**EXHIBIT99.1**

 

STRESSGENBIOTECHNOLOGIES CORPORATIONCHARTER OF THE BOARD OF DIRECTORS

 

 

| I.     | Board of Directors      |
|--------|-------------------------|
|   |                    |
| II.    | Audit  Committee        |
|   |                    |
| III.   | Governance Committee    |
|   |                    |
| IV.    | Compensation Committee  |
|   |                    |
| V.     | Chairman of the Board   |
|   |                    |
| VI.    | Chief Executive Officer |

 

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**I.****                                         CHARTERAND RESPONSIBILITIES OF THE BOARD OF DIRECTORS**

 

**Stewardship Responsibility**

 

A.                                   Subjectto the Memorandum and Articles of Stressgen Biotechnologies Corporation (the “Company”)and applicable law, the Board of Directors of the Company has the followingstewardship responsibilities:

 

1.                                       Supervisethe management of and to oversee the conduct of the business of the Company.

 

2.                                       Provideleadership and direction to management.

 

3.                                       Evaluatemanagement.

 

4.                                       Setpolicies appropriate for the business of the Company.

 

5.                                       Approvecorporate strategies and goals.

 

B.                                     Theday-to-day management of the business and affairs of the Company is delegatedby the Board of Directors to the Chief Executive Officer.  The Board of Directors will give directionand guidance through the Chief Executive Officer to management and the ChiefExecutive Officer will keep management informed of the Board of Directors’evaluation of the senior officers in achieving and complying with establishedgoals and policies.

 

**General Responsibilities**

 

A.                                   TheBoard of Directors will perform the following:

 

1.                                       Beforeeach annual general meeting but after considering the report of the GovernanceCommittee, recommend nominees to the shareholders for election as directors forthe ensuing year.

 

2.                                       Immediatelyfollowing each annual general meeting:

 

(a)                                  Appoint a GovernanceCommittee, an Audit Committee and a Compensation Committee and appoint thechair of each committee (other than the Audit Committee so long as the law ofthe jurisdiction of incorporation of the Company requires the chair beappointed by the committee itself); and

 

(b)                                 Elect a Chairman ofthe Board and, when desirable, a Vice-Chairman of the Board, and establishtheir duties and responsibilities.

 

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3.                                       Establishwritten mandates for each committee of the Board of Directors delegating theduties and responsibilities described therein to such committee, unless thecommittee elects to submit the action for approval by the full Board ofDirectors.

 

4.                                       Reviewthe minutes of each committee of the Board of Directors.

 

5.                                       Appointthe Chief Executive Officer of the Company, who shall be a member of the Boardof Directors, and establish the duties and responsibilities of the ChiefExecutive Officer.

 

6.                                       Onthe recommendation of the Chief Executive Officer, appoint the senior officersof the Company and approve the senior management structure of the Company.

 

B.                                     Aprincipal responsibility of the Chairman of the Board will be to manage, andact as the chief administrative officer of, the Board of Directors with suchduties and responsibilities as the Board of Directors may establish from timeto time.  The Chairman of the Board shallnot be an employee of the Company.

 

C.                                     Theprincipal duties and responsibilities of the Vice-Chairman, if any, will be asestablished by the Board of Directors from time to time.  The Vice-Chairman will be independent ofmanagement.

 

D.                                    TheBoard of Directors will meet not less than four times during each year andendeavor to hold one meeting in each quarter. The Board of Directors will also meet at any other time at the call ofthe Chairman of the Board or, subject to the Memorandum and Articles of theCompany, the Chief Executive Officer or any director.

 

**Specific Responsibilities**

 

A.                                   TheBoard of Directors has the following specific duties and responsibilities:

 

1.                                       Approve,supervise and provide guidance on the strategic planning process.  The Chief Executive Officer and seniormanagement team will have direct responsibility for the ongoing strategicplanning process and the establishment of long-term goals for the Company,which are to be reviewed and approved not less than annually by the Board ofDirectors.  The Board of Directors willprovide guidance to the Chief Executive Officer and senior management team onthe Company’s ongoing strategic plan. Based on the reports from the Chief Executive Officer, the Board ofDirectors will monitor the success of management in implementing the approvedstrategies and goals.

 

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2.                                       Identifythe principal risks of the Company’s business and use reasonable steps toensure the implementation of appropriate systems to manage these risks.

 

3.                                       Takereasonable steps to ensure the Company has management of the highestcaliber.  This responsibility is carriedout primarily through the appointment of the Chief Executive Officer as theCompany’s business leader.  The Board ofDirectors will assess, on an ongoing basis, the Chief Executive Officer’sperformance against criteria and objectives established by the Board ofDirectors from time to time.  The Boardof Directors will also use reasonable steps to ensure that the Chief ExecutiveOfficer has in place adequate programs to train, develop and assess theperformance of senior management.

 

4.                                       Keepin place adequate and effective succession plans for the Chief ExecutiveOfficer and senior management.

 

5.                                       Placelimits on management’s authority.

 

6.                                       Overseethe integrity of the Company’s internal control and management informationsystems.

 

7.                                       Overseethe Company’s communications policy.  TheBoard of Directors will monitor the policies and procedures that are in placeto provide for effective communication by the Company with its shareholders andwith the public generally, including effective means to enable shareholders tocommunicate with senior management and the Board of Directors.  The Board of Directors will also monitor thepolicies and procedures that are in place to maintain a strong, cohesive andpositive image of the Company with shareholders, the biotechnology and medicalindustry, governments and the public generally.

 

8.                                       Stayinformed of the Company’s activities and performance and take appropriateaction to correct inadequate performance.

 

9.                                       Approveall significant capital plans and establish priorities for the allocation offunds to ongoing operations and capital projects.

 

10.                                 Approveexpenditure items proposed by the Company that exceed management’s authorizedsignature limits.

 

11.                                 Overseethe actions of the Committees.

 

12.                                 Providefor the independent functioning of the Board of Directors and itsCommittees.  The Board of Directors willput in place appropriate

 

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procedures to enable the Board of Directorsto function independently of management at such times as is desirable or necessarythrough:

 

(a)                                  The institution ofmechanisms to allow directors who are independent of management an opportunityto discuss issues in the absence of management; and

 

(b)                                 The engagement ofoutside advisers by directors at the Company’s expense, the approval for whichmay be delegated to the Governance Committee.

 

**No Broadening of Duties**

 

The duties and responsibilities set out above are intended to clarifyrather than to broaden the obligations and liabilities of the directors.  This charter should not be interpreted asextending the duties of the Board of Directors, its Committees and the Chairmanof the Board beyond those imposed by applicable law and the Memorandum andArticles of the Company.

 

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**II.****                                     DUTIESAND RESPONSIBILITIES OF THE AUDIT COMMITTEE**

 

A.                                   TheAudit Committee reports to, and is a committee of, the Board of Directors; andconsists of at least three members of the Board of Directors, all of whom shallbe directors who are not and have not been employees of the Company for atleast three years.  The Audit Committeeshall conduct itself to meet the requirements promulgated by the Toronto StockExchange, the Nasdaq Stock Market if the Company is listed thereon, and theU.S. Securities Exchange Commission in connection with a qualified legalcompliance committee.  The Chair of theCommittee is responsible for leadership of the Committee, including schedulingand presiding over meetings, preparing agendas, making regular reports to theBoard and maintaining regular liaison with the Chief Executive Officer, ChiefFinancial Officer and the lead outside audit partner.

 

B.                                     AuditCommittee meetings are held, in person or by teleconference, (a) prior toannouncing financial results to the public (except if a quorum of the AuditCommittee is not available, in which case the Chair may approve such earningsrelease), (b) prior to filing quarterly and annual financial informationstatements, (c) preceding certain Board of Directors meetings, and (d) asappropriate to determine whether an investigation of legal compliance issues isnecessary, initiate and respond to results of such investigation.  At least once each year, the Committee shallhave separate private meetings with the outside auditors and management.

 

C.                                     TheAudit Committee has the following duties and responsibilities:

 

1.                                       Reviewwith the outside auditors and management the scope of the prospective audit,the estimated fees thereof and such other matters pertaining to such audit asthe Committee may deem appropriate. Receive copies of the annual comments from the outside auditors onaccounting procedures and systems of control, and review with them anyquestions, comments or suggestions they may have relating to the internalcontrols, accounting practices or procedures of the Company or itssubsidiaries.

 

2.                                       Reviewat least annually with management the Company’s detailed budget, the currentand future programs of the Company’s Chief Financial Officer and his staff, theCompany’s treasury investment policy, and the procedure for assuringimplementation of accepted recommendations made by the outside auditors.

 

3.                                       Makeor cause to be made, from time to time, such other examinations or reviews asthe Committee may deem advisable with respect to the adequacy of the systems ofinternal controls and accounting practices of the Company and its subsidiariesand with respect to current accounting

 

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trends and developments.  Take such action with respect thereto as maybe deemed appropriate.

 

4.                                       Recommendannually the outside auditors for approval by the Board of Directors.  Such auditors are ultimately accountable tothe Board and the Committee, as representatives of the shareholders.

 

5.                                       Evaluate,together with the Board and management, the performance of the outside auditorsand, where appropriate, review proposals from other auditors and replaceincumbent auditors.

 

6.                                       Obtainannually from the outside auditors a formal written statement describing allrelationships between the auditors and the Company.  Actively engage in a dialogue with theoutside auditors with respect to any relationships that may impact theobjectivity and independence of the auditors and take, or recommend that theBoard take, appropriate actions to oversee and satisfy itself as to theauditors’ independence.

 

7.                                       Reviewwith management and the outside auditors the quarterly/annual financialstatements of the Company and any material changes in accounting principles orpractices used in preparing the statements, subject to approval by the fullBoard of the annual financial statements (and biannual statements if applicableprovincial law so requires).  TheCommittee’s review of the annual audited statements shall include a review ofsignificant accounting estimates, reserves and accruals, judgmental areas,audit adjustments (whether or not recorded), and other such inquiries as theCommittee or the outside auditors deem appropriate.  Based on such review, the Committee shallmake its recommendation to the Board as to the inclusion of the Company’saudited financial statements in the Company’s annual report on Form 10-K(or the Annual Report to Shareholders, if distributed prior to the filing ofthe Form 10-K).

 

8.                                       Reviewthe status of compliance with laws, regulations, and internal procedures,contingent liabilities and risks (such as environmental liabilities) that maybe material to the Company and the scope and status of systems designed toassure Company compliance with laws, regulations and internal procedures,through receiving reports from management, legal counsel and other thirdparties as determined by the Committee on such matters.  Review legislative and regulatorydevelopments that could materially impact the Company’s contingent liabilitiesand risks.

 

9.                                       Approve,as delegated by the Board, expenditure items proposed by the Company thatexceed management’s authorized signature limits.

 

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10.                                 Issueannually a report of the Committee’s activities to be included in the Company’sproxy statement, as required by the rules of applicable securities andexchange commissions.

 

11.                                 Determinewhether an investigation of legal compliance issues is necessary, conduct andrespond to results of such investigation, including recommending a response;informing the Board, the Company’s chief legal officer, chief executive officerand/or U.S. Securities and Exchange Commission, as appropriate; and monitoringimplementation of the response.

 

12.                                 Reviewand reassess this charter annually and recommend any proposed changes to theBoard for approval.

 

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**III.****                                 DUTIESAND RESPONSIBILITIES OF THE GOVERNANCE COMMITTEE**

 

A.                                   TheGovernance Committee consists of two or more members of the Board of Directors,who are not and have never been employees of the Company, a majority of whomare unrelated directors.

 

B.                                     TheChairman of the Governance Committee shall not be an employee of the Company.

 

C.                                     TheGovernance Committee shall meet at least once each year on a date determined bythe Chairman of the Committee.

 

D.                                    Theduties and responsibilities of the governance committee are as follows:

 

1.                                       Identify,review the qualifications of and recommend to the Board of Directors possiblenominees for the Board of Directors to be proposed in management’s proxycircular for election or re-election at each annual general meeting, keeping inmind experience in business and financial matters and applicable residencyrequirements;

 

2.                                       Identify,review the qualifications of and recommend to the Board of Directors possiblecandidates to fill vacancies on the Board of Directors between annual generalmeetings;

 

3.                                       Overseethe relationship between the management and the Board of Directors and torecommend improvements in such relationship to the Board of Directors;

 

4.                                       Takeinitiatives, at such times as is desirable or necessary, to ensure that theBoard of Directors can function independently of management, including, withoutlimitation, recommending to the Board of Directors:

 

(a)                                  Mechanisms to allowdirectors who are independent of management an opportunity to discuss issues inthe absence of management; and

 

(b)                                 The engagement ofoutside advisers including legal, accounting and financial advisers byindividual directors at the Company’s expense;

 

5.                                       Annuallyreview and make recommendations to the Board of 

 

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Directors withrespect to the following:

 

(a)                                  Size and compositionof the Board of the Directors, with a view to promoting effectiveness andefficiency;

 

(b)                                 Appropriateness of thecommittees of the Board of Directors, their charters and responsibilities andthe composition of the committees;

 

(c)                                  Changes to the termsof the charter and responsibilities of the Board of Directors and itscommittees;

 

(d)                                 Appropriatenessof directors and officers of the Company maintaining directorships in othercorporations;

 

(e)                                  Directorretirement policies;

 

(f)                                    Company’snominees on the boards of directors of its subsidiaries including StressgenBiotechnologies Inc. and other corporations; and

 

(g)                                 Chairmanof the Board and the appropriateness of the duties and responsibilities of theChairman of the Board.

 

6.                                       Considerand make recommendations to the Board of Directors regarding comments by theshareholders or other interested third-parties relating to the composition ofthe Board of Directors or qualifications of any member; and

 

7.                                       Undertakesuch other initiatives as are needed to assist the Board of Directors inproviding efficient and effective corporate governance for the benefit ofshareholders.

 

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**IV.****                                DUTIESAND RESPONSIBILITIES OF THE COMPENSATION COMMITTEE**

 

A.                                   TheCompensation Committee consists of three or more members of the Board ofDirectors, a majority of whom who are not and have never been employees of theCompany.

 

B.                                     Thechairman of the Compensation Committee shall not be an employee of the Company.

 

C.                                     TheCompensation Committee shall meet at least once each year on a day determinedby the chairman of the committee.

 

D.                                    Theduties and responsibilities of the Compensation Committee are as follows:

 

1.                                       Onthe recommendation of the Chairman of the Board, make recommendations on thesalary, discretionary benefits, option grants and bonus of the Chief ExecutiveOfficer, subject to the terms of any existing contractual arrangements, forapproval by the Board of Directors;

 

2.                                       Onthe recommendation of the Chief Executive Officer:

 

(a)                                  Review and approvegeneral compensation structure, policies and programs, including salaries andincentive compensation for the Company;

 

(b)                                 Review and approveinitial salary, discretionary benefits and option grants for incoming corporateofficers with a title of at least vice president who will report to thePresident and Chief Executive Officer; and

 

(c)                                  Recommendto the Board of Directors for its review and approval salary, discretionarybenefits, option grants and severance arrangements for corporate officers witha title of at least vice president who report to the President and ChiefExecutive Officer; and

 

(d)                                 Reviewand approve option grants if the aggregate number of options to be grantedexceeds the then applicable limit applicable to grants approved by management;

 

3.                                       Determinethe cash and equity compensation of the Chairman of the Board and the otherdirectors in light of time commitments, compensation levels at comparable

 

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companies, risksand responsibilities;

 

4.                                       Reviewthe Company’s stock option plan and proposed new plans or amendments to suchplans from time to time and make recommendations to the Board of Directorsregarding the adoption and use of such plans as a form of incentivecompensation for service providers;

 

5.                                       Reviewand approve any modifications to the terms of outstanding stock option grantsthat would have accounting consequences to the Company, taking into accountsuch accounting consequences;

 

6.                                       Reviewannually all other benefit programs for salaried personnel;

 

7.                                       Deliverthe annual report to shareholders on executive compensation required to beincluded in the information circular for the annual general meeting;

 

8.                                       Reviewand make recommendations to the Board of Directors on issues that arise inrelation to any employment contracts in force from time to time; and

 

9.                                       Atthe request of the Chief Executive Officer, review the qualifications of,interview and assist with recruitment of possible candidates for officers.

 

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**V.****                                    DUTIESAND RESPONSIBILITIES OF THE CHAIRMAN OF THE BOARD**

 

A.                                   TheChairman of the Board shall manage, and act as chief administrative officer of,the Board of Directors with the following specific duties and responsibilities:

 

1.                                       Actas the chair, unless absent, at all meetings of the shareholders and the Boardof Directors.

 

2.                                       Actas the spokesperson for the Board of Directors.

 

3.                                       Reviewthe agenda for each meeting of the Board of Directors.

 

4.                                       Assistthe Board of Directors in the discharge of its mandate and responsibilities.

 

5.                                       Approveand sign on behalf of the Board of Directors all communications and reportsfrom the Board of Directors to the shareholders.

 

6.                                       Reviewthe performance of the Chief Executive Officer with him or her, cooperate withthe Chief Executive Officer to establish objectives for his or her performancein future years, and present salary, discretionary benefits, option grants andbonus for the Chief Executive Officer to the Compensation Committee.

 

B.                                     Suchother duties and responsibilities as are established by the Board of Directorsas a whole or by the several Committees.

 

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**VI.****                                DUTIESAND RESPONSIBILITIES OF THE CHIEF EXECUTIVE OFFICER**

 

A.                                   TheChief Executive Officer manages and administers the day-to-day operation of theCompany with the following specific duties and responsibilities:

 

1.                                       Reportsto the Board of Directors and act as a liaison between management and the Boardof Directors.

 

2.                                       Evaluatesmanagement operations and reports to the Board of Directorson results.

 

3.                                       Conductsongoing strategic planning and establishes long term goals for the Company.

 

4.                                       Assiststhe Board of Directors with policy development.

 

5.                                       Trains,develops and assesses the performance of senior management.

 

B.                                     TheChief Executive Officer is responsible for meeting the corporate objectives ofthe Company, as periodically developed by the Board of Directors inconsultation with management.

 

C.                                     Suchother duties and responsibilities as set forth in respect of the Board ofDirectors as a whole and in respect of the several Committees.

 

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