¨
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Registration Statement Pursuant to Section 12(b) or 12(g) of The Securities Exchange Act of 1934
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ý
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Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 for the fiscal year ended
December 31, 2018
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¨
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Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
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¨
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Shell Company Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Shares
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NASDAQ Capital Market
Toronto Stock Exchange
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 4A.
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Item 5.
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Item 6.
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Item 7.
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Item 8.
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Item 9.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16A.
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Item 16B.
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Item 16C.
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Item 16D.
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Item 16E.
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Item 16F.
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Item 16G.
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Item 16H.
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Item 17.
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Item 18.
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Item 19.
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Item 1.
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Identity of Directors, Senior Management and Advisers
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A.
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Directors and senior management
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B.
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Advisers
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C.
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Auditors
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Item 2.
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Offer Statistics and Expected Timetable
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A.
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Offer statistics
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B.
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Method and expected timetable
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Item 3.
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Key Information
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A.
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Selected financial data
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December 31,
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|||||||||||||
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2018
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2017
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2016
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2015
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|
2014
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|||||
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$
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$
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$
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|
$
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|
$
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|||||
Revenues
|
|
|
|
|
|
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|||||
License fees
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24,325
|
|
|
458
|
|
|
497
|
|
|
248
|
|
|
11
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Product sales
|
2,167
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Royalty income
|
184
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Sales commission and other
|
205
|
|
|
465
|
|
|
414
|
|
|
297
|
|
|
—
|
|
|
26,881
|
|
|
923
|
|
|
911
|
|
|
545
|
|
|
11
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Cost of sales
|
2,104
|
|
|
—
|
|
|
—
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|
|
—
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|
|
—
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Research and development costs
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2,932
|
|
|
10,704
|
|
|
16,495
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|
|
17,234
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|
|
23,716
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General and administrative expenses
|
8,894
|
|
|
8,198
|
|
|
7,147
|
|
|
11,308
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|
|
9,840
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Selling expenses
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3,109
|
|
|
5,095
|
|
|
6,745
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|
|
6,887
|
|
|
3,850
|
|
|
17,039
|
|
|
23,997
|
|
|
30,387
|
|
|
35,429
|
|
|
37,406
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Income (loss) from operations
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9,842
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|
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(23,074
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)
|
|
(29,476
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)
|
|
(34,884
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)
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|
(37,395
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)
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Settlements
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(1,400
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)
|
|
—
|
|
|
—
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|
|
—
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|
|
—
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Gain (loss) due to changes in foreign currency exchange rates
|
656
|
|
|
502
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|
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(70
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)
|
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(1,767
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)
|
|
1,879
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Change in fair value of warrant liability
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263
|
|
|
2,222
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|
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4,437
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(10,956
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)
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18,272
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Warrant exercise inducement fee
|
—
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|
|
—
|
|
|
—
|
|
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(2,926
|
)
|
|
—
|
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Other finance income
|
278
|
|
|
75
|
|
|
150
|
|
|
305
|
|
|
168
|
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Net finance income (costs)
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1,197
|
|
|
2,799
|
|
|
4,517
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|
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(15,344
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)
|
|
20,319
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Income (loss) before income taxes
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9,639
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|
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(20,275
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)
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(24,959
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)
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(50,228
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)
|
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(17,076
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)
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Income tax recovery (expense)
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(5,452
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)
|
|
3,479
|
|
|
—
|
|
|
—
|
|
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(111
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)
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Net income (loss) from operations
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4,187
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|
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(16,796
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)
|
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(24,959
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)
|
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(50,228
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)
|
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(17,187
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)
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Net income from discontinued operations
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—
|
|
|
—
|
|
|
—
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|
|
85
|
|
|
623
|
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Net (loss) income
|
4,187
|
|
|
(16,796
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)
|
|
(24,959
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)
|
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(50,143
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)
|
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(16,564
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)
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Other comprehensive income (loss):
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|
|
|
|
|
|
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|||||
Items that may be reclassified subsequently to profit or loss:
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|
|
|
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|||||
Foreign currency translation adjustments
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(260
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)
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(1,430
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)
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569
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|
|
1,509
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(1,158
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)
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Items that will not be reclassified to profit or loss:
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|
|
|
|
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|||||
Actuarial gain (loss) on defined benefit plans
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193
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|
|
694
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(1,479
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)
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844
|
|
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(1,833
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)
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Comprehensive (loss) income
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4,120
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|
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(17,532
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)
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(25,869
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)
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(47,790
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)
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(19,555
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)
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Basic Net income (loss) per share from continuing operations
(1)
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0.25
|
|
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(1.12
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)
|
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(2.41
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)
|
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(18.17
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)
|
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(29.12
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)
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Diluted Net income (loss) per share from continuing operations
(1)
|
0.24
|
|
|
(1.12
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)
|
|
(2.41
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)
|
|
(18.17
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)
|
|
(29.12
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)
|
Net income per share (basic and diluted) from discontinued operations
1
|
—
|
|
|
—
|
|
|
—
|
|
|
0.03
|
|
|
1.06
|
|
Net (loss) income per share (basic)
1
|
0.25
|
|
|
(1.12
|
)
|
|
(2.41
|
)
|
|
(18.14
|
)
|
|
(28.06
|
)
|
Net (loss) income per share (diluted)
1
|
0.24
|
|
|
(1.12
|
)
|
|
(2.41
|
)
|
|
(18.14
|
)
|
|
(28.06
|
)
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
16,440,760
|
|
|
14,958,704
|
|
|
10,348,879
|
|
|
2,763,603
|
|
|
590,247
|
|
Diluted
|
17,034,812
|
|
|
14,958,704
|
|
|
10,348,879
|
|
|
2,763,603
|
|
|
590,247
|
|
1
|
Adjusted to reflect the November 17, 2015 100-to-1 Share Consolidation
|
|
|
As at December 31,
|
|||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||
Cash and cash equivalents
|
|
14,512
|
|
|
7,780
|
|
|
21,999
|
|
|
41,450
|
|
|
34,931
|
|
Restricted cash equivalents
|
|
418
|
|
|
381
|
|
|
496
|
|
|
255
|
|
|
760
|
|
Total assets
|
|
25,011
|
|
|
22,195
|
|
|
31,659
|
|
|
51,498
|
|
|
47,435
|
|
Warrant liability (current and non-current portion)
|
|
3,634
|
|
|
3,897
|
|
|
6,854
|
|
|
10,891
|
|
|
8,225
|
|
Share capital
|
|
222,335
|
|
|
222,335
|
|
|
213,980
|
|
|
204,596
|
|
|
150,544
|
|
Shareholders' (deficiency) equity
|
|
1,907
|
|
|
(2,783
|
)
|
|
6,212
|
|
|
21,615
|
|
|
14,484
|
|
B.
|
Capitalization and indebtedness
|
C.
|
Reasons for the offer and use of proceeds
|
D.
|
Risk factors
|
•
|
receipt of approvals from foreign regulatory authorities;
|
•
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successfully contracting with qualified third-party suppliers to manufacture Macrilen™ (macimorelin);
|
•
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developing appropriate distribution and marketing infrastructure and arrangements for our product;
|
•
|
launching and growing commercial sales of the product;
|
•
|
out-licensing Macrilen™ (macimorelin) to third parties; and
|
•
|
acceptance of the product in the medical community, among patients and with third party payers.
|
•
|
the timing and willingness of any current or future collaborators to invest the resources necessary to commercialize Macrilen™ (macimorelin);
|
•
|
not obtaining necessary regulatory approvals from the U.S. Food and Drug Administration ("FDA"), European Medicines Agency ("EMA") and other agencies that may delay or prevent us from obtaining approval of a pediatric indication for Macrilen™ (macimorelin), which may affect the price of our securities;
|
•
|
the timing of regulatory submissions and approvals;
|
•
|
the nature and timing of licensing fee revenues;
|
•
|
the outcome of litigation, including the securities class action litigation pending against us that is described elsewhere in this Annual Report on Form 20-F;
|
•
|
foreign currency fluctuations;
|
•
|
the timing of the achievement and the receipt of milestone payments from current or future licensing partners; and
|
•
|
failure to enter into new or the expiration or termination of current agreements with suppliers who manufacture Macrilen™ (macimorelin).
|
•
|
meet the requirements of these authorities from multiple countries and jurisdictions and their related statutes, regulations, and guidances;
|
•
|
meet the requirements for informed consent;
|
•
|
meet the requirements for institutional review boards; and
|
•
|
meet the requirements for good clinical practices
|
•
|
in certain circumstances, third parties may assign their rights and obligations under these agreements to other third parties without our consent or approval;
|
•
|
the third parties may cease to conduct business for financial or other reasons;
|
•
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we may not be able to renew such agreements;
|
•
|
the third parties may not properly maintain or defend certain intellectual property rights that may be important to the commercialization of Macrilen™ (macimorelin);
|
•
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the third parties may encounter conflicts of interest, changes in business strategy or other issues which could adversely affect their willingness or ability to fulfill their obligations to us (for example, pharmaceutical companies historically have re-evaluated their priorities following mergers and consolidations, which have been common in this industry);
|
•
|
delays in, or failures to achieve, scale-up to commercial quantities, or changes to current raw material suppliers or product manufacturers (whether the change is attributable to us or the supplier or manufacturer) could delay clinical studies, regulatory submissions and commercialization of Macrilen™ (macimorelin); and
|
•
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disputes may arise between us and the third parties that could result in the delay or termination of the manufacturing or commercialization of Macrilen™ (macimorelin), resulting in litigation or arbitration that could be time-consuming and expensive, or causing the third parties to act in their own self-interest and not in our interest or those of our shareholders.
|
i.
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In addition, the third parties can terminate our agreements with them for a number of reasons based on the terms of the individual agreements that we have entered into with them. If one or more of these agreements were to be terminated, we would be required to devote additional resources to manufacturing and commercializing Macrilen™ (macimorelin), which would likely cause a drop in the price of our Common Shares.
|
•
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the duration of changes to and results of our clinical trials for any future products going forward;
|
•
|
unexpected delays or developments in seeking regulatory approvals;
|
•
|
the time and cost involved in preparing, filing, prosecuting, maintaining and enforcing patent claims;
|
•
|
unexpected developments encountered in implementing our business development and commercialization strategies;
|
•
|
the potential addition of commercialized products to our portfolio;
|
•
|
the outcome of current and future litigation, including the securities class action litigation pending against us that is described elsewhere in this Annual Report on Form 20-F; and
|
•
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further arrangements, if any, with collaborators.
|
•
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demonstration of clinical efficacy and safety;
|
•
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the prevalence and severity of any adverse side effects;
|
•
|
limitations or warnings contained in the product's approved labeling;
|
•
|
availability of alternative treatments for the indications we target;
|
•
|
the advantages and disadvantages of Macrilen™ (macimorelin) relative to current or alternative treatments;
|
•
|
the availability of acceptable pricing and adequate third-party reimbursement; and
|
•
|
the effectiveness of marketing and distribution methods for Macrilen™ (macimorelin).
|
•
|
developments regarding current or future third-party suppliers and licensee(s);
|
•
|
clinical and regulatory developments regarding Macrilen™ (macimorelin);
|
•
|
delays in our anticipated clinical development or commercialization timelines;
|
•
|
announcements by us regarding technological, regulatory or other matters;
|
•
|
arrivals or departures of key personnel;
|
•
|
governmental or regulatory action affecting our product candidates and our competitors' products in the U.S., Canada and other countries;
|
•
|
developments or disputes concerning patent or proprietary rights;
|
•
|
actual or anticipated fluctuations in our revenues or expenses;
|
•
|
general market conditions and fluctuations for the emerging growth and biopharmaceutical market sectors; and
|
•
|
economic conditions in the U.S. or abroad.
|
•
|
16,440,760 Common Shares issued and outstanding;
|
•
|
no issued and outstanding Preferred Shares;
|
•
|
115,844 Common Shares issuable upon exercise of warrants that we previously issued in March 2015, which had a weighted average exercise price as of December 31, 2018 of $1.07 per Common Share, 2,331,000 Common Shares issuable upon exercise of warrants that we previously issued in December 2015, which had a weighted average exercise price as of December 31, 2018 of $7.10 per Common Share, and 945,000 Common Shares issuable upon exercise of warrants that we previously issued in November 2016, which had a weighted average exercise price as of December 31, 2018 of $4.70 per Common Share;
|
•
|
888,816 Common Shares that underlie outstanding stock options and deferred share units granted under our Plans, having a weighted average exercise price of $3.66 per Common Share;
|
•
|
869 Common Shares that underlie outstanding stock options and deferred share units granted under our Plans, having a weighted average exercise price of C$743.56 per Common Share; and
|
•
|
246,619 additional Common Shares available for future grants under our Stock Option Plan, and 737,942 additional Common Shares available for future grants under our Long Term Incentive Plan. The maximum number of Common Shares issuable under the Plans may equal 11.4% of the issued and outstanding Common Shares at any given time.
|
•
|
responding to proxy contests and other actions by activist shareholders may be costly and time‑consuming, and may disrupt our operations and divert the attention of management and our employees;
|
•
|
perceived uncertainties as to the potential outcome of any proxy contest may result in our inability to consummate potential acquisitions, collaborations or in‑licensing opportunities and may make it more difficult to attract and retain qualified personnel and business partners; and
|
•
|
if individuals that have a specific agenda different from that of our management or other members of our Board of Directors are elected to our board as a result of any proxy contest, such an election may adversely affect our ability to effectively and timely implement our strategic plan and to create value for our shareholders.
|
Item 4.
|
Information on the Company
|
A.
|
History and development of the Company
|
B.
|
Business overview
|
•
|
Measurement of blood levels of Insulin Growth Factor ("IGF")-1, which is typically used as the first test when GHD is suspected. However, this test is not used to definitively diagnose GHD because many growth hormone deficient patients show normal IGF-1 levels.
|
•
|
The Insulin Tolerance Test ("ITT"), which has historically been considered the gold standard for the evaluation of AGHD because of its high sensitivity and specificity. However, the ITT is inconvenient to both patients and physicians, administered intravenously (IV), and contra-indicated in certain patients, such as patients with coronary heart disease or seizure disorder, because it requires the patient to experience hypoglycemia to obtain an accurate result. Some physicians will not induce full hypoglycemia, intentionally compromising accuracy to increase safety and comfort for the patient. Furthermore, administration of the ITT includes additional costs associated with the patient being closely monitored by a physician for the two- to four-hour duration of the test and the test must be administered in a setting where emergency equipment is available and where the patient may be quickly hospitalized. The ITT is not used for patients with co-morbidities, such as cardiovascular disease, seizure disorder or a history of brain cancer or for patients who are elderly and frail, due to safety concerns.
|
•
|
The Glucagon Stimulation Test ("GST") is considered relatively safe by endocrinologists. The mechanism of action for this test is unclear. Also, this test takes up to three to four hours. It produces side effects in up to one-third of the patients with the most common being nausea during and after the test. This test is administered intramuscularly (IM).
|
•
|
The GHRH + ARG test (growth hormone releasing hormone-arginine stimulation) which is an easier test to perform in an office setting and has a good safety profile but is considered to be costly to administer compared to the ITT and the GST. GHRH + ARG is approved in the EU and has been proposed to be the best alternative to ITT, but GHRH is no longer available in the United States. This test is administered intravenously (IV).
|
•
|
it is safer and more convenient than the ITT because it does not require the patient to become hypoglycemic;
|
•
|
Macrilen™ (macimorelin) is administered orally, while the ITT requires an intravenous injection of insulin;
|
•
|
Macrilen™ (macimorelin) is a more robust test than the ITT leading to evaluable test results;
|
•
|
Macrilen™ (macimorelin) results are highly reproducible;
|
•
|
the evaluation of AGHD using Macrilen™ (macimorelin) is less time-consuming and labor-intensive than the ITT; and
|
•
|
the evaluation can be conducted in the physician's office rather than in a hospital-like setting.
|
•
|
We out-licensed the development compound macimorelin acetate to Ardana Bioscience in 2004. Ardana Bioscience subsequently initiated the clinical development program of macimorelin acetate as an orally active compound intended to be used in the diagnosis of AGHD, however in 2008 Ardana Bioscience filed for bankruptcy so we terminated the license and regained rights to the compound. On October 19
th
, 2009, we announced that we would continue the macimorelin clinical development program for use in evaluating the AGHD and assumed the sponsorship of the Investigational New Drug Application (IND). On December 20, 2010, we announced we had reached agreement with the FDA on a Special Protocol Assessment ("SPA") for Macrilen™ (macimorelin), enabling us to complete the ongoing registration study required to gain approval for use in evaluating AGHD. On July 26, 2011, we announced the completion of the Phase 3 study of Macrilen™ (macimorelin) as a first oral product for use in evaluating AGHD and the decision to meet with the FDA for the future filing of an NDA for the registration of Macrilen™ (macimorelin) in the United States. On June 26, 2012, we announced that the final results from a Phase 3 trial for Macrilen™ (macimorelin) showed that the drug is safe and effective in evaluating AGHD. In November 2013, we filed an NDA for Macrilen™ (macimorelin) for the evaluation of AGHD by evaluating the pituitary gland secretion of growth hormone in response to an oral dose of the product. The FDA accepted the NDA for substantive review in January 2014. On November 6, 2014, the FDA informed us, by issuing a Complete Response Letter ("CRL"), that it had determined that our NDA could not be approved in its then present form. The CRL stated that the planned analysis of our pivotal trial did not meet its stated primary efficacy objective as agreed to in the SPA. The CRL further mentioned issues related to the lack of complete and verifiable source data for determining whether patients were accurately diagnosed with AGHD. The FDA concluded that, "in light of the failed primary analysis and data deficiencies noted, the clinical trial does not by itself support the indication." To address the deficiencies identified above, the CRL stated that we needed to demonstrate the efficacy of Macrilen™ (macimorelin) as a diagnostic test for GHD in a new, confirmatory clinical study. The CRL also stated that a serious event of electrocardiogram QT interval prolongation occurred for which attribution to drug could not be excluded. Therefore, a dedicated thorough QT study to evaluate the effect of macimorelin on the QT interval would be necessary for FDA clearance and approval.
|
•
|
Following receipt of the CRL, we assembled a panel of experts in the field of growth-hormone deficiency, including experts in the field from both the United States and the EU. The panel met on January 8, 2015, during which we discussed our conclusions from the CRL, as well as the potential design of a new pivotal study. The panel advised us to continue to seek approval for Macrilen™ (macimorelin) because of their confidence in its efficacy and because there currently is no FDA-approved diagnostic test for AGHD. In parallel, we collected information on timelines and costs for such a study.
|
•
|
During an end-of-review meeting with the FDA on March 6, 2015, we agreed with the FDA on the general design of the confirmatory Phase 3 study of Macrilen™ (macimorelin) for the evaluation of AGHD, as well as evaluation criteria. We agreed with the FDA that the confirmatory study will be conducted as a two-way crossover with the ITT as the benchmark comparator.
|
•
|
On April 13, 2015, we announced plans to conduct a new, confirmatory Phase 3 clinical study to demonstrate the efficacy of Macrilen™ (macimorelin) for the evaluation of AGHD, as well as a dedicated thorough QT study to evaluate the effect of Macrilen™ (macimorelin) on myocardial repolarization. The confirmatory Phase 3 clinical study of Macrilen™ (macimorelin), entitled "Confirmatory validation of oral macimorelin as a growth hormone (GH) stimulation test (ST) for the diagnosis of AGHD in comparison with the insulin tolerance test (ITT)", was designed as a two-way crossover study with the ITT as the benchmark comparator and involved 31 sites in the United States and Europe. The study population was planned to include at least 110 subjects (at least 55 ITT-positive and 55 ITT-negative) with a medical history documenting risk factors for AGHD, and was planned to include a spectrum of subjects from those with a low risk of having AGHD to those with a high risk of having the condition.
|
•
|
On May 26, 2015, we announced that we had received written scientific advice from the EMA regarding the further development plan, including the study design, for the new confirmatory Phase 3 clinical study of Macrilen™ (macimorelin) for use in evaluating AGHD. As a result of the advice, we believe that the confirmatory Phase 3 study that was agreed with the FDA meets the EMA's study-design expectations as well, allowing for U.S. and European approval, if the study is successful.
|
•
|
On November 19, 2015, we announced the enrollment of the first patient in the confirmatory Phase 3 clinical study of Macrilen™ (macimorelin).
|
•
|
On October 26, 2016, we announced completion of patient recruitment for the confirmatory Phase 3 clinical trial of Macrilen™ (macimorelin) as a growth hormone stimulation test for the evaluation of AGHD. In addition, we completed the dedicated QT study as requested by the FDA in the CRL to evaluate the effect of Macrilen™ (macimorelin) on the QT interval.
|
•
|
On January 4, 2017, we announced that, based on an analysis of top-line data, the confirmatory Phase 3 clinical trial of Macrilen™ (macimorelin) failed to achieve one of its co-primary endpoints. Under the study protocol, the evaluation of AGHD with Macrilen™ (macimorelin) would be considered successful, if the lower bound of the two-sided 95% confidence interval for the primary efficacy variables was 75% or higher for "percent negative agreement" with the ITT, and 70% or higher for the "percent positive agreement" with the ITT. While the estimated percent negative agreement met the success criteria, the estimated percent positive agreement did not reach the criteria for a successful outcome. Therefore, the results did not meet the pre-defined equivalence criteria which required success for both the percent negative agreement and the percent positive agreement.
|
•
|
On February 13,
2017, we announced that, after reviewing the raw data on which the top-line data were based, we had concluded that Macrilen™ (macimorelin) had demonstrated performance supportive of achieving FDA registration and that we intended to pursue registration. The announcement set forth the facts on which our conclusion was based. The Company met with the FDA at the end of March 2017 to discuss this position.
|
•
|
On March 7, 2017, we announced that the Pediatric Committee ("PDCO") EMA agreed to the Company's Pediatric Investigation Plan ("PIP") for Macrilen™ (macimorelin) and agreed that the Company may defer conducting the PIP until after it files a Marketing Authorization Application ("MAA") seeking marketing authorization for the use of Macrilen™ (macimorelin) for the evaluation of AGHD.
|
•
|
On July 18, 2017, we were provided a PDUFA date of December 30, 2017 by the FDA.
|
•
|
On November 27, 2017, the EMA accepted our MMA submission for Macrilen™ (macimorelin).
|
•
|
On December 20, 2017, the FDA approved the market authorization for Macrilen™ (macimorelin), to be used in the diagnosis of patients with adult growth hormone deficiency (AGHD).
|
•
|
On January 16, 2018, the Company, through AEZS Germany, entered into the License and Assignment Agreement to carry out development, manufacturing, registration, regulatory and supply chain services for the commercialization of Macrilen™ (macimorelin) in the U.S. and Canada as further described below.
|
•
|
In the August 2018,
Volume 103, Issue 8
edition of
The Journal of Clinical Endocrinology and Metabolism
, the pivotal Phase 3 data from the macimorelin confirmatory trial was published by Jose M. Garcia, MD, PhD, et al., titled ‘Macimorelin as a Diagnostic Test for Adult GH Deficiency’.
|
•
|
On November 19, 2018, we
announced the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) adopted a positive opinion recommending a marketing authorization for macimorelin.
|
•
|
On January 16, 2019, the Company announced that the EMA has granted marketing authorization for macimorelin.
|
•
|
U.S. patent 6,861,409 covers macimorelin and U.S. patent 7,297,681 covers other related growth hormone secretagogue compounds, each also covering pharmaceutical compositions comprising the compounds as well as their medical use for elevating the plasma level of growth hormone. U.S. patent 6,861,409 and U.S. patent 7,297,681 both expire in August 2022.
|
•
|
European patent 1 289 951 covers macimorelin and European patent 1 344 773 covers other related growth hormone secretagogue compounds, pharmaceutical compositions comprising the compounds as well as their medical use for elevating the plasma level of growth hormone. EP patent 1 289 951 and EP patent 1 344 773 both expire in June 2021.
|
•
|
Japanese patent 3 522 265 covers macimorelin and pharmaceutical compositions comprising the compounds as well as their medical use for elevating the plasma level of growth hormone. This patent expires in June 2021.
|
•
|
Canadian patent 2,407,659 covers macimorelin and pharmaceutical compositions comprising the compounds as well as their medical use for elevating the plasma level of growth hormone. This patent expires in June 2021.
|
•
|
U.S. patent 8,192,719 covers a method of assessing pituitary-related growth hormone deficiency in a human or animal subject comprising an oral administration of the compound macimorelin and determination of the level of growth hormone in the sample and assessing whether the level of growth hormone in the sample is indicative of growth hormone deficiency. This patent expires in October 2027.
|
•
|
European patent 1 984 744 covers a method of assessing pituitary-related growth hormone deficiency by oral administration of macimorelin. This patent expires in February 2027.
|
•
|
Japanese patent 4 852 728 covers a method of assessing pituitary-related growth hormone deficiency by oral administration of macimorelin. This patent expires in February 2027.
|
•
|
U.S. provisional patent applications Serial No. 62/607,866 was filed on December 19, 2017 and Serial No. 62/609,059 was filed on December 21, 2017. Both are identical and are directed to a method of assessing growth hormone deficiency comprising oral administration of a macimorelin containing composition and collecting one or two post-administration samples.
|
•
|
A non-provisional U.S. application was filed on May 30, 2018 drawing the priority of both provisional applications. The US-PTO issued a Notice of Allowance on January 09, 2019. If granted, a patent would presumably expire December 19, 2037.
|
•
|
A PCT application was filed December 18, 2018 drawing the priority of both provisional U.S. applications. In addition to the method of assessing growth hormone deficiency comprising oral administration of a macimorelin containing composition and collecting one or two post-administration samples, the PCT application also covers a similar method of assessing growth hormone deficiency using 3 post-administration samples.
|
C.
|
Organizational structure
|
D.
|
Property, plants and equipment
|
Location
|
|
Use of space
|
|
Square Footage
|
|
Type of interest
|
|
315 Sigma Drive, Summerville SC 29486
|
|
Occupied for management, administration, commercial operations and business development
|
|
300
|
|
|
Leasehold
|
Weismüllerstr. 50
D-60314
Frankfurt-am-Main, Germany
|
|
Occupied for management, R&D, business development and administration
|
|
36,168
|
|
|
Leasehold
|
Item 4A
|
Unresolved Staff Comments
|
Item 5.
|
Operating and Financial Review and Prospects
|
A.
|
Operating Results
|
|
|
Three months ended December 31,
|
|
Years ended December 31,
|
|||||||||||
(in thousands, except share and per share data)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2016
|
|||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|||||
License fees
|
|
(332
|
)
|
|
119
|
|
|
24,325
|
|
|
458
|
|
|
497
|
|
Product sales
|
|
1,446
|
|
|
—
|
|
|
2,167
|
|
|
—
|
|
|
—
|
|
Royalty income
|
|
184
|
|
|
—
|
|
|
184
|
|
|
—
|
|
|
—
|
|
Sales commission and other
|
|
94
|
|
|
59
|
|
|
205
|
|
|
465
|
|
|
414
|
|
|
|
1,392
|
|
|
178
|
|
|
26,881
|
|
|
923
|
|
|
911
|
|
Cost of sales
|
|
1,413
|
|
|
—
|
|
|
2,104
|
|
|
—
|
|
|
—
|
|
Gross income
|
|
(21
|
)
|
|
178
|
|
|
24,777
|
|
|
923
|
|
|
911
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|||||
Research and development costs
|
|
767
|
|
|
526
|
|
|
2,932
|
|
|
10,704
|
|
|
16,495
|
|
General and administrative expenses
|
|
1,665
|
|
|
2,778
|
|
|
8,894
|
|
|
8,198
|
|
|
7,147
|
|
Selling expenses
|
|
588
|
|
|
452
|
|
|
3,109
|
|
|
5,095
|
|
|
6,745
|
|
|
|
3,020
|
|
|
3,756
|
|
|
14,935
|
|
|
23,997
|
|
|
30,387
|
|
Income (loss) from operations
|
|
(3,041
|
)
|
|
(3,578
|
)
|
|
9,842
|
|
|
(23,074
|
)
|
|
(29,476
|
)
|
Settlements
|
|
(1,400
|
)
|
|
—
|
|
|
(1,400
|
)
|
|
—
|
|
|
—
|
|
Gain (loss) due to changes in foreign currency exchange rates
|
|
64
|
|
|
72
|
|
|
656
|
|
|
502
|
|
|
(70
|
)
|
Change in fair value of warrant liability
|
|
(1,489
|
)
|
|
(478
|
)
|
|
263
|
|
|
2,222
|
|
|
4,437
|
|
Other finance income
|
|
104
|
|
|
21
|
|
|
278
|
|
|
75
|
|
|
150
|
|
Net finance income (costs)
|
|
(1,321
|
)
|
|
(385
|
)
|
|
1,197
|
|
|
2,799
|
|
|
4,517
|
|
Income (loss) before income taxes
|
|
(5,762
|
)
|
|
(3,963
|
)
|
|
9,639
|
|
|
(20,275
|
)
|
|
(24,959
|
)
|
Income tax recovery (expense)
|
|
636
|
|
|
3,479
|
|
|
(5,452
|
)
|
|
3,479
|
|
|
—
|
|
Net income (loss)
|
|
(5,126
|
)
|
|
(484
|
)
|
|
4,187
|
|
|
(16,796
|
)
|
|
(24,959
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|||||
Items that may be reclassified subsequently to profit or loss:
|
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency translation adjustments
|
|
(13
|
)
|
|
(238
|
)
|
|
(260
|
)
|
|
(1,430
|
)
|
|
569
|
|
Items that will not be reclassified to profit or loss:
|
|
|
|
|
|
|
|
|
|
|
|||||
Actuarial gain (loss) on defined benefit plans
|
|
(418
|
)
|
|
59
|
|
|
193
|
|
|
694
|
|
|
(1,479
|
)
|
Comprehensive income (loss)
|
|
(5,557
|
)
|
|
(663
|
)
|
|
4,120
|
|
|
(17,532
|
)
|
|
(25,869
|
)
|
Basic Net income (loss) per share
|
|
(0.31
|
)
|
|
(0.03
|
)
|
|
0.25
|
|
|
(1.12
|
)
|
|
(2.41
|
)
|
Diluted Net income (loss) per share
|
|
(0.31
|
)
|
|
(0.03
|
)
|
|
0.24
|
|
|
(1.12
|
)
|
|
(2.41
|
)
|
(in thousands, except for per share data)
|
|
Three months ended
|
||||||||||
|
|
December 31, 2018
|
|
September 30, 2018
|
|
June 30, 2018
|
|
March 31, 2018
|
||||
|
|
$
|
|
$
|
|
$
|
|
$
|
||||
Revenues
|
|
1,392
|
|
|
663
|
|
|
168
|
|
|
24,658
|
|
Net income (loss)
|
|
(5,126
|
)
|
|
(2,509
|
)
|
|
(2,602
|
)
|
|
14,424
|
|
Net income (loss) per share [basic]
|
|
(0.31
|
)
|
|
(0.15
|
)
|
|
(0.16
|
)
|
|
0.88
|
|
Net income (loss) per share [diluted]
|
|
(0.31
|
)
|
|
(0.15
|
)
|
|
(0.16
|
)
|
|
0.87
|
|
(in thousands, except for per share data)
|
|
Three months ended
|
||||||||||
|
|
December 31, 2017
|
|
September 30, 2017
|
|
June 30, 2017
|
|
March 31, 2017
|
||||
|
|
$
|
|
$
|
|
$
|
|
$
|
||||
Revenues
|
|
178
|
|
|
241
|
|
|
243
|
|
|
261
|
|
Net loss
|
|
(484
|
)
|
|
(9,631
|
)
|
|
(2,550
|
)
|
|
(4,131
|
)
|
Net loss per share [basic and diluted]
|
|
(0.03
|
)
|
|
(0.61
|
)
|
|
(0.18
|
)
|
|
(0.31
|
)
|
|
|
December 31,
|
||||
(in thousands)
|
|
2018
|
|
2017
|
||
|
|
$
|
|
$
|
||
Cash and cash equivalents
|
|
14,512
|
|
|
7,780
|
|
Trade and other receivables and other current assets
|
|
1,504
|
|
|
1,047
|
|
Restricted cash equivalents
|
|
418
|
|
|
381
|
|
Inventory
|
|
240
|
|
|
554
|
|
Property, plant and equipment
|
|
65
|
|
|
101
|
|
Deferred tax assets
|
|
—
|
|
|
3,479
|
|
Other non-current assets
|
|
8,272
|
|
|
8,853
|
|
Total assets
|
|
25,011
|
|
|
22,195
|
|
Payables and accrued liabilities and income taxes payable
|
|
4,635
|
|
|
2,814
|
|
Current portion of provision for restructuring and other costs
|
|
887
|
|
|
2,469
|
|
Current portion of deferred revenues
|
|
74
|
|
|
486
|
|
Warrant liability
|
|
3,634
|
|
|
3,897
|
|
Non-financial non-current liabilities
(1)
|
|
13,874
|
|
|
15,312
|
|
Total liabilities
|
|
23,104
|
|
|
24,978
|
|
Shareholders' equity (deficiency)
|
|
1,907
|
|
|
(2,783
|
)
|
Total liabilities and shareholders' equity
|
|
25,011
|
|
|
22,195
|
|
1.
|
Comprised mainly of employee future benefits, provisions for restructuring and other costs and non-current portion of deferred revenues.
|
B.
|
Liquidity, Cash Flows and Capital Resources
|
(in thousands)
|
|
Three months ended December 31,
|
|
Years ended December 31,
|
|||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2016
|
|||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||
Cash and cash equivalents - Beginning of period
|
|
16,800
|
|
|
12,173
|
|
|
7,780
|
|
|
21,999
|
|
|
41,450
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|||||
Net cash used in operating activities
|
|
(2,679
|
)
|
|
(4,527
|
)
|
|
6,825
|
|
|
(22,913
|
)
|
|
(29,010
|
)
|
|
|
(2,679
|
)
|
|
(4,527
|
)
|
|
6,825
|
|
|
(22,913
|
)
|
|
(29,010
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|||||
Net proceeds from issuance of common shares
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,788
|
|
|
9,924
|
|
Proceeds from warrants exercised (note 19)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
242
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,030
|
|
|
9,924
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|||||
Net cash provided by (used in) investing activities
|
|
4
|
|
|
140
|
|
|
(35
|
)
|
|
307
|
|
|
(314
|
)
|
|
|
4
|
|
|
140
|
|
|
(35
|
)
|
|
307
|
|
|
(314
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
|
387
|
|
|
(6
|
)
|
|
(58
|
)
|
|
357
|
|
|
(51
|
)
|
Cash and cash equivalents - End of period
|
|
14,512
|
|
|
7,780
|
|
|
14,512
|
|
|
7,780
|
|
|
21,999
|
|
C.
|
Research and development, patents and licenses, etc.
|
D.
|
Trend Information
|
E.
|
Off-Balance Sheet Arrangements
|
F.
|
Tabular disclosure of contractual obligations
|
(in thousands)
|
|
Minimum lease payments
|
|
Minimum sublease receipts
|
|
Service and manufacturing
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Less than 1 year
|
|
408
|
|
|
(117
|
)
|
|
2,180
|
|
1 - 3 years
|
|
533
|
|
|
(24
|
)
|
|
—
|
|
4 - 5 years
|
|
60
|
|
|
—
|
|
|
—
|
|
More than 5 years
|
|
5
|
|
|
—
|
|
|
—
|
|
Total
|
|
1,006
|
|
|
(141
|
)
|
|
2,180
|
|
(in thousands)
|
|
Euros
|
|
Less than 1 year
|
|
453
|
|
1 – 3 years
|
|
921
|
|
4 – 5 years
|
|
944
|
|
More than 5 years
|
|
13,658
|
|
Total
|
|
15,976
|
|
Item 6.
|
Directors, Senior Management and Employees
|
A.
|
Directors and senior management
|
Name and Place of Residence
|
|
Position with Aeterna Zentaris
|
|
|
|
Ammer, Nicola
|
|
Chief Medical Officer, Vice President Clinical Development
|
Frankfurt, Germany
|
|
|
|
|
|
Auld, Leslie
|
|
Senior Vice President, Chief Financial Officer
|
Ontario, Canada
|
|
|
|
|
|
Egbert, Carolyn
|
|
Chair of the Board of Directors
|
Texas, United States
|
|
|
|
|
|
Ernst, Juergen
|
|
Director
|
North Rhine-Westphalia, Germany
|
|
|
|
|
|
Garrison, Brian
|
|
Senior Vice President, Global Commercial Operations
|
Pennsylvania, United States
|
|
|
|
|
|
Grau, Günther
|
|
Vice President, Finance
|
Frankfurt, Germany
|
|
|
|
|
|
Guenther, Eckhard
|
|
Vice President, Alliance Management
|
Hessen, Germany
|
|
|
|
|
|
Limoges, Gérard
|
|
Director
|
Quebec, Canada
|
|
|
|
|
|
Norton, Brent
|
|
Director
|
Ontario, Canada
|
|
|
|
|
|
Pollack, Jonathan
|
|
Director
|
Ontario, Canada
|
|
|
|
|
|
Smith Hoke, Robin
|
|
Director
|
Ohio, United States
|
|
|
|
|
|
Teifel, Michael
|
|
Vice President, Non-Clinical Sciences
|
Hessen, Germany
|
|
|
|
|
|
Ward, Michael
|
|
President and Chief Executive Officer
|
Illinois, United States
|
|
|
|
|
|
B.
|
Compensation
|
Type of Compensation
|
|
Annual Retainer for the year 2018
|
Monthly Retainer for January 2018
|
Chair of the Board Retainer
|
|
80,000
|
-
|
Board Member Retainer
|
|
40,000
|
-
|
Audit Committee Chair Retainer
|
|
20,000
|
-
|
Audit Committee Member Retainer
|
|
5,000
|
-
|
NGCC Chair Retainer
|
|
15,000
|
-
|
NGCC Member Retainer
|
|
3,000
|
-
|
SRC Chair Retainer
|
|
-
|
7,500
|
SRC Member Retainer
|
|
-
|
7,500
|
|
|
Option-based Awards
|
|
Share-based Awards
|
||||||||||||||||||||
Name
|
|
Issuance Date
|
|
Number of
Securities
Underlying
Unexercised
Options
|
|
Option
Exercise Price
|
|
Option
Expiration Date
|
|
Value of
Unexercised In-the-money
Options
(1)
|
|
Issuance Date
|
|
Number of
Shares or
Units of Shares
that have Not
Vested
|
|
Market or Payout
Value of Share-based
Awards that have Not Vested
(2)
|
||||||||
|
|
(mm-dd-yyyy)
|
|
(#)
|
|
($)
|
|
(mm-dd-yyyy)
|
|
($)
|
|
(mm-dd-yyyy)
|
|
(#)
|
|
($)
|
||||||||
Cardiff, Michael
|
|
05-10-2016
|
|
|
20,000
|
|
|
3.48
|
|
|
05-09-2023
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12-06-2016
|
|
|
7,850
|
|
|
3.45
|
|
|
12-06-2023
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
08-15-2017
|
|
|
60,000
|
|
|
2.05
|
|
|
08-15-2024
|
|
|
53,400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
05-08-2018
|
|
|
23,000
|
|
|
67,620
|
|
|
Egbert, Carolyn
|
|
05-10-2016
|
|
|
10,000
|
|
|
3.48
|
|
|
05-09-2023
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12-06-2016
|
|
|
7,850
|
|
|
3.45
|
|
|
12-06-2023
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
08-15-2017
|
|
|
60,000
|
|
|
2.05
|
|
|
08-15-2024
|
|
|
53,400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
05-08-2018
|
|
|
23,000
|
|
|
67,620
|
|
|
Ernst, Juergen
|
|
05-10-2016
|
|
|
10,000
|
|
|
3.48
|
|
|
05-09-2023
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12-06-2016
|
|
|
7,850
|
|
|
3.45
|
|
|
12-06-2023
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
08-15-2017
|
|
|
60,000
|
|
|
2.05
|
|
|
08-15-2024
|
|
|
53,400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
05-08-2018
|
|
|
23,000
|
|
|
67,620
|
|
|
Smith Hoke, Robin
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
05-08-2018
|
|
|
23,000
|
|
|
67,620
|
|
Limoges, Gérard
|
|
05-10-2016
|
|
|
10,000
|
|
|
3.48
|
|
|
05-09-2023
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12-06-2016
|
|
|
7,850
|
|
|
3.45
|
|
|
12-06-2023
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
08-15-2017
|
|
|
60,000
|
|
|
2.05
|
|
|
08-15-2024
|
|
|
53,400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
05-08-2018
|
|
|
23,000
|
|
|
67,620
|
|
|
Norton, Brent
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
05-08-2018
|
|
|
23,000
|
|
|
67,620
|
|
Pollack, Jonathan
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
05-08-2018
|
|
|
23,000
|
|
|
67,620
|
|
(1)
|
Value of unexercised in-the-money options" at financial year-end is calculated based on the difference between the closing prices of the Common Shares on the NASDAQ on the last trading day of the fiscal year (December 31, 2018) of $2.94 and the exercise price of the options, multiplied by the number of unexercised options.
|
(2)
|
The Company used the closing price of its Common Shares on the NASDAQ as at the last trading day of the fiscal year (December 31, 2018) of $2.94
|
Name
|
|
Fees earned
(1)
|
|
Share-based
Awards (2) |
|
Option-based
Awards |
|
Non-Equity
Incentive Plan Compensation |
|
Pension
Value |
|
All Other
Compensation |
|
Total
|
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
Cardiff, Michael
|
|
53,555
|
|
41,170
|
|
—
|
|
—
|
|
—
|
|
—
|
|
94,725
|
Egbert, Carolyn
(3)
|
|
177,500
|
|
41,170
|
|
—
|
|
—
|
|
—
|
|
—
|
|
218,670
|
Ernst, Juergen
|
|
51,065
|
|
41,170
|
|
—
|
|
—
|
|
—
|
|
—
|
|
92,235
|
Smith Hoke, Robin
|
|
27,879
|
|
41,170
|
|
—
|
|
—
|
|
—
|
|
—
|
|
69,049
|
Limoges, Gérard
|
|
67,500
|
|
41,170
|
|
—
|
|
—
|
|
—
|
|
—
|
|
108,670
|
Norton, Brent
|
|
29,176
|
|
41,170
|
|
—
|
|
—
|
|
—
|
|
—
|
|
70,346
|
Pollack, Jonathan
|
|
29,176
|
|
41,170
|
|
—
|
|
—
|
|
—
|
|
—
|
|
70,346
|
(1)
|
In respect of our financial year ended December 31, 2018, we paid an aggregate amount of $450,577
to all of our Outside Directors for services rendered in their capacity as directors, excluding reimbursement of out-of-pocket expenses and the value of share-based awards and option-based awards granted in 2018.
|
(2)
|
Amounts shown represent the value of the DSUs on the grant date ($1.79). The value of one DSU on the grant date is the closing price of one Common Share on the NASDAQ on the last trading day preceding the date of grant.
|
•
|
Mr. Michael V. Ward, who currently serves as President and Chief Executive Officer as an employee;
|
•
|
Mr. James Clavijo, who served as Chief Financial Officer as an employee from March 5, 2018 to September 24, 2018;
|
•
|
Ms. Leslie Auld, who currently serves as Senior Vice President, Chief Financial Officer as an independent contractor from September 24, 2018; and
|
•
|
Dr. Richard Sachse, who served as Senior Vice President and Chief Scientific and Chief Medical Officer until June 14, 2018, Mr. Brian Garrison, who currently serves as Senior Vice President, Global Commercial Operations, and Eckhard Guenther, who currently serves as Vice President, Alliance Management, who were our three most highly compensated executive officers (other than our Chief Executive Officer and our current and former Chief Financial Officer) during 2018.
|
•
|
providing the opportunity for an executive to earn compensation that is competitive with the compensation received by executives serving in the same or measurably similar positions within comparable companies;
|
•
|
providing the opportunity for executives to participate in equity-based incentive compensation plans;
|
•
|
aligning executive compensation with our corporate objectives; and
|
•
|
attracting and retaining highly qualified individuals in key positions.
|
Goal
|
|
Result
|
Commercialization of Macrilen™ (macimorelin) in Europe and ROW
|
Assuming EMA approval, develop strategy and implementation plan for commercialization through the out-licensing of Macrilen™ (macimorelin) for Europe and ROW
|
The Board developed and approved a strategy to out-license macimorelin for the ROW, but the Corporation did not secure acceptable ROW agreements in 2018. The Corporation subsequently (in 2019) engaged Torreya to assist in identifying and executing upon such opportunities.
|
Successfully execute the board-approved strategy and implementation plan.
|
Not completed. The Board approved a strategy and implementation plan to pursue commercialization opportunities for macimorelin for the ROW and to implement non-macimorelin related opportunities. The Corporation explored several potential opportunities, but none resulted in a transaction that was acceptable to the Corporation.
|
|
Deploy all effective resources to ensure timely EMA approval of Macrilen™ (macimorelin).
|
Completed. EMA approval of macimorelin was obtained in January 2019 based on the work of the Corporation during 2018.
|
|
Commercialization of Macrilen™ (macimorelin) in United States and Canada
|
Provide effective support to Strongbridge in its commercialization efforts to ensure Macrilen™ (macimorelin) is timely marketed in 2018.
|
Not completed. The Corporation provided support, but efforts were slowed due to Strongbridge’s sale of its license rights to Novo Nordisk A/S in December 2018.
|
Ensure effective clinical studies are in place to obtain approval of pediatric indication of Macrilen™ (macimorelin).
|
In progress. The Corporation is collaborating with Novo Nordisk (and previously with Strongbridge) and is providing appropriate activities with respect to the ongoing clinical studies that are required to obtain approval for the pediatric indication of Macrilen™.
|
|
Improve operations
|
Manage costs and control expenses to maximize cash conservation.
|
In progress. The Corporation is focused on cost-savings and cash conservation. To this end, the Corporation reduced operating costs in both Germany and the United States in 2018. This continues to be an important objective in 2019.
|
Provide cash forecast by month on a 24-month projection.
|
The Corporation remains focused on aligning essential personnel, both in Germany and the United States, with the Corporation’s strategy and improving cost-effectiveness. In 2018, this included the termination of employment of certain employees.
|
|
Ensure effective and efficient use of resources and personnel.
|
The Corporation remains focused on aligning essential personnel, both in Germany and the United States, with the Corporation’s strategy and improving cost-effectiveness. In 2018, this included the termination of employment of certain employees.
|
|
Ensure that performance milestones for key managers align with and support CEO milestones.
|
Completed.
|
•
|
any amendment to Section 3.2 of the Stock Option Plan (which sets forth the limit on the number of options that may be granted to insiders) that would have the effect of permitting, without having to obtain shareholder approval on a "disinterested vote" at a duly convened shareholders' meeting, the grant of any option(s) under the Stock Option Plan otherwise prohibited by Section 3.2;
|
•
|
any amendment to the number of securities issuable under the Stock Option Plan (except for certain permitted adjustments, such as in the case of stock splits, consolidations or reclassifications);
|
•
|
any amendment that would permit any option granted under the Stock Option Plan to be transferable or assignable other than by will or in accordance with the applicable laws of estates and succession;
|
•
|
the addition of a cashless exercise feature, payable in cash or securities, which does not provide for a full deduction of the number of underlying securities from the Stock Option Plan reserve;
|
•
|
the addition of a deferred or restricted share unit component or any other provision that results in employees receiving securities while no cash consideration is received by us;
|
•
|
with respect to any Participant, whether or not such Participant is an "insider" and except in respect of certain permitted adjustments, such as in the case of stock splits, consolidations or reclassifications:
|
•
|
any reduction in the exercise price of any option after the option has been granted, or
|
•
|
any cancellation of an option and the re-grant of that option under different terms, or
|
•
|
any extension to the term of an option beyond its Outside Expiry Date to a Participant who is an "insider" (except for extensions made in the context of a "blackout period");
|
•
|
any amendment to the method of determining the exercise price of an option granted pursuant to the Stock Option Plan;
|
•
|
the addition of any form of financial assistance or any amendment to a financial assistance provision which is more favorable to employees; and
|
•
|
any amendment to the foregoing amending provisions requiring Board, shareholder and regulatory approvals.
|
•
|
amendments of a "housekeeping" or clerical nature or to clarify the provisions of the Stock Option Plan;
|
•
|
amendments regarding any vesting period of an option;
|
•
|
amendments regarding the extension of an option beyond an Early Expiry Date in respect of any Participant, or the extension of an option beyond the Outside Expiry Date in respect of any Participant who is a "non-insider";
|
•
|
adjustments to the number of issuable Common Shares underlying, or the exercise price of, outstanding options resulting from a split or a consolidation of the Common Shares, a reclassification, the payment of a stock dividend, the payment of a special cash or non-cash distribution to our shareholders on a
pro rata
basis provided such distribution is approved by our shareholders in accordance with applicable law, a recapitalization, a reorganization or any other event which necessitates an equitable adjustment to the outstanding options in proportion with corresponding adjustments made to all outstanding Common Shares;
|
•
|
discontinuing or terminating the Stock Option Plan; and
|
•
|
any other amendment which does not require shareholder approval under the terms of the Stock Option Plan.
|
|
|
Option-based Awards
|
|
Share-based Awards
|
|||||||||||||
Name
|
|
Issuance Date
|
|
Number of
Securities Underlying Unexercised Options (1) |
|
Option
Exercise Price |
|
Option
Expiration Date |
|
Value of
Unexercised In-the-money Options (2) |
|
Issuance Date
|
|
Number of
Shares or Units of shares that have Not Vested |
|
Market or Payout
Value of Share-based Awards that have Not Vested |
|
|
|
(mm-dd-yyyy)
|
|
(#)
|
|
($)
|
|
(mm-dd-yyyy)
|
|
($)
|
|
|
|
(#)
|
|
($)
|
|
Auld, Leslie
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Clavijo, James
(3)
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Garrison, Brian
|
|
11/17/2015
|
|
500
|
|
|
116.00
|
|
11/17/2022
|
|
—
|
|
—
|
|
—
|
|
—
|
|
12/21/2015
|
|
3,000
|
|
|
4.58
|
|
12/21/2022
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
12/06/2016
|
|
2,500
|
|
|
3.45
|
|
12/06/2023
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Guenther, Eckhard
|
|
12/21/2015
|
|
5,000
|
|
|
4.58
|
|
12/21/2022
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11/08/2016
|
|
398
|
|
|
3.50
|
|
11/08/2023
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
12/06/2016
|
|
10,000
|
|
|
3.45
|
|
12/06/2023
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Sachse, Richard
(4)
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Ward, Michael V.
|
|
08/15/2017
|
|
150,000
|
|
|
2.05
|
|
08/15/2024
|
|
133,500
|
|
—
|
|
—
|
|
—
|
|
04/02/2018
|
|
50,000
|
|
|
1.46
|
|
04/02/2025
|
|
74,000
|
|
—
|
|
—
|
|
—
|
|
|
06/22/2018
|
|
100,000
|
|
|
2.11
|
|
06/22/2025
|
|
83,000
|
|
—
|
|
—
|
|
—
|
(1)
|
The number of securities underlying unexercised options represents all awards outstanding at December 31, 2018.
|
(2)
|
"Value of unexercised in-the-money options" at financial year-end is calculated based on the difference between the closing price of the Common Shares on the NASDAQ on the last trading day of the fiscal year (December 31, 2018) of $2.94 and the exercise price of the options, multiplied by the number of unexercised options.
|
(3)
|
Mr. Clavijo ceased to be Chief Financial Officer on September 24, 2018. All outstanding stock options held by Mr. Clavijo were cancelled effective as of his termination date in accordance with the provisions of the Stock Option Plan.
|
(4)
|
Dr. Sachse's employment was terminated effective June 14, 2018. All outstanding stock options held by Dr. Sachse were cancelled in accordance with the provisions of the Stock Option Plan.
|
Name
|
|
Option-based awards — Value
vested during the year (1) |
|
Share-based awards —
Value vested during the year |
|
Non-equity incentive plan compensation — Value earned during the year
|
|
|
($)
|
|
($)
|
|
($)
|
Auld, Leslie
|
|
—
|
|
—
|
|
—
|
Clavijo, James
|
|
—
|
|
—
|
|
—
|
Garrison, Brian
|
|
3,074
|
|
—
|
|
35,000
|
Guenther, Eckhard
|
|
12,299
|
|
—
|
|
—
|
Sachse, Richard
|
|
—
|
|
—
|
|
120,000
|
Ward, Michael V.
|
|
—
|
|
—
|
|
35,000
|
(1)
|
Represents the aggregate dollar value that would have been realized if the options had been exercised on the vesting date, based on the difference between the closing price of the Common Shares on the NASDAQ and the exercise price on such vesting date.
|
|
Non-equity incentive plan compensation
|
|
|||||||||||||||||||||
Name and principal position
|
Years
|
|
Salary
|
|
Share
based awards |
|
Option based awards (1)
|
|
Annual
incentive plan |
|
Long-term
incentive plans |
Pension
Value |
|
All other compensation
|
|
Total
compensation |
|||||||
|
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
($)
|
|
($)
|
|
($)
|
|||||||
Ward, Michael V.
President and Chief Executive Officer
|
2018
|
|
325,000
|
|
—
|
|
|
227,241
|
|
|
35,000
|
|
|
—
|
|
—
|
|
|
—
|
|
|
587,241
|
|
2017
|
|
121,461
|
|
—
|
|
|
242,495
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
363,956
|
|
|
2016
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Clavijo, James
(2)
Former Chief Financial Officer
|
2018
|
|
190,574
|
|
—
|
|
|
130,240
|
|
|
—
|
|
|
—
|
|
—
|
|
|
137,500
|
|
|
458,314
|
|
2017
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2016
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Auld, Leslie
Senior Vice President, Chief Financial Officer |
2018
|
|
62,385
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
62,385
|
|
2017
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2016
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Sachse, Richard
(4)
Former Senior Vice President, Chief Scientific Officer and Chief Medical Officer |
2018
|
|
403,297
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
403,297
|
|
2017
|
|
222,000
|
|
—
|
|
|
—
|
|
|
120,000
|
|
|
—
|
|
37,067
|
|
|
—
|
|
|
379,067
|
|
|
2016
|
|
222,000
|
|
—
|
|
|
257,000
|
|
|
55,500
|
|
|
—
|
|
37,067
|
|
|
—
|
|
|
571,567
|
|
|
Garrison, Brian
Senior Vice President, Global Commercial Operations |
2018
|
|
235,015
|
|
—
|
|
|
3,550
|
|
|
35,000
|
|
|
—
|
|
—
|
|
|
—
|
|
|
273,565
|
|
2017
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2016
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Guenther, Eckhard
Vice President, Alliance Management |
2018
|
|
191,242
|
|
—
|
|
|
—
|
|
|
13,154
|
|
|
—
|
|
3,298
|
|
|
—
|
|
|
207,694
|
|
2017
|
|
155,318
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
2,970
|
|
|
—
|
|
|
158,288
|
|
|
2016
|
|
152,510
|
|
—
|
|
|
27,797
|
|
|
—
|
|
|
—
|
|
2,851
|
|
|
—
|
|
|
183,158
|
|
(1)
|
The value of option-based awards represents the closing price of the Common Shares on the NASDAQ on the last trading day preceding the date of grant multiplied by the Black-Scholes factor as at such date and the number of stock options granted on such date. The following table sets forth the value of the option-based awards and the corresponding Black-Scholes factor:
|
(2)
|
Mr. Clavijo received a severance payment of $137,500 following the date that he ceased to be the Chief Financial Officer on September 24, 2018. All outstanding stock options held by Mr. Clavijo were cancelled in accordance with the provisions of the Stock Option Plan.
|
(3)
|
We maintained a reinsured benevolent fund (
Rückgedeckte Unterstützungskasse
), which is a type of private defined contribution pension plan, for Dr. Sachse. We contributed to a private pension provider an amount equal to 2.4% of Dr. Sachse’s salary, up to a monthly salary limit of €6,050, plus an additional contribution of 18% of the amount of Dr. Sachse’s salary that exceeds the monthly limit. Dr. Sachse also contributed a percentage of his salary to the plan. We are liable to Dr. Sachse for the pension benefits that have been promised, if the private pension provider does not, or cannot, pay the promised pension payments. We obtained reinsurance against the insolvency or liquidation of the private pension provider. The table below sets forth additional information
|
Accumulated value at start of year
|
Compensatory
|
Accumulated value at year end
|
$133,639
|
$12,258
|
$145,897
|
C.
|
Board practices
|
D.
|
Employees
|
E.
|
Share ownership
|
Name
|
No. of Common Shares owned or held
|
Percent
(1)
|
No. of stock options held
(2)
|
No. of currently exercisable options
|
|||||||
Auld, Leslie
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
Cardiff, Michael
(3)
|
—
|
|
|
—
|
|
87,850
|
|
|
87,850
|
|
|
Clavijo, James
(4)
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
Egbert, Carolyn
|
1,920
|
|
|
*
|
|
77,850
|
|
|
5,951
|
|
|
Ernst, Juergen
|
1,348
|
|
|
*
|
|
77,850
|
|
|
5,951
|
|
|
Garrison, Brian
|
—
|
|
|
—
|
|
6,000
|
|
|
—
|
|
|
Guenther, Eckhard
|
—
|
|
|
—
|
|
15,398
|
|
|
6,801
|
|
|
Hoke Smith, Robin
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
Limoges, Gérard
|
1,200
|
|
|
*
|
|
77,850
|
|
|
5,951
|
|
|
Norton, Brent
|
—
|
|
|
*
|
|
—
|
|
|
—
|
|
|
Pollack, Jonathan
|
—
|
|
|
*
|
|
—
|
|
|
—
|
|
|
Sachse, Richard
(5)
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
Teifel, Michael
|
—
|
|
|
—
|
|
30,350
|
|
|
13,451
|
|
|
Ward, Michael V.
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
Total
|
4,468
|
|
|
*
|
|
373,148
|
|
|
125,955
|
|
*
|
Less than 1%
|
(1)
|
Based on
16,440,760
Common Shares outstanding as at
December 31, 2018
.
|
(2)
|
For information regarding option expiration dates and exercise price refer to the tables included under the caption "Outstanding Option-Based Awards and Share-Based Awards".
|
(3)
|
Mr. Cardiff resigned from the Board for personal reasons in March 2019. At such time, the Board amended the Stock Option Plan to accelerate vesting of Mr. Cardiff’s stock options. His stock options will remain exercisable until the seventh business day following the end of the current blackout period, following which time any unexercised options of Mr. Cardiff will be forfeited and cancelled.
|
(4)
|
Mr. Clavijo ceased to be the Company's Chief Financial Officer on September 24, 2018. All outstanding stock options held by Mr. Clavijo were cancelled effective as of his termination date in accordance with the provisions of the Stock Option Plan.
|
(5)
|
Dr. Sachse employment was terminated effective June 14, 2018. All outstanding stock options held by Dr. Sachse were cancelled in accordance with the provisions of the Stock Option Plan.
|
Item 7.
|
Major Shareholders and Related Party Transactions
|
A.
|
Major shareholders
|
1
Based solely on a Schedule 13G, dated February 11, 2019, filed by J. Goldman & Co., L.P. (“JGC”), J. Goldman Capital Management, Inc. (“JGCM”) and Jay G. Goldman (“JGG”) with the SEC. As indicated in that statement, JGC, JGCM, and JGG possess shared voting and dispositive power with respect to all of such Common Shares, all of which are beneficially owned by J. Goldman Master Fund, L.P.
|
|
B.
|
Related party transactions
|
C.
|
Interests of experts and counsel
|
Item 8.
|
Financial Information
|
A.
|
Consolidated statements and other financial information
|
B.
|
Significant changes
|
Item 9.
|
The Offer and Listing
|
A.
|
Offer and listing details
|
|
NASDAQ (US$)
|
TSX (CAN$)
|
||||||
|
High
|
Low
|
High
|
Low
|
||||
2018
|
3.87
|
|
1.19
|
|
5.10
|
|
1.53
|
|
2017
|
3.65
|
|
0.84
|
|
4.81
|
|
1.13
|
|
2019
|
|
|
|
|
||||
First quarter
1
|
4.27
|
|
3.03
|
|
5.70
|
|
4.12
|
|
2018
|
|
|
|
|
||||
Fourth quarter
|
3.87
|
|
1.30
|
|
5.10
|
|
1.69
|
|
Third quarter
|
2.03
|
|
1.60
|
|
2.69
|
|
2.10
|
|
Second quarter
|
2.62
|
|
1.19
|
|
3.34
|
|
1.53
|
|
First quarter
|
2.41
|
|
1.46
|
|
3.01
|
|
1.89
|
|
2017
|
|
|
|
|
||||
Fourth quarter
|
2.70
|
|
1.87
|
|
3.48
|
|
2.38
|
|
Third quarter
|
2.87
|
|
0.98
|
|
3.57
|
|
1.28
|
|
Second quarter
|
3.35
|
|
0.84
|
|
4.50
|
|
1.13
|
|
First quarter
|
3.65
|
|
2.45
|
|
4.81
|
|
3.24
|
|
|
|
|
|
|
B.
|
Plan of distribution
|
C.
|
Markets
|
D.
|
Selling shareholders
|
E.
|
Dilution
|
F.
|
Expenses of the issue
|
Item 10.
|
Additional Information
|
A.
|
Share capital
|
B.
|
Memorandum and articles of association
|
•
|
relates primarily to his or her remuneration as our director, officer, employee or agent or as a director, officer, employee or agent of an affiliate of us;
|
•
|
is for indemnity or insurance for director's liability as permitted by the CBCA; or
|
•
|
is with our affiliate.
|
•
|
borrow money upon our credit;
|
•
|
issue, reissue, sell or pledge our debt obligations;
|
•
|
give a guarantee on our behalf to secure performance of an obligation of any person; and
|
•
|
mortgage, hypothecate, pledge or otherwise create a security interest in all or any of our property, owned or subsequently acquired, to secure any of our obligations.
|
•
|
the provisions in which future shareholder approval is required to ratify the continued existence of the Rights Plan will be revised to specify that such events will occur at every third annual meeting of the shareholders subsequent to the annual meeting of shareholders whereby the Rights Plan is initially approved, as well as the addition of certain provisions in respect of the effective date of the plan to give effect to the fact that the Rights Plan is in effect a continuation of the Existing Rights Plan;
|
•
|
the definition of “
Acquiring Person
” will exclude Convertible Security Acquisitions (as defined below);
|
•
|
the definition of “
Beneficial Owner
”, “
Beneficial Ownership
” and “
Beneficially Own
” will:
|
•
|
exclude securities that may be acquired pursuant to any agreement related to an amalgamation, merger, arrangement, business combination or other similar transaction (statutory or otherwise, but for greater certainty not including a Take-over Bid) that is conditional upon shareholder approval prior to such Person acquiring such securities; and
|
•
|
include securities which are subject to a lock-up or similar agreement to tender or deposit them into any Take-over Bid made by such Person or made by any Affiliate or Associate of such Person or made by any other person acting jointly or in concert with such Person, other than Permitted Lock-up Agreements;
|
•
|
“
Convertible Security Acquisitions
” will be defined to mean an acquisition of Voting Shares by a Person upon the purchase, exercise, conversion or exchange of Convertible Securities, where such Convertible Securities are acquired or received by such Person pursuant to a Permitted Bid Acquisition, an Exempt Acquisition or a Pro Rata Acquisition;
|
•
|
“
Market Price
” will be defined to mean the average of the daily closing price per security on the 20 consecutive trading days (i.e. days on which the TSX or another stock exchange or national securities quotation system on which the Common Shares are traded (including for greater certainty, each of the Nasdaq Global Select Market, the Nasdaq Global Market and the Nasdaq Capital Market) is open for the transaction of business, subject to certain exceptions), through and including the trading day immediately preceding such date of determination, subject to certain exceptions;
|
•
|
the definition of “
Permitted Lock-Up Agreement
” will be added (as described below); and
|
•
|
certain other amendments of a non-substantive, “housekeeping” nature have been made to provide for greater clarity and consistency.
|
1.
|
the first date (the "Stock Acquisition Date") of a public announcement of facts indicating that a person has become an Acquiring Person; and
|
2.
|
the date of the commencement of, or first public announcement of the intention of any person (other than us or any of our subsidiaries) to commence a take-over bid or a share exchange bid for more than 20% of our outstanding Common Shares other than a Permitted Bid or a Competing Permitted Bid (as defined below), so long as such take-over bid continues to satisfy the requirements of a Permitted Bid or a Competing Permitted Bid, as the case may be.
|
1.
|
the take-over bid must be made by means of a take-over bid circular;
|
2.
|
the take-over bid must be made to all holders of Common Shares wherever resident, on identical terms and conditions, other than the bidder;
|
3.
|
the take-over bid must not permit Common Shares tendered pursuant to the bid to be taken up or paid for:
|
a)
|
prior to the close of business on a date that is not less than 105 days following the date of the relevant take-over bid or such shorter minimum period that a take-over bid (that is not exempt from any of the requirements of Division 5 (Bid Mechanics of NI 62-104)) must remain open for deposits of securities thereunder, in the applicable circumstances at such time, pursuant to NI 62-104;
|
b)
|
then only if at the close of business on the date Common Shares (and/or "Convertible Securities", as defined in the Rights Plan) are first taken up or paid for under such take-over bid, outstanding Common Shares and Convertible Securities held by shareholders other than any other Acquiring Person, the bidder, the bidder’s affiliates or associates, persons acting jointly or in concert with the bidder and any employee benefit plan, deferred profit-sharing plan, stock participation plan or trust for the benefit of our employees or the employees
|
4.
|
the take-over bid must allow Common Shares and/or Convertible Securities to be deposited or tendered pursuant to such take-over bid, unless such take-over bid is withdrawn, at any time prior to the close of business on the date Common Shares and/or Convertible Securities are first taken up or paid for under the take-over bid;
|
5.
|
the take-over bid must allow Common Shares and/or Convertible Securities to be withdrawn until taken up and paid for; and
|
6.
|
in the event the requirement set forth in clause 3.b) above is satisfied, the bidder must make a public announcement of that fact and the take-over bid must remain open for deposits and tenders of Common Shares for not less than ten days from the date of such public announcement.
|
•
|
the acquisition of our Common Shares by a person in the ordinary course of that person's business as a trader or dealer in securities;
|
•
|
the acquisition or control of us in connection with the realization of security granted for a loan or other financial assistance and not for any purpose related to the provisions of the Investment Act,
if the acquisition is subject to approval under the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act or the Trust and Loan Companies Act; and
|
•
|
the acquisition or control of us by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of us, through the ownership of our voting interests, remains unchanged.
|
C.
|
Material contracts
|
•
|
$4,000,000 on achieving $25,000,000 annual net sales,
|
•
|
$10,000,000 on achieving $50,000,000 annual net sales,
|
•
|
$20,000,000 on achieving $100,000,000 annual net sales,
|
•
|
$40,000,000 on achieving $200,000,000 annual net sales, and
|
•
|
$100,000,000 on achieving $500,000,000 annual net sales.
|
•
|
a "Change of Control" shall be deemed to have occurred in any of the following circumstances: (i) subject to certain exceptions, upon the acquisition by a person (or one or more persons who are affiliates of one another or who are acting jointly or in concert) of a beneficial interest in our securities representing in any circumstance 50% or more of the voting rights attaching to our then outstanding securities; (ii) upon a sale or other disposition of all or substantially all of our assets; (iii) upon a plan of liquidation or dissolution of us; or (iv) if, for any reason, including our amalgamation, merger or consolidation with or into another company, the individuals who, during the term of the change of control agreement, constituted the Board (and any new directors whose appointment by the Board or whose nomination for election by our shareholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors during the term of the change of control agreement or whose appointment or nomination for election was previously so approved) cease to constitute a majority of the members of the Board;
|
•
|
termination of employment for "Cause" includes (but is not limited to) (i) if the Executive commits any fraud, theft, embezzlement or other criminal act of a similar nature, or (ii) if the Executive commits an act of serious misconduct or willful or gross negligence in the performance of his duties.
|
Name
|
Termination Provisions
Value ($) (1) (2) |
Auld, Leslie
|
0
|
Garrison, Brian
|
0
|
Guenther, Eckhard
|
94,800
|
Ward, Michael V.
|
487,500
|
(1)
|
The termination values assume that the triggering event took place on the last business day of our financial year-end (December 31, 2018).
|
(2)
|
Value of earned/unused vacation, if applicable, and amounts owing for expense reimbursement are not included as they are not considered as “incremental” payments made in connection with termination of employment.
|
D.
|
Exchange controls
|
•
|
dealers in stocks, securities or currencies;
|
•
|
securities traders that use a mark-to-market accounting method;
|
•
|
banks and financial institutions;
|
•
|
insurance companies;
|
•
|
regulated investment companies;
|
•
|
real estate investment trusts;
|
•
|
tax-exempt organizations;
|
•
|
retirement plans, individual plans, individual retirement accounts and tax-deferred accounts;
|
•
|
partnerships or other pass-through entities for U.S. federal income tax purposes and their partners or members;
|
•
|
persons holding Common Shares as part of a hedging or conversion transaction straddle or other integrated or risk reduction transaction;
|
•
|
persons who or that are, or may become, subject to the expatriation provisions of the Code;
|
•
|
persons whose functional currency is not the U.S. dollar; and
|
•
|
direct, indirect or constructive owners of 10% or more of the total combined voting power of all classes of our voting stock or 10% or more of the total value of shares of all classes of our stock.
|
•
|
an individual citizen or resident of the United States;
|
•
|
a corporation or other entity classified as a corporation for U.S. federal income tax purposes created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
|
•
|
an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
|
•
|
a trust, if (a) a court within the United States is able to exercise primary supervision over the administration of such trust and one or more "U.S. persons" (within the meaning of the Code) have the authority to control all substantial decisions of the trust, or (b) a valid election is in effect to be treated as a U.S. person for U.S. federal income tax purposes.
|
F.
|
Dividends and paying agents
|
G.
|
Statement by experts
|
H.
|
Documents on display
|
I.
|
Subsidiary information
|
Item 11.
|
Quantitative and Qualitative Disclosures About Market Risk
|
•
|
The Company's loans and receivables are comprised of cash and cash equivalents, trade and other receivables and restricted cash equivalents.
|
•
|
Financial liabilities at FVTPL are currently comprised of the Company's warrant liability.
|
•
|
Other financial liabilities include payables, accrued liabilities, and provision for restructuring costs.
|
(in thousands)
|
|
Carrying
amount |
|
-30%
|
|
+30%
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Warrant liability
|
|
3,634
|
|
|
1,792
|
|
|
(1,504
|
)
|
Total impact on net income – (decrease) / increase
|
|
|
|
1,792
|
|
|
(1,504
|
)
|
Item 12.
|
Description of Securities Other than Equity Securities
|
A.
|
Debt securities
|
B.
|
Warrants and rights
|
C.
|
Other securities
|
D.
|
American depositary shares
|
Item 13.
|
Defaults, Dividend Arrearages and Delinquencies
|
Item 14.
|
Material Modifications to the Rights of Security Holders and Use of Proceeds
|
Item 15.
|
Controls and Procedures
|
Item 16A.
|
Audit Committee Financial Expert
|
Item 16B.
|
Code of Ethics
|
Item 16C.
|
Principal Accountant Fees and Services
|
(a)
|
Audit Fees
|
(b)
|
Audit-related Fees
|
(c)
|
Tax Fees
|
(d)
|
All Other Fees
|
(e)
|
Audit Committee Pre-Approval Policies and Procedures
|
(f)
|
Work performed by Full-time, Permanent Employees of Principal Accountant
|
Item 16D.
|
Exemptions from the Listing Standards for Audit Committees
|
Item 16E.
|
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
|
Item 16F.
|
Change in Registrant's Certifying Accountant
|
Item 16G.
|
Corporate Governance
|
Item 16H.
|
Mine Safety Disclosure
|
Item 17
|
Financial Statements
|
Item 18.
|
Financial Statements
|
Aeterna Zentaris Inc.
|
Consolidated Statements of Financial Position
|
(in thousands of US dollars)
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||
|
|
$
|
|
$
|
||
ASSETS
|
|
|
|
|
||
Current assets
|
|
|
|
|
||
Cash and cash equivalents (note 7)
|
|
14,512
|
|
|
7,780
|
|
Trade and other receivables (note 8)
|
|
294
|
|
|
221
|
|
Inventory (note 9)
|
|
240
|
|
|
554
|
|
Prepaid expenses and other current assets (note 10)
|
|
1,210
|
|
|
826
|
|
Total current assets
|
|
16,256
|
|
|
9,381
|
|
Restricted cash equivalents (note 11)
|
|
418
|
|
|
381
|
|
Property, plant and equipment (note 12)
|
|
65
|
|
|
101
|
|
Deferred tax assets (note 20)
|
|
—
|
|
|
3,479
|
|
Identifiable intangible assets (note 13)
|
|
62
|
|
|
90
|
|
Other non-current assets
|
|
—
|
|
|
150
|
|
Goodwill (note 14)
|
|
8,210
|
|
|
8,613
|
|
Total Assets
|
|
25,011
|
|
|
22,195
|
|
LIABILITIES
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
||
Payables and accrued liabilities (note 15)
|
|
2,966
|
|
|
2,814
|
|
Provision for restructuring and other costs (note 16)
|
|
887
|
|
|
2,469
|
|
Income taxes (note 22)
|
|
1,669
|
|
|
—
|
|
Current portion of deferred revenues (note 6)
|
|
74
|
|
|
486
|
|
Total current liabilities
|
|
5,596
|
|
|
5,769
|
|
Deferred revenues (note 6)
|
|
258
|
|
|
55
|
|
Warrant liability (note 17)
|
|
3,634
|
|
|
3,897
|
|
Employee future benefits (note 18)
|
|
13,205
|
|
|
14,229
|
|
Non-current portion of provision for restructuring and other costs (note 16)
|
|
411
|
|
|
1,028
|
|
Total liabilities
|
|
23,104
|
|
|
24,978
|
|
SHAREHOLDERS' EQUITY (DEFICIENCY)
|
|
|
|
|
||
Share capital (note 19)
|
|
222,335
|
|
|
222,335
|
|
Other capital (note 19)
|
|
89,342
|
|
|
88,772
|
|
Deficit
|
|
(309,781
|
)
|
|
(314,161
|
)
|
Accumulated other comprehensive income
|
|
11
|
|
|
271
|
|
Total shareholders' equity (deficiency)
|
|
1,907
|
|
|
(2,783
|
)
|
Total liabilities and shareholders' equity
|
|
25,011
|
|
|
22,195
|
|
/s/ Carolyn Egbert
|
|
/s/ Gérard Limoges
|
Carolyn Egbert
Chair of the Board
|
|
Gérard Limoges
Director
|
Aeterna Zentaris Inc.
|
Consolidated Statements of Changes in Shareholders' (Deficiency) Equity
|
For the years ended December 31, 2018, 2017 and 2016
|
(in thousands of US dollars, except share data)
|
|
|
Common shares (number of)
1
|
|
Share capital
|
|
Other capital
|
|
Deficit
|
|
Accumulated other comprehensive income
|
|
Total
|
||||||
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
||||||
Balance - January 1, 2018
|
|
16,440,760
|
|
|
222,335
|
|
|
88,772
|
|
|
(314,161
|
)
|
|
271
|
|
|
(2,783
|
)
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,187
|
|
|
—
|
|
|
4,187
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(260
|
)
|
|
(260
|
)
|
Actuarial gain on defined benefit plans (note 18)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
193
|
|
|
—
|
|
|
193
|
|
Comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,380
|
|
|
(260
|
)
|
|
4,120
|
|
Share-based compensation costs
|
|
—
|
|
|
—
|
|
|
570
|
|
|
—
|
|
|
—
|
|
|
570
|
|
Balance - December 31, 2018
|
|
16,440,760
|
|
|
222,335
|
|
|
89,342
|
|
|
(309,781
|
)
|
|
11
|
|
|
1,907
|
|
1
|
Issued and paid in full.
|
|
|
Common shares (number of)
1
|
|
Share capital
|
|
Pre-funded warrants
|
|
Other capital
|
|
Deficit
|
|
Accumulated other comprehensive income (loss)
|
|
Total
|
|||||||
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||||
Balance - January 1, 2017
|
|
12,917,995
|
|
|
213,980
|
|
|
—
|
|
|
88,590
|
|
|
(298,059
|
)
|
|
1,701
|
|
|
6,212
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,796
|
)
|
|
—
|
|
|
(16,796
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,430
|
)
|
|
(1,430
|
)
|
Actuarial gain on defined benefit plans (note 18)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
694
|
|
|
—
|
|
|
694
|
|
Comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,102
|
)
|
|
(1,430
|
)
|
|
(17,532
|
)
|
Share issuances pursuant to the exercise of pre-funded warrants (note 19)
|
|
301,343
|
|
|
977
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
977
|
|
Share issuances in connection with "at-the-market" drawdowns (note 19)
|
|
3,221,422
|
|
|
7,378
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,378
|
|
Share-based compensation costs
|
|
|
|
—
|
|
|
—
|
|
|
182
|
|
|
—
|
|
|
—
|
|
|
182
|
|
|
Balance - December 31, 2017
|
|
16,440,760
|
|
|
222,335
|
|
|
—
|
|
|
88,772
|
|
|
(314,161
|
)
|
|
271
|
|
|
(2,783
|
)
|
1
|
Issued and paid in full.
|
Aeterna Zentaris Inc.
|
Consolidated Statements of Changes in Shareholders' (Deficiency) Equity
|
For the years ended December 31, 2018, 2017 and 2016
|
(in thousands of US dollars, except share data)
|
|
Common shares (number of)1
|
|
Share capital
|
|
Pre-funded warrants
|
|
Other capital
|
|
Deficit
|
|
Accumulated other comprehensive income (loss)
|
|
Total
|
|||||||
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||||
Balance - January 1, 2016
|
9,928,697
|
|
|
204,596
|
|
|
—
|
|
|
87,508
|
|
|
(271,621
|
)
|
|
1,132
|
|
|
21,615
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,959
|
)
|
|
—
|
|
|
(24,959
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
569
|
|
|
569
|
|
Actuarial loss on defined benefit plan (note 18)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,479
|
)
|
|
—
|
|
|
(1,479
|
)
|
Comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,438
|
)
|
|
569
|
|
|
(25,869
|
)
|
Share issuances in connection with a public offering (note 19)
|
1,150,000
|
|
|
3,377
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,377
|
|
Pre-funded warrant issuances in connection with a public offering (note 19)
|
—
|
|
|
—
|
|
|
2,789
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,789
|
|
Share issuances pursuant to the exercise of pre-funded warrants (note 19)
|
950,000
|
|
|
2,789
|
|
|
(2,789
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Share issuances in connection with "at-the-market" drawdowns (note 19)
|
889,298
|
|
|
3,218
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,218
|
|
Share-based compensation costs
|
|
|
|
|
|
|
1,082
|
|
|
—
|
|
|
—
|
|
|
1,082
|
|
|||
Balance - December 31, 2016
|
12,917,995
|
|
|
213,980
|
|
|
—
|
|
|
88,590
|
|
|
(298,059
|
)
|
|
1,701
|
|
|
6,212
|
|
Aeterna Zentaris Inc.
|
Consolidated Statements of Comprehensive Income (Loss)
|
For the years ended December 31, 2018, 2017 and 2016
|
(in thousands of US dollars, except share and per share data)
|
|
|
Years Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Revenues
|
|
|
|
|
|
|
|||
License fees (note 6)
|
|
24,325
|
|
|
458
|
|
|
497
|
|
Product sales (note 6)
|
|
2,167
|
|
|
—
|
|
|
—
|
|
Royalty income (note 6)
|
|
184
|
|
|
—
|
|
|
—
|
|
Sales commission and other
|
|
205
|
|
|
465
|
|
|
414
|
|
Total revenues
|
|
26,881
|
|
|
923
|
|
|
911
|
|
Cost of sales
|
|
2,104
|
|
|
—
|
|
|
—
|
|
Gross income
|
|
24,777
|
|
|
923
|
|
|
911
|
|
Operating expenses (note 20)
|
|
|
|
|
|
|
|||
Research and development costs
|
|
2,932
|
|
|
10,704
|
|
|
16,495
|
|
General and administrative expenses
|
|
8,894
|
|
|
8,198
|
|
|
7,147
|
|
Selling expenses
|
|
3,109
|
|
|
5,095
|
|
|
6,745
|
|
Total operating expenses
|
|
14,935
|
|
|
23,997
|
|
|
30,387
|
|
Income (loss) from operations
|
|
9,842
|
|
|
(23,074
|
)
|
|
(29,476
|
)
|
Settlements (note 27)
|
|
(1,400
|
)
|
|
—
|
|
|
—
|
|
Gain (loss) due to changes in foreign currency exchange rates
|
|
656
|
|
|
502
|
|
|
(70
|
)
|
Change in fair value of warrant liability (note 17)
|
|
263
|
|
|
2,222
|
|
|
4,437
|
|
Other finance income
|
|
278
|
|
|
75
|
|
|
150
|
|
Net finance income (costs)
|
|
1,197
|
|
|
2,799
|
|
|
4,517
|
|
Income (loss) before income taxes
|
|
9,639
|
|
|
(20,275
|
)
|
|
(24,959
|
)
|
Income tax (expense) recovery (note 22)
|
|
(5,452
|
)
|
|
3,479
|
|
|
—
|
|
Net income (loss)
|
|
4,187
|
|
|
(16,796
|
)
|
|
(24,959
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|||
Items that may be reclassified subsequently to profit or loss:
|
|
|
|
|
|
|
|||
Foreign currency translation adjustments
|
|
(260
|
)
|
|
(1,430
|
)
|
|
569
|
|
Items that will not be reclassified to profit or loss:
|
|
|
|
|
|
|
|||
Actuarial gain (loss) on defined benefit plans
|
|
193
|
|
|
694
|
|
|
(1,479
|
)
|
Comprehensive income (loss)
|
|
4,120
|
|
|
(17,532
|
)
|
|
(25,869
|
)
|
Net income (loss) per share (basic) (note 26)
|
|
0.25
|
|
|
(1.12
|
)
|
|
(2.41
|
)
|
Net income (loss) per share (diluted) (note 26)
|
|
0.24
|
|
|
(1.12
|
)
|
|
(2.41
|
)
|
Weighted average number of shares outstanding (note 26)
|
|
|
|
|
|
|
|||
Basic
|
|
16,440,760
|
|
|
14,958,704
|
|
|
10,348,879
|
|
Diluted
|
|
17,034,812
|
|
|
14,958,704
|
|
|
10,348,879
|
|
Aeterna Zentaris Inc.
|
Consolidated Statements of Cash Flows
|
For the years ended December 31, 2018, 2017 and 2016
|
(in thousands of US dollars)
|
|
Years ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
|
$
|
|
$
|
|
$
|
|||
Cash flows from operating activities
|
|
|
|
|
|
|||
Net income (loss) for the year
|
4,187
|
|
|
(16,796
|
)
|
|
(24,959
|
)
|
Items not affecting cash and cash equivalents:
|
|
|
|
|
|
|
||
Change in fair value of warrant liability (note 17)
|
(263
|
)
|
|
(2,222
|
)
|
|
(4,437
|
)
|
Provision for restructuring and other costs (note 16)
|
(136
|
)
|
|
3,083
|
|
|
(8
|
)
|
Recapture of inventory previously written off
|
—
|
|
|
(643
|
)
|
|
—
|
|
Depreciation, amortization and impairment (notes 12 and 13)
|
58
|
|
|
94
|
|
|
280
|
|
Deferred income taxes (note 22)
|
3,479
|
|
|
(3,479
|
)
|
|
—
|
|
Share-based compensation costs
|
570
|
|
|
182
|
|
|
1,082
|
|
Employee future benefits (note 18)
|
316
|
|
|
246
|
|
|
382
|
|
Amortization of deferred revenues (note 6)
|
(609
|
)
|
|
(458
|
)
|
|
(345
|
)
|
Foreign exchange (gain) loss on items denominated in foreign currencies
|
(652
|
)
|
|
(553
|
)
|
|
87
|
|
Gain on disposal of property, plant and equipment
|
(9
|
)
|
|
(136
|
)
|
|
(1
|
)
|
Other non-cash items
|
35
|
|
|
(19
|
)
|
|
(83
|
)
|
Transaction cost allocated to warrants issued (note 19)
|
—
|
|
|
—
|
|
|
56
|
|
Changes in operating assets and liabilities (note 21)
|
(151
|
)
|
|
(2,212
|
)
|
|
(1,064
|
)
|
Net cash provided by/(used in) operating activities
|
6,825
|
|
|
(22,913
|
)
|
|
(29,010
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|||
Proceeds from issuances of common shares, warrants (including pre-funded warrants), net of cash transaction costs of $nil, $250 and $1,107 in 2018, 2017, and 2016, respectively (note 19)
|
—
|
|
|
7,788
|
|
|
9,924
|
|
Proceeds from warrants exercised (note 19)
|
—
|
|
|
242
|
|
|
—
|
|
Net cash provided by financing activities
|
—
|
|
|
8,030
|
|
|
9,924
|
|
Cash flows from investing activities
|
|
|
|
|
|
|||
Purchase of property, plant and equipment (note 12)
|
(9
|
)
|
|
(4
|
)
|
|
(66
|
)
|
Proceeds for disposals of property, plant and equipment (note 12)
|
24
|
|
|
161
|
|
|
2
|
|
Change in restricted cash equivalents
|
(50
|
)
|
|
150
|
|
|
(250
|
)
|
Net cash provided by (used in) investing activities
|
(35
|
)
|
|
307
|
|
|
(314
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
(58
|
)
|
|
357
|
|
|
(51
|
)
|
Net change in cash and cash equivalents
|
6,732
|
|
|
(14,219
|
)
|
|
(19,451
|
)
|
Cash and cash equivalents – beginning of year (note 6)
|
7,780
|
|
|
21,999
|
|
|
41,450
|
|
Cash and cash equivalents – end of year (note 6)
|
14,512
|
|
|
7,780
|
|
|
21,999
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
|
Methods
|
|
Annual rates and period
|
Equipment
|
|
Declining balance and straight-line
|
|
20%
|
Furniture and fixtures
|
|
Declining balance and straight-line
|
|
10% and 20%
|
Computer equipment
|
|
Straight-line
|
|
25% and 33
1
/3%
|
Leasehold improvements
|
|
Straight-line
|
|
Remaining lease term
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||
|
|
$
|
|
$
|
||
Cash on hand and balances with banks
|
|
3,501
|
|
|
7,099
|
|
Interest-bearing deposits with maturities of three months or less
|
|
11,011
|
|
|
681
|
|
|
|
14,512
|
|
|
7,780
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||
|
|
$
|
|
$
|
||
Trade accounts receivable (net of allowance for doubtful accounts of $55 (2017 - $5))
|
|
142
|
|
|
20
|
|
Value added tax
|
|
49
|
|
|
186
|
|
Other receivables
|
|
103
|
|
|
15
|
|
|
|
294
|
|
|
221
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
|
Cost
|
|||||||||||||
|
|
Equipment
|
|
Furniture and fixtures
|
|
Computer equipment
|
|
Leasehold improvements
|
|
Total
|
|||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||
At January 1, 2017
|
|
3,919
|
|
|
19
|
|
|
737
|
|
|
37
|
|
|
4,712
|
|
Additions
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
4
|
|
Disposals / Retirements
|
|
(2,160
|
)
|
|
—
|
|
|
(43
|
)
|
|
—
|
|
|
(2,203
|
)
|
Impact of foreign exchange rate changes
|
|
507
|
|
|
—
|
|
|
94
|
|
|
5
|
|
|
606
|
|
At December 31, 2017
|
|
2,268
|
|
|
19
|
|
|
790
|
|
|
42
|
|
|
3,119
|
|
Additions
|
|
1
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
9
|
|
Disposals / Retirements
|
|
(758
|
)
|
|
—
|
|
|
(137
|
)
|
|
—
|
|
|
(895
|
)
|
Reclassifications
|
|
11
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Impact of foreign exchange rate changes
|
|
(64
|
)
|
|
(1
|
)
|
|
(24
|
)
|
|
(2
|
)
|
|
(91
|
)
|
At December 31, 2018
|
|
1,458
|
|
|
7
|
|
|
637
|
|
|
40
|
|
|
2,142
|
|
|
Accumulated depreciation
|
|||||||||||||
|
Equipment
|
|
Furniture and fixtures
|
|
Computer equipment
|
|
Leasehold improvements
|
|
Total
|
|||||
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||
At January 1, 2017
|
3,799
|
|
|
2
|
|
|
692
|
|
|
15
|
|
|
4,508
|
|
Disposals / Retirements
|
(2,135
|
)
|
|
—
|
|
|
(43
|
)
|
|
—
|
|
|
(2,178
|
)
|
Depreciation expense
|
50
|
|
|
2
|
|
|
30
|
|
|
18
|
|
|
100
|
|
Impact of foreign exchange rate changes
|
496
|
|
|
—
|
|
|
90
|
|
|
2
|
|
|
588
|
|
At December 31, 2017
|
2,210
|
|
|
4
|
|
|
769
|
|
|
35
|
|
|
3,018
|
|
Disposals / Retirements
|
(752
|
)
|
|
—
|
|
|
(137
|
)
|
|
—
|
|
|
(889
|
)
|
Depreciation expense
|
19
|
|
|
1
|
|
|
14
|
|
|
1
|
|
|
35
|
|
Impact of foreign exchange rate changes
|
(63
|
)
|
|
—
|
|
|
(22
|
)
|
|
(2
|
)
|
|
(87
|
)
|
At December 31, 2018
|
1,414
|
|
|
5
|
|
|
624
|
|
|
34
|
|
|
2,077
|
|
|
Carrying amount
|
|||||||||||||
|
Equipment
|
|
Furniture and fixtures
|
|
Computer equipment
|
|
Leasehold improvements
|
|
Total
|
|||||
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||
At December 31, 2017
|
58
|
|
|
15
|
|
|
21
|
|
|
7
|
|
|
101
|
|
At December 31, 2018
|
44
|
|
|
2
|
|
|
13
|
|
|
6
|
|
|
65
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
|
Year ended December 31, 2018
|
|
Year ended December 31, 2017
|
||||||||||||||
|
|
Cost
|
|
Accumulated amortization
|
|
Carrying value
|
|
Cost
|
|
Accumulated amortization
|
|
Carrying value
|
||||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
||||||
Balances – Beginning of the year
|
|
34,246
|
|
|
(34,156
|
)
|
|
90
|
|
|
30,032
|
|
|
(29,962
|
)
|
|
70
|
|
Additions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Impairment (loss) reversal*
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44
|
|
|
44
|
|
Recurring amortization expense*
|
|
—
|
|
|
(23
|
)
|
|
(23
|
)
|
|
—
|
|
|
(38
|
)
|
|
(38
|
)
|
Impact of foreign exchange rate changes
|
|
(1,603
|
)
|
|
1,598
|
|
|
(5
|
)
|
|
4,214
|
|
|
(4,200
|
)
|
|
14
|
|
Balances – End of the year
|
|
32,643
|
|
|
(32,581
|
)
|
|
62
|
|
|
34,246
|
|
|
(34,156
|
)
|
|
90
|
|
|
|
Cost
|
|
Accumulated impairment loss
|
|
Carrying amount
|
|||
|
|
$
|
|
$
|
|
$
|
|||
At January 1, 2017
|
|
7,553
|
|
|
—
|
|
|
7,553
|
|
Impact of foreign exchange rate changes
|
|
1,060
|
|
|
—
|
|
|
1,060
|
|
At December 31, 2017
|
|
8,613
|
|
|
—
|
|
|
8,613
|
|
Impact of foreign exchange rate changes
|
|
(403
|
)
|
|
—
|
|
|
(403
|
)
|
At December 31, 2018
|
|
8,210
|
|
|
—
|
|
|
8,210
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||
|
|
$
|
|
$
|
||
Trade accounts payable
|
|
1,282
|
|
|
1,222
|
|
Accrued research and development costs
|
|
26
|
|
|
127
|
|
Salaries, employment taxes and benefits
|
|
183
|
|
|
390
|
|
Financing of insurance premiums (a)
|
|
738
|
|
|
—
|
|
Other accrued liabilities
|
|
737
|
|
|
1,075
|
|
|
|
2,966
|
|
|
2,814
|
|
(a)
|
Represents financing of the Company's 2019 insurance premiums, carrying interest at
6.5%
and repayable in
eight
equal monthly installments commencing January 31, 2019.
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
|
Other provision
|
|
Cetrotide
(R)
onerous contracts
|
|
2017 German Restructuring: onerous lease
|
|
2017 German Restructuring: severance
|
|
Total
|
|||||
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||
January 1, 2017
|
|
158
|
|
|
574
|
|
|
—
|
|
|
—
|
|
|
732
|
|
Provision recognized
|
|
—
|
|
|
—
|
|
|
1,113
|
|
|
2,002
|
|
|
3,115
|
|
Utilization of provision
|
|
(152
|
)
|
|
(145
|
)
|
|
(19
|
)
|
|
(138
|
)
|
|
(454
|
)
|
Change in the provision
|
|
—
|
|
|
(20
|
)
|
|
10
|
|
|
(41
|
)
|
|
(51
|
)
|
Unwinding of discount and impact of foreign exchange rate changes
|
|
3
|
|
|
64
|
|
|
104
|
|
|
(16
|
)
|
|
155
|
|
December 31, 2017
|
|
9
|
|
|
473
|
|
|
1,208
|
|
|
1,807
|
|
|
3,497
|
|
Provision recognized
|
|
—
|
|
|
317
|
|
|
—
|
|
|
—
|
|
|
317
|
|
Utilization of provision
|
|
(9
|
)
|
|
(222
|
)
|
|
(467
|
)
|
|
(1,202
|
)
|
|
(1,900
|
)
|
Change in the provision
|
|
—
|
|
|
—
|
|
|
(21
|
)
|
|
(432
|
)
|
|
(453
|
)
|
Unwinding of discount and impact of foreign exchange rate changes
|
|
—
|
|
|
(21
|
)
|
|
(57
|
)
|
|
(85
|
)
|
|
(163
|
)
|
December 31, 2018
|
|
—
|
|
|
547
|
|
|
663
|
|
|
88
|
|
|
1,298
|
|
Less: current portion
|
|
—
|
|
|
(136
|
)
|
|
(663
|
)
|
|
(88
|
)
|
|
(887
|
)
|
Non-current portion
|
|
—
|
|
|
411
|
|
|
—
|
|
|
—
|
|
|
411
|
|
|
|
Years ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Balance – Beginning of the year
|
|
3,897
|
|
|
6,854
|
|
|
10,891
|
|
Share purchase warrants issued during the year (note 19)
|
|
—
|
|
|
—
|
|
|
400
|
|
Share purchase warrants exercised during the year
|
|
—
|
|
|
(735
|
)
|
|
—
|
|
Change in fair value of share purchase warrants
|
|
(263
|
)
|
|
(2,222
|
)
|
|
(4,437
|
)
|
Balance - End of the year
|
|
3,634
|
|
|
3,897
|
|
|
6,854
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
Years ended December 31,
|
|
||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
||||||||||||
|
Number
|
|
Weighted average exercise price ($)
|
|
Number
|
|
Weighted average exercise price ($)
|
|
Number
|
|
Weighted average exercise price ($)
|
|
||||||
Balance – Beginning of the year
|
3,417,840
|
|
|
7.59
|
|
|
3,779,245
|
|
|
9.66
|
|
|
2,842,309
|
|
|
11.30
|
|
|
Issued (note 19)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
945,000
|
|
|
4.70
|
|
|
Exercised
|
—
|
|
|
—
|
|
|
(331,730
|
)
|
*
|
1.07
|
|
|
—
|
|
|
—
|
|
|
Expired (note 19)
|
(25,996
|
)
|
|
185.00
|
|
|
(29,675
|
)
|
|
345.00
|
|
|
(8,064
|
)
|
|
4.23
|
|
|
Balance – End of the year
|
3,391,844
|
|
|
6.23
|
|
|
3,417,840
|
|
|
7.59
|
|
|
3,779,245
|
|
|
9.66
|
|
|
|
|
|
|||
Exercise price ($)
|
|
Number
|
|
Weighted average remaining contractual life (years)
|
|
1.07
|
|
115,844
|
|
|
1.19
|
4.70
|
|
945,000
|
|
|
1.34
|
7.10
|
|
2,331,000
|
|
|
1.96
|
|
|
3,391,844
|
|
|
1.76
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
Number of equivalent shares
|
|
Market-value per share price
|
|
Weighted average exercise price
|
|
Risk-free annual interest rate
|
|
Expected volatility
|
|
Expected life (years)
|
|
Expected dividend yield
|
||||||
|
|
|
($)
|
|
($)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
||||||
March 2015 Series A Warrants (e)
|
115,844
|
|
|
2.94
|
|
|
1.07
|
|
|
2.58
|
%
|
|
81.81
|
%
|
|
1.19
|
|
0.00
|
%
|
December 2015 Warrants
|
2,331,000
|
|
|
2.94
|
|
|
7.10
|
|
|
2.47
|
%
|
|
122.00
|
%
|
|
1.96
|
|
0.00
|
%
|
November 2016 Warrants (f)
|
945,000
|
|
|
2.94
|
|
|
4.70
|
|
|
2.56
|
%
|
|
78.95
|
%
|
|
1.34
|
|
0.00
|
%
|
(a)
|
Based on United States Treasury Government Bond interest rates with a term that is consistent with the expected life of the warrants.
|
(b)
|
Based on the historical volatility of the Company's stock price over the most recent period consistent with the expected life of the warrants, as well as on future expectations.
|
(c)
|
Based upon time to expiry from the reporting period date.
|
(d)
|
The Company has not paid dividends and it does not intend to pay dividends in the foreseeable future.
|
(e)
|
For the
March 2015
Series A Warrants, the inputs and assumptions applied to the Black-Scholes option pricing model have been further adjusted to take into consideration the value attributed to certain anti-dilution provisions. Specifically, the weighted average exercise price is subject to adjustment (see
note 19 - Share and other capital
).
|
(f)
|
For the
November 2016
Warrants, the Company reduced the fair value of these warrants to take into consideration the fair value of the
$10
call option, which was also calculated using the Black-Scholes pricing model. (see
note 19 - Share and other capital
).
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
|
Pension benefit plans
Years ended December 31, |
|
Other benefit plans
Years ended December 31, |
||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
||||||
Balances – Beginning of the year
|
|
14,145
|
|
|
13,197
|
|
|
12,375
|
|
|
84
|
|
|
217
|
|
|
281
|
|
Current service cost
|
|
66
|
|
|
107
|
|
|
87
|
|
|
6
|
|
|
14
|
|
|
13
|
|
Interest cost
|
|
224
|
|
|
237
|
|
|
282
|
|
|
1
|
|
|
3
|
|
|
—
|
|
Actuarial (gain) loss arising from changes in financial assumptions
|
|
(193
|
)
|
|
(694
|
)
|
|
1,479
|
|
|
19
|
|
|
(115
|
)
|
|
—
|
|
Benefits paid
|
|
(492
|
)
|
|
(485
|
)
|
|
(399
|
)
|
|
(2
|
)
|
|
(66
|
)
|
|
(60
|
)
|
Impact of foreign exchange rate changes
|
|
(650
|
)
|
|
1,783
|
|
|
(627
|
)
|
|
(3
|
)
|
|
31
|
|
|
(17
|
)
|
Balances – End of the year
|
|
13,100
|
|
|
14,145
|
|
|
13,197
|
|
|
105
|
|
|
84
|
|
|
217
|
|
Amounts recognized:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
In net loss
|
|
(290
|
)
|
|
(344
|
)
|
|
(369
|
)
|
|
(26
|
)
|
|
98
|
|
|
(13
|
)
|
In other comprehensive income (loss)
|
|
843
|
|
|
(1,089
|
)
|
|
(852
|
)
|
|
3
|
|
|
(31
|
)
|
|
17
|
|
|
|
Pension benefit plans
|
|
Other benefit plans
|
||||||||
|
|
Years ended December 31,
|
|
Years ended December 31,
|
||||||||
Actuarial assumptions
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
|
%
|
|
%
|
|
%
|
|
%
|
|
%
|
|
%
|
Discount rate
|
|
1.90
|
|
1.70
|
|
1.60
|
|
1.90
|
|
1.70
|
|
1.60
|
Pension benefits increase
|
|
1.80
|
|
1.80
|
|
1.80
|
|
1.80
|
|
1.80
|
|
1.80
|
Rate of compensation increase
|
|
2.00
|
|
2.00
|
|
2.00
|
|
2.00
|
|
2.00
|
|
2.00
|
|
|
2018
|
|
2017
|
|
2016
|
Retiring at the end of the reporting period:
|
|
|
|
|
|
|
Male
|
|
20
|
|
20
|
|
20
|
Female
|
|
24
|
|
24
|
|
24
|
Retiring 20 years after the end of the reporting period:
|
|
|
|
|
|
|
Male
|
|
28
|
|
22
|
|
22
|
Female
|
|
31
|
|
26
|
|
26
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
|
$
|
|
2019
|
|
453
|
|
2020
|
|
458
|
|
2021
|
|
463
|
|
2022
|
|
468
|
|
2023
|
|
476
|
|
Thereafter
|
|
13,658
|
|
|
|
15,976
|
|
Assumption
|
Increase
|
Decrease
|
||
|
|
|
||
Change interest rate by 0.25%
|
(467
|
)
|
498
|
|
Change salary rate by 0.25%
|
19
|
|
(17
|
)
|
Change pension by 0.25%
|
372
|
|
(355
|
)
|
Change mortality by 1 year
|
464
|
|
(463
|
)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
|
Years ended December 31,
|
||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||
US dollar-denominated options
|
|
Number
|
|
Weighted average exercise price (US$)
|
|
Number
|
|
Weighted average exercise price (US$)
|
|
Number
|
|
Weighted average exercise price (US$)
|
||||||
Balance – Beginning of the year
|
|
712,415
|
|
|
4.66
|
|
|
966,539
|
|
|
7.23
|
|
|
272,874
|
|
|
25.88
|
|
Granted
|
|
426,000
|
|
|
1.74
|
|
|
390,000
|
|
|
2.05
|
|
|
713,573
|
|
|
3.47
|
|
Forfeited
|
|
(249,599
|
)
|
|
3.23
|
|
|
(643,271
|
)
|
|
6.02
|
|
|
(10,034
|
)
|
|
99.22
|
|
Cancelled
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,874
|
)
|
|
157.11
|
|
Expired
|
|
—
|
|
|
—
|
|
|
(853
|
)
|
|
704.88
|
|
|
—
|
|
|
—
|
|
Balance – End of period
|
|
888,816
|
|
|
3.66
|
|
|
712,415
|
|
|
4.66
|
|
|
966,539
|
|
|
7.23
|
|
|
|
Years ended December 31,
|
||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||
Canadian dollar-denominated stock options
|
|
Number
|
|
Weighted average exercise price (CAN$)
|
|
Number
|
|
Weighted average exercise price (CAN$)
|
|
Number
|
|
Weighted average exercise price (CAN$)
|
||||||
Balance – Beginning of the year
|
|
1,503
|
|
|
605.84
|
|
|
1,858
|
|
|
820.27
|
|
|
3,787
|
|
|
845.46
|
|
Forfeited
|
|
(104
|
)
|
|
668.65
|
|
|
—
|
|
|
—
|
|
|
(1,028
|
)
|
|
967.63
|
|
Cancelled
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(901
|
)
|
|
758
|
|
Expired
|
|
(530
|
)
|
|
367.70
|
|
|
(355
|
)
|
|
1,728.15
|
|
|
—
|
|
|
—
|
|
Balance – End of the year
|
|
869
|
|
|
743.56
|
|
|
1,503
|
|
|
605.84
|
|
|
1,858
|
|
|
820.27
|
|
|
|
Total US$ share-based awards as at December 31, 2018
|
|||||||
Exercise price
(US$) |
|
Number
|
|
Weighted average remaining
contractual life (years) |
|
Weighted average exercise price
(US$) |
|||
1.46 to 1.79
|
|
211,000
|
|
|
8.62
|
|
|
1.71
|
|
1.80 to 2.11
|
|
490,000
|
|
|
6.41
|
|
|
2.06
|
|
2.12 to 3.50
|
|
157,148
|
|
|
4.75
|
|
|
3.46
|
|
3.51 to 4.58
|
|
26,000
|
|
|
3.97
|
|
|
4.58
|
|
4.59 to 1,044.00
|
|
4,668
|
|
|
2.77
|
|
|
260.87
|
|
|
|
888,816
|
|
|
6.55
|
|
|
3.66
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
|
Total exercisable US$ share-based awards as at December 31, 2018
|
|||||||
Exercise price
(US$) |
|
Number
|
|
Weighted average remaining
contractual life (years) |
|
Weighted average exercise price
(US$) |
|||
1.46 to 1.79
|
|
161,000
|
|
|
9.35
|
|
|
1.79
|
|
1.80 to 2.11
|
|
130,000
|
|
|
5.62
|
|
|
2.05
|
|
2.12 to 3.50
|
|
104,774
|
|
|
4.75
|
|
|
3.46
|
|
3.51 to 4.58
|
|
26,000
|
|
|
3.97
|
|
|
4.58
|
|
4.59 to 1,044.00
|
|
4,668
|
|
|
2.77
|
|
|
260.87
|
|
|
|
426,442
|
|
|
6.68
|
|
|
5.29
|
|
|
|
CAN$ options outstanding and exercisable as at December 31, 2018
|
|||||||
Exercise price
(CAN$) |
|
Number
|
|
Weighted average remaining
contractual life (years) |
|
Weighted average exercise price
(CAN$) |
|||
570.00 to 741.00
|
|
428
|
|
|
0.94
|
|
|
570.00
|
|
741.01 to 912.00
|
|
441
|
|
|
1.87
|
|
|
912.00
|
|
|
|
869
|
|
|
1.41
|
|
|
743.56
|
|
|
|
Years ended December 31,
|
||||
|
|
2018
|
|
|
2017
|
|
Expected dividend yield
|
(a)
|
0.00
|
%
|
|
0.00
|
%
|
Expected volatility
|
(b)
|
129.23
|
%
|
|
137.60
|
%
|
Risk-free annual interest rate
|
(c)
|
2.51
|
%
|
|
1.53
|
%
|
Expected life (years)
|
(d)
|
3.60
|
|
|
3.26
|
|
Weighted average share price
|
|
$1.74
|
|
|
$2.05
|
|
Weighted average exercise price
|
|
$1.74
|
|
|
$2.05
|
|
Weighted average grant date fair value
|
|
$1.39
|
|
|
$1.62
|
|
(a)
|
The Company has not paid dividends and it does not intend to pay dividends in the foreseeable future.
|
(b)
|
Based on the historical volatility of the Company's stock price over the most recent period consistent with the expected life of the stock options, as well as on future expectations.
|
(c)
|
Based on United States Treasury Government Bond interest rates with a term that is consistent with the expected life of the stock options.
|
(d)
|
Based upon historical data related to the exercise of stock options, on post-vesting employment terminations and on future expectations related to exercise behavior.
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
|
Years ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Key management personnel compensation
(1)
|
|
|
|
|
|
|
|||
Salaries and short-term employee benefits
|
|
2,388
|
|
|
2,081
|
|
|
2,430
|
|
Consultants fees
|
|
62
|
|
|
—
|
|
|
—
|
|
Termination benefits
|
|
356
|
|
|
—
|
|
|
—
|
|
Post-employment benefits
|
|
147
|
|
|
59
|
|
|
78
|
|
Share-based compensation costs
|
|
462
|
|
|
87
|
|
|
1,051
|
|
|
|
3,415
|
|
|
2,227
|
|
|
3,559
|
|
Other employees compensation:
|
|
|
|
|
|
|
|||
Salaries and short-term employee benefits
|
|
1,325
|
|
|
3,584
|
|
|
3,574
|
|
Termination benefits (note 16)
|
|
—
|
|
|
1,806
|
|
|
—
|
|
Post-employment benefits
|
|
275
|
|
|
441
|
|
|
500
|
|
Share-based compensation costs
|
|
108
|
|
|
95
|
|
|
31
|
|
|
|
1,708
|
|
|
5,926
|
|
|
4,105
|
|
Professional fees
|
|
6,421
|
|
|
7,153
|
|
|
7,157
|
|
Insurance
|
|
1,303
|
|
|
949
|
|
|
870
|
|
Third-party R&D
|
|
498
|
|
|
3,758
|
|
|
11,796
|
|
Contracted sales force
|
|
256
|
|
|
22
|
|
|
14
|
|
Travel
|
|
256
|
|
|
831
|
|
|
1,185
|
|
Marketing services
|
|
176
|
|
|
698
|
|
|
5
|
|
Laboratory supplies
|
|
139
|
|
|
2
|
|
|
30
|
|
Other goods and services
|
|
342
|
|
|
162
|
|
|
160
|
|
Leasing costs, net of sublease receipts of $121 in 2018, $359 in 2017 and $345 in 2016
(2)
|
|
344
|
|
|
2,247
|
|
|
1,131
|
|
Transaction costs related to share purchase warrants
|
|
—
|
|
|
—
|
|
|
56
|
|
Depreciation and amortization
|
|
60
|
|
|
138
|
|
|
195
|
|
Impairment (reversal) losses
|
|
—
|
|
|
(44
|
)
|
|
85
|
|
Operating foreign exchange (gains) losses
|
|
17
|
|
|
(72
|
)
|
|
39
|
|
|
|
9,812
|
|
|
15,844
|
|
|
22,723
|
|
|
|
14,935
|
|
|
23,997
|
|
|
30,387
|
|
(1)
|
Key management includes the Company's executive management team and directors.
|
(2)
|
Leasing costs also include changes in the onerous lease provision (note 16 - provisions for restructuring and other costs), other than attributable to the unwinding of the discount.
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
|
Years ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|||
Trade and other receivables
|
|
(95
|
)
|
|
158
|
|
|
228
|
|
Inventory
|
|
314
|
|
|
—
|
|
|
—
|
|
Prepaid expenses and other current assets
|
|
448
|
|
|
(343
|
)
|
|
(45
|
)
|
Other non-current assets
|
|
150
|
|
|
39
|
|
|
(233
|
)
|
Payables and accrued liabilities
|
|
(586
|
)
|
|
(1,080
|
)
|
|
(199
|
)
|
Taxes payable
|
|
1,669
|
|
|
—
|
|
|
—
|
|
Deferred revenues
|
|
400
|
|
|
—
|
|
|
555
|
|
Provision for restructuring and other costs (note 16)
|
|
(1,957
|
)
|
|
(435
|
)
|
|
(911
|
)
|
Employee future benefits (note 18)
|
|
(494
|
)
|
|
(551
|
)
|
|
(459
|
)
|
|
|
(151
|
)
|
|
(2,212
|
)
|
|
(1,064
|
)
|
|
|
Years ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Current tax (expense) recovery
|
|
—
|
|
|
—
|
|
|
—
|
|
Deferred tax:
|
|
|
|
|
|
|
|||
Origination and reversal of temporary differences
|
|
(4,003
|
)
|
|
6,395
|
|
|
9,199
|
|
Adjustments in respect of prior years
|
|
742
|
|
|
(149
|
)
|
|
36
|
|
Change in unrecognized tax assets
|
|
(2,191
|
)
|
|
(2,767
|
)
|
|
(9,235
|
)
|
Income tax (expense) recovery
|
|
(5,452
|
)
|
|
3,479
|
|
|
—
|
|
|
|
Years ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Combined Canadian federal and provincial statutory income tax rate
|
|
26.7
|
%
|
|
26.8
|
%
|
|
26.9
|
%
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
|
Years ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Income tax (expense) recovery based on combined statutory income tax rate
|
|
(2,574
|
)
|
|
5,434
|
|
|
6,714
|
|
Change in unrecognized tax assets
|
|
(1,963
|
)
|
|
(2,701
|
)
|
|
(9,235
|
)
|
Change in unrecognized tax assets related to OCI
|
|
(188
|
)
|
|
(228
|
)
|
|
436
|
|
Share issuance costs
|
|
(40
|
)
|
|
164
|
|
|
224
|
|
Permanent difference attributable to the use of local currency for tax reporting
|
|
792
|
|
|
(71
|
)
|
|
(30
|
)
|
Change in enacted rates used
|
|
(58
|
)
|
|
(358
|
)
|
|
(16
|
)
|
Permanent difference attributable to net change in fair value of warrant liability
|
|
70
|
|
|
595
|
|
|
1,194
|
|
Share-based compensation costs
|
|
(152
|
)
|
|
(49
|
)
|
|
(291
|
)
|
Difference in statutory income tax rate of foreign subsidiaries
|
|
(917
|
)
|
|
768
|
|
|
972
|
|
Adjustments in respect of prior years
|
|
(372
|
)
|
|
(149
|
)
|
|
36
|
|
Other
|
|
(50
|
)
|
|
74
|
|
|
(4
|
)
|
|
|
(5,452
|
)
|
|
3,479
|
|
|
—
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||
|
|
$
|
|
$
|
||
Deferred tax assets
|
|
|
|
|
||
Current:
|
|
|
|
|
||
Operating losses carried forward
|
|
—
|
|
|
3,479
|
|
Non-current:
|
|
|
|
|
||
Operating losses carried forward
|
|
764
|
|
|
696
|
|
Intangible assets
|
|
3,646
|
|
|
4,812
|
|
|
|
4,410
|
|
|
8,987
|
|
Deferred tax liabilities
|
|
|
|
|
||
Current:
|
|
|
|
|
||
Deferred revenues
|
|
38
|
|
|
—
|
|
Restricted cash
|
|
153
|
|
|
—
|
|
Payables and accrued liabilities
|
|
95
|
|
|
—
|
|
|
|
286
|
|
|
—
|
|
Non-current:
|
|
|
|
|
||
Property, plant and equipment
|
|
3
|
|
|
5
|
|
Deferred revenues
|
|
4,074
|
|
|
5,316
|
|
Other
|
|
47
|
|
|
187
|
|
|
|
4,124
|
|
|
5,508
|
|
|
|
4,410
|
|
|
5,508
|
|
Deferred tax assets (liabilities), net
|
|
—
|
|
|
3,479
|
|
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||
|
|
$
|
|
$
|
||
Deferred tax assets
|
|
|
|
|
||
Current:
|
|
|
|
|
||
Deferred revenues and other provisions
|
|
649
|
|
|
584
|
|
|
|
649
|
|
|
584
|
|
Non-current:
|
|
|
|
|
||
Deferred revenues
|
|
—
|
|
|
—
|
|
Operating losses carried forward
|
|
81,731
|
|
|
82,421
|
|
SR&ED Pool
|
|
9,148
|
|
|
9,167
|
|
Unused tax credits
|
|
5,894
|
|
|
8,019
|
|
Employee future benefits
|
|
2,048
|
|
|
2,296
|
|
Property, plant and equipment
|
|
448
|
|
|
407
|
|
Share issuance expenses
|
|
467
|
|
|
841
|
|
Other
|
|
241
|
|
|
335
|
|
|
|
99,977
|
|
|
103,486
|
|
Unrecognized deferred tax assets
|
|
100,626
|
|
|
104,070
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
December 31, 2018
|
Financial assets at amortized cost
|
|
Financial liabilities at FVTPL
|
|
Financial liabilities at amortized cost
|
|
Total
|
||||
|
$
|
|
$
|
|
$
|
|
$
|
||||
Cash and cash equivalents (note 7)
|
14,512
|
|
|
—
|
|
|
—
|
|
|
14,512
|
|
Trade and other receivables (note 8)
|
245
|
|
|
—
|
|
|
—
|
|
|
245
|
|
Restricted cash equivalents (note 11)
|
418
|
|
|
—
|
|
|
—
|
|
|
418
|
|
Payables and accrued liabilities (note 15)
|
—
|
|
|
—
|
|
|
(2,940
|
)
|
|
(2,940
|
)
|
Provision for restructuring and other costs (note 16)
|
—
|
|
|
—
|
|
|
(1,298
|
)
|
|
(1,298
|
)
|
Warrant liability (note 17)
|
—
|
|
|
(3,634
|
)
|
|
—
|
|
|
(3,634
|
)
|
|
15,175
|
|
|
(3,634
|
)
|
|
(4,238
|
)
|
|
7,303
|
|
December 31, 2017
|
|
Financial assets at amortized cost
|
|
Financial liabilities at FVTPL
|
|
Financial liabilities at amortized cost
|
|
Total
|
||||
|
|
$
|
|
$
|
|
$
|
|
$
|
||||
Cash and cash equivalents (note 7)
|
|
7,780
|
|
|
—
|
|
|
—
|
|
|
7,780
|
|
Trade and other receivables (note 8)
|
|
35
|
|
|
—
|
|
|
—
|
|
|
35
|
|
Restricted cash equivalents (note 11)
|
|
381
|
|
|
—
|
|
|
—
|
|
|
381
|
|
Payables and accrued liabilities (note 15)
|
|
—
|
|
|
—
|
|
|
(2,687
|
)
|
|
(2,687
|
)
|
Provision for restructuring and other costs (note 16)
|
|
—
|
|
|
—
|
|
|
(3,497
|
)
|
|
(3,497
|
)
|
Warrant liability (note 17)
|
|
—
|
|
|
(3,897
|
)
|
|
—
|
|
|
(3,897
|
)
|
|
|
8,196
|
|
|
(3,897
|
)
|
|
(6,184
|
)
|
|
(1,885
|
)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
|
Carrying
amount |
|
-30%
|
|
+30%
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Warrant liability
|
|
3,634
|
|
|
1,792
|
|
|
(1,504
|
)
|
Total impact on net income – (decrease) / increase
|
|
|
|
1,792
|
|
|
(1,504
|
)
|
|
|
Years ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Ireland
|
|
24,910
|
|
|
—
|
|
|
—
|
|
United States
|
|
1,416
|
|
|
452
|
|
|
410
|
|
China
|
|
275
|
|
|
262
|
|
|
249
|
|
Singapore
|
|
—
|
|
|
—
|
|
|
101
|
|
British Virgin Islands
|
|
280
|
|
|
206
|
|
|
100
|
|
Other
|
|
—
|
|
|
3
|
|
|
51
|
|
|
|
26,881
|
|
|
923
|
|
|
911
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||
|
|
$
|
|
$
|
||
Germany
|
|
8,599
|
|
|
12,552
|
|
United States
|
|
153
|
|
|
102
|
|
Canada
|
|
3
|
|
|
160
|
|
|
|
8,755
|
|
|
12,814
|
|
*
|
Non-current assets include property, plant and equipment, identifiable intangible assets and goodwill.
|
|
|
Years ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Net income (loss)
|
|
4,187
|
|
|
(16,796
|
)
|
|
(24,959
|
)
|
Basic weighted average number of shares outstanding
|
|
16,440,760
|
|
|
14,958,704
|
|
|
10,348,879
|
|
Diluted weighted average number of shares outstanding
|
|
17,034,812
|
|
|
14,958,704
|
|
|
10,348,879
|
|
Items excluded from the calculation of diluted net income (loss) per share because the exercise price was greater than the average market price of the common shares or due to their anti-dilutive effect
|
|
|
|
|
|
|
|||
Stock options
|
|
889,685
|
|
|
713,918
|
|
|
968,397
|
|
Share purchase warrants
|
|
3,391,844
|
|
|
3,417,840
|
|
|
3,779,245
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
|
|
Minimum lease payments
|
|
Minimum sublease receipts
|
|
Service and manufacturing
|
|
Total
|
||||
|
|
$
|
|
$
|
|
$
|
|
$
|
||||
Less than 1 year
|
|
408
|
|
|
(117
|
)
|
|
2,180
|
|
|
2,471
|
|
1 - 3 years
|
|
533
|
|
|
(24
|
)
|
|
—
|
|
|
509
|
|
4 - 5 years
|
|
60
|
|
|
—
|
|
|
—
|
|
|
60
|
|
More than 5 years
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
Total
|
|
1,006
|
|
|
(141
|
)
|
|
2,180
|
|
|
3,045
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, 2017 and 2016
|
(tabular amounts in thousands of US dollars, except share/option/warrant/DSU and per share/option/warrant/DSU data and as otherwise noted)
|
Item 19.
|
Exhibits
|
1.1
|
|
|
1.2
|
|
|
1.3
|
|
|
1.4
|
|
|
2.1
|
|
|
2.2
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
4.4
|
|
|
4.5
|
|
|
4.6
|
|
|
4.7
|
|
|
4.8
|
|
|
4.9
|
|
|
4.10
|
|
|
4.11
|
|
|
4.12
|
|
|
4.13
|
|
|
8.1
|
|
|
11.1
|
|
|
11.2
|
|
|
11.3
|
|
|
12.1
|
|
|
12.2
|
|
|
13.1
|
|
|
13.2
|
|
|
15.1
|
|
AETERNA ZENTARIS INC.
|
|
/s/ Michael V. Ward
|
|
Michael V. Ward
|
President and Chief Executive Officer
|
A.
|
The Board of Directors of the Corporation, in the exercise of its fiduciary duties to the Corporation, has determined that it is advisable to implement a shareholder rights plan to ensure, to the extent possible, that all shareholders of the Corporation are treated fairly in connection with any take-over offer or other acquisition of control of the Corporation;
|
B.
|
The Board of Directors of the Corporation approved a shareholder rights plan of the Corporation on March 29, 2016, which was approved, ratified and confirmed by the shareholders at the annual and special meeting of shareholders of the Corporation on May 10, 2016 (the “
Original Agreement
”).
|
C.
|
On March 26, 2019, the Board of Directors approved certain amendments to update and restate the Original Agreement in its entirety to be on the terms and conditions and in the form of this agreement to take effect immediately upon receipt of approval of the shareholders at the annual and special meeting of shareholders which was held on [May 8], 2019;
|
D.
|
The Board of Directors had previously:
|
(a)
|
authorized and declared a distribution of one right (a “
Right
”) in respect of each Share outstanding at the Record Time;
|
(b)
|
authorized the issuance of one Right in respect of each Share issued after the Record Time and prior to the earlier of the Separation Time and the Expiration Time; and
|
(c)
|
authorized the issuance of Rights Certificates to holders of Rights pursuant to the terms and subject to the conditions set forth herein.
|
A.
|
Each Right entitles the holder thereof, after the Separation Time, to purchase securities of the Corporation pursuant to the terms and subject to the conditions set forth herein.
|
B.
|
The Corporation desires to confirm the appointment of Computershare Trust Company of Canada as the Rights Agent to act on behalf of the Corporation, and the Rights Agent is willing to so act, in connection with the issuance, transfer, exchange and replacement of Rights Certificates, the exercise of Rights and other matters referred to herein.
|
Section 1.1
|
Certain Definitions
|
(a)
|
“
Acquiring Person
” shall mean any Person who is at any time after the Effective Date the Beneficial Owner of 20% or more of the outstanding Voting Shares; provided, however, that the term “Acquiring Person” shall not include:
|
(i)
|
the Corporation or any corporation controlled by the Corporation;
|
(ii)
|
any Person who becomes the Beneficial Owner of 20% or more of the outstanding Voting Shares as a result of one or any combination of:
|
(A)
|
a Voting Share Reduction;
|
(B)
|
a Permitted Bid Acquisition;
|
(C)
|
an Exempt Acquisition;
|
(D)
|
a Pro Rata Acquisition; or
|
(E)
|
a Convertible Security Acquisition;
|
(iii)
|
an underwriter or member of a banking or selling group acting in such capacity that becomes the Beneficial Owner of 20% or more of the Voting Shares in connection with a distribution of securities pursuant to a prospectus or by way of private placement; or
|
(iv)
|
a Person (a “
Grandfathered Person
”) who is the Beneficial Owner of 20% or more of the outstanding Voting Shares determined as of the Record Time, provided, however, that this exemption shall not be, and shall cease to be, applicable to a Grandfathered Person in the event that such Grandfathered Person shall, after the Record Time, (A) cease to own 20 percent or more of the outstanding Voting Shares, or (B) become the Beneficial Owner of additional Voting Shares that increases its Beneficial Ownership of Voting Shares by more than one percent of the number of Voting Shares outstanding as at the Record Time, other than through one or any combination of a Voting Share Reduction, a Permitted Bid Acquisition, an Exempt Acquisition, a Pro Rata Acquisition or a Convertible Security Acquisition; or
|
(v)
|
for a period of 10 calendar days after the Disqualification Date (as defined below), any Person who becomes the Beneficial Owner of 20% or more of the outstanding Voting Shares as a result of such Person becoming disqualified from relying on Section 1.1(e)(vi) solely because such Person is making or has announced a current intention to make a Take-over Bid, either alone or by acting jointly or in concert with any other Person. For the purposes of this definition, “
Disqualification Date
” means the first date of a public announcement of facts indicating that any Person is making, or has announced a current intention to make a Take-over Bid.
|
(b)
|
“
Affiliate
” shall mean, when used to indicate a relationship with a specified body corporate, a Person that directly or indirectly through one or more intermediaries controls, or is a body corporate controlled by, or under common control with, such specified body corporate.
|
(c)
|
“
Agreement
” means this agreement as may be amended, modified or supplemented from time to time.
|
(d)
|
“
Associate
” shall mean, when used to indicate a relationship with a specified Person, (i) a spouse of that Person, (ii) any Person of the same or opposite sex with whom that Person is living in a conjugal relationship outside marriage, (iii) any relative of that Person if that relative has the same residence as that Person or (iv) any relative of such spouse or other Person referred to in the immediately preceding clauses (i), (ii) or (iii) above, if that relative has the same residence as the specified Person.
|
(e)
|
A Person shall be deemed the “
Beneficial Owner
” of, and to have “
Beneficial Ownership
” of, and to “
Beneficially Own
”:
|
(i)
|
any securities of which such Person or any of such Person’s Affiliates or Associates is owner at law or in equity;
|
(ii)
|
any securities which the Person or any of such Person’s Affiliates or Associates has the right or obligation to acquire within 60 days (where such right is exercisable within a period of 60 days whether or not upon the occurrence of a contingency or the making of a payment) pursuant to any Convertible Security, agreement, arrangement, pledge or understanding, whether or not in writing (other than (A) customary agreements with and between underwriters and/or banking group and/or selling group members with respect to a distribution of securities (B) pledges of securities in the ordinary course of the pledgee’s business) or (C) agreements pursuant to an amalgamation, merger, arrangement, business combination or other similar transaction (statutory or otherwise, but for greater certainty not including a Take-over Bid) that are conditional upon the approval of the shareholders of the Corporation to be obtained prior to such Person acquiring such securities;
|
(iii)
|
any securities which are subject to a lock-up or similar agreement to tender or deposit them into any Take-over Bid made by such Person or made by any Affiliate or Associate of such Person or made by any other person acting jointly or in concert with such Person; and
|
(iv)
|
any securities that are Beneficially Owned within the meaning of clause (i), (ii) or (iii) of this Section 1.1(e) by any other Person with whom such Person is acting jointly or in concert;
|
(v)
|
such security has been agreed to be deposited or tendered pursuant to a Permitted Lock-up Agreement or is otherwise deposited or tendered pursuant to any Take-over Bid made by such Person, made by any of such Person’s Affiliates or Associates or made by any other Person acting jointly or in concert with such Person, but only until such time as such deposited or tendered security has been taken up or paid for, whichever shall occur first; or
|
(vi)
|
such
Person, for greater certainty holding such security in the ordinary course of such Person’s business, holds such security, provided that:
|
(A)
|
the ordinary business of that Person (a "
Fund Manager
") includes the management of pension or mutual or investment funds for others (which others, for greater certainty, may include or be limited to one or more employee benefit plans or pension plans) and such security is held by the Fund Manager in the ordinary course of such business in the performance of such Fund Manager’s duties for the account of any other Person (a "
Client
") including non-discretionary accounts held on behalf of a Client by a broker or dealer registered under applicable laws; or
|
(B)
|
such Person (the "
Trust Company
") is licensed to carry on the business of a trust company under applicable law and, as such, acts as trustee or administrator or in a similar capacity in relation to the estates of deceased or incompetent Persons (each, an "
Estate Account
") or in relation to other accounts (each, an "
Other Account
") and holds such security in the ordinary course of such duties for such Estate Accounts or for such Other Accounts; or
|
(C)
|
such Person (the "
Statutory Body
") is an independent Person established by statute for purposes that include, and the ordinary business or activity of such Person includes, the management of investment funds for employee benefit plans, pension plans, insurance plans of various public bodies and the Statutory Body holds such security for the purposes of its activities as such; or
|
(D)
|
such Person (the "
Plan Administrator
") is the administrator or the trustee of one or more pension funds or plans registered under the laws of Canada or any province thereof or the United States or any state thereof (each, a "
Plan
"), or is a Plan;
|
(E)
|
such Person (the “
Crown Agent
”) is acting as an agent of the Crown for purposes that include, and the ordinary business or activity of such Person includes, the management of public assets and such security is held by the Crown Agent in the ordinary course of the management of such public assets; or
|
(F)
|
such Person is a Plan and such security is held by the Plan in the ordinary course of such Plan’s activities;
|
(vii)
|
such Person is a Client of the same Fund Manager as another Person on whose account the Fund Manager holds such security, or because such Person is an Estate Account or an Other Account of the same Trust Company as another Person on whose account the Trust Company holds such security, or because such Person is a Plan with the same Plan Administrator as another Plan on whose account the Plan Administrator holds such security;
|
(viii)
|
such Person is a Client of a Fund Manager and such security is owned at law or in equity by the Fund Manager, or because such Person is an Estate Account or an Other Account of a Trust Company and such security is owned at law or in equity by the Trust Company, or because such Person is a Plan and such security is owned at law or in equity by the Plan Administrator; or
|
(ix)
|
such Person is the registered holder of securities as a result of carrying on the business of, or acting as, a nominee of a securities depository.
|
(f)
|
“
Board of Directors
” shall mean the board of directors of the Corporation or any duly constituted and empowered committee thereof.
|
(g)
|
“
Business Day
” shall mean any day, other than a Saturday or Sunday or a day on which banking institutions in Montreal, Quebec are authorized or obligated by law to close.
|
(h)
|
“
Canada Business Corporations Act
” shall mean the
Canada Business Corporations Act
(Canada), R.S.C. 1985, c. C-44, as amended and the regulations thereunder, as from time to time in effect.
|
(i)
|
“
Canadian Dollar Equivalent
” of any amount which is expressed in United States dollars shall mean on any date the Canadian dollar equivalent of such amount determined by reference to the U.S. - Canadian Exchange Rate in effect on such date.
|
(j)
|
“
Close of Business
” on any date means the time on such date (or, if such date is not a Business Day, the time on the next succeeding Business Day) at which the office of the transfer agent for the Shares in the City of Montreal, Quebec (or, after the Separation Time, the office of the Rights Agent in the City of Montreal, Quebec) is closed to the public; provided, however, that for the purposes of the definition of “Competing Permitted Bid” and the definition of “Permitted Bid”, “Close of Business” on any date means 11:59 p.m. (local time, at the place of deposit) on such date (or, if such date is not a Business Day, 11:59 p.m. (local time, at the place of deposit) on the next succeeding Business Day).
|
(k)
|
“
Competing Permitted Bid
” means a Take-over Bid that
is made by means of a Take-over Bid circular and which also complies with the following additional provisions
:
|
(i)
|
is made after a Permitted Bid or another Competing Permitted Bid (each such Permitted Bid or Competing Permitted Bid being in this definition, the “
Prior Bid
”) has been made and prior to the expiry, termination or withdrawal of that Prior Bid;
|
(ii)
|
satisfies all the components of the definition of a Permitted Bid provided that it is not required to satisfy the requirement set forth in Clause (ff)(ii)(A) thereof; and
|
(iii)
|
contains, and the take-up and payment for securities deposited or tendered thereunder are subject to, an irrevocable and unqualified condition that no Voting Shares and/or Convertible Securities shall be taken up or paid for pursuant to the Take-over Bid prior to the Close of Business on the last day of the minimum initial deposit period that such Take-over Bid must remain open for deposits of securities thereunder pursuant to NI 62-104 after the date of the Take-over Bid constituting the Competing Permitted Bid,
|
(l)
|
“
controlled
”: a Person is “controlled” by another Person or two or more Persons acting jointly or in concert if and only if:
|
(i)
|
in the case of a body corporate, securities entitled to vote in the election of directors of such body corporate carrying more than 50% of the votes for the election of the directors are held, directly or indirectly, by or for the benefit of the other Person or Persons and the votes carried by such securities are entitled, if exercised, to elect a majority of the board of directors of such body corporate; or
|
(ii)
|
in the case of a Person which is not a body corporate, more than 50% of the voting interests of such entity are held, directly or indirectly, by or for the benefit of the other Person or Persons;
|
(m)
|
“
Convertible Security
” means, at any time, any securities issued by the Corporation from time to time (other than the Rights) carrying any exercise, conversion or exchange right to which the holder thereof may acquire Voting Shares or other securities which are convertible into or exercisable or exchangeable for Voting Shares
(
whether such right is exercisable immediately or exercisable after a specified period and whether or not on condition or the happening of any contingency).
|
(n)
|
“
Convertible Security Acquisition
” means the acquisition of Voting Shares by a Person upon the purchase, exercise, conversion or exchange of Convertible Securities acquired or received by such Person pursuant to a Permitted Bid Acquisition, an Exempt Acquisition or a Pro Rata Acquisition.
|
(o)
|
“
Co-Rights Agents
” shall have the meaning ascribed thereto in Subsection 4.1a).
|
(p)
|
“
Disposition Date
” shall have the meaning ascribed thereto in Subsection 5.1b).
|
(q)
|
“
Effective Date
” shall mean 5:01 p.m. on March 29, 2016.
|
(r)
|
“
Election to Exercise
” shall have the meaning ascribed thereto in Subsection 2.2d).
|
(s)
|
“
Exempt Acquisition
” means a share acquisition (i) in respect of which the Board of Directors has waived the application of Section 3.1 pursuant to Subsection 5.1b), 5.1d) or 5.1e) or (ii) pursuant to an amalgamation, merger or other statutory procedure requiring shareholder approval.
|
(t)
|
“
Exercise Price
” shall mean, as of any date from and after the Separation Time, the price at which a holder of a Right may purchase the securities issuable upon exercise of one whole Right which, subject to adjustment in accordance with the terms hereof, shall be an aggregate dollar amount equal to the Market Price per Share (determined as at the Separation Time) multiplied by five (5).
|
(u)
|
“
Expiration Time
” shall mean the earlier of: (i) the Termination Time; and (ii) the Close of Business on the date on which a Reconfirmation Meeting occurs and at which this Agreement is not reconfirmed or presented for reconfirmation as contemplated in Section 5.20.
|
(v)
|
“
Fiduciary
” shall mean, when acting in that capacity, a trust company registered under the trust company legislation of Canada or any province thereof, a trust company organized under the laws of any state of the United States of America, a portfolio manager registered under the securities legislation of one or more provinces of Canada or an investment adviser registered under the United States Investment Advisers Act of 1940 or any other securities legislation of the United States of America or any state of the United States of America.
|
(w)
|
“
Flip-in Event
” shall mean a transaction or event in or pursuant to which any Person becomes an Acquiring Person.
|
(x)
|
“
holder
” shall have the meaning ascribed thereto in Section 2.8.
|
(y)
|
“
Independent Shareholders
” shall mean holders of outstanding Voting Shares, other than (i) any Acquiring Person or Offeror other than a Person who is deemed not to Beneficially Own such Voting Shares by reason of Section 1.1(e)(vi)
hereof; (ii) any Person acting jointly or in concert with any Acquiring Person or Offeror; (iii) any Associate or Affiliate of any Acquiring Person or Offeror; and (iv) any employee benefit plan, stock purchase plan, deferred profit sharing plan and any similar plan or trust for the benefit of employees of the Corporation or a corporation controlled by the Corporation, unless the beneficiaries of the plan or trust direct the manner in which the Voting Shares are to be voted or withheld from voting or direct whether the Voting Shares are to be deposited or tendered to a Take-over Bid.
|
(z)
|
"
Market Price
" per security of any securities on any date of determination shall mean the VWAP of such securities for the twenty (20) consecutive Trading Days through and including the Trading Day immediately preceding such date of determination, provided, however, that (i) if on any such date the securities are not traded on any exchange or in the over-the-counter market, the Market Price per share of such securities on such date shall mean the fair market value per security of the securities on such date as determined by a nationally or internationally recognized investment dealer or investment banker selected by the Board of Directors, and (ii) if the Market Price so determined is expressed in United States dollars, such amount shall be converted to the Canadian Dollar Equivalent.
|
(aa)
|
"
NI 62-104
" means National Instrument 62-104 –
Take-Over Bids and Issuer Bids
.
|
(bb)
|
“
Nominee
” shall have the meaning ascribed thereto in Subsection 2.2c).
|
(cc)
|
“
Offer to Acquire
” shall include:
|
(i)
|
an offer to purchase or a solicitation of an offer to sell Voting Shares, or a public announcement of an intention to make such an offer or solicitation; and
|
(ii)
|
an acceptance of an offer to sell Voting Shares, whether or not such offer to sell has been solicited;
|
(dd)
|
“
Offeror
” shall mean a Person who has announced a current intention to make, or who is making, a Take-over Bid.
|
(ee)
|
“
Offeror’s Securities
” shall mean the Voting Shares Beneficially Owned on the date of a Take-over Bid by an Offeror.
|
(ff)
|
“
Permitted Bid
” means a Take-over Bid that is made by means of a take-over bid circular and that also complies with the following additional provisions:
|
(i)
|
the Take-over Bid shall be made to all holders of Voting Shares of record (other than the Offeror); and
|
(ii)
|
the Take-over Bid contains, and the take-up and payment for securities tendered or deposited thereunder are subject to, an irrevocable and unqualified condition that no securities shall be taken up or paid for pursuant to the Take-over Bid:
|
(A)
|
prior to the close of business on the date which is not less than one hundred and five (105) days following the date of the Take-over Bid or such shorter minimum period as determined in accordance with section 2.28.2 or section 2.28.3 of NI 62-104 for which a Take-over Bid (that is not exempt from any of the requirements of division 5 (Bid Mechanics) of NI 62-104) must remain open for deposit of securities thereunder; and
|
(B)
|
unless, at the close of business on such date in (A), more than 50% of the then outstanding Voting Shares held by Independent Shareholders have been deposited or tendered pursuant to the Take-over Bid and have not been withdrawn;
|
(iii)
|
the Take-over Bid contains an irrevocable and unqualified provision that securities may be deposited pursuant to such Take-over Bid at any time during the period of time described in Section 1.1(ff)(ii)(A) above and during any extension of such Take-over Bid and any securities deposited pursuant to the Take-over Bid may be withdrawn until taken up and paid for; and
|
(iv)
|
the Take-over Bid contains an irrevocable and unqualified provision that if the requirement set forth in Section 1.1(ff)(ii)(B) is satisfied and such securities are taken up by the Offeror, the Offeror will make a public announcement of that fact and the Take-over Bid will remain open for deposits and tenders of Voting Shares for not less than 10 days from the date of such public announcement;
|
(gg)
|
“
Permitted Bid Acquisition
” means an acquisition of Voting Shares made pursuant to a Permitted Bid or a Competing Permitted Bid.
|
(hh)
|
“
Permitted
Lock-up Agreement
” means an agreement (the "
Lock-up Agreement
") between an Offeror or any Affiliate or Associate of an Offeror and one or more holders of Voting Shares (each such holder herein referred to as a “
Locked-up Person
”) who are not Affiliates or Associates of the Offeror and who are not, other than by virtue of entering into such agreement, acting jointly or in concert with the Offeror, the terms of which are publicly disclosed and a copy of which is made available to the public (including the Corporation) not later than the date of the Lock-up Bid (as hereinafter defined) or, if the Lock-up Bid has been made prior to the date of the Lock-up Agreement, not later than the Business Day following the date the Lock-up Agreement was entered into, pursuant to which each Locked-up Person agrees to deposit or tender the Voting Shares and/or Convertible Securities held by such holder to a Take-over Bid (the “
Lock-up Bid
”) made by the Offeror or any Affiliates or Associates of the Offeror or any other Person acting jointly or in concert with the Offeror provided that:
|
(i)
|
the Lock-up Agreement permits the Locked-up Person to withdraw its Voting Shares and/or Convertible Securities from the Lock-up Agreement and the Lock-up Bid in order to deposit or tender the Voting Shares and/or Convertible Securities to another Take-over Bid or to support another transaction prior to the Voting Shares and/or Convertible Securities being taken up and paid for under the Lock-up Bid:
|
(A)
|
at a price or value per Voting Share or Convertible Security that exceeds the price or value per Voting Share or Convertible Security offered under the Lock-up Bid; or
|
(B)
|
for a number of Voting Shares or Convertible Securities that exceeds by as much as or more than a number specified in the Lock-up Agreement (the “
Specified Number
”) the number of Voting Shares or Convertible Securities that the Offeror has offered to purchase under the Lock-up Bid at a price or value per Voting Share or Convertible Security that is not less than the price or value per Voting Share or Convertible Security offered under the Lock-up Bid, provided that the Specified Number is not greater than 7% of the number of Voting Shares or Convertible Securities offered to be purchased under the Lock-up Bid; or
|
(C)
|
at such price or value that exceeds by as much as or more than an amount specified in the Lock-up Agreement (the “
Specified Amount
”) the offering price for each Voting Share or Convertible Security contained in or proposed to be contained in the Lock-up Bid, provided that the Specified Amount is not greater than 7% of the offering price contained in or proposed to be contained in the Lock-up Bid;
|
(ii)
|
no “break-up” fees, “topping” fees, penalties, expenses or other amounts that exceed in aggregate the greater of:
|
(A)
|
2½% of the price or value of the aggregate consideration payable under the Lock-up Bid to a Locked-up Person; and
|
(B)
|
50% of the amount by which the price or value of the consideration received by a Locked-up Person under another Take-over Bid or transaction exceeds the price or value of the consideration that the Locked-up Person would have received under the Lock-up Bid;
|
(ii)
|
“
Person
”
shall include any individual, firm, limited partnership, limited liability company or partnership, association, trust, trustee, executor, administrator, legal or personal representative, government, governmental body, entity or authority, group, body corporate, or other incorporated or unincorporated organization or association, syndicate, joint venture or any other entity, whether or not having legal personality, and any of the foregoing in any derivative, representative or fiduciary capacity and pronouns have a similar extended meaning.
|
(jj)
|
“
Privacy Laws
” shall have the meaning ascribed thereto in Section 4.6.
|
(kk)
|
“
Pro Rata Acquisition
” means an acquisition by a Person of Voting Shares pursuant to (i) any dividend reinvestment plan, share purchase plan or other plan of the Corporation made available to all holders of Voting Shares (other than holders resident in any jurisdiction where participation in such plan is restricted or impractical as a result of applicable law); (ii) a stock dividend, a stock split or other event pursuant to which such Person becomes the Beneficial Owner of Voting Shares on the same pro rata basis as all other holders of Voting Shares of the same class or series; (iii) the acquisition or exercise of rights to purchase Voting Shares distributed to all holders of Voting Shares (other than holders resident in any jurisdiction where such distribution or exercise is restricted or impractical as a result of applicable law) by the Corporation pursuant to a rights offering (but only if such rights are acquired directly from the Corporation); or (iv) a distribution of Voting Shares or Convertible Securities in respect thereof offered pursuant to a prospectus or by way of a private placement by the Corporation or a conversion or exchange of any such Convertible Security, provided that, in the cases of (iii) and (iv) above, such Person does not thereby acquire a greater percentage of Voting Shares or Convertible Securities so offered than the Person’s percentage of Voting Shares Beneficially Owned immediately prior to such acquisition.
|
(ll)
|
“
Reconfirmation Meeting
” shall have the meaning ascribed thereto in Section 5.20.
|
(mm)
|
“
Record Time
” means 5:01 p.m. on March 29, 2016, being the Effective Date.
|
(nn)
|
“
Redemption Price
” shall have the meaning attributed thereto in Subsection 5.1a).
|
(oo)
|
“
Regular Cash Dividend
” means cash dividends paid on the Shares in any fiscal year of the Corporation to the extent that such cash dividends do not exceed in the aggregate in any fiscal year the greatest of:
|
(i)
|
100% of the aggregate consolidated net income of the Corporation, before extraordinary items, for its immediately preceding fiscal year; and
|
(ii)
|
200% of the aggregate amount of cash dividends declared payable by the Corporation on its Shares in its immediately preceding fiscal year; and
|
(iii)
|
300% of the arithmetic mean of the aggregate amounts of cash dividends declared payable by the Corporation on its Shares in its three immediately preceding fiscal years
.
|
(pp)
|
“
Right
” shall mean the rights described herein to purchase securities pursuant to the terms and subject to the conditions set forth herein.
|
(qq)
|
“
Rights Certificate
” shall mean the certificates representing the Rights after the Separation Time which shall be substantially in the form attached hereto as Exhibit A.
|
(rr)
|
“
Rights Register
” and “
Rights Registrar
” shall have the respective meanings ascribed thereto in Subsection 2.6a).
|
(ss)
|
“
Securities Act
” shall mean the
Securities Act
, R.S.Q., c. V-1.1, as amended and the regulations, rules and policy statements made thereunder, as from time to time in effect.
|
(tt)
|
“
Separation Time
” means the Close of Business on the eighth Trading Day after the earlier of:
|
(i)
|
the Stock Acquisition Date; and
|
(ii)
|
the date of the commencement of, or first public announcement or disclosure of the intent of any Person (other than the Corporation or any corporation controlled by the Corporation) to commence, a Take-over Bid (other than a Permitted Bid, so long as such Take-over Bid continues to satisfy the requirements of a Permitted Bid);
|
(uu)
|
“
Shares
” means the common shares in the share capital of the Corporation, as such shares may be subdivided, consolidated, reclassified or otherwise changed from time to time.
|
(vv)
|
“
Stock Acquisition Date
” shall mean the first date of public announcement or disclosure by the Corporation or an Acquiring Person of facts indicating that a Person has become an Acquiring Person (which, for the purposes of this definition, shall include, without limitation, an early warning report filed pursuant to National Instrument 62-103 – The Early Warning System and Related Take-over Bid and Insider Reporting Issues (adopted in Québec as Regulation 62-103 respecting the Early Warning System and Related Take-Over Bid and Insider Reporting Issues) or Section 13(d) of the
U.S. Exchange Act
disclosing such information).
|
(ww)
|
“
Take-over Bid
” means an Offer to Acquire Voting Shares of any class, or Convertible Securities with respect thereto, where the Voting Shares subject to the Offer to Acquire, together with the Voting Shares into or for which the securities subject to the Offer to Acquire are convertible or exchangeable and the Offeror’s Securities constitute in the aggregate 20% or more of the outstanding Voting Shares at the date of the Offer to Acquire.
|
(xx)
|
“
Termination Time
” means the time at which the right to exercise Rights shall terminate pursuant to Section 5.1 hereof.
|
(yy)
|
“
Trading Day
” when used with respect to any securities, means the day on which the principal Canadian or United States securities exchange (as determined by the Board of Directors acting in good faith) on which such securities are listed or admitted to trading is open for the transaction of business or, if the securities are not listed or admitted to trading on any Canadian or United States securities exchange, a Business Day.
|
(zz)
|
“
TSX
” means the Toronto Stock Exchange.
|
([[)
|
“
U.S. - Canadian Exchange Rate
” on any date shall mean:
|
(i)
|
if on such date the Bank of Canada sets an average noon spot rate of exchange for the conversion of one United States dollar into Canadian dollars, such rate; and
|
(ii)
|
in any other case, the rate for such date for the conversion of one United States dollar into Canadian dollars which is calculated in the manner which shall be determined by the Board of Directors from time to time acting in good faith.
|
(aaa)
|
“
U.S. Exchange Act
” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder as from time to time in effect.
|
(bbb)
|
“
Voting Share Reduction
” means an acquisition or redemption by the Corporation or any corporation controlled by the Corporation of Voting Shares which, by reducing the number of Voting Shares outstanding, increases the percentage of Voting Shares Beneficially Owned by any Person to 20% or more of the Voting Shares then outstanding.
|
(ccc)
|
“
Voting Shares
” means the Shares and any other securities the holders of which are entitled to vote generally on the election of directors of the Corporation, and “voting shares”, when used with reference to any Person other than the Corporation, means common shares of such other Person and any other securities the holders of which are entitled to vote generally on the election of the directors of such other Person.
|
(ddd)
|
“
VWAP
” means, with respect to any class of securities, the volume weighted average trading price of the securities, calculated by dividing the aggregate sale price by the total volume of the securities traded on the TSX for the relevant period, as adjusted, as the case may be, by the TSX (provided that, if at the date of determination such securities are listed or admitted to trading on more than one stock exchange or national securities quotation system (including, for greater certainty, each of the Nasdaq Global Select Market, the Nasdaq Global Market and the Nasdaq Capital Market), such volume shall be determined based on the stock exchange or quotation system on which such securities are then listed or admitted to trading on which the largest number of such securities were traded during the most recently completed calendar year or, if a calendar year has not been completed prior to the date of determination, during such shorter period as the Board of Directors acting in good faith determines to be appropriate, and provided in each case that the TSX shall have approved and accepted the use of the prices of the securities in question on such other stock exchange or national securities quotation system for purposes of such determination) or, if for any reason any of the sale prices used in determining the VWAP is not available on such date or the securities are not listed or admitted to trading on a stock exchange or a national securities quotation system on such date, the last sale price, or in case no sale takes place on such date, the average of the high bid and low asked prices for each of such securities in the over-the-counter market; provided, however, that if an event of a type analogous to any of the events described in Section 2.3 hereof shall have caused any of the sale prices used to determine the VWAP for any Trading Day not to be fully comparable with the sale prices on the Trading Day immediately preceding such date of determination, each such sale price so used shall be appropriately adjusted in a manner analogous to the applicable adjustment provided for in Section 2.3 hereof (as determined by the Board of Directors acting in good faith) in order to make it fully comparable with the sale price on the Trading Day immediately preceding such date of determination.
|
Section 1.2
|
Currency
|
Section 1.3
|
Number and Gender
|
Section 1.4
|
Sections and Headings
|
Section 1.5
|
Statutory References
|
Section 1.6
|
Determination of Percentage Ownership
|
Section 1.7
|
Acting Jointly or in Concert
|
Section 2.1
|
Legend on Share Certificates
|
(a)
|
Certificates representing the Shares, including without limitation Shares issued upon the conversion of Convertible Securities, issued after the Record Time but prior to the Close of Business on the earlier of the Separation Time and the Expiration Time shall also evidence one Right for each Share represented thereby and shall have impressed on, printed on, written on or otherwise affixed to them the following legend:
|
(b)
|
Certificates representing Shares that have been issued prior to, and remain outstanding at, the Record Time, shall evidence one Right for each Share evidenced thereby until the earlier of the Separation Time and the Expiration Time notwithstanding the absence of the legend required by Subsection 2.1a).
|
Section 2.2
|
Initial Exercise Price; Exercise of Rights; Detachment of Rights
|
(a)
|
Right to entitle holder to purchase one Share prior to adjustment.
Subject to adjustment as herein set forth, including without limitation as set forth in Article 3, each Right will entitle the holder thereof, from and after the Separation Time and prior to the Expiration Time, to purchase one Share for the Exercise Price (which Exercise Price and number of Shares are subject to adjustment as set forth below). Notwithstanding any other provision of this Agreement, any Rights held by the Corporation or any of its subsidiaries shall be void.
|
(b)
|
Rights not exercisable until Separation Time.
Until the Separation Time, (i) the Rights shall not be exercisable and no Right may be exercised and (ii) for administrative purposes, each Right will be evidenced by the certificate for the associated Shares registered in the name of the holder thereof (which certificate shall be deemed to represent a Rights Certificate) and will be transferable only together with, and will be transferred by a transfer of, such associated Shares.
|
(c)
|
Delivery of Rights Certificate and disclosure statement
.
From and after the Separation Time and prior to the Expiration Time, the Rights may be exercised, and the registration and transfer of the Rights shall be separate from and independent of Shares. Promptly following the Separation Time, the Corporation will prepare or cause to be prepared and the Rights Agent will mail to each holder of record of Shares as of the Separation Time and, in respect of each Convertible Security converted into Shares after the Separation Time and prior to the Expiration Time, promptly after such conversion, the Corporation will prepare or cause to be prepared and the Rights Agent will mail to the holder so converting (other than in each case an Acquiring Person or any other Person whose Rights are or become void pursuant to the provisions of Section 3.1(b) hereof and, in respect of any Rights Beneficially Owned by such Acquiring Person or other Person whose Rights are or become void pursuant to the provisions of Section 3.1(b) hereof, which are not held of record by such Acquiring Person or other Person, the holder of record of such rights (a “
Nominee
”)) at such holder’s address as shown by the records of the Corporation (the Corporation hereby agreeing to furnish copies of such record to the Rights Agent for this purpose):
|
(i)
|
a Rights Certificate in substantially the form of Exhibit A hereto appropriately completed, representing the number of Rights held by such holder at the Separation Time and having such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Corporation may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law, rule or regulation or judicial or administrative order, or with any article, requirement or regulation of any stock exchange or quotation system on which the Rights may from time to time be listed or traded, or to conform to usage; and
|
(ii)
|
a disclosure statement prepared by the Corporation describing the Rights;
|
(d)
|
Exercise of Rights.
Rights may be exercised in whole or in part on any Business Day after the Separation Time and prior to the Expiration Time by submitting to the Rights Agent at its principal office in Montreal, Quebec, or any other office of the Rights Agent designated for that purpose from time to time by the Corporation:
|
(i)
|
the Rights Certificate evidencing such Rights;
|
(ii)
|
an election to exercise (an “
Election to Exercise
”) substantially in the form attached to the Rights Certificate duly completed and executed in a manner acceptable to the Rights Agent; and
|
(iii)
|
payment by certified cheque, banker’s draft or money order payable to the order of the Rights Agent, or by wire transfer to an account designated by the Rights Agent, of a sum equal to the Exercise Price multiplied by the number of Rights being exercised and a sum sufficient to cover any transfer tax or charge which may be payable in respect of any transfer involved in the transfer or delivery of Rights Certificates or the issuance or delivery of certificates for Shares in a name other than that of the holder of the Rights being exercised.
|
(e)
|
Duties of Rights Agent upon receipt of Election to Exercise.
Upon receipt of a Rights Certificate, which is accompanied by an appropriately completed and duly executed Election to Exercise (which does not or is not deemed to indicate that such Right is null and void as provided by Subsection 3.1b)) and payment as set forth in Subsection 2.2d), the Rights Agent (unless otherwise instructed by the Corporation) will thereupon promptly:
|
(i)
|
requisition from the transfer agent of the Shares certificates representing the number of Shares to be purchased (the Corporation hereby irrevocably authorizing its transfer agent to comply with all such requisitions);
|
(ii)
|
after receipt of such share certificates, deliver such certificates to, or to the order of, the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder;
|
(iii)
|
when appropriate, requisition from the Corporation the amount of cash, if any, to be paid in lieu of issuing fractional Shares;
|
(iv)
|
when appropriate, after receipt of such cash, deliver such cash to, or to the order of, the registered holder of the Rights Certificate; and
|
(v)
|
tender to the Corporation all payments received on exercise of the Rights.
|
(f)
|
Partial Exercise of Rights.
If the holder of any Rights shall exercise less than all of the Rights evidenced by such holder’s Rights Certificate, a new Rights Certificate evidencing the Rights remaining unexercised will be issued by the Rights Agent to such holder or to such holder’s duly authorized assigns.
|
(g)
|
Duties of the Corporation.
The Corporation covenants and agrees that it will:
|
(i)
|
take all such action as may be necessary and within its power to ensure that all Shares delivered upon the exercise of Rights shall, at the time of delivery of the certificates for such Shares (subject to payment of the Exercise Price), be duly and validly authorized, executed, issued and delivered as fully paid and non-assessable;
|
(ii)
|
take all such action as may reasonably be considered to be necessary and within its power to comply with any applicable requirements of the
Canada Business Corporations Act
, the
Securities Act
, the
U.S. Exchange Act
, the
United States Securities Act of 1933
, as amended, and applicable comparable legislation of each of the provinces and territories of Canada and states of the United States of America, or the rules and regulations thereunder or any other applicable law, rule or regulation, in connection with the issuance and delivery of the Rights, the Rights Certificates and the issuance of any Shares upon exercise of the Rights;
|
(iii)
|
use reasonable efforts to cause all Shares issued upon exercise of the Rights to be listed on the stock exchanges on which the Shares are listed at that time;
|
(iv)
|
cause to be reserved and kept available out of its authorized and unissued Shares, the number of Shares that, as provided in this Agreement, will from time to time be sufficient to permit the exercise in full of all outstanding Rights;
|
(v)
|
pay when due and payable, if applicable, any and all federal, provincial, state and municipal taxes (not in the nature of income, capital gains or withholding taxes) and charges which may be payable in respect of the original issuance or delivery of the Rights Certificates or certificates for Shares issued upon the exercise of Rights, provided that the Corporation shall not be required to pay any transfer tax or charge which may be payable in respect of any transfer of Rights or the issuance or delivery of certificates for Shares issued upon the exercise of Rights, in a name other than that of the holder of the Rights being transferred or exercised; and
|
(vi)
|
after the Separation Time, except as permitted by Section 5.1 or Section 5.4, not take (or permit any corporation it controls to take) any action if at the time such action is taken it is reasonably foreseeable that such action will diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights.
|
Section 2.3
|
Adjustments to Exercise Price; Number of Rights
|
(a)
|
The Exercise Price, the number and kind of securities subject to purchase upon exercise of each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 2.3 and in Article 3.
|
(b)
|
Adjustment to Exercise Price upon changes to share capital.
In the event that the Corporation shall at any time after the Record Time and prior to the Expiration Time:
|
(i)
|
declare or pay a dividend on the Shares payable in Voting Shares or Convertible Securities in respect thereof other than in the ordinary course of business or pursuant to any dividend reinvestment plan or program;
|
(ii)
|
subdivide or change the then outstanding Shares into a greater number of Shares;
|
(iii)
|
consolidate, combine or change the then outstanding Shares into a smaller number of Shares; or
|
(iv)
|
issue any Voting Shares (or Convertible Securities in respect thereof) in respect of, in lieu of, or in exchange for existing Shares, whether in a reclassification, amalgamation, statutory arrangement, consolidation or otherwise;
|
(A)
|
If the Exercise Price and number of Rights outstanding are to be adjusted:
|
i.
|
the Exercise Price in effect after such adjustment will be equal to the Exercise Price in effect immediately prior to such adjustment divided by the number of Shares (or other securities of the Corporation) that a holder of one Share immediately prior to such dividend, subdivision, change, consolidation or issuance would hold thereafter as a result thereof; and
|
ii.
|
each Right held prior to such adjustment will become that number of Rights equal to that number that is equal to the number of Shares (or other securities of the Corporation) that a holder of one Share immediately prior to such dividend, subdivision, change, consolidation or issuance would hold immediately thereafter as a result thereof, and the adjusted number of Rights will be deemed to be allocated among the Shares with respect to which the original Rights were associated (if they remain outstanding) and the securities of the Corporation issued in respect of such dividend, subdivision, change, consolidation or issuance, so that each such Share (or other security of the Corporation) will have exactly one Right associated with it.
|
(B)
|
If the securities purchasable upon exercise of Rights are to be adjusted, the securities purchasable upon exercise of each Right after such adjustment will be the securities that a holder of the securities purchasable upon exercise of one Right immediately prior to such dividend, subdivision, change, consolidation or issuance would hold thereafter as a result thereof.
|
(c)
|
Adjustments pursuant to Subsection 2.3b) shall be made successively, whenever an event referred to in Subsection 2.3b) occurs.
|
(d)
|
If an event occurs which would require an adjustment under both this Section 2.3 and Section 3.1 hereof, the adjustment provided for in this Section 2.3 shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 3.1 hereof.
|
(e)
|
If, after the Record Time and prior to the Expiration Time, the Corporation shall issue any shares of its capital other than Shares in a transaction of a type described in Section 2.3(b)(i) or Section 2.3(b)(iv), such shares shall be treated herein as nearly equivalent to Shares as may be practicable and appropriate under the circumstances, and the Corporation and the Rights Agent hereby agree to amend this Agreement in accordance with Section 5.4 in order to effect such treatment. In the event the Corporation shall at any time after the Record Time and prior to the Expiration Time issue any Shares otherwise than in a transaction referred to in Subsection 2.3b), each such Share so issued shall automatically have one new Right associated with it, which Right shall be evidenced by the certificate representing such Shares.
|
(f)
|
Adjustment to Exercise Price upon issue of rights, options and warrants.
In the event the Corporation shall, at any time after the Record Time and prior to the Expiration Time, fix a record date for the making of a distribution to all holders of Shares of Convertible Securities entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Shares (or other Convertible Securities in respect of Shares) at a price per Share (or, in the case of such other Convertible Security, having a conversion, exchange or exercise price per share (including the price required to be paid to purchase such other Convertible Security)) less than 90% of the Market Price per Share on such record date, the Exercise Price in effect after such record date will equal the Exercise Price in effect immediately prior to such record date multiplied by a fraction;
|
(i)
|
of which the numerator shall be the number of Shares outstanding on such record date plus the number of Shares which the aggregate offering price of the total number of Shares so to be offered (and/or the aggregate initial conversion, exchange or exercise price of the Convertible Securities so to be offered (including the price required to be paid to purchase such Convertible Securities)) would purchase at such Market Price per Share; and
|
(ii)
|
of which the denominator shall be the number of Shares outstanding on such record date plus the number of additional Shares to be offered for subscription or purchase (or into which the Convertible Securities so to be offered are initially convertible, exchangeable or exercisable).
|
(g)
|
Adjustment to Exercise Price upon Corporate Distributions.
In the event the Corporation shall, at any time after the Record Time and prior to the Expiration Time, fix a record date for the making of a distribution to all holders of Shares of (i) evidences of indebtedness or assets (other than a Regular Cash Dividend or a dividend paid in Shares, but including any dividend payable in securities other than Shares), (ii) Convertible Securities entitling them to subscribe for or purchase Voting Shares (or Convertible Securities in respect of Voting Shares), at a price per Voting Share (or, in the case of a Convertible Security in respect of Voting Shares, having a conversion, exchange or exercise price per share (including the price required to be paid to purchase such Convertible Security)) less than 90% of the Market Price per Share on such record date (excluding Convertible Securities referred to in Subsection 2.3f)) or (iii) other securities of the Corporation, the Exercise Price in effect after such record date shall be equal to the Exercise Price in effect immediately prior to such record date less the fair market value (as determined in good faith by the Board of Directors) of the portion of the assets, evidences of indebtedness, Convertible Securities or other securities so to be distributed applicable to each of the securities purchasable upon exercise of one Right. Such adjustment shall be made successively whenever such a record date is fixed.
|
(h)
|
Each adjustment made pursuant to Section 2.3 shall be made as of
|
(i)
|
the payment or effective date for the applicable dividend, subdivision, change, consolidation or issuance, in the case of an adjustment made pursuant to Subsection 2.3b) above; and
|
(ii)
|
the record date for the applicable dividend or distribution, in the case of an adjustment made pursuant to Subsections 2.3f) or 2.3g) above, subject to readjustment to reverse the same if such distribution shall not be made.
|
(i)
|
Corporation may provide for alternate means of adjustment.
In the event the Corporation shall, at any time after the Record Time and prior to the Expiration Time, issue any shares (other than Shares), or Convertible Securities to subscribe for or purchase any such shares, or Convertible Securities in respect of any such shares, in a transaction referred to in any of clauses 2.3b)i) to (iv), Subsection 2.3f) or Subsection 2.3g) above, if the Board of Directors acting in good faith determines that the adjustments contemplated by Subsections 2.3b), 2.3f) and 2.3g) above in connection with such transaction would not appropriately protect the interests of the holders of Rights, the Board of Directors may from time to time acting in good faith determine what other adjustments, if any, to the Exercise Price, number of Rights or securities purchasable upon exercise of Rights would be appropriate in the circumstances, if any, and such other adjustments (if any) shall be made upon the Board of Directors providing written certification thereof to the Rights Agent pursuant to Subsection 2.3q) and no adjustments contemplated by Subsections 2.3b), 2.3f) or 2.3g) shall be made notwithstanding the terms thereof. The Corporation and the Rights Agent shall amend this Agreement to provide for any such other adjustments contemplated by this Subsection 2.3i), subject to the prior approval of the TSX (if the Shares are then listed on the TSX), and of the shareholders of the Corporation or the holders of Rights obtained in accordance with Section 5.4.
|
(j)
|
De minimis threshold for adjustment to Exercise Price
.
Notwithstanding anything herein to the contrary, no adjustment of the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% in such Exercise Price; provided, however, that any adjustments which by reason of this Subsection 2.3j) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All adjustments to the Exercise Price made pursuant to this Section 2.3 shall be calculated to the nearest cent.
|
(k)
|
Rights to evidence right to purchase Shares at adjusted Exercise Price.
Each Right originally issued by the Corporation subsequent to any adjustment made to the Exercise Price hereunder shall evidence the right to purchase, at the adjusted Exercise Price, the number of Shares purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.
|
(l)
|
Adjustment to number of Shares purchasable upon adjustment to Exercise Price.
Unless the Corporation shall have exercised its election as provided in Subsection 2.3m) to adjust the number of Rights in lieu of any adjustment in the number of Shares purchasable upon the exercise of a Right, upon each adjustment of the Exercise Price as a result of the calculations made in Subsections 2.3f) and 2.3g), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of Shares obtained by:
|
(i)
|
multiplying (A) the number of Shares covered by a Right immediately prior to such adjustment, by (B) the Exercise Price in effect immediately prior to such adjustment; and
|
(ii)
|
dividing the product so obtained by the Exercise Price in effect immediately after such adjustment.
|
(m)
|
Election to adjust number of Rights upon adjustment to Exercise Price.
The Corporation may elect on or after the date of any adjustment of the Exercise Price to adjust the number of Rights, in lieu of any adjustment in the number of Shares purchasable upon the exercise of a Right. Each of the Rights outstanding after the adjustment in the number of Rights shall be exercisable for the number of Shares for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become the number of Rights obtained by dividing the relevant Exercise Price in effect immediately prior to adjustment of the relevant Exercise Price by the relevant Exercise Price in effect immediately after adjustment of the relevant Exercise Price. The Corporation shall make a public announcement of its election to adjust the number of Rights pursuant to this Subsection 2.3m), indicating the record date for the adjustment; and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the relevant Exercise Price is adjusted or any day thereafter, but, if the Rights Certificates have been issued, shall be at least 10 calendar days later than the date of the public announcement. If Rights Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Subsection 2.3m), the Corporation shall, as promptly as practicable, cause to be distributed to holders of record of Rights Certificates on such record date, Rights Certificates evidencing, subject to Section 5.5, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Corporation, shall cause to be distributed to such holders of record in substitution and replacement for the Rights Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Corporation, new Rights Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Rights Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein and may bear, at the option of the Corporation, the relevant adjusted Exercise Price and shall be registered in the names of holders of record of Rights Certificates on the record date specified in the public announcement.
|
(n)
|
Corporation may in certain cases defer issues of securities.
In any case in which this Section 2.3 shall require that an adjustment in an Exercise Price be made effective as of a record date for a specified event, the Corporation may elect to defer until the occurrence of such event the issuance to the holder of any Right exercised after such record date of the number of Shares and other securities of the Corporation, if any, issuable upon such exercise over and above the number of Shares and other securities of the Corporation, if any, issuable upon such exercise on the basis of the relevant Exercise Price in effect prior to such adjustment; provided, however, that the Corporation shall deliver to such holder an appropriate instrument evidencing such holder’s right to receive such additional Shares (fractional or otherwise) or other securities upon the occurrence of the event requiring such adjustment.
|
(o)
|
Corporation has discretion to reduce Exercise Price for tax reasons.
Notwithstanding anything in this Section 2.3 to the contrary, the Corporation shall be entitled to make such adjustments in the Exercise Price, in addition to those adjustments expressly required by this Section 2.3, as and to the extent that in its good faith judgment the Board of Directors shall determine to be advisable in order that any (i) subdivision or consolidation of the Shares, (ii) issuance wholly for cash of any Shares at less than the applicable Market Price, (iii) issuance wholly for cash of any Shares or securities that by their terms are exchangeable for or convertible into or give a right to acquire Shares, (iv) stock dividends, or (v) issuance of Convertible Securities referred to in this Section 2.3, hereafter made by the Corporation to holders of its Shares, shall not be taxable to such shareholders, subject to the prior approval of the TSX (if the Shares are then listed on the TSX).
|
(p)
|
Rights Certificates may contain Exercise Price before adjustment.
Irrespective of any adjustment or change in the securities purchasable upon exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to represent the securities so purchasable which were represented in the initial Rights Certificates issued hereunder.
|
(q)
|
Adjustment to Rights exercisable into shares other than Shares.
If, as a result of an adjustment made pursuant to Section 3.1, the holder of any Right thereafter exercised shall become entitled to receive any securities other than Shares, thereafter the number of such other securities so receivable upon exercise of any Right and the applicable Exercise Price thereof shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as may be practicable to the provisions with respect to the Shares contained in the foregoing Sections of this Section 2.3 and the provisions of this Agreement with respect to the Shares shall apply on like terms to any such other securities.
|
(r)
|
Notice in Respect of Adjustments.
Whenever an adjustment to the Exercise Price or a change in the securities purchasable upon the exercise of Rights is made pursuant to this Section 2.3, the Corporation shall:
|
(i)
|
promptly prepare a certificate setting forth such adjustment and a brief statement of the facts accounting for such adjustment; and
|
(ii)
|
promptly file with the Rights Agent and with each transfer agent for the Shares a copy of such certificate and mail a brief summary thereof to each holder of Rights who requests a copy.
|
Section 2.4
|
Date on Which Exercise is Effective
|
Section 2.5
|
Execution, Authentication, Delivery and Dating of Rights Certificates
|
(a)
|
The Rights Certificates shall be executed on behalf of the Corporation by any two officers of the Corporation. The signature of any of these officers on the Rights Certificates may be manual or facsimile. Rights Certificates bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Corporation shall bind the Corporation, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the countersignature and delivery of such Rights Certificates.
|
(b)
|
Promptly after the Corporation learns of the Separation Time, the Corporation will notify the Rights Agent of such Separation Time and will deliver Rights Certificates executed by the Corporation to the Rights Agent for countersignature and a statement describing the Rights, and the Rights Agent shall countersign manually (or by facsimile signature in a manner satisfactory to the Corporation) and deliver such Rights Certificates and statement to the holders of the Rights pursuant to Section 2.2 hereof. No Rights Certificate shall be valid for any purpose until countersigned by the Rights Agent as aforesaid.
|
(c)
|
Each Rights Certificate shall be dated the date of countersignature thereof.
|
Section 2.6
|
Registration, Transfer and Exchange
|
(a)
|
Following the Separation Time, the Corporation shall cause to be kept a register (the “
Rights Register
”) in which, subject to such reasonable regulations as it may prescribe, the Corporation will provide for the registration and transfer of Rights. The Rights Agent is hereby appointed “Rights Registrar” for the purpose of maintaining the Rights Register for the Corporation and registering Rights and transfers of Rights as herein provided and the Rights Agent hereby accepts such appointment. In the event that the Rights Agent shall cease to be the Rights Registrar, the Rights Agent will have the right to examine the Rights Register at all reasonable times.
|
(b)
|
After the Separation Time and prior to the Expiration Time, upon surrender for registration of transfer or exchange of any Rights Certificate, and subject to the provisions of Subsections 2.6d) and 3.1b) below, the Corporation will execute, and the Rights Agent will countersign, register and deliver, in the name of the holder or the designated transferee or transferees, as required pursuant to the holder’s instructions, one or more new Rights Certificates evidencing the same aggregate number of Rights as did the Rights Certificates so surrendered.
|
(c)
|
All Rights issued upon any registration of transfer or exchange of Rights Certificates shall be valid obligations of the Corporation, and such Rights shall be entitled to the same benefits under this Agreement as the Rights surrendered upon such registration of transfer or exchange.
|
(d)
|
Every Rights Certificate surrendered for registration of transfer or exchange shall be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Corporation or the Rights Agent, as the case may be, duly executed by the registered holder thereof or such holder’s attorney duly authorized in writing. As a condition to the issuance of any new Rights Certificate under this Section 2.6, the Corporation may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Rights Agent) in connection therewith.
|
(e)
|
The Corporation shall not be required to register the transfer or exchange of any Rights after the Rights have been terminated pursuant to the provisions of this Agreement.
|
Section 2.7
|
Mutilated, Lost, Stolen and Destroyed Rights Certificates
|
(a)
|
If any mutilated Rights Certificate is surrendered to the Rights Agent prior to the Expiration Time, the Corporation shall execute and the Rights Agent shall countersign and deliver in exchange therefor a new Rights Certificate evidencing the same number of Rights as did the Rights Certificate so surrendered.
|
(b)
|
If there shall be delivered to the Corporation and the Rights Agent prior to the Expiration Time: (i) evidence to their reasonable satisfaction of the ownership, destruction, loss or theft of any Rights Certificate; and (ii) such security or indemnity as may be reasonably required by them to save each of them and any of their agents harmless, then, in the absence of notice to the Corporation or the Rights Agent that such Rights Certificate has been acquired by a bona fide purchaser, the Corporation shall execute and, upon the Corporation’s request the Rights Agent shall countersign and deliver, in lieu of any such destroyed, lost or stolen Rights Certificate, a new Rights Certificate evidencing the same number of Rights as did the Rights Certificate so destroyed, lost or stolen.
|
(c)
|
As a condition to the issuance of any new Rights Certificate under this Section 2.7, the Corporation may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Rights Agent) connected therewith.
|
(d)
|
Every new Rights Certificate issued pursuant to this Section 2.7 in lieu of any destroyed, lost or stolen Rights Certificate shall evidence a contractual obligation of the Corporation, whether or not the destroyed, lost or stolen Rights Certificate shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Agreement equally and proportionately with any and all other Rights duly issued hereunder.
|
Section 2.8
|
Persons Deemed Owners
|
Section 2.9
|
Delivery and Cancellation of Certificates
|
Section 2.10
|
Agreement of Rights Holders
|
(a)
|
to be bound by and subject to the provisions of this Agreement, as amended or supplemented from time to time in accordance with the terms hereof, in respect of all Rights held;
|
(b)
|
that, prior to the Separation Time, each Right will be transferable only together with, and will be transferred by a transfer of, the associated share certificate representing such Right;
|
(c)
|
that, after the Separation Time, the Rights Certificate will be transferable only on the Rights Register as provided herein;
|
(d)
|
that prior to due presentment of a Rights Certificate (or, prior to the Separation Time, the associated share certificate representing the Shares) for registration of transfer, the Corporation, the Rights Agent and any agent of the Corporation or the Rights Agent may deem and treat the Person in whose name the Rights Certificate (or, prior to the Separation Time, the associated Shares certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on such Rights Certificate or the associated share certificate made by anyone other than the Corporation or the Rights Agent) for all purposes whatsoever, and neither the Corporation nor the Rights Agent shall be affected by any notice to the contrary;
|
(e)
|
that such holder of Rights has waived its right to receive any fractional Rights or any fractional Shares or other securities upon exercise of a Right;
|
(f)
|
that, subject to the provisions of Section 5.4, without the approval of any holder of Rights or Voting Shares and upon the sole authority of the Board of Directors acting in good faith, this Agreement may be supplemented or amended from time to time as provided herein; and
|
(g)
|
that notwithstanding anything in this Agreement to the contrary, neither the Corporation nor the Rights Agent shall have any liability to any holder of a Right or any other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation.
|
Section 3.1
|
Flip-in Event
|
(a)
|
Subject to Sections 3.1b) and 5.1, in the event that prior to the Expiration Time a Flip-in Event occurs, each Right shall thereafter constitute, effective at the close of business on the eighth Trading Day after the Stock Acquisition Date, the right to purchase from the Corporation, upon exercise thereof in accordance with the terms hereof, that number of Shares as have an aggregate Market Price on the date of consummation or occurrence of such Flip-in Event equal to twice the Exercise Price for an amount in cash equal to the Exercise Price (such Right to be appropriately adjusted in a manner analogous to the applicable adjustment provided for in Section 2.3 in the event that, after such date of consummation or occurrence, an event of a type analogous to any of the events described in Section 2.3 shall have occurred with respect to such Shares).
|
(b)
|
Notwithstanding anything in this Agreement to the contrary, upon the occurrence of any Flip-in Event, any Rights that are or were Beneficially Owned on or after the earlier of the Separation Time and the Stock Acquisition Date, or which may thereafter be Beneficially Owned, by:
|
(i)
|
an Acquiring Person (or any Affiliate or Associate of an Acquiring Person or any other Person acting jointly or in concert with an Acquiring Person or any Associate or Affiliate of such other Person); or
|
(ii)
|
a transferee of Rights, direct or indirect, from an Acquiring Person (or from any Affiliate or Associate of an Acquiring Person or any Person acting jointly or in concert with an Acquiring Person or any Associate or Affiliate thereof) where such a transferee becomes a transferee concurrently with or subsequent to the Acquiring Person becoming such in a transfer that the Board of Directors, acting in good faith, has determined is part of a plan, arrangement or scheme of an Acquiring Person (or of any Person acting jointly or in concert with an Acquiring Person or any Associate or Affiliate of an Acquiring Person), that has the purpose or effect of avoiding clause 3.1b)i);
|
(c)
|
Any Rights Certificate that represents Rights Beneficially Owned by a Person described in either of clauses 3.1b)i) or 3.1b)ii) or transferred to any Nominee of any such Person, and any Rights Certificate issued upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence, shall contain or will be deemed to contain the following legend:
|
(d)
|
After the Separation Time, the Corporation shall do all such acts and things necessary and within its power to ensure compliance with the provisions of this Section 3.1 including, without limitation, all such acts and things as may be required to satisfy the requirements of the Canada Business Corporations Act, the Securities Act and the securities laws or comparable legislation in each of the provinces of Canada and in any other jurisdiction where the Corporation is subject to such laws and the rules of the stock exchanges or quotation systems where the Shares are listed or quoted at such time in respect of the issue of Shares upon the exercise of Rights in accordance with this Agreement.
|
(e)
|
In the event that there shall not be sufficient Shares authorized for issuance to permit the exercise in full of the Rights in accordance with this Section 3.1, the Corporation shall take such actions as may be reasonably necessary to authorize additional Shares for issuance upon the exercise of the Rights.
|
Section 3.2
|
Fiduciary Duties of the Board of Directors of the Corporation
|
Section 4.1
|
General
|
(a)
|
The Corporation hereby appoints the Rights Agent to act as agent for the Corporation and the holders of the Rights in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Corporation may from time to time appoint such co-rights agents (“
Co-Rights Agents
”) as it may deem necessary or desirable subject to the prior written approval of the Rights Agent. In the event the Corporation appoints one or more Co-Rights Agents, the respective duties of the Rights Agent and Co-Rights Agents shall be as the Corporation may determine with the written approval of the Rights Agent. The Corporation agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and other disbursements reasonably incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder, including the reasonable fees and disbursements of counsel and other experts consulted by the Rights Agent pursuant to Subsection 4.3a). The Corporation also agrees to indemnify the Rights Agent, its officers, directors, employees and agents for, and to hold it harmless against any loss, liability, cost, claim, action, damage, suit or expense, incurred without negligence, bad faith or willful misconduct on the part of the Rights Agent for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement including its reasonable legal costs and expenses, which right to indemnification will survive the termination of this Agreement or the removal or resignation of the Rights Agent.
|
(b)
|
The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Agreement in reliance upon any certificate for Shares, Rights Certificate, certificate for other securities of the Corporation, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons.
|
(c)
|
The Corporation shall inform the Rights Agent in a reasonably timely manner of events which may materially affect the administration of this Agreement by the Rights Agent and, at any time upon request, shall provide to the Rights Agent an incumbency certificate certifying the then current officers of the Corporation.
|
Section 4.2
|
Merger, Amalgamation, Consolidation or Change of Name of Rights Agent
|
(a)
|
Any corporation into which the Rights Agent or any successor Rights Agent may be merged or amalgamated or with which it may be consolidated, or any corporation resulting from any merger, amalgamation or consolidation to which the Rights Agent or any successor Rights Agent is a party, or any corporation succeeding to the shareholder services business of the Rights Agent or any successor Rights Agent, will be the successor to the Rights Agent under this Agreement without the execution or filing of any document or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 4.4 hereof. In case at the time such successor Rights Agent succeeds to the agency created by this Agreement any of the Rights Certificates have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates have not been countersigned, any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Rights Certificates will have the full force provided in the Rights Certificates and in this Agreement.
|
(b)
|
In case at any time the name of the Rights Agent is changed and at such time any of the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name or in its changed name; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement.
|
Section 4.3
|
Duties of Rights Agent
|
(a)
|
The Rights Agent may retain and consult with legal counsel (who may be legal counsel for the Corporation) or such other experts that the Rights Agent considers necessary to carry out its duties under this Agreement and the opinion of such counsel or other expert will be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion; the Rights Agent may also, with the approval of the Corporation (such approval not to be unreasonably withheld), consult with such other experts (at the expense of the Corporation) as the Rights Agent shall consider necessary or appropriate to properly carry out the duties and obligations imposed under this Agreement and the Rights Agent shall be entitled to act and rely in good faith on the advice of any such expert.
|
(b)
|
Whenever in the performance of its duties under this Agreement the Rights Agent deems it necessary or desirable that any fact or matter be proved or established by the Corporation prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by a person believed by the Rights Agent to be a senior officer of the Corporation and delivered to the Rights Agent; and such certificate will be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate.
|
(c)
|
The Rights agent will be liable hereunder only for its own fault, negligence, gross negligence, bad faith or wilful misconduct.
|
(d)
|
The Rights Agent will not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the certificates for Shares, or the Rights Certificates (except its countersignature thereof) or be required to verify the same, and all such statements and recitals are and will be deemed to have been made by the Corporation only.
|
(e)
|
The Rights Agent will not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due authorization, execution and delivery hereof by the Rights Agent) or in respect of the validity or execution of any share certificate, or Rights Certificate (except its countersignature thereon) nor will it be responsible for any breach by the Corporation of any covenant or condition contained in this Agreement or in any Rights Certificate; nor will it be responsible for any change in the exercisability of the Rights (including the Rights becoming void pursuant to Subsection 3.1b) hereof or any adjustment required under the provisions of Section 2.3) hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights after receipt of the certificate contemplated by Section 2.3 describing any such adjustment or any written notice from the Corporation or any holder that a Person has become an Acquiring Person); nor will it by any act hereunder be deemed to make any representation or warranty as to the authorization of any Shares to be issued pursuant to this Agreement or any Rights or as to any Shares, when issued, being duly and validly authorized, issued and delivered as fully paid and non-assessable.
|
(f)
|
The Corporation agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.
|
(g)
|
The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any person designated in writing by the Corporation, and to apply to such individuals for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered by it in good faith in accordance with instructions of any such individual. It is understood that instructions to the Rights Agent shall, except where circumstances make it impractical or the Rights Agent otherwise agrees, be given in writing and, where not in writing, such instructions shall be confirmed in writing as soon as reasonably practicable after the giving of such instructions.
|
(h)
|
Subject to applicable law, the Rights Agent and any shareholder or director, officer or employee of the Rights Agent may buy, sell or deal in Shares, Rights or other securities of the Corporation or become pecuniarily interested in any transaction in which the Corporation may be interested, or contract with or lend money to the Corporation or otherwise act as fully and freely as though it were not the Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Corporation or for any other legal entity.
|
(i)
|
The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent will not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Corporation resulting from any such act, default, neglect or misconduct, provided reasonable care was exercised in the selection and continued employment of such attorneys and agents.
|
Section 4.4
|
Change of Rights Agent
|
Section 4.5
|
Compliance with Anti-Money Laundering Legislation
|
Section 4.6
|
Privacy Legislation
|
Section 4.7
|
Liability
|
Section 5.1
|
Redemption, Waiver and Termination
|
(a)
|
Subject to the prior consent of the holders of the Voting Shares or the Rights obtained as set forth herein, the Board of Directors acting in good faith may, at any time prior to a Flip-in Event as to which the application of Section 3.1 has not been waived pursuant to this Section 5.1, elect to redeem all but not less than all of the then outstanding Rights at a redemption price of $0.00001 per Right (appropriately adjusted in a manner analogous to the applicable adjustments provided for in Section 2.3 in the event that an event of the type analogous to any of the events described in Section 2.3 shall have occurred) (such redemption price being herein referred to as the “
Redemption Price
”).
|
(b)
|
The Board of Directors shall waive the application of Section 3.1 in respect of the occurrence of any Flip-in Event if the Board of Directors has determined, following the Stock Acquisition Date and prior to the Separation Time, that a Person became an Acquiring Person by inadvertence and without any intention to become, or knowledge that it would become, an Acquiring Person under this Agreement and, in the event that such a waiver is granted by the Board of Directors, such Stock Acquisition Date shall be deemed not to have occurred. Any such waiver pursuant to this Subsection 5.1b) may only be given on the condition that such Person, within 10 days after the foregoing determination by the Board of Directors or such later date as the Board of Directors may determine (the “
Disposition Date
”), has reduced its Beneficial Ownership of Voting Shares such that the Person is no longer an Acquiring Person. If the Person remains an Acquiring Person at the Close of Business on the Disposition Date, the Disposition Date shall be deemed to be the date of occurrence of a further Stock Acquisition Date and Section 3.1 shall apply thereto.
|
(c)
|
In the event that a Person acquires Voting Shares pursuant to a Permitted Bid or an Exempt Acquisition referred to in Subsection 5.1d), then the Board of Directors of the Corporation shall, immediately upon the consummation of such acquisition and without further formality, be deemed to have elected to redeem the Rights at the Redemption Price.
|
(d)
|
The Board of Directors acting in good faith may, prior to the occurrence of the relevant Flip-in Event, upon prior written notice delivered to the Rights Agent, determine to waive the application of Section 3.1 to a Flip-in Event that may occur by reason of a Take-over Bid made by means of a take-over bid circular to all holders of record of Voting Shares, provided that if the Board of Directors waives the application of Section 3.1 in respect of a Take-over Bid pursuant to this Subsection 5.1d), the Board of Directors shall also be deemed to have waived the application of Section 3.1 in respect of any other Take-over Bid made by means of a take-over bid circular to all holders of record of Voting Shares prior to the expiry of any Take-over Bid (as the same may be extended from time to time) in respect of which a waiver is, or is deemed to have been, granted under this Subsection 5.1d).
|
(e)
|
The Board of Directors acting in good faith may, with the prior consent of the holders of Voting Shares obtained as set forth herein, prior to the occurrence of the relevant Flip-in Event, upon prior written notice delivered to the Rights Agent, determine to waive the application of Section 3.1 to a Flip-in Event that may occur by reason of an acquisition of Voting Shares other than pursuant to a Take-over Bid made by means of a take-over bid circular to all holders of record of Voting Shares and other than in the circumstances set out in Subsection 5.1b). In the event that the Board of Directors proposes such a waiver, the Board of Directors shall extend the Separation Time to a time and date subsequent to and not more than 10 Business Days following the meeting of shareholders held to approve such waiver.
|
(f)
|
Where a Take-over Bid that is not a Permitted Bid is withdrawn or otherwise terminated after the Separation Time has occurred and prior to the occurrence of a Flip-in Event, the Board of Directors may elect to redeem all the outstanding Rights at the Redemption Price without the consent of the holders of the Voting Shares or the Rights and reissue Rights under this Agreement to holders of record of Voting Shares immediately following such redemption. Upon the Rights being redeemed and reissued pursuant to this Subsection 5.1f), all the provisions of this Agreement shall continue to apply as if the Separation Time had not occurred and Rights Certificates representing the number of Rights held by each holder of record of Shares at the Separation Time had not been mailed to each such holder, and for all purposes of this Agreement the Separation Time shall be deemed not to have occurred and the Corporation shall be deemed to have issued replacement Rights to the holders of its then outstanding Shares.
|
(g)
|
If the Board of Directors is deemed under Subsection 5.1c) to have elected or elects under Subsection 5.1a) to redeem the Rights, the right to exercise the Rights will thereupon, without further action and without notice, terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price.
|
(h)
|
Within 10 days after the Board of Directors is deemed under Subsection 5.1c) to have elected or elects under Subsection 5.1a) or (f) to redeem the Rights, the Corporation shall give notice of redemption to the holders of the then outstanding Rights by mailing such notice to each such holder at his last address as it appears upon the registry books of the Rights Agent or, prior to the Separation Time, on the registry books of the transfer agent for the Voting Shares. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price will be made.
|
(i)
|
If a redemption of Rights pursuant to Subsection 5.1a) or a waiver of a Flip-in Event pursuant to Subsection 5.1e) is proposed at any time prior to the Separation Time, such redemption or waiver shall be submitted for approval to the holders of Voting Shares. Such approval shall be deemed to have been given if the redemption or waiver is approved by the affirmative vote of a majority of the votes cast by Independent Shareholders represented in person or by proxy at a meeting of such holders duly held in accordance with applicable laws and the Corporation’s by-laws.
|
(j)
|
If a redemption of Rights pursuant to Subsection 5.1a) or a waiver of a Flip-in Event pursuant to Subsection 5.1e) is proposed at any time after the Separation Time, such redemption or waiver shall be submitted for approval to the holders of Rights. Such approval shall be deemed to have been given if the redemption or waiver is approved by holders of Rights as set forth in Subsection 5.4d).
|
Section 5.2
|
Expiration
|
Section 5.3
|
Issuance of New Rights Certificates
|
Section 5.4
|
Supplements and Amendments
|
(a)
|
Subject to Subsections 5.4b) and (c) and this Subsection 5.4a), the Corporation may from time to time amend, vary or delete any of the provisions of this Agreement and the Rights; provided, however, that no amendment, variation or deletion made on or after the date of the 2022 meeting of shareholders at which the resolution referred to in Section 5.20 is to be considered shall be made without the prior consent of the holders of the Rights, given as provided in Subsection 5.4b) below, except that amendments, variations or deletions made for any of the following purposes shall not require such prior approval but shall be subject to subsequent ratification in accordance with Subsection 5.4b):
|
(i)
|
in order to make such changes as are necessary in order to maintain the validity of this Agreement and the Rights as a result of any change in any applicable legislation, regulations or rules; or
|
(ii)
|
in order to make such changes as are necessary in order to cure any clerical or typographical error.
|
(b)
|
Any amendment, variation or deletion to or from this Agreement made by the Board of Directors pursuant to Subsection 5.4a) shall:
|
(i)
|
if made prior to the Separation Time, be submitted to the shareholders of the Corporation at the next meeting of shareholders and the shareholders may, by resolution passed by a majority of the votes cast by Independent Shareholders who vote in respect of such amendment, variation or deletion, confirm or reject such amendment or supplement; or
|
(ii)
|
if made after the Separation Time, be submitted to the holders of Rights at a meeting to be held on a date not later than the date of the next meeting of shareholders of the Corporation and the holders of Rights may, by resolution passed by a majority of the votes cast by the holders of Rights which have not or are not deemed to have become void pursuant to Subsection 3.1b) who vote in respect of such amendment, variation or deletion, confirm or reject such amendment or supplement.
|
(c)
|
For greater certainty and notwithstanding anything herein contained, (i) no amendment, variation or deletion to the provisions of Article 4 shall be made except with the concurrence of the Rights Agent thereto, and (ii) neither the exercise by the Board of Directors of any power or discretion conferred on it hereunder nor the making by the Board of Directors of any determination or the granting of any waiver it is permitted to make or give hereunder shall constitute an amendment, variation or deletion of the provisions of this Agreement or the Rights, for purposes of this Section 5.4 or otherwise.
|
(d)
|
The approval, confirmation or consent of the holders of Rights with respect to any matter arising hereunder shall be deemed to have been given if the action requiring such approval, confirmation or consent is authorized by the affirmative votes of the holders of Rights present or represented at and entitled to be voted at a meeting of the holders of Rights and representing a majority of the votes cast in respect thereof. For the purposes hereof, each outstanding Right (other than Rights which are void pursuant to the provisions hereof or which, prior to the Separation Time, are held otherwise than by Independent Shareholders) shall be entitled to one vote, and the procedures for the calling, holding and conduct of the meeting shall be those, as nearly as may be, which are provided in the Corporation’s by- laws and the Canada Business Corporations Act with respect to meetings of shareholders of the Corporation.
|
(e)
|
The Corporation shall be required to provide the Rights Agent with notice in writing of any such amendment, variation or deletion to this Agreement as referred to in this Section 5.4 within 5 days of effecting such amendment, variation or deletion.
|
(f)
|
Any supplement or amendment to this Agreement pursuant to Subsections 5.4b) through (e) shall be subject to the receipt of any requisite approval or consent from any governmental or regulatory authority having jurisdiction over the Corporation, including without limitation any requisite approval of stock exchanges on which the Shares are listed.
|
Section 5.5
|
Fractional Rights and Fractional Shares
|
(a)
|
The Corporation will not be required to issue fractions of Rights or to distribute Rights Certificates which evidence fractional Rights.
Any such fractional Right shall be null and void and the Corporation will not have any obligation or liability in respect thereof.
|
(b)
|
The Corporation shall not be required to issue fractional Shares upon exercise of the Rights or to distribute certificates that evidence fractional Shares. In lieu of issuing fractional Shares, the Corporation shall pay to the registered holder of Rights Certificates at the time such Rights are exercised as herein provided, an amount in cash equal to the same fraction of the Market Price of one Share at the date of such exercise. The Rights Agent shall have no obligation to make any payments in lieu of fractional Shares unless the Corporation shall have provided the Rights Agent with the necessary funds to pay in full all amounts payable in accordance with Subsection 2.2e)iii).
|
Section 5.6
|
Rights of Action
|
Section 5.7
|
Holder of Rights Not Deemed a Shareholder
|
Section 5.8
|
Notice of Proposed Actions
|
Section 5.9
|
Notices
|
(a)
|
if to the Corporation:
|
(b)
|
if to the Rights Agent:
|
(c)
|
if to the holder of any Rights, to the address of such holder as it appears on the registry books of the Rights Agent or, prior to the Separation Time, on the registry books of the Corporation for the Shares.
|
Section 5.10
|
Costs of Enforcement
|
Section 5.11
|
Regulatory Approvals
|
Section 5.12
|
Declaration as to Non-Canadian and Non-U.S. Holders
|
Section 5.13
|
Successors
|
Section 5.14
|
Benefits of this Agreement
|
Section 5.15
|
Determination and Actions by the Board of Directors
|
Section 5.16
|
Governing Law
|
Section 5.17
|
Language
|
Section 5.18
|
Counterparts
|
Section 5.19
|
Severability
|
Section 5.20
|
Reconfirmation
|
Section 5.21
|
Time of the Essence
|
|
|
AETERNA ZENTARIS INC.
|
|
By:
|
|
||
|
Name: Michael V. Ward
|
||
|
Title: President and Chief Executive Officer
|
|
|
COMPUTERSHARE TRUST COMPANY OF CANADA
|
|
By:
|
|
||
|
Name: Martine Gauthier
|
||
|
Title: Professional, Client Services
|
||
By:
|
|
||
|
Name: Steve Gilbert
|
||
|
Title: Professional, Client Services
|
|
|
AETERNA ZENTARIS INC.
|
|
By:
|
|
||
|
Authorized Signing Officer
|
||
By:
|
|
||
|
Authorized Signing Officer
|
|
|
COMPUTERSHARE TRUST COMPANY OF CANADA,
in the City of Montreal
|
|
By:
|
|
||
|
Authorized Signing Officer
|
Date:
|
|
|
|
|
|
|
Signature
|
|
|
|
(Signature must correspond to name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever)
|
|
Signature Guaranteed
|
|
|
|
|
|
|
Signature
|
||
|
|
||
|
(Please print name below signature)
|
Date:
|
|
|
|
|
|
|
Signature
|
|
|
|
(Signature must correspond to name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever)
|
|
Signature Guaranteed
|
|
|
|
|
|
|
Signature
|
||
|
|
||
|
(Please print name below signature
|
|
|
|
Signature
|
||
|
||
(Veuillez écrire le nom en lettres moulées sous la signature)
|
Date:
|
|
|
|
|
|
|
Signature
|
|
|
|
(La signature doit correspondre en tous points au nom apparaissant au recto du présent certificat de Droits, sans modification, ajout ni changement d’aucune sorte.)
|
|
(Signature avalisée)
|
|
|
|
|
Signature
|
||
|
||
(Veuillez écrire le nom en lettres moulées sous la signature)
|
1.
|
Services
: As a consultant you will perform such services as may be mutually agreed to between you and the Corporation (the “
Services
”) from time to time. We have agreed that you will perform the Services described in Schedule “A” hereto. The Corporation anticipates the provision of these Services will require not more than One Hundred Twenty (120) hours of work each month, with any additional hours to be agreed upon in advance between the parties. To assist in the provision of the Services, you will have the title of Senior Vice President, Chief Financial Officer.
|
2.
|
Standard of Care
.
You will provide the Services to the best of your ability and in a competent and professional manner. You represent and warrant that you have sufficient expertise and resources, and the ability, to provide the Services. You will act in good faith and in the best interests of the Corporation in carrying out the Services.
|
3.
|
Term
: The term of this Agreement will commence as of the Effective Date and unless sooner terminated as provided herein, will continue for an indefinite term (the “
Term
”).
|
4.
|
Conflict of Interest
: You represent that (a) there are, as of the date hereof, no conflicts of interest or fiduciary obligations, written or unwritten, which would affect your ability to provide the Services; and (b) during the Term of this Agreement, you will not enter into any agreement, or undertake any other course of action which may reasonably be expected to give rise to a conflict of interest on your part or materially impair your ability to provide the Services hereunder. The Corporation agrees the voluntary team positions held by you at the Effective Date do not give rise to a conflict of interest under this section 4.
|
5.
|
Direction & Control
:
You will be solely responsible for determining the means and methods of performing the Services at all times complying with the standards contained in Section 6 below. You will ensure that you devote adequate time and attention in order to provide the Services as required herein provided you are under no obligation to provide the Services for any particular number of hours a day, or for any particular number of days a week. It is understood and agreed between the parties that you are not limited in providing services to any other person during the term of this Agreement provided that the provision of such Services does not breach the provisions of this Agreement including Section 4 and do not compete with the business of the Corporation. Except as expressly set out herein to the contrary, you will provide all necessary tools, equipment and labour related to the provision of the Services.
|
6.
|
Service Standards
: You will perform the Services in accordance with (i) the overall standards and lawful policies and procedures established by the Corporation, including any code of ethics or business conduct adopted by the Corporation (including any future revisions of such policies, procedures or other codes of business conduct) and you acknowledge having been given copies of the Corporation’s Code of Conduct and Business Ethics in advance of executing this Agreement; and (ii) all applicable laws, rules and regulations, and all requirements of all applicable regulatory, self-regulatory and administrative bodies.
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7.
|
Reporting:
You will report on the Services to the President and Chief Executive Officer of the Corporation (“CEO”). You will also provide reporting as part of your Services as a member of the executive management team of the Corporation, including to the Corporation’s Audit Committee and Board, as required.
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8.
|
Location:
The Services will be principally performed at your home office in Toronto. You agree domestic and international travel will be required in the provision of the Services.
Time travelling will be paid up to eight (8) hours per round trip at an hourly rate of C$150.00.
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9.
|
Consulting Fees
: In consideration of the Services rendered hereunder, y
ou will be paid a consulting fee of C$150.00 per hour (the “
Base Fees
”), plus goods and services or harmonized sales tax eligible under the
Excise Tax Act
,
1985
(Canada) (“
HST
”), as required. The Base Fee will be paid monthly in arrears, payable within 30 days of submission of appropriate invoices reflecting the Services rendered in the previous month. You will not invoice the Corporation for more than the hours set out in section 1 (together with any time travelling) unless you have obtained prior approval from the CEO for such additional hours. All or part of the Base Fees may be paid through an affiliate of the Corporation.
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10.
|
Clawback Entitlement
: If the Corporation finds, after full consideration of the facts, that you engaged in fraud, theft, embezzlement or any other criminal act of a similar nature in the performance of the Services, you agree the Corporation is entitled to obtain reimbursement from you, to the full extent permitted by governing law and to the extent it determines (in its sole discretion) that it is in the Corporation’s best interest to do so.
This subsection 10 does not limit the Corporation’s right to take other appropriate actions with respect to you, including termination of this engagement and other remedial and recovery action.
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11.
|
Independent Status
: The parties agree that you are a self-employed independent contractor and that you are not an employee or agent of the Corporation and this Agreement will not create any partnership, joint venture, employer/employee, principal/agent, master/servant or any other relationship between the parties except that of independent contractor. Accordingly, the Corporation has no responsibility to make deductions for, or to pay, benefits, health, welfare and pension costs, withholdings for income taxes, employment insurance premiums, Workers’ Compensation premiums, Canada Pension Plan premiums, payroll taxes, disability insurance premiums or any other similar charges with respect to the payment for the Services.
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12.
|
Expenses:
The Corporation will reimburse you for reasonable entertainment, travel and other business expenses, incurred on behalf of or at the request of the Corporation, so long as they are in incurred accordance with the Corporation’s policies and rules for such reimbursements. As an independent contractor, you are solely responsible for any and all other expenses incurred in providing the Services and the Corporation is not responsible for reimbursing you for any other expenses.
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13.
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Confidentiality
: You acknowledge that you have received and will receive or conceive, in carrying on or in the course of providing Services to the Corporation, Confidential Information (defined below) pertaining to the activities, the technologies, the operations and the business, past, present and future, of the Corporation, which information is not in the public domain. You acknowledge that such Confidential Information belongs to the Corporation and that its disclosure or unauthorized use could be damaging or prejudicial to the Corporation and contrary to the Corporation’s best interests. Accordingly, you agree that you will maintain as confidential all information obtained under or in connection with this Agreement and will not use or disclose such information to any third party without prior consent of the Corporation. You agree to take no action that may cause any such information to lose its character as Confidential Information. This clause does not extend to information which was rightfully in your possession prior to the commencement of the negotiations that led to this Agreement, which was already in the public domain, or which becomes so at a future date through no fault by you.
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14.
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Ownership of Developments and Intellectual Property in Developments:
You acknowledge and agree that all rights, titles and interests in or to the Developments and all Intellectual Property (defined below) in and to the Developments shall be owned exclusively by the Corporation
as of their creation and you will make full and prompt disclosure to the Corporation of all information relating to any Developments unless specifically released from such obligation in writing by the Corporation’s Board of Directors. Copyrightable work included in Developments shall be deemed to "work made for hire" (as defined in the
Copyright Act
, 17 U.S.C.A. § 101 et seq., as amended). Without further compensation, you hereby irrevocably quit-claim and assign, and agree to assign to the Corporation, or any designee, your entire right, title and interest in and to the Developments and all Intellectual Property in and to the Developments. You understand that this assignment is intended to, and does, extend to Developments currently in existence, in development, as well as Developments which have yet to be created.
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a)
|
result or derive from the relationship created under this Agreement or from your knowledge or use of the Corporation’s confidential information;
|
b)
|
are conceived or made by you (individually or in collaboration with others) in the course of your engagement by the Corporation under this Agreement;
|
c)
|
result from or derive from the use or application of the resources of the Corporation; or
|
d)
|
relate to the business operations of actual or demonstrably anticipated research and development by the Corporation.
|
a)
|
rights to any patents, trademarks, service marks, trade names, domain names, copyright, database rights, designs, industrial designs, trade secrets, integrated circuit rights and topography rights; and
|
b)
|
all domestic and foreign registrations, applications, divisionals, continuations, continuations in-part, re-examinations and renewals thereof.
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15.
|
Further Assurances
. You shall, at the Corporation’s expense, perform all actions reasonably requested by the Corporation (whether during or after the Term) to establish and confirm title and ownership of Developments and all Intellectual Property in and to the Developments (including, without limitation, assignments, consents, powers of attorney and other instruments). You agree to execute on demand, whether during or after the Term, any applications, transfers, assignments or other documents as the Corporation may consider necessary for the purpose of either:
|
a)
|
obtaining maintaining, or vesting or assigning absolute title in any Developments and any Intellectual Property related thereto to the Corporation; or
|
b)
|
applying for, prosecuting, obtaining or protecting any patent, copyright, industrial design or trade-mark registration or any other similar right pertaining to any Intellectual Property in Developments in any country. You further agree to cooperate and assist the Corporation in every way possible in the application for or prosecution of rights pertaining to such Intellectual Property.
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16.
|
Remedies
: You recognize and expressly acknowledge that the Corporation would be subject to irreparable harm should any of the provisions of sections 13 and 14 be infringed, or should any of your obligations under this Agreement be breached by you, and that damages alone will be an inadequate remedy for any breach or violation thereof and that the Corporation, in addition to all other remedies, will be entitled as a matter of right to equitable relief, including temporary or permanent injunction to restrain such breach.
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17.
|
Ownership of Files and Other Property
: Any property of the Corporation, including any file, sketch, drawing, letter, report, memorandum or other document, any equipment, machinery, tool, instrument or other device, any diskette, recording tape, compact disc, software, electronic communication device or any other property, which comes into your control or possession during the Term in the performance or in the course of performing the Services for the Corporation, regardless of whether you participated in its preparation or design, how it may have come under your control or into your possession and whether it is an original or a copy, shall at all times remain the property of the Corporation and, forthwith upon any request by the Corporation and upon the termination of this Agreement (for any reason), shall promptly be returned to the Corporation or its designated representative. You may not keep a copy or give one to a third party without the prior expressly written permission of the Chairman of the Board.
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18.
|
Termination
: This Agreement and the relationship created under this Agreement may be terminated by you or the Corporation, as the case may be prior to the expiry of the Term, upon the occurrence of any of the following events:
|
a)
|
By the Corporation upon the material breach or default by you of any provision of this Agreement; or
|
b)
|
By the Corporation at any time by providing thirty (30) days written notice to you. During this working notice period you will assist with transitional duties as required by the Corporation;
or
|
c)
|
By you by providing at least thirty (30) days prior written notice and during such working notice period assisting with transitional duties as required by the Corporation. Any such notice shall not relieve either party of their mutual obligations to perform under this Agreement (it being understood the Corporation is under no obligation to utilize you to provide Services during this period); or
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d)
|
Immediately upon your death; or
|
e)
|
Upon the mutual agreement of the parties.
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19.
|
Privacy and Personal Information
: You acknowledge that as a result of your engagement, you may become aware of personal information (as such term is defined in the
Personal Information Electronic Documents Act
) which is collected, used or disclosed by the Corporation. You agree that you will not, without the prior written consent of the Corporation, disclose or make available any such personal information to any other person or entity except in accordance with the Corporation’s express instructions. You agree that any personal information provided to you by the Corporation will only be used by you for such purposes as are specified therein and for no other purpose. You agree to execute any such further agreements required to evidence your agreement in respect thereof.
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20.
|
Indemnity
:
You agree to indemnify the Corporation from and against any and all claims, costs, liabilities, damages, charges and expenses, arising out of or in connection with this Agreement or the Services, including any costs, losses or penalties incurred by the Corporation as a result of the Corporation’s failure to make any deductions, withholdings, remittances and contributions required by law, if any. If the Corporation should ever be required by any governmental authority at any time to pay on your behalf any assessments including, but not limited to, income taxes, employment insurance premiums, workers’ compensation premiums, Canada Pension Plan premiums, payroll taxes or any other similar charges, you will, forthwith upon notice, reimburse the Corporation for such payment, together with interest and any penalties applicable thereon. Your obligation under this paragraph will survive the termination or expiration of this Agreement.
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21.
|
Survival
: Notwithstanding the termination of this Agreement, each party shall remain bound by the provisions of this Agreement which by their terms impose obligations upon that party that extend beyond the termination of this Agreement.
|
22.
|
Binding Arbitration
: Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined exclusively by arbitration administered by the International Centre for Dispute Resolution Canada ("
ICDR Canada
") and carried out in Toronto, Ontario, Canada, before one arbitrator, with the cost of such arbitration to be split equally between the parties. The arbitration shall be conducted in accordance with ICDR Canada's Canadian Arbitration Rules, except as modified herein. The arbitrator may award any form of relief permitted under this Agreement and applicable law. The arbitrator shall have no jurisdiction to vary the express terms of this Agreement. The decision of the arbitrator shall be in writing, in English, and shall state the reasons for the award. The decision rendered by the arbitrator may be entered in any court of competent jurisdiction. The parties hereto waive, to the fullest extent permitted by law, any rights to appeal to, or to seek review of such award by, any court. The parties hereto further agree to obtain the arbitral tribunal's agreement to preserve the confidentiality of the arbitration.
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23.
|
Notices
: Any notice given hereunder shall be given in writing and sent by registered or certified mail or hand-delivered. If such notice is sent by registered or certified mail, it shall be deemed to have been received five (5) business days following the date of its mailing if the postal services are working normally. If such is not the case, the notice must be sent by electronic mail, hand-delivered or served by bailiff, at the discretion of the sender. In the case of sending by electronic mail, hand-delivery or service, the notice shall be deemed to have been received the same day. It is agreed that if the delivery date is a non-business day, the notice shall be deemed to have been received on the following business day.
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24.
|
General
:
|
a)
|
This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and the parties acknowledge and agree that its execution has not been induced by, nor do either of the parties rely upon or regard as material, any representations or writings whatsoever not incorporated and made a part of this Agreement. This Agreement supersedes any prior agreements understandings, negotiations and discussions, whether oral or written, between the parties with respect to the subject matter hereof.
|
b)
|
No amendment, change or modification of this Agreement will be valid unless in writing signed by the parties hereto.
|
c)
|
This Agreement will be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.
|
d)
|
If any provision of this Agreement will be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement will not be affected by such invalidity.
Moreover, if any provision of this Agreement is deemed to be overbroad or otherwise unenforceable as written, the parties agree that such provision should be modified and reformed, and then enforced, to the maximum extent permitted by applicable law.
|
e)
|
This Agreement is personal to you and may not be assigned.
|
25.
|
Acknowledgment:
By entering into this Agreement, you acknowledge and agree that you have read and understand your obligations under this Agreement, agree to all of the terms hereof and have been given the opportunity to seek independent legal advice in respect of the same. You understand and agree that you are an independent contractor and are not and will not be an employee of the Corporation. You agree that the Corporation will not be obligated to make any payments to you upon termination of this Agreement except in respect of Services rendered to the date of termination.
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26.
|
Counterparts:
This Agreement may be executed in counterparts, each of which when so executed and delivered shall be deemed to be an original and such counterparts will together constitute one and the same Agreement
|
1.
|
I have reviewed this annual report on Form 20-F of Aeterna Zentaris Inc.;
|
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 company as at, and for, the periods presented in this report;
|
4.
|
The company'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 company 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 company, 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 company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as at the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
|
5.
|
The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company'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 company'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 company's internal control over financial reporting.
|
1.
|
I have reviewed this annual report on Form 20-F of Aeterna Zentaris Inc.;
|
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 company as at, and for, the periods presented in this report;
|
4.
|
The company'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 company 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 company, 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 company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as at the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
|
5.
|
The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company'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 company'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 company's internal control over financial reporting.
|
(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 presents, in all material respects, the financial condition and results of operations of the Company.
|
(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 presents, in all material respects, the financial condition and results of operations of the Company.
|