Filed pursuant to Rule 424(b)(3)
Registration No. 333-226239
PROSPECTUS SUPPLEMENT NO. 29
(To Prospectus
dated August 8, 2018)
INTELLIPHARMACEUTICS INTERNATIONAL INC.
Common Shares
This Prospectus
Supplement No. 29 (this
“
Prospectus Supplement
”
) amends and supplements our
Prospectus dated August 8, 2018, as previously supplemented (the
“
Prospectus
”
), which form a part of our
Registration Statement (our
“
Registration Statement
”
) on Form F-1 (Registration No.
333-226239). This Prospectus Supplement is being filed to update,
amend and supplement the information included or incorporated by
reference in the Prospectus with the information contained in this
Prospectus Supplement. The Prospectus and this Prospectus
Supplement relate to the resale, from time to time, of up to
6,858,334 common shares by certain of our shareholders identified
in the Prospectus.
This Prospectus
Supplement includes certain information from our Report on Form
6-K, which was filed with the Securities and Exchange Commission on
May 28, 2019. Such information from the Report, as filed, is set
forth below.
This Prospectus
Supplement should be read in conjunction with the Prospectus,
except to the extent that the information in this Prospectus
Supplement updates and supersedes the information contained in the
Prospectus.
NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION (THE
“SEC”) NOR ANY STATE SECURITIES COMMISSION OR CANADIAN
SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS SUPPLEMENT IS TRUTHFUL
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
_______________
The date of this
Prospectus Supplement is May 29, 2019
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of May 2019.
Commission File Number:
000-53805
Intellipharmaceutics International Inc.
(Translation
of registrant's name into English)
30 WORCESTER ROAD TORONTO, ONTARIO M9W 5X2
(Address
of principal executive office)
Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F. Form 20-F [ x ]
Form 40-F [ ]
Indicate by check mark if the registrant is
submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(1):
Note:
Regulation S-T Rule 101(b)(1) only permits the
submission in paper of a Form 6-K if submitted solely to provide an
attached annual report to security holders.
Indicate by check mark if the registrant is
submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(7):
Note:
Regulation S-T Rule 101(b)(7) only permits the
submission in paper of a Form 6-K if submitted to furnish a report
or other document that the registrant foreign private issuer must
furnish and make public under the laws of the jurisdiction in which
the registrant is incorporated, domiciled or legally organized (the
registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded,
as long as the report or other document is not a press release, is
not required to be and has not been distributed to the registrant's
security holders, and, if discussing a material event, has already
been the subject of a Form 6-K submission or other Commission
filing on EDGAR.
This
Report of Foreign Private Issuer on Form 6-K and the attached
exhibits shall be incorporated by reference into the
Company’s effective Registration Statements on Form F-3, as
amended and supplemented (Registration Statement Nos. 333-172796
and 333-218297), filed with the Securities and Exchange Commission,
from the date on which this Report is filed, to the extent not
superseded by documents or reports subsequently filed or furnished
by Intellipharmaceutics International Inc. under the Securities Act
of 1933 or the Securities Exchange Act of 1934.
EXHIBIT
LIST
Exhibit
|
Description
|
99.1
|
Proxy for Common Shares Solicited on Behalf of the Management of
Intellipharmaceutics International Inc. [Intentionally
omitted]
|
99.2
|
Notice
of 2019 Annual Meeting of Shareholders and Management Proxy
Circular
|
99.3
|
Confirmation
of Mailing
[Intentionally omitted]
|
99.4
|
Voting
Instruction Form
[Intentionally omitted]
|
99.5
|
Notice-and-Access
Notification to Shareholders
[Intentionally omitted]
|
|
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
|
Intellipharmaceutics
International Inc.
(Registrant)
/s/
Greg Powell
|
Date:
May 28, 2019
|
|
Greg
Powell
Chief Financial Officer
|
Intellipharmaceutics
International Inc.
NOTICE
OF 2019
ANNUAL
MEETING OF SHAREHOLDERS AND
MANAGEMENT
PROXY CIRCULAR
Annual Meeting of
Shareholders of Intellipharmaceutics International
Inc.
commencing at 10:30
a.m. (Toronto time) on May 29, 2019 at the offices of
Gowling
WLG (Canada) LLP
1 First Canadian
Place
100 King Street
West, Suite 1600
Toronto,
Ontario
Canada
April 15,
2019
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN THAT
the annual
meeting (the “
Meeting
”) of shareholders of
Intellipharmaceutics International Inc. (the “
Company
”) will be held at the
offices of Gowling WLG (Canada) LLP, 1 First Canadian Place,
100 King Street West, Suite 1600, Toronto, Ontario on Wednesday,
May 29, 2019, at 10:30 a.m. (Toronto time) for the following
purposes:
1.
to receive the
audited consolidated financial statements of the Company for the
financial year ended November 30, 2018, and the auditor’s
report thereon;
2.
to elect six (6)
directors;
3.
to reappoint the
auditor and to authorize the directors to fix the auditor’s
remuneration; and
4.
to transact such
further and other business as may properly come before the Meeting
or any adjournments or postponements thereof.
The specific
details of the matters proposed to be put before the Meeting are
set forth in the accompanying Management Proxy Circular. The
Company is utilizing the notice-and-access model for distribution
of the Management Proxy Circular.
Notice-and-access
is a set of rules that allows issuers to post electronic versions
of proxy-related materials (such as proxy circulars and annual
financial statements) on-line, via the System for Electronic
Document Analysis and Retrieval (“
SEDAR
”) and one other website,
rather than mailing paper copies of such materials to shareholders.
Electronic copies of the Management Proxy Circular and other
Meeting-related materials may be found on the Company’s
issuer profile on SEDAR at www.sedar.com as well as the
Company’s website at
www.intellipharmaceutics.com/proxy.cfm.
Shareholders with
questions about notice-and-access can call the Company toll-free at
1-800-275-0139. Shareholders may obtain paper copies of the
Management Proxy Circular free of charge by calling the same
toll-free number. Requests for paper copies in advance of the
Meeting should be made no later than May 13, 2019 in order to allow
sufficient time for shareholders to receive the paper copies and to
return their relevant voting documents by the proxy deposit
date.
DATED at Toronto,
Ontario, April 15, 2019.
|
|
BY
ORDER OF THE BOARD OF DIRECTORS
|
(signed) “Dr. Amina Odidi”
|
Dr. Amina
Odidi
|
President and Chief
Operating Officer
|
NOTES:
1.
Registered
shareholders who are unable to be present at the Meeting are kindly
requested to specify on the accompanying proxy form the manner in
which the shares represented thereby are to be voted, and to sign,
date, and return same in accordance with the instructions set out
in the proxy form and the Management Proxy Circular.
2.
As provided in the
Canada Business Corporations
Act
, the directors have fixed a record date of April 12,
2019. Accordingly, shareholders registered on the books of the
Company at the close of business on April 12, 2019 are entitled to
receive notice of, and to vote at, the Meeting.
3.
If you are a
non-registered shareholder and you received these materials through
your broker or another intermediary, please complete and return the
materials in accordance with the instructions provided to you by
your broker or intermediary.
MANAGEMENT
INFORMATION CIRCULAR OF
INTELLIPHARMACEUTICS INTERNATIONAL
INC.
INTRODUCTION
General
This management
information circular (this “
Management Proxy Circular
”) is for
the annual meeting of shareholders of Intellipharmaceutics
International Inc. (the “
Company
”) to be held on Wednesday,
May 29, 2019, at 10:30 a.m. (Toronto time) and any adjournments or
postponements thereof (the “
Meeting
”). As a shareholder on
April 12, 2019 (the “
Record
Date
”), you have the right to vote your common shares
of the Company on:
●
the election of
directors;
●
the reappointment
of the auditor;
●
any other business
that may properly come before the Meeting.
To help you make an
informed decision, this Management Proxy Circular provides you with
more details about the matters for which you are entitled to vote.
Your proxy is solicited by the Company’s management, and any
solicitation will be made by directors, officers and regular
employees of the Company personally, by telephone, by mail or by
electronic means of communication. The Company may also retain, and
pay a fee to, one or more proxy solicitation firms to solicit
proxies from the shareholders of the Company in favor of the
matters set forth in the accompanying notice of the Meeting. All
costs associated with the Company’s solicitation of proxies
will be borne by the Company.
In this document,
“you”, “your” and “shareholder”
refer to holders of common shares of the Company and the terms
“shares” and “common shares” refers to the
common shares in the capital of the Company without par value.
“We”, “us”, “our”,
“Company” and “Intellipharmaceutics” refer
to Intellipharmaceutics International Inc. and “board”
or “board of directors” refers to our board of
directors, unless otherwise indicated. This Management Proxy
Circular is dated April 15, 2019 and the information herein is
current to April 15, 2019 unless otherwise indicated. All
references to “US$” are references to United States
dollars and references to “C$” are references to
Canadian dollars.
The
Meeting
The Meeting will be
held at the offices of Gowling WLG (Canada) LLP, 1 First Canadian
Place, 100 King Street West, Suite 1600, Toronto, Ontario starting
at 10:30 a.m. (Toronto time) on Wednesday, May 29,
2019.
What
the Meeting will Cover
The Meeting will
include three items of business that occur at every annual
shareholders’ meeting: (1) receipt of our audited
consolidated financial statements for the most recent financial
year and the auditor’s report thereon; (2) election of our
directors for another term; and (3) reappointment of the
auditor.
GENERAL
PROXY MATTERS
Voting
by Proxy
We have enclosed a
form of proxy with this Management Proxy Circular. Typically, this
is the easiest way to vote. Voting by proxy means that you are
giving the persons named on your proxy form (known as your
“
proxyholder
”)
the authority to vote your common shares at the Meeting. A
proxyholder must vote your shares in accordance with the
instructions you provide.
You can choose from
among four different ways to vote your common shares by
proxy:
4.
by appointing
another person as your proxyholder to go to the Meeting and vote
your common shares for you.
The persons named
as proxyholders in the accompanying proxy form are directors and
officers of the Company.
If you
submit your proxy, these persons will vote your common shares for
you, unless you appoint someone else to be your proxyholder.
The persons named in the enclosed form of proxy will vote or
withhold from voting the common shares represented by the form of
proxy in accordance with your instructions on any ballot that may
be called for and, if you specify a choice with respect to any
matter to be acted upon, the common shares represented by the form
of proxy will be voted accordingly.
You
may appoint another person or company (who need not be a
shareholder of the Company) to go to the Meeting and vote your
common shares for you. If you appoint someone else, your
proxyholder must be present at the Meeting to vote your common
shares.
The enclosed form
of proxy, when properly completed and signed, confers discretionary
authority upon the persons named as proxyholders to vote as they
see fit on any amendments or variations to the matters identified
in the notice of meeting and on any other matters which may
properly come before the Meeting, whether or not any such
amendments or variations or any other matter properly brought
before the Meeting are routine or contested. At the date of this
Management Proxy Circular, the management of the Company is not
aware of any amendments or variations to the matters referred to in
the notice of meeting or other matters which may come before the
Meeting.
If you are voting
your common shares by proxy, our transfer agent, AST Trust Company
(Canada), must receive your completed proxy form by 10:30 a.m.
(Toronto time) on Monday, May 27, or 48 hours (excluding Saturdays,
Sundays and statutory holidays) before the commencement of any
adjourned or postponed Meeting.
Registered
Shareholders and Non-Registered Shareholders
You are a
registered shareholder if your name appears on your share
certificates. Your proxy form tells you whether you are a
registered shareholder. Only registered shareholders or the persons
they appoint as their proxyholders are permitted to vote at the
Meeting.
You are a
non-registered (beneficial) shareholder if your bank, trust
company, securities broker or other financial institution (an
“
Intermediary
”)
holds your common shares for you. For most non-registered
shareholders, your proxy form or voting instruction form tells you
whether you are a non-registered shareholder.
Non-registered
shareholders who have not objected to their Intermediary disclosing
certain ownership information about themselves to the Company are
referred to as “non-objecting beneficial owners” or
“NOBOs”. Non-registered shareholders who have objected
to their Intermediary disclosing the ownership information about
themselves to the Company are referred to as “objecting
beneficial owners” or “OBOs”. The Corporation
will send proxy-related materials to NOBOs and OBOs indirectly
through Intermediaries and will pay for an Intermediary to deliver
the proxy-related materials and a request for voting instructions
to OBOs.
Notice-and-Access
The Company has
elected to use the notice-and-access provisions under National
Instrument 54-101 -
Communication
with Beneficial Owners of Securities of a Reporting Issuer
(“
NI 54-101
”)
for sending this Management Proxy Circular and other proxy-related
materials (the “
Meeting
Materials
”) to all shareholders, including
non-registered shareholders.
Notice-and-access
is a set of rules adopted by the Canadian Securities Administrators
that allows issuers to post electronic versions of proxy-related
materials (such as proxy circulars and annual financial statements)
on-line, via a secured website, rather than mailing paper copies of
such materials to shareholders. Electronic copies of this
Management Proxy Circular and other Meeting Materials may therefore
be found on
www.intellipharmaceutics.com/proxy.cfm
or the Company’s issuer profile on SEDAR at
www.sedar.com
. Shareholders are
reminded to review this Management Proxy Circular before
voting.
Although this
Management Proxy Circular will be posted electronically on-line as
noted above, shareholders will be sent a notice of the Meeting via
prepaid mail, courier or the equivalent containing information
prescribed by applicable securities law, along with the relevant
voting document.
The Company will
not rely upon the use of “stratification”.
Stratification occurs when a reporting issuer using
notice-and-access provides a paper copy of the information circular
to certain shareholders. In relation to the Meeting, no shareholder
will receive a paper copy of this Management Proxy Circular unless
such shareholder specifically requests same.
Shareholders with
questions about notice-and-access can call the Company toll-free at
1-800-275-0139. Shareholders may obtain paper copies of this
Management Proxy Circular free of charge for up to one year. A
request for paper copies of this Management Proxy Circular prior to
the date of the Meeting should be made no later than May 13, 2019
in order to allow sufficient time for the shareholders to receive
the paper copies and to return their relevant voting document by
the proxy deposit date. For requests received prior to the date of
the Meeting, paper copies of this Management Proxy Circular
requested will be sent within three business days after receiving
the request; for requests received on or after the date of the
Meeting (and within one year), paper copies of this Management
Proxy Circular requested will be sent within 10 calendar days after
receiving the request.
How
to Vote – Registered Shareholders
By proxy
●
Complete, sign and
date the proxy form and send the completed proxy to our transfer
agent, AST Trust Company (Canada), as follows:
Detach and return
it in the envelope provided or otherwise return it to:
President of
Intellipharmaceutics International Inc.
c/o AST Trust
Company (Canada)
P.O. Box 721,
Agincourt, ON M1S 0A1
Attn: Proxy
Dept.
Email a pdf copy of
the signed proxy form to proxyvote@astfinancial.com.
Fax the signed
proxy to 416-368-2502 or toll free in Canada and United States to
1-866-781-3111.
4.
You may appoint
another person or company as your proxyholder to go to the Meeting
and vote your common shares for you. This person or company does
not have to be a shareholder. Make sure the person or company you
appoint is aware of the appointment and attends the
Meeting.
●
See also
“
Completing the Proxy
Form
” section below for more information.
In-person at the Meeting
●
If you wish to vote
in-person, please bring your proxy form to the Meeting (to register
and enter the Meeting).
●
You may vote
in-person at the Meeting on votes conducted by show of hands or by
ballot.
How
to Vote – Non-Registered Shareholders
By proxy
●
Your Intermediary
is required to ask for your voting instructions before the Meeting,
and you should contact your Intermediary if you did not receive a
request for voting instructions or proxy form in this
package.
●
In most cases, you
will receive a voting instruction form from your Intermediary, and
you should provide your voting instructions in accordance with the
directions on the form.
●
Less frequently,
you will receive a proxy form signed by the Intermediary that is
restricted as to the number of common shares beneficially owned by
you, but is otherwise incomplete.
●
If you receive a
proxy form, you should complete and return it in accordance with
the directions on the proxy form using the envelope provided, or
otherwise return it to AST Trust Company (Canada) by mail to Proxy
Department, P.O. Box 721, Agincourt, Ontario, M1S 0A1, or by fax at
416-368-2502.
●
To be valid for use
at the Meeting, proxies must be received before 10:30 a.m. (Toronto
time) on Monday, May 27, 2019 or 48 hours (excluding Saturdays,
Sundays and statutory holidays) before the commencement of any
adjourned or postponed Meeting.
In person at the Meeting
●
The Company does
not have access to the names or holdings of non-registered
(beneficial) shareholders.
●
Non-registered
shareholders can only vote common shares in person at the Meeting
if appointed as the proxyholder (you can do this by printing your
name in the space provided on the voting instruction form provided
by your Intermediary and submitting and returning it as directed on
the form).
●
If appointed as
proxyholder, a non-registered shareholder will be asked to register
his or her attendance at the Meeting and may vote at the Meeting on
votes conducted by show of hands or by ballot.
Completing
the Proxy Form
For the election of
directors and reappointment of the auditor, you can choose to vote
“
FOR
” or
“
WITHHOLD
”.
When you sign the
proxy form, you authorize one of Dr. Isa Odidi, Chairman and Chief
Executive Officer of the Company, or, failing him, Dr. Amina Odidi,
President and Chief Operating Officer of the Company, to vote or
withhold from voting your shares in accordance with your
instructions.
If you return a
duly executed proxy form but do not tell us how you want to vote
your shares, your votes will be cast (i)
FOR
electing
the nominees for election as directors of the Company who are
listed in this Management Proxy Circular; and (ii)
FOR
reappointing MNP LLP as our auditor.
You have the right
to appoint a person or company other than the persons designated in
the proxy form to represent you and vote your shares at the
Meeting. If you are appointing someone else to vote your shares for
you at the Meeting, strike out the two names that are printed on
the proxy form and write the name of the person or company you are
appointing in the space provided. Complete your voting
instructions, date and sign the proxy form, and return it to AST
Trust Company (Canada) as instructed. If you do not specify how you
want your shares voted, your proxyholder will vote your shares as
he or she sees fit on any matter that may properly come before the
Meeting.
If you are an
individual shareholder, your proxy form must be signed by you or
your authorized attorney. If you are a corporation or other legal
entity, the proxy form must be signed by an authorized officer or
attorney. A proxy form signed by a person acting as an attorney or
in some other representative capacity (including a representative
of a corporate shareholder) should indicate that person’s
capacity following his or her signature. That proxy form should be
accompanied by the appropriate instrument evidencing qualification
and authority to act, unless such instrument has previously been
filed with the Company.
Revocation
of Proxy - Changing Your Vote
You can revoke a
vote you made by proxy by:
●
completing a proxy
form that is dated later than the proxy form you are revoking, and
sending it by postal mail, email or fax to AST Trust Company
(Canada), Proxy Department, P.O. Box 721, Agincourt, Ontario, M1S
0A1, 1-866-781-3111, so that it is received before 10:30 a.m.
(Toronto time) on Monday, May 27, 2019;
●
depositing an
instrument in writing from you or your authorized attorney (or, if
the shareholder is a corporation, by a duly authorized officer)
with the President of the Company at the registered office of the
Company at 30 Worcester Road, Toronto, Ontario, M9W 5X2,
before 5:00 p.m. (Toronto time), on the last business day preceding
the day of the Meeting or any adjournments or postponements thereof
at which the proxy is to be used; or
●
depositing an
instrument in writing from you or your authorized attorney (or, if
the shareholder is a corporation, by a duly authorized officer)
revoking your proxy to the chair or secretary of the Meeting, prior
to the commencement of the Meeting (or any adjournment or
postponement thereof).
A proxy may also be
revoked in any other manner permitted by law.
Voting
Shares and Record Date
You have one vote
for each common share you held on the Record Date, which was April
12, 2019. As at the Record Date there were 22,075,577 common shares
outstanding, each carrying the right to one vote at meetings of
shareholders.
Only persons who
were holders of shares as of the close of business on the Record
Date are entitled to receive notice of, attend, and vote at the
Meeting. The Company will prepare or cause to be prepared a list of
the holders of common shares as of the close of business on the
Record Date. At the Meeting, each holder of common shares named in
that list will be entitled to vote, in person or by proxy, the
common shares shown opposite the holder’s name on that
list.
Where
Voting Results Will Be Posted
In accordance with
Canadian securities law, following the Meeting a report on the
voting results of the Meeting will be filed with securities
regulators and will be available under the Company’s SEDAR
profile at www.sedar.com.
Quorum
The Company’s
by-laws provide that the quorum for a meeting is two persons
present at the meeting who are entitled to vote thereat as
shareholders or proxyholders, representing collectively not less
than 5% of the outstanding shares of the Company.
VOTING
SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES
As of the close of
business on the Record Date, there were issued and outstanding
22,075,577 common shares of the Company without nominal or par
value, each carrying the right to one vote per share.
Each shareholder of
record as of the close of business on the Record Date will be
entitled to vote at the Meeting, in person or by proxy, the number
of common shares held by such holder on the Record Date. To the
knowledge of the directors and officers of the Company, no person
or company beneficially owns or controls or directs, directly or
indirectly, 10% or more of the issued and outstanding common shares
of the Company.
PARTICULARS
OF MATTERS TO BE ACTED UPON
1.
Election
of Directors
The articles of
arrangement dated October 22, 2009 of the Company provide for a
minimum of three (3) and a maximum of ten (10) directors. The board
of directors of the Company (the “
Board
”) has fixed at six (6) as
the number of directors to be elected at the Meeting.
Unless authority to vote is withheld, the
persons named in the accompanying form of proxy will vote FOR the
election of each of the six nominees whose names are set forth
below.
All of the nominees
are now members of the Board and have been since the dates
indicated. Management does not contemplate that any of the nominees
will be unable to serve as directors, but if that should occur for
any reason prior to the Meeting, the persons named in the
accompanying form of proxy reserve the right to vote for another
nominee, if any, at their discretion, unless the shareholder has
specified in the form of proxy that such shareholder’s shares
are to be withheld from voting on the election of
directors.
The following table
and the notes thereto state the names of all persons proposed to be
nominated for election as directors, their place of residence, and
all other positions and offices with the Company now held by them,
their principal occupations or employments and abbreviated
biographies, other public company boards on which they serve, their
periods of service as directors of the Company or its predecessor,
Intellipharmaceutics Ltd., the number of common shares of the
Company beneficially owned, controlled or directed, directly or
indirectly, by each of them as at the date of this Management Proxy
Circular, and their attendance record at Board meetings during the
period December 1, 2017 to fiscal year end, November 30,
2018.
Each proposed
director will hold office until the next annual meeting of
shareholders or until his successor is duly elected, unless prior
thereto the director resigns or the director’s office becomes
vacant.
Name and Position
with the Company and Place of Residence
|
Principal
Occupation and Biography
|
Other Public
Company Boards
|
Director
Since
Common shares
beneficially owned or controlled or directed
(1)
Board Meeting
Attendance (including telephone meetings)
(2)
|
Dr.
Isa Odidi
Director and
Chairman of the Board and Chief Executive Officer
Ontario,
Canada
|
Dr. Isa Odidi is
Chairman of the Board and Chief Executive Officer of the Company.
He was a co-founder, and has been an officer and/or a director of
the Company or its predecessors since 1998. From 1995 to 1998, Dr.
Odidi held positions, first as Director, then as Vice President of
Research of Drug Development and New Technologies, at Biovail
Corporation International (now Bausch Health Companies Inc.), a
drug delivery company. He currently holds a Chair as Professor of
Pharmaceutical Technology at the Toronto Institute of
Pharmaceutical Technology in Canada and is an Adjunct Professor at
the Institute for Molecular Medicine in California. Dr. Odidi is
also the Chairman of Smart Pharmaceutical (Shanghai) Ltd, China.
Dr. Odidi received his M.Sc. in Pharmaceutical Technology and his
Ph.D. in Pharmaceutics from the University of London. Dr. Odidi is
also a graduate of the Ivey Executive Management Program from Ivey
School of Business at the University of Western Ontario, and
obtained his MBA from the Rotman School of Management at the
University of Toronto.
|
None
|
September
2004
578,131
(3)
4 of 4
|
Dr.
Amina Odidi
Director and
President and Chief Operating Officer
Ontario,
Canada
|
Dr. Amina Odidi is
President and Chief Operating Officer of the Company. She was a
co-founder, and has been an officer and/or a director of the
Company or its predecessors since 1998. She has extensive
experience developing and applying proprietary technologies to the
development of controlled-release drug products for third-party
pharmaceutical companies. She has invented or co-invented various
proprietary controlled delivery devices for the delivery of
pharmaceutical, nutraceutical, biological, agricultural and
chemical agents. Previously she has worked for the pharmaceutical
and health care industry. She has co-authored articles, papers and
textbooks. She received her M.Sc. in Biopharmaceutics and her Ph.D.
in Pharmaceutics from the University of London.
|
None
|
September
2004
578,131
(3)
4 of 4
|
Bahadur Madhani
(4)(5)
Director
Ontario,
Canada
|
Mr. Madhani is
President and CEO of Equiprop Management Limited, a property
management company. Mr. Madhani was previously a member of the
advisory board of Quebecor Ontario. He has also served as Chairman
of United Way of Toronto, Chairman of the YMCA of Greater Toronto,
and Chairman of the Nelson Mandela Children’s Fund of Canada.
Mr. Madhani was awarded membership in the Order of Canada in
2001.
|
None
|
March
2006
750
(6)
4 of 4
|
Kenneth Keirstead
(4)(5)(6)
Director
New Brunswick,
Canada
|
Mr. Keirstead is
Executive Manager of the Lyceum Group, a consulting business. He
was President and CEO, Sanofi Winthrop Canada Inc.; General
Manager, Squibb Medical Systems International; President, Chemfet
International and President, Quinton Instruments among other
positions. Mr. Keirstead has published studies and reports on
health care and related services topics.
|
None
|
January
2006
Nil
(7)
4 of 4
|
Norman Betts
(5)
Director
New Brunswick,
Canada
|
Dr. Betts is a
Professor, Faculty of Business Administration, University of New
Brunswick, a Chartered Professional Accountant Fellow (FCPA) and a
member of the Institute of Corporate Directors (ICD). Dr. Betts
currently serves as a director and member of the audit committees
of Tanzanian Royalty Exploration Corporation, 49 North Resources,
Biotricity Inc and Adex Mining Inc. He has extensive public company
and Crown Corporation experience including having served on boards
including Tembec Inc, New Brunswick Power Corporation, and the Bank
of Canada. He is also co-chair of the board of trustees of the
University of New Brunswick Pension Plan for Academic Employees.
Dr. Betts is a former Finance Minister and Minister of Business New
Brunswick with the Province of New Brunswick. He was awarded a
Ph.D. in Management from the School of Business at Queens
University in 1992.
|
Tanzanian Royalty
Exploration Inc.
Adex Mining
Inc.
49 North Resources
Inc.
Biotricity
Inc.
Canada House
Wellness Group Inc.
|
January
2019
13,334
N/A
|
Shawn Graham
(4)(6)
Director
New Brunswick,
Canada
|
Mr. Graham is the
President and CEO of G&R Holdings Inc., which assists companies
with developing and implementing global projects and business
alliance strategies with a special focus on globalizing with China.
Mr. Graham previously served as 31st Premier of Province of New
Brunswick (from October 2006 to October 2010). He is a former Chair
of the Council of The Federation, Co-chair of Northeastern
Governors and Eastern Canadian Premiers, and Co-chair of a
Pan-Canadian trade mission to China. He is currently a member of
the advisory board of the faculty of business, University of New
Brunswick, Saint John as well as a national board member to Ducks
Unlimited Canada. Mr. Graham has been awarded an Honorary Doctor of
Laws Degree from the University of New Brunswick.
|
None
|
May
2018
13,334
3 of 3
|
Notes:
(1)
The information as
to common shares beneficially owned, controlled or directed,
directly or indirectly, not being within the knowledge of the
Company, has been furnished by each director
individually.
(2)
Committee meetings
were held on an as-needed basis throughout the year and are not
reflected in these numbers.
(3)
Represents shares
owned of record by Odidi Holdings Inc., a privately-held company
controlled by Drs. Amina and Isa Odidi. In addition, 276,394
performance-based options are held by Drs. Amina and Isa Odidi, and
560,500 stock options are held by each of Dr. Isa Odidi and
Dr. Amina Odidi, of which 224,834 are currently exercisable.
Further, Drs. Amina and Isa Odidi have the right to acquire up to
201,666 common shares upon conversion of the 2013 Debenture and the
2018 Debenture (each defined below).
(4)
Member of the
Company’s corporate governance committee (the
“
Corporate Governance
Committee
”).
(5)
Member of the
Company’s audit committee (the “
Audit Committee
”).
(6)
Member of the
Company’s compensation committee (the “
Compensation
Committee
”).
(7)
Mr. Madhani
also holds 76,750 options to purchase common shares, of which
35,417 are currently exercisable.
(8)
Mr. Keirstead
also holds 76,750 options to purchase common shares, of which
35,417 are currently exercisable.
(9)
Dr. Betts also
holds 40,000 options to purchase common shares, of which 13,334 are
currently exercisable.
(10)
Mr. Graham also
holds 40,000 options to purchase common shares, of which 13,334 are
currently exercisable.
(11)
Dr. Betts was
appointed a director of the Company January 22, 2019 to fill the
vacancy created by the resignation of Dr. Eldon Smith.
The Board adopted a
policy on majority voting in March 2016. If, in an uncontested
election of directors, a nominee is not elected by at least a
majority (50% + 1 vote) of the votes cast with respect to his or
her election, he or she will immediately tender to the Board his or
her resignation as a director. The Corporate Governance Committee
of the Board will then consider the circumstances surrounding the
resignation and the director’s ability to continue to serve
effectively as member of the Board, and then make a recommendation
to the Board as to whether the Board should accept the
director’s resignation. The Board will then determine whether
or not to accept the resignation within 90 days after the date of
the relevant shareholders’ meeting. Absent exceptional
circumstances, the Board will accept the resignation. The Company
will promptly issue a news release with the Board’s decision.
If the Board determines not to accept a resignation, the news
release will fully state the reasons for that
decision.
Cease Trade Order
Except as noted
below, no director of the Company is, as at the date of this
Management Proxy Circular, or has been within 10 years before the
date of this Management Proxy Circular, a director, chief executive
officer or chief financial officer of any company that was the
subject of a cease trade or similar order, or an order that denied
the other issuer access to any statutory exemptions, for a period
of more than thirty consecutive days (i) while that person was
acting as a director, chief executive officer or chief financial
officer; or (ii) after that person ceased acting as a director,
chief executive officer or chief financial officer which resulted
from an event that occurred while that person was acting in that
capacity.
From March 2006
until June 2013, Dr. Norman Betts served as a director of Starfield
Resources Inc. (TSX: SRU) (“
Starfield
”). On August 22, 2013,
Starfield was the subject of a cease trade order issued by the
Ontario Securities Commission as a result of Starfield’s
failure to file,
inter
alia
, its audited annual financial statements, related
management’s discussion and analysis and officer
certifications for the year ended February 28, 2013. The order is
still in effect. On April 18, 2013, Starfield’s shares were
delisted from the TSX.
Bankruptcies
Except as noted
below, no director of the Company (i) is, as at the date of this
Management Proxy Circular, or has been, within 10 years before the
date of this Management Proxy Circular, a director or executive
officer of any company that, while that person was acting in that
capacity, or within a year of that person ceasing to act in that
capacity, became bankrupt, made a proposal under any legislation
relating to bankruptcy or insolvency, or was subject to or
instituted any proceedings, arrangement or compromise with
creditors or had a receiver, receiver manager or trustee appointed
to hold its assets, or (ii) has, within 10 years before the date of
this Management Proxy Circular, become bankrupt, made a proposal
under any legislation relating to bankruptcy or insolvency or (iii)
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.
From March 2006
until June 2013, Dr. Norman Betts served as a director of
Starfield. On July 2, 2013, Starfield announced that it was deemed
to have made an assignment in bankruptcy, effective at the close of
business on June 28, 2013 for failure to file a proposal before the
time for doing so had past pursuant to the provisions of the
Bankruptcy and Insolvency
Act
(Canada) (the “
BIA
”). Starfield had previously
filed a Notice of Intention to Make a Proposal (“
Notice of Intention
”) pursuant to
the provisions of Part III of the BIA. Pursuant to the Notice of
Intention, PriceWaterhouseCoopers Inc. (“
PwC
”) was appointed as the trustee
(“
Proposal
Trustee
”) in Starfield’s proposal proceedings.
Pursuant to an Order of the Ontario Superior Court of Justice
(Commercial List), the time for Starfield to file a proposal
expired at the end of the day on June 28, 2013. Starfield completed
a sale of substantially all of its assets related to its Ferguson
Lake Project in early June 2013. However, in consultation with the
Proposal Trustee, Starfield determined that it would not be able to
put forward a viable proposal and would not be filing a proposal by
the deadline. As a result, Starfield was deemed to have made an
assignment in bankruptcy at the end of the day on June 28, 2013.
PwC acted as the trustee in bankruptcy for Starfield.
2.
Appointment
and Remuneration of Auditor
The Company’s
auditor is MNP LLP (“
MNP
”), Independent Registered
Public Accounting Firm, 111 Richmond Street West, Suite 300,
Toronto, ON M5H 2G4. MNP was first appointed as auditor of the
Company on July 27, 2016 after Deloitte LLP (“
Deloitte
”), the Company’s
former auditor, agreed to resign. Deloitte had served as the
Company’s auditor since October 22, 2009 up to its
resignation on July 27, 2016.
Unless
authority to vote is withheld, the persons named in the
accompanying form of proxy intend to vote FOR the reappointment of
MNP, Chartered Professional Accountants, as the auditor of the
Company, to hold office until the next annual meeting of the
shareholders and to authorize the directors to fix the
auditor’s remuneration.
The following table
summarizes the total fees paid or accrued by the Company for audit
and other services provided by MNP, in relation to the fiscal years
ended November 30, 2018 and 2017:
|
|
|
Audit
Fees
(1)
|
$
C139,100
|
$
C129,342
|
Audit-Related
Fees
(2)
|
$
C160,603
|
$
C210,791
|
Tax
Fees
(3)
|
$
C29,305
|
-
|
All Other
Fees
(4)
|
-
|
-
|
Total
Fees
|
$
C329,008
|
$
C340,133
|
Notes:
(1)
Audit fees consist
of fees related to the audit of the Company’s consolidated
financial statements.
(2)
Audit-related fees
consist of consultation on accounting and disclosure matters and
reviews of quarterly interim financial statements, prospectus and
base shelf activities and Form 20-F reviews.
(3)
Tax fees consist of
fees for tax consultation, tax advice and tax compliance services
for the Company and its subsidiaries.
(4)
All other fees
related to internal control reviews.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Background
The Company is a
pharmaceutical company specializing in the research, development
and manufacture of novel and generic controlled-release and
targeted-release oral solid dosage drugs. The Company’s
patented Hypermatrix™ technology is a multidimensional
controlled-release drug delivery platform that can be applied to
the efficient development of a wide range of existing and new
pharmaceuticals. Based on this technology platform, the Company has
developed several drug delivery systems and a pipeline of products
(some of which have received approval from the United States Food
and Drug Administration (“
FDA
”)) and product candidates in
various stages of development, including abbreviated new drug
applications filed with the FDA (and one abbreviated new drug
submission filed with Health Canada) and one new drug application
filing in therapeutic areas that include neurology, cardiovascular,
gastrointestinal tract, diabetes and pain. As of November 30, 2018,
the Company had 59 full-time employees engaged in administration
and research and development.
Compensation Governance
The Company’s
Compensation Committee is comprised of three directors, Messrs.
Graham, Madhani and Keirstead, each of whom is considered
“independent” within the meaning of section 2.4 of Form
51-102F6 –
Statement of
Executive Compensation
. Each member of the Compensation
Committee has sufficient experience in order to make decisions on
the suitability of the Company’s compensation policies and
practices. See the biography of each member of the Compensation
Committee under the heading “
Election of
Directors
”.
The Compensation
Committee recommends compensation policies concerning officers and
senior management to the Board. The Corporate Governance Committee
recommends compensation policies concerning independent directors
to the Board. The Board makes the final determinations regarding
the adequacy and form of the compensation for non-executive
directors to ensure that such compensation realistically reflects
the responsibilities and risks involved, without compromising a
director’s independence. Further details relating to the role
and function of the Compensation Committee and the Corporate
Governance Committee is provided in Schedule A to this
Management Proxy Circular.
Risk Management
The Board is
responsible for identifying the principal risks of the
Company’s business and ensuring the implementation of
appropriate systems to manage these risks. Through the Compensation
Committee, the Board is involved in the design of compensation
policies to meet the specific compensation objectives discussed
below and considers the risks relating to such policies, if any.
The Compensation Committee is ultimately responsible for ensuring
compliance of the compensation policies and practices of the
Company. To date, the Board and the Compensation Committee have not
identified any risks arising from the Company’s compensation
policies and practices that would be reasonably likely to have a
material adverse effect on the Company.
Objectives
The overall
objectives of the Company’s compensation program include: (a)
attracting and retaining talented executive officers; (b) aligning
the interests of those executive officers with those of the
Company; and (c) linking individual executive officer compensation
to the performance of the Company. The Company’s compensation
program is currently designed to compensate executive officers for
performance of their duties and to reward certain executive
officers for performance relative to certain milestones applicable
to their services.
Elements of Compensation
The elements of
compensation awarded to, earned by, paid to, or payable to the
Named Executive Officers (as hereinafter defined) for the most
recently completed financial year are: (a) base salary and
discretionary bonuses; (b) long-term incentives in the form of
stock options; (c) restricted share unit awards
(“
RSUs
”); and
(d) perquisites and personal benefits. The Company chose each of
these elements because they help to fulfill the objectives of the
Company’s compensation program listed above. Prior to the
most recently completed financial year, the Named Executive
Officers have also received option-based awards which were assumed
by the Company pursuant to the plan of arrangement completed on
October 22, 2009.
Base Salary and Discretionary Bonus
Base salary is a
fixed element of compensation payable to each Named Executive
Officer for performing his or her position’s specific duties.
The amount of base salary for a Named Executive Officer has been
determined through negotiation of an employment agreement with each
Named Executive Officer (see “
Employment Agreements
” below).
While base salary is intended to fit into the Company’s
overall compensation objectives in order to attract and retain
talented executive officers, the size of the Company and the nature
and stage of its business also impact the level of base salary. To
date, the level of base salary has not impacted the Company’s
decisions about any other element of compensation and the Board may
consider discretionary bonuses for individual employees based on
exceptional performance by such individuals in a particular fiscal
year.
Option-Based Awards
Option-based awards
are a variable element of compensation that rewards each Named
Executive Officer for individual and corporate performance overall
determined by the Board. Option-based awards are intended to fit
into the Company’s overall compensation objectives by
aligning the interests of all Named Executive Officers with those
of the Company, and linking individual Named Executive
Officers’ compensation to the performance of the Company. The
Board, which includes two of the Named Executive Officers, is
responsible for setting and amending any equity incentive plan
under which an option-based award is granted.
The Company has in
place a stock option plan (the “
Option Plan
”) for the benefit of
certain officers, directors, employees and consultants of the
Company, including the Named Executive Officers (as described in
greater detail under the heading “
Share-based and Option-based
Awards
”). Named Executive Officers have been issued
options under such plan.
The Company has
also granted performance-based options to Dr. Isa Odidi and Dr.
Amina Odidi pursuant to a separate option agreement, which was
negotiated at the same time as their employment agreements. These
options vest upon the Company attaining certain milestones relating
to FDA filings and approvals for the development of Company drugs,
such that 27,639 options vest in connection with each of the FDA
filings for the first five Company drugs and 27,639 options vest in
connection with each of the FDA approvals for the first five
Company drugs. As of the date hereof, 276,394 of these options have
vested and are exercisable.
The Option Plan was
adopted effective October 22, 2009 as part of the IPC Arrangement
Transaction approved by the shareholders of Intellipharmaceutics
Ltd., our predecessor company, at the meeting of shareholders on
October 19, 2009.
Subject to the requirements of the
Option Plan, the Board, with the assistance of the Compensation
Committee, has the authority to select those directors, officers,
employees and consultants to whom options will be granted, the
number of options to be granted to each person and the price at
which common shares of the Company may be purchased. Grants are
determined based on individual and aggregate performance as
determined by the Board.
Restricted Share Units
The Company
established a plan for RSUs (the “
RSU Plan
”) to form part of its
incentive compensation arrangements available for officers and
employees of the Company and its designated affiliates (as
described in greater detail under the heading “
Share-based and Option-based
Awards
”) as of May 28, 2010, when the RSU Plan
received shareholder approval.
Perquisites and Personal Benefits
The Company also
provides perquisites and personal benefits to its Named Executive
Officers, including basic employee benefit plans, which are
available to all employees, and a car allowance to cover the cost
of an automobile for business purposes. These perquisites and
personal benefits were determined through negotiation of an
employment agreement with each Named Executive Officer (see
“
Employment
Agreements
” below). While perquisites and personal
benefits are intended to fit into the Company’s overall
compensation objectives by serving to attract and retain talented
executive officers, the size of the Company and the nature and
stage of its business also impact the level of perquisites and
benefits. To date, the level of perquisites and benefits has not
impacted the Company’s decisions about any other element of
compensation.
Other Compensation-Related Matters
The Company’s
share trading policy prohibits all directors and officers of the
Company from, among other things, engaging in any short sales
designed to hedge or offset a decrease in market value of the
securities of the Company.
Performance
Graph
The performance
graph presented illustrates the cumulative total shareholder return
of a C$100 investment in the Company’s common shares over the
five most recently completed fiscal years, compared with the
cumulative total return of the S&P/TSX Composite
Index.
The trend in total
shareholder return each year is generally consistent with the trend
in the Company’s total compensation of Named Executive
Officers (as reflected below under the heading “
Summary Compensation Table
”).
This makes sense as a substantial portion of Named Executive
Officers’ total compensation is linked to the Company’s
performance and share price. See the above discussion under the
heading “
Compensation
Discussion and Analysis
”.
Share-based
and Option-based Awards
Grants
of stock options and RSUs are determined by the Board with the
assistance of the Compensation Committee and, where applicable, in
accordance with the terms of the Option Plan and the RSU Plan, as
described below. To date previous grants have been taken into
account when considering new grants.
Employee Stock Option Plan
The Option Plan was
adopted effective October 22, 2009 as part of the IPC Arrangement
Transaction approved by the shareholders of Intellipharmaceutics
Ltd., our predecessor company, at the meeting of shareholders on
October 19, 2009. Subject to the requirements of the Option
Plan, the Board, with the assistance of the Compensation Committee,
has the authority to select those directors, officers, employees
and consultants to whom options will be granted, the number of
options to be granted to each person and the price at which common
shares of the Company may be purchased. Grants are determined based
on individual and aggregate performance as determined by the
Board.
The key features of
the Option Plan are as follows:
●
The eligible
participants are full-time and part-time employees, officers and
directors of, or consultants to, the Company or its affiliates,
which may be designated from time to time by the
Board.
●
The fixed maximum
percentage of common shares issuable under the Option Plan is 10%
of the issued and outstanding common shares from time to time. The
Option Plan will automatically “reload” after the
exercise of an option provided that the number of common shares
issuable under the Option Plan does not then exceed the maximum
percentage of 10%.
●
There are no
restrictions on the maximum number of options which may be granted
to insiders of the Company other than not more than 1% of the total
common shares outstanding on a non-diluted basis can be issued to
non-executive directors of the Company pursuant to options granted
under the Option Plan and the value of any options granted to any
non-executive director of the Company, shall not, on an annual
basis, exceed C$100,000.
●
The Board
determines the exercise price of each option at the time the option
is granted, provided that such price is not lower than the
“market price” of common shares at the time the option
is granted. “Market price” means the volume weighted
average trading price of common shares on the TSX, or another stock
exchange where the majority of the trading volume and value of
common shares occurs, for the five trading days immediately
preceding the relevant date, calculated in accordance with the
rules of such stock exchange.
●
Unless otherwise
determined by the Board, each option becomes exercisable as to
33
1/3
% on
a cumulative basis, at the end of each of the first, second and
third years following the date of grant.
●
The period of time
during which a particular option may be exercised is determined by
the Board, subject to any Employment Contract or Consulting
Contract (both as hereinafter defined), provided that no such
option term shall exceed 10 years.
●
If an option
expiration date falls within a “black-out period” (a
period during which certain persons cannot trade common shares
pursuant to a policy of the Company’s respecting restrictions
on trading), or immediately following a black-out period, the
expiration date is automatically extended to the date which is the
tenth business day after the end of the black-out
period.
●
Options may
terminate prior to expiry of the option term in the following
circumstances:
●
on death of an
optionee, options vested as at the date of death are immediately
exercisable until the earlier of 180 days from such date and expiry
of the option term; and
●
if an optionee
ceases to be a director, officer, employee or consultant of the
Company for any reason other than death, including receipt of
notice from the Company of the termination of his, her or its
Employment Contract or Consulting Contract (as defined below),
options vested as at the date of termination are exercisable until
the earlier of 120 days following such date and expiry of the
option term,
subject however to
any contract between the Company and any employee relating to, or
entered into in connection with, the employment of the employee or
between the Company and any director with respect to his or her
directorship or resignation there from (an “
Employment Contract
”), any
contract between the Company and any consultant relating to, or
entered into in connection with, services to be provided to the
Company (a “
Consulting
Contract
”) or any other agreement to which the Company
is a party with respect to the rights of such person upon
termination or change in control of the Company.
●
Options and rights
related thereto held by an optionee are not to be assignable or
transferable except on the death of the optionee.
●
If there is a
take-over bid (within the meaning of the
Securities Act
(Ontario)) made for all
or any of the issued and outstanding common shares of the Company,
then all options outstanding become immediately exercisable in
order to permit common shares issuable under such options to be
tendered to such bid.
●
If there is a
consolidation, merger, amalgamation or statutory arrangement
involving the Company, separation of the business of the Company
into two or more entities or sale of all or substantially all of
the assets of the Company to another entity, the optionees will
receive, on exercise of their options, the consideration they would
have received had they exercised their options immediately prior to
such event. In such event and in the event of a securities exchange
take-over bid, the Board may, in certain circumstances, require
optionees to surrender their options if replacement options are
provided. In the context of a cash take-over bid for 100% of the
issued and outstanding common shares of the Company, optionees may
elect to conditionally surrender their options or, if provided for
in an agreement with the offeror, automatically exchange their
options for options of the offeror.
●
The Board may from
time to time in its absolute discretion amend, modify and change
the provisions of the Option Plan or any options granted pursuant
to the Option Plan, provided that any amendment, modification or
change to the provisions of the Option Plan or any options granted
pursuant to the Option Plan shall:
●
not adversely alter
or impair any option previously granted;
●
be subject to any
regulatory approvals, where required, including, where applicable,
the approval of the TSX and/or such other exchange as may be
required; and
●
not be subject to
shareholder approval in any circumstances, except where the
amendment, modification or change to the Option Plan or option
would:
i.
reduce the exercise
price of an option held by an insider of the Company;
ii.
extend the term of
an option held by an insider beyond the original expiration date
(subject to such date being extended in a black-out extension
situation);
iii.
increase the fixed
maximum percentage of common shares issuable under the Option Plan;
or
iv.
amend the amendment
provision of the Option Plan;
in which case the
amendment, modification or change will be subject to shareholder
approval in accordance with the rules of the TSX and/or such other
exchange as may be required. Amendments to the Option Plan not
requiring shareholder approval may for example include, without
limitation:
●
amendments of a
“housekeeping nature”, including any amendment to the
Option Plan or an option that is necessary to comply with
applicable law or the requirements of any regulatory authority or
stock exchange;
●
changes to the
exercise price of an option to an exercise price not below the
“market price” unless the change is a reduction in the
exercise price of an option held by an insider of the
Company;
●
amendments
altering, extending or accelerating any vesting terms or conditions
in the Option Plan or any options;
●
changes amending or
modifying any mechanics for exercising an option;
●
amendments changing
the expiration date (including acceleration thereof) or changing
any termination provision in any option, provided that such change
does not entail an extension beyond the original expiration date of
such option (subject to such date being extended in a black-out
extension situation);
●
amendments
introducing a cashless exercise feature, payable in securities,
whether or not such feature provides for a full deduction of the
number of underlying securities from the Option Plan
maximum;
●
amendments changing
the application of the provisions of the Option Plan dealing with
adjustments in the number of shares, consolidations and mergers and
take-over bids;
●
amendments adding a
form of financial assistance or amending a financial assistance
provision which is adopted;
●
amendments changing
the eligible participants of the Option Plan; and
●
amendments adding a
deferred or restricted share unit provision or any other provision
which results in participants receiving securities while no cash
consideration is received by the Company.
The Board may
discontinue the Option Plan at any time without consent of the
participants under the Option Plan provided that such
discontinuance shall not adversely alter or impair any option
previously granted.
A copy of the
Option Plan is available upon request in writing to the Chief
Financial Officer of the Company at 30 Worcester Road, Toronto,
Ontario, M9W 5X2 or on
www.sedar.com
.
The 2,207,557
shares that are currently authorized for issuance under the Option
Plan represent 10% of the common shares issued and outstanding as
at the Record Date. Of the options authorized for issuance under
the Option Plan, a total of 251,006 have been issued, representing
1.14% of the common shares issued and outstanding as of the date of
this Management Proxy Circular. As of the date of this Management
Proxy Circular, 17,200 options have been exercised under the
Plan.
The Company has
also granted performance-based options to Dr. Isa Odidi and Dr.
Amina Odidi pursuant to a separate option agreement, which was
negotiated at the same time as their employment agreements. These
options vest upon the Company attaining certain milestones relating
to FDA filings and approvals for the development of Company drugs,
such that 27,639 options vest in connection with each of the FDA
filings for the first five Company drugs and 27,639 options vest in
connection with each of the FDA approvals for the first five
Company drugs. As of the date hereof, these performance-based
options are exercisable for up to an aggregate of 276,394 common
shares representing approximately 1.25% of the common shares issued
and outstanding as at the Record Date (calculated on a partially
diluted basis assuming the full exercise of these options), at an
exercise price per common share of US$36.20. To date, the level of
these performance-based options has been taken into account by the
Board and impacted the Company’s decisions about base salary
and option-based awards under the Option Plan for the said Named
Executive Officers.
Restricted Share Unit Awards for Officers &
Employees
The Company
established the RSU Plan to form part of its incentive compensation
arrangements available for officers and employees of the Company
and its designated affiliates as of May 28, 2010, when the RSU Plan
received shareholder approval.
The key features of
the RSU Plan are as follows:
●
The stated purpose
of the RSU Plan is to advance the interests of the Company through
the motivation, attraction and retention of employees and officers
of the Company and the designated affiliates of the Company and to
secure for the Company and the shareholders of the Company the
benefits inherent in the ownership of common shares by employees
and officers of the Company, it being generally recognized that
share incentive plans aid in attracting, retaining and encouraging
employees and officers due to the opportunity offered to them to
acquire a proprietary interest in the Company and to align their
interests with those of the Company.
●
Employees and
officers, including both full-time and part-time employees, of the
Company and any designated affiliate of the Company, but not any
directors of the Company who are not also serving as employees or
officers, are eligible to participate under the RSU Plan. Prior to
April 5, 2018, the terms of the RSU Plan specifically named
Dr. Isa Odidi and Dr. Amina Odidi as not eligible to participate;
however, the Board, on the recommendation of the Compensation
Committee, amended the terms of the RSU Plan to remove this
restriction with the result being that Dr. Isa Odidi and Dr. Amina
Odidi will be eligible to be awarded RSUs so long as they are
officers of the Company or any designated affiliate of the
Company.
●
The RSU Plan is
administered by the Board or a committee thereof, which will
determine, from time to time, who may participate in the RSU Plan,
the number of RSUs to be awarded and the terms of each RSU, all
such determinations to be made in accordance with the terms and
conditions of the RSU Plan, based on individual and/or corporate
performance factors as determined by the Board.
●
The number of
common shares available for issuance upon the vesting of RSUs
awarded under the RSU Plan is limited to an aggregate of 33,000
common shares of the Company representing approximately 0.15% of
the issued and outstanding common shares of the Company as of the
Record Date.
●
A separate notional
account will be maintained for each participant under the RSU Plan.
Each such account will be credited with RSUs awarded to the
participant from time to time by way of a bookkeeping entry in the
books of the Company. On the vesting of the RSUs and the
corresponding issuance of common shares to the participant, or on
the forfeiture and cancellation of the RSUs, the RSUs credited to
the participant’s account will be cancelled.
●
At the time of the
award of RSUs, the Board will determine in its sole discretion the
vesting criteria (whether based on time or performance measures of
individual and/or corporate performance) applicable to the awarded
RSUs. Unless otherwise determined by the Board at the time of the
award, RSUs will vest in respect of 33
1/3
% of the common
shares subject to the RSUs on the first day after each of the first
three anniversaries of the award date of such RSU. Notwithstanding
the foregoing, all vesting and issuances or payments, as
applicable, will be completed no later than December 15 of the
third calendar year commencing after an award date.
●
The RSU Plan
provides that any unvested RSUs will vest at such time as
determined by the Board in its sole discretion such that
participants in the RSU Plan will be able to participate in a
change of control transaction, including by surrendering such RSUs
to the Company or a third party or exchanging such RSUs, for
consideration in the form of cash and/or securities.
●
Under the RSU Plan,
should the vesting of an RSU fall within a blackout period or
within nine business days following the expiration of a blackout
period, the vesting will be automatically extended to the tenth
business day after the end of the blackout period.
●
If an “event
of termination” of employment has occurred, any and all
common shares corresponding to any vested RSUs in a
participant’s account, if any, will be issued as soon as
practicable after the event of termination to the former
participant. If an event of termination has occurred, any unvested
RSUs in the participant’s account will, unless otherwise
determined by the Board in its discretion, forthwith and
automatically be forfeited by the participant and cancelled.
Notwithstanding the foregoing, if a participant is terminated for
just cause, each unvested RSU in the participant’s account
will be forfeited by the participant and cancelled. An
“
event of
termination
” is defined under the RSU Plan as an event
whereby a participant ceases to be eligible under the RSU Plan and
is deemed to have occurred by the giving of any notice of
termination of employment (whether voluntary or involuntary and
whether with or without cause), retirement, or any cessation of
employment for any reason whatsoever, including disability or
death.
●
No rights under the
RSU Plan and no RSUs awarded pursuant to the provisions of the RSU
Plan are assignable or transferable by any participant other than
pursuant to a will or by the laws of descent and
distribution.
●
Under the RSU Plan,
the Board may from time to time in its absolute discretion amend,
modify and change the provisions of the RSU Plan or any RSUs
awarded pursuant to the Plan, provided that any amendment
will:
●
not adversely alter
or impair any RSU previously awarded except as permitted by the
adjustment provisions in the RSU Plan;
●
be subject to any
regulatory approvals including, where required, the approval of the
TSX;
●
be subject to
shareholder approval in accordance with the rules of the TSX in
circumstances where the amendment, modification or change to the
RSU Plan or RSUs would:
i.
allow for the
assignment or transfer of any right under the RSU Plan or a RSU
awarded pursuant to the provisions of the RSU Plan other than as
provided for under the assignability provisions in the RSU
Plan;
ii.
increase the fixed
maximum number of common shares which may be issued pursuant to the
RSU Plan; or
iii.
amend the amendment
provisions of the RSU Plan; and
●
not be subject to
shareholder approval in circumstances (other than those listed in
the paragraph immediately above), including, but not limited to,
circumstances where the amendment, modification or change to the
RSU Plan or RSU would:
i.
be of a
“housekeeping nature”, including any amendment to the
RSU Plan or a RSU that is necessary to comply with applicable law
or the requirements of any regulatory authority or stock exchange
and any amendment to the RSU Plan or a RSU to correct or rectify
any ambiguity, defective provision, error or omission therein,
including any amendment to any definitions therein;
ii.
alter, extend or
accelerate any vesting terms or conditions in the RSU Plan or any
RSU;
iii.
change any
termination provision in any RSU;
iv.
introduce features
to the RSU Plan that would permit the Company to, instead of
issuing common shares from treasury upon the vesting of the RSUs,
retain a broker and make payments for the benefit of participants
to such broker who would purchase common shares through the
facilities of the TSX for such participants;
v.
introduce features
to the RSU Plan that would permit the Company to, instead of
issuing common shares from treasury upon the vesting of the RSUs,
make lump sum cash payments to participants;
vi.
change the
application of the adjustment provisions of the RSU Plan or the
change of control provisions of the RSU Plan; or
vii.
change the eligible
participants under the RSU Plan.
A copy of the RSU
Plan is available upon request in writing to the Chief Financial
Officer of the Company at 30 Worcester Road, Toronto, Ontario,
M9W 5X2.
The 33,000 common
shares that are currently authorized for issuance under the RSU
Plan represent approximately 0.15% of the Company’s common
shares issued and outstanding as at the Record Date. No RSUs have
been issued and none are outstanding as at the Record
Date.
Summary
Compensation Table
The following table
sets forth all direct and indirect compensation for, or in
connection with, services provided to the Company for the financial
years ended November 30, 2018, November 30, 2017 and November 30,
2016 in respect of the Chief Executive Officer, the Chief Financial
Officer and two other officers of the Company who earned greater
than C$150,000 in total compensation in the fiscal year ended
November 30, 2018 (“
Named
Executive Officers
”).
Non-equity
incentive plan compensation (U.S.$)(f)
|
Name
and principal position(a)
|
Year(b)
|
Salary
(U.S.$)(1)(c)
|
Share-based
awards (U.S.$)(d)
|
Option-based
awards (U.S.$)(2)(e)
|
Annual
incentive plans(3)
|
Long-term
incentive plans
|
Pension
value (U.S.$)(g)
|
All
other compensation (U.S.$)(4)(h)
|
Total
compensation (U.S.$)(i)
|
Dr. Isa Odidi,
Chairman, Chief Executive Officer and Co-Chief Scientific
Officer
|
2018
2017
2016
|
$350,306
$343,430
$340,464
|
N/A
N/A
N/A
|
$811,208
$1,609,573
$703,016
|
N/A
N/A
$340,464
|
N/A
N/A
N/A
|
N/A
N/A
N/A
|
$13,950
$13,676
$13,558
|
$1,175,465
$1,966,680
$1,397,502
|
Dr. Amina
Odidi,
President, Chief
Operating Officer and Co-Chief Scientific Officer
|
2018
2017
2016
|
$350,306
$343,430
$340,464
|
N/A
N/A
N/A
|
$811,208
$1,609,573
$703,016
|
N/A
N/A
$340,464
|
N/A
N/A
N/A
|
N/A
N/A
N/A
|
$13,950
$13,676
$13,558
|
$1,175,465
$1,966,680
$1,397,502
|
Andrew Patient,
Former Chief Financial Officer(5)
|
2018
2017
|
$232,504
$54,395
|
N/A
N/A
|
$11,619
$19,800
|
N/A
N/A
|
N/A
N/A
|
N/A
N/A
|
$13,950
$3,419
|
$258,073
$77,614
|
Greg
Powell,
Chief Financial
Officer (6)
|
2018
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Notes:
(1)
Salaries paid by
the Company to each Named Executive Officer are paid in Canadian
dollars. All amounts are expressed in U.S. dollars converted at the
exchange rate of US$0.7750 to C$1.00 (2017 - US$ 0.7598; 2016
– U.S. $0.7932) being the average closing exchange rate
quoted by the Bank of Canada for the respective periods. Salary
includes all amounts paid or payable to the Named Executive
Officer. Actual amount paid to each Named Executive Officer in
fiscal 2018, 2017 and 2016 are as disclosed in the
table.
(2)
The Company entered
into a separate acknowledgement and agreement with Drs. Isa and
Amina Odidi dated October 22, 2009 to be bound by the
performance-based stock option agreement dated September 10, 2004
pursuant to which Drs. Isa and Amina Odidi are entitled to purchase
up to 276,394 of the Company’s common shares upon payment of
US$36.20 per share, subject to satisfaction of the performance
vesting conditions. The value of the option-based awards is
determined using the Black-Scholes pricing model calculated as at
the award date.
(3)
“All other
compensation” includes car allowances and other miscellaneous
benefits.
(4)
Amount awarded at
the discretion of the Board. Bonuses awarded in 2016 were paid in
the second quarter of 2017; no bonuses were awarded during the
fiscal years 2017 and 2018.
(5)
Mr. Patient served
as the Company's Chief Financial Officer from September 6, 2017
until his resignation effective on November 30, 2018.
(6)
Mr. Powell was
appointed as Chief Financial Officer of the Company effective
February 11, 2019.
Significant factors
necessary to understand the information disclosed in the Summary
Compensation Table above include the terms of each Named Executive
Officer’s employment agreement and the terms of the separate
agreement relating to performance-based options applicable to Drs.
Isa and Amina Odidi described below.
Employment Agreements
The employment
agreement with Dr. Isa Odidi, the Chief Executive Officer and
Co-Chief Scientific Officer of the Company, effective September 1,
2004, entitles Dr. Isa Odidi to receive a base salary of US$200,000
per year, which is paid in Canadian dollars, and is increased
annually each year during the term of the agreement by 20% of the
prior year’s base salary. In addition, he is entitled to: (a)
participate in the Option Plan; (b) participate in all employee
benefit plans and programs, except for the DSU Plan; and (c) a car
allowance of up to US$1,000 per month. The initial term of the
employment agreement was until September 30, 2007, at which time,
pursuant to the terms of the agreement, the agreement was deemed to
be extended automatically for an additional three-year period on
the same terms and conditions (i.e. until September 30, 2010). The
agreement will continue to be extended automatically for successive
additional three-year periods on the same terms unless the Company
gives Dr. Isa Odidi written notice at least two years prior to the
date on which the agreement would otherwise be extended. See
“
Termination and Change of
Control Benefits
” below. Dr. Isa Odidi’s
employment agreement was amended on August 1, 2007 and June 8, 2009
to include intellectual property, non-competition and
non-solicitation provisions in favour of the Company. In April
2010, Dr. Isa Odidi’s employment agreement was amended
effective as of December 1, 2009, to eliminate the right to annual
increases in his base salary of 20% each year and to
roll
back his base
salary effective December 1, 2009 to the level payable under the
employment agreement for the period from September 2008 to August
2009 or C$452,000 per year. Pursuant to such amendment, Dr. Isa
Odidi’s base salary is subject to increase on an annual basis
at the discretion of the Board, and Dr. Isa Odidi is eligible to
receive a bonus, based on his performance, and that of the Company,
as determined by the Board. In February 2012, Dr. Isa Odidi
received a grant of 30,000 options of which 20,000 vested
immediately on issuance and the remaining 10,000 vested on February
17, 2013 at an exercise price of C$32.70 per share. In April 2013,
Dr. Isa Odidi received a grant of 7,500 options of which 3,750
vested immediately on issuance and the remaining 3,750 vested on
November 30, 2013 at an exercise price of C$18.10 per share. In
March 2014, Dr. Isa Odidi received a grant of 5,000 options of
which 2,500 vested immediately on issuance and the remaining 2,500
vested on November 30, 2014 at an exercise price of C$42.90 per
share. In November 2015, Dr. Isa Odidi received a grant of 7,000
options of which 4,900 vested immediately on issuance, with the
remaining 2,100 options vested on November 30, 2016 at an exercise
price of C$25.20 per share. In August 2016, Dr. Isa Odidi received
a grant of 9,000 options of which 6,000 vested immediately on
issuance, with the remaining 3,000 vested on November 30, 2017 at
an exercise price of C$24.20 per share. In November 2017, Dr. Isa
Odidi received a grant of 7,000 options of which 2,333 vested
immediately on issuance, 2,333 vested on November 30, 2018 and
2,334 will vest on November 30, 2019 at an exercise price of
C$11.50 per share.
The employment
agreement with Dr. Amina Odidi, the President, Chief Operating
Officer and Co-Chief Scientific Officer of the Company, effective
September 1, 2004, entitles Dr. Amina Odidi to receive a base
salary of US$200,000 per year, which is paid in Canadian dollars
and is increased annually each year during the term of the
agreement by 20% of the prior year’s base salary. In
addition, she is entitled to: (a) participate in the Option Plan;
(b) participate in all employee benefit plans and programs, except
for the DSU Plan; and (c) a car allowance of up to US$1,000 per
month. The initial term of the employment agreement was until
September 30, 2007, at which time, pursuant to the terms of the
agreement, the agreement was deemed to be extended automatically
for an additional three-year period on the same terms and
conditions (i.e. until September 30, 2010). The agreement will
continue to be extended automatically for successive additional
three-year periods on the same terms unless the Company gives Dr.
Amina Odidi written notice at least two years prior to the date on
which the agreement would otherwise be extended. See
“
Termination and Change of
Control Benefits
” below. Dr. Amina Odidi’s
employment agreement was amended on August 1, 2007 and June 8, 2009
to include intellectual property, non-competition and
non-solicitation provisions in favour of the Company. In April
2010, Dr. Amina Odidi’s employment agreement was amended
effective as of December 1, 2009, to eliminate the right to annual
increases in her base salary of 20% each year and to roll back her
base salary effective December 1, 2009 to the level payable under
the employment agreement for the period from September 2008 to
August 2009, being C$452,000 per year. Pursuant to such amendment,
Dr. Amina Odidi’s base salary is subject to increase on an
annual basis at the discretion of the Board, and Dr. Amina Odidi is
eligible to receive a bonus, based on her performance and the
Company, as determined by the Board. In February 2012, Dr. Amina
Odidi received a grant of 30,000 options of which 20,000 vested
immediately on issuance and the remaining 10,000 vested on February
17, 2013 at an exercise price of C$32.70 per share. In April 2013,
Dr. Amina Odidi received a grant of 7,500 options of which 3,750
vested immediately on issuance and the remaining 3,750 vested on
November 30, 2013 at an exercise price of C$18.10 per share. In
March 2014, Dr. Amina Odidi received a grant of 5,000 options of
which 2,500 vested immediately on issuance and the remaining 2,500
vested on November 30, 2014 at an exercise price of C$42.90 per
share. In November 2015, Dr. Amina Odidi received a grant of 7,000
options of which 4,900 vested immediately on issuance, with the
remaining 2,100 options vested on November 30, 2016 at an exercise
price of C$25.20 per share. In August 2016, Dr. Amina Odidi
received a grant of 9,000 options of which 6,000 vested immediately
on issuance, with the remaining 3,000 vested on November 30, 2017
at an exercise price of C$24.20 per share. In November 2017, Dr.
Amina Odidi received a grant of 7,000 options of which 2,333 vested
immediately on issuance, 2,333 vested on November 30, 2018 and
2,334 will vest on November 30, 2019 at an exercise price of
C$11.50 per share.
In addition, the
Company entered into a separate acknowledgement and agreement with
Drs. Isa and Amina Odidi dated October 22, 2009 to be bound by the
performance-based stock option agreement dated September 10, 2004
pursuant to which Drs. Isa and Amina Odidi are entitled to purchase
up to 276,394 of the Company’s common shares. These options
were not granted under the Option Plan. These options vest upon the
Company attaining certain milestones related to the FDA filings and
approvals for
Company products
and product candidates. The options are exercisable at a price of
$36.20 per share and were to expire in September 2014. Effective
March 27, 2014, the Company’s shareholders approved a two
year extension of the performance-based stock option expiry date to
September 2016. Effective April 19, 2016, the Company’s
shareholders approved a further two year extension of the
performance-based stock option expiry date to September 2018.
Effective May 15, 2018, the Company’s shareholders approved a
further two year extension of the performance-based stock option
expiry date to September 2020. As of the date hereof, 276,394 of
these options have vested and are exercisable.
Andrew Patient had served as the Company’s
Chief Financial Officer from September 6, 2017 until his
resignation effective on November 30, 2018. The employment
agreement with Andrew Patient, dated August 30, 2017, effective
September 6, 2017, entitled Mr. Patient to receive a base salary of
C$300,000, which was paid in Canadian dollars, per year. In
addition, he was entitled to: (a) participate in the Option Plan;
(b) participate in all employee benefit plans and programs; and (c)
a car allowance of C$1,500 per month. The agreement provided for
automatic renewal on December
31 each year from year to year
in absence of notice of termination from the Company at least 90
days prior to the end of the then applicable term. If the agreement
was terminated without cause, it required payment to Mr. Patient of
3 months' base salary, plus 6 weeks' base salary for every full
year of service, up to a combined maximum of 12 months. If such
termination occurred within six months of a change of control of
the Company, it required payment to Mr. Patient of thirteen months'
base salary, plus 6 weeks' base salary for every full year of
service, up to a combined maximum of 18 months. Mr. Patient’s
employment agreement contains intellectual property,
non-competition and non-solicitation provisions in favor of the
Company. Mr. Patient was granted 6,000 options, of which 2,000
vested immediately on issuance, 2,000 vested on October 20, 2018
and the remaining 2,000 were to vest on October 20, 2019 at an
exercise price of C$12.70 per share. In November 2017, Mr. Patient
received a grant of 1,500 options of which 500 vested immediately
on issuance, 500 to vest on November 30, 2018 and the remaining 500
to vest on November 30, 2019 at an exercise price of C$11.50 per
share. Mr. Patient’s options will cease to be exercisable 120
days after the date on which he ceased to be employed by the
Company, i.e. will cease to be exercisable on March 30,
2019.
The employment
agreement with Greg Powell, the Chief Financial Officer of the
Company, effective February 11, 2019 entitles Mr. Powell to receive
a base salary of C$180,000 per year, which is paid in Canadian
dollars. In addition, he is entitled to: (a) participate in the
Option Plan; (b) participate in all employee benefit plans and
programs; and (c) a car allowance of C$1,000 per month. The
employment agreement is for an indefinite term. If the agreement is
terminated without cause, payment instead of notice can be
provided: it will require payment to Mr. Powell of 3 months' base
salary, plus 1 month’s base salary for every full year of
service, up to a combined maximum of 12 months. Mr. Powell’s
employment agreement contains intellectual property,
non-competition and non-solicitation provisions in favor of the
Company.
Incentive
Plan Awards
Outstanding Option-Based Awards and
Share-Based Awards
– The following table sets forth
for each Named Executive Officer all awards outstanding at the end
of the most recently completed financial year, including awards
granted before the most recently completed financial year. Each
option grant allows the holder to purchase one of the
Company’s common shares.
|
Option-based
Awards
|
Share-based
Awards
|
Name(a)
|
Number of
securities underlying unexercised options (#)(b)
|
Option exercise
price (C$)(c)
|
Option expiration
date(d)
|
Value of
unexercised in-the-money options (C$)(e)
(3)
|
Number of shares or
units of shares that have not vested (#)(f)
|
Market or payout
value of share-based awards that have not vested
(C$)(g)
|
Drs. Isa Odidi and
Amina Odidi
(1)
|
276,394
|
U.S.$36.20
|
Sept. 10,
2020
|
N/A
|
N/A
|
N/A
|
Dr. Isa
Odidi
|
30,000
7,500
5,000
7,000
9,000
7,000
|
32.70
18.10
42.90
25.20
24.20
11.50
|
Feb. 16,
2022
Apr. 13.
2020
Feb. 28,
2019
Nov. 30,
2020
Aug. 31,
2021
Nov. 30,
2022
|
N/A
N/A
N/A
N/A
N/A
N/A
|
N/A
N/A
N/A
N/A
N/A
N/A
|
N/A
N/A
N/A
N/A
N/A
N/A
|
Dr. Amina
Odidi
|
30,000
7,500
5,000
7,000
9,000
7,000
|
32.70
18.10
42.90
25.20
24.20
11.50
|
Feb. 16,
2022
Apr. 13.
2020
Feb. 28,
2019
Nov. 30,
2020
Aug. 31,
2021
Nov. 30,
2022
|
N/A
N/A
N/A
N/A
N/A
N/A
|
N/A
N/A
N/A
N/A
N/A
N/A
|
N/A
N/A
N/A
N/A
N/A
N/A
|
John
Allport
(2)
|
25,000
2,500
5,000
4,000
5,500
|
32.70
18.10
42.90
25.20
24.20
|
Feb. 16.
2022
Apr. 13,
2020
Feb. 28,
2019
Nov. 30,
2020
Aug. 31,
2021
|
N/A
N/A
N/A
N/A
N/A
|
N/A
N/A
N/A
N/A
N/A
|
N/A
N/A
N/A
N/A
N/A
|
Andrew
Patient
(5)
|
6,000
1,500
|
12.70
11.50
|
Oct. 20,
2027
(5)
Nov. 30,
2022
(5)
|
N/A
|
N/A
|
N/A
|
Greg
Powell
(6)
|
10,000
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Notes:
(1)
These option-based
awards are held jointly.
(2)
The value of
unexercised options at year-end is calculated by subtracting the
option exercise price from the closing price of the common shares
of the Company on the TSX for C$ exercise prices and Nasdaq for US$
exercise prices on November 30, 2018 (C$0.45 and US$0.33,
respectively) and multiplying the result by the number of common
shares underlying an option.
(3)
Mr. Patient served
as the Company’s Chief Financial Officer from September 6,
2017 until his resignation effective November 30, 2018. Mr.
Patient’s options ceased to be exercisable on March 30, 2019,
i.e. 120 days after he ceased to be employed by the
Company.
(4)
Mr. Powell was
appointed as Chief Financial Officer of the Company effective
February 11, 2019. Mr. Powell’s employment agreement provides
for the grant, pursuant and subject to the Option Plan, and as of
the commencement of employment, of 10,000 options, of which 4,000
should vest immediately on issuance, 3,000 should vest on the first
anniversary of issuance, and the remaining 3,000 should vest on the
second anniversary of issuance. The exercise price of these options
should be the volume weighted average trading price of the
Company’s common shares on TSX and Nasdaq for the five
business day preceding the approval of the issuance of the options
by the Board. These options were approved by the Board on March 20,
2019.
Incentive Plan Awards – Value Vested or
Earned During the Year –
The following table sets
forth details of the value vested or earned during the most
recently completed financial year for each incentive plan
award.
Name
|
Option-based
awards - Value vested during the year (U.S.$)
|
Share-based
awards - Value vested during the year (U.S.$)
|
Non-equity
incentive plan compensation - Value earned during the year
(U.S.$)
|
(a)
|
|
|
|
Drs. Isa
Odidi
|
N/A
|
N/A
|
N/A
|
Dr. Amina
Odidi
|
N/A
|
N/A
|
N/A
|
Andrew
Patient
(2)
|
N/A
|
N/A
|
N/A
|
Notes:
(1)
The amount
represents the theoretical total value if the options had been
exercised on the vesting date, established by calculating the
difference between the closing price of the common shares of the
Company on the TSX on the vesting date and the exercise
price.
(2)
Mr. Patient served
as the Company’s Chief Financial Officer from September 6,
2017 until his resignation effective November 30, 2018. Mr.
Patient’s options ceased to be exercisable on March 30, 2019,
i.e. 120 days after he ceased to be employed by the
Company.
Pension
Plan Benefits
The Company does
not provide a defined benefit pension plan or a defined
contribution pension plan for any of its Named Executive Officers,
nor does it have a deferred compensation pension plan for any of
its Named Executive Officers. There are no amounts set aside or
accrued by the Company or its subsidiaries to provide pension,
retirement or similar benefits.
Termination
and Change of Control Benefits
The employment
agreement with each of Dr. Isa Odidi and Dr. Amina Odidi
(collectively, the “
Odidis
”), by virtue of it being a
fixed-term agreement with automatic renewal provisions, effectively
provides for payments to the Odidis following termination of the
employment agreement unless the agreement has been terminated in
accordance with its terms. As a result, if either of the Odidis had
been terminated on the last business day of the Company’s
most recently completed financial year, it is estimated that an
amount of up to approximately C$1.8 million would be payable to
each of the Odidis, which is the amount that would have been
payable through to September 30, 2022, at each of the Odidis’
current annual base salary level. Given their nature as fixed term
employment agreements, if notice is properly provided to not renew
the agreement following the term ending September 30, 2022, then as
such date approaches the amount payable upon termination to the
Odidis will decrease to the point where no amount would be payable
upon termination as at September 30, 2022. Any termination of the
employment of the Odidis must be undertaken by and is subject to
the prior approval of the Board. There are no payments applicable
under the employment agreements of the Odidis relating to a change
of control of the Company.
For a discussion of
certain termination and change of control benefits under the
employment agreement with Mr. Patient, see the description of
his employment agreement under the heading “
Employment Agreements
”
above.
DIRECTOR
COMPENSATION
Director
Compensation Table
The following table
sets forth all amounts of compensation provided to the
non-executive directors (except for Dr. Betts who was elected
to the Board in January 2019) for the Company’s most recently
completed financial year.
Name
|
|
|
|
Non-equity
incentive plan compensation
|
|
|
|
(a)
|
|
|
|
|
|
|
|
Eldon
Smith
(1)
|
C$33,250
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
C$33,250
|
Kenneth
Keirstead
|
C$43,000
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
C$43,000
|
Bahadur
Madhani
|
C$48,000
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
C$48,000
|
Shawn
Graham
|
C$16,375
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
C$16,375
|
Notes:
(1)
DSUs (defined
herein) that were earned. Does not include DSUs earned in the
previous financial year and granted in the most recently completed
financial year.
(2)
Option-based awards
for fiscal year 2018 were issued on November 30, 2018.
(3)
Eldon Smith served
as a Director to the Company from October 2009 until his
resignation (effective January 8, 2019) to pursue other
opportunities.
Significant factors
necessary to understand the information disclosed in the Director
Compensation Table above include the following: Non-management
directors receive an annual retainer of C$25,000. The Audit
Committee chair receives an annual retainer of C$10,000. The
Corporate Governance Committee chair and Compensation Committee
Chair, each receives an annual retainer of C$5,000. Non-chair
committee members are paid an additional C$2,500 per year per
committee. Meetings will result in an additional C$1,000 per day
per meeting.
Deferred Share Unit Awards for Outside Directors
The Company
established a plan (the “
DSU
Plan
”) for deferred share units (“
DSUs
”) to permit directors who are
not officers of the Company to defer receipt of all or a portion of
their Board fees until termination of Board service, and to receive
such fees in the form of common shares at that time.
The key features of
the DSU Plan are as follows:
●
The DSU Plan is
administered by the Board or a committee thereof. Members of the
Board who are not salaried officers or employees of the Company or
a related corporation are eligible to participate under the DSU
Plan. By the terms of the DSU Plan, Dr. Isa Odidi, the Chief
Executive Officer of the Company, and Dr. Amina Odidi, the
President and Chief Operating Officer of the Company, are
specifically not eligible to participate.
●
The number of
common shares available for issuance upon redemption of DSUs issued
under the DSU Plan is limited to 11,000 common shares of the
Company, representing approximately 0.05% of the total number of
issued and outstanding common shares as of the Record
Date.
●
Each participant
may elect to be paid a minimum of 20% up to a maximum of 100%, in
10% increments, of Board fees in the form of DSUs in lieu of being
paid such fees in cash. On the date on which Board fees are payable
(on a quarterly basis), the number of DSUs to be credited to the
participant is determined by dividing an amount equal to the
designated percentage of the Board fees that the participant has
elected to have credited in DSUs on that fee payment date, by the
calculated market value of a common share (typically on the TSX) on
that fee payment date. The market value of a common share is the
weighted average trading price of the common shares on any exchange
where the common shares are listed (including the TSX) for the last
five trading days prior to such day. If dividends are declared by
the Company, a participant will also be credited with dividend
equivalents in the form of additional DSUs based on the number of
DSUs the participant holds on the record date for the payment of a
dividend. Dividend equivalents are calculated by dividing (i) the
amount obtained by multiplying the amount of the dividend declared
and paid per common share by the number of DSUs in the
participant’s account on the record date for the payment of
such dividend, by (ii) the market value of a common share on that
dividend payment date. The market value of a common share is the
weighted average trading price of the common shares on any exchange
where the common shares are listed (including the TSX) for the last
five trading days prior to such day.
●
A participant is
permitted to redeem his/her DSUs only following termination of
Board service by way of retirement, non-re-election as a director,
resignation or death. Upon redemption of DSUs, the Company will
issue to the participant common shares of the Company equal to the
number of DSUs to be redeemed.
●
A separate notional
account is maintained for each participant under the DSU Plan. Each
such account will be credited with DSUs issued to the participant
from time to time by way of a bookkeeping entry in the books of the
Company. The DSUs credited to the participant’s account will
be cancelled as of the applicable redemption date and following
redemption of all DSUs credited to the participant’s account,
such participant’s account will be closed.
●
No rights under the
DSU Plan and no DSUs credited pursuant to the provisions of the DSU
Plan are assignable or transferable by any participant other than
pursuant to a will or by the laws of descent and
distribution.
●
Under the DSU Plan,
the Board may from time to time in its absolute discretion amend,
modify and change the provisions of the DSU Plan or any DSUs issued
pursuant to the DSU Plan, provided that any amendment
will:
●
not adversely alter
or impair any DSU previously credited without such
participant’s consent in writing except as permitted by the
adjustment provisions in the DSU Plan;
●
be subject to any
regulatory approvals including, where required, the approval of the
TSX;
●
be subject to
shareholder approval in accordance with the rules of the TSX in
circumstances where the amendment, modification or change to the
DSU Plan or DSU would:
i.
allow for the
assignment or transfer of any right under the DSU Plan or a DSU
credited pursuant to the provisions of the DSU Plan other than as
provided for under the assignability provisions in the DSU
Plan;
ii.
increase the fixed
maximum number of common shares which may be issued pursuant to the
DSU Plan; or
iii.
amend the amendment
provisions of the DSU Plan; and
●
not be subject to
shareholder approval in circumstances (other than those listed in
the paragraph immediately above), including, but not limited to,
circumstances where the amendment, modification or change to the
DSU Plan or DSU would:
i.
be of a
“housekeeping nature”, including any amendment to the
DSU Plan or a DSU that is necessary to comply with applicable law
or the requirements of any regulatory authority or stock exchange
and any amendment to the DSU Plan or a DSU to correct or rectify
any ambiguity, defective provision, error or omission therein,
including any amendment to any definitions therein;
ii.
introduce features
to the DSU Plan that would permit the Company to, instead of
issuing common shares from treasury upon the redemption of the
DSUs, retain a broker and make payments for the benefit of
participants to such broker who would purchase common shares
through the facilities of the TSX for such
participants;
iii.
introduce features
to the DSU Plan that would permit the Company to, instead of
issuing common shares from treasury upon the redemption of the
DSUs, make lump sum cash payments to participants;
iv.
change the
application of the adjustment provisions of the DSU Plan;
or
v.
change the eligible
participants under the DSU Plan.
A copy of the DSU
Plan is available upon request in writing to the Chief Financial
Officer of the Company at 30 Worcester Road, Toronto, Ontario, M9W
5X2.
The 11,000 common
shares that are currently authorized for issuance under the DSU
Plan represent approximately 0.05% of the Company’s common
shares issued and outstanding as at the Record Date. A total of
10,279 DSUs have been issued, representing common share rights that
comprise approximately 0.05% of the common shares issued and
outstanding as at the Record Date.
Outstanding
Option-Based Awards and Share-Based Awards
The following table
sets forth all amounts of option-based and share-based awards to
the non-executive directors for the Company’s most recently
completed financial year.
|
Option-based
Awards
|
Share-based
Awards
|
Name
|
Number
of securities underlying unexercised options (#)
|
Option
exercise price
|
Option
expiration date
|
Value
of unexercised in-the-money options
|
Number
of shares or units of shares that have not vested (#)
|
Market
or payout value of share-based awards that have not
vested
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)(1)
|
(f)(2)
|
(g)(3)
|
Eldon
Smith
|
1,000
2,500
3,750
3,750
2,000
3,500
4,000
|
C$28.80
C$18.10
C$32.20
C$42.90
C$25.20
C$24.20
C$11.50
|
May 08,
2019
May 08,
2029
May 08,
2019
Feb. 28,
2019
May 08,
2020
May 08,
2021
May 08,
2022
|
N/A
N/A
N/A
N/A
N/A
N/A
N/A
|
10,279
N/A
N/A
N/A
N/A
N/A
N/A
|
C$4,626
N/A
N/A
N/A
N/A
N/A
N/A
|
Kenneth
Keirstead
|
1,000
2,500
3,750
3,750
2,000
3,500
4,000
|
C$28.80
C$18.10
C$32.20
C$42.90
C$25.20
C$24.20
C$11.50
|
Oct. 22,
2019
Apr. 13,
2020
Nov. 30,
2019
Feb. 28,
2019
Nov. 30,
2020
Aug. 31,
2021
Nov. 30,
2022
|
N/A
N/A
N/A
N/A
N/A
N/A
N/A
|
N/A
N/A
N/A
N/A
N/A
N/A
N/A
|
N/A
N/A
N/A
N/A
N/A
N/A
N/A
|
Bahadur
Madhani
|
1,000
2,500
3,750
3,750
2,000
3,500
4,000
|
C$28.80
C$18.10
C$32.20
C$42.90
C$25.20
C$24.20
C$11.50
|
Oct. 22,
2019
Apr. 13,
2020
Nov. 30,
2019
Feb. 28,
2019
Nov. 30,
2020
Aug. 31,
2021
Nov. 30,
2022
|
N/A
N/A
N/A
N/A
N/A
N/A
N/A
|
N/A
N/A
N/A
N/A
N/A
N/A
N/A
|
N/A
N/A
N/A
N/A
N/A
N/A
N/A
|
Shawn
Graham
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Notes:
(1)
The value of
unexercised options at year-end is calculated by subtracting the
option exercise price from the closing price of the common shares
of the Company on the TSX on November 30, 2018 (C$0.45) and
multiplying the result by the number of common shares underlying an
option.
(2)
These DSUs are
permitted to be redeemed only following termination of Board
service. Includes DSUs earned as at November 30,
2018.
(3)
The value of DSUs
at year-end is calculated from the closing price of the common
shares of the Company on the TSX on November 30, 2018 (C$0.45)
and multiplying by the number of common shares underlying a
DSU.
Incentive
Plan Awards – Value Vested or Earned During the
Year
The following table
sets forth all amounts of option-based and share-based awards
vested to the non-executive directors of the Company for the most
recently completed financial year and no non-equity incentive plan
compensation was earned during the most recently completed
financial year.
Name
|
Option-based
awards - Value vested during the year
|
Share-based
awards - Value vested during the year
|
Non-equity
incentive plan compensation - Value earned during the
year
|
(a)
|
|
|
(d)
|
Eldon
Smith
|
N/A
|
N/A
|
Nil
|
Kenneth
Keirstead
|
N/A
|
N/A
|
Nil
|
Bahadur
Madhani
|
N/A
|
N/A
|
Nil
|
Notes:
(1)
The amount
represents the theoretical total value if the options had been
exercised on the vesting date, established by calculating the
difference between the closing price of the common shares of the
Company on the TSX on the vesting date and the exercise
price.
(2)
The amount
represents the theoretical total value of DSUs which were fully
vested on their respective dates of issuance. DSUs are issued at
the calculated market value of a common share on the date of
issuance.
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
PLANS
Information
regarding securities authorized for issuance under the
Company’s equity compensation plans is provided below, as of
November 30, 2018.
Plan
Category
|
Number of securities
to be issued upon exercise of outstanding options, warrants, and
rights
|
Weighted-average
exercise price of outstanding options, warrants and rights
(US$)
|
Number of securities
remaining available for future issuance under equity compensation
plans (excluding all securities reflected in
column)
|
|
|
|
|
Equity compensation
plans approved by security holders (Employee Stock Option
Plan)
|
279,256
|
13.61
|
1,545,968
|
Equity compensation
plans not approved by security holders
(1)
|
276,394
|
36.20
|
N/A
|
TOTA
|
555,650
|
31.61
|
1,545,968
|
Note:
(1)
Includes 276,394 of
performance-based options issued to certain Named Executive
Officers. See “
Executive
Compensation
”.
INDEBTEDNESS
OF DIRECTORS AND EXECUTIVE OFFICERS
Since the beginning
of the Company’s last financial year, no present or former
director or officer, or any associate of such director or officer
is currently or has been indebted to the Company.
AUDIT
COMMITTEE INFORMATION
Reference is made
to the annual information form of the Company for the year ended
November 30, 2018 (the “
Annual Information Form
”) for
disclosure of information relating to the Audit Committee. A copy
of this document can be found on SEDAR at www.sedar.com or by
contacting the Chief Financial Officer of the Company at 30
Worcester Road, Toronto, Ontario, M9W 5X2 telephone (416) 798-3001.
A copy of the Charter of the Audit Committee is attached to the
Annual Information Form as Schedule A.
INTEREST
OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED
UPON
To the knowledge of
the Company, no person who has been a director or executive officer
of the Company since the beginning of the Company’s most
recently completed financial year, nor any associate or affiliate
of such persons, has any material interest, direct or indirect, by
way of beneficial ownership of securities or otherwise, in matters
to be acted upon at the Meeting, other than in a capacity as a
holder of securities of the Company.
INTERESTS
OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
Other than as set
forth below, to the knowledge of the Company, no (i) director or
executive officer of the Company or any of its subsidiaries; (ii)
shareholder (or director or executive officer of such shareholder)
who beneficially owns, or controls or directs, directly or
indirectly, more than 10% of the common shares of the Company; and
(iii) associates or affiliates of the foregoing, had any material
interest, direct or indirect, in any transaction since the
commencement of the Company’s most recently completed
financial year or in any proposed transaction which has materially
affected or would materially affect the Company or any of its
subsidiaries.
On September 10,
2018, the Company completed a private placement financing of an
unsecured convertible debenture in the principal amount of US$0.5
million (the “
2018
Debenture
”). The 2018 Debenture bears interest at a
rate of 10% per annum, payable monthly, may be prepaid at any time
at our option, and is convertible into common shares at any time
prior to the maturity date at a conversion price of US$3.00 per
common share at the option of the holder. Drs. Isa and Amina Odidi,
who are directors, executive officers and shareholders of our
Company, provided us with the original US$500,000 of proceeds for
the 2018 Debenture. The maturity date for the 2018 Debenture is
September 1, 2020.
On April 4, 2019,
the Company received conditional approval from the TSX for the
proposed issuance by the Company of an unsecured convertible
debenture in the principal amount of US$1,050,000 (the
“
New Debenture
”)
to Drs. Isa and Amina Odidi. The New Debenture would bear interest
at a rate of 12% per annum, payable monthly, could be prepaid at
any time at our option, and would be convertible into common shares
at any time prior to the maturity date at a conversion price of
US$0.59 per common share at the option of the holder. The maturity
date for the New Debenture would be November 1, 2019. The New
Debenture is meant to satisfy the principal amount owing under the
convertible debenture issued by the Company to Drs. Isa and Amina
Odidi on January 10, 2013 (the “
2013 Debenture
”), which has been
extended multiple times and was most recently due and payable on
April 1, 2019. Drs. Isa and Amina Odidi agreed to a 30 day
extension of the maturity date, so the 2013 Debenture is now due
and payable on May 1, 2019.
CORPORATE
GOVERNANCE DISCLOSURE
Guidelines
“
Corporate governance
” is the
process and structure used to direct and manage the business and
affairs of the Company to achieve the shareholders’
objectives. The shareholders elect the members of the Board who in
turn are responsible for overseeing all aspects of the operations
of the Company, appointing management, and ensuring that the
business is managed properly taking into account the interests of
the shareholders and other stakeholders, such as employees and
patients.
The Board, monitors
changes with respect to corporate governance practices and
regulatory requirements. Under National Instrument 58-101 -
Disclosure of Corporate Governance
Practices
and National Instrument 52-110 -
Audit Committees
of the Canadian
Securities Administrators, the Company is required to disclose
information in this Management Proxy Circular relating to its
corporate governance practices. The Company’s disclosure is
set out below and in Schedule A to this Management Proxy
Circular.
Mandate
of the Board of Directors
The Board has
adopted a formal mandate outlining its responsibilities. The text
of the Board’s mandate can be found on the Company’s
web site and at www.sedar.com.
The Board is
responsible for the stewardship of the Company and for supervising
the management of the business and affairs of the Company. As part
of this overall responsibility, the Board handles the following
matters:
●
Succession
planning, including appointing, developing, and monitoring senior
management and the CEO;
●
Adopting a
strategic planning process and approving and reviewing, on at least
an annual basis, a strategic plan which takes into account, among
other things, the opportunities and risks of the
Company;
●
Identifying the
principal risks of the Company’s business and ensuring the
implementation of appropriate systems to manage those
risks;
●
Establishing
communication policies for the Company, which should:
a.
address how the
Company interacts with analysts, investors, other key stakeholders,
and the public;
b.
contain measures
with respect to the Company’s compliance, its continuous and
timely disclosure obligations, and the avoidance of selective
disclosure; and
c.
be reviewed at
least annually.
●
Ensuring the
integrity of the Company’s internal control and management
information systems;
●
Ensuring the
integrity of the CEO and the other executive officers, and ensuring
that there is a culture of integrity throughout the
organization;
●
Establishing what
business transactions and expenditures require the prior approval
of the Board;
●
Establishing
specific and effective measures in the Company for receiving
shareholder feedback;
●
On an annual basis,
communicating to management the Board’s expectations of
it;
●
Establishing a
committee composed solely of non-Management directors with the
responsibility to assess directors on an ongoing basis and propose
new Board nominees;
●
Establishing an
orientation and education program for all new directors and a
continuing education program for all directors;
●
Developing the
Company’s approach to corporate governance and monitoring
compliance with relevant regulatory guidelines;
●
Together with the
CEO, developing position descriptions for the Board and the CEO,
including the limits to Management’s
responsibilities;
●
Reviewing and
approving the corporate objectives that the CEO is responsible for
meeting, and assessing the CEO against these
objectives;
●
Establishing
procedures to ensure that the Board functions independently of
management;
●
Regularly assessing
its own effectiveness and contribution, as well as the
effectiveness and contribution of each Board committee and each
individual director;
●
Appointing an Audit
Committee composed solely of unrelated and independent directors,
each of whom is “financially literate” and one of whom
has “accounting or related financial
experience”;
●
Adopting
definitions for “financially literate” and
“accounting or related financial
experience”;
●
Reviewing and
assessing the adequacy of the charter for the Audit Committee, as
well as the charters for other established committees, at least
annually;
●
Establishing a
system whereby an individual director can engage an external
advisor at the expense of the Company in appropriate circumstances,
subject to the approval of an appropriate committee of the Board;
and
●
Conducting regular
meetings independent of management.
Members of the
Board are expected to review available meeting materials in
advance, to attend all regularly scheduled Board meetings, and
committee meetings of which they are a member, whenever possible,
and to devote the necessary time and attention to effectively carry
out their responsibilities as directors.
The Board
encourages feedback from security holders of the Company. If you
wish to communicate directly with the independent members of the
Board, please do so in writing by mailing your correspondence,
clearly marked as “
Shareholder Correspondence
” to
President, c/o Intellipharmaceutics International Inc., 30
Worcester Road, Toronto, Ontario, M9W 5X2.
SHAREHOLDER
PROPOSALS FOR THE 2020 ANNUAL MEETING
The Company will
review shareholder proposals intended to be included in proxy
material for the 2020 annual meeting of shareholders that are
received by the Company at 30 Worcester Road, Toronto, Ontario, M9W
5X2, Attention: President, no later than the date that is at least
90 days prior to the anniversary of the date that notice of the
Meeting was sent to the shareholders.
ADDITIONAL
INFORMATION
Copies of the
following documents are available without charge to shareholders
upon written request to the President of the Company at 30
Worcester Road, Toronto, Ontario, M9W 5X2:
(a)
the audited
consolidated financial statements for the year ended November 30,
2018 together with the accompanying report of the auditor and
management’s discussion and analysis for the year ended
November 30, 2018;
(b)
this Management
Proxy Circular; and
(c)
the Annual
Information Form.
Additional
information relating to the Company can be found under the
Company’s issuer profile on SEDAR at www.sedar.com and the
Company’s website at www.intellipharmaceutics.com. Financial
information is provided in the Company’s audited consolidated
financial statements and management’s discussion and analysis
for the financial year ended November 30, 2018.
DIRECTORS’
APPROVAL
The contents of
this Management Proxy Circular and its distribution to shareholders
have been approved by the board of directors of the
Company.
DATED
at Toronto, Ontario, the
15
th
day
of April, 2019.
|
BY
ORDER OF THE BOARD OF DIRECTORS
|
|
|
(signed) “Dr. Amina Odidi”
|
|
Dr. Amina
Odidi
President and Chief
Operating Officer
|
SCHEDULE A
Corporate
Governance Guidelines
The Company
believes that effective corporate governance practices are
fundamental to the overall success of a company. The Canadian
Securities Administrators have adopted National Instrument 58-101
(“
NI 58-101
”)
and the associated National Policy 58-201 which require the Company
to disclose its corporate governance practices. In addition, the
Company must comply with National Instrument 52-110
(“
NI 52-110
”)
with respect to Audit Committees. See details in the accompanying
Management Proxy Circular under the heading “
Audit Committee
Information
”.
CORPORATE
GOVERNANCE DISCLOSURE REQUIREMENT
(1)
|
COMMENTS
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1(a) Disclose
the identity of directors who are independent.
|
The Board has
reviewed the independence of each director on the basis of the
definition in section 1.4 of NI 52-110. A director is
“independent” if he or she has no direct or indirect
material relationship with the Company. A “material
relationship” is one that could, in the view of the Board, be
reasonably expected to interfere with the exercise of a
director’s independent judgment. The Board has determined,
after reviewing the roles and relationships of each of the
directors, that three out of six of the nominees proposed by
Management for election to the Board are independent from the
Company. The Board monitors the disclosure of conflicts of interest
by directors and ensures that no director will vote nor participate
in a discussion on a matter in respect of which such director has a
material interest. The following nominees have been affirmatively
determined by the Board to be independent by the
Board:
Mr.
Madhani
Mr.
Keirstead
Dr.
Betts
Mr.
Graham
|
(b) Disclose
the identity of directors who are not independent, and describe the
basis for that determination.
|
The Board has
determined, after reviewing the roles and relationships of each of
the directors, that the following two out of six nominees proposed
by Management for election to the Board are not independent from
the Company since they are currently executive officers of the
Company:
Dr. Isa Odidi,
Chairman of the Board & Chief Executive Officer,
Dr. Amina Odidi,
President and Chief Operating Officer
|
(c) Disclose
whether or not a majority of the directors are independent. If a
majority of directors are not independent, describe what the Board
does to facilitate its exercise of independent judgement in
carrying out its responsibilities.
|
Four of the six
nominees proposed by Management for election to the Board are
independent. The Board monitors the disclosure of conflicts of
interest by directors and ensures that no director will vote nor
participate in a discussion on a matter in respect of which such
director has a material interest.
|
(d) If a
director is presently a director of any other issuer that is a
reporting issuer (or the equivalent) in a jurisdiction or a foreign
jurisdiction, identify both the other director and the other
issuer.
|
All directorships
with other public entities for each of the nominees are set out in
the accompanying Management Proxy Circular in the table under the
heading “
Election of
Directors
”.
|
(e) Disclose
whether or not the independent directors hold regularly scheduled
meetings at which members of management are not in attendance. If
the independent directors hold such meetings, disclose the number
of meetings held during the most recently completed financial year.
If the independent directors do not hold such meetings, describe
what the Board does to facilitate open and candid discussion among
its independent directors.
|
At each Board and
committee meeting, including all telephone meetings, there is a
portion at which non-independent directors and members of
management are not in attendance. There have been three such board
meeting, four such Audit Committee meetings and two such Corporate
Governance Committee meeting held during the most recently
completed fiscal year.
|
(f) Disclose
whether or not the chair of the Board is an independent director,
disclose the identity of the independent chair, and describe his or
her role and responsibilities.
|
The positions of
CEO and Chairman of the Board are not split; accordingly, the
Chairman of the Board is not independent. The roles and
responsibilities of the Chairman include the
following:
- working to
ensure a strong, effective, well-balanced and representative
composition of the Board and its committees
- ensuring
that committees are working effectively
- ensuring the
Board is receiving timely information of appropriate quality,
before, during, and after Board meetings.
- providing
leadership for the independent directors by encouraging them to
meet independently any time they consider it appropriate to do
so.
|
(g) Disclose
the attendance record of each director for all board meetings held
since the beginning of the most recently completed financial
year.
|
See disclosure in
the accompanying Management Proxy Circular under the heading
“
Election of
Directors
”.
|
2. Disclose
the text of the board’s written mandate.
|
The Board has
adopted a formal mandate for itself. The mandate of the Board is
available on the Company’s website and summary is included in
the Management Proxy Circular under the heading
“
Corporate Governance – Mandate of the
Board of Directors
”. A copy may also be obtained upon
request to the Chief Financial Officer of the Company at 30
Worcester Road, Toronto, Ontario, M9W 5X2, telephone (416)
798-3001. A copy of the mandate can be found under the
Company’s corporate profile at
www.sedar.com
. The written mandate of the
Board provides that the Board is responsible for the stewardship of
the Company including the creation of a culture of integrity, the
adoption of a strategic planning process that takes into account,
among other things, the opportunities and risks of the business,
the identification of the principal risks of the business and the
implementation of appropriate systems to manage these risks,
succession planning, internal control and management information
systems and the Company’s approach to corporate
governance.
|
3.(a) Disclose
whether or not the board has developed written position
descriptions for the chair and the chair of each board
committee.
|
The Board has
developed written position descriptions for the Chairman of the
Board, as well as for the Chairman of the Audit Committee, Chairman
of the Compensation Committee and Chairman of the Corporate
Governance Committee. Their duties reflect the responsibilities of
the committees whose charters are available on the Company’s
website and at
www.sedar.com
.
|
(b) Disclose
whether or not the board and CEO have developed a written position
description for the CEO.
|
The Company has
developed a written position description for the CEO. The position
description of the CEO includes the following duties and
responsibilities: strategy, leadership, operations, finance,
reporting to the Board, and relations with shareholders, employees
and the public.
|
4.(a) Briefly
describe what measures the board takes to orient new members
regarding
(i) the role
of the board, its committees and its directors, and
(ii) the
nature and operation of the issuer’s business.
|
The Board has an
orientation and education program in place for new directors which
the Board feels is appropriate having regard to the Company and the
current makeup of the Board. Each director receives relevant
corporate and business information on the Company, the Board and
its committees.
|
(b) Briefly
describe what measures, if any, the board takes to provide
continuing education for its directors.
|
Presentations and
reports are made to the Board from time to time to educate and keep
them informed of changes within the Company and of regulatory and
industry requirements and standards.
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5.(a) Disclose
whether or not the board has adopted a written code for its
directors, officers and employees. If the board has adopted a
written code:
(i) disclose
how an interested party may obtain a copy of the written
code;
(ii) describe
how the board monitors compliance with its code; and
(iii) provide
a cross-reference to any material change report(s) filed since the
beginning of the most recently completed financial year that
pertains to any conduct of a director or executive officer that
constitutes a departure from the Code.
|
The Board has
adopted a Code of Business Conduct and Ethics (the
“
Code
”)
applicable to employees and its directors, copies of which are
available on the Company’s website or at
www.sedar.com
. A copy may also be obtained
upon request to the Chief Financial Officer of the Company at 30
Worcester Road, Toronto, Ontario, M9W 5X2.
The Board regularly
monitors compliance with the Code by monitoring corporate
activities and also ensures that management encourages and promotes
a culture of ethical business conduct.
The Company has
developed and the Board has approved various corporate policies,
including the Disclosure Policy and the Share Trading
Policy.
The Board has not
granted any waiver of the Code in favour of a director or executive
officer. Accordingly, no material change report has been required
or filed.
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(b) Describe
any steps the Board takes to ensure directors exercise independent
judgment in considering transactions and agreements in respect of
which a director or executive officer has a material
interest.
|
The Board monitors
the disclosure of conflicts of interest by directors and ensures
that no director will vote nor participate in a discussion on a
matter in respect of which such director has a material
interest.
|
(c) Describe
any steps the Board takes to encourage and promote a culture of
ethical business conduct.
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The Board has
adopted a Code of Business Conduct and Ethics applicable to the
Company’s employees and directors.
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6.(a) Describe
the process by which the Board identifies new candidates for board
nomination.
|
The Board has a
Corporate Governance Committee, copies of whose Charter are
available on the Company’s website or at
www.sedar.com
. The committee makes
recommendations to the Board concerning the appointment of such new
directors as may be necessary to fill vacancies or the additional
needs of the Board. For purposes of filling vacancies on the Board,
the Board will review the qualifications of prospective members and
determine their relevance taking into consideration the
recommendations of the Corporate Governance Committee, current
Board composition and the anticipated skills required to round out
the capabilities of the Board.
|
(b) Disclose
whether or not the Board has a nominating committee composed
entirely of independent directors.
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The Board does not
have a nominating committee. As above, it does consider the
recommendations of the Corporate Governance Committee, of which two
of the three members are independent directors.
The responsibility
for identifying and recommending individuals to the Board for
nomination to the Board as members of the Board and its committees
rests with the Corporate Governance Committee, and is ultimately
decided by the Board as a whole. Three out of the six members of
the Board are considered independent.
|
(c) If the
board has a nominating committee, describe the responsibilities,
powers and operation of the nominating committee.
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The Board does not
have a nominating committee. It does take into account the
recommendations of the Corporate Governance Committee.
|
7.(a) Describe
the process by which the board determines the compensation for your
company’s directors and officers.
|
The Compensation
Committee recommends compensation policies concerning officers and
senior management to the Board. The Corporate Governance Committee
recommends compensation policies concerning independent directors
to the Board. The Board makes the final determinations regarding
the adequacy and form of the compensation for non-executive
directors to ensure that such compensation realistically reflects
the responsibilities and risks involved, without compromising a
director’s independence.
Directors who are
executives of the Company receive no additional remuneration for
their services as directors.
A description of
the Company’s practices regarding executive and director
compensation is set out in the Management Proxy Circular under the
heading “
Executive
Compensation
”.
Directors who are
executives of the Company exclude themselves from any determination
by the Board of compensation for themselves or any
relative.
|
(b) Disclose
whether or not the board has a compensation committee composed
entirely of independent directors.
|
The Board has a
Compensation Committee composed entirely of independent directors.
Copies of its Charter are available on the Company’s website
or
www.sedar.com
.
|
(c) If the
board has a compensation committee, describe the responsibilities,
powers, and operation of the compensation committee.
|
The Compensation
Committee is a standing committee of the Board whose primary
function is to assist the Board in fulfilling its responsibilities
relating to:
a) the
development, review and periodic approval of the Company’s
compensation philosophy that attracts and retains key executives
and employees, while supporting the overall business strategy and
objectives and links compensation with business objectives and
organizational performance;
b) evaluate
and approve all compensation of executive officers including
salaries, bonuses and equity compensation that are required to be
determined;
c) review
the Company’s stock option plan, the employee restricted
stock unit plan and the deferred stock unit plan on an annual
basis;
d) review
and make recommendations to the Board on compensation payable to
senior officers of the Company to be hired subsequent to the
adoption of this Charter; and
e) produce
a report annually on executive officer compensation for inclusion
in the proxy statement of the Company.
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8. If the
board has standing committees other than the audit, compensation
and nominating committees, identify the committees and describe
their function.
|
The Corporate
Governance Committee is a standing committee of the Board whose
primary function is to assist the Board in dealing with the
corporate governance matters described in its charter, including
recommendations concerning nominations to the Board.
|
9. Disclose
whether or not the board, its committees and individual directors
are regularly assessed with respect to their effectiveness and
contribution. If assessments are regularly conducted, describe the
process used for the assessments.
|
The Corporate
Governance Committee, whose Charter was adopted by the Board in
November 2011, has the mandate to receive comments and evaluations
from all directors as to the performance of the Board and its
standing committees, and to annually assess the Board’s
performance. The Chairman of the Corporate Governance Committee
will oversee the assessment and evaluation process of the Board and
the directors and will report the results to the Board. The Board
also monitors the quality of the relationship between management
and the Board, in order to recommend ways to improve that
relationship.
Each director will
exclude himself/herself from any consideration by the Board of the
assessment of the effectiveness and contribution of that
director.
|
10. Disclose
whether or not the issuer has adopted term limits for the directors
on its board or other mechanisms of board renewal and, if so,
include a description of those director term limits or other
mechanisms of board renewal. If the issuer has not adopted director
term limits or other mechanisms of board renewal, disclose why it
has not done so.
|
The Company has not
adopted term limits for the directors or other formal mechanisms of
Board renewal as term limits could restrict the Company’s
ability to benefit from the contributions of otherwise qualified,
experienced directors with a deeper understanding of the
Company’s business. As noted above, the Corporate Governance
Committee is responsible for assessments of the Board and director
nominees and considers the potential contributions of new
directors.
|
11.(a) Disclose
whether the issuer has adopted a written policy relating to the
identification and nomination of women directors. If the issuer has
not adopted such a policy, disclose why it has not done
so.
(b) If an
issuer has adopted a policy referred to in (a), disclose the
following in respect of the policy:
(i) a short
summary of its objectives and key provisions,
(ii) the
measures taken to ensure that the policy has been effectively
implemented,
(iii) annual
and cumulative progress by the issuer in achieving the objectives
of the policy, and
(iv) whether
and, if so, how the board or its nominating committee measures the
effectiveness of the policy.
|
The Company has not
adopted a written policy relating specifically to the
identification and nomination of women directors as the
Company’s written corporate governance guidelines takes into
account a broader range of relevant considerations.
|
12. Disclose
whether and, if so, how the board or nominating committee considers
the level of representation of women on the board in identifying
and nominating candidates for election or re-election to the board.
If the issuer does not consider the level of representation of
women on the board in identifying and nominating candidates for
election or re-election to the board, disclose the issuer’s
reasons for not doing so.
|
The Company does
consider the level of representation of women on the Board in
identifying and nominating candidates for election or re-election
to the Board; however, gender is only one factor in the
consideration of the competencies and skills the Board, as a whole,
should possess taking into account the tangible and intangible
skills and qualities necessary for an effective Board given the
Company’s stage of development, operational and financial
condition, and strategic outlook.
|
13. Disclose
whether and, if so, how the issuer considers the level of
representation of women in executive officer positions when making
executive officer appointments. If the issuer does not consider the
level of representation of women in executive officer positions
when making executive officer appointments, disclose the
issuer’s reasons for not doing so.
|
The Company has
considered the level of representation of women in executive
officer positions when making the limited number of executive
officer appointments. One of the Company’s current
executive officers is a women. The Company did not consider it
necessary to specifically target a female candidate when the Chief
Financial Officer was appointed in 2019.
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14.(a) For
purposes of this Item, a “target” means a number or
percentage, or a range of numbers or percentages, adopted by the
issuer of women on the issuer’s board or in executive officer
positions of the issuer by a specific date.
(b) Disclose
whether the issuer has adopted a target regarding women on the
issuer’s board. If the issuer has not adopted a target,
disclose why it has not done so.
(c) Disclose
whether the issuer has adopted a target regarding women in
executive officer positions of the issuer. If the issuer has not
adopted a target, disclose why it has not done so.
(d) If the
issuer has adopted a target referred to in either (b) or (c),
disclose:
(i) the
target, and
(ii) the
annual and cumulative progress of the issuer in achieving the
target.
|
The Company has not
adopted a target regarding the number or percentage of women on the
Board given the current representation of women on the Board and
the need to consider all qualifications of potential nominees or
appointees.
The Company has not
adopted a target regarding the number or percentage of women in
executive officer positions given the current representation of
women in executive offices, the infrequency of such appointments
and the need to consider all qualifications of potential appointees
in selecting the best candidate for executive officer
positions.
|
15.(a) Disclose
the number and proportion (in percentage terms) of directors on the
issuer’s board who are women.
(b) Disclose
the number and proportion (in percentage terms) of executive
officers of the issuer, including all major subsidiaries of the
issuer, who are women.
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One of the
Company’s six directors (or 17%) is a woman.
One of the
Company’s three executive officers (or 33%) is a
woman.
|
(1)
Reference is made
to the items in Form 58-101F1 of NI 58-101.
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