Document:

Exhibit 10.53

 

STELLAR PHARMACEUTICALS INC.

 

AMENDED AND RESTATED STOCK OPTION PLAN

 

The Corporation hereby amends and restates the Plan as follows:

 

1. Purpose of the Plan

 

1.1 The purpose of the Plan is to attract, retain and motivate persons of training, experience and leadership to the Corporation and its Subsidiaries, including their directors, officers and employees, and to advance the interests of the Corporation by providing such persons with the opportunity, through share options, to acquire an increased proprietary interest in the Corporation.

 

2. Defined Terms

 

Where used herein, the following terms shall have the following meanings, respectively:

 

2.1 “Affiliate” means an affiliate, as such term is defined in Subsection 1(2) of the Securities Act (Ontario), of the Corporation.

 

2.2 “Associate” means an associate, as such term is defined in Subsection 1(1) of the Securities Act (Ontario).

 

2.3 “Board” means the board of directors of the Corporation or, if established and duly authorized to act, the Executive Committee of the board of directors of the Corporation.

 

2.4 “Committee” means the Human Resources Committee of the Board provided that, if at any time the Committee has not been constituted, the Committee shall be deemed for all purposes of the Plan to be the Board.

 

2.5 “Consultant” means an individual (or an Eligible Corporation) who:

 

(a)                                                                                 provides ongoing consulting services to the Corporation or an Affiliate under a written contract;

 

(b)                                                                                 possesses technical, business or management expertise of value to the Corporation or an Affiliate;

 

(c)                                                                                  spends a significant amount of time and attention on the business and affairs of the Corporation or an Affiliate; and

 

(d)                                                                                 has a relationship with the Corporation or an Affiliate that enables the individual to be knowledgeable about the business and affairs of the Corporation.

 

2.6 “Corporation” means Stellar Pharmaceuticals Inc. and includes any successor corporation thereof.

 

2.7 “director” means a director, senior officer or Management Company Employee of the Corporation or a director, senior officer or Management Company Employee of a Subsidiary.

 

2.8 “Discounted Market Price” means the Market Price less the discount set forth below, subject to a minimum price of $0.10:

 

	
Closing Price
    	
 
    	
Discount
    	
 
    
	
Up to $0.50
    	
 
    	
25
    	
%
    
	
$0.51 to $2.00
    	
 
    	
20
    	
%
    
	
Above $2.00
    	
 
    	
15
    	
%
    

 

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2.9 “Eligible Corporation” means a corporation all of the issued and outstanding voting shares of which are beneficially owned, directly or indirectly, by an Eligible Person.

 

2.10 “Eligible Person” means a bona fide:

 

(a)                                                                                 director;

 

(b)                                                                                 employee;

 

(c)                                                                                  Management Company Employee;

 

(d)                                                                                 Consultant; or

 

(e)                                                                                  Eligible Corporation.

 

2.11 “employee” means:

 

(a)                                                                                 an individual who is considered an employee under the Income Tax Act (Canada); or

 

(b)                                                                                 an individual who works full-time for the Corporation providing services normally provided by an employee and who is subject to the same control and direction by the Corporation over the details and methods of work as an employee of the Corporation, but for whom income tax deductions are not made at source.

 

2.12 “Expiry Time” means, with respect to any Option, the close of business on the date upon which such Option will expire or within ten (10) trading days immediately following, a date upon which such Eligible Person is prohibited from exercising such Option due to a black-out period or other trading restriction imposed by the Corporation, then the Expiry Time of such Option shall be automatically extended to the tenth (10th) trading day following the date the relevant black-out period or other trading restriction imposed by the Corporation is lifted, terminated or removed;.

 

2.13 “Insider” means an insider, as such term is defined in Subsection 1(1) of the Securities Act (Ontario), of the Corporation, other than a person who falls within that definition solely by virtue of being a director or senior officer of a Subsidiary, and includes any Associate of such Insider.

 

2.14 “Investor Relations Activities” means any activities or oral or written communications, by or on behalf of the Corporation or shareholder of the Corporation, that promote or reasonably could be expected to promote the purchase or sale of securities of the Corporation, but does not include:

 

(a)                                                                                 the dissemination of information provided, or records prepared, in the ordinary course of business of the Corporation:

 

(i)                                                                                                                                     to promote the sale of products or services of the Corporation; or

 

(ii)                                                                                                                                  to raise public awareness of the Corporation,

 

that cannot reasonably be considered to promote the purchase or sale of securities of the Corporation;

 

(b)                                                                                 activities or communications necessary to comply with the requirements of:

 

(i)                                                                                                                                     applicable securities laws,

 

(ii)                                                                                                                                  the requirements of an applicable stock exchange or the by-laws, rules or other regulatory instruments of any other self regulatory body or exchange having jurisdiction over the Corporation;

 

(c)                                                                                  communications by a publisher of, or writer for, a newspaper, magazine or business or financial publication, that is of general and regular paid circulation, distributed only to subscribers to it for value or to purchasers of it, if

 

(i)                                                                                                                                     the communication is only through the newspaper, magazine or publication, and

 

(ii)                                                                                                                                  the publisher or writer receives no commission or other consideration other than for acting in the capacity of publisher or writer; or

 

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(d)                                                                                 activities or communications that may be otherwise specified by any applicable stock exchange.

 

2.15 “Management Company Employee” means an individual employed by a company providing management services to the Corporation, which are required for the ongoing successful operation of the business enterprise of the Corporation, but excluding an individual or company engaged in Investor Relations Activities.

 

2.16 “Market Price” at any date in respect of the Shares means the last closing price of the Shares on the OTC Markets Group before the issuance of a news release disclosing the transaction(s), pursuant to which the Shares are intended to be issued.

 

2.17 “Option” means an option to purchase Shares granted to an Eligible Person under the Plan.

 

2.18 “Option Price” means the price per Share at which Shares may be purchased under an Option, as the same may be adjusted from time to time in accordance with Article 8 hereof.

 

2.19 “Optioned Shares” means the Shares issuable pursuant to an exercise of Options.

 

2.20 “Optionee” means an Eligible Person to whom an Option has been granted and who continues to hold such Option.

 

2.21 “Plan” means the Stock Option Plan of the Corporation, as the same may be further amended or varied from time to time.

 

2.22 “Shares” means the common shares of the Corporation or, in the event of an adjustment contemplated by Article 8 hereof, such other shares or securities to which an Optionee may be entitled upon the exercise of an Option as a result of such adjustment.

 

2.23 “Subsidiary” means any corporation which is a subsidiary, as such term is defined in Subsection 1(4) of the Securities Act (Ontario), of the Corporation.

 

3. Administration of the Plan

 

3.1 The Plan shall be administered by the Committee.

 

3.2 The Committee shall have the power, where consistent with the general purpose and intent of the Plan and subject to the specific provisions of the Plan:

 

(a)                                                                                 to establish policies and to adopt rules and regulations for carrying out the purposes, provisions and administration of the Plan;

 

(b)                                                                                 to interpret and construe the Plan and to determine all questions arising out of the Plan or any Option, and any such interpretation, construction or determination made by the Committee shall be final, binding and conclusive for all purposes;

 

(c)                                                                                  to determine the number of Shares covered by each Option;

 

(d)                                                                                 to determine the Option Price of each Option;

 

(e)                                                                                  to determine the time or times when Options will be granted and exercisable;

 

(f)                                                                                   to determine if the Shares which are issuable on the exercise of an Option will be subject to any restrictions upon the exercise of such Option; and

 

(g)                                                                                  to prescribe the form of the instruments relating to the grant, exercise and other terms of Options.

 

3.3 A member of the Committee may be entitled to participate in the Plan only if an Option to such member is granted, and the terms and provisions thereof determined, by the Committee without such member of the Committee participating in any manner whatsoever in the granting of an Option to, or the determinations made with respect to, such member of the Committee or to such Option.

 

3.4 The Committee may, in its discretion, require as conditions to the grant or exercise of any Option that the Optionee shall have:

 

(a)                                                                                 represented, warranted and agreed in form and substance satisfactory to the Corporation that such Optionee is acquiring and will acquire such Option and the Shares to be issued upon the exercise thereof or, as the case may be, is acquiring such Shares, for such Optionee’s own account, for investment and not with a view to or in connection with any distribution, that such Optionee has had access to such information as is necessary to enable such Optionee to evaluate the merits and risks of such investment and that such Optionee is able to bear the economic risk of investing in the Shares;

 

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(b)                                                                                 agreed to restrictions on transfer in form and substance satisfactory to the Corporation and to an endorsement on any option agreement or certificate representing the Shares making appropriate reference to such restrictions; and

 

(c)                                                                                  agreed to indemnify the Corporation in connection with the foregoing.

 

3.5 Any Option granted under the Plan shall be subject to the requirement that, if at any time counsel to the Corporation shall determine that the listing, registration or qualification of the Shares subject to such Option upon any securities exchange or under any law or regulation of any jurisdiction, or the consent or approval of any securities exchange or any governmental or regulatory body, is necessary as a condition of, or in connection with, the grant or exercise of such Option or the issuance or purchase of Shares thereunder, such Option may not be accepted or exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained on conditions acceptable to the Committee. Nothing herein shall be deemed to require the Corporation to apply for or to obtain such listing, registration, qualification, consent or approval.

 

3.6 If the Corporation is required under the Income Tax Act (Canada) or any other applicable law to make source deductions in respect of employee stock option benefits and to remit to the applicable governmental authority an amount on account of tax on the value of the taxable benefit associated with the issuance of common shares on exercise of Options, then the Optionee shall:

 

(a)                                                                                 pay to the Corporation, in addition to the exercise price for the Options, sufficient cash as is reasonably determined by the Corporation to be the amount necessary to permit the required tax remittance;

 

(b)                                                                                 authorize the Corporation, on behalf of the Optionee, to sell in the market on such terms and at such time or times as the Corporation determines a portion of the common shares being issued upon exercise of the Options to realize cash proceeds to be used to satisfy the required tax remittance; or

 

(c)                                                                                  make other arrangements acceptable to the Corporation to fund the required tax remittance.

 

4. Shares Subject to the Plan

 

4.1 Options may be granted in respect of authorized and unissued Shares, provided that the aggregate number of Shares reserved for issuance upon the exercise of all Options granted under the Plan, subject to any adjustment of such number pursuant to the provisions of Article 8 hereof, shall not exceed 10% of the number of Shares which are issued and outstanding at the date of such grant. Optioned Shares in respect of which Options are not exercised shall be available for subsequent Options. No fractional Shares may be purchased or issued under the Plan.

 

5. Eligibility, Grant and Terms of Options

 

5.1 Options may be granted to any Eligible Person in accordance with Section 5.2 hereof. If an Option is granted to an Eligible Corporation, such Eligible Corporation shall, as a condition precedent to such grant, execute and deliver any document or instrument required by any applicable stock exchange.

 

5.2 Options may be granted by the Corporation pursuant to the recommendations of the Committee from time to time provided and to the extent that such decisions are approved by the Board.

 

5.3 Subject as herein and otherwise specifically provided in this Article 4.1, the number of Shares subject to each Option, the Option Price, the Expiry Time, the extent to which such Option is exercisable from time to time during the term of the Option and other terms and conditions relating to such Option shall be determined by the Committee.

 

5.4 Subject to any adjustments pursuant to the provisions of Article 8 hereof, the Option Price of any Option shall in no circumstances be lower than the Discounted Market Price on the date on which the grant of the Option is approved by the Committee. If, as and when any Shares have been duly purchased and paid for under the terms of an Option, such Shares shall be conclusively deemed allotted and issued as fully paid and non-assessable Shares at the price paid therefor.

 

5.5 The term of an Option shall not exceed five years from the date of the grant of the Option.

 

5.6 No Options shall be granted to any Optionee if the total number of Shares issuable to such Optionee under the Plan, together with any Shares reserved for issuance to such Optionee under options for services or any other stock option plans, would exceed 5% of the issued and outstanding Shares.

 

5.7 An Option shall be personal to the Optionee and shall be non-assignable and non-transferable (whether by operation of law or otherwise), except as between a corporation, all of the issued and outstanding voting shares of which are beneficially owned, directly or indirectly, by such Optionee, and such Optionee, or as otherwise provided for herein. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of an Option contrary to the provisions of the Plan, or upon the levy of any attachment or similar process upon an Option, the Option shall, at the election of the Corporation, cease and terminate and be of no further force or effect whatsoever.

 

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5.8 No Options shall be granted to any Optionee if such grant could result, at any time, in:

 

(a)                                                                                 the number of Shares reserved for issuance pursuant to Options or other stock options granted to Insiders exceeding 10% of the issued and outstanding Shares;

 

(b)                                                                                 the issuance to Insiders, within a one-year period, of a number of Shares exceeding 10% of the issued and outstanding Shares;

 

(c)                                                                                  the issuance to any one Insider and such Insider’s associates, within a one-year period, of a number of Shares exceeding 5% of the issued and outstanding Shares;

 

(d)                                                                                 the issuance to any one Optionee within a one-year period, of a number of Shares purchasable upon the exercise of Options granted during such a one-year period exceeding 5% of the issued and outstanding Shares;

 

(e)                                                                                  the number of Shares reserved for issuance pursuant to Options granted to Consultants exceeding 2% of the issued and outstanding Shares; and

 

(f)                                                                                   the number of Shares reserved for issuance to persons employed in Investor Relation Activities exceeding 2% of the issue and outstanding Shares;

 

unless permitted otherwise by any applicable stock exchange.

 

5.9 In the event that no specific determination is made by the Committee with respect to any of the following matters, each Option shall, subject to any other specific provisions of the Plan, be exercisable as to a maximum of one-third of the number of Shares covered by such Option (on a cumulative basis) following each anniversary of the date upon which the Option was granted.

 

6. Termination of Employment

 

6.1 Subject to Sections 6.2 and 6.3 hereof and to any express resolution passed by the Committee with respect to an Option, an Option and all rights to purchase Shares pursuant thereto shall expire and terminate immediately upon the Optionee who holds such Option ceasing to be an Eligible Person provided that, in the case of termination of employment for any reason, and whether or not for cause, such Option and all rights to purchase Shares thereto shall expire and terminate 30 days following notice of termination of employment.

 

6.2 If, before the expiry of an Option in accordance with the terms thereof, an Optionee shall cease to be an Eligible Person (an “Event of Termination”) by reason of the Optionee’s retirement at normal retirement age (including early retirement in accordance with the Corporation’s then current plans, policies or practices with respect thereto) or as a result of the Optionee’s permanent disability, then the Committee, at its discretion, may allow the Optionee to exercise the Option to the extent that the Optionee was entitled to do so at the time of such Event of Termination, at any time up to and including, but not after, a date that is: three months following the date of such Event of Termination or on the Expiry Time, whichever is earlier, in the case of retirement or permanent disability.

 

6.3 If an Optionee dies before the expiry of an Option in accordance with the terms thereof, the Optionees legal representative(s) may, subject to the terms of the Option and the Plan, exercise the Option to the extent that the Optionee was entitled to do so at the date of the Optionee’s death at any time up to and including, but not after, a date one year following the date of the Optionee’s death or on the Expiry Time, whichever is earlier.

 

6.4 For greater certainty, Options shall not be affected by any change of employment of the Optionee or by the Optionee ceasing to be a director of the Corporation provided that the Optionee continues to be an Eligible Person.

 

6.5 If the Optionee is an Eligible Corporation, the references to the Optionee in this Article 6 shall be deemed to refer to the Eligible Person associated with such Optionee.

 

7. Exercise of Options

 

7.1 Subject to the provisions of the Plan, an Option may be exercised from time to time by delivery to the Corporation at its principal office in London, Ontario of a written notice of exercise addressed to the Chief Financial Officer of the Corporation specifying the number of Shares with respect to which the Option is being exercised and accompanied by payment in full, by cash or cheque, of the Option Price of the Shares then being purchased. Certificates for such Shares shall be issued and delivered to the Optionee within a reasonable time following the receipt of such notice and payment.

 

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7.2 Notwithstanding any of the provisions contained in the Plan or in any Option, the Corporation’s obligation to issue Shares to an Optionee pursuant to the exercise of any Option shall be subject to:

 

(a)                                                                                 completion of such registration or other qualification of such Shares or obtaining approval of such governmental or regulatory authority as the Corporation shall determine to be necessary or advisable in connection with the authorization, issuance or sale thereof;

 

(b)                                                                                 the admission of such Shares to listing on any stock exchange on which the Shares may then be listed;

 

(c)                                                                                  the receipt from the Optionee of such representations, warranties, agreements and undertakings, as the Corporation determines to be necessary or advisable in order to safeguard against the violation of the securities laws of any jurisdiction; and

 

(d)                                                                                 the satisfaction of any conditions on exercise prescribed pursuant to Section 3.4 hereof.

 

In this connection the Corporation shall, to the extent necessary, take all commercially reasonable steps to obtain such approvals, registrations and qualifications as may be necessary for the issuance of such Shares in compliance with applicable securities laws and for the listing of such Shares on any stock exchange on which the Shares are then listed.

 

7.3 Options shall be evidenced by a share option agreement, instrument or certificate in such form not inconsistent with this Plan as the Committee may from time to time determine as provided for under Subsection 3.2(g), provided that the substance of Article 4.1 shall be included therein.

 

8. Certain Adjustments

 

8.1 In the event of any subdivision or redivision of the Shares into a greater number of Shares at any time after the grant of an Option to any Optionee and prior to the Expiry Time, the Corporation shall deliver to such Optionee at the time of any subsequent exercise of such Optionee’s Option in accordance with the terms hereof, in lieu of the number of Shares to which such Optionee was theretofore entitled upon such exercise, but for the same aggregate consideration payable therefor, such number of Shares as such Optionee would have held as a result of such subdivision or redivision if, on the record date thereof, the Optionee had been the registered holder of the number of Shares to which such Optionee was theretofore entitled upon such exercise.

 

8.2 In the event of any consolidation of the Shares into a lesser number of Shares at any time after the grant of an Option to any Optionee and prior to the Expiry Time, the Corporation shall deliver to such Optionee at the time of any subsequent exercise of such Optionee’s Option in accordance with the terms hereof, in lieu of the number of Shares to which such Optionee was theretofore entitled upon such exercise, but for the same aggregate consideration payable therefor, such number of Shares as such Optionee would have held as a result of such consolidation if, on the record date thereof, the Optionee had been registered holder of the number of Shares to which such Optionee was theretofore entitled upon such exercise.

 

8.3 If at any time after the grant of an Option to any Optionee and prior to the Expiry Time, the Shares shall be reclassified, reorganized or otherwise changed, otherwise than as specified in Sections 8.1 and 8.2 or, subject to the provisions of Subsection 9.2(a) hereof, the Corporation shall consolidate, merge or amalgamate with or into another corporation (the corporation resulting or continuing from such consolidation, merger or amalgamation being herein call the “Successor Corporation”) or the Corporation shall pay a stock dividend (other than any dividends in the ordinary course), the Optionee shall be entitled to receive upon the subsequent exercise of such Optionee’s Option in accordance with the terms hereof and shall accept in lieu of the number of Shares to which such Optionee was theretofore entitled upon such exercise but for the same aggregate consideration payable therefor, the aggregate number of shares of the appropriate class and/or other consideration from the Corporation or the Successor Corporation (as the case may be) that the Optionee would have been entitled to receive as a result of such reclassification, reorganization or other change or, subject to the provisions of Subsection 9.2(a) hereof, as a result of such consolidation, merger, amalgamation, or stock dividend if, on the record date of such reclassification, reorganization, other change or stock dividend or the effective date of such consolidation, merger or amalgamation or dividend payment, as the case may be, such Optionee had been the registered holder of the number of Shares to which such Optionee was theretofore entitled upon such exercise.

 

8.4 In the event the Corporation should declare and pay a special cash dividend or other distribution out of the ordinary course, a special dividend in specie on the Shares, or a stock dividend other than in the ordinary course, the Option Price of all Options outstanding on the record date of such dividend or other distribution shall be reduced by an amount equal to the cash payment or other distribution or the fair market value of the dividend in specie or stock dividend or other distribution, as determined by the Committee in its sole discretion but subject to all necessary regulatory approvals.

 

9. Amendment or Discontinuance of the Plan

 

9.1 The Board may amend or discontinue the Plan at any time, provided, however, that no such amendment may materially and adversely affect any Option previously granted to an Optionee without the consent of the Optionee, except to the extent required by law. Any such amendment shall, if required, be subject to the prior approval of, or acceptance by, any stock exchange on which the Shares are listed and posted for trading.

 

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9.2 Notwithstanding anything contained to the contrary in this Plan or in any resolution of the Board in implementation thereof:

 

(a)                                                                                 in the event the Corporation proposes to amalgamate, merge or consolidate with any other corporation (other than a wholly-owned Subsidiary) or to liquidate, dissolve or wind-up, or in the event an offer to purchase or repurchase the Shares of the Corporation or any part thereof shall be made to all or substantially all holders of Shares of the Corporation, the Corporation shall have the right, upon written notice thereof to each Optionee holding Options under the Plan, to permit the exercise of all such Options within the 20 day period next following the date of such notice and to determine that upon the expiration of such 20 day period, all rights of the Optionees to such Options or to exercise same (to the extent not theretofore exercised) shall ipso facto terminate and cease to have further force or effect whatsoever;

 

(b)                                                                                 in the event of the sale by the Corporation of all or substantially all of the assets of the Corporation as an entirety or substantially as an entirety so that the Corporation shall cease to operate as an active business, any outstanding Option may be exercised as to all or any part of the Optioned Shares in respect of which the Optionee would have been entitled to exercise the Option in accordance with the provisions of the Plan at the date of completion of any such sale at any time up to and including, but not after the earlier of: (i) the close of business on that date which is 30 days following the date of completion of such sale; and (ii) the Expiry Time; but the Optionee shall not be entitled to exercise the Option with respect to any other Optioned Shares;

 

(c)                                                                                  subject to the rules of any applicable stock exchange or other regulatory authority, the Board may, by resolution, advance the date on which any Option may be exercised or extend the Expiry Time provided that the Board shall not, in the event of any such advancement or extension, be under any obligation to advance or extend the date on or by which Options may be exercised by any other Optionee; and

 

(d)                                                                                 the Board may, by resolution, but subject to applicable regulatory requirements, decide that any of the provisions hereof concerning the effect of termination of the Optionee’s employment shall not apply to any Optionee for any reason acceptable to the Board.

 

Notwithstanding the provisions of this Article 9, should changes be required to the Plan by any securities commission, stock exchange or other governmental or regulatory body of any jurisdiction to which the Plan or the Corporation now is or hereafter becomes subject, such changes shall be made to the Plan as are necessary to conform with such requirements and, if such changes are approved by the Board, the Plan, as amended, shall be filed with the records of the Corporation and shall remain in full force and effect in its amended form as of and from the date of its adoption by the Board.

 

10. Miscellaneous Provisions

 

10.1 An Optionee shall not have any rights as a shareholder of the Corporation with respect to any of the Shares covered by such Option until the date of issuance of a certificate for Shares upon the exercise of such Option, in full or in part, and then only with respect to the Shares represented by such certificate or certificates. Without in any way limiting the generality of the foregoing, no adjustment shall be made for dividends or other rights for which the record date is prior to the date such shares certificate is issued.

 

10.2 Nothing in the Plan or any Option shall confer upon an Optionee any right to continue or be re-elected as a director of the Corporation or any right to continue in the employ of the Corporation or any Subsidiary, or affect in any way the right of the Corporation or any Subsidiary to terminate his or her employment at any time; nor shall anything in the Plan or any Option be deemed or construed to constitute an agreement, or an expression of intent, on the part of the Corporation or any Subsidiary to extend the employment of any Optionee beyond the time which he or she would normally be retired pursuant to the provisions of any present or future retirement plan of the Corporation or any Subsidiary or any present or future retirement policy of the Corporation or any Subsidiary, or beyond the time at which he or she would otherwise be retired pursuant to the provisions of any contract of employment with the Corporation or any Subsidiary.

 

10.3 The Plan and all matters to which reference is made herein shall be governed by and interpreted in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.

 

10.4 Effective as of the date of receipt of shareholder ratification and all regulatory approvals of the Plan as contemplated by Section 11.1 hereof, the Plan shall replace and supercede the Corporation’s current stock option plan, if any, (the “Current Plan”) and no further options shall be granted pursuant to the Current Plan; provided that nothing herein shall affect the existence or validity of any options granted under the Current Plan prior to such date, which options shall remain in full force and effect.

 

11. Shareholder and Regulatory Approval

 

11.1 The Plan shall be subject to ratification by the shareholders of the Corporation to be effected by a resolution passed at a meeting of the shareholders of the Corporation, and to acceptance by any other relevant regulatory authority. Any Options granted under the Plan prior to such ratification and acceptance shall be conditional upon such ratification and acceptance being given and no such Options may be exercised unless and until such ratification and acceptance are given.

 

11.2 Any material amendment to an Option held by an Insider, including a change in the Option Price or Expiry Time, must be approved by a majority of votes cast at a meeting of shareholders other than votes attaching to securities beneficially owned by the Optionee and his or her Associates.

 

Effective October 31, 2001

 

Amended April 1, 2011

 

Subject to Shareholder Approval on June 22, 2011

 

7Exhibit 10.54

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS AGREEMENT made as of the 1st day of January, 2015

 

B E T W E E N :

 

TRIBUTE PHARMACEUTICALS CANADA INC., a corporation organized under the laws of the Province of Ontario,

 

(hereinafter referred to as the “Corporation”)

 

- and -

 

ROB HARRIS, of the Town of Milton, in the Province of Ontario,

 

(hereinafter referred to as the “Executive”)

 

RECITALS:

 

WHEREAS:

 

A.                                  The Corporation first entered into an agreement (the “Employment Agreement”) to retain the services of the Executive as the President and Chief Executive Officer of the Corporation effective December 1, 2011;

 

B.                                  The Corporation and the Executive amended the Employment Agreement on February 6, 2014

 

C.                                  Both the Corporation and the Executive wish to formally renew the terms and conditions of the employment of the Executive effective January 1, 2015 (the “Effective Date”), including the terms and conditions that will govern the termination of the employment of the Executive, including termination in connection with a Control Change (as hereafter defined).

 

NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each of the parties hereto, the parties hereby agree as follows:

 

ARTICLE 1

DEFINITIONS AND PRINCIPLES OF INTERPRETATION

 

1.1 Definitions

 

Where used in this Agreement, unless there is something in the context or the subject matter inconsistent therewith, the following terms shall have the following meanings, respectively:

 

“Annual Salary” means the annual base salary of the Executive, payable to the Executive by the Corporation as at the end of the month immediately preceding the month in which the employment of the Executive is terminated (the “Prior Month”) and if an annual base salary has not been established, it shall be calculated by multiplying the monthly salary of the Executive in effect for the Prior Month by twelve;

 

“Approved Budget” means the Corporation’s approved operating budget (which for greater certainty will include management and employee bonuses (other than bonuses for sales representatives) based on an assumption that 100% of the applicable budgets are achieved) as approved by the Board, each year throughout the Term and shall include Gross Revenue Budget and EBITDA Budget amounts therein;

 

 

“Board” means the board of directors of the Corporation as constituted from time to time;

 

“Cash Award” has the meaning ascribed to it in Section 3.5(i);

 

“Confidential Information” means all confidential records, material and information and copies thereof concerning the business or affairs of the Corporation or any subsidiary thereof including information relating to the shareholders, research and development, present and future, information about or relating to potential business ventures and licences, financial information of all kinds relating to the Corporation’s activities, but does not include any of the foregoing which is or becomes a matter of public knowledge, other than through a breach by the Executive of Article 5;

 

“Control Change” means the occurrence of both:

 

(a)                                                                     the acquisition or continued ownership of shares of the Corporation and/or securities (“Convertible Securities”) convertible into, exchangeable for or representing the right to acquire shares of the Corporation as a result of which a person, group of persons or persons acting jointly or in concert or persons associated or affiliated (within the meanings of the Business Corporations Act (Ontario)) with any such person, group of persons or any of such persons acting jointly or in concert (collectively, the “Acquirors”) beneficially own shares of the Corporation and/or Convertible Securities such that, assuming only the conversion, exchange or exercise of Convertible Securities beneficially owned by the Acquirors, the Acquirors would beneficially own shares of the Corporation that would entitle the holders thereof to cast more than 50% of the votes cast attaching to all shares of the Corporation that may be cast to elect members of the Board; and

 

(b)                                                                     exercise of voting power over all or any such shares of the Corporation so as to cause or result in the election of such number of directors of the Corporation as would constitute a majority of the Board and who were not Incumbent Directors;

 

“Date of Termination” means the date of termination of the Executive’s employment, whether by death of the Executive, by the Executive or by the Corporation;

 

“Disability” means the Executive’s failure to substantially perform his duties on a full-time basis for a period of 6 months out of any 18 month period, where such inability is a result of physical or mental illness;

 

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“EBITDA” means earnings before interest, taxes, depreciation, amortization, expense relating to the issuance of employee, director or officer stock options, and excludes (i) any expenses for newly licensed or acquired products not approved for sale in any year throughout the Term, (ii) all expenses specifically attributable to the development of Bezalip SR, Uracyst, NeoVisc or other unapproved products in the United States of America, and (iii) any other expenses related to new projects or investor relation initiatives not currently captured in the Approved Budget as approved by the Board in each year throughout the Term;

 

“EBITDA Budget” shall mean the EBITDA budget amount as determined annually in the Approved Budget by the Board;

 

“Good Reason” shall include, without limitation, the occurrence of any of the following without the Executive’s written consent (except in connection with the termination of the employment of the Executive for Just Cause):

 

(a)                                                                     a material change (other than those that are clearly consistent with a promotion) in the Executive’s position or duties, responsibilities (including to whom the Executive reports and who reports to the Executive), title or office, which includes any removal of the Executive from or any failure to re-elect or re-appoint the Executive to any such positions or offices;

 

(b)                                                                     a reduction by the Corporation of the Executive’s salary, benefits or any other form of remuneration or change in the basis upon which the Executive’s salary, benefits or any other form of remuneration payable by the Corporation is determined or any failure by the Corporation to increase the Executive’s salary, benefits or other forms of remuneration payable by the Corporation in a manner consistent (both as to frequency and percentage increase) with practices in effect at the time in question with respect to the senior executives of the Corporation which is not cured within 30 days after written notice by the Executive to the Board;

 

(c)                                                                      any failure by the Corporation to continue in effect any material benefit, bonus, incentive, remuneration or compensation plan, stock option plan, pension plan or retirement plan in which the Executive is participating or entitled to participate, or the Corporation taking any action or failing to take any action that would adversely effect the Executive’s participation in or reduce his rights or benefits under or pursuant to any such plan, where the Corporation fails to increase or improve such rights or benefits on a basis consistent with practices in effect at the time in question with respect to the senior executives of the Corporation which is not cured within 30 days after written notice by the Executive to the Board;

 

(d)                                                                     the Corporation taking any action to deprive the Executive of any material fringe benefit not hereinbefore mentioned and enjoyed by him immediately prior to the time in question, or the Corporation failing to increase or improve such material fringe benefits on a basis consistent with practices in effect at the time in question with respect to the senior executives of the Corporation which is not cured within 30 days after written notice by the Executive to the Board;

 

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(e)                                                                      any breach by the Corporation of any material provision of this Agreement which is not cured within 30 days after written notice by the Executive to the Board;

 

(f)                                                                       the failure by the Corporation to obtain, in a form satisfactory to the Executive, an effective assumption, if required, of its obligations hereunder by any successors to the Corporation, including a successor to a material portion of its business; or

 

(g)                                                                      a “constructive dismissal” as that term is defined by Ontario common law;

 

“Gross Revenue” means (i) gross revenue amounts invoiced for each finished product sold on an arms-length basis by the Corporation and its sub-contractors to customers, (ii) license income, (iii) royalty income, (iv) milestone income and (v) gross revenue from any other source;

 

“Gross Revenue Budget” shall mean the Gross Revenue budget amount as determined annually in the Approved Budget by the Board;

 

“including” means including without limitation;

 

“Incumbent Director” means any member of the Board who was a member of the Board immediately prior to a Control Change and any successor to an Incumbent Director who is recommended or elected or appointed to succeed an Incumbent Director by the affirmative vote of the Corporation when that affirmative vote includes the affirmative vote of a majority of Incumbent Directors then on the Board;

 

“Just Cause” means any of the following events or conditions: (i) willful failure to perform, or negligence in the performance of, the Executive’s duties and responsibilities to the Corporation; (ii) fraud, embezzlement, theft or other material dishonesty resulting or intended to result directly or indirectly in personal gain of the Executive at the Corporation’s expense; and (iii) conviction of, or plea of guilty or no contest to a criminal offence and that materially harms the Corporation’s business, interests or reputation;

 

“Options” has the meaning ascribed to it in Section 3.4(a) and includes all Time Based Options and Performance Based Options;

 

“Performance Based Options” mean has the meaning ascribed to it in Section 3.4(a)(ii);

 

“Remuneration” shall include any compensation set out in Section 3.1 of this Agreement;

 

“subsidiary” shall have the meaning ascribed thereto in the Securities Act (Ontario);

 

“Term” has the meaning ascribed to it in Section 2.1; and

 

“Time Based Options” has the meaning ascribed to it in Section 3.4(a)(i).

 

1.2 Sections and Headings

 

The division of this Agreement into articles, sections and subsections, the insertion of headings and the provision of a table of contents are for convenience of reference only and shall not affect the interpretation of this Agreement. Unless otherwise indicated, any reference in this Agreement to a section or subsection refers to the specified section or subsection of this Agreement.

 

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1.3 Number, Gender and Persons

 

In this Agreement, words importing the singular number only shall include the plural and vice versa, words importing gender shall include all genders and words importing persons shall include individuals, corporations, partnerships, associations, trusts, unincorporated organizations, governmental bodies and other legal or business entities.

 

1.4 Entire Agreement

 

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether written or oral. There are no conditions, covenants, agreements, representations, warranties or other provisions, express or implied, relating to the subject matter hereof except as herein provided.

 

1.5 Pre-Contractual Representations

 

The Executive hereby waives any right to assert a claim based on any pre-contractual representations, negligent or otherwise, made by the Corporation.

 

1.6 Amendments and Waivers

 

No amendment to this Agreement will be valid or binding unless set forth in writing and duly executed by both of the parties to this Agreement. No waiver of any breach of any provision of this Agreement will be effective or binding unless made in writing and signed by the party purporting to give the same and, unless otherwise provided in the written waiver, will be limited to the specific breach waived.

 

1.7 Currency

 

Unless otherwise expressly provided, all monetary amounts are stated in Canadian funds.

 

1.8 Governing Law

 

This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

 

1.9 Attornment

 

For the purpose of all legal proceedings this Agreement will be deemed to have been performed in the Province of Ontario. Subject to the Arbitration clause set out in Article 7 of this Agreement, the Corporation and the Executive each hereby attorns to the jurisdiction of the courts of the Province of Ontario provided that nothing in this Agreement contained will prevent the Corporation from proceeding at its election against the Executive in the courts of any other province or country.

 

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1.10 Severability

 

If any provision of this Agreement, including the breadth or scope of such provision, shall be held by any court of competent jurisdiction to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the validity or enforceability of the remaining provisions, or part thereof, of this Agreement and such remaining provisions, or part thereof, shall remain enforceable and binding.

 

ARTICLE 2

EMPLOYMENT AND DUTIES OF EXECUTIVE

 

2.1 Employment

 

In accordance with the terms and conditions of this Agreement, the Corporation hereby agrees to employ the Executive and the Executive hereby accepts such employment with the Corporation as President and Chief Executive Officer of the Corporation.

 

The Corporation shall employ the Executive for a period commencing on January 1, 2015 and ending on December 31, 2017 (the “Term”). The parties will use their commercially reasonable best efforts to either (i) commence negotiations of a renewal of this Agreement or (ii) notify the other that it does not wish to negotiate a renewal of the this Agreement, not less than 180 days prior to the end of the Term.

 

2.2 Director

 

During the Executive’s employment with the Corporation, the Executive agrees to serve as a director of the Corporation.

 

2.3 Place of Employment

 

The Executive will perform work and services for the Corporation in either Milton or, London, Ontario (or within 30 miles from either location) or such other location as the Board may approve. The Executive acknowledges that the performance of his duties and functions may necessitate frequent travel to other locations.

 

2.4 Duties

 

The Executive shall serve the Corporation in such capacity or capacities and shall perform such duties and exercise such powers pertaining to the management and operation of the Corporation as may be determined from time to time by the Board consistent with the office of the Executive.

 

The Executive shall:

 

(a)                                                                     devote his full time and attention to the business and affairs of the Corporation and the subsidiaries of the Corporation;

 

(b)                                                                     perform those duties that may reasonably be assigned to the Executive diligently and faithfully to the best of the Executive’s abilities and in the best interests of the Corporation; and

 

(c)                                                                      use his best efforts to promote the interests of the Corporation and its shareholders.

 

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2.5 Reporting Procedures

 

The Executive shall report to the Board. The Executive shall report fully on the management, operations, financial and business affairs of the Corporation and advise, to the best of his ability and in accordance with reasonable business standards, on business and financial matters that may arise from time to time during the Term.

 

ARTICLE 3

REMUNERATION

 

3.1 Remuneration

 

The annual base salary payable to the Executive for his services hereunder for each year of the three year term of this Agreement shall be $325,000, exclusive of bonuses, benefits and other compensation. The annual base salary payable to the Executive pursuant to the provisions of this subsection shall be payable in monthly instalments in arrears on the last day of each month or in such other manner as may be mutually agreed upon or as may hereafter become the effective practice of the Corporation in effect for senior executives of the Corporation, less, in any case, any deductions or withholdings required by applicable law.

 

3.2 Benefits

 

The Corporation shall provide the Executive with employee benefits comparable to those provided by the Corporation from time to time to other senior executives of the Corporation, provided such benefits shall entitle the Executive to one annual executive medical at a Canadian private healthcare clinic, the cost of which shall not exceed $3,500.00 annually.

 

3.3 Automobile Allowance

 

The Corporation shall provide the Executive with a monthly automobile allowance of $1,200.00. This monthly automobile allowance is inclusive of all automobile expenses including mileage, fuel, insurance, maintenance, etc.

 

3.4 Stock Options

 

(a)                                                                     The Executive shall be entitled to an initial grant of 1,200,000 stock options of the Corporation (the “Options”) which shall be earned and thereafter vest as follows:

 

(i)                                                                                                                           300,000 of the Options will be subject to a time vesting (“Time Based Options”) schedule beginning on April 1, 2015 as outlined in Table 1 below:

 

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Table 1 - Vesting for Time Based Options

 

	
Date of Vesting
    	
 
    	
Number of Time Based Options Vested
    
	
March 31, 2015
    	
 
    	
8 1/3rds% of total   options granted in (i)
    
	
June 30, 2015
    	
 
    	
8 1/3rds% of total   options granted in (i)
    
	
September 30, 2015
    	
 
    	
8 1/3rds% of total options   granted in (i)
    
	
December 31, 2015
    	
 
    	
8 1/3rds% of total   options granted in (i)
    
	
March 31, 2016
    	
 
    	
8 1/3rds% of total   options granted in (i)
    
	
June 30, 2016
    	
 
    	
8 1/3rds% of total   options granted in (i)
    
	
September 30, 2016
    	
 
    	
8 1/3rds% of total   options granted in (i)
    
	
December 31, 2016
    	
 
    	
8 1/3rds% of total   options granted in (i)
    
	
March 31, 2017
    	
 
    	
8 1/3rds% of total   options granted in (i)
    
	
June 30, 2017
    	
 
    	
8 1/3rds% of total   options granted in (i)
    
	
September 30, 2017
    	
 
    	
8 1/3rds% of total   options granted in (i)
    
	
December 31, 2017
    	
 
    	
8 1/3rds% of total   options granted in (i)
    

 

The Time Based Options in Section 3.4 (a)(i) above shall have an exercise price equivalent to the closing price of the Corporation’s common shares on the day immediately preceding the date of grant and an expiry date five years from the date of grant. Such Time Based Options shall be granted as soon as possible after the Effective Date provided that the Corporation is not then in a blackout period that has not been waived by the Board; and

 

(ii)                                                                                                                                  225,000 of the Options will be earned upon the achievement of between 100% - 105% of the Gross Revenue Budget (75,000 per year such Budget is achieved); and; 225,000 of the Options will be earned upon the achievement of between 100% - 105% of the EBITDA Budget (75,000 per year such budged was achieved). A total of 450,000 of the Options will be earned if both the Gross Revenue and EBITDA Budgets are achieved (150,000 per year such budget is achieved). All Options earned pursuant to Section 3.4(a)(ii) (the “Performance Based Options”) shall vest as outlined in Table 2 below:

 

(A) If the Gross Revenue Budget or EBITDA Budget are not achieved in any year throughout the Term but:

 

a.                                                                                                                                      90% to 95% of the Gross Revenue Budget is achieved the Executive shall earn 67,500 of the Options;

 

b.                                                                                                                                      greater than 95% to 100% of the Gross Revenue Budget is achieved the Executive shall earn 71,250 of the Options;

 

c.                                                                                                                                       90% to 95% of the EBITDA Budget is achieved the Executive shall earn 67,500 of the Options;

 

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d.                                                                                                                                      greater than 95% to 100% of the EBITDA Budget is achieved the Executive shall earn 71,250 of the Options, and;

 

(B) If the Gross Revenue Budget or EBITDA Budget are achieved in any year throughout the Term but:

 

a.                                                                                                                                      greater than 105% to 110% of the Gross Revenue Budget is achieved the Executive shall earn 78,750 of the Options;

 

b.                                                                                                                                      greater than 110% to 115% of the Gross Revenue Budget is achieved the Executive shall earn 82,500 of the Options;

 

c.                                                                                                                                       greater than 115% to 120% of the Gross Revenue Budget is achieved the Executive shall earn 86,250 of the Options;

 

d.                                                                                                                                      greater than 120% to 200% of the Gross Revenue Budget is achieved the Executive shall earn 112,500 of the Options;

 

e.                                                                                                                                       greater than 200% of the Gross Revenue Budget is achieved the Executive shall earn 150,000 of the Options;

 

f.                                                                                                                                        greater than 105% to 110% of the EBITDA Budget is achieved the Executive shall earn 78,750 of the Options;

 

g.                                                                                                                                       greater than 110% to 115% of the EBITDA Budget is achieved the Executive shall earn 82,500 of the Options;

 

h.                                                                                                                                      greater than 115% to 120% of the EBITDA Budget is achieved the Executive shall earn 86,250 of the Options.

 

i.                                                                                                                                          greater than 120% to 200% of the EBITDA Budget is achieved the Executive shall earn 112,500 of the Options;

 

j.                                                                                                                                         greater than 200% of the EBITDA Budget is achieved the Executive shall earn 150,000 of the Options;

 

(iii) The Performance Based Options referred to in Section 3.4(a)(ii) above shall have an exercise price equivalent to the closing price of the Corporation’s common shares on the day immediately preceding the date of grant and an expiry date five years from the date of grant. Such Performance Based Options shall be granted as soon as possible after the Effective Date provided that the Corporation is not then in a blackout period that has not been waived by the Board.

 

(iv) All Options earned in Section 3.4 (a)(ii) above shall vest in accordance with the vesting schedule for Options in Table 2 below;

 

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Table 2

 

	
Date of Vesting
    	
 
    	
Number of Performance Based Options Vested
    
	
March 31, 2016
    	
 
    	
25% of Options Earned   in Respect of 2015 EBITDA and Gross Revenue Budgets
    
	
June 30, 2016
    	
 
    	
25% of Options Earned   in Respect of 2015 EBITDA and Gross Revenue Budgets
    
	
September 30, 2016
    	
 
    	
25% of Options Earned   in Respect of 2015 EBITDA and Gross Revenue Budgets
    
	
December 31, 2016
    	
 
    	
25% of Options Earned   in Respect of 2015 EBITDA and Gross Revenue Budgets
    
	
March 31, 2017
    	
 
    	
25% of Options Earned   in Respect of 2016 EBITDA and Gross Revenue Budgets
    
	
June 30, 2017
    	
 
    	
25% of Options Earned   in Respect of 2016 EBITDA and Gross Revenue Budgets
    
	
September 30, 2017
    	
 
    	
25% of Options Earned   in Respect of 2016 EBITDA and Gross Revenue Budgets
    
	
December 31, 2017
    	
 
    	
25% of Options Earned   in Respect of 2016 EBITDA and Gross Revenue Budgets
    
	
March 31, 2018
    	
 
    	
25% of Options Earned   in Respect of 2017 EBITDA and Gross Revenue Budgets
    
	
June 30, 2018
    	
 
    	
25% of Options Earned   in Respect of 2017 EBITDA and Gross Revenue Budgets
    
	
September, 2018
    	
 
    	
25% of Options Earned   in Respect of 2017 EBITDA and Gross Revenue Budgets
    
	
December 31, 2018
    	
 
    	
25% of Options Earned   in Respect of 2017 EBITDA and Gross Revenue Budgets
    

 

(v) The exercise prices of all Options granted in Section 3.4 above will be denominated in Canadian dollars.

 

3.5 Cash Award

 

(i) For each calendar year during the Term, the Executive will be eligible for performance-based cash compensation (the “Cash Award”) equal to 50% of the Executive’s Annual Salary for such year for the achievement of 100% - 105% of the Gross Revenue and EBITDA Budgets for each applicable calendar year.

 

(ii) Should only one of the budgets, either Gross Revenue Budget or EBITDA Budget, be achieved for any calendar year, then the Executive will be eligible for one-half (50%) of the Cash Award in such calendar year; and

 

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(A) If the Gross Revenue Budget or EBITDA Budget are not achieved in any year throughout the Term but:

 

a.                                                                                                                                    90% to 95% of the Gross Revenue Budget is achieved the Executive shall be entitled to 90% of the Cash Award that would have been earned if 100% to 105% of the Gross Revenue Budget had been achieved;

 

b.                                                                                                                                    greater than 95% to 100% of the Gross Revenue Budget is achieved the Executive shall be entitled to 95% of the Cash Award that would have been earned if 100% to 105% of the Gross Revenue Budget had been achieved;

 

c.                                                                                                                                     90% to 95% of the EBITDA Budget is achieved the Executive shall be entitled to 90% of the Cash Award that would have been earned if 100% to 105% of the EBITDA Budget had been achieved;

 

d.                                                                                                                                    greater than 95% to 100% of the EBITDA Budget is achieved the Executive shall be entitled to 95% of the Cash Award that would have been earned if 100% to 105% of the EBITDA Budget had been achieved, and;

 

(B) If the Gross Revenue Budget or EBITDA Budget are achieved in any year throughout the Term but:

 

a.                                                                                                                                    105% to110% of the Gross Revenue Budget is achieved the Executive shall be entitled to 105% of the Cash Award that would have been earned if 100% to 105% of the Gross Revenue Budget had been achieved;

 

b.                                                                                                                                    greater than 110% to115% of the Gross Revenue Budget is achieved the Executive shall be entitled to 110% of the Cash Award that would have been earned if the Gross Revenue Budget had been achieved;

 

c.                                                                                                                                     greater than 115% to 120% of the Gross Revenue Budget is achieved the Executive shall be entitled to 115% of the Cash Award that would have been earned if 100% to 105% of the Gross Revenue Budget had been achieved;

 

d.                                                                                                                                    greater than 120% to 200% of the Gross Revenue Budget is achieved the Executive shall be entitled to 150% of the Cash Award that would have been earned if 100% to 105% of the Gross Revenue Budget had been achieved;

 

e.                                                                                                                                     greater than 200% of the Gross Revenue Budget is achieved the Executive shall be entitled to 200% of the Cash Award that would have been earned if 100% to 105% of the Gross Revenue Budget had been achieved;

 

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f.                                                                                                                                      105% to 110% of the EBITDA Budget is achieved the Executive shall be entitled to 105% of the Cash Award that would have been earned if 100% to 105% of the EBITDA Budget had been achieved;

 

g.                                                                                                                                     greater than 110% to 115% of the EBITDA Budget is achieved the Executive shall be entitled to 110% of the Cash Award that would have been earned if 100% to 105% of the EBITDA Budget had been achieved;

 

h.                                                                                                                                    greater than 115% to 120% of the EBITDA Budget is achieved the Executive shall be entitled to 115% of the Cash Award that would have been earned if 100% to 105% of the EBITDA Budget had been achieved.

 

i.                                                                                                                                        greater than 120% to 200% of the EBITDA Budget is achieved the Executive shall be entitled to 150% of the Cash Award that would have been earned if 100% to 105% of the Gross Revenue Budget had been achieved;

 

j.                                                                                                                                       greater than 200% of the EBITDA Budget is achieved the Executive shall be entitled to 200% of the Cash Award that would have been earned if 100% to 105% of the Gross Revenue Budget had been achieved;

 

(iii) Performance Based compensation amounts qualified for in Section 3.5 above are to be paid within 30 days following the release of the final audit report for the applicable calendar year from the Corporation’s auditors, provided however, that at the Board’s discretion (and subject to receipt of all applicable regulatory approvals and compliance with applicable securities laws) any Cash Award earned by the Executive for achievement of the Gross Revenue and/or EBITDA Budget may be paid in common shares of the Corporation (“Equity Offer”) provided that (a) the Corporation has less than six (6) months of cash available and that payment of a Cash Award to the Executive could potentially leave the Corporation with less than six (6) months of cash available, or (b) that the Executive shall have the right to defer such Equity Offer for a period of six (6) months (the “Extended Period”) in preference of a Cash Award assuming the cash position of the Corporation may improve during this period of time. In the event that the cash position of the Corporation does not improve during the Extended Period, then the Executive will be compensated in an Equity Offer upon the termination of the Extended Period. The number of common shares to be issued pursuant to the Equity Offer shall be determined by dividing the amount of the Cash Award by the five-day volume weighted average trading price of the Corporation’s common shares for the five (5) trading days preceding the later of (i) the Payment Date or (ii) the termination of the Extended Period, where applicable.

 

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3.6 Vacation

 

The Executive shall be entitled to six weeks paid vacation in each calendar year. Such vacation entitlement will be prorated for any part of a calendar year. The Executive will take his vacation at a time or times reasonable for each of the Corporation and the Executive in the circumstances.

 

3.7 Expenses

 

The Executive shall be reimbursed for all reasonable travel and other out-of-pocket expenses actually and properly incurred by the Executive from time to time in connection with carrying out his duties hereunder. For all such expenses, the Executive shall follow the Corporation’s standard, expense reporting procedures except that upon request, the Executive shall furnish to the Corporation originals of all vouchers, receipts, statements, invoices or other reasonable details of expenses in respect of which the Executive seeks reimbursement.

 

ARTICLE 4

TERMINATION OF EMPLOYMENT

 

4.1 Termination for Death

 

This Agreement shall terminate without notice upon the death of the Executive. In case of death, all Time Based Options referred to in Section 3.4(a)(i) above shall vest immediately and continue to be available for exercise for a period of 60 days following date of death, after which any such Rights shall be void and of no further force and effect.

 

4.2 Termination by Corporation for Just Cause; Termination by Executive other than for Good Reason

 

If the Executive’s employment (i) is terminated by the Corporation for Just Cause or (ii) is terminated by the Executive other than for Good Reason, the Executive shall not be entitled to any compensation, termination allowance or severance payment other than Remuneration earned by the Executive before the Date of Termination calculated pro rata up to and including the Date of Termination and reimbursement for expenses incurred up to the Date of Termination and the Corporation shall have no further obligations to the Executive under this Agreement.

 

4.3 Severance Payments

 

(a)                                                                     If the Executive’s employment is terminated during the Term: (i) by the Corporation for any reason other than for Just Cause or death; (ii) by the Corporation because of the Executive’s Disability; or (iii) by the Executive for Good Reason, the Executive shall be entitled to (a) an amount equal to twice the Annual Salary and the Cash Award based on achieving 100 to 105% of the applicable EBITDA and Gross Revenue Budgets and (b) the pro-rated Cash Award for the year in which termination occurs that would be payable based on the actual year to date Gross Revenue and EBITDA performance compared to the year to date agreed upon Gross Revenue and EBITDA Budgets as set forth in the Approved Budget, up to and including the last full calendar month prior to the termination.

 

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(b)                                                                     Notwithstanding Section 4.3(a), in the event that the Corporation terminates the Executive due to the Executive’s Disability, the amounts owing to the Executive in Section 4.3(a) shall be reduced by the amount of any payments received by or on behalf of the Executive from the Corporation’s long term disability insurance during the period in respect of which severance payments are to be made.

 

(c)                                                                      If the Executive’s employment is terminated and the Executive holds any Options, rights, or other entitlements for the purchase or acquisition of shares in the capital of the Corporation (collectively, “Rights”), all such Rights shall vest immediately and continue to be available for exercise for a period of 60 days following the Date of Termination, after which any such Rights shall be void and of no further force and effect. Notwithstanding the foregoing, in the event of a termination for Just Cause or upon the resignation of the Executive without Good Reason, the 60 day period shall be reduced to 30 days and the Executive shall only be entitled to exercise those Options that have vested at the date of such termination and the vesting of Options will not be accelerated in such circumstance. For greater certainty, such Rights include all Time Based and Performance Based Options throughout the Term and for any year in the Term not yet completed shall assume that all performance criteria have been met at the 100% to 105% level and with all completed years being based on the actual performance in such year.

 

(d)                                                                     Upon a Control Change, the Executive shall automatically be entitled to the severance payments described below:

 

(i)                                                                                                                                    the Corporation shall pay to the order of the Executive (a) an amount equal to twice the Annual Salary and the Cash Award based on achieving 100 to 105% of the applicable EBITDA and Gross Revenue Budgets and (b) the pro-rated Cash Award for the year in which the Control Change occurs that would be payable based on the actual year to date Gross Revenue and EBITDA performance compared to the year to date agreed upon Gross Revenue and EBITDA Budgets as set forth in the Approved Budget, up to and including the last full calendar month prior to the Control Change;

 

(ii)                                                                                                                                 the Corporation shall pay to the Executive all outstanding and accrued regular and vacation pay and expenses to the Date of Termination; and

 

(iii)                                                                                                                              the foregoing payments are payable and to be paid to the Executive upon the date of the Control Change without any obligation on the part of the Executive to mitigate his damages flowing from the termination of his employment.

 

(e)                                                                      All severance payments in this Article shall be made to the Executive upon the Control Change unless otherwise agreed to with the company or person that has control over the Corporation.

 

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4.4 Termination Claims

 

Upon any termination of the Executive’s employment by the Corporation in compliance with this Agreement, subject always to the Executive being free to object that his employment was not terminated for Just Cause, or upon any termination of the Executive’s employment by the Executive in compliance with this Agreement, the Executive will have no action, cause of action, claim or demand against the Corporation, any related or associated corporations or any other person under the Ontario Human Rights Code, Ontario Employment Standards Act, 2000, the Workplace Safety and Insurance Act, 1997, Ontario Pay Equity Act, and any other applicable statute or law or the common law which creates rights and obligations as between an employer and employee, and the Executive will be required to sign an appropriate release releasing the Corporation, its subsidiaries and their respective directors, officers, shareholders, employees and agents from any and all such actions, causes of action, claims and demands.

 

4.5 Resignation as Director and Officer

 

Upon any termination of the Executive’s employment under this Agreement, the Executive will execute forms of resignation indicating his resignation as a director and officer of the Corporation, if applicable.

 

ARTICLE 5

CONFIDENTIALITY

 

5.1 Confidentiality

 

The Executive hereby acknowledges and agrees that:

 

(a)                                                                   in the course of performing his duties and responsibilities as an officer and director of the Corporation and its subsidiaries, he will have access to and will be entrusted with Confidential Information, the disclosure of any of which to competitors of the Corporation or to the general public, or the use of same by the Executive or any competitor of the Corporation, would be highly detrimental to the interests of the Corporation;

 

(b)                                                                   in the course of performing his duties and responsibilities for the Corporation and its subsidiaries, the Executive will be a representative of the Corporation to its shareholders, potential investors in the Corporation and service providers and as such will have significant responsibility for maintaining and enhancing the goodwill of the Corporation and its subsidiaries with such persons;

 

(c)                                                                    the Executive, as a director and an officer of the Corporation and its subsidiaries, owes fiduciary duties to the Corporation and its subsidiaries, including the duty to act in the best interests of the Corporation and its shareholders; and

 

(d)                                                                   the right to maintain the confidentiality of the Confidential Information, and the right to preserve the goodwill of the Corporation constitute proprietary rights of the Corporation, which the Corporation is entitled to protect.

 

In acknowledgement of the matters described above and in consideration of the payments to be received by the Executive pursuant to this Agreement, the Executive hereby agrees that, in the event that the employment of the Executive with the Corporation is terminated for any reason whatsoever (including termination by the Executive for Good Reason or termination by the Corporation other than for Just Cause), he will not, at any time, directly or indirectly disclose to any person or in any way make use of (other than for the benefit of the Corporation and its subsidiaries), in any manner, any of the Confidential Information.

 

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5.2 Disclosure

 

During the term of employment of the Executive with the Corporation, the Executive shall promptly disclose to the Board full information concerning any interest, direct or indirect, of the Executive (as owner, shareholder, partner, lender or other investor, directors, officer, employee, consultant or otherwise) or any member of his family in any business that is reasonably known to the Executive to purchase or otherwise obtain services, property or products from, or to sell or otherwise provide services, property or products to the Corporation or any of its subsidiaries or to any of their suppliers.

 

5.3 Return of Materials

 

On termination of the Executive’s employment for any reason whatsoever (including termination by the Executive for Good Reason or termination by the Corporation other than for Just Cause), the Executive agrees to deliver promptly to the Corporation all files, forms, books, materials, written correspondence, memoranda, documents, software products and lists of any nature whatsoever pertaining to the business of the Corporation and its subsidiaries in the possession of the Executive or directly or indirectly under the control of the Executive and not to make for his personal or business use or that of any other person, reproductions or copies of any such property or other property of the Corporation or its subsidiaries.

 

5.4 Enforceability

 

The Executive hereby confirms and agrees that the covenants and restrictions pertaining to the Executive contained in this Agreement, including those contained in this Article 5, are reasonable and valid and hereby further acknowledges and agrees that the Corporation would suffer irreparable injury in the event of any breach by the Executive of his obligations under any such covenant or restriction. Accordingly, the Executive hereby acknowledges and agrees that damages would be an inadequate remedy at law in connection with any such breach and that the Corporation shall therefore be entitled to temporary and permanent injunctive relief enjoining and restraining the Executive from any such breach.

 

ARTICLE 6

NON-COMPETITION AND NON-SOLICITATION

 

6.1 Non-Competition

 

(a)                                                                                 During the Term, or following the termination of the Executive’s employment under this Agreement, the Executive will not, without the prior written consent of the Corporation, either individually or in partnership or jointly or in conjunction with any person as principal, agent, employee, shareholder (other than a holding of shares listed on a recognized stock exchange that does not exceed 10% of the outstanding shares so listed) or in any other manner whatsoever carry on or be engaged in or be concerned with or interested in or advise, lend money to, guarantee the debts or obligations of or permit his name or any part of his name to be used or employed by any person engaged in or concerned with or interested in within Canada in any Competing Business (as defined below).

 

16

 

A “Competing Business” means a business which sells, markets and distributes any product owned or licensed by such business where such product is for the same indication as (i) a product that is owned, licensed, developed or is being developed by the Corporation at the date of termination of the Executive’s employment, or (ii) a product in respect of which the Corporation has signed a letter of intent at the date of the termination of the Executive’s employment pursuant to which such product is purchased or licensed within one (1) year of the date of termination of the Executive’s employment.

 

(b)                                                                                 The foregoing restriction shall apply to the Executive:

 

(i)                                                                                                                                   for a period of two years following the Date of Termination where the Executive’s employment was terminated by the Corporation with Just Cause, due to the Executive’s Disability or by the Executive without Good Reason; and

 

(ii)                                                                                                                                during such period in respect of which payments are being made to the Executive pursuant to the applicable provision of Section 4.3 of this Agreement where the Executive’s employment was terminated by the Corporation without Just Cause or by the Executive with Good Reason, it being understood that, to the extent that the period for which any such payments are being made is less than two years, the Corporation has the option to extend such payments to ensure that the non-competition provisions apply for the entire two year period.

 

(c)                                                                                  The Executive confirms that all restrictions in Section 6.1(a) are reasonable and valid and that the Executive waives all defences to the strict enforcement of such restrictions by the Corporation.

 

6.2 Non-Solicitation

 

(a)                                                                                 The Executive will not, without the prior written consent of the Corporation, (i) during the Term of this Agreement or (ii) at any time during which the non-competition provisions in Section 6.1 apply to the Executive, either individually, or in partnership, or jointly, or in conjunction with any person as principal, agent, employee or shareholder (other than a holding of shares listed on a recognized stock exchange that does not exceed 10% of the outstanding shares so listed) or in any other manner whatsoever on behalf of the Competing Business or on behalf of anyone involved in a Competing Business, directly or indirectly solicit, or gain the custom of, interfere with or endeavour to entice away from the Corporation any person that:

 

(i)                                                                                                                                     is a client/customer of the Corporation at the Date of Termination for whatever reason of this Agreement and with whom the Executive dealt during the Executive’s employment;

 

17

 

(ii)                                                                                                                                was a client/customer of the Corporation at any time during the last two years of the Executive’s employment at the Corporation and with whom the Executive dealt during the Executive’s employment; or

 

(iii)                                                                                                                             has been pursued as a prospective client/customer by or on behalf of the Corporation at any time within one year prior to the Date of Termination of this Agreement for whatever reason and in respect of whom the Corporation has not determined to cease all such pursuit;

 

(iv)                                                                                                                            nor will the Executive interfere with or entice away any person who is an officer or employee of the Corporation at the Date of Termination for whatever reason.

 

(b)                                                                                 The Executive confirms that all restrictions in Section 6.2(a) are reasonable and valid and that the Executive waives all defences to the strict enforcement of such restrictions in Section 6.2(a) by the Corporation.

 

(c)                                                                                  Sections 6.2(a)(i), (ii), (iii) and (iv) are each separate and distinct covenants, severable one from the other and if any such covenant or covenants are determined to be invalid or unenforceable, such invalidity or unenforceability will attach only to the covenant or covenants as determined and all other such covenants will continue in full force and effect.

 

6.3 Breach

 

Any breach of the provisions of Sections 6.1(a) or 6.2(a) by the Executive will result in material and irreparable harm to the Corporation although it may be difficult for the Corporation to establish the monetary value flowing from such harm. The Executive therefore agrees that the Corporation, in addition to being entitled to the monetary damages which flow from the breach, will be entitled to injunctive relief in a court of appropriate jurisdiction in the event of any breach or threatened breach by the Executive of any of the provisions of Sections 6.1(a) or 6.2(a). In addition, the Corporation will be relieved of any further obligations to make any payments to the Executive or provide him with any benefits as outlined in Section 4.3, except those in Sections 4.3(c)(iii) or 4.3(e)(iii)(B), in the event of a breach by the Executive of any of the provisions of Sections 6.1(a) or 6.2(a).

 

ARTICLE 7

ARBITRATION

 

7.1 Submission to Arbitration

 

The Executive and the Corporation agree that any dispute or controversy in connection with this Agreement, including its interpretation, will be conclusively settled by submission to arbitration (the “Arbitration”) in accordance with the rules of arbitration of the Arbitration Act (Ontario) as amended from time to time. The Arbitration will be conducted in the City of Toronto, Ontario before a single arbitrator mutually agreeable to the parties (the “Arbitrator”). If the Arbitrator cannot be agreed upon then either the Executive or the Corporation may apply to the Ontario Superior Court of Justice to appoint an arbitrator. The initial costs of the Arbitrator will be born equally by the parties. The Arbitrator shall have the power to award costs in his or her discretion in making his or her award or decision. Nothing in this clause prohibits the Corporation from seeking injunctive relief in the Ontario Superior Court of Justice against the Executive as referenced in this Agreement. The decision of the Arbitrator shall be final and binding and without any right of appeal.

 

18

 

ARTICLE 8

GENERAL

 

8.1 No Assignment

 

The Executive may not assign, pledge or encumber the Executive’s interest in this Agreement nor assign any of the rights or duties of the Executive under this Agreement without the prior written consent of the Corporation.

 

8.2 Successors

 

This Agreement shall be binding on and enure to the benefit of the successors and assigns of the Corporation and the heirs, executors, personal legal representatives and permitted assigns of the Executive.

 

8.3 Deductions

 

The Corporation will deduct all statutory deductions from any amounts to be paid to the Executive under this Agreement.

 

8.4 Notices

 

Any notice or other communication required or permitted to be given hereunder shall be in writing and either delivered by hand or mailed by prepaid registered mail. At any time other than during a general discontinuance of postal service due to strike, lock-out or otherwise, a notice so mailed shall be deemed to have been received three business days (being any days other than Saturdays, Sundays and statutory holidays in the City of London, Ontario) after the postmarked date thereof or, if delivered by hand, shall be deemed to have been received at the time it is delivered. If there is a general discontinuance of postal service due to strike, lock-out or otherwise, a notice sent by prepaid registered mail shall be deemed to have been received three business days after the resumption of postal service. Notices shall be addressed as follows:

 

(a)                                                                                 If to the Corporation:

 

544 Egerton St.

 

London, Ontario

 

NSW 3Z8

 

Attention: Chief Financial Officer

 

19

 

With a copy to the Corporation’s solicitors:

 

Eric Roblin

c/o Fogler Rubinoff LLP

Barristers & Solicitors

Suite 1200-95 Wellington St. W.

Toronto-Dominion Centre

Toronto, Ontario, M5J 2Z9

 

(b)                                                                                 If to the Executive:

 

Rob Harris

151 Steeles Avenue East,

Milton, Ontario,

L9T 1Y1

 

8.5 Legal Advice

 

The Executive hereby represents and warrants to the Corporation and acknowledges and agrees that he had the opportunity to seek and was not prevented nor discouraged by the Corporation from seeking independent legal advice prior to the execution and delivery of this Agreement and that, in the event that he did not avail himself of that opportunity prior to signing this Agreement, he did so voluntarily without any undue pressure and agrees that his failure to obtain independent legal advice shall not be used by him as a defence to the enforcement of his obligations under this Agreement.

 

[signature page follows]

 

20

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	
 
    	
 
    	
TRIBUTE   PHARMACEUTICAL PHARMACEUTICALS INC.  
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Per:
    	
/s/Martin Thrasher 
    
	
 
    	
 
    	
Martin Thrasher,   Chairman; Compensation Committee, Board of Directors
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/Kimberley Velloza 
    	
 
    	
/s/Rob Harris 
    
	
Signature of Witness:
    	
 
    	
Rob Harris
    
	
Kimberley Velloza 
    	
 
    	
 
    
	
Name of Witness:
    	
 
    	
 
    
	
Address of Witness:
    	
 
    	
 
    
	
Milton, ON L9T 3K5
    	
 
    	
 
    

 

21

 

TRIBUTE PHARMACEUTICALS CANADA INC.

 

- and -

 

ROB HARRIS

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

made as of January 1, 2015

 

 

TABLE OF CONTENTS

 

	
Article 1   DEFINITIONS AND PRINCIPLES OF INTERPRETATION
    	
1
    
	
1.1
    	
Definitions
    	
1
    
	
1.2
    	
Sections and Headings
    	
4
    
	
1.3
    	
Number, Gender and   Persons
    	
5
    
	
1.4
    	
Entire Agreement
    	
5
    
	
1.5
    	
Pre-Contractual   Representations
    	
5
    
	
1.6
    	
Amendments and Waivers
    	
5
    
	
1.7
    	
Currency
    	
5
    
	
1.8
    	
Governing Law
    	
5
    
	
1.9
    	
Attornment
    	
5
    
	
1.1
    	
Severability
    	
6
    
	
Article 2   EMPLOYMENT AND DUTIES OF EXECUTIVE
    	
6
    
	
2.1
    	
Employment
    	
6
    
	
2.2
    	
Director
    	
6
    
	
2.3
    	
Place of Employment
    	
6
    
	
2.4
    	
Duties
    	
6
    
	
2.5
    	
Reporting Procedures
    	
7
    
	
Article 3   REMUNERATION
    	
7
    
	
3.1
    	
Remuneration
    	
7
    
	
3.2
    	
Benefits
    	
7
    
	
3.3
    	
Automobile Allowance
    	
7
    
	
3.4
    	
Stock Options
    	
7
    
	
3.5
    	
Cash Award
    	
10
    
	
3.6
    	
Vacation
    	
13
    
	
3.7
    	
Expenses
    	
13
    
	
Article 4   TERMINATION OF EMPLOYMENT
    	
13
    
	
4.1
    	
Termination for Death
    	
13
    
	
4.2
    	
Termination by   Corporation for Just Cause; Termination by Executive other than for Good   Reason
    	
13
    
	
4.3
    	
Severance Payments
    	
13
    
	
4.4
    	
Termination Claims
    	
14
    
	
4.5
    	
Resignation as Director   and Officer
    	
15
    
	
Article 5   CONFIDENTIALITY
    	
15
    
	
5.1
    	
Confidentiality
    	
15
    
	
5.2
    	
Disclosure
    	
16
    

 

 

	
5.3
    	
Return of Materials
    	
16
    
	
5.4
    	
Enforceability
    	
16
    
	
Article 6   NON-COMPETITION AND NON-SOLICITATION
    	
16
    
	
6.1
    	
Non-Competition
    	
16
    
	
6.2
    	
Non-Solicitation
    	
17
    
	
6.3
    	
Breach
    	
18
    
	
Article 7   ARBITRATION
    	
18
    
	
7.1
    	
Submission to   Arbitration
    	
18
    
	
Article 8   GENERAL
    	
19
    
	
8.1
    	
No Assignment
    	
19
    
	
8.2
    	
Successors
    	
19
    
	
8.3
    	
Deductions
    	
19
    
	
8.4
    	
Notices
    	
19
    
	
8.5
    	
Legal Advice
    	
20

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