Filed by e3 Filing, Computershare 1-800-973-3274 - BELLUS Health Inc. - Form 6-K


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Section 13a-16 or 15d-16 of the

Securities Exchange Act of 1934

For the month of April 2020

Commission File Number: 001-39034

BELLUS HEALTH INC.
(Name of registrant)

275 Armand-Frappier Blvd.
Laval, Québec
H7V 4A7
Canada

 (Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F [   ] Form 40-F [ X ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1). ____

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____





SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: April 8, 2020   BELLUS Health Inc..
     
  By: /s/ François Desjardins
  Name: François Desjardins
  Title: Vice President, Finance





Exhibit DESCRIPTION
   
99.1 Notice of the Meeting
99.2 Management Information Circular
99.3 Form of Proxy
99.4 Certificate of Abridgement




Exhibit 99.1

Exhibit 99.1

BELLUS HEALTH INC.

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

NOTICE is hereby given that the annual and special meeting (the “Meeting”) of the common shareholders of BELLUS Health Inc. (the “Company”) will be held at the offices of the Company, at 275 Armand Frappier Blvd., Laval, on May 14, 2020 at 2:30 p.m., Montréal time, for the following purposes:

  (i)     

to receive and consider the annual report of the directors to the shareholders and the financial statements of the Company for the financial year ended December 31, 2019, and the report of the auditors thereon;

  (ii)     

to elect each of the directors for the ensuing year;

  (iii)     

to appoint KPMG LLP, Chartered Accountants, as auditors of the Company and to authorize the Audit Committee to fix the auditors’ remuneration;

  (iv)     

to ratify and confirm the resolution approving the unallocated options under the Amended and Restated Stock Option Plan of the Company, the whole as more fully set forth in Schedule “A” hereto;

and

  (v)     

to transact such further and other business as may properly be brought before the Meeting or any adjournment thereof.

In light of the ongoing COVID-19 pandemic, Canadian securities administrators have announced relief allowing Canadian issuers to change the date, time and/or location of their annual meetings should the spread of the virus make it impossible or inadvisable to hold a scheduled in-person meeting. While the Company currently intends to proceed with its in-person Meeting with the appropriate distancing and other measures and in compliance with all applicable requirements, it is closely monitoring the evolving COVID-19 situation and reserves the right to change the format of the Meeting if it determines that doing so is necessary to protect the health and safety of its shareholders, employees, and community and comply with applicable requirements. In particular, the Company reserves the right to change the format of the Meeting to hybrid (in-person and virtual) or virtual-only. Should the determination to hold a virtual or hybrid Meeting be made, the Company will inform shareholders by way of a news release. The Company may notify shareholders of such change without sending additional proxy materials. All shareholders are urged to view a live webcast of the Meeting in lieu of attending, available on the Events and Presentations page under the Investors & News section of the Company’s website at: https://ir.bellushealth.com/events-presentations.

DATED at Montréal, Québec, Canada, March 18, 2020.

BY ORDER OF THE BOARD OF DIRECTORS

(signed) Sébastien Roy
Corporate Secretary

SHAREHOLDERS MAY EXERCISE THEIR VOTING RIGHTS BY ATTENDING THE MEETING OR BY COMPLETING A FORM OF PROXY. SHAREHOLDERS WHO ARE UNABLE TO BE PRESENT IN PERSON AT THE MEETING ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND MAIL IT TO THE COMPANY, C/O COMPUTERSHARE INVESTOR SERVICES INC., IN THE ENVELOPE PROVIDED FOR THAT PURPOSE. PLEASE REFER TO THE ACCOMPANYING MANAGEMENT INFORMATION CIRCULAR FOR ADDITIONAL PARTICULARS.



Exhibit 99.2

Exhibit 99.2

BELLUS HEALTH INC.

NOTICE AND MANAGEMENT INFORMATION CIRCULAR
FOR THE
ANNUAL AND SPECIAL MEETING OF COMMON SHAREHOLDERS
TO BE HELD ON MAY 14, 2020

March 18, 2020





BELLUS HEALTH INC.

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

NOTICE is hereby given that the annual and special meeting (the “Meeting”) of the common shareholders of BELLUS Health Inc. (the “Company”) will be held at the offices of the Company, at 275 Armand Frappier Blvd., Laval, on May 14, 2020 at 2:30 p.m., Montréal time, for the following purposes:

(i)     

to receive and consider the annual report of the directors to the shareholders and the financial statements of the Company for the financial year ended December 31, 2019, and the report of the auditors thereon;

 

 
(ii)     

to elect each of the directors for the ensuing year;

 

 
(iii)     

to appoint KPMG LLP, Chartered Accountants, as auditors of the Company and to authorize the Audit Committee to fix the auditors’ remuneration;

 

 
(iv)     

to ratify and confirm the resolution approving the unallocated options under the Amended and Restated Stock Option Plan of the Company, the whole as more fully set forth in Schedule “A” hereto;

 

 
 

and

 

 
(v)     

to transact such further and other business as may properly be brought before the Meeting or any adjournment thereof.

In light of the ongoing COVID-19 pandemic, Canadian securities administrators have announced relief allowing Canadian issuers to change the date, time and/or location of their annual meetings should the spread of the virus make it impossible or inadvisable to hold a scheduled in-person meeting. While the Company currently intends to proceed with its in-person Meeting with the appropriate distancing and other measures and in compliance with all applicable requirements, it is closely monitoring the evolving COVID-19 situation and reserves the right to change the format of the Meeting if it determines that doing so is necessary to protect the health and safety of its shareholders, employees, and community and comply with applicable requirements. In particular, the Company reserves the right to change the format of the Meeting to hybrid (in-person and virtual) or virtual-only. Should the determination to hold a virtual or hybrid Meeting be made, the Company will inform shareholders by way of a news release. The Company may notify shareholders of such change without sending additional proxy materials. All shareholders are urged to view a live webcast of the Meeting in lieu of attending, available on the Events and Presentations page under the Investors & News section of the Company’s website at: https://ir.bellushealth.com/events-presentations.

DATED at Montréal, Québec, Canada, March 18, 2020.

BY ORDER OF THE BOARD OF DIRECTORS

(signed) Sébastien Roy
Corporate Secretary

SHAREHOLDERS MAY EXERCISE THEIR VOTING RIGHTS BY ATTENDING THE MEETING OR BY COMPLETING A FORM OF PROXY. SHAREHOLDERS WHO ARE UNABLE TO BE PRESENT IN PERSON AT THE MEETING ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND MAIL IT TO THE COMPANY, C/O COMPUTERSHARE INVESTOR SERVICES INC., IN THE ENVELOPE PROVIDED FOR THAT PURPOSE. PLEASE REFER TO THE ACCOMPANYING MANAGEMENT INFORMATION CIRCULAR FOR ADDITIONAL PARTICULARS.





Table of Contents

PART 1. VOTING INFORMATION 4 

Solicitation of Proxies

Appointment and Revocation of Proxies

Registered Common Shareholders

Non-Registered Common Shareholders

Voting of Proxies

Voting Shares and Principal Holders thereof

PART 2. BUSINESS OF THE MEETING 6 

Presentation of Financial Statements and Auditor’s Report

Election of Directors

Auditors of the Company

Approval of Unallocated Options under the Stock Option Plan

PART 3. STATEMENT OF EXECUTIVE COMPENSATION 10 

Compensation of Directors and Executives

10 

Equity Compensation Plans

20 

Securities Authorized for Issuance under Equity Compensation Plans

24 

Indebtedness of Directors and Executive Officers

24 
PART 4. REPORT ON CORPORATE GOVERNANCE AND OTHER ITEMS 24 

Interest of Informed Persons in Material Transactions and Management Contracts

26 

2020 Shareholder Proposals

27 

Additional Information

27 

Approval by Directors

27 
Schedule “A” - RESOLUTION REGARDING THE UNALLOCATED STOCK OPTIONS UNDER THE PLAN A-1
Schedule “B” - CORPORATE GOVERNANCE PRACTICES B-1
Schedule “C” - BOARD OF DIRECTORS MANDATE C-1

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MANAGEMENT INFORMATION CIRCULAR

PART 1.
VOTING INFORMATION

This management information circular (the “Circular”) is furnished in connection with the solicitation by the management of BELLUS Health Inc. (the “Company”) of proxies to be voted at the annual and special meeting of common shareholders (the “Meeting”), to be held at the offices of the Company, at 275 Armand Frappier Blvd., Laval, on May 14, 2020 at 2:30 p.m., Montréal time, for the purposes set forth in the accompanying notice of the Meeting, and at any adjournment thereof. Except as otherwise stated, the information contained in this Circular is given as at March 18, 2020 and reflects the one-for-3.6 consolidation of the Company’s common shares (the “Common Shares”) effected on August 19, 2019. All dollar amounts and references to $ or to CDN$ are to the currency of Canada.

SOLICITATION OF PROXIES

The enclosed proxy is being solicited by the management of the Company and the expenses of solicitation of proxies will be borne by the Company. The solicitation will be made primarily by mail; however, officers and regular employees of the Company may also solicit proxies by telephone, telecopier, electronic mail or in person.

APPOINTMENT AND REVOCATION OF PROXIES

The persons named in the enclosed form of proxy are directors or officers of the Company. Each shareholder is entitled to appoint any other person to represent him or her at the Meeting, and at any adjournment thereof.

A shareholder desiring to appoint another person (who need not be a shareholder) to represent him or her at the Meeting, and at any adjournment thereof, may do so either by striking out the names of the management nominees set forth in the form of proxy and by inserting such person’s name therein or by completing another proper form of proxy and, in either case, sending the completed proxy in the enclosed reply envelope for delivery before the Meeting, or any adjournment thereof, or by depositing such proxy with the Chairman on the day of the Meeting, at the Meeting or any adjournment thereof.

A shareholder giving a proxy pursuant to this solicitation may revoke any such proxy by depositing an instrument in writing executed by the shareholder or by his or her attorney duly authorized in writing, or, if the shareholder is a corporation, under its corporate seal or by an officer or attorney of the corporation duly authorized in writing, with the Company, c/o Computershare Investor Services Inc. (the “Transfer Agent”), Attention: Proxy Department, 100 University Avenue, 9th Floor, North Tower, Toronto, Ontario M5J 2Y1, at any time up to and including the close of business two business days preceding the day of the Meeting, or any adjournment thereof, or with the Chairman on the day of the Meeting, at the Meeting or any adjournment thereof, before any vote is cast under the proxy’s authority.

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REGISTERED COMMON SHAREHOLDERS

Holders of Common Shares listed as shareholders at the close of business on March 27, 2020 (the “Record Date”), will be entitled to vote at the Meeting, or any adjournment thereof, either in person or by proxy, in respect of all matters which may properly come before the Meeting, or any adjournment thereof, except to the extent that such shareholder has subsequently (after the Record Date) transferred any such Common Shares, and the transferee of those Common Shares establishes such transferee shareholder’s ownership of such Common Shares and requests in writing, no later than two business days prior to the Meeting with sufficient evidence of such transfer of ownership, that such transferee shareholder’s name be included in the list of shareholders prepared by the Transfer Agent for the Meeting.

In such case, only the new transferee shareholder will be entitled to vote such Common Shares on each matter to be acted upon at the Meeting.

NON-REGISTERED COMMON SHAREHOLDERS

The names of the shareholders whose shares are held in the name of a broker or another intermediary will not appear on the list of shareholders of the Company. If you are not a registered shareholder of the Company, in order to vote you must a) obtain the material relating to the Meeting from your broker or other intermediary; b) complete the request for voting instructions sent to you by the broker or other intermediary; and c) follow the directions of the broker or other intermediary with respect to voting procedures.

In accordance with National Instrument 54-101 adopted by the Canadian Securities Administrators entitled “Communication with Beneficial Owners of Securities of a Reporting Issuer”, the Company is distributing copies of the material related to the Meeting to clearing agencies and intermediaries for distribution to non-registered shareholders. Such agencies and intermediaries must forward the material related to the Meeting to non-registered holders and may use a service company (such as Broadridge Financial Solutions in Canada) to permit you, if you are not a registered shareholder, to direct the voting of the Common Shares you beneficially own. If you are a non-registered shareholder of the Company, you may revoke any voting instructions given to an intermediary at any time by written notice to the intermediary. If you are a non-registered shareholder of the Company, you should submit your voting instructions to your intermediary or broker leaving sufficient time to ensure that your votes are received, from your intermediary or broker, by the Transfer Agent on behalf of the Company, as set forth under the heading “Appointment and Revocation of Proxies” in this Circular.

VOTING OF PROXIES

The persons named in the enclosed form of proxy will vote or withhold from voting the shares in respect of which they are appointed in accordance with the directions of the shareholders appointing them.

In the absence of shareholder directions, Common Shares will be voted:

a.     

FOR the election as directors of each of those persons hereinafter named as management’s nominees;

 

 
b.     

FOR the appointment of KPMG LLP, Chartered Accountants, as auditors of the Company and the authorization of the Audit Committee to fix the auditors’ remuneration; and

 

 
c.     

FOR the ratification and confirmation of the resolution approving the unallocated options under the Plan, the whole as set forth in Schedule “A” hereto.

All matters to be voted upon at the Meeting will be decided by a majority of the votes cast by the shareholders entitled to vote thereon.

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The enclosed form of proxy confers discretionary authority upon the persons named therein with respect to amendments or variations to matters identified in the accompanying notice of the Meeting or with respect to such other matters as may properly come before the Meeting, or any adjournment thereof. At the date hereof, the management of the Company knows of no such amendments, variations or other matters to be presented for action at the Meeting, or any adjournment thereof. However, if any other matters which are not now known to management should properly come before the Meeting, or any adjournment thereof, the persons named in the enclosed form of proxy will vote on such matters in accordance with their best judgment.

VOTING SHARES AND PRINCIPAL HOLDERS THEREOF

As at March 18, 2020, there were 55,378,660 Common Shares outstanding, each of which entitles its holder to one vote at the Meeting. To the knowledge of the directors and officers of the Company, based on publicly available information, as at March 18, 2020, no person beneficially owned, directly or indirectly, or exercised control or direction over, Common Shares carrying 10% or more of the voting rights attached to all outstanding voting shares of the Company, except as follows:

Name Number of Common Shares Percentage of class
OrbiMed Advisors LLC (“OrbiMed”) 7,025,832 12,7%

PART 2. BUSINESS OF THE MEETING
PRESENTATION OF FINANCIAL STATEMENTS AND AUDITOR S REPORT

The audited consolidated financial statements of the Company, the report of the auditors thereon, and the management s discussion and analysis thereof for the financial year ended December 31, 2019, are contained in the 2019 annual report of the Company and will be tabled at the Meeting, but the approval of the shareholders in respect thereto is not required.

ELECTION OF DIRECTORS

Eight directors are to be elected at the Meeting. The Board of Directors of the Company (the “Board”) recommends that shareholders vote for the election of each of the nominees whose names are set forth below. The persons named in the enclosed form of proxy intend to cast the votes to which the shares represented by such proxy are entitled FOR the election of each of the nominees whose names are set forth below, unless otherwise directed by the shareholders appointing them.

The Board has a majority voting policy. This means that if a director receives more “withhold” votes than “FOR” votes at the annual meeting of shareholders, then the director will immediately tender his or her resignation to the Chairman, which resignation becomes effective only if accepted by the Board. In such circumstances, the Nominating and Corporate Governance Committee will consider a director s offer to resign and make a recommendation to the Board as to whether to accept it. Absent exceptional circumstances, the resignation will be accepted and will be effective when accepted by the Board. The director having tendered his or her resignation pursuant to this policy will not participate in any meeting of the Board or of the Nominating and Corporate Governance Committee at which the resignation is considered. The Board will have 90 days from the annual meeting to reach a decision and disclose such decision by way of a news release, a copy of which will be provided to the Toronto Stock Exchange (“TSX”). If the Board determines not to accept the resignation, such news release will fully state the reasons for that decision. This policy does not apply in circumstances involving contested director elections.

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Management does not anticipate that any of the nominees will be unable to serve as a director, but, if that should occur for any reason at or prior to the Meeting, the persons named in the enclosed form of proxy reserve the right to vote for another nominee at their discretion, unless instructions have been received from a particular shareholder to withhold its shares from voting with respect to the election of directors. Each director elected will hold office until the next annual meeting of shareholders or until his or her successor is duly elected, unless his or her office is earlier vacated in accordance with the by-laws of the Company. Each of the individuals named in the table below are current members of the Board and have been during the period indicated.

The following table states the names of all the persons proposed by management to be nominated for election as directors, their municipality, province or state and country of residence, their age, their principal occupation during the past five years, their position and office held with the Company, the period during which each proposed nominee has served as a director and the number of Common Shares beneficially owned, directly or indirectly, by each of them or over which they exercise control or direction.

Name and Municipality
of Residence
Age
(as at
March
18, 2020)
Principal Occupation During Past Five
Years
Office Period during
which served as a
Director
Number of Common
Shares Beneficially
Owned, Controlled or
Directed (1)
Dr. Francesco Bellini, O.C. (2)
Calgary, Alberta, Canada
72 Chairman of the Board of Picchio
International Inc. (a management and
holding company)
Chairman of
the Board
2002-2020 1,004,720 (3)
Roberto Bellini (2)
Montreal, Québec, Canada
40 President and Chief Executive Officer of
the Company
Director 2009-2020 5,152,372 (4)
Dr. Youssef L. Bennani (5)
Lorraine, Québec, Canada
59 Chairman of the Board of Domain
Therapeutics (6)
Director 2017-2020 109,649
Franklin M. Berger, CFA (7)
New York, New York, United States
70 Consultant Director 2010-2020 446,141
Dr. Clarissa Desjardins
Montreal, Québec, Canada
53 Corporate Director (8) Director 2017-2020 14,620
Chau Q. Khuong (9)
New York, New York, United States
44 Private Equity Partner of OrbiMed Director 2018-2020 NIL
Pierre Larochelle (2), (5), (7)
Montréal, Québec, Canada
48 President and Chief Executive Officer
of Power Energy Corporation
Director 2009-2020 76,570
Joseph Rus (5), (7)
Toronto, Ontario, Canada
74 Consultant Director 2009-2020 NIL

 

(1)      The information as to the Common Shares beneficially owned, controlled or directed, not being within the knowledge of the Company, has been furnished by the respective candidates individually as at March 18, 2020.
(2)      Pursuant to board representation agreements dated April 16, 2009 between the Company and each of Victoria Square Ventures Inc. (“VSVI”) and a predecessor to Rocabe (the “2009 Board Representation Agreements”), each of VSVI, now Power Sustainable Capital Investments Inc. (“PSCI”), and Rocabe is entitled to cause two nominees to be included in the list of management nominees to be proposed for election to the Board at each shareholders meeting occurring following that date. PSCI’s and Rocabe’ right to two nominees each shall terminate on the date each of PSCI, on the one hand, and Rocabe, FMRC Family Trust (“FMRC”), a trust of which Dr. Francesco Bellini, Chairman of the Board of the Company, and Mr. Roberto Bellini, President and Chief Executive Officer of the Company, are beneficiaries and 1324286 Alberta Limited (“AlbertaCo”), a wholly-owned subsidiary of the FMRC, collectively, on the other hand, ceases to beneficially hold at least 7.5% of the issued and outstanding Common Shares. Despite their nomination rights, PSCI has only nominated one candidate, being Mr. Larochelle, and Rocabe has only nominated one candidate, being Dr. Bellini.
(3)      Dr. Bellini is the registered holder of 347,481 Common Shares. FMRC and AlbertaCo own 657,239 Common Shares, which shares are shown in Dr. Bellini’s share ownership.
(4)      Mr. Bellini is the registered holder of 587,562 Common Shares and has a beneficial interest in 4,564,810 Common Shares through his 50% interest in Rocabe.
(5)      Member of the Human Resources and Governance Committee.
(6)      From 2013 to 2017, Dr. Bennani was Site Head and Vice-President of R&D at Vertex Pharmaceuticals Canada Inc., a research and development company. Dr. Bennani was appointed in 2019 as venture partner of adMare BioInnovations, the sole member of the Neomed Institute.
(7)      Member of the Audit Committee.
(8)      From 2012 to 2019, Dr. Desjardins was Chief Executive Director of Clementia Pharmaceuticals, Inc.

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(9)      Pursuant to a Board representation agreement dated December 18, 2018 between the Company and OrbiMed (the “2018 Board Representation Agreement”), OrbiMed is entitled to cause one nominee to be included in the list of management nominees to be proposed for election to the Board at each shareholders meeting occurring following that date. OrbiMed’s right to one nominee shall terminate on the date OrbiMed ceases to beneficially hold at least 10% of the issued and outstanding Common Shares. OrbiMed’s nominated candidate is Mr. Khuong.

Corporate Cease Trade Orders or Bankruptcies

To the knowledge of the directors and officers of the Company, other than as set forth below, no proposed director of the Company:

(a) is, as at the date of the Circular, or has been, within 10 years before the date of the Circular, a director, chief executive officer or chief financial officer of any company, that,

  (i)     

was subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation that was issued while the proposed director was acting in the capacity as director, chief executive officer or chief financial officer that was in effect for a period of more than 30 consecutive days; or

   

 
  (ii)     

was subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation that was issued after the proposed director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer that was in effect for a period of more than 30 consecutive days; or

(b) is, as at the date of the Circular, or has been within 10 years before the date of the Circular, a director or executive officer of any company, that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or

(c) has, within the 10 years before the date of the Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold its assets.

Directors Attendance at Board and Committee Meetings

The following table set forth the number of meetings held by the Board and each of its Committees during the financial year ended December 31, 2019, and the attendance of each director at those meetings, or, in the case of Committees of the Board, the attendance of each member of such Committees.

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Board and Board Committee Attendance Record from January 1 to December 31, 2019

DIRECTOR BOARD AUDIT HUMAN RESOURCES
AND GOVERNANCE (1)
INDEPENDENT DIRECTORS (2)
Dr. Francesco Bellini 9/9 - - -
Roberto Bellini 9/9 - - -
Dr. Youssef L. Bennani 9/9 - 1/1 1/1
Franklin M. Berger 9/9 4/4 - 1/1
Dr. Clarissa Desjardins 7/9 - - 1/1
Chau Q. Khuong 9/9 - - 1/1
Pierre Larochelle 8/9 4/4 1/1 1/1
Joseph Rus 9/9 4/4 1/1 1/1

 

(1)      In March 2020, a decision was made by the Board to split the Human Resources and Governance Committee into two separate committees, namely the Compensation Committee and the Nominating and Corporate Governance Committee, effective as of the date hereof, and to allocate the roles and responsibilities of the former Human Resources and Governance Committee to such two committees in the manner described below.
(2)      An additional meeting of the independent directors was held on March 18, 2020.

Other Board Memberships

The following table identifies, in respect of the financial year ended December 31, 2019, the current directors of the Company who also act as directors for other reporting issuers.

Name Name of issuer Name of Exchange or Market
Franklin M. Berger Five Prime Therapeutics, Inc.
ESSA Pharma, Inc.
Proteostasis Therapeutics, Inc.
Tocagen, Inc.
Kezar Life Sciences, Inc.
Nasdaq Capital Market(“NASDAQ”)
TSX Venture Exchange (“TSXV”) and
NASDAQ
NASDAQ
NASDAQ
NASDAQ
Dr. Clarissa Desjardins Insmed, Inc.
Xenon Pharmaceuticals Inc.
NASDAQ
NASDAQ
Chau Q. Khuong Aerpio Pharmaceuticals Inc.
NextCure, Inc.
Synlogic Inc.
Inspire Medical Systems, Inc.
NASDAQ
NASDAQ
NASDAQ
New York Stock Exchange (“NYSE”)

AUDITORS OF THE COMPANY

KPMG LLP, Chartered Accountants, have been the auditors of the Company since September 1995. The Board recommends that shareholders vote for the appointment of KPMG LLP, Chartered Accountants, as auditors of the Company and the authorization of the Audit Committee to fix the auditors’ remuneration. The persons named in the enclosed form of proxy intend to cast the votes to which the shares represented by such proxy are entitled FOR the reappointment of KPMG LLP, Chartered Accountants, as auditors of the Company for the term expiring with the next annual meeting of shareholders, and to authorize the Audit Committee to fix their remuneration, unless otherwise directed by the shareholders appointing them.

APPROVAL OF UNALLOCATED OPTIONS UNDER THE STOCK OPTION PLAN  

Under the Company’s stock option plan (the “Plan”), the Company may grant, together with any Common Shares reserved for issuance under any other security-based compensation arrangement, options

9





to purchase Common Shares representing up to 12.5% of the total number of Common Shares of the Company issued and outstanding from time to time. The rules of the TSX provide that all unallocated options, rights or other entitlements under a security-based compensation arrangement which do not have a fixed number of maximum securities issuable be re-approved every three years. Such approval was last obtained at the Company’s 2017 annual meeting.

Accordingly, at the Meeting, shareholders will be asked to consider and, if deemed advisable, approve, with or without amendment, the resolution set forth in Schedule “A”. Previously-granted options will continue, unaffected, whether or not this resolution is approved by shareholders. However, such previously-granted options cancelled prior to exercise will not be available for grants after May 14, 2020.

PART 3.
STATEMENT OF EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS AND EXECUTIVES

Compensation Discussion and Analysis

Objectives of the Compensation Program

The Company’s Compensation Program is designed to be competitive and drive business performance, and plays an important role in attracting and retaining key members of the Company’s senior executive team.

What the Compensation Program is Designed to Reward

The Compensation Program is designed to reward the senior executive team for implementing key strategies, both in the short, and the long term, that will allow the Company to advance its development of products that provide innovative health solutions and address critical unmet medical needs, to enhance its share value, and, thereby, create economic value. Actual rewards are directly linked to the results of the Company.

In establishing remuneration and incentives under the Compensation Program, the Compensation Committee (formerly the Human Resources and Governance Committee) studies the competitive market environment and conducts a benchmarking analysis using compensation information filed by comparable publically-listed biotechnology companies (the “Peer Group”). The Committee also takes into account the Company’s own financial targets and past performance. The benchmarking analysis conducted by the Human Resources and Governance Committee in 2019 was based on a Peer Group consisting of two samples of TSX and/or NASDAQ-listed companies: (i) the first, with Canadian companies listed on NASDAQ having a market capitalization threshold of US$150 million and above, comprises IMV Inc., Theratechnologies Inc., Xenon Pharmaceuticals Inc., Milestone Pharmaceuticals Inc. Aurinia Pharmaceutical Inc. and Zymeworks Inc.; and (ii) the second, with companies listed on NASDAQ having a market capitalization threshold between US$300 and US$600 million, comprises MediciNova, Inc., Urovant Sciences Ltd., Assembly Biosciences, Inc., Crinetics Pharmaceuticals, Inc., Prothena Corporation plc and Viking Therapeutics, Inc.

Components of the Compensation Program, Determination of Amounts for Each Elements, Rationale for Amounts of Each Element

The Company’s Compensation Program has three major components: base salary, annual individual performance incentives (bonuses), and long-term incentives (granting of stock options). The Company’s Compensation Program aims to allocate 60% to incentive-based compensation and 40% to fixed remuneration. The compensation policies and guidelines for the Named Executive Officers (as

10





defined herein), other than the President and Chief Executive Officer and other senior executives, are recommended by the President and Chief Executive Officer and approved by the Compensation Committee. The compensation of the President and Chief Executive Officer is recommended by the Compensation Committee and approved by the Board.

Base Salary

Salaries for the Named Executive Officers and other senior executives are based on the experience and level of expertise of each executive. Under normal circumstances, the Company’s policy is for the total cash compensation of the Named Executive Officers and other senior executives, including individual performance incentives, to be generally aligned with the 50th percentile of the Peer Group.

For the 2019 financial year, the Human Resources and Governance Committee, with the assistance of the President and Chief Executive Officer and the Vice President, Finance, conducted an informal review of publicly available compensation data relating to companies in the Peer Group. The Committee compared the total compensation of the Named Executive Officers, including individual performance incentives, with that of executive officers of companies in the Peer Group in order to assess reasonableness. Based on its analysis, the Human Resources and Governance Committee concluded that the compensation of certain Named Executive Officers for 2019 was lower relative to the compensation of comparable executive officers of companies in the Peer Group. As such, in February 2020, the Board approved a base salary increase for Roberto Bellini, President and Chief Executive Officer (8%) and François Desjardins, Vice President, Finance (10%) for 2020.

In addition, in February 2020, the Board approved a salary adjustment for all Company employees, including the Named Executive Officers and other senior executives, to account for changes in the cost of living in the province of Québec and in Canada.

Individual Performance Incentives (Bonuses)

Individual performance incentives (bonuses) are designed to incentivize the contribution of the Named Executive Officers and the other senior executives to the Company’s key strategies, which contributions are evaluated through an annual performance review process. Bonuses are granted in accordance with each executive’s individual performance as well as corporate objectives including the results of the Company’s development programs. Should the Company ever generate revenues, which currently it does not, such revenues and any profits would also factor into the determination of annual performance bonuses to be paid to senior executive officers.

The target bonus payment for Named Executive Officers (other than the President and Chief Executive Officer and Chief Medical Officer) is set at twenty-five percent (25%) of base salary. The target bonus payment for the Chief Medical Officer is set at thirty-five percent (35%) of base salary. For 2019, the President and Chief Executive Officer was eligible to receive a cash bonus of 70% of his base salary. In February 2020, the Board approved that the percentage of the cash bonus the President and Chief Executive Officer would be eligible to receive would be increased to 100% of his base salary. The actual bonus amount paid, however, depends upon the achievement of the corporate objectives established by the Board and subject to periodic review.

Stock Option Plan

The Company believes that the granting of stock options helps align management’s interests with the goal of maximizing shareholder value. The number of stock options granted is determined based on each senior executive’s position. The Company allocates stock options to the Named Executive Officers based on the following criteria:

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Option grants to Named Executive Officers and other senior executives, other than the President and Chief Executive Officer, are proposed by the President and Chief Executive Officer to the Compensation Committee (formerly the Human Resources and Governance Committee), which evaluates the proposal, having regard to, among other factors, the number, vesting and exercise price of previously-granted stock options to each individual, before making a recommendation to the Board. The Compensation Committee also reviews any proposed amendments to the Plan before making a recommendation to the Board in respect of such amendments.

Performance Graph

The outstanding common shares of the predecessor of the Company prior to the 2012 corporate reorganization began trading on the TSX on June 22, 2000.

The Common Shares began trading under the symbol “BLU” on the TSX, on a post-consolidated basis, on August 19, 2019, and on NASDAQ on September 5, 2019.

The following graph compares, as at the end of each year up to December 31, 2019, the cumulative total shareholder return on $100 invested in Common Shares on December 31, 2014, with the cumulative total shareholder return on the S&P/TSX Composite Index, assuming reinvestment of all dividends.

12





The trend shown by the above performance graph does not directly correlate to the compensation paid to the Named Executives Officers. The factors considered by the Company’s Compensation Committee and by the Board in determining compensation matters, such as individual and company performance and market demand for skilled professionals, may not be significantly affected by the market price of the Common Shares. Shareholder return realized on the Common Shares is affected by a number of factors, including the Company’s performance and general market and economic conditions, many of which are beyond the control of the Company and the Named Executive Officers. Some of these risks are discussed under the “Risk Factors” section of the Company’s Annual Information Form dated February 26, 2020, accessible through SEDAR at www.sedar.com.

13





Summary Compensation Table

The following table summarizes the compensation paid during the three most recent financial years to the President and Chief Executive Officer, the Vice President, Finance and the three next most highly compensated executive officers of the Company during the most recently completed financial year (collectively, the “Named Executive Officers”), including their base salary, bonuses, stock options, as well as any other compensation paid during the applicable financial year.

Name and principal
position
Year Base Salary
($)
Share-Based
Awards
($)
Option-Based
Awards
($)
Non-equity Incentive
Plan Compensation -
Annual Incentive Plan
($)
Pension
Value
($)
All Other
Compensation
($)
Total
Compensation
($)
Roberto Bellini
President and Chief
Executive Officer
2019 $371,423 NIL $1,563,564 (1) $259,995 (2) N/A $30,571 $2,225,553
2018 $364,140 NIL $425,312 (3) $182,070 (4) N/A $30,207 $1,001,729
2017 $318,325 NIL $219,772(5) $214,200 (6) N/A $29,850 $782,147
François Desjardins
Vice President, Finance
2019 $210,000 NIL $286,654 (1) $65,625 (2) N/A $22,500 $584,779
2018 $187,569 NIL $106,328 (3) $46,892 (4) N/A $21,378 $362,167
2017 $173,930 NIL $64,639 (5) $55,167 (6) N/A $21,195 $314,931
Dr. Catherine Bonuccelli
Chief Medical Officer (7) (8)
2019 $197,927 (9) NIL $3,048,711 (10) $69,274 (2) N/A $206,498 (11) $3,522,410
Dr. Denis Garceau
Senior Vice President,
Drug Development
2019 $351,770 NIL $364,831 (1) $87,942 (2) N/A $29,588 $834,131
2018 $344,872 NIL $141,771 (3) $86,218 (4) N/A $29,244 $602,105
2017 $301,481 NIL $77,566 (5) $101,433 (6) N/A $28,906 $509,386
Tony Matzouranis
Vice President, Business
Development
2019 $225,000 NIL $312,711 (1) $56,250 (2) N/A $23,250 $617,211
2018 $187,569 NIL $120,505 (3) $46,892 (4) N/A $21,378 $376,344
2017 $173,930 NIL $77,566 (5) $55,167 (6) N/A $21,195 $327,858

 

(1) Stock options were granted on February 20, 2019, having an exercise price of $4.356. In determining the fair value of the option awards, the Black-Scholes model, an established methodology, was used, with the following weighted average assumptions:
  (i)      Risk-free interest rate: 1.83%;
  (ii)      Expected volatility in the market price of the shares: 100.17%;
  (iii)      Expected dividend yield: 0%; and
  (iv)      Expected life: 7 years.
    Resulting fair value per option: $3.753.
(2) This bonus was earned in 2019, but paid in cash in 2020.
(3) Stock options were granted on February 20, 2018, having an exercise price of $1.260. In determining the fair value of the option awards, the Black-Scholes model, an established methodology, was used, with the following weighted average assumptions:
  (v)      Risk-free interest rate: 2.19%;
  (vi)      Expected volatility in the market price of the shares: 99.92%;
  (vii)      Expected dividend yield: 0%; and
  (viii)      Expected life: 7 years.
    Resulting fair value per option: $1.021.
(4) This bonus was earned in 2018, but paid in cash in 2019.
(5) Stock options were granted on May 23, 2017, having an exercise price of $1.080. In determining the fair value of the option awards, the Black-Scholes model, an established methodology, was used, with the following weighted average assumptions:
  (i)      Risk-free interest rate: 1.15%;
  (ii)      Expected volatility in the market price of the shares: 106.93%;
  (iii)      Expected dividend yield: 0%; and
  (iv)      Expected life: 7 years.
    Resulting fair value per option: $0.931.
(6) This bonus was earned in 2017, but paid in cash in 2018.
(7) Catherine Bonuccelli, MD was appointed Chief Medical Officer on August 26, 2019. From 2015 to 2019, Dr. Bonuccelli was US Medical Affairs Respiratory Therapeutic Area Head for GSK.
(8) Dr. Bonuccelli’s compensation is paid in US dollars and converted for disclosure purposes to Canadian dollars based on an average exchange rate of 1.3212 in 2019 (period from August 26 to December 31, 2019).
(9) Dr. Bonuccelli’s salary for the period from August 26 to December 31, 2019, based on an annual base salary of US$425,000 in 2019.
(10) Stock options were granted on November 13, 2019, having an exercise price of $8.390. In determining the fair value of the option awards, the Black-Scholes model, an established methodology, was used, with the following weighted average assumptions:
  (v)      Risk-free interest rate: 1.54%;
  (vi)      Expected volatility in the market price of the shares: 98.52%;
  (vii)      Expected dividend yield: 0%; and
  (viii)      Expected life: 7 years.
    Resulting fair value per option: $6.456.
(11)

As per Dr. Bonuccelli’s employment agreement, includes a signing/retention payment of US$150,000 (CDN$198,180), of which a 50% was paid on August 26, 2019 (effective date of employment) and remaining 50% will be payable on Dr. Bonuccelli’s continued employment on March 31, 2020. If Dr. Bonuccelli does not complete one year of continued employment, 50% of any bonus paid shall be repaid by Dr. Bonuccelli before her last day of work.

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Incentive Plan Awards

Outstanding Share-Based Awards and Option-Based Awards

The following table indicates for each of the Named Executive Officers all awards outstanding at the end of the 2019 financial year.

  Option-based Awards Share-based Awards
Name Number of
Securities
Underlying
Unexercised
Stock Options or
Shares
(#)
Stock Option
or Share
Exercise
Price
($)
Stock Option
Expiration
Date
Value of
Unexercised
In-The-Money
Stock Options (1) (2)
($)
Number of Shares or
Units of Shares
That Have Not
Vested (#) as at
December 31, 2019
(#)
Markets or
Payout Value
of Shares-
Based
Awards That
Have Not
Vested
($)
Markets or
Payout Value of
Vested Shares-
Based Awards
Not Paid Out or
Distributed
($) (3)
Roberto Bellini
President and Chief
Executive Officer
416,667 $4.356 February 20, 2029 $2,272,502 416,667 N/A N/A
416,667 $1.260 February 20, 2028 $3,562,503 333,334 N/A N/A
236,111 $1.080 May 23, 2027 $2,061,249 141,667 N/A N/A
28,611 $4.032 February 24, 2026 $165,314 11,444 N/A N/A
444,444 $1.800 August 24, 2022 $3,559,996 NIL N/A N/A
24,930 (4) N/A N/A N/A N/A N/A $232,896
François Desjardins
Vice President, Finance
76,389 $4.356 February 20, 2029 $416,626 76,389 N/A N/A
104,167 $1.260 February 20, 2028 $890,628 83,334 N/A N/A
69,444 $1.080 May 23, 2027 $606,246 41,666 N/A N/A
111,111 $1.800 August 24, 2022 $889,999 NIL N/A N/A
596 (4) N/A N/A N/A N/A N/A $5,568

Dr. Catherine Bonuccelli
Chief Medical Officer

472,222 $8.390 November 13, 2029 $670,555 472,222 N/A N/A
Dr. Denis Garceau
Senior Vice President,
Drug Development
97,222 $4.356 February 20, 2029 $530,249 97,222 N/A N/A
138,889 $1.260 February 20, 2028 $1,187,501 111,111 N/A N/A
83,333 $1.080 May 23, 2027 $727,497 50,000 N/A N/A
152,778 $1.800 August 24, 2022 $1,223,752 NIL N/A N/A
459 (4) N/A N/A N/A N/A N/A $4,288
Tony Matzouranis
Vice President, Business
Development
83,333 $4.356 February 20, 2029 $454,498 83,333 N/A N/A
118,056 $1.260 February 20, 2028 $1,009,379 94,445 N/A N/A
83,333 $1.080 May 23, 2027 $727,497 50,000 N/A N/A
111,111 $1.800 August 24, 2022 $889,999 NIL N/A N/A
(1) As at December 31, 2019, the Company’s closing stock price on the TSX was $9.810.
(2) The value of the unexercised “in-the-money” stock options is calculated using the closing stock price on the TSX as at December 31, 2019, less the respective exercise price of the stock options. This value has not been, and may never be, realized. The actual gain, if any, will depend on the stock price on the dates, if any, on which the stock options are exercised.
(3) Cash Value of DSUs as at December 31, 2019 is $9.342 per unit.
(4) DSUs vest immediately on the grant date. DSUs are redeemable only upon participant’s departure, until December 15 of the year following such departure.

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Value Vested or Earned on Incentive Plan Awards During the Most Recently Completed Financial year

The following table indicates, for each of the Named Executive Officers, the value on vesting of all awards and the bonus payout during the 2019 financial year.

Name Option Awards - Value Vested
During the Year on Vesting
($)
Share Awards - Value Vested
During the Year on Vesting
($)
Non-Equity Incentive Plan
Compensation - Value
Earned During the Year
($) (1)
Roberto Bellini
President and Chief Executive Officer
$477,090 N/A $259,995
François Desjardins
Vice President, Finance
$127,500 N/A $65,625
Dr. Catherine Bonuccelli
Chief Medical Officer (2)
N/A N/A $69,274
Dr. Denis Garceau
Senior Vice President, Drug Development
$162,000 N/A $87,942
Tony Matzouranis
Vice President, Business Development
$148,500 N/A $56,250
(1) Corresponds to amounts disclosed in the “Summary Compensation Table” above.
(2) Dr. Bonuccelli’s compensation is paid in US dollars and converted for disclosure purposes to Canadian dollars based on an average exchange rate of 1.3212 in 2019 (period from August 26 to December 31, 2019).

Termination and Change of Control Benefits

In case of termination in 2019, for reason other than for just cause or for good reason, and other than termination following a change of control of the Company, Mr. Roberto Bellini, Mr. Francois Desjardins, Dr. Catherine Bonuccelli, Dr. Denis Garceau and Mr. Tony Matzouranis are entitled, under their employment agreements, to lump sum payments of $401,994, $232,500, $552,075(1), $381,358 and $248,250, respectively. Assuming termination on December 31, 2019, lump sum payments of $401,994, $232,500, $552,075(1), $381,358 and $248,250 would have been made to each of Mr. Roberto Bellini, Mr. Francois Desjardins, Dr. Catherine Bonuccelli, Dr. Denis Garceau and Mr. Tony Matzouranis, respectively. Mr. Roberto Bellini, Mr. Francois Desjardins, Dr. Catherine Bonuccelli, Dr. Denis Garceau and Mr. Tony Matzouranis would have realized $5,196,185, $1,310,623, nil, $1,752,251 and $1,382,874, respectively, on the exercise of vested stock options on December 31, 2019.

In case of termination in 2019 of the employment within 6 months following a change of control of the Company, each of Mr. Roberto Bellini, Mr. Francois Desjardins, Dr. Catherine Bonuccelli, Dr. Denis Garceau and Mr. Tony Matzouranis are entitled, under their employment agreements, to lump sum payments of $401,994, $232,500, $552,075(1), $381,358 and $248,250, respectively. Assuming termination on December 31, 2019, following a change in control of the Company, lump sum payments of $401,994, $232,500, $552,075(1), $381,358 and $248,250, would be made to each of Mr. Roberto Bellini, Mr. Francois Desjardins, Dr. Catherine Bonuccelli, Dr. Denis Garceau and Mr. Tony Matzouranis, respectively. A change of control of the Company would also trigger the full vesting of all unvested stock options of the Company on an accelerated basis. Mr. Roberto Bellini, Mr. Francois Desjardins, Dr. Catherine Bonuccelli, Dr. Denis Garceau and Mr. Tony Matzouranis would realize $11,621,564, $2,803,499, $670,555, $3,668,999 and $3,081,373, respectively, on the exercise of stock options on December 31, 2019.

(1) Presented in $CDN but payable in $US. Converted to Canadian dollars based on an exchange rate of 1.3212

Compensation of Directors

The members of the Board are remunerated for services rendered in their capacity as directors of the Company through a combination of cash compensation and stock options.

Compensation of the Non-Executive Members of the Board for the 2019 financial year: Non-executive members of the Board during this period received an annual retainer fee of $45,000, with an

16





additional retainer fee of $25,000 paid to the lead director. Additionally, directors who served on committees of the Board were entitled to additional fees, as follows: an annual retainer of $12,500 for the Chair of the former Human Resources and Governance Committee, an annual retainer of $20,000 for the Chair of the Audit Committee and an annual retainer of $7,500 for each other committee member. During the 2019 financial year, the Human Resources and Governance Committee, with the assistance of the President and Chief Executive Officer and the Vice President, Finance, conducted a benchmarking analysis using publically available compensation information filed by companies in the Peer Group. The Committee compared the total compensation of the members of the Board of the Company with that of the directors of companies in the Peer Group in order to assess reasonableness. Based on this benchmarking analysis, the Committee concluded that the compensation of members of the Board should be increased by 20% for the 2020 financial year. The Committee recommended such increase to the Board, and its recommendation was approved.

Summary Compensation Table for Non-Executive Members of the Board for the financial year ended December 31, 2019: The following table provides details relating to the compensation of the non-executive members of the Board during the financial year ended December 31, 2019.

Name Annual Fees
($) (1)
Share-Based
Awards
($)
Option-Based
Awards
($)
Non-Equity
Incentive Plan
Compensation
($)
Pension
Value
($)
All Other
Compensation
($)
Total
($)
Dr. Francesco Bellini N/A N/A $208,477 (2) N/A N/A $250,000 (3) $458,477
Dr. Youssef L. Bennani $52,500 N/A $104,235 (2) N/A N/A N/A $156,735
Franklin M. Berger $52,500 N/A $104,235 (2) N/A N/A N/A $156,735
Dr. Clarissa Desjardins $45,000 N/A $104,235 (2) N/A N/A N/A $149,235
Chau Q. Khuong $45,000 N/A $104,235 (2) N/A N/A N/A $149,235
Pierre Larochelle $97,500 N/A $104,235 (2) N/A N/A N/A $201,735
Joseph Rus $65,000 N/A $104,235 (2) N/A N/A N/A $169,235
(1)     

The 2019 annual fees were paid in cash or in the form of DSUs, at the director’s discretion. For directors who opted to receive DSUs, such DSUs were granted as follows:

Name Date of payment DSU unit price Nb. of units allocated
Franklin M. Berger May 31,2019 $5.250 10,000
Dr. Clarissa Desjardins May 31,2019 $5.250 8,572
Chau Q. Khuong May 31,2019 $5.250 8,572
Pierre Larochelle May 31,2019 $5.250 18,572
Joseph Rus May 31,2019 $5.250 2,857
(2)     

Stock options were granted on February 20, 2019, having an exercise price of $4.356. In determining the fair value of the option awards, the Black-Scholes model, an established methodology, was used, with the following weighted average assumptions:

  (i)     

Risk-free interest rate: 1.83%;

  (ii)     

Expected volatility in the market price of the shares: 100.17%;

  (iii)     

Expected dividend yield: 0%; and

  (iv)     

Expected life: 7 years.

   

Resulting fair value per option: $3.753.

(3)

The Company has entered into a Consulting and Service Agreement effective as of January 1, 2010, with Picchio International, providing for strategic advice on matters pertaining to the development and commercialization of pharmaceutical products to provide health solutions to address critical unmet needs. See “Interest of Informed Persons in Material Transactions and Management Contracts - Consulting and Service Agreement” in this Circular. This amount excludes reimbursement of reasonable expenses incurred in the proper conduct of the services as per the agreement.

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Outstanding Share-Based Awards and Option-Based Awards: The following table provides details of all awards outstanding at the end of the financial year ended December 31, 2019 for each of the non-executive members of the Board.

  Option-based Awards Shares-based Awards
Name Number of
Securities
Underlying
Unexercised
Stock Options or
Shares
(#)
Stock Option
or Share
Exercise
Price
($)
Stock Option
Expiration
Date
Value of
Unexercised
In-The-Money
Stock Options
($) (1) (2)
Number of Shares or
Units of Shares
That Have Not Vested
as at December 31,
2019
(#)
Markets or
Payout Value
of Shares-Based
Awards That
Have Not Vested
($)
Markets or
Payout Value of
Vested Shares-
Based Awards
Not Paid Out or
Distributed
($) (3)
Dr. Francesco Bellini 55,556 $4.356 February 20, 2029 $303,002 55,556 N/A N/A
69,444 $1.260 February 20, 2028 $593,746 55,555 N/A N/A
41,667 $1.080 May 23, 2027 $363,753 25,000 N/A N/A
75,000 $1.800 August 24, 2022 $600,750 NIL N/A N/A
28,370 (4) N/A N/A N/A N/A N/A $265,032
Dr. Youssef L. Bennani 27,777 $4.356 February 20, 2029 $151,496 27,777 N/A N/A
41,667 $1.260 February 20, 2028 $356,253 33,334 N/A N/A
41,667 $1.080 May 23, 2027 $363,753 25,000 N/A N/A
Franklin M. Berger 27,777 $4.356 February 20, 2029 $151,496 27,777 N/A N/A
41,667 $1.260 February 20, 2028 $356,253 33,334 N/A N/A
27,778 $1.080 May 23, 2027 $242,502 16,667 N/A N/A
41,667 $1.800 August 24, 2022 $333,753 NIL N/A N/A
35,473 (4) N/A N/A N/A N/A N/A $331,388
Dr. Clarissa Desjardins 27,777 $4.356 February 20, 2029 $151,496 27,777 N/A N/A
41,667 $1.260 February 20, 2028 $356,253 33,334 N/A N/A
41,667 $1.512 November 7, 2027 $345,753 25,000 N/A N/A
37,156 (4) N/A N/A N/A N/A N/A $347,111
Chau Q. Khuong 27,778 $4.356 February 20, 2029 $151,501 27,778 N/A N/A
13,280 (4) N/A N/A N/A N/A N/A $124,062
Pierre Larochelle 27,777 $4.356 February 20, 2029 $151,496 27,777 N/A N/A
41,667 $1.260 February 20, 2028 $356,253 33,334 N/A N/A
27,778 $1.080 May 23, 2027 $242,502 16,667 N/A N/A
41,667 $1.800 August 24, 2022 $333,753 NIL N/A N/A
86,637 (4) N/A N/A N/A N/A N/A $809,362
Joseph Rus 27,777 $4.356 February 20, 2029 $151,496 27,777 N/A N/A
41,667 $1.260 February 20, 2028 $356,253 33,334 N/A N/A
27,778 $1.080 May 23, 2027 $242,502 16,667 N/A N/A
41,667 $1.800 August 24, 2022 $333,753 NIL N/A N/A
7,732 (4) N/A N/A N/A N/A N/A $72,232
(1) As at December 31, 2019, the Company’s closing stock price on the TSX was $9.810.
(2) The value of the unexercised “in-the-money” stock options is calculated using the closing stock price on the TSX as at December 31, 2019, less the respective exercise price of the stock options. This value has not been, and may never be, realized. The actual gain, if any, will depend on the stock price on the dates, if any, on which the stock options are exercised.
(3) Cash Value of DSUs as at December 31, 2019 is $9.342 per unit.
(4) DSUs vest immediately on the grant date. DSUs are redeemable only upon participant’s departure, until December 15 of the year following such departure.

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Value vested or earned on incentive plan awards during the most recently completed financial year:

The following table indicates for each of the non-executive directors of the Company, the value on vesting of all awards during the 2019 financial year.

Name Option Awards - Value Vested
During the Year on Vesting
($)
Share Awards - Value Vested
During the Year on Vesting
($)
Non-Equity Incentive Plan
Compensation - Value Earned During
the Year
($)
Dr. Francesco Bellini $81,000 N/A N/A
Dr. Youssef L. Bennani $63,001 N/A N/A
Franklin M. Berger $51,000 N/A N/A
Dr. Clarissa Desjardins $85,984 N/A N/A
Chau Q. Khuong Nil N/A N/A
Pierre Larochelle $51,000 N/A N/A
Joseph Rus $51,000 N/A N/A

Compensation Governance

In March 2020, a decision was made by the Board to split the Human Resources and Governance Committee into two separate committees, namely the Compensation Committee and the Nominating and Corporate Governance Committee, effective as of the date hereof, and to allocate the roles and responsibilities of the former Human Resources and Governance Committee to such two committees in the manner described in this Circular. Up to March 2020, the members of the Human Resources and Governance Committee were Mr. Joseph Rus (Chair), Dr. Youssef L. Bennani and Mr. Pierre Larochelle.

The mandate of the Compensation Committee includes reviewing the compensation arrangements for the Company’s employees, including executive officers and directors, making recommendations to the Board with respect to such compensation arrangements, and to the Company’s incentive compensation plans and equity-based plans, and overseeing succession planning. Moreover, the Compensation Committee is responsible for reviewing and making recommendations to the Board as to the compensation of the President and Chief Executive Officer, the objectives of the President and Chief Executive Officer and the assessment of whether and to what extent such objectives are met. The members of the Compensation Committee are Mr. Joseph Rus (Chair), Dr. Youssef L. Bennani, Dr. Clarissa Desjardins and Mr. Pierre Larochelle.

The members of the Compensation Committee are all independent directors of the Company. Each member of the Committee has skills and experience relevant to compensation matters, including making decisions and determinations as to the suitability of compensation policies and practices. Each member has held a number of executive management positions, including, in most cases, as president of a company to whom the human resources department reported. In connection with each member’s various responsibilities in such positions, each member of the Committee has experience implementing and managing compensation policies and practices, including with respect to wage policies, management compensation, succession planning and share-based incentive programs.

The Board has adopted a charter of the Compensation Committee that clearly establishes the Compensation Committee’s mandate and responsibilities, the required member qualifications, the procedures for the appointment and removal of members, as well as the committee’s structure, operations and reporting obligations to the Board. The charter also allows for an outside consultant or advisor to be engaged to assist the Compensation Committee with the approval of the Nominating and Corporate

19





Governance Committee. No such consultant or advisor was retained by the Company to assist the Compensation Committee during the 2019 financial year.

The Compensation Committee also reviews the compensation policies and practices of the Company taking into account risks associated with these policies and practices. The Compensation Committee has not identified risks associated with the Company’s compensation policies which could have material adverse consequences on the Company. The risks and uncertainties which may have material adverse consequences on the Company are disclosed in the Company’s public filings, including its Annual Information Form.

Although the Company has not adopted a policy forbidding Named Executive Officers and directors from purchasing financial instruments relating to the Common Shares, the Company is not aware of any insider having entered into such a transaction.

EQUITY COMPENSATION PLANS

Amended and Restated Stock Option Plan

Under its amended and restated stock option plan (the “Amended and Restated Stock Option Plan”), the Company may grant, together with any Common Shares reserved for issuance under any other security-based compensation arrangement, options in respect of up to 12.5% of the issued and outstanding Common Shares of the Company from time to time. As at March 18, 2020, the total number of Common Shares issued under the Plan and issuable under outstanding stock options granted under the Plan and the percentage of the Company’s issued and outstanding Common Shares represented by such shares, was as follows:

Common Shares issued
under the Plan
Common Shares issuable
under outstanding stock options
NIL (0%) 4,726,943 (8.5%)

As at March 18, 2020, 5,524,901 Common Shares were reserved for issuance under the Plan, representing approximately 10.0% of the Company’s issued and outstanding Common Shares as at such date.

The following table outlines the burn rate for the Plan for the past three years as of December 31, 2019:

Description 2019 2018 2017
The burn rate is calculated by dividing the number of stock options granted under
the Plan during a financial year by the weighted average number of shares
outstanding for such financial year
3.3% 3.6% 4.2%

Pursuant to the Plan, stock options may be granted to directors, officers, full-time employees, consultants and members of the Scientific or Clinical Advisory Board (if any) of the Company or any affiliate thereof. The number of Common Shares subject to each stock option, the expiration date of each stock option, the extent to which each stock option is exercisable from time to time during its term and other terms and conditions relating to each such stock option shall be determined by the Compensation Committee and be subject to approval by the Board, provided, however, that if no specific determination is made by the Compensation Committee with respect to any of the foregoing matters, each stock option shall, subject to any other specific provisions of the Plan, be subject to the following terms and conditions:

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  (a)     

the period during which a stock option shall be exercisable shall be 10 years from the date of the grant; and

   

 
  (b)     

the optionee may take up and pay for not more than 20% of the Common Shares covered by the stock option after the expiration of each one-year period in arrears from the date of the grant; provided, however, that if the number of Common Shares taken up under the stock option after the expiration of each one-year period is less than 20% of the Common Shares covered by the stock option, the optionee shall have the right, on a cumulative basis, at any time or from time to time during the remainder of the term of the stock option, to purchase such number of Common Shares subject to the stock options that were purchasable, but not purchased by such optionee, after the expiration of each such one-year period.

The purchase price for Common Shares granted under stock options is determined by the Compensation Committee but shall not be less than the volume weighted average trading price for such Common Shares for the five days preceding the effective date of grant during which the Common Shares were traded on the TSX. In no event may the term of any stock option exceed 10 years from the date of the grant of the stock option. Any stock option granted under the Plan is personal to the optionee and is non-assignable.

The Plan provides for the following limitations on the number of Common Shares issuable thereunder:

  (a)     

the aggregate number of Common Shares reserved for issuance at any time to any one optionee shall not exceed 5% of the number of Common Shares of the Company outstanding on a non- diluted basis at such time, less the total of all shares reserved for issuance to such optionee pursuant to any other share compensation arrangement of the Company and its Affiliates (as defined in the Plan);

   

 
  (b)     

the aggregate number of Common Shares issuable (or, reserved for issuance) to insiders of the Company and its affiliates under the Plan and any other share compensation arrangement of the Company and its affiliates, cannot at any time exceed 10% of the issued and outstanding Common Shares; and

   

 
  (c)     

the aggregate number of Common Shares issued to insiders under the Plan and any other share compensation arrangement of the Company and its affiliates, within a one-year period, cannot exceed 10% of the issued and outstanding Common Shares.

Subject to any express resolution passed by the Board or the Compensation Committee, a stock option, and all rights to purchase Common Shares pursuant thereto, shall expire and terminate immediately upon an optionee ceasing to be a director, full-time employee, consultant or member of the Scientific Advisory Board of the Company and its affiliates. For greater certainty, the optionee shall not lose any rights to any stock options granted pursuant to the Plan if he or she changes positions within the Company or its affiliates so long as he or she remains eligible. If, before the expiry of a stock option, in accordance with the terms thereof, the employment of the optionee by the Company and its affiliates terminates for any reason whatsoever other than termination by the Company or its affiliates for cause, but including termination by reason of the death of the optionee, such stock option may, subject to the terms thereof and any other terms of the Plan, be exercised, if the optionee is deceased, by the legal personal representative(s) of the estate of the optionee during the first three months following the death of the optionee, or if he or she is alive, by the optionee, at any time within three months of the date of termination of the employment of the optionee (but in either case prior to the expiry of the option in accordance with the terms thereof), but only to the extent that the optionee was entitled to exercise such stock option at the date of the termination of his or her employment.

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Notwithstanding any vesting period determined by the Board in respect of any stock option granted to an optionee at any time, the Board may, upon written notice to all the optionees, provide that all or a portion of the then vested or unvested stock options held by such optionees will become exercisable in full as of a specified time prior to the consummation of an Acquisition Event (as defined below) and that all or a portion of the stock options (whether or not vested) will terminate immediately prior to the consummation of such Acquisition Event, except to the extent exercised by the optionees before the consummation of such Acquisition Event; provided, however, that in the event of an Acquisition Event under the terms of which holders of Common Shares will receive upon consummation thereof a cash payment for each Common Share surrendered pursuant to such Acquisition Event (the “Acquisition Price”), then the Board may instead provide in such notice that all or a portion of the outstanding vested or unvested (or both) stock options shall terminate upon consummation of such Acquisition Event and that each optionee shall receive, in exchange therefore, a cash payment equal to the amount (if any) by which (A) the Acquisition Price multiplied by the number of Common Shares subject to such outstanding stock options (whether or not then vested), exceeds (B) the aggregate exercise price of such stock options. For the purposes thereof, “Acquisition Event” shall mean any transaction or series of transactions after which a Person (or a related group of Persons) owns at least 50.1% of the Common Shares; and “Person” shall mean any individual, corporation or company, partnership, joint venture, syndicate, sole proprietorship, trust, trustee, executor, administrator or other legal representative or an unincorporated organization, government or governmental authority or entity.

Notwithstanding anything contained to the contrary in the Plan, or in any resolution of the Board in the implementation thereof, the Board may, by resolution, and with the approval of the TSX, approve, at the election of optionees who cease to be directors of the Company upon application of the mandatory retirement policy adopted by the Board from time to time, either:

  (i)     

the acceleration of the date upon which any unvested stock option may vest, and therefore be exercisable by such optionees, subject always to the three-month period for exercise set forth in the Plan; or

   

 
  (ii)     

notwithstanding the three-month period for exercise set forth in the Plan, the extension of the period for the exercise by such optionees of such stock options as are vested, and therefore are exercisable by such optionees, on the date at which such optionee has ceased to be a director of the Company from the three-month period for exercise set forth in the Plan to twelve months from the date at which any such optionee has ceased to be a director of the Company.

The election referred to above shall be made in writing to the Company no later than the date upon which such optionees cease to be directors of the Company upon application of the mandatory retirement policy. The Board shall not, in the event of any such election, be under any obligation to accelerate the date, or extend the exercise period, in accordance with which any stock option may be exercised by any other optionee.

The Plan provides that the Board may amend or discontinue the Plan at any time without notice or approval from the shareholders of the Company or any optionee, for any purpose whatsoever, including, without limitation for the purpose of:

  (a)     

amendments of a “housekeeping” nature,which include, without limitation, amendments to ensure continued compliance with applicable laws, regulations, rules or policies of any regulatory authority and amendments to remove any ambiguity or to correct or supplement any provision contained in the Plan which may be incorrect or incompatible with any other provision of the Plan;

   

 
  (b)     

a change to the vesting provisions of a stock option of the Plan;

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  (c)     

a change to the termination provisions of a stock option or the Plan which does not entail an extension beyond the original expiration date; and

   

 
  (d)     

the addition of a cashless exercise feature payable in cash or securities which provides for a full deduction of the number of underlying Common Shares from the number of Common Shares reserved for issuance under the Plan;

provided, however, that no such amendment may increase the maximum number of Common Shares issuable pursuant to the Plan, change the manner of determining the minimum Option Price (as defined in the Plan), alter the stock option exercise period following the expiration of the Blackout Period (as defined in the Plan) or, without the consent of the optionee, adversely alter or impair any stock option previously granted to an optionee under the Plan.

The Plan also provides that (i) a reduction in the Option Price, (ii) an extension of the expiration date of an outstanding stock option, (iii) any amendment to the definition of “Eligible Person” under the Plan, or (iv) any amendment which would permit stock options to be transferable or assignable other than for normal estate settlement purposes, may not be made without the approval of the shareholders of the Company (excluding the votes of securities held directly or indirectly by insiders benefiting from the amendment), provided that: (x) an adjustment to the Option Price pursuant to Article 9 of the Plan and (y) an extension of the expiry date pursuant to Section 5.6 of the Plan, in each case subject to any applicable regulatory requirements, shall not require approval of the shareholders of the Company.

The Plan provides that if the term of a stock option of any eligible person under the Plan expires during or within 10 business days of the expiration of a Blackout Period (as defined in the Plan), then the term of the stock option or the unexercised portion thereof, shall be extended by 10 business days after the expiration of the Blackout Period.

The Plan also provides that the Company may, from time to time, implement such procedures and conditions as it determines appropriate with respect to the withholding and remittance of taxes imposed under applicable law, or the funding of related amounts for which liability may arise under such applicable law. Without limiting the generality of the foregoing, following a stock option exercise, if the underlying Common Shares issuable are not to be sold on the optionee’s behalf by the Company, the optionee must, in addition to following the procedures set out elsewhere in the Plan, and as a condition of exercise: (i) deliver a certified cheque, wire transfer or bank draft payable to the Company for the amount determined by the Company to be the appropriate amount on account of such taxes or related amounts; or (ii) otherwise ensure, in a manner acceptable to the Company (if at all) in its sole and unfettered discretion, that the amount will be securely funded; and must in all other respects follow any related procedures and conditions imposed by the Company. In the event of an exercise pursuant to which Common Shares issuable to the optionee are to be sold on the optionee’s behalf, the Company shall deduct from any proceeds payable to the optionee any and all amounts necessary to satisfy the Company’s withholding and/or remittance obligations under applicable law.

The anti-dilution provisions of the Plan adjust the exercise price and, in some cases, the amount of underlying shares that may be subscribed, in the event of the following scenarios: (i) a reorganization of the share-capital; (ii) an issuance of rights, stock options or warrants to all or substantially all of the shareholders to subscribe for or purchase shares at a price per Common Share that is less than 95% of the market price per Common Share; (iii) a payment or issuance of a special dividend in cash or in kind; (iv) an issuer bid where the consideration per Common Share exceeds the market price per Common Share; and (v) other events affecting the shareholders where an optionee has exercised his/her stock options after the effective date of such event.

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In connection with the listing of the Common Shares on NASDAQ in September 2019, the Board approved certain amendments to the Plan, such amendments being effective as of February 26, 2020. In particular, such amendments relate to: (i) the registration requirements applicable to any Common Shares issued under the Plan pursuant to the United States Securities Act of 1933, as amended, and any applicable state securities laws; and (ii) certain United States tax law matters applicable to optionees who are United States citizens, permanent residents or for whom a benefit under the Plan would otherwise be subject to taxation under the U.S. Internal Revenue Code of 1986, as amended, and the rulings and regulations in effect thereunder (which United States tax law matters do not modify the Plan in respect of any other category of optionee).

Deferred Share Unit Plans

Effective January 1, 2007, the Company adopted a deferred share unit plan for directors and a deferred share unit plan for designated employees (the “DSU Plans”) pursuant to which members of the Board may, on an annual basis, elect to receive 100% of their Board retainer in the form of DSUs and designated employees may elect to receive all or any part of their annual bonus in the form of DSUs. The DSUs are redeemable once a Board member is no longer a member of the Board or a designated employee no longer employed by the Company, and vest immediately upon being granted to such persons. Upon redemption, the value of the DSUs credited to a Board member or designated employee will be based on the value of the underlying Common Shares as at that date, as adjusted pursuant to the terms of the applicable DSU Plan, and will be payable to such Board member or designated employee in a lump sum cash payment, subject to applicable withholding taxes.

As at December 31, 2019, each DSU had a cash value of $9.342.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table indicates the number of Common Shares to be issued upon the exercise of stock options outstanding as at March 18, 2020, the weighted average exercise price of such outstanding stock options and the number of Common Shares reserved for future issuance under the Plan.

Plan Category Number of Common Shares to
be issued upon exercise of
outstanding stock options
Weighted-average exercise
price of outstanding stock
options
($)
Number of Common Shares
reserved for issuance under equity
compensation plans (excluding
securities reflected in the first
column)
Equity compensation plans
approved by security holders
4,726,943 $2.88 5,524,901
Equity compensation plans not
approved by security holders
N/A N/A N/A
Total 4,726,943 $2.88 5,524,901

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

No officers, directors, employees or former officers, directors and employees of the Company were indebted to the Company as at March 18, 2020.

PART 4.
REPORT ON CORPORATE GOVERNANCE AND OTHER ITEMS

The CSA has adopted National Policy 58-201 - Corporate Governance Guidelines (the “Guidelines”) to provide guidance to Canadian reporting issuers on matters of corporate governance. The Guidelines relate to a number of significant governance issues, including the proper role of the board of

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directors, its structure and composition and its relationship with shareholders and management. The CSA has also adopted National Instrument 58-101 - Disclosure of Corporate Governance Practices requiring that disclosure be made by a Canadian reporting issuer of its corporate governance practices. A complete description of the Company’s corporate governance practices, with specific references to each of the Guidelines, is attached hereto as Schedule “B”. The former Human Resources and Governance Committee, composed up to March 2020 of Mr. Joseph Rus (Chair), Mr. Pierre Larochelle and Dr. Youssef L. Bennani, reviewed the disclosure set out in Schedule “B”.

The Nominating and Corporate Governance Committee (and formerly the Human Resources and Governance Committee) periodically monitors corporate governance proposals made by the CSA. As new standards become effective, the Nominating and Corporate Governance Committee amends, where necessary and appropriate, the Company’s corporate governance practices and the eligibility requirements for members of the Board to sit on each committee.

Committees of the Board

The following is a description of the current committees of the Board:

Audit Committee

The mandate of the Audit Committee includes assisting the Board in its oversight of (i) the integrity of the Company’s financial statements, accounting and financial reporting processes, system of internal controls over financial reporting and audit process, (ii) the Company’s compliance with, and process for monitoring compliance with, legal and regulatory requirements so far as they may relate to matters of financial reporting, (iii) the independent auditors’ qualifications, independence and performance, and (iv) the performance of the Company’s internal audit function (if any). The current members of the Audit Committee are Mr. Pierre Larochelle (Chair), Mr. Franklin M. Berger and Mr. Joseph Rus.

All of the members of the Audit Committee are “independent directors” as defined under applicable law and the listing standards and applicable policies of the TSX and the NASDAQ and such members meet the independence, experience and expertise requirements under such laws, listing standards and applicable policies and under the applicable policies of the Board.

Additional information regarding the Audit Committee can be found under the heading “Audit Committee” in the Company’s Annual Information Form for the year ended December 31, 2019 (the “Annual Information Form”).

Compensation Committee

In March 2020, a decision was made by the Board to split the Human Resources and Governance Committee into two separate committees, namely the Compensation Committee and the Nominating and Corporate Governance Committee, effective as of the date hereof, and to allocate the roles and responsibilities of the former Human Resources and Governance Committee to such two committees in the manner described below. Up to March 2020, the members of the Human Resources and Governance Committee were Mr. Joseph Rus (Chair), Dr. Youssef L. Bennani and Mr. Pierre Larochelle.

The mandate of the Compensation Committee includes reviewing the compensation arrangements for the Company’s employees, including executive officers and directors, and making recommendations to the Board with respect to such compensation arrangements, as well as making recommendations to the Board with respect to the Company’s incentive compensation plans and equity-based plans, and overseeing succession planning. The members of the Compensation Committee are Mr. Joseph Rus (Chair), Dr. Youssef L. Bennani, Dr. Clarissa Desjardins and Mr. Pierre Larochelle.

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Nominating and Corporate Governance Committee

The mandate of the Nominating and Corporate Governance Committee is to develop and make recommendations to the Board with respect to corporate governance matters, including preparing and reviewing the Company’s disclosure with respect to corporate governance before such disclosure is submitted to the Board for approval. The Nominating and Corporate Governance Committee is also responsible for the review and periodic update of the Company’s corporate governance mandates, charters, policies and procedures, including its Code of Ethics, which governs the conduct of the Company’s directors, officers and other employees. Moreover, the Nominating and Corporate Governance Committee is mandated to examine, on an annual basis, the size and composition of the Board and, if appropriate, make recommendations in that regard in order to ensure the composition of the Board facilitates effective decision-making.

In addition, the Nominating and Corporate Governance Committee’s mandate includes identifying individuals qualified to become members of the Board and making recommending to the Board with respect to nominees to be put before shareholders at each annual meeting, as well as recommendations with respect to the process for board, committee and director assessment. In identifying potential candidates, the Committee seeks to put forward individuals it believes represent potentially suitable candidates and also solicits names of other potentially suitable candidates from the other members of the Board of Directors and from members of management. The Committee then considers the qualifications and qualities of each individual in light of the needs of the Board and of the Company and makes a recommendation to the Board on that basis.

The members of the Nominating and Corporate Governance Committee are Mr. Franklin Berger (Chair), Dr. Youssef L. Bennani and Dr. Clarissa Desjardins.

Communications, Insider Trading, Confidential Information and Disclosure Policies

The Board is committed to an effective communications policy with all its stakeholders, including shareholders, suppliers, advertisers, employees, agents and members of the investment community. The Company is committed to complying with all applicable laws, regulations and policies, as well as with best practices in the field. This commitment is evidenced, notably, by the adoption by the Company of a Disclosure and Trading Policy.

The Audit Committee or the Board reviews in advance all press releases which disclose financial results. Other continuous disclosure documents, including, without limitation, the annual report, proxy materials and Annual Information Form are reviewed by members of the Company’s Disclosure Committee and, where appropriate, the Board and, where required, these documents are also reviewed and approved by the Board.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS AND MANAGEMENT CONTRACTS

Consulting and Service Agreement

The Company has entered into a Consulting and Service Agreement with effect from January 1, 2010, with Picchio International providing for strategic advice on matters pertaining to the development and commercialization of pharmaceutical products to provide health solutions to address critical unmet needs. Under the terms of that agreement Picchio International has assigned primary responsibility for providing such services to Dr. Francesco Bellini. For the services, a monthly retainer of $20,833, is paid, plus applicable taxes, and Picchio International is reimbursed for its reasonable expenses incurred in the proper conduct of the services. The Consulting and Services Agreement automatically renews for successive one-year terms, unless one party advises the other party of its intention not to renew by October 1 of the current

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year. During the fiscal period ended December 31, 2019, Picchio International received $381,000 under the Consulting and Services Agreement.

The Consulting and Services Agreement was automatically renewed for a one-year period, commencing on January 1, 2020.

2020 SHAREHOLDER PROPOSALS

Shareholder proposals must be submitted no later than December 18, 2020 to be considered for inclusion in the Management Information Circular for the purposes of the Company’s 2021 annual meeting of shareholders.

ADDITIONAL INFORMATION

Financial information is provided in the Company’s audited financial statements and management's discussion and analysis for its most recently completed financial year. Copies of these documents and additional information relating to the Company are available on SEDAR at www.sedar.com.

APPROVAL BY DIRECTORS

The contents of the Circular and the sending thereof have been approved by resolution of the Board.

DATED at Montréal, Québec, Canada, March 18, 2020.

(signed) Sébastien Roy
Corporate Secretary

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SCHEDULE “A”

RESOLUTION RELATED TO UNALLOCATED STOCK OPTIONS

WHEREAS the Board of Directors of the Corporation amended the amended and restated stock option plan of the Corporation on March 14, 2005 to provide that the maximum number of Common Shares issuable thereunder would be fixed at 12.5% of the Common Shares issued and outstanding and that the amended and restated stock option plan (the “Plan”) has since been further amended and restated.

WHEREAS the shareholders of the Corporation approved on May 12, 2005, the amendments to the Plan, by a majority of votes cast and confirmed and ratified such approval on April 15, 2008, on May 11, 2011, on May 7, 2014 and on May 16, 2017;

WHEREAS the rules of Toronto Stock Exchange provide that all unallocated options, rights or other entitlements under a security-based compensation arrangement which do not have a fixed number of maximum securities issuable be re-approved every three (3) years;

NOW THEREFORE BE IT RESOLVED THAT:

1.     

all unallocated options under the Plan be and are hereby approved;

2.     

the Corporation have the ability to continue granting options under the Plan until May 14, 2023; and

3.     

any director or officer of the Corporation be and is hereby authorized to do such things and to sign, execute and deliver all documents that such director or officer may, in their discretion, determine to be necessary in order to give full effect to the intent and purpose of this resolution.

A-1





SCHEDULE “B”

CORPORATE GOVERNANCE PRACTICES

This Schedule provides a detailed comparison of the Company’s governance practices with the Guidelines. All capitalized terms used but not defined in this Schedule shall have the meanings ascribed thereto in the Circular.

GOVERNANCE DISCLOSURE GUIDELINE
UNDER NI 58-101
THE COMPANY’S GOVERNANCE PROCEDURES
A. Directors  
1. The board should have a majority of independent directors. The Board currently consists of a majority of independent directors as, of the eight directors currently serving on the Board, six are considered independent, namely Dr. Youssef L. Bennani, Mr. Franklin M. Berger, CFA, Dr. Clarissa Desjardins, Mr. Chau Q. Khuong, Mr. Pierre Larochelle and Mr. Joseph Rus. Dr. Francesco Bellini, O.C. and Mr. Roberto Bellini are not independent directors.

Pursuant to the 2009 Board Representation Agreements, each of PSCI and Rocabe is entitled to cause up to two nominees to be included in the list of management nominees to be proposed for election to the Board at each shareholders’ meeting occurring following the date thereof. Mr. Larochelle is the nominee of PSCI and Dr. F. Bellini is the nominee of Rocabe. See “Election of Directors” on pages 6 and 7 of the Circular.

Pursuant to the 2018 Board Representation Agreement, OrbiMed is entitled to cause one nominee to be included in the list of management nominees to be proposed for election to the Board at each shareholders’ meeting occurring following the date thereof. Mr. Chau Q. Khuong is the nominee of OrbiMed. See “Election of Directors” on pages 6 and 7 of the Circular.

During the year ended December 31, 2019, Dr. Francesco Bellini, O.C., Chairman of the Board was not an independent director because of his relationship with Mr. Roberto Bellini, the current President and Chief Executive Officer. Mr. Roberto Bellini was not independent because, as President and Chief Executive Officer, he is a member of the management of the Company.

Regarding the persons proposed by management to be nominated for election as directors at the Meeting, a majority are considered independent. The nominees

B-1





GOVERNANCE DISCLOSURE GUIDELINE
UNDER NI 58-101
THE COMPANY’S GOVERNANCE PROCEDURES
  considered independent are: Dr. Youssef L. Bennani, Mr. Franklin M. Berger, CFA, Dr. Clarissa Desjardins, Mr. Chau Q. Khuong, Mr. Pierre Larochelle and Mr. Joseph Rus. Dr. Francesco Bellini, O.C., the Chair of the Board of Directors, is not an independent director because of his relationship with Mr. Roberto Bellini, the current President and Chief Executive Officer. Mr. Roberto Bellini, the current President and Chief Executive Officer, is not an independent director as he is a member of the management of the Company.
2. If a director is presently a director of any other reporting issuer, identify both the director and the other issuer. A table identifying which directors are also directors of other reporting issuers is included on page 9 of the Circular.
3. The Chair of the board should be an independent director. The Chair of the Board, Dr. Francesco Bellini, O.C., is not an independent director. Given the Company’s current stage of development and the controls in place, the Board is of the opinion that it is in the best interests of the Company and its shareholders to have Dr. Francesco Bellini, O.C., continue to act as Chair of the Board.

Mr. Pierre Larochelle acts as lead director. The lead director is the representative of the independent directors to the Board. He provides leadership to ensure that the Board’s agenda will enable it to successfully carry out its duties and leads meetings of the independent directors, as described below.
4. The independent directors should hold regularly scheduled meetings at which non-independent directors and members of management are not in attendance. The independent directors hold regular meetings at which non-independent directors and members of management are not in attendance, usually after regularly scheduled meetings of the Board. A record of attendance of each independent director at such meetings held in the financial year ended December 31, 2019, is included on page 9 of the Circular.
5. The attendance record of each director for all board meetings held since the beginning of the issuer’s most recently completed financial year should be disclosed. A record of attendance of each director at Board and Board committee meetings held since the beginning of the Company’s most recently completed financial year is included on page 9 of the Circular.
B. Mandate of the Board of Directors  
6. The board should adopt a written mandate in which it explicitly acknowledges responsibility for the stewardship of the issuer. The Board has explicitly assumed responsibility for the stewardship of the Company in a formal Mandate of the Board of Directors, which was revised and amended in August 2019. This Mandate is regularly reviewed and is attached herewith as Schedule “C”.

B-2





GOVERNANCE DISCLOSURE GUIDELINE
UNDER NI 58-101
THE COMPANY’S GOVERNANCE PROCEDURES
C. Position Descriptions  
7. The board should develop clear position descriptions for the Chair of the board and the Chair of each board committee. In addition, the board should develop a clear position description for the president and CEO. The board should also develop or approve the goals and objectives that the president and CEO must meet.

The Board of Directors has adopted Terms of Reference for its Chair, for its lead director, for the Chair of the Audit Committee, the Chair of the Compensation Committee and the Chair of the Nominating and Corporate Governance Committee as well as for the President and Chief Executive Officer. The Mandate of the Board of Directors, along with the charters of the committees, set forth the roles and responsibilities of the Board of Directors and its committees and guide the Chair of the Board and the Chairs of each committee in discharging their own responsibilities. The Board of Directors also periodically discusses with the President and Chief Executive Officer his role and responsibilities, as well as his goals and objectives.

D. Orientation and Continuing Education  

8. The board should ensure that all new directors receive a comprehensive orientation. All new directors should understand the nature and operation of the issuer’s business.

The board should provide continuing education opportunities for all directors.

The Nominating and Corporate Governance Committee has the mandate, explicitly documented in its Charter, to consider the appropriateness of implementing, from time to time and as appropriate, orientation and continuing education for directors. Directors receive comprehensive packages prior to each Board and committee meeting, and are regularly briefed by management on the business and activities of the Company.

Further, the directors also receive a comprehensive binder setting out all of the Company’s corporate governance mandates, charters, policies, practices and procedures, together with copies of relevant legislation and regulations, and informational updates and analyses provided to the public by external legal advisors relating to corporate governance matters. This binder is updated periodically, as necessary.

The directors have discussed with management the development of a program of continuing education on the Company’s ongoing development programs aimed at helping each director participate actively in decisions relating to the Company’s ongoing and future development programs. In light thereof, the Company’s management provides regular briefings to the Board regarding the Company’s ongoing development programs.

E. Ethical Business Conduct  
9. The board should adopt a written code of business conduct and ethics. The code should The Company has adopted a written code of ethics. This code is available through SEDAR at www.sedar.com. All directors, officers and employees

B-3





GOVERNANCE DISCLOSURE GUIDELINE
UNDER NI 58-101
THE COMPANY’S GOVERNANCE PROCEDURES
be applicable to directors, officers and employees of the issuer. of the Company are provided with a copy of the code of ethics.
10. The board should be responsible for monitoring compliance with the code. Any waivers from the code that are granted for the benefit of the issuer’s directors or executive officers should be granted by the board (or a board committee) only.

The Nominating and Corporate Governance Committee is responsible for monitoring compliance with the Company’s code of ethics. The Board has not granted any waiver from the code of ethics in favour of any director or executive officer of the Company in the financial year ended December 31, 2019.

In March 2020, a decision was made by the Board to split the Human Resources and Governance Committee into two separate committees, namely the Compensation Committee and the Nominating and Corporate Governance Committee, effective as of the date hereof, and to allocate the roles and responsibilities of the former Human Resources and Governance Committee to such two committees in the manner described in the Circular.

11. The board must ensure that directors exercise independent judgment in considering transactions and agreements in which a director or executive officer has a material interest.

The code of ethics of the Company provides that each director, officer or employee, including in particular senior financial officers, (collectively the “Designated Individuals”) of the Company and its subsidiary must avoid any conflict, or perception of conflict, between his or her personal interests and the interests of the Company in transacting the Company’s business. All actions and decisions by Designated Individuals in the performance of work must be based on impartial and objective assessments of the Company’s interests in the situation, totally without regard to any gifts, favours, or similar benefits from outside parties that could affect (or be seen by others to possibly affect) their judgment. Any gift, loan to or guarantee of obligation of, or benefit of any kind that has a value in excess of $400 must be approved by the Vice President, Finance or, in his absence, the President and Chief Executive Officer the Company.

The code of ethics also provides that no Designated Individual shall have any financial interest or position with any entity that transacts business with or competes with the Company other than the ownership of a minor percentage of shares in a public company without immediately disclosing these interests and obtaining the approval of the Vice President, Finance or, in the case of directors or officers, the Board.

12. The board must take steps to encourage and promote a culture of ethical business conduct. The Board is committed to encouraging and promoting a culture of ethical business conduct and integrity throughout the Company. In order to achieve this objective, and in addition to the implementation, monitoring and enforcement of the Company’s code of ethics, the Board has adopted an anonymous complaints procedure for accounting, auditing and

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GOVERNANCE DISCLOSURE GUIDELINE
UNDER NI 58-101
THE COMPANY’S GOVERNANCE PROCEDURES
  scientific matters to ensure that there will be no retaliation against Designated Individuals who have complaints in these respects.
F. Nomination of Directors  
13. The board should appoint a nominating committee composed entirely of independent directors.

The Nominating and Corporate Governance Committee is responsible for identifying nominees to the Board for election as directors.

The Nominating and Corporate Governance Committee is composed entirely of independent directors. In fulfilling its responsibilities to identify nominees to the Board, the Nominating and Corporate Governance Committee comes up with the names of individuals it believes represent potentially suitable candidates and also solicits names of other potentially suitable candidates from the other members of the Board of Directors and also from management of the Company. It then looks at the qualifications and qualities of each in light of the needs of the Board of Directors and the Company and bases its recommendation to the Board on this basis.

14. The nominating committee should have a written charter that clearly establishes the committee’s purpose, responsibilities, member qualifications, member appointment and removal, structure, operations and manner of reporting to the board. In addition, the nominating committee should be given authority to engage and compensate any outside advisor that it determines to be necessary to permit it to carry out its duties. The Board has adopted a charter of the Nominating and Corporate Governance Committee that clearly establishes the Nominating and Corporate Governance Committee’s purpose, responsibilities, member qualifications, member appointment and removal, structure, operations and manner of reporting to the Board. The charter also provides authority to the Nominating and Corporate Governance Committee to engage outside advisors, if necessary.
15. Prior to nominating or appointing individuals as directors, the board should adopt a process involving the following steps: consider what competencies and skills the board, as a whole, should possess and assess what competencies and skills each existing director possesses.

The Board is composed of directors with a variety of backgrounds, skills and experience. The Nominating and Corporate Governance Committee is responsible for identifying and recommending to the Board individuals qualified to become members of the Board.

From time to time and as appropriate, the Nominating and Corporate Governance Committee reviews the credentials of nominees to the Board, and assesses the existing strengths of the Board as well as the changing needs of the Company, to determine whether changes may be required to the composition of the Board to add value to the Company. The former Human Resources and Governance Committee undertook the most recent evaluation of the performance and effectiveness of the Board in February 2020.

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GOVERNANCE DISCLOSURE GUIDELINE
UNDER NI 58-101
THE COMPANY’S GOVERNANCE PROCEDURES
16. The board should consider the appropriate size of the board, with a view to facilitating effective decision-making by the board. The Board presently consists of eight directors with a variety of backgrounds. Its size and composition are subject to periodic review by the Nominating and Corporate Governance Committee.
17. The nominating committee should be responsible for identifying individuals qualified to become new board members and recommending to the board the new director nominees for the next annual meeting of shareholders. The Nominating and Corporate Governance Committee is responsible for identifying and recommending to the Board new candidates for election and for filling director vacancies.
18. In making its recommendations, the nominating committee should consider the competencies and skills that the board considers to be necessary for the board, as a whole, to possess and those that the board considers each existing director and new nominee to possess. As described above, the Nominating and Corporate Governance Committee ensures that the composition of the Board is such that the required competencies and skills are represented on the Board and that the nominees make up a competent team which can carry out the Mandate of the Board and add value to the Company.
19. The board should consider the representation of women on the board and in executive positions. The Board is mindful of diversity within its ranks and in executive positions. While the Board has not, at this stage, considering its size and stage of development, adopted a written diversity policy or set a target number of women directors or executive officers, the Board and the Company do seek to include gender diversity within their ranks and consider the representation of women in the identification and selection of directors and executive officers; experience and expertise, at this stage of development of the Company, are the key elements, however, in the identification and the selection of directors and executive officers. One of the eight (13%) proposed nominees to the Board is a woman. The Company has four full-time executive officers, none of which is a woman; however, the Company has historically had a number of women executives in its ranks.
G. Compensation  
20. The board should appoint a compensation committee composed entirely of independent directors. The Compensation Committee is responsible for assisting the Board in discharging its oversight responsibilities relating to, among other things, executive compensation. The Compensation Committee is composed entirely of independent directors.
21. The compensation committee should have a written charter that establishes the committee’s purpose, responsibilities, member qualifications, member appointment and removal, structure, operations and the manner of reporting to the board. In addition, the The Board has adopted a charter of the Compensation Committee which clearly establishes the Committee’s purpose, responsibilities, member qualifications, member appointment and removal, structure, operations and manner of reporting to the Board. The

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GOVERNANCE DISCLOSURE GUIDELINE
UNDER NI 58-101
THE COMPANY’S GOVERNANCE PROCEDURES
compensation committee should be given authority to engage and compensate any outside advisor that it determines to be necessary to permit it to carry out its duties. charter also gives the Compensation Committee the authority to engage outside advisors, if necessary.
22. The compensation committee should be responsible for: reviewing and approving corporate goals and objectives relevant to CEO compensation, evaluating the CEO’s performance in light of those corporate goals and objectives, and determining (or making recommendations to the board with respect to) the CEO’s compensation level based on this evaluation; making recommendations to the board with respect to non-CEO officer and director compensation, incentive-compensation plans and equity-based plans and reviewing executive compensation disclosure before the issuer publicly discloses this information. The Compensation Committee is responsible for reviewing and recommending to the Board the levels of compensation of the President and Chief Executive Officer and the officers reporting to the President and Chief Executive Officer, as well as reviewing the objectives of the President and Chief Executive Officer and assessing his performance in respect of such assessment. The Compensation Committee is also responsible for reviewing the adequacy and forms of compensation generally and of director compensation as well as the review of the executive compensation disclosure of the issuer.

23. If a compensation consultant or advisor has, at any time since the beginning of the issuer’s most recently completed financial year, been retained to assist in determining compensation for any of the issuer’s directors and officers, disclose the identity of the consultant or advisor and briefly summarize the mandate for which they have been retained. If the consultant or advisor has been retained to perform any other work for the issuer, state that fact and briefly describe the nature of the work.

No compensation consultant or advisor was retained by the Company to assist the Compensation Committee on any matters during the financial year ended December 31, 2019.
H. Other Board Committees  
24. Identify the standing committees of the board other than the audit, nominating and compensation committees, and describe their function. The Board has no standing committees other than the Audit Committee, the Nominating and Corporate Governance Committee and the Compensation Committee, each of which is described in detail on pages 25 and 26 of the Circular.
I. Assessments  
25. The board, its committees and each individual director should be regularly assessed regarding his, her or its effectiveness and contribution.

The Nominating and Corporate Governance Committee has the mandate, explicitly documented in its charter, to implement a process for assessing the effectiveness of the Board, its committees and individual directors.

Directors aim to conduct an annual evaluation of the performance and effectiveness of the Board as a whole, in light of its Mandate. This evaluation is performed through peer review, evaluation and discussions amongst the directors. The most recent

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GOVERNANCE DISCLOSURE GUIDELINE
UNDER NI 58-101
THE COMPANY’S GOVERNANCE PROCEDURES
  evaluation was conducted by the former Human Resources and Governance Committee in February 2020.
J. Term Limits  
26. Disclose whether term limits for directors or other mechanisms of board renewal has been adopted. The Board has not adopted formal term limits as it is of the view that, given the Company’s current stage of development, it is critical for the Board to ensure that the required competencies and skills continue to be represented within its ranks. The Nominating and Corporate Governance Committee considers renewal  of Board membership on a yearly basis.

B-8





SCHEDULE “C”

BELLUS HEALTH INC.

BOARD OF DIRECTORS MANDATE

1. MANDATE

1.1 In adopting this mandate,

  1.1.1     

the board acknowledges that the mandate prescribed for it by the Canada Business Corporations Act (the “CBCA”) and any other applicable legal and stock exchange listing requirements, is to manage, or supervise the management of, the business and affairs of BELLUS Health Inc. (the “Company”) and that this mandate includes responsibility for stewardship of the Company; and

  1.1.2     

the board explicitly assumes responsibility for the stewardship of the Company, as contemplated by the corporate governance guidelines adopted by the Canadian securities regulatory authorities (the “Canadian Guidelines”) and any other applicable legal and stock exchange listing requirements.

2. BOARD MEMBERSHIP

2.1 Number of Members - The board shall consist of such number of directors as the board may determine from time to time, provided that such number shall be within the minimum and maximum number of directors set out in the Company’s articles.

2.2 Independence of Members -

  2.2.1     

At least three of the directors shall not be officers or employees of the Company or any of its affiliates.

 

  2.2.2     

At least one-quarter of the directors shall be resident Canadians.

 
  2.2.3     

A majority of the directors must be independent as defined under the Canadian Guidelines and any other applicable legal and stock exchange listing requirements.

2.3 Election and Appointment of Directors - Directors shall be elected by the shareholders at each annual meeting of shareholders, provided that if directors are not elected at any annual meeting, the incumbent directors continue in office until their successors are elected.

2.4 Vacancy - The board may appoint a member to fill a vacancy, which occurs in the board between annual elections of directors to the extent permitted by the CBCA and any other applicable legal and stock exchange listing requirements.

2.5 Removal of Members - Any director may be removed from office by an ordinary resolution of the shareholders at a special meeting of shareholders.

2.6 Additional Directors - In addition to filling vacancies on the board, the directors may at any time, without exceeding the number of directors provided by the articles of the Company, appoint one or more additional directors who shall hold office for a term expiring not later than the close of the next

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annual meeting of shareholders, provided that the total number of directors so appointed may not exceed one-third (1/3) of the number of directors elected at the previous annual meetings of shareholders.

3. BOARD CHAIR

3.1 Chairperson of the Board - The chairperson of the board shall, to the extent practicable, be independent within the meaning of the Canadian Guidelines and any other applicable legal and stock exchange listing requirements.

3.2 Chairperson of Meetings - The chairperson of any meeting of the board shall be the first mentioned of such of the following officers as have been appointed and who is a director and is present at the meeting: chairperson of the board, the deputy chairperson, or chairperson of the executive committee of the board (if such a committee is constituted). If no such officer is present, the directors present shall choose one of their number to be chairperson.

4. MEETINGS OF THE BOARD

4.1 Quorum - Unless otherwise fixed by resolution of the directors, a quorum of the board shall be a majority of its members.

4.2 Secretary - The secretary of the board shall be designated from time to time in accordance with the by-laws of the Company.

4.3 Time and Place of Meetings - Meetings of the board shall be held from time to time and at such place as the board, the deputy chairperson, the chairperson of the board, the chairperson of the executive committee of the board (if such a committee is constituted) or any two directors may determine.

4.4 Right to Vote - Each member of the board shall have the right to vote on matters that come before the board unless precluded by the CBCA and any other applicable legal and stock exchange listing requirements.

4.5 Invitees - The board may invite officers and employees of the Company or any other person to attend meetings of the board to assist in the discussion and examination of the matters under consideration by the board.

4.6 Meeting of Independent Directors - The independent directors must hold regularly scheduled meetings at which only independent directors are present but, in no event, shall the independent directors meet fewer than two (2) times per year.

4.7 Attendance and Preparedness - Directors are expected to attend regularly scheduled meetings of the board and of the shareholders and to have prepared for the meetings by, at a minimum, reviewing in advance of the meeting the materials delivered in connection with the meeting. The attendance record of individual directors at meetings of the board will be disclosed in the Company’s proxy circular as required by applicable law.

5. OUTSIDE ADVISORS

5.1 Retaining and Compensating Advisors - Each director shall have the authority to retain outside counsel and any other external advisors as appropriate with the approval of the Nominating and Corporate Governance Committee.

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6. REMUNERATION OF BOARD MEMBERS

6.1 Members of the board shall receive such remuneration for their service on the board and its committees as the board may determine from time to time.

7. DUTIES AND RESPONSIBILITIES OF THE BOARD

7.1 Specific Aspects of Stewardship Function - In adopting this mandate, the board hereby explicitly assumes responsibility for the matters set out below:

  7.1.1     

to the extent feasible, satisfying itself as to the integrity of the CEO and other executive officers and that the CEO and other executive officers create a culture of integrity throughout the organization;

   

 
  7.1.2     

adopting of a strategic planning process and approving, on at least an annual basis, a strategic plan which takes into account, among other things, the opportunities and risks of the Company’s business;

   

 
  7.1.3     

the identification of the principal risks of the Company’s business and ensuring the implementation of appropriate systems to manage these risks;

   

 
  7.1.4     

succession planning, including appointing, training and monitoring senior management;

   

 
  7.1.5     

adopting a communication policy for the Company; and

   

 
  7.1.6     

the Company s internal control and management information systems.

7.2 Corporate Governance Matters - The board shall adopt and maintain corporate governance principles and guidelines recommended to it by the Nominating and Corporate Governance Committee and which comply with all applicable legal and stock exchange listing requirements and with such recommendations of relevant securities regulatory authorities and stock exchanges as the board may consider appropriate.

7.3 Nomination and Appointment of Directors -

  7.3.1     

The board shall nominate individuals for election as directors by the shareholders and shall require the Nominating and Corporate Governance Committee to make recommendations to it with respect to such nominations.

   

 
  7.3.2     

The board may fill such vacancies on the board as it is permitted by law to fill and shall require the Nominating and Corporate Governance Committee to make recommendations to it with respect to such vacancies.

   

 
  7.3.3     

The board shall consider recommendations made to it by the Nominating and Corporate Governance Committee with respect to the size and composition of the board.

   

 
  7.3.4     

In selecting candidates for appointment or nomination as directors, the board shall:

   

 
 

(i)     

consider what competencies and skills the board, as a whole, should possess; and

   

 
  (ii)     

assess what competencies and skills each existing director possesses.

7.4 Significant Decisions - The board shall require management to obtain its approval for all significant decisions, including major financings, acquisitions, dispositions, budgets and capital expenditures.

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7.5 Information Flow from Management - The board shall require management to keep it aware of the Company’s performance and events affecting the Company’s business, including opportunities in the marketplace and adverse or positive developments.

7.6 Position Descriptions - The board shall develop clear position descriptions for the chairperson of the board, the deputy chairperson and the chair of each board committee. In addition, the board, together with the CEO, shall develop a clear position description for the CEO.

7.7 Corporate Objectives - The board shall approve specific financial and business goals and objectives, which will be used as a basis for measuring the performance of the CEO.

7.8 Delegation to Committees -

  7.8.1     

The board shall establish and maintain the following committees of the board, each having charters that incorporate all applicable legal and stock exchange listing requirements and with such recommendations of relevant securities regulatory authorities and stock exchanges as the board may consider appropriate:

   

 
  (i)     

Audit Committee;

   

 
  (ii)  

Nominating and Corporate Governance Committee; and

   

 
  (iii)  

The Compensation Committee.

   

 
  7.8.2     

Subject to the Company’s articles and by-laws, the board may appoint any other committee of directors and delegate to such committee any of the powers of the board, except to the extent that such delegation is prohibited under the CBCA and any other applicable legal and stock exchange listing requirements.

   

 
  7.8.3     

The board will appoint and maintain in office, members of each of its committees such that thecompositionofeachsuchcommitteeisincompliancewithallapplicablelegalandstock exchange listing requirements and with such recommendations of relevant securities regulatory authorities and stock exchanges as the board may consider appropriate and shall require the Nominating and Corporate Governance Committee to make recommendations to it with respect to such matters.

   

 
  7.8.4     

Subject to applicable legal and stock exchange listing requirements, and in adherence to such requirements, the board will review the charters and the composition of each of its committees on a regular basis and will revise those charters or amend the composition of its committees as it considers appropriate and shall require the Nominating and Corporate Governance Committee to make recommendations to it with respect to such matters.

7.9 Delegation to Management - Subject to the Company’s articles and by-laws, the board may designate the offices of the Company, appoint officers, specify their duties and delegate to them powers to manage the business and affairs of the Company, except to the extent that such delegation is prohibited under the CBCA and any other applicable legal and stock exchange listing requirements.

7.10 Residual Authority - The board retains responsibility for any matter that has not been delegated to management or to a committee of the directors.

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7.11 Financial Statements - The board shall review and, if appropriate, approve the Company’s annual financial statements after the Audit Committee has reviewed and made a recommendation on those statements to the board.

7.12 Compensation Matters -

  7.12.1     

Executive Compensation Policy - The board shall review the executive compensation policy submitted to it by the Compensation Committee.

   

 
  7.12.2     

Compensation and Benefits - The board shall review and approve, as appropriate:

   

 
  (i)    

the overall structure of the Company’s total compensation strategy, including the elements of the Company’s annual and long-term incentive plans, including plan design, performance targets, administration and total funds/shares reserved for payments;

   

 
  (ii)

the CEO’s total compensation in light of the performance assessment by the Compensation Committee;

   

 
  (iii) the individual elements of total compensation for the executives named in the annual proxy statement and the total compensation of such other members of senior management not named in the annual proxy statement;
   

 
(iv)

the total compensation for the members of the board, in light of director compensation guidelines and principles established by the Compensation Committee; and

   

 
  (v)

shall require the Compensation Committee to make recommendations to it with respect to such matters.

   

 

  7.12.3     

Organizational Responsibilities - The board shall review and approve as appropriate:

   

 
  (i)    

appointments for all mission critical positions (as such positions are defined by the Compensation Committee from time to time) and compensation packages for such appointments;

   

 
  (ii)

executive compensation disclosure that is required to be publicly disclosed by the Company; and

   

 
  (iii)

shall require the Compensation Committee to make recommendations to it with respect to such matters.

   

 
  7.12.4     

Pension Plan Matters - The board shall receive and review reports from management and from the Compensation Committee covering administration, investment performance, funding, financial impact, actuarial reports and other pension plan related matters.

7.13 Code of Ethics -

  7.13.1     

The board shall adopt a written code of business conduct and ethics (the “Code”) recommended to it by the Nominating and Governance Committee and which complies with all applicable legal and stock exchange listing requirements and with such recommendations of relevant securities regulatory authorities and stock exchanges as the board may consider appropriate.

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  7.13.2     

The board shall be responsible for monitoring compliance with the Code. Any waivers from the Code that are granted for the benefit of directors or executive officers of the Company shall be granted by the board (or a committee of the board) only.

7.14 Communication Policy - The Board shall periodically review the Company’s overall communications policy, including measures for receiving feedback from stakeholders.

8. REGULAR BOARD ASSESSMENTS

8.1 Establish Process - The board shall establish a process to be carried out by the Nominating and Governance Committee for regularly assessing the effectiveness and contribution of the board, its committees and each individual director.

8.2 Amendments to Mandate - The board will review and reassess the adequacy of its mandate on a regular basis.

9. ORIENTATION AND CONTINUING EDUCATION

9.1 The board shall ensure that all new directors receive a comprehensive orientation.

9.2 The board shall provide continuing education opportunities for all directors, so that individuals may maintain or enhance their skills and abilities as directors, as well as to ensure their knowledge and understanding of the Company’s business remains current.

10. INTERPRETATION

10.1 The provisions of this mandate shall at all times be subject to the provisions of the CBCA, the articles and the by-laws of the Company and any other applicable legal and stock exchange listing requirements.

* * *

This mandate is intended as a component of the flexible governance framework within which the board, assisted by its committees, directs the affairs of the Company. While it should be interpreted in the context of all applicable laws, regulations and listing requirements, as well as in the context of the Company’s articles and by-laws, it is not intended to establish any legally binding obligations. The Directors have the right to derogate from the provisions of this mandate where the circumstances warrant it, to the extent permitted by applicable laws, regulations and listing requirements and the Company’s articles and by-laws.

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Exhibit 99.3

Exhibit 99.3


8th Floor, 100 University Avenue
Toronto, Ontario M5J 2Y1
www.computershare.com

  

Security Class 
 
Holder Account Number 
 
 
 





Form of Proxy - Annual and Special Meeting to be held on May 14, 2020

This Form of Proxy is solicited by and on behalf of Management.

Notes to proxy
1.

Every holder has the right to appoint some other person or company of their choice, who need not be a holder, to attend and act on their behalf at the meeting or any adjournment or postponement thereof. If you wish to appoint a person or company other than the persons whose names are printed herein, please insert the name of your chosen proxyholder in the space provided (see reverse).

 

 

2.

If the securities are registered in the name of more than one owner (for example, joint ownership, trustees, executors, etc.), then all those registered should sign this proxy. If you are voting on behalf of a corporation or another individual you must sign this proxy with signing capacity stated, and you may be required to provide documentation evidencing your power to sign this proxy.

 

 

3.

This proxy should be signed in the exact manner as the name(s) appear(s) on the proxy.

 

 

4.

If this proxy is not dated, it will be deemed to bear the date on which it is mailed by Management to the holder.

 

 

5. 

The securities represented by this proxy will be voted as directed by the holder, however, if such a direction is not made in respect of any matter, this proxy will be voted as recommended by Management.

 

 

6.

The securities represented by this proxy will be voted in favour or withheld from voting or voted against each of the matters described herein, as applicable, in accordance with the instructions of the holder, on any ballot that may be called for and, if the holder has specified a choice with respect to any matter to be acted on, the securities will be voted accordingly.

 

 

7. 

This proxy confers discretionary authority in respect of amendments or variations to matters identified in the Notice of Meeting or other matters that may properly come before the meeting or any adjournment or postponement thereof.

 

 

8.

This proxy should be read in conjunction with the accompanying documentation provided by Management.

Proxies submitted must be received by 5:00 pm, Eastern Time, on May 12, 2020.

VOTE USING THE TELEPHONE OR INTERNET 24 HOURS A DAY 7 DAYS A WEEK!

     
   To Vote Using the Telephone    To Vote Using the Internet  
     
Call the number listed BELOW from a touch tone telephone. Go to the following web site: www.investorvote.com    
1-866-732-VOTE (8683) Toll Free

Smartphone?
Scan the QR code to vote now.

 

 

 
   
If you vote by telephone or the Internet, DO NOT mail back this proxy.

Voting by mail may be the only method for securities held in the name of a corporation or securities being voted on behalf of another individual.
Voting by mail or by Internet are the only methods by which a holder may appoint a person as proxyholder other than the Management nominees named on the reverse of this proxy. Instead of mailing this proxy, you may choose one of the two voting methods outlined above to vote this proxy.

To vote by telephone or the Internet, you will need to provide your CONTROL NUMBER listed below.

CONTROL NUMBER







Appointment of Proxyholder    
I/We, being holder(s) of BELLUS Health Inc. hereby appoint: Dr. Francesco Bellini, O.C., or failing him Mr. Roberto Bellini, or failing him Mr. François Desjardins, or failing him Mr. Sébastien Roy OR Print the name of the person you are appointing if this person is someone other than the Management Nominees listed herein.    

as my/our proxyholder with full power of substitution and to attend, act and to vote for and on behalf of the shareholder in accordance with the following direction (or if no directions have been given, as the proxyholder sees fit) and all other matters that may properly come before the Annual and Special Meeting of shareholders of BELLUS Health Inc. to be held at 275 Armand-Frappier Blvd., Laval, Quebec H7V 4A7 on May 14, 2020 at 2:30 pm, Montreal Time and at any adjournment or postponement thereof.

VOTING RECOMMENDATIONS ARE INDICATED BY HIGHLIGHTED TEXT OVER THE BOXES.



   
             
1. Election of Directors            
  For Withhold For Withhold   For Withhold
 
01. Dr. Francesco Bellini, O.C. ¨  ¨ 02. Roberto Bellini ¨  ¨ 03. Dr. Youssef L. Bennani  ¨  ¨
 
04. Franklin M. Berger ¨ ¨ 05. Dr. Clarissa Desjardins ¨ ¨ 06. Chau Q. Khuong ¨ ¨
 
07. Pierre Larochelle ¨ ¨ 08. Joseph Rus ¨ ¨      
     
          For Withhold
 
2. Appointment of Auditors     ¨ ¨
Appointment of KPMG LLP as Auditors of the Company for the ensuing year and authorizing the Audit Committee to fix their remuneration.
 
          For Against
       
3. Resolution - Stock Option Plan   ¨ ¨
Ratification and confirmation of a resolution approving the unallocated options under the Stock Option Plan.  
       
       
       
       
       
       
       
       
       
       
       
           
Authorized Signature(s) - This section must be completed for your instructions to be executed. Signature(s) Date
I/We authorize you to act in accordance with my/our instructions set out above. I/We hereby revoke any proxy previously given with respect to the Meeting. If no voting instructions are indicated above, this Proxy will be voted as recommended by Management.  
  DD / MM / YY  
           

 

Interim Financial Statements - Mark this box if you would like to receive Interim Financial Statements and accompanying Management’s Discussion and Analysis by mail. ¨ Annual Financial Statements - Mark this box if you would NOT like to receive the Annual Financial Statements and accompanying Management’s Discussion and Analysis by mail. ¨ Information Circular - Mark this box if you would like to receive the Information Circular by mail for the next securityholders' meeting. ¨

If you are not mailing back your proxy, you may register online to receive the above financial report(s) by mail at www.computershare.com/mailinglist.

N R M Q 3 0 6 8 3 7 A R 2

 



Exhibit 99-4
Exhibit 99.4

BELLUS HEALTH INC.

OFFICER’S CERTIFICATE

VIA SEDAR

April 8, 2020

To: Autorité des marchés financiers,
  as principal regulator
 
RE: Abridgement of time periods prescribed by National Instrument 54-101

In relation to the annual general and special meeting of securityholders of BELLUS Health Inc. (the “Issuer”) to be held on May 14, 2020 (the “Meeting”) and as required under Section 2.20 of National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer (“NI 54-101”), the undersigned certifies for and on behalf of the Issuer, and not in a personal capacity, that the Issuer:

(a)     

has arranged to have the proxy-related materials for the Meeting sent in compliance with NI 54-101 to all beneficial owners at least 21 days before the date fixed for the Meeting; and

 

(b)     

has arranged to have carried out all of the requirements of NI 54-101 in addition to those described in the above subparagraph (a).

The Issuer is thus relying on Section 2.20 of NI 54-101 to abridge the time periods prescribed in subsections 2.1(b), 2.2(1) and 2.5(1) of NI 54-101.

BELLUS HEALTH INC.
 
(signed) Sébastien Roy
Sébastien Roy
Corporate Secretary