As filed with the U.S. Securities and Exchange Commission on December 10, 2020
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________________________
TRILLIUM THERAPEUTICS INC.
(Exact name of Registrant as specified in its charter)
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British Columbia, Canada
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Not Applicable
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(State or other jurisdiction of Incorporation or organization)
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(I.R.S. Employer Identification No.)
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2488 Dunwin Drive
Mississauga, Ontario L5L 1J9
Canada
(416) 595-0627
Attention: Chief Financial Officer
(Address of principal executive offices) (Zip code)
Trillium Therapeutics Inc. 2018 Amended and Restated Stock Option Plan
Trillium Therapeutics Inc. 2020 Omnibus Equity Incentive Plan
(Full title of the plans)
_____________________________________
Trillium Therapeutics USA Inc.
100 Cambridgepark Drive, Suite 510
Cambridge, Massachusetts 02140
(857) 412-7029
(Name and address of agent for service) (Telephone number, including area code, of agent for service)
Copies to:
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Thomas S. Levato
Goodwin Procter LLP
The New York Times Building
620 Eighth Avenue
New York, New York 10018
(212) 813-8800
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James Parsons
Trillium Therapeutics Inc.
2488 Dunwin Drive
Mississauga, Ontario L5L 1J9
Canada
(416) 595-0627
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David Palumbo
Baker & McKenzie LLP
181 Bay Street, Suite 2100
Toronto, Ontario M5J 2T3
Canada
(416) 865-6879
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☐
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Emerging growth company ☒
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
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Title of Securities
to be Registered
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Amount to be Registered (1)(2)
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Proposed Maximum
Offering
Price per Share(3)
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Proposed Maximum
Aggregate
Offering Price(3)
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Amount of
Registration Fee
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Common Shares, no par value per share
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16,131,755
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$3.32 - $16.20
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$223,767,437
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$24,414
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(1)
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Represents (i) 13,400,000 common shares, without par value (the "Common Shares"), of Trillium Therapeutics Inc. (the "Registrant") that are issuable upon the exercise of stock options granted under the Trillium Therapeutics Inc. 2020 Omnibus Equity Incentive Plan (the "2020 Equity Incentive Plan") and (ii) 2,731,755 Common Shares of the Registrant that are issuable upon the exercise of stock options granted under the Trillium Therapeutics Inc. 2018 Amended and Restated Stock Option Plan (the "2018 Stock Option Plan").
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(2)
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Pursuant to Rule 416(c) under the Securities Act of 1933, as amended (the "Securities Act"), this Registration Statement shall also cover any additional Common Shares that become issuable under the 2020 Equity Incentive Plan and the 2018 Stock Option Plan as set forth herein by reason of any stock dividend, stock split, recapitalization, or other similar transaction effected that results in an increase to the number of outstanding shares of the Registrant's Common Shares, as applicable.
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(3)
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Estimated in accordance with Rule 457(c) and Rule 457(h) under the Securities Act solely for the purpose of calculating the registration fee on the basis of (a) US$13.69, the weighted-average exercise price for outstanding options granted pursuant to the 2020 Equity Incentive Plan, (b) US$16.20, the average of the high and low prices of the Registrant's Common Shares as reported on the Nasdaq Capital Market on December 7, 2020, with respect to the shares to be registered pursuant to the 2020 Equity Incentive Plan, and (c) US$3.32, the weighted-average exercise price for outstanding options granted pursuant to the 2018 Stock Option Plan.
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Securities
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Number of
Common Shares
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Offering Price
Per Share
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Aggregate
Offering
Price/Registration
Fee
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Shares issuable upon the exercise of outstanding options granted under the 2020 Equity Incentive Plan
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949,000 (1
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)
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$
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13.69 (3)(a)
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$
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12,991,810
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Shares issuable upon the exercise of outstanding deferred share units granted under the 2020 Equity Incentive Plan
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3,073,295 (1
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$
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16.20 (3)(b)
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$
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49,787,379
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Shares reserved for future grant under the 2020 Equity Incentive Plan
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9,377,705 (1
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)
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$
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16.20 (3)(b)
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$
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151,918,821
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Shares issuable upon the exercise of outstanding options granted under the 2018 Stock Option Plan
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2,731,755 (1
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$
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3.32 (3)(c)
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$
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9,069,427
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Proposed Maximum Aggregate Offering Price:
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$
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223,767,437
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Registration Fee:
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$
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24,414
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EXPLANATORY NOTE
This Registration Statement relates to two separate prospectuses.
1. Section 10(a) Prospectus: Part I, Items 1 and 2, and the documents incorporated by reference pursuant to Part II, Item 3, constitute a prospectus that meets the requirements of Section 10(a) of the Securities Act.
2. Reoffer Prospectus: The material that follows Part I, Item 2, up to but not including Part II of this Registration Statement, of which the reoffer prospectus is a part, constitutes a "reoffer prospectus," prepared in accordance with the requirements of Part I of Form F-3 under the Securities Act. Pursuant to Instruction C of Form S-8, the reoffer prospectus may be used for reoffers or resales of common stock which are deemed to be "control securities" or "restricted securities" under the Securities Act that have been acquired by the selling stockholders named in the reoffer prospectus.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.*
Item 2. Registrant Information and Employee Plan Annual Information.*
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*
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Information required by Part I to be contained in the Section 10(a) prospectus is omitted from this Registration Statement in accordance with Rule 428 under the Securities Act and the "Note" to Part I of Form S-8.
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REOFFER PROSPECTUS
2,731,755 Common Shares
This prospectus relates to 2,731,755 common shares, no par value (the "Shares"), of Trillium Therapeutics Inc., which may be offered from time to time by certain stockholders that are our current or former employees, consultants and/or former members of our board of directors (the "Selling Stockholders") for their own accounts. We will not receive any of the proceeds from the sale of Shares by the Selling Stockholders made hereunder. The Shares were acquired by the Selling Stockholders pursuant to the Trillium Therapeutics Inc. 2018 Amended and Restated Stock Option Plan.
The Selling Stockholders may sell the securities described in this prospectus in a number of different ways and at varying prices, including sales in the open market, sales in negotiated transactions and sales by a combination of these methods. The Selling Stockholders may sell any, all or none of the Shares and we do not know when or in what amount the Selling Stockholders may sell their Shares hereunder following the effective date of the registration statement of which this prospectus forms a part. The price at which any of the Shares may be sold, and the commissions, if any, paid in connection with any such sale, are unknown and may vary from transaction to transaction. The Shares may be sold at the market price of the common shares at the time of a sale, at prices relating to the market price over a period of time, or at prices negotiated with the buyers of shares. The Shares may be sold through underwriters or dealers which the Selling Stockholders may select. If underwriters or dealers are used to sell the Shares, we will name them and describe their compensation in a prospectus supplement. We provide more information about how the Selling Stockholders may sell their Shares in the section titled "Plan of Distribution." The Selling Stockholders will bear all sales commissions and similar expenses. Any other expenses incurred by us in connection with the registration and offering that are not borne by the Selling Stockholders will be borne by us.
Our common shares are listed on the Toronto Stock Exchange, or the TSX, and on the Nasdaq Capital Market, or the Nasdaq, under the symbol "TRIL". On December 9, 2020, the closing price of the common shares on the TSX was C$15.13 per common share, and the closing price of the common shares on the Nasdaq was US$11.78 per common share.
Investing in our securities involves a high degree of risk. Before buying any securities, you should carefully read the discussion of the risks of investing in our securities in "Risk Factors" beginning on page 2 of this prospectus.
The Securities and Exchange Commission (the "SEC") may take the view that, under certain circumstances, the Selling Stockholders and any broker-dealers or agents that participate with the Selling Stockholders in the distribution of the Shares may be deemed to be "underwriters" within the meaning of the Securities Act. Commissions, discounts or concessions received by any such broker-dealer or agent may be deemed to be underwriting commissions under the Securities Act. See the section titled "Plan of Distribution."
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is December 10, 2020.
TABLE OF CONTENTS
You should rely only on the information contained in this prospectus or in any accompanying prospectus supplement by us or on our behalf. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the Shares. Our business, financial condition, results of operations and prospects may have changed since that date.
Unless the context otherwise requires, references to "we," "us," "our" or similar terms, as well as references to "Trillium" or the "Company," refer to Trillium Therapeutics Inc., either alone or together with our subsidiary.
THE COMPANY
This summary highlights key aspects of this offering and certain information contained elsewhere in this prospectus and the documents incorporated by reference. This summary is not complete and does not contain all of the information that may be important to you or that you should consider before investing in our common shares. You should read carefully the other information included and incorporated by reference in this prospectus before investing in our common shares. You should pay special attention to the risks and uncertainties identified under the captions "Risk Factors," "Special Note Regarding Forward-Looking Statements" and elsewhere in this prospectus and the documents incorporated by reference herein, including our most recent Annual Report on Form 40-F and our Reports on Form 6-K, when determining whether an investment in our common shares is appropriate for you.
Overview
We are a clinical stage immuno-oncology company developing innovative therapies for the treatment of cancer. We have two SIRPαFc fusion proteins, TTI-621 and TTI-622, in clinical development. Both consist of the extracellular CD47-binding domain of human signal regulatory protein alpha, or SIRPα, linked to an Fc region of a human immunoglobulin (IgG). They are designed to activate the anti-tumor activity of macrophages by blocking the inhibitory ("don't eat me") signal from CD47 and simultaneously delivering a pro-phagocytic ("eat") signal through the Fc region. The two molecules differ in the identity of the Fc region; TTI-621 delivers a strong pro-phagocytic signal through its IgG1 Fc, whereas TTI-622 delivers a more modest pro-phagocytic signal through its IgG4 Fc region. TTI-621 has shown single agent activity by both local and/or systemic delivery in multiple B- and T-cell lymphoma indications and has been well tolerated in over 200 patients to date. TTI-622 has shown monotherapy activity across multiple lymphoma indications and has been well tolerated in 26 patients to date. Both TTI-621 and TTI-622 are currently in phase 1 dose escalation studies.
Corporate Information
We were incorporated under the Business Corporations Act (Alberta) on March 31, 2004 as Neurogenesis Biotech Corp. On October 19, 2004, we amended our articles of incorporation to change our name to Stem Cell Therapeutics Corp., or SCT, and on November 7, 2013 SCT was continued under the Business Corporations Act (Ontario). Articles of amalgamation were filed on June 1, 2014 to amalgamate SCT with its wholly-owned subsidiary, Trillium Therapeutics Inc., and the amalgamated entity continued to operate under the name Trillium Therapeutics Inc. On December 18, 2019, we were continued under the laws of the Province of British Columbia. We are now governed under the Business Corporations Act (British Columba), or the BCBCA. Additionally, on December 18, 2019, we adopted new articles which are substantially similar to our previous by-laws but for changes that were required to be made in accordance with the BCBCA.
We are a company domiciled in Ontario, Canada. Our head office is located at 2488 Dunwin Drive, Mississauga, Ontario, Canada, L5L 1J9. Our registered office is located at Suite 1750-1055 W. Georgia Street, P.O. Box 11125, Vancouver, British Columbia, V6E 3P3. We have one wholly-owned subsidiary, Trillium Therapeutics USA Inc., which was incorporated March 26, 2015 in the State of Delaware, with an office in Cambridge, Massachusetts. Our website address is www.trilliumtherapeutics.com. Information contained on, or that can be accessed through, our website does not constitute a part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference.
RISK FACTORS
Investing in our common shares is speculative and involves a high degree of risk. Risks currently unknown to us could materially adversely affect our future business, operations and financial condition and could cause them to differ materially from the estimates described in forward-looking information relating to us, or our business, property or financial results, each of which could cause purchasers of our common shares to lose part or all of their investment. In addition to the other information contained in this prospectus and the documents incorporated by reference herein, prospective investors should carefully consider the factors set out under "Risk Factors" in our Annual Report on Form 40-F for the year ended December 31, 2019 and our Reports on Form 6-K in evaluating Trillium and its business before making an investment in our common shares.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents incorporated by reference herein, contain certain statements that are "forward-looking statements" or "forward-looking information" (collectively, "forward-looking statements") within the meaning of the U.S. Private Securities Litigation Reform Act and applicable Canadian securities laws, respectively. All statements contained herein that are not clearly historical in nature are forward-looking, and the words "anticipate", "believe", "expect", "estimate", "may", "will", "could", "leading", "intend", "contemplate", "shall" and similar expressions are generally intended to identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. Examples of such forward-looking statements include, but are not limited to:
• our expected future loss and accumulated deficit levels;
• our projected financial position and estimated cash burn rate;
• our requirements for, and the ability to obtain, future funding on favorable terms or at all;
• our projections for the SIRPαFc development plans and progress of each of our products and technologies, particularly with respect to the timely and successful completion of studies and trials and availability of results from such studies and trials;
• our plans to focus our intravenous TTI-621 & TTI-622 programs on large hematologic malignancy indications, specifically acute myeloid lymphoma & myelodysplastic syndromes, or AML/MDS, peripheral T-cell lymphoma, or PTCL, diffuse large B-cell lymphoma, or DLBCL, and multiple myeloma, as well as on solid tumors;
• our expectations about our products' safety and efficacy;
• our expectations regarding our ability to arrange for and scale up the manufacturing of our products and technologies;
• our expectations regarding the progress, and the successful and timely completion, of the various stages of the regulatory approval process;
• our expectations about the timing of achieving milestones and the cost of our development programs;
• our observations and expectations regarding the relative low binding of SIRPαFc to red blood cells, or RBCs, compared to anti-CD47 monoclonal antibodies and proprietary CD47-blocking agents and the potential benefits to patients;
• our ability to intensify the dose of TTI-621 with the goal of achieving increased blockade of CD47;
• our expectation that we will be able to increase dosing to levels of TTI-622 in patients sufficient to achieve sustained CD47 blockade;
• our expectation that TTI-622 is likely to be more effective in combination with agents that provide additional "eat" signals to macrophages or other forms of immune activation;
• our plans to market, sell and distribute our products and technologies;
• our expectations regarding the acceptance of our products and technologies by the market;
• our ability to retain and access appropriate staff, management and expert advisers;
• our ability to secure strategic partnerships with larger pharmaceutical and biotechnology companies;
• our expectations with respect to existing and future corporate alliances and licensing transactions with third parties, and the receipt and timing of any payments to be made by us or to us in respect of such arrangements; and
• our strategy with respect to the protection of our intellectual property.
All forward-looking statements reflect our beliefs and assumptions based on information available at the time the assumption was made. These forward-looking statements are not based on historical facts but rather on management's expectations regarding future activities, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities.
By its nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, known and unknown, that contribute to the possibility that the predictions, forecasts, projections or other forward-looking statements will not occur. In evaluating forward-looking statements, readers should specifically consider various factors, including the risks outlined under the heading "Risk Factors" in this prospectus and in the documents incorporated by reference herein. Some of these risks and assumptions include, among others:
• substantial fluctuation of losses from quarter to quarter and year to year due to numerous external risk factors, and anticipation that we will continue to incur significant losses in the future;
• uncertainty as to our ability to raise additional funding to support operations;
• uncertainty as to the duration and impact of the current COVID-19 pandemic, including its impact on patient enrollment and participation in our clinical trials;
• our ability to generate product revenue to maintain our operations without additional funding;
• the risks associated with the development of our product candidates which are at early stages of development;
• the risk that positive results from preclinical and early clinical research are not predictive of the results of later-stage clinical trials;
• reliance on third parties to plan, conduct and monitor our preclinical studies and clinical trials;
• our product candidates may fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or may not otherwise produce positive results;
• risks related to filing Investigational New Drug applications, or INDs, to commence clinical trials and to continue clinical trials if approved;
• the risks of delays and inability to complete clinical trials due to difficulties enrolling patients;
• the risk that we may not achieve our publicly announced milestones according to schedule, or at all;
• the risk of being required to repurchase the outstanding warrants in the event of a "Fundamental Transaction", and possibility of price protection reset of the exercise price of the warrants at prices below the exercise price;
• competition from other biotechnology and pharmaceutical companies;
• our reliance on the capabilities and experience of our key executives and scientists and the resulting loss of any of these individuals;
• our ability to fully realize the benefits of acquisitions;
• our ability to adequately protect our intellectual property and trade secrets;
• our ability to source and maintain licenses from third-party owners;
• the risk of patent-related litigation;
• risks relating to our loss of foreign private issuer status and the resultant transition to the status of U.S. domestic issuer upon the expiration of the grace period;
• risks relating to the different disclosure obligations as a U.S. domestic issuer, versus those as a foreign private issuer, which will be required upon the expiry of the grace period;
• risks associated with the anticipated loss of our emerging growth company status; and
• our expectations regarding our status as a passive foreign investment company, or PFIC.
Although the forward-looking statements contained in this prospectus are based upon what our management believes to be reasonable assumptions, we cannot assure readers that actual results will be consistent with these forward-looking statements.
Any forward-looking statements represent our estimates only as of the date of this prospectus and should not be relied upon as representing our estimates as of any subsequent date. We undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as may be required by applicable securities laws.
You should read carefully the risk factors described in this prospectus and the documents incorporated by reference in this prospectus for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the Shares. All proceeds from the sale of the Shares will be for the account of the Selling Stockholders, as described below. See the sections titled "Selling Stockholders" and "Plan of Distribution" described below.
SELLING STOCKHOLDERS
The following table sets forth information regarding beneficial ownership of our common stock as of December 10, 2020, as adjusted to reflect the Shares that may be sold from time to time pursuant to this prospectus, for all Selling Stockholders, consisting of the individuals shown as having shares listed in the column entitled "Shares Being Offered."
The Shares offered by the Selling Stockholders hereunder include an aggregate of 2,731,755 Shares issuable under the Trillium Therapeutics Inc. 2018 Amended and Restated Stock Option Plan (which replaced the 2016 stock option plan and the 2014 stock option plan) upon the exercise of stock options held by certain of our current or former employees, consultants and/or board of directors. We have determined beneficial ownership in accordance with the rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially own, subject to community property laws where applicable. In computing the number of our common shares beneficially owned by a person and the percentage ownership of that person, we deemed outstanding common shares subject to options held by that person that are currently exercisable or exercisable within 60 days of December 10, 2020. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.
We have based percentage ownership of our common shares prior to this offering on 101,108,825 common shares outstanding as of December 10, 2020, unless otherwise noted.
Unless otherwise indicated, the address of each beneficial owner listed below is c/o Trillium Therapeutics Inc., 2488 Dunwin Drive, Mississauga, Ontario L5L 1J9 Canada.
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Shares Beneficially Owned Prior
to the Offering
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Shares Being
Offered
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Shares Beneficially Owned After
the Offering(1)
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Selling Stockholder
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Shares
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Percentage
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Shares
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Shares
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Percentage
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Named Selling Stockholders(2)
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242,734
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*
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242,734
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0
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*
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Luke Beshar(3)
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550,374
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*
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6,666
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543,708
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*
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Robert Kirkman(4)
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477,316
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*
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6,666
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470,650
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*
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James Parsons(5)
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571,422
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*
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571,422
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0
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*
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Penka Petrova(6)
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571,422
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*
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571,422
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0
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*
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Thomas Reynolds(7)
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529,584
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*
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6,666
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522,918
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*
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Yaping Shou(8)
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354,793
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*
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354,793
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0
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*
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Jan Skvarka(9)
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315,000
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*
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315,000
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0
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*
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Robert Uger(10)
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656,386
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*
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656,386
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0
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*
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*
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Represents beneficial ownership of less than 1%.
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(1)
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Assumes that all of the Shares held by each Selling Stockholder and being offered under this prospectus are sold, and that no Selling Stockholder will acquire additional common shares before the completion of this offering.
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(2)
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Includes the following 26 named non-affiliate persons, each of whom holds at least 1,000 Shares: Amani Ammari, Tina Catalano, Vien Chai, Clinton Chan, Hui Chen, Katarzyna Deren, Scott Duncan, Rubaiya Hassan, Violetta House, Debbie Jin, Marie Kaldchibachi, Tina Kirkham, Kathleen Large, Vivian Lee, Gloria Lin, Joyce Lin, Naomi Molloy, Xinli Pang, Jeri Paul, Mark Regliszyn, Vivette Ritchie, Kathleen Roberge, Amirah Shahin, Theresa Thompson, Tran Truong and Mark Wong. Each of these persons beneficially owns less than 1% of our common shares.
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(3)
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Consists of (i) 0 outstanding common shares, (ii) 543,708 deferred share units, or DSUs, and (iii) 6,666 common shares issuable to Mr. Beshar upon the exercise of options within 60 days of December 10, 2020.
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(4)
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Consists of (i) 0 outstanding common shares, (ii) 470,650 DSUs and (iii) 6,666 common shares issuable to Mr. Kirkman upon the exercise of options within 60 days of December 10, 2020.
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(5)
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Consists of (i) 0 outstanding common shares and (ii) 571,422 common shares issuable to Mr. Parsons upon the exercise of options within 60 days of December 10, 2020.
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(6)
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Consists of (i) 0 outstanding common shares and (ii) 571,422 common shares issuable to Ms. Petrova upon the exercise of options within 60 days of December 10, 2020.
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(7)
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Consists of (i) 0 outstanding common shares, (ii) 522,918 DSUs, and (iii) 6,666 common shares issuable to Mr. Reynolds upon the exercise of options within 60 days of December 10, 2020.
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(8)
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Consists of (i) 0 outstanding common shares and (ii) 354,793 common shares issuable to Ms. Shou upon the exercise of options within 60 days of December 10, 2020.
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(9)
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Consists of (i) 0 outstanding common shares and (ii) 315,000 common shares issuable to Mr. Skvarka upon the exercise of options within 60 days of December 10, 2020.
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(10)
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Consists of (i) 0 outstanding common shares and (ii) 656,386 common shares issuable to Mr. Uger upon the exercise of options within 60 days of December 10, 2020.
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PLAN OF DISTRIBUTION
We are registering the Shares covered by this prospectus to permit the Selling Stockholders to conduct public secondary trading of these Shares from time to time after the date of this prospectus. We will not receive any of the proceeds of the sale of the Shares offered by this prospectus. The aggregate proceeds to the Selling Stockholders from the sale of the Shares will be the purchase price of the Shares less any discounts and commissions. We will not pay any brokers' or underwriters' discounts and commissions in connection with the registration and sale of the Shares covered by this prospectus. The Selling Stockholders reserve the right to accept and, together with their respective agents, to reject, any proposed purchases of Shares to be made directly or through agents.
The Shares offered by this prospectus may be sold from time to time to purchasers:
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|
•
|
|
directly by the Selling Stockholders, or
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•
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through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, commissions or agent's commissions from the Selling Stockholders or the purchasers of the Shares.
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Any underwriters, broker-dealers or agents who participate in the sale or distribution of the Shares may be deemed to be "underwriters" within the meaning of the Securities Act. As a result, any discounts, commissions or concessions received by any such broker-dealer or agents who are deemed to be underwriters will be deemed to be underwriting discounts and commissions under the Securities Act. Underwriters are subject to the prospectus delivery requirements of the Securities Act and may be subject to certain statutory liabilities under the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We will make copies of this prospectus available to the Selling Stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. To our knowledge, there are currently no plans, arrangements or understandings between the Selling Stockholders and any underwriter, broker-dealer or agent regarding the sale of the Shares by the Selling Stockholders.
The Shares may be sold in one or more transactions at:
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prevailing market prices at the time of sale;
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prices related to such prevailing market prices;
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varying prices determined at the time of sale; or
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These sales may be effected in one or more transactions:
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on any national securities exchange or quotation service on which the Shares may be listed or quoted at the time of sale, including the TSX and Nasdaq;
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in the over-the-counter market;
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in transactions otherwise than on such exchanges or services or in the over-the-counter market;
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any other method permitted by applicable law; or
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through any combination of the foregoing.
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These transactions may include block transactions or crosses. Crosses are transactions in which the same broker acts as an agent on both sides of the trade.
At the time a particular offering of the Shares is made, a prospectus supplement, if required, will be distributed, which will set forth the name of the Selling Stockholders, the aggregate amount of Shares being offered and the terms of the offering, including, to the extent required, (1) the name or names of any underwriters, broker-dealers or agents, (2) any discounts, commissions and other terms constituting compensation from the Selling Stockholders and (3) any discounts, commissions or concessions allowed or reallowed to be paid to broker-dealers.
The Selling Stockholders will act independently of us in making decisions with respect to the timing, manner, and size of each resale or other transfer. There can be no assurance that the Selling Stockholders will sell any or all of the Shares under this prospectus. Further, we cannot assure you that the Selling Stockholders will not transfer, distribute, devise or gift the Shares by other means not described in this prospectus. In addition, any Shares covered by this prospectus that qualify for sale under Rule 144 of the Securities Act may be sold under Rule 144 rather than under this prospectus. The Shares may be sold in some states only through registered or licensed brokers or dealers. In addition, in some states the Shares may not be sold unless they have been registered or qualified for sale or an exemption from registration or qualification is available and complied with.
The Selling Stockholders and any other person participating in the sale of the Shares will be subject to the Exchange Act. The Exchange Act rules include, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the Shares by the Selling Stockholders and any other person. In addition, Regulation M may restrict the ability of any person engaged in the distribution of the Shares to engage in market-making activities with respect to the particular Shares being distributed. This may affect the marketability of the Shares and the ability of any person or entity to engage in market-making activities with respect to the Shares.
The Selling Stockholders may indemnify any broker or underwriter that participates in transactions involving the sale of the Shares against certain liabilities, including liabilities arising under the Securities Act.
LEGAL MATTERS
The validity of the Shares offered hereby has been passed upon by Baker & McKenzie LLP, Toronto, Ontario.
EXPERTS
The consolidated financial statements of Trillium Therapeutics Inc. included in our Annual Report on Form 40-F for the year ended December 31, 2019 have been audited by Ernst & Young LLP, independent registered public accounting firm as set forth in their report thereon, included therein, and incorporated herein by reference in this prospectus and elsewhere in the registration statement of which this prospectus forms a part. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
ENFORCEABILITY OF CIVIL LIABILITIES
We are a corporation existing under the BCBCA. Some of our officers and directors named in this prospectus are Canadian residents, and many of our assets or the assets of our officers and directors are located outside the United States. We have appointed an agent for service of process in the United States, but it may be difficult for holders of common shares who reside in the United States to effect service within the United States upon those directors and officers who are not residents of the United States. It may also be difficult for holders of common shares who reside in the United States to realize in the United States upon judgments of courts of the United States predicated upon our civil liability and the civil liability of our officers and directors under the United States federal securities laws. We have been advised by our Canadian counsel, Baker & McKenzie LLP, that a judgment of a United States court predicated solely upon civil liability under U.S. federal securities laws would probably be enforceable in Canada if the United States court in which the judgment was obtained has a basis for jurisdiction in the matter that would be recognized by a Canadian court for the same purposes and if certain other conditions are met. We have also been advised by Baker & McKenzie LLP, however, that there is substantial doubt whether an action could be brought in Canada in the first instance on the basis of liability predicated solely upon U.S. federal securities laws.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed with the SEC are hereby incorporated by reference in this prospectus:
1. Our Annual Report on Form 40-F, as filed with the SEC on March 10, 2020, which contains our audited consolidated financial statements for the year ended December 31, 2019.
2. All other reports filed by us under Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), since December 31, 2019 and prior to the date of this Registration Statement.
3. The description of our Common Shares contained in our Annual Report on Form 40-F, as filed with the SEC on March 10, 2020, including any amendment or report filed for the purpose of amending such description.
We also incorporate by reference each of the following documents we file with the SEC after the date of this prospectus and until this offering is terminated: (i) all annual reports on Form 40-F, Form 20-F or Form 10-K; (ii) all quarterly reports on Form 10-Q; (iii) all current reports on Form 8-K; and (iv) those portions of any reports on Form 6-K that we indicate in such reports are to be deemed incorporated by reference into this prospectus.
Any statement contained in this prospectus or in a document (or part thereof) incorporated by reference, or deemed to be incorporated by reference, in this prospectus shall be deemed to be modified or superseded, for purposes of this prospectus, to the extent that a statement contained in the prospectus or in any subsequently filed document (or part thereof) that also is, or is deemed to be, incorporated by reference in this prospectus modifies or replaces such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute part of this prospectus. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document which it modifies or supersedes.
You may obtain a copy of any of any filings that are incorporated by reference into this prospectus, at no cost, by writing to or telephoning us at the following address:
Trillium Therapeutics Inc.
2488 Dunwin Drive
Mississauga, Ontario L5L 1J9
Canada
(416) 595-0627
Attention: Corporate Secretary
WHERE YOU CAN FIND MORE INFORMATION
We are required to file documents with securities commissions or similar authorities in the provinces of British Columbia, Alberta, Manitoba, Ontario and Nova Scotia in Canada. In addition, we are subject to the informational requirements of the Exchange Act, and, in accordance with the Exchange Act, we also file reports with, and furnish other information to, the SEC. As a foreign private issuer, certain of these reports and other information (including financial information) may be prepared in accordance with the disclosure requirements of Canada, which differ in certain respects from those in the United States. In addition, as a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. We are also not required to publish financial statements as promptly as U.S. companies.
You may read any document we file with or furnish to the securities commissions and authorities of the provinces of Canada through the Internet on the Canadian System for Electronic Document Analysis and Retrieval at www.sedar.com. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Certain of our filings are also electronically available on EDGAR, and may be accessed at www.sec.gov.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
The following documents filed by the Registrant with the SEC are incorporated by reference into this Registration Statement:
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Our Annual Report on Form 40-F, as filed with the SEC on March 10, 2020, which contains our audited consolidated financial statements for the year ended December 31, 2019.
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2.
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All other reports filed by us under Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), since December 31, 2019 and prior to the date of this Registration Statement.
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3.
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The description of our Common Shares contained in our Annual Report on Form 40-F, as filed with the SEC on March 10, 2020, including any amendment or report filed for the purpose of amending such description.
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In addition, all reports and documents filed by us under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Registration Statement and prior to the filing of a post-effective amendment which indicates that all securities being offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in and to be part of this Registration Statement from the date of filing of each such document, provided that reports on Form 6-K shall be so deemed incorporated by reference only if and to the extent indicated in such reports.
Item 4. Description of Securities.
The Registrant's Common Shares are registered under Section 12(b) of the Exchange Act.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
We are subject to the provisions of Part 5, Division 5, of the BCBCA. Under Section 160 of the BCBCA, we may, subject to Section 163 of the BCBCA:
1. indemnify an individual who:
a. is or was a director or officer of our company;
b. is or was a director or officer of another corporation (i) at a time when such corporation is or was an affiliate of our company; or (ii) at our request or,
c. at our request, is or was, or holds or held a position equivalent to that of, a director or officer of a partnership, trust, joint venture or other unincorporated entity, and including, subject to certain limited exceptions, the heirs and personal or other legal representatives of that individual (collectively, an "eligible party"), against all eligible penalties to which the eligible party is or may be liable; and
2. after final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by an eligible party in respect of that proceeding where:
a. "eligible penalty" means judgement, penalty or fine awarded or imposed in, or an amount paid in settlement of, an eligible proceeding.
b. "eligible proceeding" means a proceeding in which an eligible party or any of the heirs and personal or other legal representatives of the eligible party, by reason of the eligible party being or having been a director or officer of, or holding or having held a position equivalent to that of a director or officer of, our company or an associated corporation (i) is or may be joined as a party, or (ii) is or may be liable for or in respect of a judgment, penalty or fine in, or expenses related to, the proceeding.
c. "proceeding" includes any legal proceeding or investigative action, whether current, threatened, pending or completed.
Under Section 161 of the BCBCA, and subject to Section 163 of the BCBCA, we must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by an eligible party in respect of that proceeding if the eligible party (i) has not been reimbursed for those expenses, and (ii) is wholly successful, on the merits or otherwise, in the outcome of the proceeding or is substantially successful on the merits in the outcome of the proceeding.
Under Section 162 of the BCBCA, and subject to Section 163 of the BCBCA, we may pay, as they are incurred in advance of the final disposition of an eligible proceeding, the expenses actually and reasonably incurred by an eligible party in respect of the proceeding, provided that we must not make such payments unless we first receive from the eligible party a written undertaking that, if it is ultimately determined that the payment of expenses is prohibited under Section 163 of the BCBCA, the eligible party will repay the amounts advanced.
Under Section 163 of the BCBCA, we must not indemnify an eligible party against eligible penalties to which the eligible party is or may be liable or pay the expenses of an eligible party in respect of that proceeding under Sections 160, 161 or 162 of the BCBCA, as the case may be, if any of the following circumstances apply:
a. if the indemnity or payment is made under an earlier agreement to indemnify or pay expenses and, at the time that the agreement to indemnify or pay expenses was made, we were prohibited from giving the indemnity or paying the expenses by our memorandum or articles;
b. if the indemnity or payment is made otherwise than under an earlier agreement to indemnify or pay expenses and, at the time that the indemnity or payment is made, we are prohibited from giving the indemnity or paying the expenses by our memorandum or articles;
c. if, in relation to the subject matter of the eligible proceeding, the eligible party did not act honestly and in good faith with a view to the best interests of our company or the associated corporation, as the case may be; or
d. in the case of an eligible proceeding other than a civil proceeding, if the eligible party did not have reasonable grounds for believing that the eligible party's conduct in respect of which the proceeding was brought was lawful.
If an eligible proceeding is brought against an eligible party by or on behalf of us or by or on behalf of an associated corporation, we must not either indemnify the eligible party against eligible penalties to which the eligible party is or may be liable, or pay the expenses of the eligible party under Sections 160, 161 or 162 of the BCBCA, as the case may be, in respect of the proceeding
Under Section 164 of the BCBCA, and despite any other provision of Part 5, Division 5 of the BCBCA and whether or not payment of expenses or indemnification has been sought, authorized or declined under Part 5, Division 5 of the BCBCA, on application of our company or an eligible party, the Supreme Court of British Columbia may do one or more of the following:
a. order us to indemnify an eligible party against any liability incurred by the eligible party in respect of an eligible proceeding;
b. order us to pay some or all of the expenses incurred by an eligible party in respect of an eligible proceeding;
c. order the enforcement of, or payment under, an agreement of indemnification entered into by us;
d. order us to pay some or all of the expenses actually and reasonably incurred by any person in obtaining an order under Section 164 of the BCBCA; or
e. make any other order the court considers appropriate.
Under our articles, and subject to the BCBCA, we must indemnify our director, former director or alternate director and his or her heirs and legal personal representatives against all eligible penalties to which such person is or may be liable, and we must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding. Each of our directors and alternate directors are deemed to have contracted with us on the terms of the indemnity contained in our articles. Under our articles, and subject to the BCBCA, we may also indemnify any other person.
We have entered into indemnification agreements ("Indemnification Agreements") with each of our officers and directors, pursuant to which we are obligated to indemnify and hold harmless such persons to the greatest extent permitted by law for liabilities arising out of their service to the company as directors and officers. However, such indemnification obligations arise only to the extent that the party seeking indemnification was acting honestly and in good faith with a view to our best interests, and, in the case of criminal or administrative actions or other non-civil proceedings that are enforced by monetary penalties, that such person had reasonable grounds for believing that his or her conduct was lawful. Under these Indemnification Agreements, we may advance to the indemnified parties the expenses incurred in defending any such actions or proceedings.
We have also purchased directors' and officers' liability insurance for the benefit of our directors and officers, to back up our indemnification of them against liability incurred in their capacity as directors and officers, subject to certain limitations under applicable law.
Insofar as indemnification for liabilities arising under the Securities Act, may be permitted to directors, officers or persons controlling the Registrant pursuant to the foregoing provisions, the Registrant has been informed that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Reference is made to Item 9 for the undertakings of the Registrant with respect to indemnification for liabilities arising under the Securities Act.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
* Filed herewith
Item 9. Undertakings.
The undersigned Registrant hereby undertakes, except as otherwise specifically provided in the rules of the SEC promulgated under the Securities Act:
1. To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in this Registration Statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the SEC by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in this Registration Statement.
2. That, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized, in Mississauga, Ontario, Canada, on this 10th day of December, 2020.
TRILLIUM THERAPEUTICS INC.
By: /s/ James Parsons
Name: James Parsons
Title: Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Jan Skvarka and James Parsons, and each of them, any of whom may act without the joinder of the other, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this Registration Statement and registration statements filed pursuant to Rule 429 under the Securities Act of 1933, and to file the same, with all exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, each acting alone, or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:
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Signature
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Title
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Date
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/s/ Jan Skvarka
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President, Chief Executive Officer, Director
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December 10, 2020
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Jan Skvarka
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(Principal Executive Officer)
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/s/ James Parsons
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Chief Financial Officer
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December 10, 2020
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James Parsons
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(Principal Financial Officer and
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Principal Accounting Officer)
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/s/ Robert Kirkman
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Director, Chairman of the Board
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December 10, 2020
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Robert Kirkman
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/s/ Luke Beshar
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Director
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December 10, 2020
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Luke Beshar
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/s/ Thomas Reynolds
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Director
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December 10, 2020
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Thomas Reynolds
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/s/ Helen Tayton-Martin
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Director
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December 10, 2020
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Helen Tayton-Martin
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/s/ Michael Kamarck
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Director
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December 10, 2020
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Michael Kamarck
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/s/ Paul Walker
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Director
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December 10, 2020
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Paul Walker
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/s/ Paolo Pucci
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Director
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December 10, 2020
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Paolo Pucci
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TRILLIUM THERAPEUTICS INC.
2020 OMNIBUS EQUITY INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the Trillium Therapeutics Inc. 2020 Omnibus Equity Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable the officers, employees, Non-Employee Directors and Consultants of Trillium Therapeutics Inc., a company existing under the laws of the Province of British Columbia, Canada (the "Company") and its Subsidiaries upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business to acquire a proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Company's welfare will assure a closer identification of their interests with those of the Company and its shareholders, thereby stimulating their efforts on the Company's behalf and strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
"Act" means the U.S. Securities Act of 1933, as amended, and the rules and regulations thereunder.
"Administrator" has the meaning ascribed thereto in Section 2(a) of the Plan.
"Award" or "Awards," except where referring to a particular category of grant under the Plan, shall include, Section 7 Options, ISOs, Non-Qualified Options, Share Appreciation Rights, Restricted Share Units, Restricted Share Awards, Unrestricted Share Awards, Deferred Share Units, and Dividend Equivalent Rights.
"Award Certificate" means a written or electronic document or agreement setting forth the terms and provisions applicable to an Award granted under the Plan. Each Award Certificate is subject to the terms and conditions of the Plan.
"Black out Period" means a period of time when pursuant to any policies of the Company, any securities of the Company may not be traded by certain persons designated by the Company;
"Board" means the board of directors of the Company.
"Canadian Taxpayer" means a grantee that is subject to tax under the Tax Act in respect of any benefit he or she derives from the Plan.
"Change in Control" shall mean any one or a combination of:
(i) any transaction at any time and by whatever means pursuant to which (A) the Company goes out of existence by any means, except for any corporate transaction or reorganization in which the proportionate voting power among holders of securities of the entity resulting from such corporate transaction or reorganization is substantially the same as the proportionate voting power of such holders of Company voting securities immediately prior to such corporate transaction or reorganization or (B) any person or any group of two or more persons acting jointly or in concert other than the Company, a wholly-owned Subsidiary of the Company, an employee benefit plan of the Company or of any of its wholly-owned Subsidiaries, including the trustee of any such plan acting as trustee) hereafter acquires the direct or indirect "beneficial ownership" (as defined by the Business Corporations Act (Ontario)) of, or acquires the right to exercise control or direction over, securities of the Company representing more than 50% of the Company's then issued and outstanding securities in any manner whatsoever, including, without limitation, as a result of a take-over bid, an exchange of securities, an amalgamation of the Company with any other entity, an arrangement, a capital reorganization or any other business combination or reorganization;
(ii) the sale, assignment or other transfer of all or substantially all of the assets of the Company to a person other than a wholly-owned Subsidiary of the Company;
(iii) the dissolution or liquidation of the Company except in connection with the distribution of assets of the Company to one or more persons which were wholly-owned Subsidiaries of the Company immediately prior to such event;
(iv) the occurrence of a transaction requiring approval of the Company's shareholders whereby the Company is acquired through consolidation, merger, exchange of securities, purchase of assets, amalgamation, arrangement or otherwise by any person other than a wholly-owned Subsidiary of the Company (and other than a short form amalgamation or exchange of securities with a wholly-owned Subsidiary of the Company).
Notwithstanding the foregoing, Change in Control shall be interpreted, for a U.S. Taxpayer, in a manner, and limited to the extent necessary, so that it will not cause adverse tax consequences under Section 409A of the Code.
"Code" means the U.S. Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.
"Consultant" means any natural person that provides bona fide services to the Company for a period of at least 12 months, on a continuous basis, and such services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company's securities and shall be limited to the meaning ascribed thereto in National Instrument 45-106 - Prospectus Exemption.
"Deferred Share Unit" means an Award entitling the recipient to acquire a Share on a deferred payment basis.
"Dividend Equivalent Right" means an Award entitling the grantee to receive credits based on cash dividends that would have been paid on the Shares specified in the Dividend Equivalent Right (or other award to which it relates) if such Shares had been issued to and held by the grantee.
"Effective Date" means the date on which the Plan is approved by shareholders as set forth in Section 19.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
"Fair Market Value" of the Shares on any given date means:
(i) if the Shares are listed the Nasdaq Stock Market and the Toronto Stock Exchange, the fair market value of the Shares shall mean the closing price of the Shares on the Nasdaq Stock Market on the market trading day immediately prior to the applicable grant date; provided, however, if the Shares are not listed on the Nasdaq Stock Market, then on such other exchange or quotation system as the Shares are listed, as may be selected by the Board in accordance with such exchange's regulations; or
(ii) if the Shares are not listed on a national securities exchange or quotation system, the fair market value of the Shares determined in good faith by the Administrator in a manner consistent with Section 409A of the Code.
"Filing Date" means the date on which a Redemption Notice is filed with the Company by a grantee of Deferred Share Units who is not a U.S. Taxpayer following the termination of the grantee's employment with the Company.
"ISO" means any Option designated and qualified as an "incentive stock option" as defined in Section 422 of the Code.
"Non-Employee Director" means a member of the Board who is not also an employee of the Company or any Subsidiary.
"Non-Qualified Option" means any Option that is not an ISO.
"Option" means any option to purchase Shares granted pursuant to Section 5.
"Performance Criteria" means the criteria that the Administrator selects for purposes of establishing the Performance Goal or Performance Goals for an individual for a Performance Cycle.
"Performance Cycle" means one or more periods of time, which may be of varying and overlapping durations, as the Administrator may select, over which the attainment of one or more Performance Criteria will be measured for the purpose of determining a grantee's right to and the payment of a Restricted Share Award or Restricted Share Units, the vesting and/or payment of which is subject to the attainment of one or more Performance Goals.
"Performance Goals" means, for a Performance Cycle, the specific goals established in writing by the Administrator for a Performance Cycle based upon the Performance Criteria.
"Redemption Notice" means a notice filed (or deemed to be filed) by a grantee with the Company following the termination of the grantee's employment to trigger the redemption of Deferred Share Units in accordance with Section 10, which notice shall be in the form prescribed from time to time by the Company.
"Reorganization Event" shall mean: (a) any merger or consolidation of the Company with or into another entity as a result of which all of the Shares of the Company are converted into or exchanged for the right to receive cash, securities or other property or is cancelled, (b) any transfer or disposition of all of the Shares of the Company for cash, securities or other property pursuant to a share exchange or other transaction or (c) any liquidation or dissolution of the Company.
"Restricted Share Award" means an Award of Shares subject to such restrictions and conditions as the Administrator may determine at the time of grant, including but not limited to the attainment of specified Performance Goals.
"Restricted Share Units" means an Award entitling the recipient to acquire the right to receive one Share (or the cash value of one Share, if so determined by the Administrator) for each unit on a specified settlement date set forth in the Award Certificate, subject to such restrictions and conditions as the Administrator may determine at the time of grant, including but not limited to the attainment of specified Performance Goals.
"Sale Price" means the value as determined by the Administrator of the consideration payable, or otherwise to be received by shareholders, per Share pursuant to a Reorganization Event.
"Section 409A" means Section 409A of the Code and the regulations and other guidance promulgated thereunder.
"Section 7 Options" means options to acquire Shares that are governed by section 7 of the Tax Act and that are granted to individuals who are Canadian Taxpayers that are employees or Non-Employee Directors of the Company or any of its Subsidiaries.
"Separation from Service" means the date of the U.S. Taxpayer incurs a "separation from service" with the Company within the meaning of U.S. Treas. Regs. § 1.409A-1(h).
"Specified Employee" means a U.S. Taxpayer who meets the definition of "specified employee," as defined in Section 409A(a)(2)(B)(i) of the Code.
"Shares" means the common shares of the Company, subject to adjustments pursuant to Section 3.
"Share Appreciation Right" means an Award entitling the recipient to receive Shares (or cash, to the extent explicitly provided for in the applicable Award Certificate) having a value equal to the excess of the Fair Market Value of the Shares on the date of exercise over the exercise price of the Share Appreciation Right multiplied by the number of Shares with respect to which the Share Appreciation Right shall have been exercised.
"Subsidiary" means a corporation, company, partnership or other body corporate that is controlled, directly or indirectly, by the Company, except that for purposes of the granting of an ISO, subsidiary shall be defined as set forth in Section 424(f) of the Code and shall generally mean any corporation or other entity (other than the Company) in which the Company has the right to exercise control or direction over 50% or more of the voting power, either directly or indirectly.
"Tax Act" means the Income Tax Act (Canada) and its regulations thereunder, as amended from time to time.
"Ten Percent Owner" means an employee who is a U.S. Taxpayer and owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10 percent of the combined voting power of all share classes of the Company or any parent or subsidiary corporation.
"U.S. Taxpayer" means a grantee who is subject to taxes in the United States, including any taxes imposed under Section 409A of the Code.
"Unrestricted Share Award" means an Award of Shares free of any restrictions.
SECTION 2. ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS
(a) Administration of Plan. The "Administrator" of the Plan shall be the Board or, if the Board by resolution so decides, by a committee appointed by the Board.
(b) Powers of Administrator. The Administrator shall have the power and authority to grant Awards consistent with the terms of the Plan, including the power and authority:
(i) to select the individuals to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent, if any, of Section 7 Options, ISOs, Non-Qualified Options, Share Appreciation Rights, Restricted Share Awards, Restricted Share Units, Unrestricted Share Awards, Deferred Share Units and Dividend Equivalent Rights, or any combination of the foregoing, granted to any one or more grantees;
(iii) to determine the number of Shares to be covered by any Award;
(iv) to determine and modify from time to time the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and grantees, and to approve the forms of Award Certificates;
(v) to accelerate at any time the exercisability or vesting of all or any portion of any Award, subject to any applicable rules of any securities exchange the Share are listed on;
(vi) subject to the provisions of Section 5(b) and Section 6(c) and compliance with Section 409A of the Code, to extend at any time the period in which Options and Share Appreciation Rights may be exercised;
(vii) at any time to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem advisable, subject to any applicable rules of any securities exchange the Shares are listed on; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan.
All decisions and interpretations of the Administrator shall be binding on all persons, including the Company and Plan grantees. None of the Company, the Board or the Administrator, nor any other person to whom authority is delegated under Section 2(c) of the Plan shall be liable for any action, omission or determination made in good faith in the administration, interpretation, construction or applicable of the Plan or any Award granted hereunder.
(c) Delegation of Authority to Grant Awards. To the extent permitted under applicable law, the Board or the Administrator may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any portion of its responsibilities and powers to any other person selected by it. The Board or the Administrator may revoke any such allocation or delegation at any time. Notwithstanding the foregoing, only the Board or the Administrator, if the Administrator is comprised solely of "non-employee directors" as defined under Rule 16b-3 of the Exchange Act, shall be authorized to grant an Award to any director of the Company or to any "officer" of the Company as defined by Rule 16a-1 under the Exchange Act.
(d) Award Certificate. Awards under the Plan shall be evidenced by Award Certificates that set forth the terms, conditions and limitations for each Award which may include, without limitation, the term of an Award and the provisions applicable in the event employment or service terminates.
(e) Foreign Award Recipients. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company and its Subsidiaries operate or have employees or other individuals eligible for Awards, the Administrator, in its sole discretion, shall have the power and authority to: (i) determine which Subsidiaries shall be covered by the Plan; (ii) determine which individuals outside Canada and the United States are eligible to participate in the Plan; (iii) modify the terms and conditions of any Award granted to individuals outside Canada and the United States to comply with applicable foreign laws; (iv) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Administrator determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to the Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in Section 3(a) hereof; and (v) take any action, before or after an Award is made, that the Administrator determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate any applicable Canadian or United States securities law, the Tax Act, the Code, or any other applicable Canadian or United States governing statute or law.
SECTION 3. SHARES ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
(a) Shares Issuable. The maximum number of Shares reserved and available for issuance under the Plan shall be 13,400,000 Shares, subject to adjustment as provided in this Section 3. For purposes of this limitation, the Shares underlying any Awards under the Plan as well as common shares underlying any options under the Company's Amended and Restated Stock Option Plan dated March 8, 2018, that are forfeited, canceled or otherwise terminated (other than by exercise) on or after the Effective Date shall be added back to the Shares available for issuance under the Plan. Notwithstanding the foregoing, the following shares shall not be added to the Shares authorized for grant under the Plan: (i) Shares tendered or held back upon exercise of an Option or settlement of an Award to cover the exercise price or tax withholding, and (ii) Shares subject to a Share Appreciation Right that are not issued in connection with the share settlement of the Share Appreciation Right upon exercise thereof. In the event the Company repurchases Shares on the open market, such Shares shall not be added to the Shares available for issuance under the Plan. Subject to such overall limitations, Shares may be issued up to such maximum number pursuant to any type or types of Award; provided, however, that ISOs for no more than 18,400,000 Shares may be granted under the Plan. The Shares available for issuance under the Plan may be authorized but unissued Shares or Shares reacquired by the Company.
(b) Changes in Shares. Subject to Section 3(c) hereof, if, as a result of any reorganization, recapitalization, reclassification, share dividend, share split, reverse share split or other similar change in the Company's capital, the outstanding Shares are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such Shares or other securities, or, if, as a result of any merger or consolidation, sale of all or substantially all of the assets of the Company, the outstanding Shares are converted into or exchanged for securities of the Company or any successor entity (or a parent or subsidiary thereof), the Administrator shall make an appropriate or proportionate adjustment in (i) the maximum number of Shares reserved for issuance under the Plan, including the maximum number of Shares that may be authorized for the issuance under or upon the exercise of ISOs, (ii) the number and kind of Shares or other securities subject to any then outstanding Awards under the Plan, (iii) the repurchase price, if any, per Share subject to each outstanding Restricted Share Award, and (iv) the exercise price for each Share subject to any then outstanding Options and Share Appreciation Rights under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied by the number of Options and Share Appreciation Rights) as to which such Options and Share Appreciation Rights remain exercisable. The Administrator shall also make equitable or proportionate adjustments in the number of Shares subject to outstanding Awards and the exercise price and the terms of outstanding Awards to take into consideration cash dividends paid other than in the ordinary course or any other extraordinary corporate event. The adjustment by the Administrator shall be final, binding and conclusive. No fractional Shares shall be issued under the Plan resulting from any such adjustment, but the Administrator in its discretion may make a cash payment in lieu of fractional Shares.
(c) Reorganization Events and Change in Control Transactions. Except as the Administrator may otherwise specify with respect to particular Awards in the relevant Award Certificate, in the case of and subject to the consummation of a Reorganization Event, the parties thereto may cause the assumption or continuation of Awards theretofore granted by the successor entity, or the substitution of such Awards with new Awards of the successor entity or parent thereof, with appropriate adjustment as to the number and kind of Shares and, if appropriate, the per Share exercise prices, as such parties shall agree. To the extent the parties to such Reorganization Event do not provide for the assumption, continuation or substitution of Awards, upon the effective time of the Reorganization Event, the Plan and all outstanding Awards granted hereunder shall terminate. In the event such Reorganization Event also constitutes a Change in Control, except as may be otherwise provided in the relevant Award Certificate, all Options and Share Appreciation Rights with time-based vesting that are not vested and/or exercisable immediately prior to the effective time of the Change in Control shall become fully vested and exercisable as of the effective time of the Change in Control, all other Awards with time-based vesting, conditions or restrictions shall become fully vested and nonforfeitable as of the effective time of the Change in Control, and all Awards with conditions and restrictions relating to the attainment of Performance Goals shall be deemed to vest and become nonforfeitable as of the Change in Control assuming the greater of (i) achievement of all relevant Performance Goals at the "target" level (prorated based upon the length of time within the Performance Period that has elapsed prior the Change in Control) or (ii) actual achievement as of the date of such Change in Control. In the event of such termination, (i) the Company shall have the option (in its sole discretion) to make or provide for a payment, in cash or in kind, to the grantees holding Options and Share Appreciation Rights, in exchange for the cancellation thereof, in an amount equal to the difference between (A) the Sale Price multiplied by the number of Shares subject to outstanding Options and Share Appreciation Rights (to the extent then exercisable at prices not in excess of the Sale Price) and (B) the aggregate exercise price of all such outstanding Options and Share Appreciation Rights (provided that, in the case of an Option or Share Appreciation Right with an exercise price equal to or greater than the Sale Price, such Option or Share Appreciation Right shall be cancelled for no consideration); or (ii) each grantee shall be permitted, within a specified period of time prior to the consummation of the Reorganization Event as determined by the Administrator, to exercise all outstanding Options and Share Appreciation Rights (to the extent then exercisable) held by such grantee. The Company shall also have the option (in its sole discretion) to make or provide for a payment, in cash or in kind, to the grantees holding other Awards in an amount equal to the Sale Price multiplied by the number of vested Shares under such Awards.
(d) Substitute Awards. The Administrator may grant Awards under the Plan in substitution for share-based awards held by employees, directors or other key persons of another corporation in connection with the merger or consolidation of the employing corporation with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of property or shares of the employing corporation. The Administrator may direct that the substitute awards be granted on such terms and conditions as the Administrator considers appropriate in the circumstances. Subject to exchange approval, if applicable, any substitute Awards granted under the Plan shall not count against the share limitation set forth in Section 3(a).
(e) Maximum Shares Available for Specific Individuals and Groups. The maximum number of Shares that may be issued to any grantee in any 12-month period under the Plan may be no more than five percent (5%) of the total of the number of then issued and outstanding Shares of the Company and the number of Shares of the Company issuable upon due conversion of the issued and outstanding preferred shares of the Company in any 12 month period.
SECTION 4. ELIGIBILITY
Grantees under the Plan will be such full or part-time officers and other employees, Non-Employee Directors and Consultants of the Company and its Subsidiaries as are selected from time to time by the Administrator in its sole discretion.
SECTION 5. OPTIONS
Any Option granted under the Plan shall be in such form as the Administrator may from time to time approve. Options granted under the Plan to a U.S. Taxpayer may be either ISOs or Non-Qualified Options. ISOs may be granted only to U.S. Taxpayers who are employees of the Company or any Subsidiary that is a "subsidiary corporation" within the meaning of Section 424(f) of the Code. To the extent that any Option issued to a U.S. Taxpayer does not qualify as an ISO, it shall be a Non-Qualified Option. Options granted to a Canadian Taxpayer that is an employee or a Non-Employee Director shall be Section 7 Options unless the Administrator causes the arrangement to be structured such that section 7 of the Tax Act does not apply.
Options granted pursuant to this Section 5 shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable. If the Administrator so determines, Options may be granted in lieu of cash compensation at the optionee's election, subject to such terms and conditions as the Administrator may establish.
(a) Exercise Price. The exercise price per share for the Shares covered by an Option granted pursuant to this Section 5 shall be determined by the Administrator at the time of grant but shall not be less than 100 percent of the Fair Market Value on the date of grant. In the case of an ISO that is granted to a Ten Percent Owner, the exercise price per share for the Shares covered by such ISO shall be not less than 110 percent of the Fair Market Value on the grant date.
(b) Option Term. The term of each Option shall be fixed by the Administrator, but no Option shall be exercisable more than ten years after the date the Option is granted. Notwithstanding the expiration date applicable to any Option, and subject to Section 409A of the Code for U.S. Taxpayers, if an Option would otherwise expire during or immediately after a Black out Period, then the expiration date of such Option shall be the tenth business day following the expiration of the Black out Period. In the case of an ISO that is granted to a Ten Percent Owner, the term of such Option shall be no more than five years from the date of grant.
(c) Exercisability; Rights of a Shareholder. Options shall become exercisable at such time or times, whether or not in installments, as shall be determined by the Administrator at or after the grant date. The Administrator may at any time accelerate the exercisability of all or any portion of any Option. An optionee shall have the rights of a shareholder only as to Shares acquired upon the exercise of an Option and not as to unexercised Options.
(d) Method of Exercise. Options may be exercised in whole or in part, by giving written or electronic notice of exercise to the Company, specifying the number of Shares to be purchased. Payment of the exercise price may be made by one or more of the following methods except to the extent otherwise provided in the Option Award Certificate:
(i) In cash, by certified or bank check or other instrument acceptable to the Administrator;
(ii) If permitted under applicable securities laws, through the delivery (or attestation to the ownership) of Shares that are not then subject to restrictions under any Company plan. Such surrendered Shares shall be acquired and valued pursuant to National Instrument - Take-Over Bids and Issuer Bids;
(iii) By the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the exercise price; provided that in the event the optionee chooses to pay the exercise price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment procedure; or
(iv) With respect to Options that are not ISOs, or Options issued to Canadian Taxpayers that are not Section 7 Options, by a "net exercise" arrangement pursuant to which the Company will reduce the number of Shares issuable upon exercise by the largest whole number of Shares with a Fair Market Value that does not exceed the aggregate exercise price.
Payment instruments will be received subject to collection. The transfer to the optionee on the records of the Company or of the transfer agent of the Shares to be purchased pursuant to the exercise of an Option will be contingent upon receipt from the optionee (or a purchaser acting in his stead in accordance with the provisions of the Option) by the Company of the full exercise price for such Shares and the fulfillment of any other requirements contained in the Option Award Certificate or applicable provisions of laws (including the satisfaction of any withholding taxes that the Company is obligated to withhold with respect to the optionee). If permitted under applicable securities laws, in the event an optionee chooses to pay the exercise price by previously-owned Shares through the attestation method, the number of Shares transferred to the optionee upon the exercise of the Option shall be net of the number of attested Shares. In the event that the Company establishes, for itself or using the services of a third party, an automated system for the exercise of Options, such as a system using an internet website or interactive voice response, then the paperless exercise of Options may be permitted through the use of such an automated system.
(e) Annual Limit on ISOs. To the extent required for "incentive stock option" treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the Shares with respect to which ISOs granted under the Plan and any other plan of the Company or its parent and subsidiary corporations become exercisable for the first time by an optionee during any calendar year shall not exceed U.S.$100,000. To the extent that any Option exceeds this limit, it shall constitute a Non-Qualified Option.
(f) The Administrator shall have the discretion to determine whether or not the Company makes an election under subsection 110(1.1) of the Tax Act in respect of any Section 7 Options that are exercised by Canadian Taxpayers.
(g) Any Options granted to Canadian Taxpayers that are not Section 7 Options shall be such that they will not constitute a "Salary Deferral Arrangement" for the purposes of the Tax Act.
SECTION 6. SHARE APPRECIATION RIGHTS
(a) Exercise Price of Share Appreciation Rights. The exercise price of a Share Appreciation Right shall not be less than 100 percent of the Fair Market Value of a Share on the date of grant.
(b) Grant and Exercise of Share Appreciation Rights. Share Appreciation Rights may be granted by the Administrator independently of any Option granted pursuant to Section 5 of the Plan.
(c) Terms and Conditions of Share Appreciation Rights. Share Appreciation Rights shall be subject to such terms and conditions as shall be determined from time to time by the Administrator. The term of a Share Appreciation Right may not exceed ten years. Share Appreciation Rights granted to Canadian Taxpayers shall be structured such that they will not constitute a "Salary Deferral Arrangement" for the purposes of the Tax Act.
SECTION 7. RESTRICTED SHARE AWARDS
(a) Nature of Restricted Share Awards. The Administrator shall determine the restrictions and conditions applicable to each Restricted Share Award at the time of grant. Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established Performance Goals. The terms and conditions of each such Award shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees.
(b) Rights as a Shareholder. Upon the grant of the Restricted Share Award and payment of any applicable purchase price, a grantee shall have the rights of a shareholder with respect to the voting of the Restricted Shares and receipt of dividends; provided that any dividends paid by the Company during the vesting period shall accrue and shall not be paid unless and until the Restricted Shares have vested. Unless the Administrator shall otherwise determine, (i) uncertificated Restricted Shares shall be accompanied by a notation on the records of the Company or the transfer agent to the effect that they are subject to forfeiture until such Restricted Shares are vested as provided in Section 7(d) below, and (ii) certificated Restricted Shares shall remain in the possession of the Company until such Restricted Shares are vested as provided in Section 7(d) below, and the grantee shall be required, as a condition of the grant, to deliver to the Company such instruments of transfer as the Administrator may prescribe.
(c) Restrictions. Restricted Shares may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided herein or in the Restricted Share Award Certificate. Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 15 below, in writing after the Award is issued, if a grantee's employment (or other service relationship) with the Company and its Subsidiaries terminates for any reason, any Restricted Shares that have not vested at the time of termination shall automatically and without any requirement of notice to such grantee from or other action by or on behalf of, the Company be deemed to have been reacquired by the Company at its original purchase price (if any) from such grantee or such grantee's legal representative simultaneously with such termination of employment (or other service relationship), and thereafter shall cease to represent any ownership of the Company by the grantee or rights of the grantee as a shareholder. Following such deemed reacquisition of unvested Restricted Shares that are represented by physical certificates, a grantee shall surrender such certificates to the Company upon request without consideration.
(d) Vesting of Restricted Shares. The Administrator at the time of grant shall specify the date or dates and/or the attainment of pre-established Performance Goals and other conditions on which the non-transferability of the Restricted Shares and the Company's right of repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or the attainment of such pre-established Performance Goals and other conditions, the shares on which all restrictions have lapsed shall no longer be Restricted Shares and shall be deemed "vested." Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 15 below, in writing after the Award is issued, a grantee's rights in any Restricted Shares that have not vested shall automatically terminate upon the grantee's termination of employment (or other service relationship) with the Company and its Subsidiaries and such shares shall be subject to the provisions of Section 7(c) above.
SECTION 8. RESTRICTED SHARE UNITS
(a) Nature of Restricted Share Units. The Administrator shall determine the restrictions and conditions applicable to each Restricted Share Unit at the time of grant. Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established Performance Goals. The terms and conditions of each such Award Certificate shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees. Except in the case of Restricted Share Units that are issued to U.S. Taxpayers with a deferred settlement date that complies with Section 409A, if applicable, at the end of the vesting period, the Restricted Share Units, to the extent vested, shall be settled in Shares. Restricted Share Units with deferred settlement dates issued to U.S. Taxpayers are subject to Section 409A and shall contain such additional terms and conditions as the Administrator shall determine in its sole discretion in order for such Award to comply with the requirements of Section 409A. Any Restricted Share Units issued to Canadian Taxpayers shall be structured such that they will not constitute a "Salary Deferral Arrangement" for the purposes of the Tax Act.
(b) Rights as a Shareholder. A grantee shall have the rights as a shareholder only as to Shares acquired by the grantee upon settlement of Restricted Share Units; provided, however, that the grantee may be credited with Dividend Equivalent Rights with respect to the Shares underlying the Restricted Share Units, subject to the provisions of Section 11 and such terms and conditions as the Administrator may determine.
(c) Termination. Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 15 below, in writing after the Award is issued, a grantee's right in all Restricted Share Units that have not vested shall automatically terminate upon the grantee's termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.
SECTION 9. UNRESTRICTED SHARE AWARDS
Grant or Sale of Unrestricted Shares.The Administrator may, in its sole discretion, grant (or sell at par value or such higher purchase price determined by the Administrator) an Unrestricted Share Award under the Plan. Unrestricted Share Awards may be granted in respect of past services or other valid consideration, or in lieu of cash compensation due to such grantee. Any Unrestricted Share Units issued to Canadian Taxpayers shall be structured such that they will not constitute a "Salary Deferral Arrangement" for the purposes of the Tax Act.
SECTION 10. DEFERRED SHARE UNITS
(a) Determination of Deferred Share Units. The Administrator will, in its sole and absolute discretion, decide at the time of declaring or awarding any annual and special bonuses payable to any employee or any board retainer, chair, committee, meeting or any other fees that may be payable to any Non-Employee Director whether any of such compensation will be satisfied in the form of Deferred Share Units. The Administrator will also determine, in connection with each grant, the effective date thereof, the terms and conditions of vesting, and such other terms and conditions which the Administrator considers appropriate, and which terms and conditions need not be identical as between any two Deferred Share Unit Awards, whether or not contemporaneous.
(b) Grantee's Account. The Company shall maintain or cause to be maintained in its records an account for each grantee recording at all times the number of Deferred Share Units credited to the grantee. The number of Deferred Share Units (including fractional Deferred Share Units, computed to three digits) to be credited to a grantee for services will be determined by dividing the amount of compensation awarded by the Fair Market Value as of the last trading day before the amount of compensation is declared by the Administrator. Upon delivery of Shares in satisfaction of Deferred Share Units in accordance with Section 10(c) of the Plan, the grantee's entitlement to receive Shares upon redemption of Deferred Share Units shall be fully discharged and satisfied and such Deferred Share Units shall be cancelled and thereupon deleted from the account of such grantee. A written confirmation of the balance in each grantee's account will be sent by the Company to the grantee upon the request of the grantee.
(c) Redemption of Deferred Share Units. Upon the termination of the grantee's service with the Company, a grantee may elect to redeem his or her Deferred Share Units credited to grantee's account by filing a Redemption Notice on or before December 15 of the first calendar year commencing after the date on which the grantee's employment with the Company has terminated. If the grantee fails to file such a notice on or before that December 15, the grantee will be deemed to have filed a Redemption Notice on that December 15 and will be deemed to have elected to redeem all of his or her Deferred Share Units. The Company may defer the Filing Date to any other date if such deferral is, in the sole opinion of the Company, desirable to ensure compliance with applicable law. Upon receiving a Redemption Notice, the Company shall satisfy the grantee's entitlement in Shares. The delivery of Shares will be made by the Company as soon as reasonably possible following the Filing Date, but in any event, not later than the date that is sixty days following the Filing Date. In no event will the payment be made later than December 31 of the first calendar year commencing after the grantee's employment with the Company has terminated. Fractional Shares may not be issued, and where a grantee would be entitled to receive a fractional Share in respect of any fractional Deferred Share Unit, the Company will pay such grantee, in lieu of such fractional Share, cash equal to its Fair Market Value, calculated as at the Filing Date. Upon delivery of the Shares as payment for Deferred Share Units, and cash in lieu of fractional Shares, the Deferred Share Units shall be cancelled and the grantee shall have no further rights under the Plan.
(d) Notwithstanding the foregoing provisions of Section 10(c), if a grantee is a U.S. Taxpayer, then the following rules shall apply relating to the redemption of Deferred Share Units:
(i) Deferred Share Units which become redeemable under Section 10(c) shall be redeemed only if the event giving rise to the termination of the grantee's employment is a Separation from Service; and
(ii) the redemption date shall be any date determined by the Company to occur as soon as reasonably possible (but not later than 60 days) after the Separation from Service, except that if the U.S. Taxpayer is determined to be a Specified Employee, the redemption date shall be the first day of the seventh month after the Separation from Service of the U.S. Taxpayer.
If a grantee is a Canadian Taxpayer, it is intended that at all times the Deferred Share Unit component of the Plan shall be administered or operated such that it meets the conditions of Regulation 6801(d) enacted pursuant to the Tax Act, or any successor provisions thereto.
(e) Dividend Equivalents. On any date on which a cash dividend is paid on Shares, a grantee's account will be credited with the number of Deferred Share Units (including fractional Deferred Share Units, computed to three digits) calculated by:
(i) multiplying the amount of the dividend per Share by the aggregate number of Deferred Share Units that were credited to the grantee's account as of the record date of payment of the dividend; and
(ii) dividing the amount obtained in Section 10(e)(i) by the Fair Market Value on the date on which the dividend is paid.
(f) Death. In the event of the death of a grantee, the Company will, within sixty days of the grantee's death, deliver Shares as payment for Deferred Share Units which would have been deliverable to the grantee if the grantee had terminated service with the Company in respect of the Deferred Share Units credited to the deceased grantee's account (net of any applicable withholding tax) to or for the benefit of the legal representative of the grantee.
(g) Change in Control. Upon the occurrence of a Change in Control, all Deferred Share Units credited to each grantee's account shall immediately vest in full, provided that any grantee who benefits from such accelerated vesting and who is a Canadian Taxpayer will not be able to receive their Deferred Share Unit entitlement until such time as they terminate their service with the Company.
SECTION 11. DIVIDEND EQUIVALENT RIGHTS
(a) Dividend Equivalent Rights. A Dividend Equivalent Right may be granted hereunder to any grantee as a component of an award of Restricted Share Units or as a freestanding award. No Options or Share Appreciation Rights shall provide for the payment or accrual of Dividend Equivalents. The terms and conditions of Dividend Equivalent Rights shall be determined by the Administrator and specified in the Award Certificate. Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid concurrently with vesting of the underlying Award or may be deemed to be reinvested in additional Share, which may thereafter accrue additional equivalents. Any such reinvestment shall be at Fair Market Value on the date of reinvestment or such other price as may then apply under a dividend reinvestment plan sponsored by the Company, if any. Dividend Equivalent Rights may be settled in cash or Shares or a combination thereof, in a single installment or installments. A Dividend Equivalent Right granted as a component of an Award with vesting shall provide that such Dividend Equivalent Right shall be settled only upon settlement or payment of, or lapse of restrictions on, such other Award, and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other Award.
(b) Termination. Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 15 below, in writing after the Award is issued, a grantee's rights in all Dividend Equivalent Rights granted as a component of an award of Restricted Share Units that has not vested shall automatically terminate upon the grantee's termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.
SECTION 12. TRANSFERABILITY OF AWARDS
(a) Transferability. Except as provided in Section 12(b) below, during a grantee's lifetime, his or her Awards shall be exercisable only by the grantee, or by the grantee's legal representative or guardian in the event of the grantee's incapacity. No Awards shall be sold, assigned, transferred or otherwise encumbered or disposed of by a grantee other than by will or by the laws of descent and distribution or pursuant to a domestic relations order. No Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind, and any purported transfer in violation hereof shall be null and void.
(b) Administrator Action. Notwithstanding Section 12(a), the Administrator, in its discretion, and if permitted by applicable securities laws, may provide either in the Award Certificate regarding a given Award or by subsequent written approval that the grantee (who is an employee or director) may transfer his or her Non-Qualified Options to his or her immediate family members, to trusts for the benefit of such family members, or to partnerships in which such family members are the only partners, provided that the transferee agrees in writing with the Company to be bound by all of the terms and conditions of the Plan and the applicable Award. In no event may an Award be transferred by a grantee for value.
(c) Family Member. For purposes of Section 12(b), "family member" shall mean a grantee's child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the grantee's household (other than a tenant of the grantee), a trust in which these persons (or the grantee) have more than 50% of the beneficial interest, a foundation in which these persons (or the grantee) control the management of assets, and any other entity in which these persons (or the grantee) own more than 50% of the voting interests.
(d) Designation of Beneficiary. Each grantee to whom an Award has been made under the Plan may designate a beneficiary or beneficiaries to exercise any Award or receive any payment under any Award payable on or after the grantee's death. Any such designation shall be on a form provided for that purpose by the Administrator and shall not be effective until received by the Administrator. If no beneficiary has been designated by a deceased grantee, or if the designated beneficiaries have predeceased the grantee, the beneficiary shall be the grantee's estate.
SECTION 13. TAX WITHHOLDING
(a) Payment by Grantee. Each grantee shall, no later than the date as of which the value of an Award or of any Shares or other amounts received thereunder first becomes includable in the gross income of the grantee for income tax purposes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of, any taxes of any kind required by law to be withheld by the Company with respect to such income. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the grantee. The Company's obligation to deliver evidence of book entry (or certificates) to any grantee is subject to and conditioned on tax withholding obligations being satisfied by the grantee.
(b) Payment in Shares. The Administrator may require the Company's tax withholding obligation satisfied, in whole or in part, by the Company withholding from Shares to be issued pursuant to any Award a number of Shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due; provided, however, that the amount withheld does not exceed the maximum statutory tax rate or such lesser amount as is necessary to avoid adverse accounting treatment. The Administrator may also require Awards to be subject to mandatory share withholding up to the required withholding amount. For purposes of share withholding, the Fair Market Value of withheld Shares shall be determined in the same manner as the value of Shares includible in income of the grantees. The Administrator may also require the Company's tax withholding obligation to be satisfied, in whole or in part, by an arrangement whereby a certain number of Shares issued pursuant to an Award are immediately sold and proceeds from such sale are remitted to the Company in an amount that would satisfy the withholding amount due.
SECTION 14. SECTION 409A AWARDS
Awards granted to U.S. Taxpayers are intended to be exempt from Section 409A to the greatest extent possible and to otherwise comply with Section 409A. The Plan and all applicable Awards shall be interpreted in accordance with such intent. To the extent that any Award is determined to constitute "nonqualified deferred compensation" within the meaning of Section 409A (a "409A Award"), the Award shall be subject to such additional rules and requirements as specified by the Administrator from time to time in order to comply with Section 409A. In this regard, if any amount under a 409A Award is payable upon a Separation from Service to a grantee who is then considered a Specified Employee, then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the grantee's Separation from Service, or (ii) the grantee's death, but only to the extent such delay is necessary to prevent such payment from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A. Further, the settlement of any such Award may not be accelerated except to the extent permitted by Section 409A.
SECTION 15. TERMINATION OF SERVICE RELATIONSHIP; TRANSFER, LEAVE OF ABSENCE, ETC.
(a) Termination of Service Relationship. If the grantee's employment or service relationship is with a Subsidiary and such Subsidiary ceases to be a Subsidiary, the grantee shall be deemed to have terminated his or her employment or service relationship for purposes of the Plan.
(b) For purposes of the Plan, the following events shall not be deemed a termination of employment:
(i) a transfer to the employment from the Company to a Subsidiary or from a Subsidiary to the Company, or from one Subsidiary to another; and
(ii) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee's right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Administrator otherwise so provides in writing.
(c) The date of termination of services means the last day upon which the grantee provides services to the Company or Subsidiary, as the case may be, at its premises and not the last day upon which the Company or Subsidiary pays wages or salaries in lieu of notice of termination, statutory, contractual or otherwise.
SECTION 16. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and the Administrator may, at any time, amend or cancel any outstanding Award for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall materially and adversely affect rights under any outstanding Award without the holder's consent. The Board has the discretion to make amendments to the Plan and any Awards granted hereunder which it may deem necessary, without having to obtain shareholder approval. Such changes include, without limitation:
(i) minor changes of a "housekeeping" nature;
(ii) amending Awards under the Plan, including with respect to the Award period, except as otherwise limited herein and by applicable exchange regulations, vesting period, exercise method and frequency, and method of determining the exercise price, assignability and effect of termination of a grantee's employment or cessation of services; and
(iii) except as provided below, changing the terms and conditions of any financial assistance which may be provided by the Company to grantees to facilitate the purchase of Shares under the Plan.
Except as provided in Section 3(b) or 3(c), without prior shareholder approval, in no event may the Administrator exercise its discretion:
(i) to reduce the exercise price of outstanding Options or Share Appreciation Rights or effect repricing through cancellation and re-grants or cancellation of Options or Share Appreciation Rights in exchange for cash;
(ii) to amend the amendment provisions of the Plan;
(iii) to increase the maximum number of Shares issuable under the Plan;
(iv) any amendment which would permit Awards granted under the Plan to be transferable or assignable other than as set forth in Section 12 and for normal estate settlement purposes;
(v) the addition of any form of financial assistance;
(vi) any amendment to a financial assistance provision that is more favorable to participants;
(vii) to extend the Option term (other than as a result of a Black out Period extension); and
(viii) an extension of the term of an Award which benefits an Insider (as such term is defined in the policies of the TSX) of the Company.
Furthermore, notwithstanding anything herein to the contrary, to the extent required under the rules of any securities exchange or market system on which the Shares are listed, or to the extent determined by the Administrator to be required by the Code to ensure that ISOs granted under the Plan are qualified under Section 422 of the Code, Plan amendments shall be subject to approval by the Company shareholders entitled to vote at a meeting of shareholders. Nothing in this Section 16 shall limit the Administrator's authority to take any action permitted pursuant to Section 3(b) or 3(c).
SECTION 17. STATUS OF PLAN
With respect to the portion of any Award that has not been exercised and any payments in cash, Shares or other consideration not received by a grantee, a grantee shall have no rights greater than those of a general creditor of the Company unless the Administrator shall otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the Administrator may authorize the creation of trusts or other arrangements to meet the Company's obligations to deliver Shares or make payments with respect to Awards hereunder, provided that the existence of such trusts or other arrangements is consistent with the foregoing sentence.
SECTION 18. GENERAL PROVISIONS
(a) No Distribution. The Administrator may require each person acquiring Shares pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the Shares without a view to distribution thereof.
(b) Issuance of Shares. To the extent certificated, share certificates to grantees under the Plan shall be deemed delivered for all purposes when the Company or its transfer agent shall have mailed such certificates in the Canadian or United States mail, addressed to the grantee, at the grantee's last known address on file with the Company. Uncertificated Share shall be deemed delivered for all purposes when the Company or its transfer agent of the Company shall have given to the grantee by electronic mail or by Canadian or United States mail, addressed to the grantee, at the grantee's last known address on file with the Company, notice of issuance and recorded the issuance in its records (which may include electronic "book entry" records). Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any evidence of book entry or certificates evidencing Shares pursuant to the exercise or settlement of any Award, unless and until the Administrator has determined, with advice of counsel (to the extent the Administrator deems such advice necessary or advisable), that the issuance and delivery is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the Shares are listed, quoted or traded. All Shares issued pursuant to the Plan shall be subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with federal, state or foreign jurisdiction, securities or other laws, rules and quotation system on which the Shares are listed, quoted or traded. The Administrator may place legends on any certificate or notations on any book entry to reference restrictions applicable to the Shares. In addition to the terms and conditions provided herein, the Administrator may require that an individual make such reasonable covenants, agreements, and representations as the Administrator, in its discretion, deems necessary or advisable in order to comply with any such laws, regulations, or requirements. The Administrator shall have the right to require any individual to comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Administrator.
(c) Shareholder Rights. Until Shares are deemed delivered in accordance with Section 18(b), no right to vote or receive dividends or any other rights of a shareholder will exist with respect to Shares to be issued in connection with an Award, notwithstanding the exercise of an Option or any other action by the grantee with respect to an Award.
(d) Other Compensation Arrangements; Voluntary Participation and No Employment Rights. Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, including trusts, and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of the Plan and the grant of Awards do not confer upon any officers, employees, Non-Employee Directors and Consultants any right to continued employment or engagement with the Company or any Subsidiary.
(e) Trading Policy Restrictions. Option exercises and other Awards under the Plan shall be subject to the Company's insider trading policies and procedures, as in effect from time to time.
(f) Clawback Policy. Awards under the Plan shall be subject to the Company's clawback policy, as in effect from time to time.
(g) No Tax Advice. Neither the Company nor the Administrator is providing any tax advice of any nature to any grantee or other person in connection with the Plan and in particular, no tax advice is provided to any individual who is both a Canadian Taxpayer and a U.S. Taxpayer.
SECTION 19. EFFECTIVE DATE OF PLAN
The Plan shall become effective on the date the Plan is approved by the Board, provided that, no Awards may be issued under the Plan until and unless all required exchange, regulatory and shareholder approvals have been obtained with respect to the issuance of Awards hereunder. The Plan shall expire on the tenth anniversary of the date the Plan is approved by the Board. No Awards may be granted under the plan on and after the tenth anniversary of the date the Plan is approved by the Board. However, any Award granted prior to such termination (or any earlier termination thereof), and the authority of the Administrator to amend, alter, adjust, termination any such Award or to waive any conditions or rights under such Award in accordance with the terms of the Plan, shall extend beyond such termination until the final disposition of the Award.
SECTION 20. GOVERNING LAW
The Plan and all Awards and actions taken thereunder shall be governed by, and construed in accordance with, the laws of the Province of Ontario and the laws of Canada applicable therein. The grantee and the Company hereby attorn to the jurisdiction of the courts of the Province of Ontario with respect to any and all actions in relation thereto.
DATE APPROVED BY BOARD OF DIRECTORS: May 6, 2020
