeting and voting his or her Common Shares.
IF YOU ARE A BENEFICIAL SHAREHOLDER AND WISH TO VOTE IN PERSON AT THE MEETING, PLEASE CONTACT YOUR INTERMEDIARY OR AGENT WELL IN ADVANCE OF THE MEETING TO DETERMINE HOW YOU CAN DO SO.
BUSINESS OF THE MEETING
At the Meeting, Shareholders will be asked:
1. | to receive the audited consolidated financial statements of the Corporation for the year ended December 31, 2015, together with the auditors’ report thereon; |
2. | to elect directors of the Corporation for the ensuing year; |
3. | to reappoint Ernst & Young, LLP, Chartered Professional Accountants, Licensed Public Accountants, as auditors of the Corporation for the ensuing year and to authorize the directors to fix the remuneration to be paid to the auditors; |
4. | to consider and, if deemed appropriate, approve the Corporation’s amended and restated stock option plan; |
5. | to consider and, if deemed appropriate, pass a resolution confirming, ratifying and approving an amendment to the general by-law of the Corporation to add an advance notice requirement for nominations of directors by shareholders in certain circumstances; and |
6. | to transact such other business as may properly come before the Meeting or any adjournment or postponement thereof. |
Audited Consolidated Financial Statements and Auditors’ Report
Our audited consolidated financial statements for the year ended December 31, 2015, and the auditors’ report thereon will be submitted at the Meeting. No vote will be taken regarding our audited consolidated financial statements.
Election of Directors
The articles of the Corporation provide that we have not less than three and not more than ten directors, with the actual number of directors holding office from time to time to be determined by the Board of the corporation, or the Board. Currently, the Board is comprised of seven members, all of whom will be standing for re-election at the Meeting. Accordingly, seven directors are proposed to be elected at the Meeting. All directors so elected will, subject to our by-laws and to applicable laws, hold office until the close of the next annual meeting of Shareholders, or until their respective successors are elected or appointed.
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All of the nominees are now members of the Board and have been since the dates indicated below. The term of each current director’s appointment will expire at the Meeting. At the Meeting, the nominees will be voted on individually and in accordance with applicable Canadian and U.S. securities legislation, the voting results for each nominee will be publicly disclosed.
The Board has adopted a majority voting policy to the effect that if a director nominee in an uncontested election receives a greater number of votes “withheld” than votes “for”, he or she must immediately tender his or her resignation to the Board. The corporate governance and nominating committee will consider the director’s offer to resign and make a recommendation to the Board whether to accept it or not. The Board shall accept the resignation unless there are exceptional circumstances, and the resignation will be effective when accepted by the Board. The Board shall make its final determination within 90 days after the date of the shareholder meeting and promptly announce that decision (including, if applicable, the exceptional circumstances for rejecting the resignation) in a news release. A director who tenders his or her resignation pursuant to the majority voting policy will not participate in any meeting of the Board or the corporate governance and nominating committee at which the resignation is considered. The majority voting policy does not apply to the election of directors at contested meetings; that is, where the number of directors nominated for election is greater than the number of seats available on the Board.
The persons designated in the enclosed proxy form, unless instructed otherwise, intend to vote FOR the election of the following nominees.Management does not contemplate that any of the nominees will be unable to serve as a director, but if that should occur for any reason at or prior to the Meeting, the persons named in the enclosed form of proxy reserve the right to vote for another nominee in their discretion.
The following table sets forth for all persons proposed to be nominated for election as directors, the positions and offices with us now held by them, their present principal occupation and principal occupation for the preceding five years, if applicable, the periods during which they have served as our directors and the number of our Common Shares beneficially owned, directly or indirectly, by each of them, or over which they exercise control or direction as of April 15, 2016.
Name | ||
Present Office Held | Number | |
Province/State and | of | |
Country of Residence | Principal Business Activities, | Common |
Position Held Since | Other Principal Directorships and Function | Shares |
Luke Beshar Director(1) New Jersey, USA March 10, 2014 | Mr. Beshar is an independent biotechnology consultant and financial expert. He was most recently the Executive/Senior Vice President and Chief Financial Officer of NPS Pharmaceuticals, Inc., a global biopharmaceutical company from November 2007 to February 2015. Mr. Beshar also sits on the boards of REGENXBIO Inc., Entera Bio Ltd. and Sancilio Pharmaceuticals Company, Inc. | Nil |
As an independent director, Mr. Beshar supervises our management and helps to ensure compliance with our corporate governance policies and standards. | ||
Henry Friesen Director(1)(2) Manitoba, Canada June 28, 2011 | Dr. Friesen is a Distinguished University Professor Emeritus at University of Manitoba since October 2000. As an independent director, Dr. Friesen supervises our management and helps to ensure compliance with our corporate governance policies and standards. | Nil |
Robert Kirkman Director(1)(3) Washington, USA December 17, 2013 | Dr. Kirkman was the President and Chief Executive Officer and director of Oncothyreon Inc., an oncology-focused biotechnology company from September 2006 to January 2016. As an independent director, Dr. Kirkman supervises our management and helps to ensure compliance with our corporate governance policies and standards. | Nil |
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Name | ||
Present Office Held | Number | |
Province/State and | of | |
Country of Residence | Principal Business Activities, | Common |
Position Held Since | Other Principal Directorships and Function | Shares |
Michael Moore Director(2)(3) Surrey, UK April 9, 2013 | Dr. Moore is the Chair ofMISSIONTherapeutics Ltd. since 2012 and a board chair or director of PsiOxus Therapeutics Ltd., Chronos Therapeutics Ltd. and Akinion Pharmaceuticals AB. From 2004 to 2013, Dr. Moore was the Chair of Trillium Privateco, and from 2003 to 2008, Dr. Moore was the Chief Executive Officer and director of PIramed Ltd, a UK- based oncology company sold to Roche in 2008. | Nil |
As an independent director, Dr. Moore supervises our management and helps to ensure compliance with our corporate governance policies and standards. | ||
Thomas Reynolds Director(2)(3) Washington, USA March 10, 2014 | Dr. Reynolds is an independent biotechnology consultant since February 2013, and was Chief Medical Officer of Seattle Genetics, Inc., a biotechnology company focused on antibody-based therapies for the treatment of cancer from March 2007 to January 2013. Dr. Reynolds also sits on the boards of MEI Pharma, Inc. and Oxford Biotherapeutics, Ltd. | Nil |
As an independent director, Dr. Reynolds supervises our management and helps to ensure compliance with our corporate governance policies and standards. | ||
Calvin Stiller Director, Chair of the Board Ontario, Canada July 18, 2011 | Dr. Stiller is the Chair Emeritus of the Ontario Institute for Cancer Research and Professor Emeritus at Western University. Dr. Stiller also sits on the boards of Revera Corporation, Magor Corporation and Smarter Alloys Inc. As an independent director, Dr. Stiller supervises our management and helps to ensure compliance with our corporate governance policies and standards. | 31,000 |
Niclas Stiernholm President and Chief Executive Officer, Director Ontario, Canada | Dr. Stiernholm is the President and Chief Executive Officer of Trillium since April 9, 2013 and was the President and Chief Executive Officer of Trillium Privateco since 2002. He joined Trillium from YM BioSciences Inc. where he was Executive Vice President and Chief Scientific Officer. Dr. Stiernholm also sits on the board of Vasomune Therapeutics Inc. | Nil |
Director since July 18, 2011; President and Chief Executive Officer since April 9, 2013 | As President and Chief Executive Officer, Dr. Stiernholm is responsible for overseeing our strategic direction, executing business development plans and ensuring that our scientific programs remain funded and advance on schedule. As a director, Dr. Stiernholm participates in management oversight and helps to ensure compliance with our corporate governance policies and standards. |
Notes:
(1) Member of our audit committee.
(2) Member of our corporate governance and nominating committee.
(3) Member of our compensation committee.
Corporate Cease Trade Orders or Bankruptcies
To the knowledge of the Corporation, no proposed director is, or within the ten years prior to the date hereof has been, a director, Chief Executive Officer, or CEO, or Chief Financial Officer, or CFO, of any company (including the Corporation) that was subject to (a) a cease trade order; (b) an order similar to a cease trade order; or (c) an order that denied the company access to any exemption under securities legislation, that was in effect for a period of more than thirty consecutive days, issued while that person was acting in such capacity or issued thereafter but resulted from an event that occurred while that person was acting in such capacity.
To the knowledge of the Corporation, no proposed director is, or within the ten years prior to the date hereof has been, a director or executive officer of any company (including the Corporation) 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.
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Penalties or Sanctions and Personal Bankruptcies
To the knowledge of the Corporation, no proposed director 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 a 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.
To the knowledge of the Corporation, no proposed director has, within the ten years prior to the date hereof, 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, receiver manager or trustee appointed to hold his or her assets.
Indemnification
No indemnification under section 136 of the Act was paid or became payable in 2015.
Appointment and Remuneration of the Auditors
Ernst & Young LLP, Chartered Professional Accountants, Licensed Public Accountants, have been our auditors since August 25, 2004. The Board has proposed that Ernst & Young LLP be reappointed as our independent auditors for the year ending December 31, 2016 and that the Board be authorized to fix the auditors’ remuneration. A majority of the votes voted by the Shareholders represented at the Meeting is required to approve the appointment of our auditors.
Unless otherwise directed, the persons named in the form of proxy forming part of the Printed Materials intend to vote at the Meeting IN FAVOUR of the reappointment of Ernst & Young LLP as the Corporation’s auditors and the authorization of the Board to fix the auditors’ remuneration.
Approval of 2016 Stock Option Plan
A summary of the material terms and conditions of the 2014 Stock Option Plan (as defined below) are described under the heading “Statement of Executive Compensation - Securities Authorized for Issuance under Equity Compensation Plan -2014 Stock Option Plan”. On March 22, 2016, the Board approved the 2016 amended and restated option plan, or the 2016 Stock Option Plan.
Background to Amendments
The Common Shares are listed for trading on the Toronto Stock Exchange, or TSX, under the symbol “TR” and the NASDAQ Stock Market, or NASDAQ, under the symbol “TRIL”, with the majority of historical trading volume occurring on NASDAQ. For the 12 months ended December 31, 2015, approximately 93% of the trading volume occurred on NASDAQ as opposed to 7% on the TSX. In light of the foregoing, the Board has determined to defer to NASDAQ policies for the purposes of the 2016 Stock Option Plan.
Additional amendments were adopted to conform to current corporate governance guidelines and to address certain housekeeping matters.
If approved by the Shareholders at the Meeting, the 2016 Stock Option Plan will amend, restate and supersede the 2014 Stock Option Plan.
Summary of Material Amendments
A summary of material amendments incorporated in the 2016 Stock Option Plan is provided below:
• | the number of Common Shares reserved for issuance on exercise of stock options under the 2016 Stock Option Plan has been fixed at 1,894,501 Common Shares (of which 943,834 are already reserved for issuance on exercise of currently outstanding stock options); |
• | an exercise of stock options will no longer make new grants available under the plan; |
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• | certain specified insider participation restrictions will no longer apply (consistent with NASDAQ rules) and new participation restrictions were introduced for non-employee directors; |
• | upon a Change of Control (as such term is defined in the 2016 Stock Option Plan), any surviving, successor or acquiring entity will be obligated to assume any outstanding stock options or will substitute similar awards for the outstanding stock options. If the surviving, successor or acquiring entity does not assume the outstanding stock options or substitute similar awards for the outstanding stock options, or if the Board otherwise determines in its sole discretion, the 2016 Stock Option Plan will be terminated effective immediately prior to the Change of Control and all stock options will be deemed to be vested and the Board may make provision for the exercise of stock options and tender of Common Shares in connection with the Change of Control and may otherwise make provision for the cash out or termination of stock options that are not exercised within a specified period of time; |
• | upon retirement, resignation or termination without cause, a participant shall have the right, until the earlier of (i) 120 days (or such other longer period as may be determined by the Board in its sole discretion or, if longer, the period specified in the participant’s employment contract) following the participant’s last day of active employment, or the Termination Date, which shall not include any period of statutory or reasonable notice or any period of deemed employment or salary continuance; and (ii) the normal expiry date of the stock option rights of such participant, to exercise all stock options to the extent they were exercisable on the Termination Date; |
• | vesting of stock options upon a Change of Control is no longer automatic, except in certain circumstances. More specifically, the 2016 Stock Option Plan provides that if the employment of a participant is terminated by the Corporation (or its successor, if applicable) without cause or if the participant resigns in circumstances constituting constructive dismissal, in each case, within 24 months following a Change of Control all of the stock options, will vest immediately prior to the Termination Date. All vested stock options may be exercised until the earlier of: (i) 120 days (or such other longer period as may be determined by the Board in its sole discretion) following the Termination Date; or (ii) the normal expiry date of the stock options rights of such participant. These are also known as “double trigger” vesting provisions; and |
• | the provisions governing the Board’s discretion to make amendments to the 2016 Stock Option Plan and any stock option grants without shareholder approval have been amended to provide clarification regarding specific instances where shareholder approval would not be required, including in respect to certain amendments to granted stock options and the insertion of a cashless exercise feature. In addition, the 2016 Stock Option Plan now provides that shareholder approval will be required, among other things, in connection with amendments that may permit the introduction or re-introduction of non-employee directors on a discretionary basis or amendments that increase limits previously imposed on non-employee director participation. |
The amendments described above are intended as a summary only and are qualified in their entirety by reference to the 2016 Stock Option Plan which is attached as Schedule “A”hereto. A blackline comparison of the 2016 Stock Option Plan against the 2014 Stock Option Plan is attached for reference as Schedule “B” hereto.
Notwithstanding the foregoing, the Board has determined that the “double trigger” vesting provisions of the 2016 Stock Option will not apply in respect of an aggregate of 927,834 stock options granted by the Corporation prior to November 19, 2015. The vesting of all such stock options upon a Change of Control will continue to be governed in accordance with the terms and conditions of the 2014 Stock Option Plan.
2016 Stock Option Plan Resolution
At the Meeting, shareholders will be asked to consider and, if deemed advisable, to approve, with or without variation, a resolution, or the 2016 Stock Option Plan Resolution, approving, confirming and ratifying the 2016 Stock Option Plan. The text of the 2016 Stock Option Plan Resolution is as follows:
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“RESOLVED AS AN ORDINARY RESOLUTION THAT:
1. | the 2016 Stock Option Plan, attached as Schedule “A” to this Circular, which plan was approved by the Board on March 22, 2016, is hereby approved, confirmed and ratified in replacement of the 2014 Stock Option Plan. |
2. | any director or officer of the Corporation is hereby authorized and directed, for and on behalf of the Corporation, to do all things and execute and deliver all such agreements, documents and instruments necessary or desirable in connection with the foregoing.” |
In the absence of a contrary specification made in the form of proxy, the persons named in the enclosed form of proxy intend to vote “for” the 2016 Stock Option Plan Resolution. Approval of the foregoing resolution will require the affirmative vote of a majority of the votes cast by holders of Common Shares present in person or represented by proxy at the Meeting.
Approval of Amendment to By-laws of the Corporation
On March 22, 2016, the Board approved an amendment to By-Law No. 1 of the Corporation, or the By-Law Amendment, to add an advance notice requirement, or the Advance Notice Requirement, in circumstances where nominations of persons for election to the Board are made by Shareholders other than pursuant to: (a) a requisition to call a meeting of Shareholders made pursuant to the provisions of the Act; or (b) a Shareholder proposal made pursuant to the provisions of the Act.
The By-Law Amendment became effective upon its approval by the Board. However, pursuant to the provisions of the Act, the By-Law Amendment will cease to be effective unless approved, ratified and confirmed by a resolution adopted by a simple majority of the votes cast by Shareholders at the Meeting. The full text of the By-Law Amendment is set forth in Schedule “C” to this Circular.
Among other things, the Advance Notice Requirement fixes a deadline by which Shareholders must submit a notice of director nominations to the Corporation prior to any annual or special meeting of Shareholders where directors are to be elected and sets forth the information that a Shareholder must include in the notice for it to be valid.
In the case of an annual meeting of Shareholders, notice to the Corporation must be given not less than 30 days prior to the date of the annual meeting; provided, however, that in the event that the annual meeting is to be held on a date that is less than50 days after the date on which the first public announcement of the date of the annual meeting was made, notice may be made not later than the close of business on the10th day following such public announcement.
In the case of a special meeting of Shareholders (which is not also an annual meeting), notice to the Corporation must be given not later than the close of business on the15th day following the day on which the first public announcement of the date of the special meeting was made.
The Board believes that the Advance Notice Requirement provides a clear process for Shareholders to follow to nominate directors and sets out a reasonable time frame for nominee submissions along with a requirement for accompanying information, allowing the Corporation and the Shareholders to evaluate all nominees’ qualifications and suitability as a director of the Corporation. The purpose of the Advance Notice Requirement is to treat all Shareholders fairly by ensuring that all Shareholders, including those participating in a meeting by proxy rather than in person, receive adequate notice of the nominations to be considered at a meeting and sufficient information with respect to all nominees and can thereby exercise their voting rights in an informed manner. In addition, the Advance Notice Requirement should assist in facilitating an orderly and efficient meeting process.
The Board may, in its sole discretion, waive any requirement of the Advance Notice Requirement.
By-Law Amendment Resolution
At the Meeting, Shareholders will be asked to consider, and, if deemed appropriate, approve, with or without variation, a resolution, or the By-Law Amendment Resolution, confirming, ratifying and approving the adoption of the By-Law Amendment Resolution by the Board. The text of the By-Law Amendment Resolution is as follows:
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“RESOLVED AS AN ORDINARY RESOLUTION THAT:
1. | the By-Law Amendment, which amendment was approved by the Board on March 22, 2016, be and is hereby confirmed, ratified and approved; and |
2. | any director or officer of the Corporation is hereby authorized and directed, for and on behalf of the Corporation, to do all things and execute and deliver all such agreements, documents and instruments necessary or desirable in connection with the foregoing.” |
In the absence of a contrary specification made in the form of proxy, the persons named in the enclosed form of proxy intend to vote “for” the By-Law Amendment Resolution.Approval of the foregoing resolution will require the affirmative vote of a majority of the votes cast by holders of Common Shares present in person or represented by proxy at the Meeting.
OTHER MATTERS COMING BEFORE THE MEETING
Management knows of no other matters to come before the Meeting other than as referred to in the Notice. Should any other matters properly come before the Meeting, the Common Shares represented by proxy solicited hereby will be voted on such matters in accordance with the best judgment of the person voting such proxy.
STATEMENT OF EXECUTIVE COMPENSATION
All dollar amounts in this Circular are expressed in Canadian dollars unless otherwise indicated.
Compensation Discussion and Analysis
Compensation Philosophy
The objectives of our executive compensation program are to: (i) to attract, retain and motivate quality executives; (ii) align the interests of executives with those of our Shareholders; and (iii) to provide total compensation to executives that is competitive with that paid by other companies of comparable size engaged in similar business in appropriate regions. The executive compensation program has been designed to reward executives for the reinforcement of our business objectives and values, the achievement of performance objectives and milestones, and their individual performance.
Compensation Oversight
Our executive compensation policy is determined by the compensation committee of the Board. The compensation committee has general oversight of compensation of employees and executive officers. For more information concerning the compensation committee, see “Corporate Governance Disclosure - Compensation Committee”.
In carrying out its duties and responsibilities in relation to compensation, the compensation committee shall:
• | review and recommend to the independent members of the Board at least annually the compensation of the CEO; |
| |
• | establish plans for salaries, incentives, and other forms of compensation paid to officers and other employees of the Corporation, and monitor the effectiveness of such plans and the performance thereunder; |
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• | review and recommend to the Board the corporate goals and objectives for the coming year; |
| |
• | determine compensation for the officers or employees of the Corporation as are designated from time-to- time by the committee, but which in all cases shall include all executive officers of the Corporation other than the CEO, or collectively the Evaluated Officers, with reference to: (1) the achievement of corporate goals and objectives relevant to compensation for the Evaluated Officers; (2) the Board's evaluation of the performance of the CEO and the CEO’s evaluation of the performance of each of the other Evaluated Officers in light of the personal goals and objectives set for each of the Evaluated Officers; (3) reports and analyses of a qualified compensation consultant of executive compensation of similar positions at peer companies, when requested by the committee; (4) with respect to any long-term incentive component, awards given to such Evaluated Officers in past years, the Corporation’s performance, shareholder return and the value of similar incentive awards relative to such targets at comparable companies; and (5) such other factors as the committee deems appropriate and in the best interests of the Corporation; |
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• | establish the Corporation’s various compensation plans and arrangements, retention and severance agreements, employment agreements, funded and unfunded retirement plans and other benefit plans, including the Corporation’s equity compensation plans, monitor the effectiveness of such plans and arrangements and the performance of officers thereunder, and amend or terminate such arrangements, as applicable; |
• | oversee the Corporation’s administration of and make recommendations to the Board regarding the Corporation’s equity compensation plans; |
• | recommend to the Board compensation arrangements for Board members with such adjustments as the committee may recommend from time to time; |
• | annually review and assess the compensation policies and practices of the Corporation for its employees generally to determine whether the compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the Corporation; and |
• | evaluate whether any compensation consultant retained or to be retained by it has any conflict of interest in accordance with applicable United States securities laws. |
Compensation Risk
In carrying out its mandate, the compensation committee reviews from time to time the risk implications of our compensation policies and practices, including those applicable to our executives. This review of the risk implications ensures that compensation plans, in their design, structures and application have a clear link between pay and performance and do not encourage excessive risk taking. Key factors that mitigate compensation risk include the following:
• | executives are compensated based on company-wide performance goals; |
• | there is a balance of short-term performance incentives and long-term equity-based awards that vest over time; |
• | compensation policies do not rely solely on the accomplishment of specific tasks without consideration of longer term risks and objectives; |
• | stock options are a significant portion of executive compensation. Stock options vest over a four year period and encourage sustainable Common Share price appreciation and reduce the risk of actions which may have short-term advantages; |
• | base salaries provide a steady income regardless of share price performance, allowing executives to focus on both near term and long term goals and objectives without undue reliance on short term share price performance or market fluctuations; |
• | the Employee and Insider Trading Policy prohibits its directors and officers from engaging in short sales of our securities or buying or selling puts, calls or other derivatives that are designed to hedge or offset a decrease in the market value of our securities; and |
• | compensation payable under our bonus plan is overseen by the compensation committee. The compensation committee does not consider the applicable periods set for bonus purposes to be heavily weighed to the short-term and believes it has struck an appropriate balance between short-term performance incentives and long-term awards that vest over time. |
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The compensation committee and the Board considered the implications of the risks associated with the Corporation’s compensation practices and did not identify any risks from the Corporation’s compensation policies or practices that are likely to have a material adverse effect on the Corporation.
Independent Advice
In April 2015, the compensation committee retained Meridian Compensation Partners, or Meridian, to provide independent advice to the compensation committee.Meridian was retained to perform a review of the Corporation’s compensation and practices.Meridian does not provide any services to management. The Compensation Committee has sole authority to retain and terminate any compensation consultant to be used to assist it in the evaluation of executive officer compensation. The compensation committee has sole authority to approve such consultants’ fees and retention terms and to obtain advice and assistance from internal or external legal, accounting or other advisors.
The table below sets out the fees billed by Meridian for each of the last two fiscal years in respect of the services noted above:
| December 31, 2015 ($) | December 31, 2014 ($) |
Executive Compensation - Related Fees(1) | 74,852 | — |
All Other Fees(2) | — | — |
Total Fees | 74,852 | — |
Notes: | |
(1) | Aggregate fees billed by Meridian, or any of its affiliates, for services related to determining compensation for any of the Corporation’s directors and executive officers. |
(2) | Aggregate fees billed for all other services provided by Meridian, or any of its affiliates, that are not reported under (1). |
Comparator Group
In 2015, the Corporation, with advice from Meridian, its independent compensation consultant, reviewed its compensation peer group. The Corporation developed a new comparator group taking into account direct competitors for talent, especially for industry specific roles. The comparator group is comprised of 19 publicly traded U.S. and Canadian biotechnology companies which range in size from approximately ⅓× to 3× the market capitalization of the Corporation (including in determining market capitalization for the Corporation all securities convertible into Common Shares). The companies comprising the comparator group are as follows:
Comparator Group Companies | |
Agenus Inc. | Merrimack Pharmaceuticals |
Array Biopharma Inc. | Oncomed Pharmaceuticals |
Curis Inc. | Oncothyreon Inc. |
Epizyme Inc. | Peregrine Pharmaceuticals Inc. |
Exelixis Inc. | Stemline Therapeutics Inc. |
Five Prime Therapeutics Inc. | Tekmira Pharmaceuticals Corp |
Galena Biopharma Inc. | Transition Therapeutics Inc. |
Immune Design Corp | Verastem Inc. |
Inovio Pharmaceuticals Inc. | Xencor Inc. |
Macrogenics Inc. |
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Pay Positioning
The Corporation targets total cash compensation (salary and short-term incentive) somewhat below median of the comparator group, and provides long-term incentive opportunities somewhat above median of the comparator group, with target total direct compensation positioned competitive with the median of the comparator group. The compensation committee believes that this aligns executive compensation with the long-term interests of shareholders and with the Corporation’s strategy.
In 2015, Meridian provided detailed information to the compensation committee relating to compensation values, pay mix and incentive vehicles at the comparator group companies. Based on this information and also taking into account experience in the role, scope of the role, performance and retention risk, the compensation committee set compensation for the executives for 2015 aligned with the target pay positioning set out above, as set out in the summary compensation table below.
Compensation Elements
In 2015, our named executive officers, or NEOs, were Dr. Niclas Stiernholm, CEO, Dr. Robert Uger, Chief Scientific Officer, Dr. Eric Sievers, Chief Medical Officer, Dr. Penka Petrova, Chief Development Officer, and Mr. James Parsons, CFO.
Compensation for our NEOs is comprised of four primary elements. These are set out below with the purpose of each element:
Compensation Element | Purpose | |
Salary | Cash payment designed to attract and retain key employees. Salary level takes into consideration the current competitive market conditions, experience, proven or expected performance, and the particular skills of the NEO. | |
Short-Term Incentive | Cash payment designed to align NEO performance with strategy, to reward the achievement of key milestones and to provide a competitive level of compensation. Short-term incentive awards for target performance are set as a percentage of salary, with actual awards based on performance relative to specific targets. Target awards for each of the NEOs are as follows: | |
• | CEO 50% of salary | |
• | Other NEOs 35% of salary | |
Long-Term Incentive | Award of stock options designed to align NEO compensation with long-term shareholder interests and to provide a competitive level of compensation. | |
Benefits and Group Registered Retirement Savings Plan | Companywide, modest benefits, designed to attract and retain key employees. |
The salary of each executive is considered by the compensation committee each year. Any increases in salary will depend on the recent performance of the executive, his or her potential as a succession candidate for key roles and the executive’s development in the position.
Short-term incentive awards for each NEO at target performance are set as a percentage of salary, with actual awards based on performance relative to specific targets. As soon as practical following the year end, the Board determines our performance against predetermined targets and milestones for that year. The resultant corporate performance determines each NEO’s executive’s short term incentive payment for the year.
Long-term incentives are awarded periodically to NEOs in the form of stock options. The Board takes into account previous stock option grants to a particular individual when considering new grants. The purpose and principal features of our existing stock option plan is set out under the heading “Statement of Executive Compensation - Securities Authorized for Issuance under Equity Compensation Plan -2014 Stock Option Plan”.
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For the executive group, the target compensation mix (of salary, annual incentive plan, or AIP, and stock options) and levels of pay at risk in 2015 were as follows:
Short Term Incentive Performance Metrics
The performance of the NEOs for the 2015 fiscal year was measured against five corporate objectives important to the progress of the company. The first objective weighted at 40% was the filing of an IND for the first-in-human clinical trial of SIRPaFc and the receipt of a non-objection letter from the FDA in the fourth quarter. The objective was achieved in October 2015 on target. The second objective weighted at 10% was the receipt of Investigational Review Board, or IRB, approval for one clinical site in 2015. The objective was achieved on target with two sites receiving IRB approval in 2015. The third objective weighted at 20% was the development of preclinical data supporting a second indication beyond AML for potential preclinical development. The objective was achieved on a stretch basis with more than 2 additional indications supported by preclinical data. The fourth objective weighted at 25% was the completion of a financing by the end of the second quarter in the amount of $35 million to $50 million. The objective was achieved on target. The final objective weighted at 5% was the hiring of a CMO by the end of the second quarter which was accomplished on target.
On assessment of the objectives, the Board determined that management exceeded the corporate goals and awarded an achievement of 110%. Incentive compensation related to the attainment of these objectives was paid in 2016. Similar performance metrics will be established for the year ending December 31, 2016.
Summary Compensation Table
Outlined below is a summary of the compensation paid, payable, awarded or granted by the Corporation during each of the three most recently completed fiscal years to our CEO, CFO and three other NEOs.
Name and Principal | Year | Salary | Share- | Option- | Non-Equity Incentive | Pension | All other | Total | |
Occupation | ($) | based | based | Plan Compensation ($) | Value | Compensation | Compensation | ||
Awards | Awards | ($) | ($) | ($) | |||||
(1) | Annual | Long- | |||||||
($) | ($) | Incentive | Term | ||||||
Plans(2) | Incentive | ||||||||
Plans | |||||||||
Niclas Stiernholm(3)(4) | 2015 | 450,000 | – | 1,266,790 | 247,500 | – | – | – | 1,964,290 |
President & CEO | 2014 | 390,000 | – | 2,035,768 | 204,750 | – | – | – | 2,630,518 |
2013 | 217,500 | – | 262,679 | 120,000 | – | – | – | 600,179 | |
Robert Uger(4) | 2015 | 320,000 | – | 391,411 | 123,200 | – | – | – | 834,611 |
Chief Scientific Officer | 2014 | 270,000 | – | 525,057 | 85,050 | – | – | – | 880,107 |
2013 | 137,750 | – | 52,536 | 47,500 | – | – | – | 237,786 |
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Name and Principal | Year | Salary | Share- | Option- | Non-Equity Incentive | Pension | All other | Total | |
Occupation | ($) | based | based | Plan Compensation ($) | Value | Compensation | Compensation | ||
Awards | Awards | ($) | ($) | ($) | |||||
($) | (1) | Annual | Long- | ||||||
($) | Incentive | Term | |||||||
Plans(2) | Incentive | ||||||||
Plans | |||||||||
Eric Sievers(5) | 2015 | 365,678 | – | 1,806,122 | 140,786 | – | – | – | 2,312,586 |
Chief Medical Officer | 2014 | – | – | – | – | – | – | – | – |
2013 | – | – | – | – | – | – | – | – | |
James Parsons(6) | 2015 | 275,000 | – | 406,192 | 105,875 | – | – | – | 787,067 |
Chief FinancialOfficer | 2014 | 218,750 | – | 439,393 | 65,625 | – | – | – | 723,768 |
2013 | 106,042 | – | 26,268 | 25,000 | – | – | – | 157,310 | |
Penka Petrova(4) | 2015 | 275,000 | – | 522,475 | 105,875 | – | – | – | 903,350 |
Chief Development | 2014 | 205,000 | – | 321,467 | 53,813 | – | – | – | 580,280 |
Officer | 2013 | 90,625 | – | 26,268 | 31,250 | – | – | – | 148,143 |
Notes: | |
(1) | The option-based awards value is the grant date fair value of stock options granted in the year calculated in accordance with IFRS using the Black-Scholes option pricing model with the following weighted average assumptions for 2015: expected life of 6.1 years; risk free rate of 1.0%; dividend yield of 0; and expected volatility of 82%. |
(2) | These payments reflect cash bonuses on the achievement of the annual corporate objectives. |
(3) | Dr. Stiernholm was not compensated as a director. |
(4) | Drs. Stiernholm, Uger and Petrova joined the Corporation as officers on April 9, 2013. |
(5) | Dr. Sievers joined the Corporation on April 1, 2015 with an annual salary of US $375,000. His compensation was paid in U.S. dollars and has been converted to Canadian dollars using an average exchange rate of 1 $US = 1.3002 $Cdn. |
(6) | Mr. Parsons worked on a part-time basis until June 1, 2014 when he joined full-time. Mr. Parsons’ annual salary for 2014 was $250,000. |
Outstanding Option-Based Awards and Share-Based Awards (NEOs)
The following table sets forth information concerning all option-based and share-based awards for each NEO outstanding at December 31, 2015, including awards granted before the financial year ended December 31, 2015.
Name | Option-based Awards | Share-based Awards | |||||
Number of | Option | Option | Value of | Number of | Market or | Market or | |
securities | exercise | expiration date | unexercised | shares or | payout | payout value | |
underlying | price ($) | in-the- | units of | value of | of vested | ||
unexercised | money | shares that | share- | share-based | |||
options (#) | options | have not | based | awards not | |||
($)(1) | vested (#) | awards | paid out or | ||||
that have | distributed ($) | ||||||
not vested | |||||||
($) | |||||||
Niclas Stiernholm, | 1,667 | $30.00 | Jul 18, 2016 | — | — | — | — |
President, CEO and | 42,505 | $7.50 | Apr 8, 2023 | $418,249 | — | — | — |
Director | 159,768 | $10.35 | Apr 27, 2024 | $1,116,778 | — | — | — |
134,848 | $8.34 | May 27, 2024 | $1,213,632 | — | — | — | |
94,094 | $19.333 | Nov 19, 2025 | — | — | — | — | |
Robert Uger, | 8,501 | $7.50 | Apr 8, 2023 | $83,650 | — | — | — |
Chief Scientific | 42,067 | $10.35 | Apr 27, 2024 | $294,048 | — | — | — |
Officer | 33,712 | $8.34 | May 27, 2024 | $303,408 | — | — | — |
29,073 | $19.333 | Nov 19, 2025 | — | — | — | — |
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Name | Option-based Awards | Share-based Awards | |||||
Number of | Option | Option | Value of | Number of | Market or | Market or | |
securities | exercise | expiration date | unexercised | shares or | payout | payout value | |
underlying | price ($) | in-the- | units of | value of | of vested | ||
unexercised | money | shares that | share- | share-based | |||
options (#) | options | have not | based | awards not | |||
($)(1) | vested (#) | awards | paid out or | ||||
that have | distributed ($) | ||||||
not vested | |||||||
($) | |||||||
Eric Sievers | 85,000 | $23.441 | Apr 1, 2025 | — | — | — | — |
Chief Medical Officer | 28,713 | $19.333 | Nov 19, 2025 | — | — | — | — |
James Parsons, | 417 | $30.00 | Aug 25, 2016 | — | — | — | — |
CFO | 4,250 | $7.50 | Apr 8, 2023 | $41,820 | — | — | — |
36,204 | $10.35 | Apr 27, 2024 | $253,066 | — | — | — | |
26,970 | $8.34 | May 27, 2024 | $242,730 | — | — | — | |
30,171 | $19.333 | Nov 19, 2025 | — | — | — | — | |
Penka Petrova, | 4,250 | $7.50 | Apr 8, 2023 | $41,820 | — | — | — |
Chief Development | 26,090 | $10.35 | Apr 27, 2024 | $182,369 | — | — | — |
Officer | |||||||
20,227 | $8.34 | May 27, 2024 | $182,043 | — | — | — | |
38,808 | $19.333 | Nov 19, 2025 | — | — | — | — |
Note: | |
(1) | The value of the unexercised “in-the-money” options as at December 31, 2015 has been determined based on the excess of the closing price on such date of the Common Shares on the TSX of $17.34 per Common Share over the exercise price of such options. |
Incentive Plan Awards - Value Vested or Earned During the Year (NEOs)
The following table provides information regarding the value on payout or vesting of incentive plan awards for the NEOs for the fiscal year ended December 31, 2015.
Name | Option-based awards - Value vested during the year ($)(1) | Share-based awards - Value vested during the year ($) | Non-equity incentive plan compensation - Value earned during the year ($) |
Niclas Stiernholm | 1,225,981 | — | 247,500 |
Robert Uger | 304,890 | — | 123,200 |
Eric Sievers | 212,752 | — | 140,786 |
James Parsons | 241,963 | — | 105,875 |
Penka Petrova | 182,261 | — | 105,875 |
Note: | |
(1) | Aggregate dollar value that would have been realized by determining the difference between the closing market price of our Common Shares on the TSX and the exercise price of the underlying option on each date during the fiscal year when an option award vested. |
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Securities Authorized for Issuance under Equity Compensation Plan
The following table sets out information concerning the number and price of securities to be issued under our equity compensation plans as at December 31, 2015.
Number of securities | |||
Number of securities | remaining available for | ||
to be issued upon | Weighted-average | future issuance under equity | |
exercise of outstanding | exercise price of | compensation plans | |
options, warrants and | outstanding options, | (excluding securities | |
rights | warrants and rights | reflected in column (a)) | |
Plan Category | (a) | (b) | (c) |
Equity compensation | |||
plans approved by | |||
securityholders | 979,622 | $14.07 | 87,048 |
Equity compensation | |||
plans not approved by | |||
securityholders | Nil | N/A | Nil |
Total | 979,622 | $14.07 | 87,048 |
The Corporation has the following two equity based compensation plans: (1) the 2014 Stock Option Plan, and (2) the 2014 DSU Plan (as defined below).
2014 Stock Option Plan
We have adopted a stock option plan, or the 2014 Stock Option Plan, that provides for the granting of stock options to officers, directors, employees and consultants of ours and our affiliates. The purpose of the 2014 Stock Option Plan is to advance our interests by encouraging our directors, officers and key employees and consultants retained to acquire Common Shares, thereby: (a) increasing the proprietary interests of such persons in us; (b) aligning the interests of such persons with the interests of our shareholders generally; (c) encouraging such persons to remain associated with us; and (d) furnishing such persons with an additional incentive in their efforts on behalf of us. As at December 31, 2015, pursuant to the 2014 Stock Option Plan, we were entitled to issue an additional 87,048 options.
The following is a summary only, and is qualified in its entirety by the terms and conditions of the 2014 Stock Option Plan. Capitalized terms used in this summary but not otherwise defined herein shall have the meanings ascribed thereto in the 2014 Stock Option Plan.
Administration by the Board of Directors
The 2014 Stock Option Plan is administered by our Board which has final authority and discretion, subject to the express provisions of the 2014 Stock Option Plan, to interpret the 2014 Stock Option Plan, to prescribe, amend and rescind rules and regulations relating to it and to make all other determinations deemed necessary or advisable for the administration of the 2014 Stock Option Plan. This includes the discretion of our Board to decide who will participate in the 2014 Stock Option Plan, including directors, officers, employees or consultants, each a Participant. Our Board also has authority to delegate its duties to the compensation committee.
Expiry
Stock options granted under the 2014 Stock Option Plan are non-transferable, expire not later than ten years from the date of issuance and are exercisable as determined by our Board. In addition, notwithstanding the expiration date applicable to any stock option, if a stock option would otherwise expire during or immediately after a Blackout Period (as defined in the 2014 Stock Option Plan), then the expiration date of such stock option shall be the 10th business day following the expiration of the Blackout Period, provided that in no event shall the period during which said stock option is exercisable be extended beyond 10 years from the date such stock option is granted to the Participant.
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Exercise Price
The exercise price payable in respect of each stock option may not be lower than the volume weighted average trading price of the Common Shares on the TSX over a period of five days preceding the date of grant.
Insider Participation Limit
The aggregate number of Common Shares issuable (or reserved for issuance) to insider Participants under the 2014 Stock Option Plan or any other security-based compensation arrangement of ours and our affiliates (including, without limitation, our 2014 Deferred Share Unit Plan, or the 2014 DSU Plan, may not at any time exceed 10% of the combined total number of Common Shares issued and outstanding (on a non-diluted basis) and the total number of Common Shares into which the outstanding preferred shares may be converted. Common Shares issued to insider Participants under the 2014 Stock Option Plan or any other security-based arrangement of ours within a one-year period may not exceed 10% of the total number of Common Shares issued and outstanding (on a non-diluted basis) plus 10% of the total number of Common Shares into which the outstanding preferred shares may be converted.
Amendment Provisions
Our Board has the discretion to make amendments to the 2014 Stock Option Plan and any stock options granted thereunder which it may deem necessary, without having to obtain shareholder approval. Such changes include, without limitation:
• | minor changes of a “housekeeping” nature; |
• | amending stock options under the 2014 Stock Option Plan, including with respect to the stock option period (provided that the period during which a stock option is exercisable does not exceed ten years from the date the stock option is granted and that such stock option is not held by an insider Participant), vesting period, exercise method and frequency, exercise price of an stock option (provided that such stock option is not held by an insider Participant) and method of determining the exercise price, assignability and effect of termination of a Participant’s employment or cessation of the Participant’s directorship; |
• | changing the class of Participants eligible to participate under the 2014 Stock Option Plan; |
• | changing the terms and conditions of any financial assistance which may be provided by us to Participants to facilitate the purchase of Common Shares under the 2014 Stock Option Plan; and |
• | adding a cashless exercise feature, payable in cash or securities, whether or not providing for a full deduction of the number of underlying Common Shares from the 2014 Stock Option Plan reserve. |
Shareholder approval will be required in the case of: (i) any amendment to the amendment provisions of the 2014 Stock Option Plan; (ii) any increase in the maximum number of Common Shares issuable under the 2014 Stock Option Plan; and (iii) any reduction in the exercise price or extension of the stock option period benefiting an insider Participant, in addition to such other matters that may require shareholder approval under the rules and policies of the TSX.
Termination, Resignation, Death, etc.
Stock options granted under the 2014 Stock Option Plan are, and will be, evidenced by an option agreement entered between us and the Participant. Stock options granted under the plan terminate immediately if a Participant is dismissed with cause. If a Participant ceases to hold any position as a Participant, by reason of retirement, resignation or termination, the vested options terminate within 120 days from cessation (or until the normal expiry of the stock options if earlier). Under the 2014 Stock Option Plan, if a Participant dies, his options may be exercised by his legal representatives during the period of (and they shall terminate) one year following the date to the extent they were exercisable on the date of death. If a Participant ceases to be a director, officer or employee of, or consultant to, the Corporation or of one of our subsidiaries as a result of disability or illness preventing the Participant from performing the duties routinely performed by such Participant, vested options terminate 180 days from the date that the Participant ceases to serve in such capacities (or until the normal expiry date of the stock options if earlier).
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Change of Control
The 2014 Stock Option Plan provides that any stock options outstanding immediately prior to the occurrence of a Change of Control (as defined in the 2014 Stock Option Plan), but which are not then exercisable, shall immediately vest and become fully exercisable upon the occurrence of a Change of Control.
Maximum Limit
The 2014 Stock Option Plan is a “rolling” and “reloading” stock option plan, meaning that stock options may be granted for no more than 10% of the total number of Common Shares issued and outstanding (on a non-diluted basis) plus 10% of the total number of Common Shares into which the outstanding preferred shares may be converted in accordance with their terms less the number of any Common Shares reserved for issuance to insiders of ours pursuant to the 2014 DSU Plan. Each exercise of stock options will result in a corresponding increase in the number of stock options available for granting under the 2014 Stock Option Plan, up to the 10% aggregate maximum limit. There are additional restrictions in the 2014 Stock Option Plan with regard to the number of stock options that may be granted which include the restriction that the aggregate number of stock options granted in any 12 month period to any one person cannot exceed 5% of the aggregate total number of issued and outstanding Common Shares (on a non-diluted basis) and Common Shares into which the outstanding preferred shares may be converted in accordance with their terms.
Other Terms
Any consolidation or subdivision of Common Shares will be reflected in an adjustment to the stock options. Stock options granted under the 2014 Stock Option Plan are non-transferrable and non-assignable, and the Corporation does not provide any financial assistance in connection with option awards.
Amendment and Restatement of 2014 Stock Option Plan
At the Meeting, Shareholders will be asked to approve the 2016 Stock Option Plan, which, if approved, will supersede the 2014 Stock Option Plan. The 2016 Stock Option Plan includes, among other things, changes to the plan limits, the insider participation limits, the vesting of options on Change of Control, and the amendment provisions. See “Particulars of Matters to be Acted Upon - Approval of 2016 Stock Option Plan.”
2014 DSU Plan
Our shareholders approved the 2014 DSU Plan on May 27, 2014. The 2014 DSU Plan is intended to promote a greater alignment of long term interests between non-executive directors and executive officers and our shareholders through the issuance of DSUs. Since the value of a DSU increases or decreases with the market price of the Common Shares, DSUs reflect a philosophy of aligning the interests of directors and executive officers with those of the shareholders by tying compensation to share price performance. Our Board intends to use DSUs issued under the 2014 DSU Plan, as well as stock options issued under the 2014 Stock Option Plan, as part of our overall director and executive officer compensation program. A total of 51,788 units were issued and outstanding as at December 31, 2015.
Overview of the 2014 DSU Plan
The 2014 DSU Plan provides that, subject to the terms of the 2014 DSU Plan and such other conditions as our Board (or compensation committee of our Board after delegation by authority from our Board) may impose, an executive officer or director of ours, each an Eligible Person, shall receive his or her Total Compensation in the form of DSUs. The term “Total Compensation” includes annual and special bonuses payable to directors and executive officers and, in the case of directors, directors fees (including annual Board retainers, fees for serving as chair of our Board and/or as a chair or member of any committee of our Board, for attending meetings of our Board or any committee thereof, and any other fees payable to directors) in the form of DSUs. Our Board may use DSUs to pay bonuses and directors fees either alone or in conjunction with cash, or any combination of DSUs and cash.
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The number of DSUs (including fractional DSUs, computed to three digits) to be credited to an Eligible Person for services will be determined by dividing the awarded amount by the fair market value as at the last trading day before the date the awarded amount is declared by our Board. “Fair Market Value” of the Common Shares is the volume weighted average trading price of the Common Shares on the TSX for the five days immediately preceding the date in question.
An Eligible Person who has ceased to be a director or executive officer (other than as a result of death) may elect to receive one Common Share in respect of each whole DSU credited to the Eligible Person’s account by filing with us a notice of redemption in the form and by the time stipulated in the 2014 DSU Plan. If the Eligible Person does not make the election on a timely basis, the Eligible Person will be deemed to have elected to redeem all of his or her DSUs. The issuance of the Common Shares will be made by us as soon as reasonably possible following the election to redeem the DSUs, or being deemed to have been made, by the Eligible Person.
Maximum Number of Shares Issuable under the Plan
The “Outstanding Issue” means the combined total of the number of Common Shares outstanding and the number of Common Shares into which the preferred shares outstanding (on a non-diluted basis) may be converted in accordance with their terms. The maximum number of Common Shares reserved for issuance under the 2014 DSU Plan is 66,667, which is approximately 0.6% of the Outstanding Issue as at December 31, 2015, subject to adjustment.
The 2014 DSU Plan provides that the maximum number of Common Shares that may be reserved for issuance to Insiders (as that term is defined in the TSX’s rules) pursuant to the 2014 DSU Plan, together with any Common Shares issuable pursuant to any other securities-based compensation arrangement of ours (including the 2014 Stock Option Plan), will not exceed 10% of the Outstanding Issue.
In addition, the maximum number of Common Shares that may be issued to Insiders under the 2014 DSU Plan, together with any Common Shares issued to Insiders pursuant to any other securities-based compensation arrangement of ours (including the 2014 Stock Option Plan), within any one year period, will not exceed 10% of the Outstanding Issue. Also, in no event, may the number of Common Shares reserved for issuance to any one person pursuant to the 2014 DSU Plan and the 2014 Stock Option Plan exceed 5% of the Outstanding Issue.
Transferability
DSUs and any other rights, benefits or interests in the 2014 DSU Plan are non-transferable, except that if the Eligible Person dies, the legal representatives of the Eligible Person will be entitled to receive the amount of any payment otherwise payable to the Eligible Person in accordance with the provisions 2014 DSU Plan.
Amendments to the 2014 DSU Plan
Our Board has the discretion to make amendments to the 2014 DSU Plan and any DSUs granted thereunder which it may deem necessary, without having to obtain shareholder approval. Such changes may include, without limitation:
• | minor changes of a “housekeeping” nature; |
• | amending the terms of DSUs under the 2014 DSU Plan and method of determining the awarded amount and the number of DSUs that may be issued to an Eligible Person, and the assignability and effect of terminated service of an Eligible Person; |
• | changing the class of Eligible Persons; and |
• | changing the method and procedures to be followed with regard to the issuance of DSUs under the 2014 DSU Plan. |
Shareholder approval will be required in the case of: (i) any amendment to the amendment provisions of the 2014 DSU Plan; (ii) any increase in the maximum number of Common Shares issuable under the 2014 DSU Plan; and (iii) such other matters that may require shareholder approval under the rules and policies of the TSX.
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Termination of Service
An Eligible Person who has terminated service may elect to receive one Common Share in respect of each whole DSU credited to the Eligible Person’s account, by filing a notice of redemption in the form prescribed from time to time by us on or before December 15 of the first calendar year commencing after the date on which the Eligible Person has terminated service. If the Eligible Person fails to file such notice on or before that December 15, the Eligible Person will be deemed to have filed a notice of redemption on that December 15 and will be deemed to have elected to redeem all of his or her DSUs. The date on which a notice is filed or deemed to be filed with the Secretary of the Company is the “Filing Date”. We may defer the Filing Date to any other date if such deferral is, in the sole opinion of ours, desirable to ensure compliance the 2014 DSU Plan. There are no causes of cessation of entitlement under the 2014 DSU Plan, including termination for or without cause.
In the event of the death of an Eligible Person, we will, within two months of the Eligible Person’s death, pay cash equal to the Fair Market Value of the shares which would be deliverable to the Eligible Person if the Eligible Person had terminated service in respect of the DSUs credited to the deceased Eligible Person’s account (net of any applicable withholding tax) to or for the benefit of the legal representative of the Eligible Person. The Fair Market Value will be calculated on the date of death of the Eligible Person.
The foregoing is a summary only, and is qualified in its entirety by the terms and conditions of the 2014 DSU Plan.
Performance Graph
The following graph compares the total shareholder return of $100 invested in our Common Shares with the total return of the S&P/TSX Composite Index.
Year Return on Investment
December 31, 2010 to December 31, 2015
2010 = $100
The performance trend shown by the above graph does not reflect the trend in our compensation to NEOs reported over the same period. The market price of the Common Shares, similar to the share prices of many publicly-traded biotechnology companies, has historically been highly volatile. Our approach to compensation is designed to attract and retain quality executives while promoting long-term profitability and maximizing shareholder value. Our NEOs are compensated on the basis of individual and corporate performance and compensation is benchmarked to other life sciences companies, rather than on factors strictly tied to the short-term performance of our Common Shares in the market.
Pension Benefit Plans
The Corporation does not have any pension plans that provide for payments of benefits at, following or in connection with, retirement or provide for retirement or deferred compensation plans for the NEOs or directors.
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Termination of Employment, Change of Control and Employment Contracts
Niclas Stiernholm
Effective February 11, 2016, we entered into a new employment agreement with Niclas Stiernholm which has an indefinite term and provides for his employment as Chief Executive Officer. The agreement provides for an annual base salary of $450,000 and participation in our short-term incentive plan and stock option plan. Dr. Stiernholm’s agreement provides for continuation of his salary and average monthly bonus for the period equal to the greater of 18 months or one month per year of completed service (capped at 24 months) for termination without cause. If Dr. Stiernholm terminates his employment within one year of a change of control, he is entitled to severance of 20 months of base salary, plus a bonus equal to the average annual bonus of the past three years. In the event of a change in control, all unvested stock options granted prior to November 20, 2015 will immediately vest. If Dr. Stiernholm’s employment is terminated without cause or Dr. Stiernholm resigns in circumstances constituting constructive dismissal, in each case within 24 months following a change of control, any stock options granted after November 19, 2015 will vest immediately prior to the date of such termination or resignation, as applicable. The estimated additional payment to Dr. Stiernholm in the case of termination without cause, assuming that a termination took place on December 31, 2015 is $961,125. In the case of termination without cause or resignation in circumstances constituting constructive dismissal in connection with a change in control, the incremental severance, plus in the money value of accelerated vesting of stock options granted prior to November 19, 2015, is $1,304,628.
Dr. Stiernholm’s employment agreement contains provisions relating to: (i) non-disclosure or use of the Corporation’s confidential information, (ii) non-competition during, and 12 months after, employment, and (iii) non-solicitation of the Corporation’s clients and employees during, and 12 months after, employment.
Robert Uger
Effective February 11, 2016, we entered into a new employment agreement with Robert Uger which has an indefinite term and provides for his employment as Chief Scientific Officer. The agreement provides for an annual base salary of $320,000 and participation in our short-term incentive plan and stock option plan. Dr. Uger’s agreement provides for continuation of his salary and average monthly bonus for the period equal to the greater of 12 months or one month per year of completed service (capped at 24 months) for termination without cause. In the event of a change in control, all unvested stock options granted prior to November 20, 2015 will immediately vest. If Dr. Uger’s employment is terminated without cause or Dr. Uger resigns in circumstances constituting constructive dismissal, in each case within 24 months following a change of control, any stock options granted after November 19, 2015 will vest immediately prior to the date of such termination or resignation, as applicable. The estimated additional payment to Dr. Uger in the case of termination without cause, assuming that a termination took place on December 31, 2015 is $405,250. In the case of termination without cause or resignation in circumstances constituting constructive dismissal in connection with a change in control, the incremental in the money value of accelerated vesting of stock options granted prior to November 19, 2015 is $326,608.
Dr. Uger’s employment agreement contains provisions relating to: (i) non-disclosure or use of the Corporation’s confidential information, (ii) non-competition during, and 12 months after, employment, and (iii) non-solicitation of the Corporation’s clients and employees during, and 12 months after, employment.
Eric Sievers
Effective April 1, 2015, we entered into an employment agreement with Eric Sievers which has an indefinite term and provides for his employment as Chief Medical Officer. The agreement provides for an annual base salary of USD$375,000 and participation in our short-term incentive plan and stock option plan. Dr. Siever’s agreement provides for continuation of his salary for 12 months for termination without cause. The estimated additional payment to Dr. Sievers in the case of termination without cause, assuming that a termination took place on December 31, 2015 is USD$375,000.
Dr. Sievers’ employment agreement contains provisions relating to: (i) non-disclosure or use of the Corporation’s confidential information, (ii) non-competition during, and 12 months after, employment, and (iii) non-solicitation of the Corporation’s clients and employees during, and 12 months after, employment.
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James Parsons
Effective February 11, 2016, we entered into a new employment agreement with James Parsons which has an indefinite term and provides for his employment as Chief Financial Officer. The agreement provides for an annual base salary of $275,000 and participation in our short-term incentive plan and stock option plan. Mr. Parsons’ agreement provides for continuation of his salary and average monthly bonus for the period equal to the greater of 12 months or one month per year of completed service (capped at 24 months) for termination without cause. In the event of a change in control, all unvested stock options granted prior to November 20, 2015 will immediately vest. If Mr. Parsons’ employment is terminated without cause or Mr. Parsons resigns in circumstances constituting constructive dismissal, in each case within 24 months following a change of control, any stock options granted after November 19, 2015 will vest immediately prior to the date of such termination or resignation, as applicable. The estimated additional payment to Mr. Parsons in the case of termination without cause, assuming that a termination took place on December 31, 2015 is $340,500. In the case of termination without cause or resignation in circumstances constituting constructive dismissal in connection with a change in control, the incremental in the money value of accelerated vesting of stock options granted prior to November 19, 2015 is $261,841.
Mr. Parsons’ employment agreement contains provisions relating to: (i) non-disclosure or use of the Corporation’s confidential information, (ii) non-competition during, and 12 months after, employment, and (iii) non-solicitation of the Corporation’s clients and employees during, and 12 months after, employment.
Penka Petrova
Effective February 11, 2016, we entered into a new employment agreement with Penka Petrova which has an indefinite term and provides for her employment as Chief Development Officer. The agreement provides for an annual base salary of $275,000 and participation in our short term incentive plan and stock option plan. Dr. Petrova’s agreement provides for continuation of his salary and average monthly bonus for the period equal to the greater of 12 months or one month per year of completed service (capped at 24 months) for termination without cause. In the event of a change in control, all unvested stock options granted prior to November 20, 2015 will immediately vest. If Dr. Petrova’s employment is terminated without cause or Dr. Petrova resigns in circumstances constituting constructive dismissal, in each case within 24 months following a change of control, any stock options granted after November 19, 2015 will vest immediately prior to the date of such termination or resignation, as applicable. The estimated additional payment to Dr. Petrova in the case of termination without cause, assuming that a termination took place on December 31, 2015 is $338,646. In the case of termination without cause or resignation in circumstances constituting constructive dismissal in connection with a change in control, the incremental in the money value of accelerated vesting of stock options granted prior to November 19, 2015 is $196,154.
Dr. Petrova’s employment agreement contains provisions relating to: (i) non-disclosure or use of the Corporation’s confidential information, (ii) non-competition during, and 12 months after, employment, and (iii) non-solicitation of the Corporation’s clients and employees during, and 12 months after, employment.
Entitlements under Stock Option Plan
Pursuant to the 2014 Stock Option Plan, if an optionholder ceases to be our director, officer, consultant or employee or our service provider due to retirement, resignation or termination, such optionholder may exercise his or her options to the extent that the optionholder was entitled to exercise his or her options at the date of such cessation, for 120 days after the optionholder ceases to be a director, officer, consultant, employee or service provider, or until the normal expiry date of the subject options, whichever is earlier. Assuming the 2016 Stock Option Plan is approved at the Meeting, upon retirement, resignation or termination without cause, the optionholder will have the right, until the earlier of (i) 120 days (or such other longer period as may be determined by the Board in its sole discretion or, if longer, the period specified in the participant’s employment contract) following the Termination Date, and (ii) the normal expiry date of the stock option rights of such participant, to exercise all stock options to the extent they were exercisable on the Termination Date.
The 2014 Stock Option Plan provides that any stock options outstanding immediately prior to the occurrence of a Change of Control (as defined in the 2014 Stock Option Plan), but which are not then exercisable, shall immediately vest and become fully exercisable upon the occurrence of a Change of Control. Assuming the 2016 Stock Option Plan is approved at the Meeting, any unvested stock options granted thereunder will be subject to “double trigger” vesting as set out in the 2016 Stock Option Plan. See “Business of the Meeting - Approval of 2016 Stock Option Plan”.
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Directors’ and Officers’ Liability Insurance
The Corporation has purchased directors’ & officers’ liability insurance coverage, or D&O Insurance, for directors and officers of the Corporation. The total annual premium payable by the Corporation for the D&O Insurance for the year ended December 31, 2015 was US$289,500, and no amount of such premium was paid by the directors or officers of the Corporation. The D&O Insurance coverage has an annual aggregate limit of $20 million. There is a US$750,000 deductible for any claim made, but no deductible is assessed against any director or officer. D&O Insurance is designed to protect Board members and officers for their legal liabilities including, but not limited to, securities claims, claims for statutory liabilities and employment claims.
Director Compensation
The Corporation targets director compensation within a competitive range of the median of the same comparator group as it used for benchmarking executive compensation. In 2015, Meridian provided detailed information to the compensation committee relating to director compensation values and mix of compensation between cash and equity at the comparator group companies. Based on this information, the compensation committee determined to maintain the cash retainer of $40,000 for directors and increased the equity compensation retainer for directors from $50,000 to $90,000, paid in DSUs. Directors also received the following annual fees: chair of the Board $40,000; chair of the audit committee $16,000; chair of the corporate governance and nominating committee and chair of the compensation committee $10,000; member of the audit committee $8,000; and member of the corporate governance and nominating committee and member of the compensation committee $5,000. The compensation committee believes that the significant weighting of director compensation to DSUs, the value of which is directly aligned with the value of the Common Shares and which must be held during each director’s tenure, is aligned with the directors fiduciary oversight role and with long-term shareholder interests.
In addition, each independent director was entitled to reimbursement for reasonable expenses incurred in such capacity as a director, including travel and other out-of-pocket expenses relating to meetings of the Board and any committee meetings.
The following table shows all compensation (before taxes and other statutory withholdings) provided to the non-executive directors for the year ended December 31, 2015.
Non-equity | |||||||
Share-based | Option-based | incentive plan | All other | Pension | |||
Fees Earned | awards | awards | compensation | compensation | value | Total | |
Name | ($) | ($) | ($) | ($) | ($) | ($) | ($) |
Luke Beshar, | 56,000 | 90,000 | — | — | — | — | 146,000 |
Director | |||||||
Henry Friesen, | 58,000 | 90,000 | — | — | — | — | 148,000 |
Director | |||||||
Robert Kirkman, | 53,000 | 90,000 | — | — | — | — | 143,000 |
Director | |||||||
Michael Moore, | 55,000 | 90,000 | — | — | — | — | 145,000 |
Director | |||||||
Thomas Reynolds, | 50,000 | 90,000 | — | — | — | — | 140,000 |
Director | |||||||
Calvin Stiller, | 80,000 | 90,000 | — | — | — | — | 170,000 |
Director, Chair |
Outstanding Option-Based Awards and Share Based Awards - Directors
The following table sets forth information concerning all option-based and share-based awards for each non-executive director outstanding at December 31, 2015, including awards granted before the financial year ended December 31, 2015. During the financial year ended December 31, 2015, the directors were granted 23,011 DSUs and were granted no option-based awards.
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Name(1) | Option-based Awards | Share-based Awards | |||||
Number of | Option | Option | Value of | Number of | Market or | Market or | |
securities | exercise | expiration | unexercised | shares or | payout value | payout value | |
underlying | price ($) | date | in-the- | units of | of share- | of vested | |
unexercised | money | shares that | based | share-based | |||
options (#) | options ($)(1) | have not | awards that | awards not | |||
vested (#) | have not | paid or | |||||
vested ($) | distributed | ||||||
($)(2) | |||||||
Luke Beshar, | 6,667 | $18.90 | Mar 6, 2024 | — | — | — | 149,662 |
Director | |||||||
Henry Friesen, | 1,667 | $30.00 | Jun 28, 2016 | — | — | — | 149,662 |
Director | 4,500 | $7.50 | Apr 8, 2023 | $44,280 | — | ||
Robert Kirkman | 6,667 | $15.30 | Jan 29, 2024 | $13,601 | — | — | 149,662 |
Director | |||||||
Michael Moore | 4,000 | $7.50 | Apr 8, 2023 | $39,360 | — | — | 149,662 |
Director | |||||||
Thomas | 6,667 | $18.90 | Mar 6, 2024 | – | — | — | 149,662 |
Reynolds | |||||||
Director | |||||||
Calvin Stiller | 1,667 | $30.00 | Jul 18, 2016 | — | — | — | 149,662 |
Director, Chair | 4,000 | $7.50 | Apr 8, 2023 | $39,360 |
Notes: | |
(1) | The value of the unexercised “in-the-money” options as at December 31, 2015 has been determine based on the excess of the closing price on such date of the Common Shares on the TSX of $17.34 per Common Share over the exercise price of such options. |
(2) | The value of the DSUs as at December 31, 2015 has been determined based on the number of DSUs multiplied by the closing price of the Common Shares on the TSX of $17.34 on such date. |
Incentive Plan Awards - Value Vested or Earned During the Year - Directors
The following table provides information regarding the value on pay-out or vesting of incentive plan awards for each of the Corporation’s directors for the financial year ended December 31, 2015. None of the independent directors earned any non-equity incentive plan compensation during 2015. Only the options which vested during the 2015 fiscal year that were “in-the-money” are reported in the table below.
Name and Principal Position | Option-based awards – Value vested during the year(1) | Share-based awards – Value vested during the year | Non-equity incentive plan compensation – Value earned during the year |
Luke Beshar | Nil | $90,000 | N/A |
Director | |||
Henry Friesen | $19,650 | $90,000 | N/A |
Director | |||
Robert Kirkman | $2,111 | $90,000 | N/A |
Director | |||
Michael Moore | $17,475 | $90,000 | N/A |
Director | |||
Thomas Reynolds | Nil | $90,000 | N/A |
Director | |||
Calvin Stiller | $17,475 | $90,000 | N/A |
Director, Chair |
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Notes: | |
(1) | Aggregate dollar value that would have been realized by determining the difference between the closing market price of our Common Shares on the TSX and the exercise price of the underlying option on each date during the fiscal year when an option award vested. |
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
As at the date of this Circular, other than routine indebtedness as defined under applicable securities laws, no director, nominee for director, executive officer or any associate or affiliate thereof is indebted to the Corporation or any of its subsidiaries.
INTERESTS OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
Except as set out herein, to the knowledge of the Corporation, no “informed person”, proposed director or any associate or affiliate of an informed person or proposed director of ours had a material interest, direct or indirect, in any transaction or proposed transaction since January 1, 2015 that materially affected or would materially affect us. An “informed person” means, among others, (i) a director or executive officer of the Corporation or of a subsidiary of the Corporation, (ii) any person or company who beneficially owns, or controls or directs, directly or indirectly, voting securities of the Corporation or a combination of both carrying more than 10% of the voting rights attached to all outstanding voting securities of the Corporation other than voting securities held by the person or company as underwriter in the course of a distribution.
In relation to the acquisition of Fluorinov Pharma Inc., or Fluorinov, on January 26, 2016, two directors declared a conflict of interest and recused themselves from discussions and board decisions relating to the acquisition. One director was also a director of Fluorinov and had an ownership position in Fluorinov at the time of acquisition of less than 2%. A second of our directors was a director of the Ontario Institute of Cancer Research, a not-for-profit corporation (being a beneficiary of the Fight Against Cancer Innovation Trust, a shareholder and debenture holder of Fluorinov).
INTERESTS OF CERTAIN PERSONS AND
COMPANIES IN MATTERS TO BE ACTED UPON
Management is not aware of any material interest, direct or indirect, of any director or nominee for director, executive officer or any associate or affiliate of any of the foregoing in any matter to be acted on at the Meeting.
CORPORATE GOVERNANCE DISCLOSURE
Corporate governance relates to the activities of the Board, the members of which are elected by and accountable to the Shareholders, and accounts for the role of management who are appointed by the Board and charged with our day to day management. The Board and senior management consider good corporate governance to be central to our effective and efficient operations. National Instrument 58-101Disclosure of Corporate Governance Practices, or NI 58-101, requires us to disclose annually in our Circular certain information concerning its corporate governance practices, as set forth below.
Board of Directors
The Board facilitates its exercise of independent supervision over our management through a combination of formal meetings of the Board and informal discussions amongst Board members. The corporate governance and nominating committee oversees all governance matters and looks to our management to keep it apprised of all significant developments affecting the Corporation and its operations. All major acquisitions, dispositions, investments and contracts and other significant matters outside the ordinary course of our business are subject to approval by the Board.
During the most recently completed financial year ended December 31, 2015, the Board held seven formal Board meetings. The remaining decisions during the year were passed by written resolution following informal discussions amongst the directors and management.
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The Board functions independently as a majority of the members of the Board are not involved in management. Also, when appropriate, the Board excuses management from meetings and conducts business and makes decisions exclusive of management. During 2015, six such in-camera sessions were held. In addition, each committee of the Board is comprised of independent directors who also periodically hold in-camera sessions.
We have written descriptions of the roles of the Board chair, each of the Board committee chairs and the Chief Executive Officer. The responsibilities of the chair of the Board includes: (i) chairing meetings of the Board; (ii) in consultation with Board members and the Chief Executive Officer set the agendas for the meetings of the Board; (iii) in collaboration with the chairs of the Board committees and the Chief Executive Officer, ensure that agenda items for all committee meetings are ready for presentation and that adequate information is distributed to members in advance of such meetings in order that members may properly inform themselves on matters to be acted upon; (iv) assigning work to members; (v) acting as liaison and maintaining communication with the Chief Executive Officer and Board members to optimize and co-ordinate input from directors, and to optimize the effectiveness of the Board and its committees; and (vi) providing leadership to the Board with respect to its functions and mandate.
The Board has a written mandate called the Corporate Governance Guidelines to provide a concise description of the corporate governance obligations, principles and practices of our Board. The core responsibilities of the Board include: CEO and key executive officer selection; the creation of a culture of integrity throughout the organization; adopting a strategic planning process and understanding and approving Corporation strategy, annual budgets and business plans; overseeing major investments, capital expenditures and acquisitions; the identification of the principal risks of the issuer's business, and ensuring the implementation of appropriate systems to manage these risks; establishing officer and Board compensation; succession planning; adopting a communication policy; overseeing the adequacy and effectiveness of the Corporation’s system of internal control over financial reporting and disclosure controls and procedures; and developing the Corporation’s approach to corporate governance, including developing a set of corporate governance principles and guidelines. The Board delineates its role and responsibilities by overseeing the conduct of the business of the Corporation and the activities of management who are responsible for the day-to-day conduct of the business of the Corporation. The Board further operates by delegating certain of its authorities to management and by reserving certain powers to itself. The Board retains the responsibility of managing its own affairs including selecting its chair, nominating candidates for election to the Board, constituting committees of the full Board and determining compensation for the directors. Subject to the articles and bylaws of the Corporation, the Board may constitute, seek the advice of and delegate powers, duties and responsibilities to committees of the Board. Each of the committees of the Board has a charter which sets out the responsibilities of the committee and the role of the chair of each committee.
Board Composition; Term of Office
Our Board currently consists of seven members. Our directors are elected at each annual general meeting of our Shareholders and serve until their successors are elected or appointed, unless their office is vacated earlier. Our current Board was elected at the annual general meeting of shareholders on May 27, 2015.
Director Independence
As a foreign private issuer, under the listing requirements and rules of the NASDAQ Capital Market, we are not required to have independent directors on our Board, except to the extent that our audit committee is required to consist of independent directors, subject to certain phase-in schedules. Nevertheless, our Board has undertaken a review of the independence of the directors and considered whether any director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. Our Board determined that six of our seven directors are “independent” directors as defined under Ontario Securities Commission National Instrument 52-110 -Audit Committees, or NI 52-110, and current rules and regulations of the SEC and the listing standards of the NASDAQ Capital Market. In making these determinations, our Board considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances that our Board deemed relevant in determining their independence. Mr. Stiernholm is not independent by virtue of being the CEO of the Corporation.
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Board and Committee Meetings Held for the Year Ended December 31, 2015
Type of Meeting | Number of Meetings | Date of Meetings |
Board of Directors | 7 | Feb 11, Mar 10, Mar 23, May 28, |
Jun 16, Sep 3, Nov 19(1) | ||
Audit Committee | 4 | Mar 22, May 12, Aug 11, Nov 10 |
Corporate Governance and | 2 | Mar 17, Nov 19 |
Nominating Committee | ||
Compensation Committee | 6 | Feb 3, Apr 22, Jun 8, Sep 3, |
Oct 14, Nov 19 | ||
Total Meetings Held | 19 |
Note: | |
(1) | In addition, a meeting of an ad-hoc pricing committee attended by Messrs. Beshar, Stiernholm and Stiller was held on March 31, 2015. |
Attendance of Directors for the Year Ended December 31, 2015
Director | Board Meetings Attended | Audit Committee Meetings Attended(1) | Corporate Governance Committee Meetings Attended(1) | Compensation Committee Meetings Attended(1) |
Luke Beshar | 7 | 4 | — | — |
Henry Friesen | 7 | 4 | 2 | — |
Robert Kirkman | 7 | 4 | — | 6 |
Michael Moore | 7 | — | 2 | 6 |
Thomas Reynolds | 6 | — | 2 | 6 |
Niclas Stiernholm | 7 | — | — | — |
Calvin Stiller | 7 | — | — | — |
Notes: | |
(1) | Committee attendance results above are recorded only for committee members. If non-committee members attend a committee meeting, their attendance is not recorded above. |
Directorships
Certain of the directors are also directors (or equivalent) of other reporting issuers as set forth below:
Director | Company |
Dr. Thomas Reynolds | MEI Pharma, Inc. |
Dr. Calvin Stiller | Magor Corporation |
Mr. Luke Beshar | REGENXBIO Inc. |
Orientation and Continuing Education
We have a formal onboarding process for new directors. The onboarding process includes suggested reading for the new director, such as corporate documents and other briefing materials; an initial orientation session; follow-up one-on-one meetings with key personnel in the organization; and sponsorship of the new director by an existing corporate governance and nominating committee member to assist with integration. New directors are provided with relevant information including our publicly filed documents, business plans and budgets, corporate policies, technical reports, financial information, and recent board and corporate governance materials. Directors are encouraged to ask questions and communicate with management, auditors and technical consultants to keep themselves current with industry trends and developments and changes in legislation.
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Continuing education is an important compliance requirement to promote the competence and integrity of Board members. We have a continuing education program in place for our Board which is reviewed annually by the corporate governance and nominating committee to include relevant educational materials. The corporate governance and nominating committee verifies annually that Board members have reviewed the continuing education materials.
Ethical Business Conduct
Ethical business behaviour is of great importance to the Board and management. We have instituted policies on disclosure, insider trading as well as a whistleblower policy for all personnel to report any fraudulent or illegal acts on an anonymous basis directly to the audit committee chair. The Board has also adopted a Code of Business Conduct and Ethics, or Code, intended to document the principles of conduct and ethics to be followed by our employees, officers and directors. A copy of our Code can be obtained under our profile onwww.sedar.com, on our website at www.trilliumtherapeutics.com, or by written request to our Chief Financial Officer, at 2488 Dunwin Drive, Mississauga, Ontario L5L 1J9. The directors of the Corporation encourage and promote an overall culture of ethical business conduct by promoting compliance with applicable laws, rules and regulations, providing guidance to employees, directors and officers to help them recognize and deal with ethical issues, promoting a culture of open communication, honesty and accountability and ensuring awareness of disciplinary action for violations of ethical conduct.
As some of our directors also serve as directors and officers of other companies engaged in similar activities, the Board must comply with the conflict of interest provisions of the Act, as well as the relevant securities regulatory instruments, in order to ensure that directors exercise independent judgment in considering transactions and agreements in respect of which a director or officer has a material interest. Any director would be required to declare the nature and extent of his interest and would not be entitled to vote at meetings which involve such conflict.
Nomination of Directors
In connection with the nomination or appointment of individuals as directors, the Board is responsible for: (i) considering what competencies and skills the Board, as a whole, should possess; (ii) assessing what competencies and skills each existing director possesses; and (iii) considering the appropriate size of the Board, with a view to facilitating effective decision making, all with regard to their diversity, gender, age, expertise, time availability and experience (industry, professional and public service). The Board will consider the advice and input of the CGN Committee. See “Corporate Governance Disclosure - Corporate Governance and Nominating Committee” below for further details regarding such committee, including its members and responsibilities.
Corporate Governance and Nominating Committee
Our corporate governance and nominating committee shall be composed of at least two members of our Board, all of whom are “independent directors” within the meaning of NASDAQ Stock Market Rule 5605(a)(2). In affirmatively determining the independence of any member of our corporate governance and nominating committee, our Board must consider all factors specifically relevant to determining whether a director has a relationship to us that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
All members of our corporate governance and nominating committee shall be “independent” as contemplated in NI 58-101, such that all members of our corporate governance and nominating committee will have no direct or indirect relationship with us that could, in the view of our Board, be reasonably expected to interfere with the exercise of his or her independent judgment.
The purpose of our corporate governance and nominating committee is to:
• | assist our Board in identifying prospective director nominees and recommend to our Board the director nominees for each annual meeting of shareholders; |
• | recommend members for each Board committee; |
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• | ensure that our Board is properly constituted to meet its fiduciary obligations to the Corporation and its shareholders and that we follow appropriate governance standards; |
• | develop and recommend to our Board governance principles applicable to us; |
• | oversee the succession planning for senior management; and |
• | oversee the evaluation of our Board and management. |
Our corporate governance and nomination committee members are Dr. Henry Friesen (chair), Dr. Michael Moore and Dr. Thomas Reynolds. Our Board has determined that each member of our corporate governance and nomination committee is independent within the meaning of such term in the rules of NASDAQ and Canadian provincial securities regulatory authorities.
Compensation Committee
Our compensation committee is required to be composed of at least two members of our Board, all of whom are considered “independent” of our management in accordance with the provisions of Rule 10C-1(b)(1) under the Exchange Act and NASDAQ Stock Market Rule 5605(a)(2) and 5605(d)(2)(A). In affirmatively determining the independence of any member of our compensation committee, our Board must consider all factors specifically relevant to determining whether a director has a relationship to the Corporation that is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to: (i) the source of compensation of such director, including any consulting, advisory or other compensatory fee paid by the Corporation to such director; and (ii) whether such director is affiliated with the Corporation, a subsidiary of the Corporation or an affiliate of a subsidiary of the Corporation.
Our compensation committee is required to ensure that the compensation programs and values transferred to management through cash pay, share and share-based awards, whether immediate, deferred, or contingent are fair and appropriate to attract, retain and motivate management and are reasonable in view of company economics and of the relevant practices of other similar companies. Our compensation committee recommends to our Board compensation arrangements for Board members.
Our compensation committee members are Dr. Michael Moore (chair), Dr. Robert Kirkman and Dr. Thomas Reynolds. Our Board has determined that each member of our compensation committee is independent within the meaning of such term in the rules of NASDAQ, the SEC and Canadian provincial securities regulatory authorities.
Relevant Education and Experience
The following describes the education and experience of each compensation committee member that is relevant in the performance of his responsibilities as a compensation committee member:
Dr. Michael Moore-Director
Dr. Moore is currently Chair ofMISSIONTherapeutics Limited, a UK drug discovery company targeting deubiquitinating enzymes for multiple disease indications. He also holds non-executive positions with other UK biopharmaceutical companies. From 2004 to 2013, Dr. Moore was non-executive chair of Trillium Privateco and from 2003-2008 Chief Executive Officer and director of PIramed Ltd, a UK-based biotechnology company developing small molecule drugs against the PI-3 kinase superfamily, which was acquired by Roche. Prior to PIramed, he held several progressive positions at Xenova Group plc (1988-2003), including Chief Scientific Officer and Research Director. Dr. Moore held a tenured Cancer Research Campaign position (1980) at the Paterson Institute for Cancer Research, was Honorary Reader in Immunology and Oncology at the University of Manchester Medical School (1986), and Editor-in-Chief of the British Journal of Cancer (1983). Dr. Moore received his PhD (Faculty of Pure Science) and DSc (Faculty of Medicine) from Nottingham University and has more than 150 scientific publications.
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Dr. Thomas Reynolds-Director
Dr. Reynolds served as Chief Medical Officer of Seattle Genetics from March 2007 until his retirement in February, 2013. While at Seattle Genetics, he was responsible for building and leading an integrated clinical development, regulatory and medical affairs organization, highlighted by the development and approval of ADCETRIS. From 2002 to 2007, Dr. Reynolds served at ZymoGenetics (acquired by Bristol-Myers Squibb in 2010), most recently as Vice President, Medical Affairs, where he oversaw the clinical development and regulatory filing of RECOTHROM. Previously, he was Vice President, Clinical Affairs at Targeted Genetics, and before that he was at Somatix Therapy (acquired by Cell Genesys in 1997). Dr. Reynolds received his M.D., and Ph.D. in Biophysics, from Stanford University and a B.A. in Chemistry from Dartmouth College. He is currently a member of the Compensation Committee at MEI Pharma, Inc. and chair of the Remuneration Committee at Oxford BioTherapeutics Ltd, a private UK-based company.
Dr. Robert Kirkman-Director
Dr. Kirkman served as Oncothyreon’s President and Chief Executive Officer from September 2006 to January 2016. From 2005 to 2006, he was acting President and Chief Executive Officer of Xcyte Therapies, which concluded a merger with Cyclacel Pharmaceuticals, both development-stage biopharmaceutical companies, in March of 2006. From 2004 to 2005, Dr. Kirkman was Chief Business Officer and Vice President of Xcyte. From 1998 to 2003, Dr. Kirkman was Vice President, Business Development and Corporate Communications of Protein Design Labs, a biopharmaceutical company. Dr. Kirkman holds a M.D. degree from Harvard Medical School and a B.A. in economics from Yale University.
Audit Committee
The Board has established an audit committee currently comprised of Luke Beshar (Chair), Dr. Henry Friesen and Dr. Robert Kirkman. Each member of the audit committee is (a) an “Independent Director,” as defined in NASDAQ Rule 5605(a)(2), and (b) “independent” within the meaning of Rule 10A-3 under the United States Securities Exchange Act of 1934, as amended, or the Exchange Act, and the determination of independence will be affirmatively made by our Board annually, provided that our Board may elect to take advantage of any exemption from such requirements provided in the rules of NASDAQ or the Exchange Act. In addition, each member of the audit committee is an independent and non-executive directors of the Corporation and meet the independence and financial literacy requirements of NI 52-110.
For further information regarding the audit committee, see the Corporation’s Annual Information Form for the financial year ended December 31, 2015, or the AIF, which is incorporated by reference into, and forms an integral part of, this Circular. The AIF is available on SEDAR atwww.sedar.com. The Corporation will, upon request at 2488 Dunwin Drive, Mississauga, Ontario L5L 1J9, Attention: Chief Financial Officer, promptly provide a copy of the AIF free of charge to any securityholder of the Corporation.
Other Committees
We may establish special committees from time to time to deal with specific matters.
Assessments
The Board has developed a formal questionnaire to be completed by each director on an annual basis for the purpose of formally assessing the effectiveness of the Board as a whole, committees of the Board, and the contribution of individual directors. These questionnaires, and the issues arising therefrom, are intended to be reviewed and assessed by the chair on an annual basis or more frequently from time to time as the need arises.
The chair takes appropriate action as required based on the results obtained.
Director Tenure
Each of the persons elected as a director at the Meeting will serve until the close of our next annual meeting or until his or her successor is elected or appointed. The Board has not adopted a term limit for directors. The Board believes that the imposition of director term limits on a Board may discount the value of experience and continuity amongst Board members and runs the risk of excluding experienced and potentially valuable Board members. The Board relies on an annual director assessment procedure in evaluating Board members and believes that it can best strike the right balance between continuity and fresh perspectives without mandated term limits.
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Diversity
The corporate governance and nominating committee encourages diversity in the composition of the Board and requires periodic review of the composition of the Board as a whole to recommend, if necessary, measures to be taken so that the Board reflects the appropriate balance of diversity, knowledge, experience, skills and expertise required for the Board as a whole. Accordingly, while the Board has not adopted a written policy nor targets relating to the identification and nomination of women directors, the Board does take into consideration a nominee’s potential to contribute to diversity within the Board. Given that diversity is part of determining the overall balance, which includes gender, the Board has not adopted a gender specific policy target. The Board is actively seeking to propose a female nominee for the next Board vacancy, provided that such nominee meets our needs in relation to her attributes and skills.
Consistent with our approach to diversity at the Board level, our hiring practices include consideration of diversity across a number of areas, including gender. Of our 23 employees (excluding the executive team) as of December 31, 2015, 19 employees (or 83%) are women. As of December 31, 2015, one of the five (or 20%) of our executive officer positions are held by women. We do not have a target number of women executive officers. Given the small size of our executive team, we believe that implementing targets would not be appropriate. However, in our hiring practices, we consider the level of representation of women in executive officer positions.
ADDITIONAL INFORMATION
Additional information relating to us can be found on SEDAR at www.sedar.com. Financial information is provided in our audited consolidated financial statements for the year ended December 31, 2015 and the related Management’s Discussion and Analysis, or MD&A. Each of these documents is available on SEDAR at www.sedar.com and incorporated herein by reference.
Copies of these consolidated financial statements and MD&A may be obtained (in some cases upon payment of a reasonable charge if the request is made by a person or company that is not a securityholder of ours) upon written request to James Parsons, Chief Financial Officer, at: Trillium Therapeutics Inc., 2488 Dunwin Drive, Mississauga, Ontario L5L 1J9.
DIRECTORS’ APPROVAL
The contents and the sending of this Circular have been approved by the directors. DATED the 15th day of April, 2016.
SCHEDULE “A” -
2016 STOCK OPTION PLAN
TRILLIUM THERAPEUTICS INC.
STOCK OPTION PLAN
Amended and Restated
as of March 22, 2016
1. | Purpose of Plan |
The purpose of the Trillium Therapeutics Inc. (the “Corporation”) Stock Option Plan (the “Plan”) is to assist the Corporation in attracting, retaining and motivating directors, officers, consultants and employees of the Corporation and its subsidiaries and to closely align the personal interests of such directors, officers, employees and consultants with those of the shareholders of the Corporation by providing them with the opportunity, through options (“Options”), to acquire common shares (“Common Shares”) in the capital of the Corporation.
2. | Administration |
The Plan shall be administered by the Board of Directors of the Corporation which shall have full and final authority and discretion, subject to the express provisions of the Plan, to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it and to make all other determinations deemed necessary or advisable for the administration of the Plan, subject to the rules and policies of any exchange or quotation system upon which the Corporation’s Common Shares are listed or quoted including the Toronto Stock Exchange (“TSX”) and the NASDAQ Stock Market (the “Exchange Rules”). The Board of Directors may delegate any or all of its authority and discretion with respect to the administration of the Plan to the committee of the Board of Directors to which responsibility for executive compensation is delegated and when used hereafter in the Plan, “Board of Directors” shall be deemed to include such committee.
3. | Number of Shares Under Plan |
The number of authorized but unissued Common Shares that may be issued upon the exercise of Options granted under the Plan at any time, plus the number of Common Shares reserved for issuance under outstanding Options otherwise granted by the Corporation (collectively, the “Optioned Shares”) shall not exceed 1,894,501 Common Shares.
Any exercise of Options will not make new grants available under the Plan. However, if Options granted to an individual under the Plan in respect of certain Optioned Shares expire or terminate for any reason with or without having been exercised, such Optioned Shares may be made available for other Options to be granted under the Plan.
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The following additional restrictions apply:
(i) | in no event shall Options be granted to an individual to purchase in excess of 5% of the total of the number of then issued and outstanding Common Shares and the number of Common Shares issuable upon due conversion of the issued and outstanding Preferred Shares of the Corporation in any 12 month period; and | |
(ii) | the aggregate number of Common Shares issued to “reporting insiders” (as such term is defined in National Instrument 55-104 -Insider Reporting Requirements and Exemptions) under the Plan or any other security-based compensation arrangement of the Corporation and its affiliates (“Security Based Compensation Arrangement”) within a one-year period, may not exceed 10% of the total combined number of issued and outstanding Common Shares and the number of Common Shares issuable upon due conversion of the issued and outstanding Preferred Shares |
4. | Eligibility |
Options may be granted under the Plan to such directors, officers, employees of, or consultants to, the Corporation or its subsidiaries as the Board of Directors may from time to time designate as participants (the “Participants”) under the Plan. Subject to the provisions of the Plan, the total number of Optioned Shares to be made available under the Plan and to each Participant, the time or times and price or prices at which Options shall be granted, the time or times at which such Options are exercisable and any conditions or restrictions on the exercise of Options shall be in the full and final discretion of the Board of Directors.
No Options shall be granted to any Participant that is a non-employee director if such grant could result, at any time, in (i) the aggregate number of Common Shares issuable to non-employee directors under the Plan, or any other Security-Based Compensation Arrangement, exceeding 1% of the issued and outstanding Common Shares and the number of Common Shares issuable upon due conversion of the issued and outstanding Preferred Shares; or (ii) an annual grant per non-employee director exceeding $100,000 worth of Options.
Notwithstanding the expiration date applicable to any Option, if an Option would otherwise expire during or immediately after a Black-out Period, then the expiration date of such Option shall be the tenth business day following the expiration of the Black-out Period. Where used herein, “Black-out Period” means the period during which the Corporation has imposed trading restrictions on its Insiders and certain other persons pursuant to its insider trading and disclosure policies.
5. | Terms and Conditions |
All Options under the Plan shall be granted upon and subject to the terms and conditions hereinafter set forth.
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(a) | Exercise Price |
The exercise price payable in respect of each Optioned Share may not be lower than the closing trading price of the Common Shares on the TSX or the NASDAQ Stock Market, as specified by the committee in the Option award (the “Exchange”) on the trading day immediately preceding the date of grant.
(b) | Option Agreement |
All Options granted under the Plan shall be evidenced by means of an agreement (the “Option Agreement”) between the Corporation and each Participant in a form as may be approved by the Board of Directors, such approval to be conclusively evidenced by the execution of the Option Agreement by any senior officer or director of the Corporation other than the Participant. The Corporation shall represent in each Option Agreement that the Participant is a bona fide director, officer, or employee of, or consultant to, the Corporation.
(c) | Length of Grant and Vesting |
Subject to Section 4, each Option granted under the Plan shall expire not later than the 10th anniversary of the date such Option was granted and may be exercised by the Participant subject to such vesting (if any), during the term thereof as the Board of Directors shall determine (“Option Period”).
(d) | Non-Assignability of Options |
An Option granted under the Plan shall not be transferable or assignable (whether absolutely or by way of mortgage, pledge or other charge) by a Participant other than to “permitted assigns” as such term is defined in National Instrument 45-106 -Prospectus and Registration Exemptions or by will or other testamentary instrument or the laws of succession and may be exercisable during the lifetime of the Participant only by such Participant.
(e) | Right to Postpone Exercise |
Each Participant, upon becoming entitled to exercise an Option in respect of any Optioned Shares in accordance with an Option Agreement, shall thereafter be entitled to exercise the Option to purchase such Optioned Shares at any time prior to the expiration or other termination of the Option Agreement or the Option rights granted thereunder in accordance with such agreement.
(f) | Exercise and Payment |
Any Option granted under the Plan may be exercised by a Participant or the legal representative of a Participant by giving notice to the Corporation specifying the number of Common Shares in respect of which such Option is being exercised, accompanied by payment (by cash or certified cheque payable to the Corporation) of the entire exercise price (determined in accordance with the Option Agreement) for the number of Common Shares specified in the notice. Upon any such exercise of an Option by a Participant, the Corporation shall promptly deliver to such Participant or the legal representative of such Participant, as the case may be, a share certificate in the name of such Participant or the legal representative of such Participant, as the case may be, representing the number of Common Shares specified in the notice.
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If the Corporation is required under theIncome Tax Act (Canada) or any other applicable law to remit to any governmental authority an amount on account of tax on the value of any taxable benefit associated with the exercise or disposition of Options by a Participant, then the Participant shall, concurrently with the exercise or disposition:
(i) | pay to the Corporation, in addition to the exercise price for the Options, if applicable, sufficient cash as is determined by the Corporation to be the amount necessary to fund the required tax remittance; | |
(ii) | where the Corporation so agrees, authorize the Corporation, on behalf of the Participant, to sell in the market on such terms and at such time or times as the Corporation determines such portion of the Common Shares being issued upon exercise of the Options as is required to realize cash proceeds in the amount necessary to fund the required tax remittance; or | |
(iii) | make other arrangements acceptable to the Corporation to fund the required tax remittance. |
(g) | Rights of Participants |
The Participants shall have no rights whatsoever as shareholders in respect of any of the Optioned Shares (including, without limitation, any right to receive dividends or other distributions therefrom, voting rights, warrants or rights under any rights offering) other than in respect of Optioned Shares for which Participants have exercised their Option to purchase and which have been issued by the Corporation.
(h) | Change of Control |
The term “Change of Control” shall mean any one or a combination of:
(i) | any transaction at any time and by whatever means pursuant to which (A) the Corporation goes out of existence by any means, except for any corporate transaction or reorganization in which the proportionate voting power among holders of securities of the entity resulting from such corporate transaction or reorganization is substantially the same as the proportionate voting power of such holders of Corporation voting securities immediately prior to such corporate transaction or reorganization or (B) any Person or any group of two or more Persons acting jointly or in concert (other than the Corporation, a wholly-owned Subsidiary (as defined in the Securities Act (Ontario)) of the Corporation, an employee benefit plan of the Corporation or of any of its wholly-owned Subsidiaries, including the trustee of any such plan acting as trustee) hereafter acquires the direct or indirect “beneficial ownership” (as defined by the Business Corporations Act (Ontario)) of, or acquires the right to exercise control or direction over, securities of the Corporation representing 50% or more of the Corporation’s then issued and outstanding securities in any manner whatsoever, including, without limitation, as a result of a take-over bid, an exchange of securities, an amalgamation of the Corporation with any other entity, an arrangement, a capital reorganization or any other business combination or reorganization; |
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(ii) | the sale, assignment or other transfer of all or substantially all of the assets of the Corporation to a Person other than a wholly-owned Subsidiary of the Corporation; | |
(iii) | the dissolution or liquidation of the Corporation except in connection with the distribution of assets of the Corporation to one or more Persons which were wholly-owned Subsidiaries of the Corporation immediately prior to such event; | |
(iv) | the occurrence of a transaction requiring approval of the Corporation’s shareholders whereby the Corporation is acquired through consolidation, merger, exchange of securities, purchase of assets, amalgamation, arrangement or otherwise by any Person other than a wholly-owned Subsidiary of the Corporation (and other than a short form amalgamation or exchange of securities with a wholly-owned Subsidiary of the Corporation); or | |
(v) | the Board of Directors passes a resolution to the effect that, for the purposes of some or all of the Option Agreements, an event set forth in (i), (ii), (iii) or (iv) above has occurred. |
Notwithstanding any other provision of the Plan, in the event of a Change of Control, any surviving, successor or acquiring entity will assume any outstanding Options or will substitute similar awards for the outstanding Options. If the surviving, successor or acquiring entity does not assume the outstanding Options or substitute similar awards for the outstanding Options, or if the Board of Directors otherwise determines in its sole discretion, the Corporation will give written notice to all Participants advising that the Plan will be terminated effective immediately prior to the Change of Control and all Options will be deemed to be vested Options and may make provision for the exercise of Options and tender of Common Shares in connection with the Change of Control and may otherwise make provision for the cash out or termination of Options that are not exercised within a specified period of time.
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(i) | Alterations in Shares |
In the event of a share dividend, share split, issuance of Common Shares or instruments convertible into Common Shares (other than pursuant to the Plan) for less than market value, share consolidation, share reclassification, exchange of Common Shares, recapitalization, amalgamation, merger, consolidation, corporate continuance, reorganization, liquidation or the like of or by the Corporation, the Board of Directors may make such adjustment, if any, of the number of Optioned Shares, or of the exercise price, or both, as it shall deem appropriate to give proper effect to such event, including to prevent, to the extent possible, substantial dilution or enlargement of rights granted to Participants under the Plan. In any such event, the maximum number of Common Shares available under the Plan may be appropriately adjusted by the Board of Directors.
Subject to Section 5(h) (in respect of a Change of Control), if because of a proposed merger, amalgamation or other corporate continuance or reorganization, the exchange or replacement of Common Shares in the Corporation for those in another corporation is imminent, the Board of Directors may, in a fair and equitable manner, determine the manner in which all unexercised Option rights granted under the Plan shall be treated including, for example, the time for the fulfilment of any conditions or restrictions on such exercise. All determinations of the Board of Directors under this paragraph (j) shall be full and final,
(j) | Termination for Cause |
If a Participant is dismissed as a director, officer or employee of, or consultant to, the Corporation or one of its subsidiaries for cause (as such term is interpreted by the courts of Ontario from time to time, “Cause”), all unexercised Option rights of that Participant under the Plan shall immediately become terminated and shall lapse notwithstanding the original term of the Option granted to such Participant under the Plan.
(k) | Retirement, Resignation or Termination without Cause |
Subject to earlier termination pursuant to Section 5(j) above, if a Participant ceases to be a director, officer or employee of, or consultant to, the Corporation or of one of its subsidiaries as a result of:
(i) | retirement at the normal retirement age prescribed by the Corporation pension plan, if any; | |
(ii) | resignation; or | |
(iii) | termination without Cause; |
such Participant shall have the right until the earlier of: (i) 120 days (or such other longer period as may be determined by the Board of Directors in its sole discretion or, if longer, the period specified in the Participant’s employment contract) following the Participant’s last day of active employment which shall not include any period of statutory or reasonable notice or any period of deemed employment or salary continuance (“Termination Date”) ; and (ii) the normal expiry date of the Option rights of such Participant, to exercise the Option under the Plan with respect to all Optioned Shares of such Participant to the extent that they were exercisable on the Termination Date. Upon the expiration of such period, all unexercised Option rights of that Participant shall immediately become terminated and shall lapse notwithstanding the original term of the Option granted to such Participant under the Plan.
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(l) | Disabled Participant |
If a Participant ceases to be a director, officer or employee of, or consultant to, the Corporation or of one of its subsidiaries as a result of disability or illness preventing the Participant from performing the duties routinely performed by such Participant, such Participant shall have the right until the earlier of: (i) 180 days following the Termination Date; and (ii) the normal expiry date of the Option rights of such Participant, to exercise the Option under the Plan with respect to all Optioned Shares of such Participant to the extent they were exercisable on the Termination Date. Upon the expiration of such 180 day period all unexercised Option rights of that Participant shall immediately become terminated and shall lapse notwithstanding the original term of the Option granted to such Participant under the Plan.
(m) | Deceased Participant |
In the event of the death of any Participant, the legal representatives of the deceased Participant shall have the right until the earlier of: (i) one year after the date of death of the Participant; and (ii) the normal expiry date of the Option rights of such Participant, to exercise the deceased Participant’s Option with respect to all of the Optioned Shares of the deceased Participant to the extent they were exercisable on the date of death. Upon the expiration of such period all unexercised Option rights of the deceased Participant shall immediately become terminated and shall lapse notwithstanding the original term of the Option granted to the deceased Participant under the Plan.
(n) | Termination without Cause Following a Change of Control |
Notwithstanding anything in the Plan to the contrary, if the employment of a Participant is terminated by the Corporation (or its successor, if applicable) without cause or if the Participant resigns in circumstances constituting constructive dismissal, in each case, within 24 months following a Change of Control all of the Participant’s Options, will vest immediately prior to the Termination Date. All vested Options may be exercised until the earlier of: (i) 120 days (or such other longer period as may be determined by the Board of Directors in its sole discretion) following the Termination Date ; or (ii)the normal expiry date of the Option rights of such Participant. Upon the expiration of such period, all unexercised Option rights of that Participant shall immediately become terminated and shall lapse notwithstanding the original term of the Option granted to such Participant under the Plan.
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6. | Amendment and Discontinuance of Plan |
The Board of Directors has the discretion to make amendments to this Plan and any Options granted hereunder which it may deem necessary, without having to obtain shareholder approval. Such changes include, without limitation:
(i) | minor changes of a “housekeeping” nature; | |
(ii) | amending Options under the Plan, including with respect to the Option Period (provided that the period during which an Option is exercisable does not exceed ten years from the date the Option is granted and does not deal with an extension of the Option Period)), vesting period, exercise method and frequency, and method of determining the exercise price, assignability and effect of termination of a Participant’s employment or cessation of the Participant’s directorship; | |
(iii) | changing the class of Participants eligible to participate under the Plan; | |
(iv) | changing the terms and conditions of any financial assistance which may be provided by the Company to Participants to facilitate the purchase of Common Shares under the Plan; and | |
(v) | adding a cashless exercise feature, payable in cash or securities, provided that a cashless exercise will result in a full deduction of the number of underlying Common Shares from the Plan reserve. |
Shareholder approval will be required in the case of: (i) any amendment to the amendment provisions of the Plan; (ii) any increase in the maximum number of Common Shares issuable under the Plan; (iii) amendments that may permit the introduction or re-introduction of non-employee directors on a discretionary basis or amendments that increase limits previously imposed on non-employee director participation; and (iv) any reduction in the exercise price or extension of the Option Period (other than as a result of a Blackout Period extension), in addition to such other matters that may require shareholder approval under the Exchange Rules.
7. | No Further Right |
Nothing contained in the Plan nor in any Option granted hereunder shall give any Participant or any other person any interest or title in or to any Common Shares of the Corporation or any rights as a shareholder of the Corporation or any other legal or equitable right against the Corporation whatsoever other than as set forth in the Plan and pursuant to the exercise of any Option, nor shall it confer upon the Participants any right to continue as an officer or employee of the Corporation or of its subsidiaries.
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8. | Compliance with Laws |
The obligations of the Corporation to sell Common Shares and deliver share certificates under the Plan are subject to such compliance by the Corporation and the Participants with all applicable corporate and securities laws and Exchange Rules as the Corporation deems necessary or advisable.
SCHEDULE “B” -
BLACKLINE COMPARISON
2016 STOCK OPTION PLAN V. 2014 STOCK OPTION PLAN
TRILLIUM THERAPEUTICS INC.(formerly, Stem Cell Therapeutics Corp.)
STOCK OPTION PLAN
Amended and Restatedon May 27, 2014as of March 22, 2016
1. | Definitions |
Unless otherwise defined herein or the context otherwise requires, capitalized terms usedhave the meaning ascribed to them in theToronto Stock Exchange (“TSX”)Company Manual.
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The purpose of the Trillium Therapeutics Inc. (the “Corporation”) Stock Option Plan (the “Plan”) is to assist the Corporation in attracting, retaining and motivating directors, officers,service providers (the term “service provider” having the definition ascribed thereto in the TSXCompany Manual)consultantsand employees of the Corporation and its subsidiaries and to closely align the personal interests of such directors, officers, employees andserviceprovidersconsultants with those of the shareholders of the Corporation by providing them with the opportunity, through options (“Options”), to acquire common shares (“Common Shares”) in the capital of the Corporation.
2. |
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The Plan shall be administered by the Board of Directors of the Corporation which shall have full and final authority and discretion, subject to the express provisions of the Plan, to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it and to make all other determinations deemed necessary or advisable for the administration of the Plan, subject to the rules and policies of any exchange or quotation system upon which the Corporation’s Common Shares are listed or quoted including theTSXToronto Stock Exchange (“TSX”)andthe NASDAQ Stock Market (the “Exchange Rules”). The Board of Directors may delegate any or all of its authority and discretion with respect to the administration of the Plan toathecommittee of the Board of Directors to which responsibility for executive compensationcommittee of directors. Whenis delegated and when used hereafter in the Plan, “Board of Directors” shall be deemed to includethe compensationsuchcommittee acting on behalf of theBoard of Directors.
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The number of authorized but unissued Common Shares that may be issued upon the exercise of Options granted under the Plan at any time, plus the number of Common Shares reserved for issuance under outstanding Options otherwise granted by the Corporation (collectively, the “Optioned Shares”) shall not exceedten percent of the combined total of theissued and outstanding Common Shares and the number of Common Shares issuable upon dueexercise of the issued and outstanding Preferred Shares, and the number of Optioned Sharesreserved for issuance under the Plan shall increase or decrease as the number of issued andoutstanding Common Shares and Preferred Shares changes.1,894,501 Common Shares.
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Any exercise of Options willnotmake new grants available under the Plan. However,theif Options granted to an individual under the Plan in respect of certain Optioned Shares expireor terminate for any reason with or without having been exercised, such Optioned Shares may bemade available for other Options to be granted under the Plan.
The following additional restrictions apply:
(i) |
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(b) |
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(ii) |
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(d) |
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4. |
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Options may be granted under the Plan to such directors, officers, employees of, orservice providersconsultants to, the Corporation or its subsidiaries as the Board of Directors may from time to time designate as participants (the “Participants”) under the Plan. Subject to the provisions of the Plan, the total number of Optioned Shares to be made available under the Plan and to each Participant, the time or times and price or prices at which Options shall be granted, the time or times at which such Options are exercisable and any conditions or restrictions on the exercise of Options shall be in the full and final discretion of the Board of Directors.
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No Options shall be granted to any Participant that is a non-employee director if suchgrant could result, at any time, in (i)the aggregate number of Common Sharesissuable to non-employee directors under the Plan, or any otherSecurity-Based CompensationArrangement,exceeding 1% of the issued and outstanding Common Shares and the number of Common Sharesissuable upon due conversion of the issued and outstanding Preferred Shares; or (ii) an annualgrant per non-employee director exceeding $100,000 worth of Options.
Notwithstanding the expiration date applicable to any Option, if an Option would otherwise expire during or immediately after a Black-out Period, then the expiration date of such Option shall be the tenth business day following the expiration of the Black-out Period, providedthat in no event shall the period during which said Option is exercisable be extended beyond 10years from the date such Option is granted to the Participant. Where used herein, “Black-out Period” means the period during which the Corporation has imposed trading restrictions on its Insiders and certain other persons pursuant to its insider trading and disclosure policies.
5. |
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All Options under the Plan shall be granted upon and subject to the terms and conditions hereinafter set forth.
(a) | Exercise Price | |
The exercise price payable in respect of each Optioned Share may not be lower than the | ||
(b) | Option Agreement | |
All Options granted under the Plan shall be evidenced by means of an agreement (the “Option Agreement”) between the Corporation and each Participant in a form as may be approved by the Board of Directors, such approval to be conclusively evidenced by the execution of the Option Agreement by any senior officer or director of the Corporation other than the Participant. The Corporation shall represent in each Option Agreement that the Participant is a bona fide director, officer, or employee of, or |
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(c) | Length of Grant and Vesting | |
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(d) | Non-Assignability of Options | |
An Option granted under the Plan shall not be transferable or assignable (whether absolutely or by way of mortgage, pledge or other charge) by a Participant other than to | ||
(e) | Right to Postpone Exercise | |
Each Participant, upon becoming entitled to exercise an Option in respect of any Optioned Shares in accordance with an Option Agreement, shall thereafter be entitled to exercise the Option to purchase such Optioned Shares at any time prior to the expiration or other termination of the Option Agreement or the Option rights granted thereunder in accordance with such agreement. | ||
(f) | Exercise and Payment | |
Any Option granted under the Plan may be exercised by a Participant or the legal representative of a Participant by giving notice to the Corporation specifying the number of Common Shares in respect of which such Option is being exercised, accompanied by payment (by cash or certified cheque payable to the Corporation) of the entire exercise price (determined in accordance with the Option Agreement) for the number of Common Shares specified in the notice. Upon any such exercise of an Option by a Participant, the Corporation shall promptly deliver to such Participant or the legal representative of such Participant, as the case may be, a share certificate in the name of such Participant or the legal representative of such Participant, as the case may be, representing the number of Common Shares specified in the notice. | ||
If the Corporation is required under theIncome Tax Act(Canada) or any other applicable law to remit to any governmental authority an amount on account of tax on the value of any taxable benefit associated with the exercise or disposition of Options by a Participant, then the Participant shall, concurrently with the exercise or disposition: |
(i) | pay to the Corporation, in addition to the exercise price for the Options, if applicable, sufficient cash as is determined by the Corporation to be the amount necessary to fund the required tax remittance; |
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(ii) | where the Corporation so agrees, authorize the Corporation, on behalf of the Participant, to sell in the market on such terms and at such time or times as the Corporation determines such portion of the Common Shares being issued upon exercise of the Options as is required to realize cash proceeds in the amount necessary to fund the required tax remittance; or | |
(iii) | make other arrangements acceptable to the Corporation to fund the required tax remittance. |
(g) | Rights of Participants | |
The Participants shall have no rights whatsoever as shareholders in respect of any of the Optioned Shares (including, without limitation, any right to receive dividends or other distributions therefrom, voting rights, warrants or rights under any rights offering) other than in respect of Optioned Shares for which Participants have exercised their Option to purchase and which have been issued by the Corporation. | ||
(h) | Change of Control | |
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(i) | any transaction at any time and by whatever means pursuant to which (A) the Corporation goes out of existence by any means, except for any corporate transaction or reorganization in which the proportionate voting power among holders of securities of the entity resulting from such corporate transaction or reorganization is substantially the same as the proportionate voting power of such holders of Corporation voting securities immediately prior to such corporate transaction or reorganization or (B) any Person or any group of two or more Persons acting jointly or in concert (other than the Corporation, a wholly-owned Subsidiary (as defined in theSecurities Act(Ontario)) of the Corporation, an employee benefit plan of the Corporation or of any of its wholly-owned Subsidiaries, including the trustee of any such plan acting as trustee) hereafter acquires the direct or indirect “beneficial ownership” (as defined by theBusiness Corporations Act(Ontario)) of, or acquires the right to exercise control or direction over, securities of the Corporation representing 50% or more of the Corporation’s then issued and outstanding securities in any manner whatsoever, including, without limitation, as a result of a take-over bid, an exchange of securities, an amalgamation of the Corporation with any other entity, an arrangement, a capital reorganization or any other business combination or reorganization; |
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(ii) | the sale, assignment or other transfer of all or substantially all of the assets of the Corporation to a Person other than a wholly-owned Subsidiary of the Corporation; | |
(iii) | the dissolution or liquidation of the Corporation except in connection with the distribution of assets of the Corporation to one or more Persons which were wholly-owned Subsidiaries of the Corporation immediately prior to such event; | |
(iv) | the occurrence of a transaction requiring approval of the Corporation’s shareholders whereby the Corporation is acquired through consolidation, merger, exchange of securities, purchase of assets, amalgamation, arrangement or otherwise by any | |
(v) | the Boardof Directorspasses a resolution to the effect that, for the purposes of some or all of the Option Agreements, an event set forth in (i), (ii), (iii) or (iv) above has occurred. |
Notwithstanding any other provision of the Plan, in the event of a Change ofControl, any surviving, successor or acquiring entity will assume any outstandingOptions or will substitute similar awards for the outstanding Options. If thesurviving, successor or acquiring entity does not assume the outstanding Optionsor substitute similar awards for the outstanding Options, or if the Board ofDirectors otherwise determines in its sole discretion, the Corporation will givewritten notice to all Participants advising that the Plan will be terminated effectiveimmediately prior to the Change of Control and all Options will be deemed to bevested Options and may make provision for the exercise of Options and tender ofCommon Shares in connection with the Change of Control and may otherwisemake provision for the cash out or termination of Options that are not exercisedwithin a specified period of time.
(i) | Alterations in Shares | |
In the event of a share dividend, share split, issuance of Common Shares or instruments convertible into Common Shares (other than pursuant to the Plan) for less than market value, share consolidation, share reclassification, exchange of Common Shares, recapitalization, amalgamation, merger, consolidation, corporate continuance, reorganization, liquidation or the like of or by the Corporation, the Board of Directors may make such adjustment, if any, of the number of Optioned Shares, or of the exercise price, or both, as it shall deem appropriate to give proper effect to such event, including to prevent, to the extent possible, substantial dilution or enlargement of rights granted to Participants under the Plan. In any such event, the maximum number of Common Shares available under the Plan may be appropriately adjusted by the Board of Directors. |
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(j) | Termination for Cause | |
If a Participant is dismissed as a director, officer or employee of, or | ||
(k) | Retirement, Resignation or Terminationwithout Cause | |
Subject to earlier termination pursuant to Section |
(i) | retirement at the normal retirement age prescribed by the Corporation pension plan, if any; | |
(ii) | resignation; or | |
(iii) | terminationwithout Cause; |
such Participant shall have the rightfor a perioduntil the earlier of: (i) 120 daysfrom the date of ceasing to be a director, officer, employee or service provider(orsuch other longer period as may be determined by the Board of Directors in itssole discretion or, if longer, the period specified in the Participant’s employmentcontract) following the Participant’s last day of active employment which shallnot include any period of statutory or reasonable notice or any period of deemedemployment or salary continuance (“Termination Date”) ; and (ii)the normalexpiry date of the Option rights of such Participant, to exercise the Option under the Plan with respect to all Optioned Shares of such Participant to the extentthat they were exercisable on thedate of ceasing to hold any such position with theCorporation, or untilthe normal expiry date of the Option rights of suchParticipant, whichever is earlierTermination Date. Upon the expiration of such period, all unexercised Option rights of that Participant shall immediately become terminated and shall lapse notwithstanding the original term of the Option granted to such Participant under the Plan.
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(l) | Disabled Participant | |
If a Participant ceases to be a director, officer or employee of, or | ||
(m) | Deceased Participant | |
In the event of the death of any Participant, the legal representatives of the deceased Participant shall have the right | ||
(n) | Termination without Cause Following a Change of Control | |
Notwithstanding anything in the Plan to the contrary, if the employment of a Participant is terminated by the Corporation (or its successor, if applicable) without cause or if the Participant resigns in circumstances constituting constructive dismissal, in each case, within 24 months following a Change of Control all of the Participant’s Options, will vest immediately prior to the Termination Date. All vested Options may be exercised until the earlier of: (i) 120 days (or such other longer period as may be determined by the Board of Directors in its sole discretion) following the Termination Date ; or (ii)the normal expiry date of the Option rights of such Participant. Upon the expiration of such period, all unexercised Option rights of that Participant shall immediately become terminated and shall lapse notwithstanding the original term of the Option granted to such Participant under the Plan. |
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6. |
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The Board of Directors has the discretion to make amendments to this Plan and any Options granted hereunder which it may deem necessary, without having to obtain shareholder approval. Such changes include, without limitation:
(i) | minor changes of a “housekeeping” nature; | |
(ii) | amending Options under the Plan, including with respect to the Option Period (provided that the period during which an Option is exercisable does not exceed ten years from the date the Option is granted and | |
(iii) | changing the class of Participants eligible to participate under the Plan; | |
(iv) | changing the terms and conditions of any financial assistance which may be provided by the Company to Participants to facilitate the purchase of Common Shares under the Plan; and | |
(v) | adding a cashless exercise feature, payable in cash or securities, |
Shareholder approval will be required in the case of: (i) any amendment to the amendment provisions of the Plan; (ii) any increase in the maximum number of Common Shares issuable under the Plan;and(iii)amendments that may permit the introduction or re-introductionof non-employee directors on a discretionary basis or amendments that increase limits previouslyimposed on non-employee director participation; and (iv)any reduction in the exercise price or extension of the Option Periodbenefiting an Insider Participant(other than as a result of aBlackout Period extension), in addition to such other matters that may require shareholder approval under therules and policies of the TSXExchange Rules.
7. |
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Nothing contained in the Plan nor in any Option granted hereunder shall give any Participant or any other person any interest or title in or to any Common Shares of the Corporation or any rights as a shareholder of the Corporation or any other legal or equitable right against the Corporation whatsoever other than as set forth in the Plan and pursuant to the exercise of any Option, nor shall it confer upon the Participants any right to continue as an officer or employee of the Corporation or of its subsidiaries.
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8. |
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The obligations of the Corporation to sell Common Shares and deliver share certificates under the Plan are subject to such compliance by the Corporation and the Participants with all applicable corporate and securities lawsand Exchange Rulesas the Corporation deems necessary or advisable.
SCHEDULE “C” -
BY-LAW AMENDMENT
Trillium Therapeutics Inc.
(the “Corporation”)
Proposed Amendment to By-Law No. 1
Relating to Advance Notice of Nomination for Election of Directors
By-Law No. 1 of the Corporation is hereby amended by adding thereto, the following Section 4.20, following Section 4.19 of By-Law No. 1:
4.20 Nomination of Directors -
(a) | Subject to the provisions of the Act, the articles and Applicable Securities Laws (as defined below), only persons who are nominated in accordance with the procedures set out in this Section 4.20 shall be eligible for election as directors of the Corporation. Nominations of an individual for election to the Board may only be made at any annual general meeting of shareholders, or at any special meeting of shareholders if one of the purposes for which such meeting was called is the election of directors of the Corporation, as follows: |
(i) | by or at the direction of the Board or an authorized officer of the Corporation, including pursuant to a notice of meeting; | |
(ii) | by or at the direction or request of one or more shareholders pursuant to a proposal made in accordance with the provisions of the Act or a requisition to call a meeting of shareholders made in accordance with the provisions of the Act; or | |
(iii) | by any person (a “Nominating Shareholder”) who, (A) at the close of business on the date of the giving of the notice provided for below in this Section 4.20 and on the record date for notice of such meeting, is entered in the securities register of the Corporation as a holder of one or more shares carrying the right to vote at such meeting or who beneficially owns shares that are entitled to be voted at such meeting, and (B) complies with the notice procedures set forth below in this Section 4.20. |
(b) | In addition to any other applicable requirements, for a nomination to be made by a Nominating Shareholder, the Nominating Shareholder must have given timely notice thereof in proper written form to the Chief Financial Officer of the Corporation at the registered office of the Corporation in accordance with this Section 4.20. | |
(c) | To be timely, a Nominating Shareholder’s notice to the Chief Financial Officer of the Corporation must be made: |
(i) | in the case of an annual general meeting of shareholders, not less than 30 days prior to the date of the annual general meeting of shareholders; provided, however, that in the event that the annual general meeting of shareholders is to be held on a date that is less than 50 days after the date on which the initial Public Announcement (as defined below) of the date of the annual general meeting of shareholders was made, notice by the Nominating Shareholder may be made not later than the close of business on the 10thday following such Public Announcement; | |
(ii) | in the case of a special meeting of shareholders that is not also an annual general meeting but is called for the purpose of electing directors of the Corporation (whether or not called for other purposes), not later than the close of business on the 15thday following the day on which the initial Public Announcement of the special meeting of shareholders was made; and |
(iii) | notwithstanding the foregoing, in the case of an annual general or special meeting of shareholders where “notice-and-access” is used for the delivery of proxy-related materials, not less than 40 days prior to the date of such meeting. |
(d) | To be in proper written form, a Nominating Shareholder’s notice to the Chief Financial Officer of the Corporation must set forth: |
(i) | as to each individual whom the Nominating Shareholder proposes to nominate for election as a director: |
A. | his or her name, age, business address and residence address, and status as a “resident Canadian” (as such term is defined in the Act); | |
B. | his or her principal occupation or employment for the past five years; | |
C. | the class or series and number of shares in the capital of the Corporation which are owned beneficially, or which are controlled or over which direction is exercised, directly or indirectly, or of record by him or her, as of the record date for the meeting of shareholders (if such date shall then have been made publicly available by the Corporation and shall have occurred) and as of the date of such notice; | |
D. | a statement as to whether he or she would be “independent” of the Corporation (within the meaning of Sections 1.4 and 1.5 of National Instrument 52-110 -Audit Committees of the Canadian Securities Administrators, as such provisions may be amended from time to time) if elected as a director of the Corporation at such meeting and the reasons and basis for such determination; and | |
E. | any other information relating to him or her that would be required to be disclosed in a dissident's proxy circular in connection with solicitations of proxies for election of directors pursuant to the Act and Applicable Securities Laws; and |
(ii) | as to the Nominating Shareholder giving the notice: |
A. | the name and address of the Nominating Shareholder; | |
B. | the class or series and number of shares in the capital of the Corporation which are owned beneficially, or which are controlled or over which direction is exercised, directly or indirectly, or of record by the Nominating Shareholder or its affiliates and associates and any person acting jointly or in concert with the forgoing (“Joint Actors”) as of the record date for the meeting of shareholders (if such date shall then have been made publicly available by the Corporation and shall have occurred) and as of the date of such notice; | |
C. | full particulars of any proxy, contract, arrangement, understanding or relationship pursuant to which such Nominating Shareholder or any Joint Actor has the right to vote any shares in the capital of the Corporation; | |
D. | full particulars of any derivatives, hedges or other economic or voting interests relating to the Nominating Shareholder’s interest in the securities of the Corporation; and | |
E. | any other information relating to such Nominating Shareholder or its Joint Actors that would be required to be made in a dissident's proxy circular in connection with solicitations of proxies for election of directors pursuant to the Act and Applicable Securities Laws. |
In addition, to be considered timely and in proper written form, a Nominating Shareholder’s notice shall be promptly updated and supplemented, if necessary, so that information provided or required to be provided in such notice shall be true and correct as of the record date for the meeting.
(e) | The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable shareholder's understanding of the independence, or lack thereof, of such proposed nominee. | |
(f) | No individual shall be eligible for election as a director of the Corporation unless nominated in accordance with the provisions of this Section 4.20; provided, however, that nothing in this Section 4.20 shall be deemed to preclude discussions by a shareholder of the Corporation (as distinct from the nomination of directors) at a meeting of shareholders of any matter that is properly before such meeting pursuant to the provisions of the Act or the discretion of the chairman of the meeting. The chairman of the meeting shall have the power and duty to determine whether a nomination was made in accordance with the procedures set forth in the foregoing provisions and, if any proposed nomination is not determined to be in compliance with such foregoing provisions, to declare that such defective nomination shall be disregarded. |
(g) | For purposes of this Section 14.20: |
(i) | “Applicable Securities Laws” means the applicable securities legislation of each relevant province and territory of Canada, as amended from time to time, the rules, regulations and forms made or promulgated under any such statute and the published national instruments, multilateral instruments, policies, statements, bulletins and notices of the securities commission and similar regulatory authority of each province and territory of Canada; and | |
(ii) | “Public Announcement” shall mean disclosure in a press release reported by a national news service in Canada, or in a document publicly filed by the Corporation under its profile on the System of Electronic Document Analysis and Retrieval atwww.sedar.com. |
References to “Nominating Shareholder” shall be deemed to refer to each shareholder that nominates a person for election as director of the Corporation in the case of a nomination proposal where more than one shareholder is involved in making such nomination proposal.
(h) | Notwithstanding any other provision of the by-laws, notice given to the Chief Financial Officer of the Corporation pursuant to this Section 4.20 may only be given by personal delivery, by email (at such email address as may be stipulated from time to time by the Chief Financial Officer of the Corporation for this notice) or by facsimile transmission, and shall be deemed to have been given and made only at the time it is served by personal delivery to the Chief Financial Officer at the address of the registered office of the Corporation, or by email (at the address as aforesaid) or sent by facsimile transmission (provided that receipt of confirmation of such transmission has been received) provided, that if such delivery, electronic communication or transmission is made on a day which is not a business day or later than 5:00 p.m. (Toronto time) on a day which is a business day, then such delivery, electronic communication or transmission shall be deemed to have been made on the subsequent day that is a business day. | |
(i) | Notwithstanding the foregoing, the Board may, in its sole discretion, waive any requirement in this Section 4.20. |