These materials are important and require your immediate attention. They require shareholders of Titan
Medical Inc. (the “Corporation”) to make important decisions. If you are in doubt as to how to make such decisions, please contact your financial, legal or other professional advisors. If you have any questions or require more information
with regard to voting your shares of the Corporation, please contact Computershare Trust Company of Canada at (416) 263- 9200.
|
1.
|
to receive and consider the financial statements of the Corporation for the fiscal year ended December 31, 2019, together with the report of the auditors thereon;
|
2.
|
to elect directors of the Corporation for the ensuing year;
|
3.
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to appoint as auditors BDO Canada LLP, the incumbent auditors of the Corporation, and authorize the directors to fix the remuneration of the auditors;
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4.
|
to approve amendments to the Corporation’s stock option plan to permit the Corporation to designate up to a maximum number of options granted to be incentive stock
options (as defined in the United States Internal Revenue Code);
|
5.
|
to consider, and if deemed advisable, approve the consolidation of the outstanding common shares of the Corporation on the basis of a ratio to be determined by the board
of directors of the Corporation in its sole discretion, within a range of 1 post-consolidation common share for every 5 to 10 outstanding pre-consolidation common shares of the Corporation; and
|
6.
|
to transact such other business as may properly come before the Meeting or any adjournments thereof.
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By Order of the Board
|
|
(signed) “David McNally”
|
|
Chairman, President and Chief Executive Officer
|
|
Titan Medical Inc.
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INTRODUCTION
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5
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Forward-Looking Statements
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5
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Information Contained in this Circular
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5
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GENERAL PROXY MATTERS
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5
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Appointment, Time for Deposit and Revocability of Proxy
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5
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Voting by Proxy
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8
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Mail
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8
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Fax
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8
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Internet
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9
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Appointing a Proxyholder
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9
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Revocation of Voting Instructions or Proxies
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9
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Voting of Proxies
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9
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Voting Shares and Principal Holders Thereof
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10
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BUSINESS OF THE MEETING
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10
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1. Financial Statements
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10
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2. Election Of Directors
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10
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3. Appointment And Remuneration Of Auditors
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13
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4. Stock Option Plan Amendment
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13
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5. Share Consolidation
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14
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STATEMENT OF EXECUTIVE COMPENSATION
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20
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CORPORATE GOVERNANCE PRACTICES
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34
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INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON
|
38
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ADDITIONAL INFORMATION
|
39
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DIRECTORS’ APPROVAL
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39
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●
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Registered Shareholders and duly appointed proxyholders can participate in the meeting by clicking “I have a login” and entering a Username and Password before the
start of the meeting.
|
o
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Registered Shareholders - The 15-digit control number located on the form of proxy or in the email notification you received is the Username, and the Password is “titan2020”.
|
o
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Duly appointed proxyholders – Computershare will provide the proxyholder with a Username after the voting deadline has passed. The Password to the meeting is “titan2020”.
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●
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Voting at the meeting will only be available for Registered Shareholders and duly appointed proxyholders. Non-Registered Shareholders who have not appointed themselves may attend the meeting by clicking “I am a guest” and completing the online form.
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●
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Registered Shareholders (as defined in this Circular under the heading “Voting at the
Meeting”) that have a 15-digit control number, along with duly appointed proxyholders who were assigned a Username by Computershare Trust Company of Canada / Computershare Investor Services Inc. (“Computershare”) (see details under the
heading “Appointment of Proxies”), will be able to vote and submit questions during the meeting. To do so, please go to https://web.lumiagm.com/218853590
prior to the start of the meeting to login. Click on “I have a login” and enter your 15-digit control number or Username along with the password
“titan2020”. Non-Registered Shareholders (as defined in this Circular under the heading “Non-Registered Shareholders”) who have not appointed themselves to vote at the meeting, may login as a guest, by clicking on “I am a Guest” and
complete the online form.
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●
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United States Beneficial holders: To attend and vote at the virtual Meeting, you must first obtain a valid legal proxy from your broker, bank or other agent and then register in advance to attend the Annual
and Special Meeting. Follow the instructions from your broker or bank included with these proxy materials or contact your broker or bank to request a legal proxy form. After first obtaining a valid legal proxy from your broker, bank or
other agent, to then register to attend the Annual and Special Meeting, you must submit a copy of your legal proxy to Computershare. Requests for registration should be directed to:
Computershare
100 University Avenue 8th Floor
Toronto, Ontario
M5J 2Y1
OR
Email at: uslegalproxy@computershare.com
Requests for registration must be labeled as “Legal Proxy” and be received no later than September 28, 2020 by 1:00 EST. You will receive a confirmation of your registration by email
after we receive your registration materials. You may attend the Annual and Special Meeting and vote your shares at https://web.lumiagm.com/218853590 during the meeting. Please note
that you are required to register your appointment at www.computershare.com/TitanMedical.
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●
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Non-Registered Shareholders who do not have a 15-digit control number or Username will only be able to attend as a guest which allows them listen to the meeting however will not be able
to vote or submit questions. Please see the information under the heading “Non-Registered Shareholders” for an explanation of why certain shareholders may not receive a form of proxy.
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●
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If you are using a 15-digit control number to login to the online meeting and you accept the terms and conditions, you will be revoking any and all previously submitted proxies. However,
in such a case, you will be provided the opportunity to vote by ballot on the matters put forth at the meeting. If you DO NOT wish to revoke all previously submitted proxies, do not accept the terms and conditions, in which case you can
only enter the meeting as a guest.
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●
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If you are eligible to vote at the meeting, it is important that you are connected to the internet at all times during the meeting in order to vote when balloting commences. It is your
responsibility to ensure connectivity for the duration of the meeting.
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1.
|
Financial Statements
|
2.
|
Election Of Directors
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Name and Municipality of Residence
|
Principal Occupation
|
Director Since
|
Number of Common
Shares Beneficially
Owned, or Controlled or
Directed, Directly or
Indirectly(1)
|
Paul Cataford(2)
Calgary, Alberta, Canada
|
Chief Executive Officer and co-founder of Zephyr Sleep Technologies Inc.
|
-
|
-
|
Anthony J. Giovinazzo(2)
Carlisle, Ontario, Canada
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Independent Corporate Director, Executive Chairman – Sublimity Therapeutics (Holdings) Ltd.
|
-
|
-
|
David J. McNally
Salt Lake City, Utah, USA
|
President, Chief Executive Officer and Chairman of the Board of Directors
|
2017
|
4,167
|
Stephen Randall
Toronto, Ontario, Canada
|
Chief Financial Officer and Director
|
2017
|
22,993
|
Cary G. Vance(2)
Salt Lake City, Utah, USA
|
President & CEO, OptiScan Biomedical
|
-
|
-
|
(1) |
The information as to common shares beneficially owned, or controlled or directed, directly or indirectly, not being within the knowledge of the Corporation, has been furnished by the respective nominees individually.
|
(2) |
If elected at the Meeting, will serve as a member of the Audit Committee, Compensation Committee and Governance Committee of the Corporation.
|
3.
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Appointment And Remuneration Of Auditors
|
4.
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Stock Option Plan Amendment
|
1.
|
the amendments to the Corporation’s stock option plan, amended and restated as of July 15, 2020 (the “Option Plan”), to permit the Corporation to designate up to a
maximum of 9,455,713 options to be incentive stock options (as defined in the United States Internal Revenue Code) are hereby approved as set forth in the form of the amended and restated stock option plan annexed to the Corporation’s proxy
circulated dated August 31, 2020;
|
2.
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all options outstanding under the Stock Option Plan or any previous form of stock option plan shall remain valid and outstanding and they shall be governed by the Option Plan (as amended hereunder); and
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3.
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any one director or officer of the Corporation be and is hereby authorized and directed, for and on behalf of the Corporation, to execute and deliver or file such documents and instruments and to do all such
other acts and things as are required or as such director or officer, in such director’s or officer’s sole discretion, may deem necessary to give full effect to or carry out the provisions of the above resolution.”
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5.
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Share Consolidation
|
Post-Share Consolidation
|
||||
Grant Date
|
Expiry Date
|
Number
Outstanding
|
Based on 5:1 Share
Consolidation
|
Based on 10:1 Share
Consolidation
|
Warrants
10
|
||||
November 16, 2015
|
November 16, 2020
|
233,740
|
46,748
|
23,374
|
February 12 and 23, 2016
|
February 12, 2021
|
444,920
|
88,985
|
44,493
|
March 31 and
April 14, 2016
|
March 31, 2021
|
577,106
|
115,422
|
57,712
|
September 20 and
October 27, 2016
|
September 20, 2021
|
637,111
|
127,423
|
63,712
|
March 16, 2017
|
March 16, 2021
|
355,253
|
71,051
|
35,526
|
June 29, and
July 21, 2017
|
June 29, 2022
|
446,377
|
89,276
|
44,638
|
August 24, 2017
|
August 24, 2022
|
563,067
|
112,614
|
56,307
|
December 5, 2017
|
December 5, 2022
|
1,533,333
|
306,667
|
153,334
|
April 10 and
May 10, 2018
|
April 10, 2023
|
1,295,554
|
259,111
|
129,556
|
August 10, 2018
|
August 10, 2023
|
6,661,068
|
1,332,214
|
666,107
|
March 21, 2019
|
March 21, 2024
|
8,455,882
|
1,691,177
|
845,589
|
May 6, 2020
|
November 6, 2025
|
64,313
|
12,863
|
6,432
|
June 10, 2020
|
June 10, 2024
|
9,000,000
|
1,800,000
|
900,000
|
Compensation
Warrants
|
3,265,496
|
653,099
|
326,550
|
(a)
|
Pursuant to section 168(1)(h) of the Business Corporations Act (Ontario) (the “OBCA”), the Articles of Titan Medical Inc. (the
“Corporation”) be amended to consolidate all of the issued and outstanding common shares of the Corporation (the “Common Shares”) on the basis of a ratio of one
(1) post‑consolidation Common Share for a number of outstanding pre-consolidation Common Shares that is between 5 and 10, with such ratio to be determined by the Board of Directors in its sole discretion.
|
(b)
|
Any resulting fractional Common Shares shall be either rounded up or down to the nearest whole Common Share and no consideration will be paid or issued in respect of fractional common shares that are
cancelled as a result of the Share Consolidation;
|
(c)
|
The Board of Directors of the Corporation be and it is hereby authorized to revoke, without further approval of the Shareholders, this special resolution at any time prior to the completion thereof,
notwithstanding the approval by the Shareholders of same, if determined, in the Board of Directors’ sole discretion to be in the best interest of the Corporation; and
|
(d)
|
Any director or officer of the Corporation be and is hereby authorized to do all such further acts and things and execute all such documents and instruments as may be necessary or desirable to give effect to
the matters contemplated by this special resolution, including but not limited to, the filing of articles of amendment under the OBCA.”
|
(1) |
David McNally, President and Chief Executive Officer
|
(2) |
Stephen Randall, Chief Financial Officer and Secretary
|
(3) |
Perry Genova, Senior Vice President, Research and Development
|
(4) |
Curtis Jensen, Vice President, Quality and Regulatory Affairs, and
|
(5) |
Sachin Sankholkar, Vice President of Marketing (collectively, the “Named Executive Officers” or “NEO”).
|
2019 Fees
|
2018 Fees
|
|||||||
Executive Compensation Related Fees:
|
||||||||
-Hugessen
|
$
|
8,123
|
$
|
21,276
|
||||
-Pearl Meyer
|
25,925
|
-
|
||||||
Subtotal
|
34,048
|
21,276
|
||||||
All Other Fees:
|
||||||||
-Hugessen
|
2,936
|
8,915
|
||||||
-Pearl Meyer
|
-
|
-
|
||||||
Subtotal
|
2,936
|
8,915
|
||||||
Total
|
$
|
36,984
|
$
|
30,191
|
Compensation Peer Group
|
|
Apyx Medical Corporation
Corindus Vascular Robotics, Inc.
Ekso Bionics Holdings, Inc.
IRadimed Corporation
Medigus Ltd.
Microbot Medical Inc.
Misonix, Inc.
MRI Interventions, Inc.
|
Nuvectra Corporation
Profound Medical Corp.
Ra Medical Systems Inc.
ReWalk Robotics Ltd.
Restoration Robotics Inc.
Sensus healthcare Inc.
Stereotaxis, Inc.
TransEnterix, Inc.
|
As at December 31,
|
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
Titan Medical Inc.
|
$ 100.00
|
$ 74.29
|
$ 22.86
|
$ 26.79
|
$ 4.02
|
$ 1.57
|
S&P/TSX Composite Index
|
$ 100.00
|
$ 88.91
|
$ 104.48
|
$ 110.78
|
$97.88
|
$ 116.61
|
Name and
principal
position
|
Year
Ended
Dec. 31
|
Salary
(U.S.$)
|
Share-
based
Awards
(U.S.$)
|
Option-
based
Awards(1)
(U.S.$)
|
Non-equity Incentive
Plan Compensation
($)
|
Pension
Value
(U.S.$)
|
All Other
Compensation(2)
(U.S.$)
|
Total
Compensation
(U.S.$)
|
|
Annual
Incentive
Plans
|
Long-
term
Incentive
Plans
|
||||||||
David McNally
President & CEO
|
2019
|
330,000
|
0 |
0
|
0
|
0
|
165,000
|
495,000
|
|
2018
|
330,000
|
0 |
409,334
|
0
|
0
|
0
|
150,000
|
889,334
|
|
2017
|
300,000
|
0 |
2,027,215
|
0
|
0
|
0
|
0
|
2,327,215
|
|
Stephen Randall
Chief Financial Officer |
2019
|
209,729
|
0 |
0
|
0
|
0
|
0
|
103,475
|
313,204
|
2018
|
199,646
|
0 |
270,340
|
0
|
0
|
0
|
95,070
|
565,056
|
|
2017
|
187,038
|
0 |
0
|
0
|
0
|
0
|
0
|
187,038
|
|
Perry Genova
|
2019
|
250,000
|
0
|
0
|
0
|
0
|
0
|
125,000
|
375,000
|
2018
|
250,000
|
0
|
310,099
|
0
|
0
|
0
|
112,500
|
672,599
|
|
Senior Vice President
|
|||||||||
Research and Development
|
|||||||||
2017
|
206,250
|
0
|
251,735
|
0
|
0
|
0
|
0
|
457,985
|
|
Curtis Jensen
|
2019
|
210,000
|
0
|
0
|
0
|
0
|
0
|
52,500
|
262,500
|
2018
|
210,000
|
0
|
260,482
|
0
|
0
|
0
|
50,000
|
520,482
|
|
Vice President Quality and
|
|||||||||
Regulatory Affairs
|
|||||||||
2017
|
150,000
|
0
|
245,111
|
0
|
0
|
0
|
0
|
395,111
|
|
Sachin
|
2019
|
180,000
|
0
|
0
|
0
|
0
|
0
|
50,000
|
230,000
|
Sankholkar
|
|||||||||
2018
|
180,000
|
0
|
223,274
|
0
|
0
|
0
|
37,500
|
440,774
|
|
Vice President
|
|||||||||
of Marketing
|
|||||||||
2017
|
150,000
|
0
|
0
|
0
|
0
|
0
|
0
|
150,000
|
|
1. |
The fair value of options granted was estimated at the date of grant using the Black-Scholes option pricing model using assumptions based on expected life, risk free rate, expected dividend yield and expected volatility.
|
2. |
Represents cash bonus paid in the year for performance in the prior calendar year.
|
Name
|
Option based Awards
|
Share based Awards
|
||||||
Number of
securities
underlying
unexercised
options
(#)
|
Option
Exercise
Price(1)
CDN($)
|
Option
Exercise
Price
US($)
|
Option
Expiration
Date
(DD-M-YY)
|
Value of
unexercised
in-the-
money
options
(U.S.$)
|
Number of
shares or
units of
shares that
have not
vested
(#)
|
Market or
payout
value of
share-based
awards that
have not
vested
(U.S.$)
|
Market or payout value of vested share-based awards not paid out or distributed
(U.S.$)
|
|
David
|
277,519
|
4.54
|
-
|
17-Jan24
|
-
|
-
|
-
|
-
|
McNally
|
55,018
|
4.54
|
-
|
19-Jan-25
|
-
|
-
|
-
|
-
|
Stephen
|
3,313
|
4.54
|
-
|
9-Jun-20
|
-
|
-
|
-
|
-
|
Randall
|
1,319
|
4.54
|
-
|
23-Dec-20
|
||||
17,589
|
4.54
|
-
|
24-Aug-21
|
-
|
-
|
-
|
-
|
|
36,336
|
4.54
|
-
|
19-Jan-25
|
-
|
-
|
-
|
-
|
|
Perry
|
16,667
|
4.54
|
-
|
7-Feb-24
|
-
|
-
|
-
|
-
|
Genova
|
33,333
|
4.54
|
-
|
17-Apr-24
|
-
|
-
|
-
|
-
|
41,680
|
4.54
|
-
|
19-Jan-25
|
-
|
-
|
-
|
-
|
|
Curtis
|
16,667
|
4.54
|
-
|
17-Apr-24
|
-
|
-
|
-
|
-
|
Jensen
|
18,950
|
4.54
|
-
|
8-Nov-24
|
-
|
-
|
-
|
-
|
35,011
|
4.54
|
-
|
19-Jan-25
|
-
|
-
|
-
|
-
|
|
Sachin
|
9,000
|
4.54
|
-
|
27-Jan-21
|
-
|
-
|
-
|
-
|
Sankholkar
|
11,726
|
4.54
|
-
|
24-Aug-21
|
-
|
-
|
-
|
-
|
30,010
|
4.54
|
-
|
19-Jan-25
|
-
|
-
|
-
|
-
|
1.
|
As of May 29, 2019, the Corporation was authorized to amend the exercise price of the common share purchase options granted to executive officers or employees who are insiders of the Corporation to a price
equal to the higher of the March 21, 2019 offering price of US $3.40 per share or the five day volume weighted average price on either the TSX or the Nasdaq as determined as at the close of business on May 28, 2019. This price was
subsequently determined to be CDN $4.54.
|
Name
|
Option-based awards –
Value vested during the year (U.S.$)
|
Share-based awards –
Value vested during the
year
(U.S.$)
|
Non-equity incentive plan
compensation – Value earned
during the year
(U.S.$)
|
David McNally
|
-
|
-
|
165,000
|
Stephen Randall
|
-
|
-
|
103,475
|
Perry Genova
|
-
|
-
|
125,000
|
Curtis Jensen
|
-
|
-
|
52,500
|
Sachin Sankholkar
|
-
|
-
|
50,000
|
Plan Category
|
Denominated in:
|
Number of securities to be issued
upon exercise of outstanding options,
warrants and rights
|
Weighted–average
exercise price of
outstanding options,
warrants and rights
|
Number of securities
remaining for future
issuance under equity
compensation
plan
|
Equity compensation plan
approved by security holders
|
CDN dollar
|
860,379
|
CDN$5.89
|
4,271,731
|
US dollar
|
854,042
|
US$ 2.65
|
||
Total
|
1,714,421
|
Name
|
Fees Earned
(CDN$)
|
Share-based
Awards
(CDN$)
|
Option-based
Awards (CDN$)
|
Non-equity
Incentive Plan
Compensation
(CDN$)
|
Pension
Value
(CDN$)
|
All Other
Compensation
(CDN$)
|
Total
(CDN$)
|
John E. Barker
|
26,000
|
0
|
41,000
|
0
|
0
|
0
|
67,000
|
Dr. Bruce G. Wolff(1)
|
8,018
|
0
|
0
|
0
|
0
|
0
|
8,018
|
John Schellhorn(2)
|
64,550
|
0
|
0
|
0
|
0
|
0
|
64,550
|
Domenic Serafino(3)
|
63,754
|
0
|
0
|
0
|
0
|
0
|
63,754
|
Charles Federico(4)
|
102,390
|
0
|
643,270
|
0
|
0
|
0
|
745,660
|
Name
|
Option-based Awards
|
Share-based Awards
|
|||||
Number of
securities
underlying
unexercised
options
(#)
|
Option
Exercise
Price per
share
CDN($)
|
Option
Expiration
Date
(DD-M-YY)
|
Value of
unexercised
in-the-money
options
USD($)
|
Number of
shares or units
of shares that
have not vested
(#)
|
Market or
payout value of
share-based
awards that
have not vested
($)
|
Market or payout
value of vested
share-based
awards not paid out
or distributed
($)
|
|
Martin C. Bernholtz(1)
|
1,044
415
5,570
|
51.60
30.60
30.00
|
9-Jun-20
23-Dec-20
23-Aug-21
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
John E. Barker
|
1,044
415
5,687
7,674
21,053
25,719
|
51.60
30.60
30.00
9.00
3.28
4.54
|
9-Jun-20
23-Dec-20
24-Aug-21
06-Jul-25
29-Aug-25
18-Jul-26
|
0
0
0
0
0
0
|
0
0
0
0
0
0
|
0
0
0
0
0
0
|
0
0
0
0
0
0
|
Dr. Bruce G. Wolff(2)
|
828
330
5,277
3,807
10,445
|
51.60
30.60
30.00
9.00
3.28
|
9-Jun-20
23-Dec-20
24-Aug-21
06-Jul-25
29-Aug-25
|
0
0
0
0
0
|
0
0
0
0
0
|
0
0
0
0
0
|
0
0
0
0
0
|
John Schellhorn(3)
|
12,269
|
4.41
|
7-Sept-24
|
0
|
0
|
0
|
0
|
Domenic Serafino(4)
|
5,590
|
7.49
|
06-Jul-25
|
0
|
0
|
0
|
0
|
Charles Federico(5)
|
253,000
41,273
|
4.40
4.40
|
01-May-26
19-Jul-26
|
0
0
|
0
0
|
0
0
|
0
0
|
Name
|
Option-based awards –
Value vested during the year (U.S.$)
|
Share-based awards –
Value vested during the year
(U.S.$)
|
Non-equity incentive plan compensation –
Value earned during the year
(U.S.$)
|
John Barker
|
0
|
0
|
0
|
Dr. Bruce G. Wolff(1)
|
0
|
0
|
0
|
John Schellhorn(2)
|
0
|
0
|
0
|
Domenic Serafino(3)
|
0
|
0
|
0
|
Charles Federico(4)
|
0
|
0
|
0
|
a)
|
Minor changes of a “housekeeping nature”;
|
b)
|
Amending the Options under the Option Plan, including with respect to the option period (provided that the period during which an Option is exercisable does not exceed ten years from the date the Option is
granted and that such Option is not held by an insider), vesting period, exercise method and frequency, subscription price (provided that such option is not held by an insider), and method of determining the subscription price,
assignability and effect of termination of an optionee’s employment or cessation of the optionee’s directorship;
|
c)
|
Changing the class of optionees eligible to participate under the Option Plan;
|
d)
|
Accelerating vesting or extending the expiration date of any Option (provided that such option is not held by an insider), and where such option is held by an insider in such case, shareholder approval shall be
obtained in connection with the extension;
|
e)
|
Changing the terms and conditions of any financial assistance which may be provided by the Corporation to optionees to facilitate the purchase of common shares under the Option Plan; and
|
f)
|
Adding a cashless exercise feature, payable in cash or securities, which provides for a full deduction of the number of underlying common shares from the Option Plan reserve.
|
Awards
|
Number
|
Percentage of Currently
Outstanding Common
Shares
|
Options exercised, expired or cancelled since inception
|
737,702
|
1%
|
Options outstanding
|
2,627,376
|
3%
|
Awards available for grant under the Compensation Plans
|
9,601,272
|
12%
|
Fiscal Year
|
Burn Rate
|
2019
|
3%
|
2018
|
2%
|
2017
|
5%
|
Awards
|
Number
|
Percentage of Currently
Outstanding Common
Shares
|
Outstanding Options
|
2,627,376
|
3%
|
Awards Outstanding under the SU Plan
|
0
|
0%
|
Awards Outstanding under the DSU Plan
|
0
|
0%
|
Awards available for grant under the Compensation Plans
|
9,601,272
|
12%
|
Name
|
Number of Meetings Attended by the Directors
|
|||
Board of Directors
|
Audit Committee
|
Compensation Committee
|
Governance and
Nominating
Committee
|
|
John E. Barker
|
17/17
|
4/4
|
4/4
|
1/1
|
David McNally
|
17/17
|
N/A
|
N/A
|
N/A
|
Stephen Randall
|
17/17
|
N/A
|
N/A
|
N/A
|
John Schellhorn(1)
|
16/17
|
4/4
|
4/4
|
1/1
|
Domenic Serafino(2)
|
16/17
|
4/4
|
4/4
|
1/1
|
Charles Federico(3)
|
14/16
|
2/2
|
1/1
|
1/1
|
Director
|
Independent
|
Financially Literate
|
John E. Barker
|
Yes
|
Yes
|
Phillip McStotts
|
Yes
|
Yes
|
(CDN$)
|
||||
Financial Year Ended
|
Audit Fees(1)
|
Audit-Related Fees(2)
|
Tax Fees(3)
|
All Other Fees(4)
|
December 31, 2019
|
$80,520
|
$78,240
|
$6,480.
|
$34,020
|
December 31, 2018
|
$56,085
|
$31,534
|
-
|
$139,109
|
(1) |
“Audit Fees” are fees billed by the Corporation’s external auditor for services provided in auditing the Corporation’s financial statements for the financial year.
|
(2) |
“Audit-Related Fees” are fees not included in Audit Fees that are billed by the auditor for assurance and related services that are reasonably related to performing the audit or reviewing the Corporation’s interim
financial statements.
|
(3) |
“Tax Fees” are fees billed by the auditor for professional services rendered for tax compliance, tax advice and tax planning.
|
(4) |
“All Other Fees” were amounts paid for audit related services including regulatory filings and comfort letters in connection with prospectus offerings completed during the calendar year.
|
(signed) David J. McNally
|
|
Chairman, President and Chief Executive Officer
Titan Medical Inc.
|
● |
adopting a strategic planning process;
|
● |
risk identification and ensuring that procedures are in place for the management of those risks;
|
● |
the Company’s internal control and management information systems;
|
● |
review and approve annual operating plans and budgets;
|
● |
corporate social responsibility, ethics and integrity;
|
● |
review the integrity of the Chief Executive Officer (CEO) and the other executive officers and ensure that the CEO and other executive officers create a culture of integrity;
|
● |
succession planning, including the appointment, training and supervision of management;
|
● |
delegations and general approval guidelines for management;
|
● |
monitoring financial reporting and management;
|
● |
monitoring internal control and management information systems;
|
● |
corporate disclosure and communications including the adoption of a Corporate Disclosure Policy, which shall serve as the communication policy for the Company;
|
● |
adopting measures for receiving feedback from stakeholders;
|
● |
adopting key corporate policies designed to ensure that the Company, its directors, officers and employees comply with all applicable laws, rules and regulations and conduct their business ethically and with
honesty and integrity;
|
● |
developing the Company’s approach to governance; and
|
● |
such other items as required by law including the Business Corporations Act (Ontario).
|
●
|
Insider Trading Policy; and
|
●
|
Whistleblower Policy.
|
1.
|
The Plan and Definitions
|
(a)
|
“Affiliate” shall have the meaning ascribed thereto in the Securities
Act (Ontario) and regulations and instruments published and adopted pursuant thereunder;
|
(b)
|
|
(c)
|
|
(d)
|
“Code” means the United States Internal Revenue Code of 1986, as amended;
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(ii)
|
|
(i)
|
|
(j)
|
|
(k)
|
|
(l)
|
|
(m)
|
|
(n)
|
|
(o)
|
“Incentive Stock Option” means an Option that qualifies an Incentive Stock Option under section 422 of the Code;
|
(p)
|
|
(q)
|
|
(i)
|
|
(ii)
|
|
(r)
|
“Nonqualified Stock Option” means an Option that is not an Incentive Stock Option;
|
(s)
|
|
(t)
|
|
(u)
|
|
(v)
|
|
(w)
|
|
(x)
|
|
(y)
|
“U.S. Participant” means a Participant who is a citizen of the United States or a resident of the United States, in each case as defined in section 7701(a)(30)(A) and section 7701(b)(1) of the Code, and such other
Participant to the extent their Options awarded under the Plan are subject to U.S. federal income tax under the Code;
|
(z)
|
|
2.
|
Purpose
|
3.
|
Administration
|
(a)
|
This Plan shall be administered by the Board.
|
(b)
|
Subject to the terms and conditions set forth herein, the Board is authorized to provide for the granting, exercise and method of exercise of Options, all on such terms (which may vary between Options
granted from time to time) as it shall determine. In addition, the Board shall have the authority to:
|
(c)
|
The Board’s authority to make amendments to this Plan without shareholder approval shall be in accordance with
|
(d)
|
Notwithstanding the foregoing or any other provision contained herein, the Board shall have the right to delegate the administration and operation of this Plan, in whole or in part, to a committee of the
Board or to the Chief Executive Officer or any other officer of the Corporation. Whenever used herein, the term “Board” shall be deemed to include any committee or officer to which the Board has, fully or partially, delegated
responsibility and/or authority relating to the Plan or the administration and operation of this Plan pursuant to this Section 3.
|
(e)
|
Options shall be evidenced by
|
(f)
|
The Board shall not grant Options to residents of the United States unless such Options are registered under the U.S. Securities Act or are issued in compliance with an available exemption from the
registration requirements of the U.S. Securities Act.
|
4.
|
Shares Subject to Plan
|
(a)
|
Subject to Section
|
(b)
|
The aggregate number of Common Shares reserved for issuance under this Plan and all of the other Compensation Plans of the Corporation, shall not, at the time of the stock option grant, exceed fifteen
percent (15%) of the total number of issued and outstanding Common Shares (calculated on a non-diluted basis) unless the Corporation receives the permission of the stock exchange or exchanges on which the Shares are then listed to exceed
such limit.
|
(c)
|
If any Option granted under this Plan shall expire or terminate for any reason without having been exercised in full, any un-purchased Common Shares to which such Option relates shall be available for the
purposes of the granting of Options under this Plan.
|
5.
|
Maintenance of Sufficient Capital
|
6.
|
Eligibility and Participation
|
(a)
|
The Board may, in its discretion, select any of the following persons to participate in this Plan and to receive Options under this Plan:
|
(i)
|
directors of the Corporation and of any Affiliate of the Corporation;
|
(ii)
|
officers of the Corporation and of any Affiliate of the Corporation;
|
(iii)
|
employees of the Corporation and of any Affiliate of the Corporation; and
|
(iv)
|
Service Providers;
|
(b)
|
The Board may from time to time, in its discretion, grant an Option to any Participant, upon such terms, conditions and limitations as the Board may determine, including the terms, conditions and
limitations set forth herein, provided that Options granted to any Participant shall be approved by the shareholders of the Corporation if the rules of any stock exchange on which the Shares are listed require such approval.
|
7.
|
Exercise Price
|
8.
|
Number of Optioned Shares
|
9.
|
Term
|
(a)
|
no Option shall be exercisable for a period exceeding ten (10) years from the date that the Option is granted unless the Corporation receives the required approval of the stock exchange or exchanges on
which the Common Shares are then listed and as specifically provided by the Board and as permitted under the rules of any stock exchange or exchanges on which the Shares are then listed;
|
(b)
|
no Option in respect of which shareholder approval is required under the rules of any stock exchange or exchanges on which the Common Shares are then listed shall be exercisable until such time as the
Option has been approved by the shareholders of the Corporation;
|
(c)
|
the Board may, subject to the receipt of any necessary regulatory approvals, in its sole discretion, accelerate the time at which any Option may be exercised, in whole or in part; and
|
(d)
|
notwithstanding the expiration date applicable to any Option, if an Option would otherwise expire during a Black Out Period or during the period of ten business days immediately following the last day of a
Black Out Period, the expiration date of such Option shall be the tenth business day following the expiration of the Black Out Period, provided that in no event shall the period during which said Option is exercisable be extended beyond
10 years from the date such Option is granted to the Participant.
|
10.
|
Method of Exercise of Option
|
(a)
|
Except as set forth in Sections 11 and 12 below or as otherwise determined by the Board, no Option may be exercised unless the holder of such Option is, at the time the Option is exercised, a director,
officer, employee or Service Provider of the Corporation or an Eligible Assignee.
|
(b)
|
Options that are otherwise exercisable in accordance with the terms thereof may be exercised in whole or in part from time to time.
|
(c)
|
Any Participant (or his legal, personal representative) or Eligible Assignee wishing to exercise an Option shall deliver to the Corporation, at its principal office in the City of Toronto, Ontario:
|
(i)
|
|
(ii)
|
|
(d)
|
Upon the exercise of an Option as aforesaid, the Corporation shall use reasonable efforts to forthwith deliver, or cause the registrar and transfer agent of the Common Shares to deliver, to the relevant
Participant (or his legal, personal representative) or to the order thereof, a certificate representing the aggregate number of fully paid and non-assessable Common Shares in respect of which the Option has been duly exercised.
|
(e)
|
No Option holder who is resident in the United States may exercise Options unless the Common Shares to be issued upon exercise are registered under the U.S. Securities Act or are issued in compliance with
an available exemption from the registration requirements of the U.S. Securities Act.
|
(f)
|
The Corporation shall be entitled to take all steps necessary to ensure that sufficient funds are provided to the Corporation by the Participant or Eligible Assignee to enable the Corporation to satisfy all
withholding tax and other source deduction requirements in respect of the exercise of an Option by the Participant or Eligible Assignee that are imposed by any applicable law, including:
|
(i)
|
|
(ii)
|
|
(iii)
|
|
11.
|
Ceasing to be a Director, Officer, Employee or Service Provider
|
(a)
|
if a Participant is dismissed for cause as a director, officer or employee of, or Service Provider to, the Corporation or one of its subsidiaries, all unexercised Option rights of that Participant or such
Participant’s Eligible Assignee (where the Participant has assigned the Option to such Eligible Assignee) under this Plan shall immediately become terminated and shall lapse notwithstanding the original term of the Option granted to such
Participant under this Plan; and
|
(b)
|
if any Participant shall cease to hold the position or positions of director, officer, employee or Service Provider of the Corporation (as the case may be) as a result of
|
12.
|
Death or Disability of a Participant
|
(a)
|
by the person or persons to whom the Participant’s rights under the Option shall pass by the Participant’s will or applicable law; and
|
(b)
|
to the extent that he was entitled to exercise the Option as at the date of his death.
|
13.
|
Incentive Stock Options Awarded to U.S. Participants
|
(a)
|
Each agreement or notice evidencing the grant of an Option as contemplated by Section 3(e) of the Plan shall specify whether the related Option is
an Incentive Stock Option or a Nonqualified Stock Option. If no such specification is made, the Option will be a Nonqualified Stock Option.
|
(b)
|
Notwithstanding
any other provision of this Plan to the contrary, the aggregate number of Common Shares available for Incentive Stock Options is 9,455,713 subject to adjustment pursuant to Section 16 of this Plan and subject to the provisions of
Sections 422 and 424 of the Code. For clarity, the foregoing sentence in this sub-Section 13(b) shall not be interpreted to limit the number of Nonqualified Stock Options that the Corporation may
grant (and the number of Common Shares that may be issuable thereunder), at the discretion of the Board, pursuant to this Plan.
|
(c)
|
The exercise price
per Common Share payable upon exercise of an Incentive Stock Option will be not less than one hundred percent (100%) of the fair market value of a Common Share on the applicable grant date; provided, however, that the exercise price per common Share payable upon exercise of an Incentive Stock Option granted to a U.S. Participant who is a 10% Shareholder (within the meaning of Code Sections 422 and 424) on the applicable grant date will be not less than one hundred ten percent (110%) of the fair market value of a Common Share
on the applicable grant date.
|
(d)
|
No Incentive
Stock Option may be granted more than ten (10) years after the earlier of (i) the date on which this Plan is
adopted by the Board or (ii) the date on which this Plan is approved by the shareholders of the Corporation.
|
(e)
|
An Incentive Stock
Option will terminate and no longer be exercisable no later than ten (10) years after the applicable grant date; provided, however, that an Incentive Stock Option granted to a U.S.
Participant who is a 10% Shareholder (within the meaning of Code Sections 422 and 424)
on the applicable grant date will terminate and no longer be exercisable no later than five (5) years after the applicable grant date.
|
(f)
|
The aggregate fair
market value of the Common Shares (determined as of the applicable grant date) with respect to which Incentive Stock Options are exercisable for the first time by any U.S. Participant during any calendar year (pursuant to this Plan
and all other plans of the Corporation and of any parent or subsidiary of the Corporation, as defined under Code Section 424(e) and (f)) will not exceed one hundred thousand United States dollars (US$100,000) or any other limitation subsequently set forth in Section 422(d) of the Code. To the extent that
an Option that is designated as an Incentive Stock Option becomes exercisable for the first time during any calendar year for Common Shares having a fair market value greater than US$100,000, the portion that exceeds such amount will
be treated as a Nonqualified Stock Option.
|
(g)
|
An Incentive Stock Option granted to a U.S. Participant may be exercised during such U.S. Participant’s lifetime only by such U.S. Participant.
|
(h)
|
An Incentive Stock Option granted to a U.S. Participant may not be transferred, assigned, pledged, hypothecated or otherwise disposed of by such
U.S. Participant, except by will or by the laws of descent and distribution.
|
(i)
|
In the event the
Plan is not approved by the shareholders of the Corporation in accordance with the requirements of Section 422 of the Code within twelve (12) months of the date of adoption of the Plan, Options otherwise designated as Incentive Stock
Options will be Nonqualified Stock Options.
|
(j)
|
The Corporation shall have no liability to a U.S. Participant or any other party if any Option (or any part thereof) intended to be an Incentive
Stock Option is not an Incentive Stock Option.
|
(k)
|
An Incentive Stock
Options shall be exercisable in accordance with its terms under the Plan and the applicable agreement or certificate awarding the Option and related exhibits and appendices thereto, if any. However, in order to retain
its treatment as an Incentive Stock Option for United States federal income tax purposes, the Incentive Stock Option must be exercised within the following time periods (to the extent it otherwise is exercisable during such period
pursuant to the terms of the Option):
|
(i)
|
For Incentive Stock
Option treatment, if a U.S. Participant who has been granted an Incentive Stock Option ceases to be an Employee due to the disability of such U.S. Participant (within the meaning of Code Section 22(e)), such Incentive Stock Option must be exercised (to the extent such Incentive Stock Option was exercisable on the date of disability) by the
date that is one year following the date of such disability (but in no event beyond the end of the Option Period of such Option).
|
(ii)
|
For Incentive Stock
Option treatment, if a U.S. Participant who has been granted an Incentive Stock Option ceases to be an employee for any reason other than the death or disability(within the meaning of Code Section 22(e)) of such U.S. Participant, such Incentive Stock Option must be exercised (to the extent such Incentive Stock Option was exercisable on the date
of termination) by such U.S. Participant within three months following the date of termination (but in no event beyond the end of the Option Period of such Option).
|
(iii)
|
For the purposes of this Section 13(k), the employment of a U.S. Participant who has been granted an Incentive
Stock Option will not be considered interrupted or terminated upon (a) sick leave, military
leave or any other leave of absence approved by the Corporation that does not exceed ninety (90) days in the aggregate; provided, however, that if reemployment upon the expiration of any such leave is guaranteed by contract or
applicable law, such ninety (90) day limitation will not apply, or (b) a transfer from one office of the Corporation (or of any parent or subsidiary of the Corporation as defined in
Code Sections 424(e) and (f)) to another office of the Corporation (or of any such parent or subsidiary) or a transfer between the Corporation and any such parent or subsidiary.
|
14.
|
|
15.
|
|
16.
|
|
(a)
|
The number of Common Shares subject to the Plan shall be increased or decreased proportionately in the event of the subdivision or consolidation of the outstanding Common Shares of the Corporation, and in
any such event a corresponding adjustment shall be made to the number of Common Shares deliverable upon the exercise of any Option granted prior to such event without any change in the total price applicable to the unexercised portion of
the Option, but with a corresponding adjustment in the price for each Common Share that may be acquired upon the exercise of the Option. In case the Corporation is reorganized or merged or consolidated or amalgamated with another
corporation, appropriate provisions shall be made for the continuance of the Options outstanding under this Plan and to prevent any dilution or enlargement of the same.
|
(b)
|
Adjustments under this Section
|
17.
|
|
(a)
|
the acceptance by the holders of Common Shares of the Corporation, representing in the aggregate, more than 50 percent (50%) of all issued Common Shares of the Corporation, of any offer, whether by way of a
takeover bid or otherwise, for all or any of the outstanding Common Shares of the Corporation; or
|
(b)
|
the acquisition, by whatever means, by a person (or two or more persons who, in such acquisition, have acted jointly or in concert or intend to exercise jointly or in concert any voting rights attaching to
the Common Shares acquired), directly or indirectly, of beneficial ownership of such number of Common Shares or rights to Common Shares of the Corporation, which together with such person’s then owned Common Shares and rights to Common
Shares, if any, represent (assuming the full exercise of such rights to voting securities) more than fifty percent (50%) of the combined voting rights of the Corporation’s then outstanding Common Shares; or
|
(c)
|
the entering into of any agreement by the Corporation to merge, consolidate, amalgamate, initiate an arrangement or be absorbed by or into another corporation; or
|
(d)
|
the passing of a resolution by the Board or shareholders of the Corporation to substantially liquidate the assets or wind-up the Corporation’s business or significantly rearrange its affairs in one or more
transactions or series of transactions or the commencement of proceedings for such a liquidation, winding-up or re-arrangement (except where such re-arrangement is part of a bona fide reorganization of the Corporation in circumstances
where the business of the Corporation is continued and where the shareholdings remain substantially the same following the re-arrangement); or
|
(e)
|
individuals who were members of the Board immediately prior to a meeting of the shareholders of the Corporation involving a contest for or an item of business relating to the election of directors, not
constituting a majority of the Board following such election.
|
18.
|
|
(a)
|
Subject to sub-
|
(b)
|
Notwithstanding
|
19.
|
|
(a)
|
minor changes of a “housekeeping nature”;
|
(b)
|
amending Options under this Plan, including with respect to the Option Period (provided that the period during which an Option is exercisable does not exceed 10 years from the date the Option is granted and
that such Option is not held by an Insider), vesting period, exercise method and frequency, subscription price (provided that such Option is not held by an Insider) and method of determining the subscription price, assignability and
effect of termination of a Participant’s employment or cessation of the Participant’s directorship;
|
(c)
|
changing the class of Participants eligible to participate under this Plan;
|
(d)
|
accelerating the vesting of any Option;
|
(e)
|
extending the expiration date of any Option provided that the period during which an option is exercisable does not exceed 10 years from the date the Option is granted and provided that such Option is not
held by an Insider, and where such Option is held by an Insider in such case, shareholder approval shall be obtained in connection with the extension;
|
(f)
|
changing the terms and conditions of any financial assistance which may be provided by the Corporation to Participants to facilitate the purchase of Common Shares under this Plan; and
|
(g)
|
adding a cashless exercise feature, payable in cash or securities, which provides for a full deduction of the number of underlying Common Shares from this Plan reserve.
|
20.
|
|
21.
|
|
22.
|
|
23.
|
|
24.
|
|
25.
|
|
26.
|
|
27.
|
|
(a)
|
with further approval by the Board, on March 14, 2018,
|
(b)
|
with shareholder approval, on May 29, 2019
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(c)
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with further approval by the Board, on July 15, 2020.
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