British Columbia, Canada
|
|
98-0597776
|
(State or Other Jurisdiction of
|
|
(I.R.S. Employer
|
Incorporation or Organization)
|
|
Identification No.)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Shares, without par value
|
ABUS
|
The Nasdaq Stock Market LLC
|
Large accelerated filer [ ]
|
Accelerated filer [X]
|
Non-accelerated filer [ ]
|
Smaller reporting company [X]
|
Emerging growth company [ ]
|
|
|
Page
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents (note 3)
|
$
|
78,872
|
|
|
$
|
36,942
|
|
Short-term investments (note 3)
|
16,410
|
|
|
87,675
|
|
||
Accounts receivable
|
1,531
|
|
|
1,431
|
|
||
Prepaid expenses and other current assets
|
2,770
|
|
|
3,181
|
|
||
Total current assets
|
99,583
|
|
|
129,229
|
|
||
Investment in Genevant (note 4)
|
14,377
|
|
|
22,224
|
|
||
Property and equipment, net of accumulated depreciation $8,105 (2018-$7,090)
|
9,402
|
|
|
10,145
|
|
||
Right of use asset (note 8)
|
2,901
|
|
|
—
|
|
||
Intangible assets (note 5)
|
43,836
|
|
|
43,836
|
|
||
Goodwill (note 5)
|
22,471
|
|
|
22,471
|
|
||
Total assets
|
$
|
192,570
|
|
|
$
|
227,905
|
|
Liabilities and stockholders' equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities (note 6)
|
$
|
7,940
|
|
|
$
|
9,429
|
|
Site consolidation accrual (note 7)
|
342
|
|
|
1,331
|
|
||
Liability-classified options (note 3)
|
141
|
|
|
479
|
|
||
Lease liability, current (note 8)
|
376
|
|
|
—
|
|
||
Total current liabilities
|
8,799
|
|
|
11,239
|
|
||
Deferred rent and inducements, non-current
|
—
|
|
|
645
|
|
||
Contingent consideration (notes 3 and 11)
|
3,381
|
|
|
3,126
|
|
||
Lease liability, non-current (note 8)
|
3,263
|
|
|
—
|
|
||
Deferred tax liability
|
12,661
|
|
|
12,661
|
|
||
Total liabilities
|
28,104
|
|
|
27,671
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Preferred shares (note 9)
|
|
|
|
||||
Authorized - 1,164,000 without par value
|
|
|
|
||||
Issued and outstanding: 1,164,000 (December 31, 2018 - 1,164,000)
|
131,613
|
|
|
126,136
|
|
||
Common shares
|
|
|
|
|
|
||
Authorized - unlimited number without par value
|
|
|
|
|
|
||
Issued and outstanding: 56,850,172 (December 31, 2018 - 55,518,800)
|
884,623
|
|
|
879,405
|
|
||
Additional paid-in capital
|
53,738
|
|
|
48,084
|
|
||
Deficit
|
(857,264
|
)
|
|
(805,221
|
)
|
||
Accumulated other comprehensive loss
|
(48,244
|
)
|
|
(48,170
|
)
|
||
Total stockholders' equity
|
164,466
|
|
|
200,234
|
|
||
Total liabilities and stockholders' equity
|
$
|
192,570
|
|
|
$
|
227,905
|
|
|
Three months ended
|
Six months ended
|
||||||||||||
|
June 30,
|
June 30,
|
||||||||||||
|
2019
|
|
2018
|
2019
|
|
2018
|
||||||||
Revenue (note 10)
|
$
|
653
|
|
|
$
|
1,244
|
|
$
|
1,332
|
|
|
$
|
2,680
|
|
|
|
|
|
|
|
|
||||||||
Expenses
|
|
|
|
|
|
|
||||||||
Research, development, collaborations and contracts
|
12,740
|
|
|
16,356
|
|
27,452
|
|
|
30,305
|
|
||||
General and administrative
|
8,189
|
|
|
3,775
|
|
12,601
|
|
|
7,444
|
|
||||
Depreciation
|
505
|
|
|
578
|
|
1,014
|
|
|
1,180
|
|
||||
Site consolidation (note 7)
|
(266
|
)
|
|
2,581
|
|
(149
|
)
|
|
4,202
|
|
||||
Total expenses
|
21,168
|
|
|
23,290
|
|
40,918
|
|
|
43,131
|
|
||||
|
|
|
|
|
|
|
||||||||
Loss from operations
|
(20,515
|
)
|
|
(22,046
|
)
|
(39,586
|
)
|
|
(40,451
|
)
|
||||
|
|
|
|
|
|
|
||||||||
Other (loss) income
|
|
|
|
|
|
|
||||||||
Interest income
|
606
|
|
|
805
|
|
1,206
|
|
|
1,563
|
|
||||
Interest expense
|
(2
|
)
|
|
—
|
|
(14
|
)
|
|
(104
|
)
|
||||
Foreign exchange gain (loss)
|
60
|
|
|
(359
|
)
|
68
|
|
|
(885
|
)
|
||||
Gain on investment (note 4)
|
—
|
|
|
24,884
|
|
—
|
|
|
24,884
|
|
||||
Equity investment loss (note 4)
|
(3,334
|
)
|
|
—
|
|
(7,985
|
)
|
|
—
|
|
||||
Decrease (increase) in fair value of contingent consideration (notes 3 and 10)
|
(130
|
)
|
|
(193
|
)
|
(255
|
)
|
|
655
|
|
||||
Total other (loss) income
|
(2,800
|
)
|
|
25,137
|
|
(6,980
|
)
|
|
26,113
|
|
||||
|
|
|
|
|
|
|
||||||||
Net (loss) income before income taxes
|
$
|
(23,315
|
)
|
|
$
|
3,091
|
|
$
|
(46,566
|
)
|
|
$
|
(14,338
|
)
|
|
|
|
|
|
|
|
||||||||
Items applicable to preferred shares:
|
|
|
|
|
|
|
||||||||
Accrual of coupon on convertible preferred shares
|
(2,762
|
)
|
|
(2,541
|
)
|
(5,477
|
)
|
|
$
|
(4,877
|
)
|
|||
|
|
|
|
|
|
|
||||||||
Net (loss) income attributable to common shares
|
$
|
(26,077
|
)
|
|
$
|
550
|
|
$
|
(52,043
|
)
|
|
$
|
(19,215
|
)
|
|
|
|
|
|
|
|
||||||||
Net (loss) income attributable to common shareholders, per share (note 2)
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.46
|
)
|
|
$
|
0.01
|
|
$
|
(0.92
|
)
|
|
$
|
(0.35
|
)
|
Diluted
|
$
|
(0.46
|
)
|
|
$
|
0.01
|
|
$
|
(0.92
|
)
|
|
$
|
(0.35
|
)
|
Weighted average number of common shares
|
|
|
|
|
|
|
||||||||
Basic
|
56,805,583
|
|
|
55,211,294
|
|
56,275,795
|
|
|
55,149,674
|
|
||||
Diluted
|
56,805,583
|
|
|
56,487,220
|
|
56,275,795
|
|
|
55,149,674
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income (loss)
|
$
|
(23,315
|
)
|
|
$
|
3,091
|
|
|
$
|
(46,566
|
)
|
|
$
|
(14,338
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Share of other comprehensive loss of equity method investment (note 4)
|
(52
|
)
|
|
—
|
|
|
(74
|
)
|
|
—
|
|
||||
Comprehensive income (loss)
|
$
|
(23,367
|
)
|
|
$
|
3,091
|
|
|
$
|
(46,640
|
)
|
|
$
|
(14,338
|
)
|
|
|
|
|
|
|
|
|
|
Convertible Preferred Shares
|
Common Shares
|
|
|
|
|
||||||||||||||||
|
Number
of shares
|
Share
capital
|
Number
of shares |
Share
capital |
Additional paid-in
capital |
Deficit
|
Accumulated other comprehen-
sive loss |
Total
stockholders' equity |
||||||||||||||
Balance at December 31, 2018
|
1,164,000
|
|
$
|
126,136
|
|
55,518,800
|
|
$
|
879,405
|
|
$
|
48,084
|
|
$
|
(805,221
|
)
|
$
|
(48,170
|
)
|
$
|
200,234
|
|
Accretion of coupon on Preferred Shares
|
—
|
|
2,715
|
|
—
|
|
—
|
|
—
|
|
(2,715
|
)
|
—
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
—
|
|
—
|
|
—
|
|
1,665
|
|
—
|
|
—
|
|
1,665
|
|
||||||
Certain fair value adjustments to liability stock option awards
|
—
|
|
—
|
|
—
|
|
—
|
|
47
|
|
—
|
|
—
|
|
47
|
|
||||||
Issuance of common shares pursuant to the Open Market Sale Agreement
|
—
|
|
—
|
|
614,401
|
|
2,248
|
|
—
|
|
—
|
|
—
|
|
2,248
|
|
||||||
Issuance of common shares pursuant to exercise of options
|
—
|
|
—
|
|
122,603
|
|
490
|
|
(202
|
)
|
—
|
|
—
|
|
288
|
|
||||||
Other comprehensive loss - currency translation adjustment
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(22
|
)
|
(22
|
)
|
||||||
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(23,251
|
)
|
—
|
|
(23,251
|
)
|
||||||
Balance, March 31, 2019
|
1,164,000
|
|
$
|
128,851
|
|
56,255,804
|
|
$
|
882,143
|
|
$
|
49,594
|
|
$
|
(831,187
|
)
|
$
|
(48,192
|
)
|
$
|
181,209
|
|
Accretion of coupon on Preferred Shares
|
—
|
|
2,762
|
|
—
|
|
—
|
|
—
|
|
(2,762
|
)
|
—
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
—
|
|
—
|
|
—
|
|
3,915
|
|
—
|
|
—
|
|
3,915
|
|
||||||
Certain fair value adjustments to liability stock option awards
|
—
|
|
—
|
|
—
|
|
—
|
|
230
|
|
—
|
|
—
|
|
230
|
|
||||||
Issuance of common shares pursuant to the Open Market Sale Agreement
|
—
|
|
—
|
|
593,689
|
|
2,477
|
|
—
|
|
—
|
|
—
|
|
2,477
|
|
||||||
Issuance of common shares pursuant to exercise of options
|
—
|
|
—
|
|
679
|
|
3
|
|
(1
|
)
|
—
|
|
—
|
|
2
|
|
||||||
Other comprehensive loss - currency translation adjustment
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(52
|
)
|
(52
|
)
|
||||||
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(23,315
|
)
|
—
|
|
(23,315
|
)
|
||||||
Balance, June 30, 2019
|
1,164,000
|
|
$
|
131,613
|
|
56,850,172
|
|
$
|
884,623
|
|
$
|
53,738
|
|
$
|
(857,264
|
)
|
$
|
(48,244
|
)
|
$
|
164,466
|
|
|
Convertible Preferred Shares
|
Common Shares
|
|
|
|
|
||||||||||||||||
|
Number
of shares
|
Share
capital
|
Number
of shares
|
Share
capital
|
Additional paid-in
capital
|
Deficit
|
Accumulated other comprehen-
sive loss
|
Total
stockholders'
equity
|
||||||||||||||
Balance at December 31, 2017
|
500,000
|
|
$
|
49,780
|
|
55,060,650
|
|
$
|
876,108
|
|
$
|
42,840
|
|
$
|
(738,070
|
)
|
$
|
(48,185
|
)
|
$
|
182,473
|
|
Issuance of Preferred Shares, net of issuance costs of $135
|
664,000
|
|
66,265
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
66,265
|
|
||||||
Accretion of coupon on Preferred Shares
|
—
|
|
2,336
|
|
—
|
|
—
|
|
—
|
|
(2,336
|
)
|
—
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
—
|
|
—
|
|
—
|
|
1,510
|
|
—
|
|
—
|
|
1,510
|
|
||||||
Certain fair value adjustments to liability stock option awards
|
—
|
|
—
|
|
—
|
|
—
|
|
(504
|
)
|
—
|
|
—
|
|
(504
|
)
|
||||||
Issuance of common shares pursuant to exercise of options
|
—
|
|
—
|
|
26,541
|
|
180
|
|
(77
|
)
|
—
|
|
—
|
|
103
|
|
||||||
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(17,429
|
)
|
—
|
|
(17,429
|
)
|
||||||
Balance, March 31, 2018
|
1,164,000
|
|
$
|
118,381
|
|
55,087,191
|
|
$
|
876,288
|
|
$
|
43,769
|
|
$
|
(757,835
|
)
|
$
|
(48,185
|
)
|
$
|
232,418
|
|
Issuance of Preferred Shares, net of issuance costs of $135
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Accretion of coupon on Preferred Shares
|
—
|
|
2,541
|
|
—
|
|
—
|
|
—
|
|
(2,541
|
)
|
—
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
—
|
|
—
|
|
—
|
|
1,862
|
|
—
|
|
—
|
|
1,862
|
|
||||||
Certain fair value adjustments to liability stock option awards
|
—
|
|
—
|
|
—
|
|
—
|
|
(34
|
)
|
—
|
|
—
|
|
(34
|
)
|
||||||
Issuance of common shares pursuant to exercise of options
|
—
|
|
—
|
|
238,059
|
|
1,903
|
|
(1,168
|
)
|
—
|
|
—
|
|
735
|
|
||||||
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3,091
|
|
—
|
|
3,091
|
|
||||||
Balance, June 30, 2018
|
1,164,000
|
|
$
|
120,922
|
|
55,325,250
|
|
$
|
878,191
|
|
$
|
44,429
|
|
$
|
(757,285
|
)
|
$
|
(48,185
|
)
|
$
|
238,072
|
|
|
Three months ended
|
Six months ended
|
||||||||||||
|
June 30,
|
June 30,
|
||||||||||||
|
2019
|
|
2018
|
2019
|
|
2018
|
||||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
|
||||||||
Net (loss)/income for the period
|
$
|
(23,315
|
)
|
|
$
|
3,091
|
|
$
|
(46,566
|
)
|
|
$
|
(14,338
|
)
|
Items not involving cash:
|
|
|
|
|
|
|
||||||||
Depreciation of property and equipment
|
505
|
|
|
578
|
|
1,014
|
|
|
1,180
|
|
||||
Gain on sale of property and equipment
|
(2
|
)
|
|
—
|
|
(11
|
)
|
|
—
|
|
||||
Stock-based compensation expense
|
3,784
|
|
|
2,661
|
|
5,306
|
|
|
3,616
|
|
||||
Unrealized foreign exchange (gains) losses
|
(57
|
)
|
|
361
|
|
(95
|
)
|
|
926
|
|
||||
Change in fair value of contingent consideration
|
130
|
|
|
193
|
|
255
|
|
|
(655
|
)
|
||||
Site consolidation non-cash portion
|
—
|
|
|
395
|
|
—
|
|
|
395
|
|
||||
Gain on equity investment
|
—
|
|
|
(24,884
|
)
|
—
|
|
|
(24,884
|
)
|
||||
Equity investment loss
|
3,334
|
|
|
—
|
|
7,985
|
|
|
—
|
|
||||
Net change in non-cash operating items:
|
|
|
|
|
|
|
||||||||
Accounts receivable
|
(608
|
)
|
|
(603
|
)
|
(100
|
)
|
|
(920
|
)
|
||||
Prepaid expenses and other current assets
|
(1,616
|
)
|
|
222
|
|
759
|
|
|
907
|
|
||||
Accrued revenue
|
—
|
|
|
128
|
|
—
|
|
|
128
|
|
||||
Accounts payable and accrued liabilities
|
888
|
|
|
921
|
|
(1,858
|
)
|
|
(3,266
|
)
|
||||
Deferred revenue
|
—
|
|
|
(746
|
)
|
—
|
|
|
(1,768
|
)
|
||||
Site consolidation accrual
|
(640
|
)
|
|
61
|
|
(779
|
)
|
|
1,090
|
|
||||
Other non-current liabilities
|
(8
|
)
|
|
—
|
|
(95
|
)
|
|
—
|
|
||||
Net cash used in operating activities
|
(17,605
|
)
|
|
(17,622
|
)
|
(34,185
|
)
|
|
(37,589
|
)
|
||||
INVESTING ACTIVITIES
|
|
|
|
|
|
|
||||||||
Acquisition of short-term investments
|
—
|
|
|
—
|
|
—
|
|
|
(60,015
|
)
|
||||
Disposition of short-term investments
|
10,210
|
|
|
15,403
|
|
71,265
|
|
|
—
|
|
||||
Proceeds from sale of property and equipment
|
2
|
|
|
2
|
|
11
|
|
|
2
|
|
||||
Acquisition of property and equipment
|
(240
|
)
|
|
(425
|
)
|
(271
|
)
|
|
(673
|
)
|
||||
Net cash provided by (used) in investing activities
|
9,972
|
|
|
14,980
|
|
71,005
|
|
|
(60,686
|
)
|
||||
FINANCING ACTIVITIES
|
|
|
|
|
|
|
||||||||
Promissory note repayment
|
—
|
|
|
—
|
|
—
|
|
|
(12,001
|
)
|
||||
Proceeds from sale of Series A Preferred Shares, net of issuance costs
|
—
|
|
|
—
|
|
—
|
|
|
66,265
|
|
||||
Issuance of common shares pursuant to the Open Market Sale
Agreement
|
2,477
|
|
|
—
|
|
4,725
|
|
|
—
|
|
||||
Issuance of common shares pursuant to exercise of options
|
2
|
|
|
735
|
|
290
|
|
|
838
|
|
||||
Net cash provided by financing activities
|
2,479
|
|
|
735
|
|
5,015
|
|
|
55,102
|
|
||||
Effect of foreign exchange rate changes on cash and cash equivalents
|
57
|
|
|
(361
|
)
|
95
|
|
|
(926
|
)
|
||||
Increase (Decrease) in cash, cash equivalents, and restricted investment
|
(5,097
|
)
|
|
(2,268
|
)
|
41,930
|
|
|
(44,099
|
)
|
||||
Cash, cash equivalents, and restricted investment, beginning of period
|
83,969
|
|
|
12,461
|
|
36,942
|
|
|
54,292
|
|
||||
Cash, cash equivalents, and restricted investment, end of period
|
$
|
78,872
|
|
|
$
|
10,193
|
|
$
|
78,872
|
|
|
$
|
10,193
|
|
Supplemental cash flow information
|
|
|
|
|
|
|
||||||||
Non-cash transactions:
|
|
|
|
|
|
|
||||||||
Preferred shares dividends accrued (note 9)
|
$
|
2,762
|
|
|
$
|
2,541
|
|
$
|
5,477
|
|
|
$
|
4,877
|
|
|
Three months ended
|
|
Six months ended
|
||||
|
June 30, 2019
|
|
June 30, 2019
|
||||
Numerator:
|
|
|
|
||||
Allocation of distributable earnings
|
$
|
—
|
|
|
$
|
—
|
|
Allocation of undistributed loss
|
(26,077
|
)
|
|
(52,043
|
)
|
||
Allocation of income (loss) attributed to shareholders
|
$
|
(26,077
|
)
|
|
$
|
(52,043
|
)
|
Denominator:
|
|
|
|
||||
Weighted average number of shares - basic and diluted
|
56,805,583
|
|
|
56,275,795
|
|
||
Weighted average number of shares - diluted
|
56,805,583
|
|
|
56,275,795
|
|
||
Basic and diluted net income (loss) attributable to shareholders per share
|
$
|
(0.46
|
)
|
|
$
|
(0.92
|
)
|
•
|
Level 1 inputs are quoted market prices for identical instruments available in active markets.
|
•
|
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly. If the asset or liability has a contractual term, the input must be observable for substantially the full term. An example includes quoted market prices for similar assets or liabilities in active markets.
|
•
|
Level 3 inputs are unobservable inputs for the asset or liability and will reflect management’s assumptions about market assumptions that would be used to price the asset or liability.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
June 30, 2019
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
78,872
|
|
|
—
|
|
|
—
|
|
|
$
|
78,872
|
|
||
Short-term investments
|
16,410
|
|
|
—
|
|
|
—
|
|
|
16,410
|
|
||||
Total
|
$
|
95,282
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
95,282
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Liability-classified options
|
—
|
|
|
—
|
|
|
$
|
141
|
|
|
$
|
141
|
|
||
Contingent consideration
|
—
|
|
|
—
|
|
|
3,381
|
|
|
3,381
|
|
||||
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,522
|
|
|
$
|
3,522
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
December 31, 2018
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
36,942
|
|
|
—
|
|
|
—
|
|
|
$
|
36,942
|
|
||
Short-term investments
|
87,675
|
|
|
—
|
|
|
—
|
|
|
87,675
|
|
||||
Total
|
$
|
124,617
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
124,617
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Liability-classified options
|
—
|
|
|
—
|
|
|
$
|
479
|
|
|
$
|
479
|
|
||
Contingent consideration
|
—
|
|
|
—
|
|
|
3,126
|
|
|
3,126
|
|
||||
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,605
|
|
|
$
|
3,605
|
|
|
Liability at beginning of the period
|
|
Fair value of liability-classified options exercised in the period
|
|
Increase (decrease) in fair
value of liability
|
|
Liability at end
of the period
|
||||||||
Six months ended June 30, 2018
|
$
|
1,239
|
|
|
$
|
—
|
|
|
$
|
853
|
|
|
$
|
2,092
|
|
Six months ended June 30, 2019
|
$
|
479
|
|
|
$
|
—
|
|
|
$
|
(338
|
)
|
|
$
|
141
|
|
|
Liability at beginning of the period
|
|
Increase (decrease) in fair value of Contingent Consideration
|
|
Liability at end of the period
|
||||||
Six months ended June 30, 2018
|
$
|
10,424
|
|
|
$
|
(655
|
)
|
|
$
|
9,769
|
|
Six months ended June 30, 2019
|
$
|
3,126
|
|
|
$
|
255
|
|
|
$
|
3,381
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Trade accounts payable
|
$
|
685
|
|
|
$
|
3,192
|
|
Research and development accruals
|
2,528
|
|
|
2,716
|
|
||
Professional fee accruals
|
566
|
|
|
871
|
|
||
Payroll accruals
|
4,159
|
|
|
2,341
|
|
||
Other accrued liabilities
|
2
|
|
|
309
|
|
||
Total accounts payable and accrued liabilities
|
$
|
7,940
|
|
|
$
|
9,429
|
|
7.
|
Site consolidation
|
|
|
Six months ended
June 30,
|
||||||
|
|
2019
|
|
2018
|
||||
Employee severance and relocation
|
|
$
|
197
|
|
|
$
|
3,201
|
|
Facility and other expenses
|
|
(346
|
)
|
|
1,001
|
|
||
Total site consolidation expenses
|
|
$
|
(149
|
)
|
|
$
|
4,202
|
|
|
|
Employee severance and relocation
|
|
Facility and other expenses
|
|
Total
|
||||||
Site consolidation accrual as of December 31, 2018
|
|
$
|
697
|
|
|
$
|
634
|
|
|
$
|
1,331
|
|
Additional accruals and other adjustments
|
|
197
|
|
|
(346
|
)
|
|
(149
|
)
|
|||
Payments
|
|
(733
|
)
|
|
(107
|
)
|
|
(840
|
)
|
|||
Site consolidation accrual as of June 30, 2019
|
|
$
|
161
|
|
|
$
|
181
|
|
|
$
|
342
|
|
8.
|
Leases
|
|
|
As of
|
|
|
June 30, 2019
|
Weighted average remaining lease term
|
|
7.2
|
Weighted average discount rate
|
|
8.7%
|
|
|
Six months ended June 30,
|
||||||
|
|
2019
|
|
2018
|
||||
Cash paid for amounts included in the measurement of lease liabilities
|
|
$
|
623
|
|
|
$
|
—
|
|
|
|
As of June 30, 2019
|
||
July through December 2019
|
|
$
|
433
|
|
2020
|
|
657
|
|
|
2021
|
|
677
|
|
|
2022
|
|
581
|
|
|
2023
|
|
598
|
|
|
Thereafter
|
|
2,038
|
|
|
Total Lease Payments
|
|
$
|
4,984
|
|
Less: interest
|
|
(1,345
|
)
|
|
Present value of lease payments
|
|
$
|
3,639
|
|
•
|
our strategy, future operations, pre-clinical research, pre-clinical studies, clinical trials, prospects and the plans of management;
|
•
|
the discovery, development and commercialization of a cure for chronic hepatitis B infection, a disease of the liver caused by the hepatitis B virus ("HBV");
|
•
|
our beliefs and development path and strategy to achieve a cure for HBV;
|
•
|
obtaining necessary regulatory approvals;
|
•
|
obtaining adequate financing through a combination of financing activities and operations;
|
•
|
using the results from our HBV studies to adaptively design additional clinical trials to test the efficacy of the combination therapy and the duration of the result in patients;
|
•
|
the payment of one-time employee termination benefits, employee relocation costs, and site closure costs, totaling approximately $4.9 million related to the site consolidation and organizational restructuring to align our HBV business in Warminster, PA;
|
•
|
the expected timing of and amount for payments related to Enantigen Therapeutics, Inc.'s (“Enantigen”) transaction and its programs;
|
•
|
the potential of our drug candidates to improve upon the standard of care and contribute to a curative combination treatment regimen;
|
•
|
the potential benefits of the royalty monetization transaction for our ONPATTRO™ (Patisiran) royalty interest;
|
•
|
developing a suite of products that intervene at different points in the viral life cycle, with the potential to reactivate the host immune system;
|
•
|
using pre-clinical results to adaptively design clinical trials for additional cohorts of patients, testing the combination and the duration of therapy;
|
•
|
selecting combination therapy regimens and treatment durations to conduct Phase 3 clinical trials intended to ultimately support regulatory filings for marketing approval;
|
•
|
expanding our HBV drug candidate pipeline through internal development, acquisitions and in-licenses;
|
•
|
the potential of our assets, including our ownership stake in Genevant Sciences Ltd. (Genevant”) and the royalty entitlement on ONPATTRO, to provide significant non-dilutive capital;
|
•
|
our expectation to submit safety and efficacy data of the initial Phase 1a/1b cohort results of AB-506, including a complete characterization of the ALT flare cases and results from the new 28 day study in healthy subjects, for a scientific meeting later this year;
|
•
|
our expectation to make a decision regarding AB-452 clinical development in early 2020;
|
•
|
our expectation to dose additional cohorts for the AB-506 Phase 1a/1b clinical trial, our expectation to have final results available in the first half of 2020, and our ability to utilize the final results to inform next steps toward the combination proof-of-concept Phase 2 clinical trial in subjects with chronic hepatitis B;
|
•
|
our expectation for AB-729 for preliminary safety and efficacy data from both healthy subjects and several single dose cohorts of subjects with CHB to be available in the first quarter of 2020.
|
•
|
our expectation to initiate combination clinical trials with AB-506 and AB-729 in the second half of 2020;
|
•
|
payments from the Gritstone Oncology, Inc. ("Gritstone") licensing agreement;
|
•
|
the belief that current legal proceedings will not have a material adverse effect on our consolidated results of operations, cash flows, or financial condition;
|
•
|
the expected return from strategic alliances, licensing agreements, and research collaborations;
|
•
|
statements with respect to revenue and expense fluctuation and guidance;
|
•
|
the sufficiency of our cash and cash equivalents to extend into the second half of 2020;
|
•
|
obtaining funding to maintain and advance our business from a variety of sources including public or private equity or debt financing, collaborative arrangements with pharmaceutical companies and government grants and contracts;
|
•
|
on-going arbitration and litigation proceedings; and
|
•
|
the amount and timing of potential funding,
|
•
|
developing a pipeline of proprietary therapeutic agents that target multiple elements of the HBV viral lifecycle, the most important of which we believe are HBV replication and hepatitis B surface antigen ("HBsAg") expression, and the host immune system; and
|
•
|
identifying an effective combination of complementary proprietary therapeutic agents administered for a finite treatment duration.
|
•
|
progress our clinical and pre-clinical product candidates through Phase 1 and Phase 2 clinical trials;
|
•
|
identify a safe and effective combination regimen to support a robust Phase 3 clinical registration program;
|
•
|
obtain regulatory approval for such combination regimen; and
|
•
|
commercialize such combination regimen.
|
|
Three months ended
|
|
Six Months Ended
|
|||||||||||
|
June 30,
|
|
June 30,
|
|||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||
Total revenue
|
$
|
653
|
|
|
$
|
1,244
|
|
|
$
|
1,332
|
|
|
2,680
|
|
Operating expenses
|
21,168
|
|
|
23,290
|
|
|
40,918
|
|
|
43,131
|
|
|||
Loss from operations
|
(20,515
|
)
|
|
(22,046
|
)
|
|
(39,586
|
)
|
|
(40,451
|
)
|
|||
Net income (loss)
|
$
|
(23,315
|
)
|
|
$
|
3,091
|
|
|
$
|
(46,566
|
)
|
|
(14,338
|
)
|
Net income (loss) attributable to common shares
|
(26,077
|
)
|
|
550
|
|
|
(52,043
|
)
|
|
(19,215
|
)
|
|||
Basic and diluted income (loss) per common share
|
(0.46
|
)
|
|
0.01
|
|
|
(0.92
|
)
|
|
(0.35
|
)
|
|
Three months ended June 30,
|
||||||||||||
|
2019
|
|
% of Total
|
|
2018
|
|
% of Total
|
||||||
Research and development
|
$
|
12,740
|
|
|
60
|
%
|
|
$
|
16,356
|
|
|
70
|
%
|
General and administrative
|
8,189
|
|
|
39
|
%
|
|
3,775
|
|
|
16
|
%
|
||
Depreciation and amortization
|
505
|
|
|
2
|
%
|
|
578
|
|
|
2
|
%
|
||
Site consolidation
|
(266
|
)
|
|
(1
|
)%
|
|
2,581
|
|
|
11
|
%
|
||
Total operating expenses
|
$
|
21,168
|
|
|
|
|
$
|
23,290
|
|
|
|
|
Six months ended June 30,
|
||||||||||||
|
2019
|
|
% of Total
|
|
2018
|
|
% of Total
|
||||||
Research and development
|
$
|
27,452
|
|
|
67
|
%
|
|
$
|
30,305
|
|
|
70
|
%
|
General and administrative
|
12,601
|
|
|
31
|
%
|
|
7,444
|
|
|
17
|
%
|
||
Depreciation and amortization
|
1,014
|
|
|
2
|
%
|
|
1,180
|
|
|
3
|
%
|
||
Site consolidation
|
(149
|
)
|
|
—
|
%
|
|
4,202
|
|
|
10
|
%
|
||
Total operating expenses
|
$
|
40,918
|
|
|
|
|
$
|
43,131
|
|
|
|
|
Three Months Ended
|
Six Months Ended
|
|
||||||||||||
|
June 30,
|
June 30,
|
|
||||||||||||
|
2019
|
|
2018
|
2019
|
|
2018
|
|
||||||||
Interest income
|
$
|
606
|
|
|
$
|
805
|
|
$
|
1,206
|
|
|
$
|
1,563
|
|
|
Interest expense
|
(2
|
)
|
|
—
|
|
(14
|
)
|
|
(104
|
)
|
|
||||
Foreign exchange gain (loss)
|
60
|
|
|
(359
|
)
|
68
|
|
|
(885
|
)
|
|
||||
Gain on investment
|
—
|
|
|
24,884
|
|
—
|
|
|
24,884
|
|
|
||||
Equity investment losses
|
(3,334
|
)
|
|
—
|
|
(7,985
|
)
|
|
—
|
|
|
||||
Decrease (increase) in fair value of contingent consideration
|
(130
|
)
|
|
(193
|
)
|
(255
|
)
|
|
655
|
|
|
||||
Total other income (loss)
|
$
|
(2,800
|
)
|
|
$
|
25,137
|
|
$
|
(6,980
|
)
|
|
$
|
26,113
|
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income loss for the period
|
$
|
(23,315
|
)
|
|
$
|
3,091
|
|
|
$
|
(46,566
|
)
|
|
$
|
(14,338
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities
|
7,694
|
|
|
(20,696
|
)
|
|
14,454
|
|
|
(19,422
|
)
|
||||
Changes in operating assets and liabilities
|
(1,984
|
)
|
|
(17
|
)
|
|
(2,073
|
)
|
|
(3,829
|
)
|
||||
Net cash used in operating activities
|
(17,605
|
)
|
|
(17,622
|
)
|
|
(34,185
|
)
|
|
(37,589
|
)
|
||||
Net cash provided by (used in) investing activities
|
9,972
|
|
|
14,980
|
|
|
71,005
|
|
|
(60,686
|
)
|
||||
Net cash provided by financing activities
|
2,479
|
|
|
735
|
|
|
5,015
|
|
|
55,102
|
|
||||
Effect of foreign exchange rate changes on cash & cash equivalents
|
57
|
|
|
(361
|
)
|
|
95
|
|
|
(926
|
)
|
||||
Net (decrease) increase in cash, cash equivalents, and restricted cash
|
(5,097
|
)
|
|
(2,268
|
)
|
|
41,930
|
|
|
(44,099
|
)
|
||||
Cash, cash equivalents, and restricted cash, beginning of period
|
83,969
|
|
|
12,461
|
|
|
36,942
|
|
|
54,292
|
|
||||
Cash, cash equivalents, and restricted cash, end of period
|
$
|
78,872
|
|
|
$
|
10,193
|
|
|
$
|
78,872
|
|
|
10,193
|
|
•
|
revenue earned from our legacy collaborative partnerships and licensing agreements, including potential royalty payments from Alnylam's ONPATTRO;
|
•
|
revenue earned from ongoing collaborative partnerships, including milestone and royalty payments;
|
•
|
the extent to which we continue the development of our product candidates, add new product candidates to our pipeline, or form collaborative relationships to advance our products;
|
•
|
delays in the development of our products due to pre-clinical and clinical findings;
|
•
|
our decisions to in-license or acquire additional products or technology for development, in particular for our HBV therapeutics programs;
|
•
|
our ability to attract and retain corporate partners, and their effectiveness in carrying out the development and ultimate commercialization of our product candidates;
|
•
|
whether batches of drugs that we manufacture fail to meet specifications resulting in delays and investigational and remanufacturing costs;
|
•
|
the decisions, and the timing of decisions, made by health regulatory agencies regarding our technology and products;
|
•
|
competing technological and market developments; and
|
•
|
costs associated with prosecuting and enforcing our patent claims and other intellectual property rights, including litigation and arbitration arising in the course of our business activities.
|
Number
|
Description
|
3.1
|
|
|
|
3.2
|
|
|
|
4.1
|
|
|
|
10.1
|
|
|
|
10.2
|
|
|
|
10.3
|
|
|
|
10.4
|
|
|
|
10.5*
|
|
|
|
10.6*†
|
|
|
|
10.7*
|
|
|
|
10.8*
|
|
|
|
10.9*
|
|
|
|
31.1*
|
|
|
|
31.2*
|
|
|
|
32.1**
|
|
|
|
32.2**
|
|
|
|
101
|
The following materials from Arbutus Biopharma Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations; (iii) Condensed Consolidated Statements of Comprehensive Loss; (iv) Condensed Consolidated Statements of Stockholders' Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements
|
|
ARBUTUS BIOPHARMA CORPORATION
|
|
|
|
|
|
By:
|
/s/ William H Collier
|
|
|
William H Collier
|
|
|
President and Chief Executive Officer
|
A.
|
As of the Effective Date, the Company and the Executive have agreed to terminate any and all existing employment agreements (including any amendments thereto) between the Executive and the Company and set forth their mutual rights and obligations in this Agreement; and
|
B.
|
In connection with and as a condition to the execution of this Agreement, Tekmira Pharmaceuticals Corporation, the parent of the Company (“
Tekmira
”), and the Executive have also agreed to the terms of that certain Share Repurchase Agreement, dated as of the date hereof (the “
Share Repurchase Agreement
”), whereby certain common shares of Tekmira owned by the Executive are subject to a repurchase right of Tekmira, pursuant to the terms and conditions thereof.
|
A.
|
The Company and the Executive have entered into an Executive Employment Agreement effective as of July 10, 2015 (together, as amended, restated, supplemented, or otherwise modified prior to the date hereof, the “
Employment Agreement
”); and
|
B.
|
The Parties have agreed to make certain amendments to the Employment Agreement as set forth herein.
|
A.
|
The Company and the Executive have entered into an Executive Employment Agreement effective as of July 10, 2015 (together, as amended, restated, supplemented, or otherwise modified prior to the date hereof, the “Employment Agreement”); and
|
B.
|
The Parties have agreed to make certain amendments to the Employment Agreement as set forth herein.
|
(a)
|
Section 1 of the Employment Agreement is hereby amended and restated in its entirety as set forth below:
|
(b)
|
Section 2(a) of the Employment Agreement is hereby amended and restated in its entirety as set forth below:
|
(c)
|
Section 2(b) of the Employment Agreement is hereby amended and restated in its entirety as set forth below:
|
Section 1.
|
Purpose
|
Section 2.
|
Definitions
|
(a)
|
“
Affiliate
” shall mean any entity that, directly or indirectly through one or more intermediaries, is controlled by the Company.
|
(b)
|
“
Award
” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent or Other Stock-Based Award granted under the Plan.
|
(c)
|
“
Award Agreement
” shall mean any written agreement, contract or other instrument or document evidencing an Award granted under the Plan (including a document in an electronic medium) executed in accordance with the requirements of Section 9(c).
|
(d)
|
“
Board
” shall mean the Board of Directors of the Company.
|
(e)
|
“
Cause
” in respect of a Participant means:
|
(i)
|
if “Cause” is defined in an employment agreement between such Participant and the Company, the meaning of “Cause” as provided for in such employment agreement; and
|
(ii)
|
if Cause is not so defined, a circumstance that would entitle the Company to terminate the employment or services of such Participant at law without notice or compensation as a result of such termination;
|
(f)
|
“
Change in Control
” means, unless specified otherwise in an existing agreement with a Participant:
|
(i)
|
the sale of all or substantially all of the assets of the Company to a non-Affiliate;
|
(ii)
|
a merger, reorganization, or consolidation involving the Company in which the voting securities outstanding immediately prior to the transaction represent or are converted into or exchanged for securities of the surviving or resulting entity that, immediately upon completion of the transaction, represent less than 50% of the outstanding voting power of the surviving or resulting entity;
|
(iii)
|
the acquisition of all or a majority of the outstanding voting securities of the Company in a single transaction or a series of related transactions by a person or group of persons;
|
(g)
|
“
Committee
” shall mean the Compensation Committee of the Board or such other committee designated by the Board to administer the Plan. The Committee shall be comprised of not less than such number of Directors as shall be required to permit Awards granted under the Plan to qualify under Rule 16b-3, and each member of the Committee shall be a “non-employee director” within the meaning of Rule 16b-3 and an “outside director” within the meaning of Section 162(m).
|
(h)
|
“
Company
” shall mean Arbutus Biopharma Corporation and any successor corporation.
|
(i)
|
“
Director
” shall mean a member of the Board.
|
(j)
|
“
Dividend Equivalent
” shall mean any right granted under Section 6(e) of the Plan.
|
(k)
|
“Effective Date
” shall have the meaning ascribed thereto in Section 11 of the Plan;
|
(l)
|
“
Eligible Person
” shall mean any employee, officer, non-employee Director, consultant, independent contractor or advisor providing services to the Company or any Affiliate, or any such person to whom an offer of employment or engagement with the Company or any Affiliate is extended.
|
(m)
|
“
Fair Market Value
” with respect to a Share as of any date shall mean (a) if the Share is listed on any established stock exchange, the price of one Share at the close of the regular trading session of such market or exchange on such date, as reported by The Wall Street Journal or a comparable reporting service, or, if no sale of Shares shall have occurred on such date, on the next preceding date on which there was a sale of Shares; (b) if the Shares are not so listed on any established stock exchange,
|
(n)
|
“
Full Value Award
” shall mean any Award other than an Option, Stock Appreciation Right or similar Award, the value of which is based solely on an increase in the value of the Shares after the date of grant of such Award.
|
(o)
|
“
Good Reason
” in respect of a Participant means:
|
(i)
|
if “Good Reason” is defined in an employment agreement between such Participant and the Company, the meaning of “Good Reason” as provided for in such employment agreement; and
|
(ii)
|
if Good Reason is not so defined, a circumstance that would allow a Participant to claim “constructive dismissal” at law, including a material diminution in the Participant’s title, responsibilities, reporting relationship or compensation.
|
(p)
|
“
Non-Qualified Stock Option
” shall mean an option granted under Section 6(a) of the Plan that is not intended to be a U.S. Incentive Stock Option.
|
(q)
|
“
Option
” shall mean a U.S. Incentive Stock Option or a Non-Qualified Stock Option to purchase shares of the Company.
|
(r)
|
“
Other Stock-Based Award
” shall mean any right granted under Section 6(f) of the Plan.
|
(s)
|
“
Participant
” shall mean an Eligible Person designated to be granted an Award under the Plan.
|
(t)
|
“
Performance Award
” shall mean any right granted under Section 6(d) of the Plan.
|
(u)
|
“
Performance Goal
” with respect to a Performance Award shall mean one or more of the following performance goals, either individually, alternatively or in any combination, applied on a corporate, subsidiary, division, business unit or line of business basis:
|
•
|
economic value added (EVA);
|
•
|
sales or revenue;
|
•
|
income (including without limitation operating income, pre tax income and income attributable to the Company);
|
•
|
cash flow (including without limitation free cash flow and cash flow from operating, investing or financing activities or any combination thereof);
|
•
|
earnings (including without limitation earnings before or after taxes, earnings before interest and taxes (EBIT), earnings before interest, taxes, depreciation and amortization (EBITDA) and earnings (whether before or after taxes), EBIT or EBITDA as a percentage of net sales;
|
•
|
returns (including one or more of return on actual or pro forma assets, net assets, equity, investment, revenue, sales, capital and net capital employed, total shareholder return (TSR) and total business return (TBR));
|
•
|
implementation, completion or achievement of critical corporate objectives or projects, including specified milestones in the discovery, development, commercialization and/or manufacturing of one or more products or product candidates; and
|
•
|
share price (minimum $20.00 per Share).
|
(v)
|
“
Person
” shall mean any individual or entity, including a corporation, partnership, limited liability company, association, joint venture or trust.
|
(w)
|
“
Plan
” shall mean the Arbutus 2016 Omnibus Share and Incentive Plan, as amended from time to time.
|
(x)
|
“
Restricted Stock
” shall mean any Share granted under Section 6(c) of the Plan.
|
(y)
|
“
Restricted Stock Unit
” shall mean any unit granted under Section 6(c) of the Plan evidencing the right to receive a Share (or a cash payment equal to the Fair Market Value of a Share) at some future date.
|
(z)
|
“
Rule 16b-3
” shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission under the U.S. Exchange Act, as amended, or any successor rule or regulation.
|
(aa)
|
“
Section 162(m)
” shall mean Section 162(m) of the U.S. Code, or any successor provision, and the applicable Treasury Regulations promulgated thereunder.
|
(bb)
|
“
Section 409A
” shall mean Section 409A of the U.S. Code, or any successor provision, and applicable Treasury Regulations and other applicable guidance thereunder.
|
(cc)
|
“
Share
” or “
Shares
” shall mean common shares without par value in the capital of the Company (or such other securities or property as may become subject to Awards pursuant to an adjustment made under Section 4(c) of the Plan).
|
(dd)
|
“
Specified Employee
” shall mean a specified employee as defined in Section 409A(a)(2)(B) of the U.S. Code or applicable proposed or final regulations under Section 409A, determined in accordance with procedures established by the Company and applied uniformly with respect to all plans maintained by the Company that are subject to Section 409A.
|
(ee)
|
“
Stock Appreciation Right
” shall mean any right granted under Section 4(b) of the Plan.
|
(ff)
|
“
U.S.
Code
” shall mean the Internal Revenue Code of 1986 of the United States, as amended from time to time, and any regulations promulgated thereunder.
|
(gg)
|
“
U.S.
Exchange Act
” shall mean the
Securities Exchange Act
of 1934 of the United States, as amended.
|
(hh)
|
“
U.S.
Incentive Stock Option
” shall mean an option granted under Section 6(a) of the Plan that is intended to meet the requirements of Section 422 of the U.S. Code or any successor provision.
|
Section 3.
|
Administration
|
(a)
|
Power and Authority of the Committee.
The Plan shall be administered by the Committee. Subject to the express provisions of the Plan and to applicable law, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to each Participant under the Plan; (iii) determine the number of Shares to be covered by (or the method by which payments or other rights are to be calculated in connection with) each Award; (iv) determine the terms and conditions of any Award or Award Agreement, including any terms relating to the forfeiture of any Award and the forfeiture, recapture or disgorgement of any cash, Shares or other amounts payable with respect to any Award; (v) amend the terms and conditions of any Award or Award Agreement, subject to the limitations under Section 7; (vi) accelerate the exercisability of any Award or the lapse of any restrictions relating to any Award, subject to the limitations in Section 7, (vii) determine whether, to what extent and under what circumstances Awards may be exercised in cash, Shares, other securities, other Awards or other property (excluding promissory notes), or canceled, forfeited or suspended, subject to the limitations in Section 7; (viii) determine whether, to what extent and under what circumstances amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or the Committee, subject to the requirements of Section 409A; (ix) interpret and administer the Plan and any instrument or agreement, including an Award Agreement, relating to the Plan; (x) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (xi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan; and (xii) adopt such modifications, rules, procedures and subplans as may be necessary or desirable to comply with provisions of the laws of non-U.S. jurisdictions in which the Company or an Affiliate may operate, including, without limitation, establishing any special rules for Affiliates, Eligible Persons or Participants located in any particular country, in order to meet the objectives of the Plan and to ensure the viability of the intended benefits of Awards granted to Participants located in such non-United States jurisdictions. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award or Award Agreement shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon any Participant, any holder or beneficiary of any Award or Award Agreement, and any employee of the Company or any Affiliate.
|
(b)
|
Delegation.
The Committee may delegate to one or more officers or Directors of the Company, subject to such terms, conditions and limitations as the Committee may establish in its sole discretion, the authority to grant Awards;
provided
,
however
, that the Committee shall not delegate such authority (i) with regard to grants of Awards to be made to officers of the Company or any Affiliate who are subject to Section 16 of the U.S. Exchange Act or (ii) in such a manner as would cause the Plan not to comply with the requirements of Section 162(m), applicable exchange rules or applicable corporate law.
|
(c)
|
Power and Authority of the Board
. Notwithstanding anything to the contrary contained herein, (i) the Board may, at any time and from time to time, without any further action of the Committee, exercise the powers and duties of the Committee under the Plan, unless the exercise of such powers and duties by the Board would cause the Plan not to comply with the requirements of Rule 16b-3 or Section 162(m); and (ii) only the Committee (or another committee of the Board comprised of directors who qualify as independent directors within the meaning of the independence rules of any applicable securities exchange where the Shares are then listed) may grant Awards to Directors who are not also employees of the Company or an Affiliate
|
(d)
|
Indemnification
. To the full extent permitted by law, (i) no member of the Board, the Committee or any person to whom the Committee delegates authority under the Plan shall be liable for any action or determination taken or made in good faith with respect to the Plan or any Award made under the Plan, and (ii) the members of the Board, the Committee and each person to whom the Committee delegates authority under the Plan shall be entitled to indemnification by the Company with regard to such actions and determinations. The provisions of this paragraph shall be in addition to such other rights of indemnification as a member of the Board, the Committee or any other person may have by virtue of such person’s position with the Company.
|
Section 4.
|
Shares Available for Awards
|
(a)
|
Shares Available
. Subject to adjustment as provided in Section 4(c) of the Plan, the aggregate number of Shares that may be issued under all Awards under the Plan shall equal 5,000,000. The aggregate number of Shares that may be issued under all Awards under the Plan shall be reduced by Shares subject to Awards issued under the Plan in accordance with the Share counting rules described in Section 4(b) below.
|
(b)
|
Counting Shares
. For purposes of this Section 4, except as set forth in this Section 4(b), if an Award entitles the holder thereof to receive or purchase Shares, the number of Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Plan.
|
(i)
|
Shares Added Back to Reserve
. Subject to the limitations in (ii) below, if any Shares covered by an Award or to which an Award relates are not purchased or are forfeited or are reacquired by the Company (including any Awards that are settled in cash), or if an Award otherwise terminates or is cancelled without delivery of any Shares, then the number of Shares counted against the aggregate number of Shares available under the Plan with respect to such Award, to the extent of any such forfeiture, reacquisition by the Company, termination or cancellation, shall again be available for granting Awards under the Plan.
|
(ii)
|
Shares Not Added Back to Reserve
. Notwithstanding anything to the contrary in (i) above, the following Shares will not again become available for issuance under the Plan: (A) any Shares which would have been issued upon any exercise of an Option but for the fact that the exercise price was paid by a “net exercise” pursuant to Section 6(a)(iii)(B) or any Shares tendered in payment of the exercise price of an Option; (B) any Shares withheld by the Company or Shares tendered to satisfy any tax withholding obligation with respect to an Award under the Plan; (C) Shares covered by a share-settled Stock Appreciation Right issued under the Plan that are not issued in connection with settlement in Shares upon exercise; or (D) Shares that are repurchased by the Company using Option exercise proceeds.
|
(iii)
|
Cash-Only Awards
. Awards that do not entitle the holder thereof to receive or purchase Shares shall not be counted against the aggregate number of Shares available for Awards under the Plan.
|
(iv)
|
Substitute Awards Relating to Acquired Entities
. Shares issued under Awards granted in substitution for awards previously granted by an entity that is acquired by or merged with the Company or an Affiliate shall not be counted against the aggregate number of Shares available for Awards under the Plan.
|
(c)
|
Adjustments
. In the event that any dividend (other than a regular cash dividend) or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the Shares such that an adjustment is necessary in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other securities or other property) that thereafter may be made the subject of Awards, (ii) the number and type of Shares (or other securities or other property) subject to outstanding Awards, (iii) the purchase price or exercise price with respect to any Award and (iv) the limitations contained in Section 4(d)(i) below;
provided
,
however
, that the number of Shares covered by any Award or to which such Award relates shall always be a whole number. Such adjustment shall be made by the Committee or the Board, whose determination in that respect shall be final, binding and conclusive.
|
(d)
|
Award Limitations Under the Plan
.
The limitation contained in this Section 4(d) shall apply only with respect to any Award or Awards granted under this Plan, and limitations on awards granted under any other shareholder-approved incentive plan maintained by the Company will be governed solely by the terms of such other plan.
|
(i)
|
Section 162(m) Limitation for Awards Denominated in Shares
. No Eligible Person may be granted any Stock Options, Stock Appreciation Rights or
|
(ii)
|
Section 162(m) Limitation for Performance Awards Denominated in Cash
. The maximum amount payable pursuant to all Performance Awards denominated in cash to any Eligible Person in the aggregate in any calendar year shall be $5,000,000 in value. This limitation contained in this Section 4(d)(ii) does not apply to any Award or Awards subject to the limitation contained in Section 4(d)(i).
|
(iii)
|
Limitation Awards Granted to Non-Employee Directors
. No Director who is not also an employee of the Company or an Affiliate may be granted any Award or Awards denominated in Shares that exceed in the aggregate $500,000 (such value computed as of the date of grant in accordance with applicable financial accounting rules) in any calendar year. The foregoing limit shall not apply to any Award made pursuant to any election by the Director to receive an Award in lieu of all or a portion of annual and committee retainers and annual meeting fees.
|
Section 5.
|
Eligibility
|
Section 6.
|
Awards
|
(a)
|
Options
. The Committee is hereby authorized to grant Options to Eligible Persons with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine:
|
(i)
|
Exercise Price
. The purchase price per Share purchasable under an Option shall be determined by the Committee and shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option;
provided, however,
that the Committee may designate a purchase price below Fair Market Value on the date of grant if the Option is granted in substitution for a stock option previously granted by an entity that is acquired by or merged with the Company or an Affiliate.
|
(ii)
|
Option Term
. The term of each Option shall be fixed by the Committee at the date of grant but shall not be longer than 10 years from the date of grant. Notwithstanding the foregoing, the Committee may provide in the terms of an Option (either at grant or by subsequent modification) that, to the extent consistent with Section 409A, in the event that on the last business day of the term of an Option (other than a U.S. Incentive Stock Option) (i) the exercise of the Option is prohibited by applicable law or (ii) Shares may not be purchased or sold by certain employees or directors of the Company due to the “black-out period” of a Company policy or a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, the term of the Option shall be extended for a period of not more than thirty (30) days following the end of the legal prohibition, black-out period or lock-up agreement.
|
(iii)
|
Time and Method of Exercise
. The Committee shall determine the time or times at which an Option may be exercised in whole or in part and the method or methods by which, and the form or forms, including, but not limited to, cash, Shares (actually or by attestation), other securities, other Awards or other property, or any combination thereof, having a Fair Market Value on the exercise date equal to the applicable exercise price, in which, payment of the exercise price with respect thereto may be made or deemed to have been made.
|
(A)
|
Promissory Notes
. Notwithstanding the foregoing, the Committee may not accept a promissory note as consideration.
|
(B)
|
Net Exercises
. The Committee may, in its discretion, permit an Option to be exercised by delivering to the Participant a number of Shares having an aggregate Fair Market Value (determined as of the date of exercise) equal to the excess, if positive, of the Fair Market Value of the Shares underlying the Option being exercised on the date of exercise, over the exercise price of the Option for such Shares.
|
(iv)
|
U.S. Incentive Stock Options
. Notwithstanding anything in the Plan to the contrary, the following additional provisions shall apply to the grant of stock options which are intended to qualify as U.S. Incentive Stock Options:
|
(A)
|
The aggregate number of Shares that may be issued under all U.S. Incentive Stock Options under the Plan shall be 5,000,000 Shares.
|
(B)
|
The Committee will not grant U.S. Incentive Stock Options in which the aggregate Fair Market Value (determined as of the time the Option is granted) of the Shares with respect to which U.S. Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under this Plan and all other plans of the Company and its Affiliates) shall exceed $100,000.
|
(C)
|
All U.S. Incentive Stock Options must be granted within ten years from the earlier of the date on which this Plan was adopted by the Board or the date this Plan was approved by the shareholders of the Company.
|
(D)
|
Unless sooner exercised, all U.S. Incentive Stock Options shall expire and no longer be exercisable no later than 10 years after the date of grant;
provided
,
however
, that in the case of a grant of a U.S. Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within the meaning of Section 422 of the U.S. Code) shares possessing more than 10% of the total combined voting power of all classes of shares of the Company or of its Affiliates, such U.S. Incentive Stock Option shall expire and no longer be exercisable no later than five years from the date of grant.
|
(E)
|
The purchase price per Share for a U.S. Incentive Stock Option shall be not less than 100% of the Fair Market Value of a Share on the date of grant of the U.S. Incentive Stock Option;
provided
,
however
, that, in the case of the grant of a U.S. Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within the meaning of Section 422 of the U.S. Code) shares possessing more than 10% of the total combined voting power of all classes of shares of the Company or of its Affiliates, the purchase price per Share purchasable under a U.S. Stock Option shall be not less than 110% of the Fair Market Value of a Share on the date of grant of the U.S. Incentive Stock Option.
|
(F)
|
Any U.S. Incentive Stock Option authorized under the Plan shall contain such other provisions as the Committee shall deem advisable, but shall in all events be consistent with and contain all provisions required in order to qualify the Option as a U.S. Stock Option.
|
(b)
|
Stock Appreciation Rights
. The Committee is hereby authorized to grant Stock Appreciation Rights to Eligible Persons subject to the terms of the Plan and any applicable Award Agreement. A Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive upon exercise thereof the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the Stock Appreciation Right as specified by the Committee, which price shall not be less than 100% of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right;
provided, however,
that the Committee may designate a grant price below Fair Market Value on the date of grant if the Stock Appreciation Right is granted in substitution for a stock appreciation right previously granted by an entity that is acquired by or merged with the Company or an Affiliate. Subject to the terms of the Plan and any applicable Award Agreement, the grant price, term, methods of exercise, dates of exercise, methods of settlement and any other
|
(c)
|
Restricted Stock and Restricted Stock Units
. The Committee is hereby authorized to grant an Award of Restricted Stock and Restricted Stock Units to Eligible Persons with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine:
|
(i)
|
Restrictions
. Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may impose (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right or property with respect thereto), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise as the Committee may deem appropriate. Notwithstanding the foregoing, rights to dividend or Dividend Equivalent payments shall be subject to the limitations described in Section 6(e).
|
(ii)
|
Issuance and Delivery of Shares
. Any Restricted Stock granted under the Plan shall be issued at the time such Awards are granted and may be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or issuance of a share certificate or certificates, which certificate or certificates shall be held by the Company or held in nominee name by the share transfer agent or brokerage service selected by the Company to provide such services for the Plan. Such certificate or certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the restrictions applicable to such Restricted Stock. Shares representing Restricted Stock that are no longer subject to restrictions shall be delivered (including by updating the book-entry registration) to the Participant promptly after the applicable restrictions lapse or are waived. In the case of Restricted Stock Units, no Shares shall be issued at the time such Awards are granted. Upon the lapse or waiver of restrictions and the restricted period relating to Restricted Stock Units evidencing the right to receive Shares, such Shares shall be issued and delivered to the holder of the Restricted Stock Units.
|
(iii)
|
Forfeiture
. Except as otherwise determined by the Committee or as provided in an Award Agreement, upon a Participant’s termination of employment or resignation or removal as a Director (in either case, as determined under criteria established by the Committee) during the applicable restriction period, all Shares of Restricted Stock and all Restricted Stock Units held by
|
(d)
|
Performance Awards
. The Committee is hereby authorized to grant to Eligible Persons Performance Awards that are intended to be “qualified performance-based compensation” within the meaning of Section 162(m). A Performance Award granted under the Plan (i) may be denominated or payable in cash, Shares (including, without limitation, Restricted Stock and Restricted Stock Units), other securities, other Awards or other property and (ii) shall confer on the holder thereof the right to receive payments, in whole or in part, upon the achievement of one or more objective Performance Goals during such performance periods as the Committee shall establish. Subject to the terms of the Plan, the Performance Goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award granted, the amount of any payment or transfer to be made pursuant to any Performance Award and any other terms and conditions of any Performance Award shall be determined by the Committee. Performance Awards shall be conditioned solely on the achievement of one or more objective Performance Goals established by the Committee within the time prescribed by Section 162(m), and shall otherwise comply with the requirements of Section 162(m), as described below; provided, however, that to the extent a Performance Goal is based on share price, such Performance Goal shall include a minimum threshold share price of at least $20.00 per Share (subject to adjustment made under Section 4(c) of the Plan).
|
(i)
|
Timing of Designations; Duration of Performance Periods
. For each Performance Award, the Committee shall, not later than 90 days after the beginning of each performance period, (i) designate all Participants for such performance period and (ii) establish the objective performance factors for each Participant for that performance period on the basis of one or more of the Performance Goals, the outcome of which is substantially uncertain at the time the Committee actually establishes the Performance Goal. The Committee shall have sole discretion to determine the applicable performance period, provided that in the case of a performance period less than 12 months, in no event shall a performance goal be considered to be pre-established if it is established after 25% of the performance period (as scheduled in good faith at the time the Performance Goal is established) has elapsed. To the extent required under Section 162(m), the terms of the objective performance factors must preclude discretion to increase an amount paid in connection with an Award, but may permit discretion to reduce such amount.
|
(ii)
|
Certification
. Following the close of each performance period and prior to payment of any amount to a Participant with respect to a Performance Award, the Committee shall certify in writing as to the attainment of all factors
|
(e)
|
Dividend Equivalents
. The Committee is hereby authorized to grant Dividend Equivalents to Eligible Persons under which the Participant shall be entitled to receive payments (in cash, Shares, other securities, other Awards or other property as determined in the discretion of the Committee) equivalent to the amount of cash dividends paid by the Company to holders of Shares with respect to a number of Shares determined by the Committee. Subject to the terms of the Plan and any applicable Award Agreement, such Dividend Equivalents may have such terms and conditions as the Committee shall determine. Notwithstanding the foregoing, (i) the Committee may not grant Dividend Equivalents to Eligible Persons in connection with grants of Options, Stock Appreciation Rights or other Awards the value of which is based solely on an increase in the value of the Shares after the date of grant of such Award, and (ii) no dividend or Dividend Equivalent payments shall be made to a Participant with respect to any Performance Award or other Award subject to performance-based vesting conditions prior to the date on which all conditions or restrictions relating to such Award (or portion thereof to which the dividend or Dividend Equivalent relates) have been satisfied, waived or lapsed.
|
(f)
|
Other Stock-Based Awards
. The Committee is hereby authorized to grant to Eligible Persons such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as are deemed by the Committee to be consistent with the purpose of the Plan. The Committee shall determine the terms and conditions of such Awards, subject to the terms of the Plan and any applicable Award Agreement. No Award issued under this Section 6(f) shall contain a purchase right or an option-like exercise feature.
|
(g)
|
General
.
|
(i)
|
Consideration for Awards
. Awards may be granted for no cash consideration or for any cash or other consideration as may be determined by the Committee or required by applicable law.
|
(ii)
|
Awards May Be Granted Separately or Together
. Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with or in substitution for any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards or in addition to or in tandem with awards granted under any other plan of the Company or any Affiliate may be granted either at the same time as or at a different time from the grant of such other Awards or awards.
|
(iii)
|
Forms of Payment under Awards
. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the
|
(iv)
|
Limits on Transfer of Awards
. Except as otherwise provided by the Committee in its discretion and subject to such additional terms and conditions as it determines, no Award (other than fully vested and unrestricted Shares issued pursuant to any Award) and no right under any such Award shall be transferable by a Participant other than by will or by the laws of descent and distribution, and no Award (other than fully vested and unrestricted Shares issued pursuant to any Award) or right under any such Award may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate. Where the Committee does permit the transfer of an Award other than a fully vested and unrestricted Share, such permitted transfer shall be for no value and in accordance with the rules of Form S-8. The Committee may also establish procedures as it deems appropriate for a Participant to designate a person or persons, as beneficiary or beneficiaries, to exercise the rights of the Participant and receive any property distributable with respect to any Award in the event of the Participant’s death.
|
(v)
|
Restrictions; Securities Exchange Listing
. All Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such restrictions as the Committee may deem advisable under the Plan, applicable federal or state securities laws and regulatory requirements, and the Committee may cause appropriate entries to be made with respect to, or legends to be placed on the certificates for, such Shares or other securities to reflect such restrictions. The Company shall not be required to deliver any Shares or other securities covered by an Award unless and until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.
|
(vi)
|
Prohibition on Option and Stock Appreciation Right Repricing
. Except as provided in Section 4(c) hereof, the Committee may not, without prior approval of the Company’s shareholders, seek to effect any re-pricing of any previously granted, “underwater” Option or Stock Appreciation Right by:
|
(vii)
|
Section 409A Provisions
. Notwithstanding anything in the Plan or any Award Agreement to the contrary, to the extent that any amount or benefit that constitutes “deferred compensation” to a Participant under Section 409A and applicable guidance thereunder is otherwise payable or distributable to a Participant under the Plan or any Award Agreement solely by reason of the occurrence of a Change in Control or due to the Participant’s disability or “separation from service” (as such term is defined under Section 409A), such amount or benefit will not be payable or distributable to the Participant by reason of such circumstance unless the Committee determines in good faith that (i) the circumstances giving rise to such Change in Control, disability or separation from service meet the definition of a Change in Control, disability, or separation from service, as the case may be, in Section 409A(a)(2)(A) of the U.S. Code and applicable proposed or final regulations, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise. Any payment or distribution that otherwise would be made to a Participant who is a Specified Employee (as determined by the Committee in good faith) on account of separation from service may not be made before the date which is six months after the date of the Specified Employee’s separation from service (or if earlier, upon the Specified Employee’s death) unless the payment or distribution is exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise.
|
(viii)
|
Acceleration of Vesting or Exercisability – Performance Awards
. Award Agreements may provide that, in the event a Participant’s employment is terminated without Cause or a Participant resigns for Good Reason at any time during the 12-month period following a Change in Control, all Performance Awards shall be considered to be earned and payable based on implementation, completion or achievement of performance goals or based on target performance (either in full or pro rata based on the portion of Performance Period completed as of the date of the Change in Control), and any limitations or other restrictions shall lapse and such Performance Awards shall be immediately settled or distributed; provided, however that no Award
|
(ix)
|
Ceasing to be an Eligible Person – Vesting of Options and Stock Appreciation Rights
. Except as otherwise determined by the Committee, all Options and Stock Appreciation Rights will cease to vest as at the date upon which the Participant ceases to be an Eligible Person; provided, however, that in the event of the death of the Participant prior to the Participant ceasing to be an Eligible Person, all Options and Stock Appreciation Rights of such Participant shall become immediately vested.
|
(x)
|
Ceasing to be an Eligible Person – Termination of Options and Stock Appreciation Rights
. Except as otherwise determined by the Committee, each Option and Stock Appreciation Right granted pursuant to this Plan will, subject to the provisions of this Plan, expire automatically on the earlier of: (A) in the event the Participant ceases to be an Eligible Person for any reason, other than the death of the Participant or the termination of the Participant for Cause, such period of time after the date on which the Participant ceases to be an Eligible Person as may be (i) specified by the Committee, or (ii) set out in an agreement among the Participant and the Company; provided, however, that in the absence of such a specification or agreement, will be deemed to be the date that is three months following the Participant ceasing to be an Eligible Person; (B) in the event of the termination of the Participant as a director, officer, employee or consultant of the Company or an Affiliate for Cause, the date of such termination; (C) in the event of the death of a Participant prior to: (i) the Participant ceasing to be an Eligible Person; or (ii) the date which is the number of days specified by the Committee pursuant to subparagraph (A) above from the date on which the Participant ceased to be an Eligible Person, the date which is one year after the date of death of such Participant or such other date as may be specified by the Committee and which period will be specified in the Award Agreement with the Participant with respect to such Option or Stock Appreciation Right; provided, however, that, notwithstanding the foregoing provisions of subparagraphs (A), (B) and (C) of this Section 6(g)(ix), the Committee may, subject Section 7 of this Plan, at any time prior to expiry of an Option or Stock Appreciation Right, extend the period of time within which an Option or Stock Appreciation Right may be exercised by a Participant who has ceased to be an Eligible Person, but any such extension shall not be granted beyond the original expiry date of such Option or Stock Appreciation Right as provided for in Section 6(a) and 6(b) above, as applicable.
|
(xi)
|
Termination of a Participant for Cause
. Notwithstanding any other provision of this Plan, in the case of a Participant’s termination for Cause, any and all then outstanding Awards granted to such Participant, whether or not vested, shall be immediately forfeited and cancelled, without any consideration therefore, and any and all rights of such Participant with respect to or arising from this Plan shall terminate, as of the commencement of the date that notice of such termination is given, without regard to any period of reasonable notice or any salary continuance, except as otherwise determined by the Committee.
|
Section 7.
|
Amendment and Termination; Corrections
|
(a)
|
Amendments to the Plan and Awards
. The Board may from time to time amend, suspend or terminate this Plan, and the Committee may amend the terms of any previously granted Award, provided that no amendment to the terms of any previously granted Award may, (except as expressly provided in the Plan) materially and adversely alter or impair the terms or conditions of the Award previously granted to a Participant under this Plan without the written consent of the Participant or holder thereof. Any amendment to this Plan, or to the terms of any Award previously granted, is subject to compliance with all applicable laws, rules, regulations and policies of any applicable governmental entity or securities exchange, including receipt of any required approval from the governmental entity or stock exchange. For greater certainty and without limiting the foregoing, the Board may amend, suspend, terminate or discontinue the Plan, and the Committee may amend or alter any previously granted Award, as applicable, without obtaining the approval of shareholders of the Company in order to:
|
(i)
|
amend the eligibility for, and limitations or conditions imposed upon, participation in the Plan;
|
(ii)
|
amend any terms relating to the granting or exercise of Awards, including but not limited to terms relating to the amount and payment of the exercise price, or the vesting, expiry, assignment or adjustment of Awards, or otherwise waive any conditions of or rights of the Company under any outstanding Award, prospectively or retroactively;
|
(iii)
|
make changes that are necessary or desirable to comply with applicable laws, rules, regulations and policies of any applicable governmental entity or stock exchange (including amendments to Awards necessary or desirable to avoid any adverse tax results under Section 409A), and no action taken to comply shall be deemed to impair or otherwise adversely alter or impair the rights of any holder of an Award or beneficiary thereof; or
|
(iv)
|
amend any terms relating to the administration of the Plan, including the terms of any administrative guidelines or other rules related to the Plan.
|
(i)
|
require shareholder approval under the rules or regulations of the Securities and Exchange Commission, the
National Association of Securities Dealers Inc. Automated Quotation System (NASDAQ)
or any other securities exchange that are applicable to the Company;
|
(ii)
|
increase the number of shares authorized under the Plan as specified in Section 4(a) of the Plan;
|
(iii)
|
increase the number of shares or value subject to the limitations contained in Section 4(d) of the Plan or otherwise cause the Section 162(m) exemption for qualified performance-based compensation to become unavailable with respect to the Plan;
|
(iv)
|
permit repricing of Options or Stock Appreciation Rights, which is currently prohibited by Section 6(g)(vi) of the Plan;
|
(v)
|
permit the award of Options or Stock Appreciation Rights at a price less than 100% of the Fair Market Value of a Share on the date of grant of such Option or Stock Appreciation Right, contrary to the provisions of Section 6(a)(i) and Section 6(b) of the Plan; or
|
(vi)
|
increase the maximum term permitted for Options and Stock Appreciation Rights as specified in Section 6(a)(ii) and Section 6(b).
|
(b)
|
Corporate Transactions
. In the event of any reorganization, merger, consolidation, split-up, spin-off, combination, plan of arrangement, take-over bid or tender offer, repurchase or exchange of Shares or other securities of the Company or any other similar corporate transaction or event involving the Company (or the Company shall enter into a written agreement to undergo such a transaction or event), the Committee or the Board may, in its sole discretion, provide for any of the following to be effective upon the consummation of the event (or effective immediately prior to the consummation of the event, provided that the consummation of the event subsequently occurs), and no action taken under this Section 7(b) shall be deemed to impair or otherwise adversely alter the rights of any holder of an Award or beneficiary thereof:
|
(i)
|
either (A) termination of the Award, whether or not vested, in exchange for an amount of cash and/or other property, if any, equal to the amount that would have been attained upon the exercise of the Award or realization of the Participant’s rights (and, for the avoidance of doubt, if, as of the date of the occurrence of the transaction or event described in this Section 7(b)(i)(A), the Committee or the Board determines in good faith that no amount would have been attained upon the exercise of the Award or realization of
|
(ii)
|
that the Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the shares of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices;
|
(iii)
|
that, subject to Section 6(g)(viii), the Award shall be exercisable or payable or fully vested with respect to all Shares covered thereby, notwithstanding anything to the contrary in the applicable Award Agreement; or
|
(iv)
|
that the Award cannot vest, be exercised or become payable after a date certain in the future, which may be the effective date of the event.
|
(c)
|
Correction of Defects, Omissions and Inconsistencies
. The Committee may, without prior approval of the shareholders of the Company, correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award or Award Agreement in the manner and to the extent it shall deem desirable to implement or maintain the effectiveness of the Plan.
|
Section 8.
|
Income Tax Withholding
|
Section 9.
|
General Provisions
|
(a)
|
Currency
. Unless otherwise specified, all currency amounts are stated in United States dollars.
|
(b)
|
No Rights to Awards
. No Eligible Person, Participant or other Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Eligible Persons, Participants or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to any Participant or with respect to different Participants.
|
(c)
|
Award Agreements
. No Participant shall have rights under an Award granted to such Participant unless and until an Award Agreement shall have been signed by the Participant (if requested by the Company), or until such Award Agreement is delivered and accepted through an electronic medium in accordance with procedures established by the Company. An Award Agreement need not be signed by a representative of the Company unless required by the Committee. Each Award Agreement shall be subject to the applicable terms and conditions of the Plan and any other terms and conditions (not inconsistent with the Plan) determined by the Committee.
|
(d)
|
Plan Provisions Prevail
. In the event that any provision of an Award Agreement conflicts with or is inconsistent in any respect with the terms of the Plan as set forth herein or subsequently amended, the terms of the Plan shall prevail.
|
(e)
|
No Rights of Shareholders
. Except with respect to Shares issued under Awards (and subject to such conditions as the Committee may impose on such Awards pursuant to Section 6(c)(i) or Section 6(e)), neither a Participant nor the Participant’s legal representative shall be, or have any of the rights and privileges of, a shareholder of the Company with respect to any Shares issuable upon the exercise or payment of any Award, in whole or in part, unless and until such Shares have been issued.
|
(f)
|
No Limit on Other Compensation Arrangements
. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation plans or arrangements, and such plans or arrangements may be either generally applicable or applicable only in specific cases.
|
(g)
|
No Right to Employment
. The grant of an Award shall not be construed as giving a Participant the right to be retained as an employee of the Company or any Affiliate, nor will it affect in any way the right of the Company or an Affiliate to terminate a Participant’s employment at any time, with or without Cause, in accordance with applicable law. In addition, the Company or an Affiliate may at any time dismiss a Participant from employment free from any liability or any claim under the Plan or any Award, unless otherwise expressly provided in the Plan or in any Award Agreement. Nothing in this Plan shall confer on any person any legal or equitable right against the Company or any Affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Company or an Affiliate. Under no circumstances shall any person ceasing to be an employee of the Company or any Affiliate be entitled to any compensation for any loss of any right or benefit under the Plan which such employee might otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages for wrongful
|
(h)
|
Governing Law
. The internal law, and not the law of conflicts, of the Province of British Columbia, Canada shall govern all questions concerning the validity, construction and effect of the Plan or any Award, and any rules and regulations relating to the Plan or any Award.
|
(i)
|
Severability
. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction or Award, and the remainder of the Plan or any such Award shall remain in full force and effect.
|
(j)
|
No Trust or Fund Created
. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.
|
(k)
|
Other Benefits
. No compensation or benefit awarded to or realized by any Participant under the Plan shall be included for the purpose of computing such Participant’s compensation or benefits under any pension, retirement, savings, profit sharing, group insurance, disability, severance, termination pay, welfare or other benefit plan of the Company, unless required by law or otherwise provided by such other plan.
|
(l)
|
No Fractional Shares
. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash shall be paid in lieu of any fractional Share or whether such fractional Share or any rights thereto shall be canceled, terminated or otherwise eliminated.
|
(m)
|
Headings
. Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.
|
Section 10.
|
Clawback or Recoupment
|
Section 11.
|
Effective Date of the Plan
|
Section 12.
|
Term of the Plan
|
1.
|
On [INSERT Date] (the “
Grant Date
”), the Optionee is granted the option (the “
Option
”) to purchase [number] Common Shares (the “
Option Shares
”) of the Company at a per share price of US$[INSERT dollar price] (the “
Option Price
”);
|
2.
|
the Option shall vest as follows: one third to vest on [INSERT Date]; one third to vest on [INSERT Date] and one third to vest on [INSERT Date], while the Optionee remains an Eligible Person, and will be exercisable in whole up to [INSERT Date] (the “
Expiry Date
”) or such earlier date as may be required or stipulated in accordance with the Plan or the terms of this Agreement; the Option, once vested, shall remain vested until the expiration, termination or surrender of the Option;
|
3.
|
this Option shall be considered a [U.S. Incentive Stock Option] [Non-Qualified Stock Option]. Subject to the terms of the Plan and this Agreement (including without limitation any such terms regarding the termination of this Option), if this Option is intended to be a U.S. Incentive Stock Option but does not meet the requirements for constituting an “incentive stock option” within the meaning of U.S. Code Section 422(b), this Option shall be a Non-Qualified Stock Option;
|
4.
|
if within twelve (12) months following a Change in Control, Optionee’s status as a service provider is terminated without Cause by the Company or an Affiliate (or a successor company of the Company or such Affiliate), excluding, for such purposes, a transfer of employment or service by the service provider between or among the Company and one or more Affiliates, then all shares underlying this Option
shall become fully vested and exercisable as of the moment immediately prior to such termination;
|
5.
|
the Option may be exercised only by notice signed by the Optionee or, in certain circumstances permitted by the Plan, the legal representative of the Optionee, and accompanied by full payment for the Option Shares being purchased;
|
6.
|
the Optionee (i) meets the criteria set out in Section 4 of the Plan as of the Grant Date; (ii) has not been induced to enter into this Agreement by the expectation of employment or continued employment with the Company or an Affiliate; (iii) is aware that the grant of the Option and the issuance by the Company of Option Shares thereunder are exempt from the obligation under applicable securities laws to file a prospectus or other registration document qualifying the distribution,
other than the Form S-8 registration statement; (iv) will, upon each exercise or settlement of an Option and if requested by the Company, confirm these representations; and (v) will, upon each exercise or settlement of an Option,
comply with all applicable securities laws, rules and regulations, including restrictions on transfer;
|
7.
|
the Company will have no obligation to issue any Option Shares until the Company is satisfied that the issuance of such Option Shares to the Optionee will be exempt from all registration or qualification requirements of applicable securities laws and will be permitted under the applicable rules and regulations of all regulatory authorities to which the Company is subject;
|
8.
|
the Option is subject to the terms and conditions set out in the Plan, and if there is any conflict between the terms of this Agreement and the Plan, the terms of the Plan will govern, despite any term of this Agreement; and
|
9.
|
nothing herein or otherwise shall be construed so as to confer on the Optionee any rights as a shareholder of the Company with respect to any Common Shares reserved for the purpose of the Option.
|
1.
|
On June 24, 2019 (the “
Grant Date
”), the Optionee is granted the option (the “
Option
”) to purchase 1,112,000 Common Shares (the “
Option Shares
”) of the Company at a per share price of US$2.18 (the “
Option Price
”);
|
2.
|
the Option is granted to the Optionee in connection with the Optionee entering into employment with Arbutus and is an inducement material to the Optionee’s entry into employment within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules;
|
3.
|
the Option shall be subject to and governed by, and shall be construed and administered in accordance with, the terms and conditions of the Arbutus 2016 Omnibus Share and Incentive Plan (the “
Plan
”), which terms and conditions are incorporated herein by reference; provided, however, that the Option is not awarded under the Plan and the grant of the Option shall not reduce the number of Common Shares available for issuance under awards issued pursuant to the Plan;
|
4.
|
the Option shall vest as follows: subject to Sections 7, 8 and 9 below, twenty-five percent (25%) of the total number of Option Shares subject to the Option to vest on the one-year anniversary of the Grant Date, and an additional 1/48
th
of the total original number of Option Shares subject to the Option to vest on the corresponding day of each month thereafter, subject to the Optionee’s continued employment with Arbutus through the applicable vesting date, and will be exercisable in whole up to June 24, 2029 (the “
Expiry Date
”) or such earlier date as may be required or stipulated in accordance with the Plan or the terms of this Agreement; the Option, once vested, shall remain vested until the expiration, termination or surrender of the Option;
|
5.
|
this Option shall be considered a Non-Qualified Stock Option;
|
6.
|
except as provided in Sections 7, 8, 9 and 10 below, if the Optionee’s employment with Arbutus terminates for any reason, the unvested portion of the Option shall terminate on, and not be exercisable following, the Optionee’s date of termination, and the vested portion of the Option will remain exercisable by the Optionee, the Optionee’s estate or the Optionee’s estate’s personal representative, as applicable, until the earlier of the Expiry Date and the ninetieth (90th) day following the date of the Optionee’s termination of employment (or, if the Optionee dies during such ninety (90) day period, the first anniversary of the date of death of the Optionee);
|
7.
|
in the event of the death of the Optionee, the Option
shall become immediately fully vested and exercisable, and shall remain exercisable by the Optionee’s estate or the Optionee’s estate’s personal representative, as applicable, until the earlier of the Expiry Date and the first anniversary of the date of death of the Optionee;
|
8.
|
except as provided below in Section 9, if the Optionee’s employment with Arbutus is terminated by Arbutus without Cause (as defined in the Optionee’s employment letter agreement with the Company, dated as of June 13, 2019 (the “
Letter Agreement
”)) or by the Optionee for Good Reason (as defined in the Letter Agreement), the Option shall vest and become exercisable as of the moment immediately prior to such termination on a pro-rata basis, prorated at 1/48
th
of the total original number of Option Shares subject to the Option for each completed month of service as of the Optionee’s date of termination, with the vested portion of the Option remaining exercisable by the Optionee, the Optionee’s estate or the Optionee’s estate’s personal representative, as applicable, until the earlier of the Expiry Date and the ninetieth (90th) day following the date of the Optionee’s termination of employment (or, if the Optionee dies during such ninety (90) day period, the first anniversary of the date of death of the Optionee);
|
9.
|
if, within twelve (12) months following a Change in Control, the Optionee’s employment with Arbutus is terminated by Arbutus without Cause or by the Optionee for Good Reason, the Option
shall become fully vested and exercisable as of the moment immediately prior to such termination, with the vested portion of the Option remaining exercisable by the Optionee, the Optionee’s estate or the Optionee’s estate’s personal representative, as applicable, until the earlier of the Expiry Date and the ninetieth (90th) day following the date of the Optionee’s termination of employment (or, if the Optionee dies during such ninety (90) day period, the first anniversary of the date of death of the Optionee);
|
10.
|
if the Optionee’s employment with Arbutus is terminated by Arbutus for Cause, the Option, whether or not vested, shall be immediately forfeited and cancelled, without any consideration therefore, and any and all rights of the Optionee with respect to or arising from the Plan shall terminate, as of the commencement of the date that notice
|
11.
|
the Option may be exercised only by notice signed by the Optionee or, in certain circumstances permitted by the Plan, the legal representative of the Optionee, and accompanied by full payment for the Option Shares being purchased;
|
12.
|
the Optionee (i) meets the criteria set out in Section 4 of the Plan as of the Grant Date; (ii) is aware that the grant of the Option and the issuance by the Company of Option Shares thereunder are exempt from the obligation under applicable securities laws to file a prospectus or other registration document qualifying the distribution,
other than the Form S-8 registration statement; (iii) will, upon each exercise or settlement of an Option and if requested by the Company, confirm these representations; and (iv) will, upon each exercise or settlement of an Option,
comply with all applicable securities laws, rules and regulations, including restrictions on transfer;
|
13.
|
the Company will have no obligation to issue any Option Shares until the Company is satisfied that the issuance of such Option Shares to the Optionee will be exempt from all registration or qualification requirements of applicable securities laws and will be permitted under the applicable rules and regulations of all regulatory authorities to which the Company is subject;
|
14.
|
the Option is subject to the terms and conditions set out in the Plan, and if there is any conflict between the terms of this Agreement and the Plan, the terms of the Plan will govern, despite any term of this Agreement; and
|
15.
|
nothing herein or otherwise shall be construed so as to confer on the Optionee any rights as a shareholder of the Company with respect to any Common Shares reserved for the purpose of the Option.
|
SIGNED, SEALED and DELIVERED by William J. Collier
in the presence of:
Witness’s signature Witness’s Address Witness’s Occupation |
)
) ) ) ) ) ) ) ) ) |
/s/ William H. Collier
(Optionee’s signature) (Optionee’s address) |
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Arbutus Biopharma Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ William Collier
|
|
Name: William Collier
|
|
Title: President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Arbutus Biopharma Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ David Hastings
|
|
Name: David Hastings
|
|
Title: Chief Financial Officer
|
|
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly represents, in all material respects, the financial condition and results of the operations of the Company.
|
|
/s/ William Collier
|
|
Name: William Collier
|
|
Title: President and Chief Executive Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly represents, in all material respects, the financial condition and results of the operations of the Company.
|
|
/s/ David Hastings
|
|
Name: David Hastings
|
|
Title: Chief Financial Officer
|
|
|