HLS Therapeutics Inc.

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 19, 2020

AND

MANAGEMENT INFORMATION CIRCULAR

Dated: May 19, 2020

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS ....................................................................................................... i MANAGEMENT INFORMATION CIRCULAR ....................................................................................................................... 3 PROXYHOLDER MATTERS .................................................................................................................................................... 5 RECORD DATE AND QUORUM ............................................................................................................................................. 5 VOTING SECURITIES AND PRINCIPAL HOLDERS ............................................................................................................ 6 FINANCIAL STATEMENTS ..................................................................................................................................................... 6 ELECTION OF DIRECTORS ..................................................................................................................................................... 6 REAPPOINTMENT OF AUDITOR ......................................................................................................................................... 15 STATEMENT OF GOVERNANCE PRACTICES ................................................................................................................... 15 STATEMENT OF EXECUTIVE COMPENSATION .............................................................................................................. 19 INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS .................................................................................... 32 AUDIT COMMITTEE INFORMATION ................................................................................................................................. 32 INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS ........................................................................ 32 ADDITIONAL INFORMATION .............................................................................................................................................. 32 APPROVAL OF THE DIRECTORS ........................................................................................................................................ 33 ANNEX A BOARD MANDATE ........................................................................................................................................... A-1

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the annual meeting (the “ Meeting ”) of the holders (“ Shareholders ”) of common shares (“ Common Shares ”) of HLS Therapeutics Inc. (the “ Company ”) is scheduled to be held at the offices of Blake, Cassels & Graydon LLP, 199 Bay Street, Commerce Court West, Suite 4000, Toronto, Ontario M5L 1A9, on Friday June 19, 2020 at 10:00 a.m. (Toronto time) for the following purposes:

(a) to receive the audited consolidated financial statements of the Company as at and for the year ended December 31, 2019, together with the auditor’s report thereon;
(b) to elect directors of the Company for the ensuing year;
(c) to reappoint the auditor of the Company for the ensuing year and authorize the directors of the Company to fix such auditor’s remuneration; and
(d) to transact such other business as may properly be brought before the Meeting or any adjournment(s) thereof.

The accompanying Circular provides additional information relating to the matters to be dealt with at the Meeting. The directors of the Company have fixed May 15, 2020 as the record date for determining (i) those Shareholders entitled to receive notice of and vote at the Meeting and (ii) those holders of Class A preferred shares of the Company (“ Preferred Shares ”) entitled to receive notice of and attend the Meeting. Holders of Preferred Shares are not entitled to vote at the Meeting.

The Company is actively monitoring the coronavirus disease 2019 (“ COVID-19 ”) situation and is sensitive to the public health and travel concerns that shareholders may have and to the protocols that federal, provincial and local governments may impose. The Company strongly encourages each Shareholder to submit a form of proxy or voting instruction form in advance of the Meeting and not to plan on attending the Meeting in person, in order to comply with government and public health directives regarding physical distancing. Depending on the circumstances, the Company may not be able to accommodate in-person attendance by all eligible Shareholders intending on doing so. The Meeting will be available through a live webcast and a conference call facility, and the Company encourages all Shareholders to follow the proceedings of the Meeting via the webcast or conference call facility. The Company will issue a press release containing a link to the webcast and details of the conference call and will post this information on the Company’s website at www.hlstherapeutics.investorroom.com/news by no later than June 15, 2020. Please monitor the Company’s website at www.hlstherapeutics.investorroom.com/news for updated information and the most current instructions.

If, for reasons beyond the control of the Company, the Company shall determine that it has become impractical or impermissible to hold the Meeting at the original location of the Meeting, the Meeting shall be adjourned to the Company’s offices at 11:00 a.m. (Toronto time) on June 19, 2020 for the purposes of conducting the business of the Meeting. Notice of any such adjournment will be provided as far in advance of the Meeting as practicable by press release and on the Company’s website at www.hlstherapeutics.com; however, given the context of evolving facts and circumstances, prior notice of such adjournment of the Meeting may need to be given as late as the day of the Meeting.

If you are a registered Shareholder (i.e., you hold a physical certificate representing your Common Shares in your name) we encourage you to exercise your right to vote by dating, signing and returning the accompanying form of proxy to Computershare Investor Services Inc., the Company’s transfer agent. You may also vote your Common Shares by proxy by appointing another person to attend the Meeting and vote your Common Shares for you . To be valid, completed proxy forms must be dated, completed, signed and deposited with Computershare Investor Services Inc., (i) by mail using the enclosed return envelope or one addressed to Computershare Investor Services Inc., 100 University Avenue, 8th Floor, Toronto, Ontario, M5J 2Y1 Attn: Proxy Department, or (ii) by facsimile to 1-866-249-7775. Registered Shareholders may also vote (i) on the internet at www.investorvote.com, or (ii) by telephone at 1-866-732-8683, in each case no later than 10:00 a.m. (Toronto time) on June 17, 2020 or, if the Meeting is adjourned or postponed, not less than 48 hours (excluding Saturdays, Sundays and statutory holidays in Toronto, Ontario) before any adjournment or postponement of the Meeting.

If you are a non-registered Shareholder and have received these materials from your broker or another intermediary, please complete and return the voting instruction form or other authorization form provided to you by your broker or intermediary in accordance with the instructions provided. Failure to do so may result in your Common Shares not being eligible to be voted at the Meeting.

Dated at Toronto, Ontario, this 19th day of May, 2020.

BY ORDER OF THE BOARD OF DIRECTORS OF HLS THERAPEUTICS INC.

“Ryan C. Lennox”

RYAN C. LENNOX

Corporate Secretary and General Counsel

MANAGEMENT INFORMATION CIRCULAR

This management information circular (the “Circular”) is furnished in connection with the solicitation of proxies for use at the annual meeting (the “Meeting”) of the holders (the “Shareholders”) of common shares (“Common Shares”) of HLS Therapeutics Inc. (“HLS” or the “Company”) to be held on June 19, 2020 and any adjournment(s) thereof at the time and place and for the purposes set forth in the Notice of Meeting.

The management of HLS is soliciting the proxies of Shareholders for use at the Meeting. It is expected that the solicitation will be primarily by mail, but proxies may also be solicited by telephone, or other personal contact, by regular employees of the Company, without special compensation. The Company may also engage a third party to provide proxy solicitation services on behalf of management in connection with the solicitation of proxies for the Meeting. The costs of solicitation will be borne by the Company.

The Company presents its consolidated financial statements in United States dollars. In this Circular, all references to “ US$ ” and “ $ ” are to United States dollars and all references to “ C$ ” are to Canadian dollars.

On March 12, 2018, HLS Therapeutics Inc. (“ Former HLS ”) and Automodular Corporation (“ AMD ”) amalgamated by way of a plan of arrangement (the “ Arrangement ”) in accordance with Section 183 of the Business Corporations Act (Ontario). The Arrangement constituted a reverse takeover of AMD by Former HLS under the policies of the TSX Venture Exchange (the “ TSXV ”). In this Circular, you and your refer to the Shareholders of HLS. We , us , our , the Company and HLS each refer to HLS Therapeutics Inc. and/or to Former HLS, as the context requires.

The information contained in this Circular is provided as at May 15, 2020, except where otherwise indicated.

HOW TO VOTE YOUR SHARES

How to Vote if you are a Registered Shareholder

You are a registered Shareholder if your name appears on a share certificate representing your Common Shares or if you are registered as the holder of your Common Shares in book-entry form. In either case, your name will be shown on the list of Shareholders kept by Computershare Investor Services Inc. (“ Computershare ”), the registrar and transfer agent of the Company.

Voting by proxy is the easiest way to vote. Voting by proxy means that you are giving the person or people named on your proxy form (the “ Proxyholder ”) the authority to vote your Common Shares for you at the Meeting or any adjournment. If you are a registered Shareholder, you will receive a form of proxy from Computershare with this Circular.

If you are a registered Shareholder you may vote by submitting your proxy before 10:00 a.m. (Toronto time) on June 17, 2020 or, if the Meeting is adjourned or postponed, not less than 48 hours (excluding Saturdays, Sundays and statutory holidays in Toronto, Ontario) before any adjournment or postponement of the Meeting, in any of the following ways:

By Telephone	By Internet	By Mail	By Fax	By Appointing Another Person to Attend and Vote
Call 1-866-732-8683 (toll free in Canada or the United States)	Go to www.investorvote.com	Complete, sign and date the proxy and return it in the envelope provided or otherwise to: Computershare Investor Services Inc., Proxy Tabulation, 100 University Avenue, 8th Floor, Toronto Ontario, M5J 2Y1	Complete, sign and date the proxy and fax it to: 1-866-249-7775 (toll free in Canada or the United States) or 416-263-9524 (outside Canada and the United States)	Insert the name of the person or company you are appointing in the blank space provided in the enclosed form of proxy. Complete your voting instructions, date and sign the proxy and return it to Computershare using one of the methods outlined here. The persondoesnothave

By Telephone	By Internet	By Mail	By Fax	By Appointing Another Person to Attend and Vote
				to be a Shareholder but please ensure that he or she knows that you have appointed them and they are available to attend the Meeting on your behalf.

If you are not sure whether you are a registered Shareholder, please contact Computershare using the contact information set forth on the back cover of the Circular.

How to Change your Vote/Revoke your Proxy if you are a Registered Shareholder

If you are a registered Shareholder and you have submitted a proxy, you may revoke a vote you made by proxy:

by voting again by telephone or on the internet before 10:00 a.m. (Toronto time) on June 17, 2020;
by completing a proxy form that is dated later than the proxy form you are changing, and sending it to Computershare so that it is received before 10:00 a.m. (Toronto time) on June 17, 2020;
by sending a notice in writing from you or your authorized attorney (or, if the Shareholder is a corporation, by a duly authorized officer) revoking your proxy to Ryan Lennox, the General Counsel of HLS, at the registered office of the Company, located at 10 Carlson Court, Suite 701, Etobicoke, Ontario, so that it is received before 10:00 a.m. (Toronto time) on June 17, 2020;
by giving a notice in writing from you or your authorized attorney (or, if the Shareholder is a corporation, by a duly authorized officer) revoking your proxy to the chair of the Meeting, at the Meeting or any adjournment; or
in any other manner permitted by law.

How to Vote if you are a Non-Registered Shareholder

You are a non-registered (or beneficial) Shareholder if your broker or another intermediary (your “ Nominee ”) holds your Common Shares for you. If you are a non-registered Shareholder, HLS will not have any record of your ownership and so the only way that you can vote your Common Shares is by instructing your Nominee. Your Nominee is required to ask for your voting instructions before the Meeting.

In most cases, you will receive a voting instruction form from your Nominee that allows you to provide your voting instructions by telephone, on the internet or by mail. You should complete the voting instruction form and sign and return it in accordance with the directions on that form. Please contact your Nominee if you did not receive a voting instruction form or a proxy form. Less frequently, you may receive from your Nominee a proxy form that has already been signed by the Nominee, which is restricted to the number of Common Shares beneficially owned by you, but is otherwise not completed. If you have received this proxy form, you should complete it and return it to Computershare before 10:00 a.m. (Toronto time) on June 17, 2020, using one of the methods set out above.

In accordance with the Canadian Securities Administrators’ National Instrument 54-101 — Communication with Beneficial Owners of Securities of a Reporting Issuer (“ NI 54-101 ”), the Company is distributing copies of materials related to the Meeting to Nominees for distribution to non-registered Shareholders and such Nominees are to forward the materials related to the Meeting to each non-registered Shareholder (unless the non-registered Shareholder has declined to receive such materials). Such Nominees often use a service company (such as Broadridge Investor Communication Solutions in Canada (“ Broadridge ”)), to permit the non-registered Shareholder to direct the voting of the Common Shares held by the Nominee, on behalf of the non-registered Shareholder. The Company is paying Broadridge to deliver, on behalf of the Nominees, a copy of the materials related to the Meeting to each “objecting beneficial owner” and each “non-objecting beneficial owner” (as such terms are defined in NI 54-101).

If you would like to attend the Meeting and vote in person, it will be necessary for you to appoint yourself as proxyholder of your Common Shares. You can do this by printing your name in the space provided on the voting instruction form and submitting it as directed. You will be asked to register your attendance at the Meeting.

How to Change your Vote if you are a Non-Registered Holder

A non-registered Shareholder may revoke previously-given voting instructions by contacting his or her Nominee and complying with any applicable requirements imposed by such Nominee. A Nominee may not be able to revoke voting instructions if it receives insufficient notice of revocation.

PROXYHOLDER MATTERS

Completing the Form of Proxy

You can choose to vote “ FOR ” or “ WITHHOLD ” your vote in respect of the following resolutions:

the election of each person nominated as a director of the Company (each, a “ Director ”); and
the reappointment of the auditor for the ensuing year and the authorization of the Directors to fix the auditor’s remuneration.

The Common Shares represented by proxy will be voted or withheld from voting in accordance with your instructions on any ballot that may be called and if you specify a choice with respect to any matter to be acted upon, the Common Shares will be voted accordingly.

If you are an individual, you or your authorized attorney must sign the proxy form. If you are a corporation or other legal entity, an authorized officer or attorney must sign the proxy form. A proxy form signed by a person acting as attorney or in some other representative capacity (including a representative of a corporate Shareholder) should indicate that person’s capacity (following their signature) and should be accompanied by the appropriate instrument evidencing qualification and authority to act (unless such instrument has previously been filed with HLS).

If you need help completing your proxy form, please contact Computershare at 514-982-7555 or at 1-800-5646253 (toll free in Canada and the United States) or by e-mail at [email protected].

How Proxyholders Will Vote

When you sign the proxy form, you authorize Greg Gubitz, the Chief Executive Officer, or Ryan Lennox, the General Counsel, to vote your Common Shares for you at the Meeting according to your instructions. If you return your proxy form and do not tell us how you want to vote your Common Shares, your Common Shares will be voted :

FOR electing each of the individuals nominated as a Director who are listed in this Circular;
FOR reappointing Ernst & Young LLP as auditor and authorizing the Directors to fix the auditor’s remuneration;

Your Proxyholder will also be entitled to vote your Common Shares as he or she sees fit in respect of amendments to matters identified in the Notice of Meeting and on any other item of business that may properly come before the Meeting or any adjournment(s) thereof. At the date of this Circular, the Directors and management of the Company are not aware that any such amendments or other matters are to be submitted to the Meeting.

Shareholders Can Choose any Person or Company as their Proxyholder

You have the right to appoint a person other than the persons designated in the proxy form to represent you at the Meeting. Such right may be exercised by inserting the name of the person or company in the blank space provided in the enclosed form of proxy or by completing another form of proxy. If you do not specify how you want your Common Shares voted, your Proxyholder will vote your Common Shares as he or she sees fit on any matter that may properly come before the Meeting.

RECORD DATE AND QUORUM

The board of directors of the Company (the “ Board ” or the “ Board of Directors ”) has fixed May 15, 2020 as the record date (the “ Record Date ”) for the purpose of determining which Shareholders are entitled to receive the Notice of Meeting and vote at the Meeting or any adjournment(s) thereof, either in person or by proxy. No person acquiring Common Shares after that date shall, in respect of such Common Shares, be entitled to receive the Notice of Meeting and vote at the Meeting or any adjournment(s) thereof.

The Board has fixed May 15, 2020 as the record date for determining those holders of Class A preferred shares of the Company (“ Preferred Shares ”) entitled to receive the Notice of Meeting and attend the Meeting. Holders of Preferred Shares

are not entitled to vote at the Meeting. No person acquiring Preferred Shares after that date shall, in respect of such Preferred Shares, be entitled to receive the Notice of Meeting and attend the Meeting or any adjournment(s) thereof.

A quorum for the transaction of business at the Meeting or any adjournment(s) thereof (other than an adjournment for lack of quorum) shall be two persons present and each entitled to vote at the Meeting who, together, hold or represent by proxy not less than 15% of the votes attaching to the outstanding Common Shares entitled to vote at the Meeting.

VOTING SECURITIES AND PRINCIPAL HOLDERS

HLS is authorized to issue an unlimited number of Common Shares. As of May 15, 2020, the Company had 31,740,625 outstanding Common Shares, each carrying the right to one vote at the Meeting.

As of May 15, 2020, the only persons or companies who, to the knowledge of the Company, its Directors or executive officers, based on publicly available information, beneficially own, or control or direct, directly or indirectly, voting securities carrying 10% or more of the outstanding Common Shares are as follows:

Name and Municipality of Residence of Principal Shareholder	Common Shares Owned	Common Shares Owned
	Number	Percentage (undiluted)
Stadium Capital Management, LLC (New Canaan, Connecticut, USA)	5,131,442	16.17%
Athyrium Opportunities II Co-Invest 1 LP (Cayman Islands)	4,351,782	13.71%
HealthCor Partners Fund II, L.P. (New York, New York, USA), HealthCor Sanatate Offshore Master Fund L.P. (Cayman Islands), and HealthCor Offshore Master Fund, L.P. (Cayman Islands)	4,050,000	12.76%

In addition to any other voting right to which the holders of Preferred Shares are entitled by law or other provisions of the articles of the Company from time to time in effect, but subject to the provisions of the articles of the Company, holders of Preferred Shares are entitled to vote separately as a class, in addition to any other vote of securityholders of the Company that may be required, in certain circumstances, including in respect of any amendment, alteration or repeal of any provision of the articles or by-laws of the Company which would adversely affect the rights, privileges, restrictions and conditions of the Preferred Shares. Holders of Preferred Shares are not entitled to vote separately as a class on any matters identified in the Notice of Meeting.

FINANCIAL STATEMENTS

The audited consolidated financial statements of HLS as at and for the year ended December 31, 2019, together with the auditors’ reports thereon, have been sent to Shareholders who have requested that they receive a copy. These financial statements are also available on the Company’s profile on the SEDAR website at www.sedar.com.

ELECTION OF DIRECTORS

The articles of the Company provide for a minimum of three and a maximum of ten Directors. The Board has the authority to set the number of Directors, such number presently being fixed at seven. Each of the seven individuals listed below is being recommended for election as a Director, as the term of office for each current Director expires at the close of the Meeting. If elected, they will hold office until the close of the next annual meeting of Shareholders or until their successors are elected or appointed, unless such office is earlier vacated in accordance with the Company’s by-laws. All of the proposed nominees are currently Directors.

It is the intention of the individuals named in the enclosed form of proxy to vote FOR the election of each of the individuals listed below under the heading “Nominees for Election to the Board” as Directors, to hold office until the close of the next annual meeting of Shareholders or until their successors are duly elected or appointed, unless specifically instructed in the proxy to withhold such vote. Management of the Company does not contemplate that any of the nominees will be unable or unwilling to serve as a Director; however, if such event should occur prior to the Meeting, the persons named in the enclosed form of proxy reserve the right to vote in their discretion for other nominees.

Pursuant to the rights, privileges, restrictions and conditions of the Preferred Shares (the “ Preferred Share Terms ”), HLS is required to take all necessary steps to nominate one nominee selected by Christopher Nutt, the claims administrator (the “ Claims Administrator ”) appointed pursuant to the Claims Administration and Escrow Agreement dated March 8, 2018 among AMD, Christopher Nutt and Computershare Trust Company of Canada (the “ Claims Administration and Escrow

Agreement ”) entered into as a condition to the completion of the Arrangement, to be considered for election by Shareholders in accordance with the articles and by-laws of the Company at each meeting of Shareholders at which Directors are to be elected. The Claims Administrator has selected Mr. Rodney Hill as the nominee for consideration for election by Shareholders at the Meeting.

Advance Notice Provisions

The Company’s by-laws provide for advance notice of nominations of Directors (“ Advance Notice Provisions ”) in circumstances where nominations of persons for election to the Board are made by Shareholders other than (a) pursuant to the nomination rights set out in the Preferred Share Terms or (b) by or at the direction or request of one or more Shareholders pursuant to a proposal or a requisition of the Shareholders made in accordance with applicable law and the Company’s bylaws.

To be an eligible Shareholder for making nominations under the Advance Notice Provisions, the nominating Shareholder must (a) comply with the notice procedures set forth in the Advance Notice Provisions, as provided for below, and (b) at the close of business on the date of the giving of the applicable notice and on the record date for notice of the applicable Shareholder meeting, be entered in the Company’s register as a holder of one or more Common Shares carrying the right to vote at such meeting or beneficially own Common Shares that are entitled to be voted at such meeting.

The Advance Notice Provisions fix deadlines by which an eligible Shareholder must notify the Company of nominations of individuals for election to the Board as follows: such notice must be provided to the Corporate Secretary of the Company (a) in the case of an annual meeting, not less than 30 days prior to the date of the annual meeting; provided, however, that in the event that the annual meeting is to be held on a date that is less than 50 days after the date (the “ Notice Date ”) that is the earlier of the date that a notice of meeting is filed for such meeting and the date on which the first public announcement of the date of such meeting was made, notice may be given not later than the close of business on the tenth day following the Notice Date; and (b) in the case of a special meeting (which is not also an annual general meeting) of Shareholders called for the purpose of electing Directors (whether or not called for other purposes), not later than the close of business on the fifteenth day following the Notice Date. The Advance Notice Provisions also stipulate that certain information about any proposed nominee and the nominating Shareholder be included in such a notice in order for it to be valid.

The Advance Notice Provisions are intended to: (a) facilitate orderly and efficient annual general or, where the need arises, special meetings; (b) ensure that all Shareholders receive adequate notice of Board nominations and sufficient information with respect to all nominees; and (c) allow Shareholders to register an informed vote.

A copy of the Company’s by-laws is available on the Company’s website at www.hlstherapeutics.com and on its profile on the SEDAR website at www.sedar.com.

Nominees for Election to the Board

The following tables set forth profiles of the seven individuals who are nominated for election as Directors, including the positions and offices with the Company now held by each nominee, the present principal occupation or employment of each nominee, the business experience over the last five years of each nominee, the period during which each nominee has served as a Director and the number of securities of the Company (including Common Shares, options to purchase Common Shares (“ Options ”) and Founder PSUs (as defined herein), if applicable) beneficially owned, or controlled or directed, directly or indirectly, by each nominee as at the date of this Circular. The information as to securities beneficially owned, or controlled or directed, directly or indirectly, by each nominee has been furnished by the respective proposed nominees individually.

The information set forth below in respect of the period during which Messrs. Wells, Gubitz, Lanthier and Bastien have served as a Director includes the period such individuals served as directors of Former HLS.

The Board has determined that five of the seven individuals nominated for election as a Director at the Meeting are independent. The only Directors who are not independent are Messrs. Wells and Gubitz due to the executive position which each holds at HLS. All of the members of each of the Audit Committee and the Compensation and Governance Committee (“ C&G Committee ”) are independent Directors. For more information about the Company’s independence standards and assessment, see the section of this Circular entitled “ Statement of Governance Practices – Director Independence ”. For information on the compensation paid to non-management Directors, see the section of this Circular entitled “ Directors’ Compensation ”. In addition, a description of the role of the Board is included in the section of this Circular entitled “ Statement of Governance Practices – Board Mandate ” and a copy of the Mandate of the Board of Directors (the “ Board Mandate ”) is attached as Annex A to this Circular.

WILLIAMWELLS Royal Westmoreland, St. James, Barbados Director since: June 5, 2014 Age: 59	William Wells is the Executive Chairman of HLS. Mr. Wells is the former Chief Executive Officer and director of Biovail Corporation and former Chairman of Valeant Pharmaceutical International, Inc. Mr. Wells is a seasoned business executive with extensive experience managing complex global businesses. He has been involved in three successful turnaround efforts of major public companies and led the turnaround of Biovail, first as Lead Director of the board of directors and then as Chief Executive Officer. Mr. Wells holds a Bachelor of Arts degree from the University of Western Ontario and a Masters in International Business Studies from the University of South Carolina. Mr. Wells currently serves on the board of privately held Neuronasal Inc.	William Wells is the Executive Chairman of HLS. Mr. Wells is the former Chief Executive Officer and director of Biovail Corporation and former Chairman of Valeant Pharmaceutical International, Inc. Mr. Wells is a seasoned business executive with extensive experience managing complex global businesses. He has been involved in three successful turnaround efforts of major public companies and led the turnaround of Biovail, first as Lead Director of the board of directors and then as Chief Executive Officer. Mr. Wells holds a Bachelor of Arts degree from the University of Western Ontario and a Masters in International Business Studies from the University of South Carolina. Mr. Wells currently serves on the board of privately held Neuronasal Inc.	William Wells is the Executive Chairman of HLS. Mr. Wells is the former Chief Executive Officer and director of Biovail Corporation and former Chairman of Valeant Pharmaceutical International, Inc. Mr. Wells is a seasoned business executive with extensive experience managing complex global businesses. He has been involved in three successful turnaround efforts of major public companies and led the turnaround of Biovail, first as Lead Director of the board of directors and then as Chief Executive Officer. Mr. Wells holds a Bachelor of Arts degree from the University of Western Ontario and a Masters in International Business Studies from the University of South Carolina. Mr. Wells currently serves on the board of privately held Neuronasal Inc.	William Wells is the Executive Chairman of HLS. Mr. Wells is the former Chief Executive Officer and director of Biovail Corporation and former Chairman of Valeant Pharmaceutical International, Inc. Mr. Wells is a seasoned business executive with extensive experience managing complex global businesses. He has been involved in three successful turnaround efforts of major public companies and led the turnaround of Biovail, first as Lead Director of the board of directors and then as Chief Executive Officer. Mr. Wells holds a Bachelor of Arts degree from the University of Western Ontario and a Masters in International Business Studies from the University of South Carolina. Mr. Wells currently serves on the board of privately held Neuronasal Inc.
	Board/Committee Membership		Principal Occupation(s) (for the past 5 years)
	Board		Executive Chairman of HLS since June 2014; Chairman of Evizone Limited since November 2009
Securities of the Company	beneficially owned, or controlled or directed, directly or indirectly
Common Shares (#)		Options (#)		Cash-Settled Founder PSUs (#)
952,250		370,064		65,000

GREGGUBITZ Caledon, Ontario, Canada Director since: June 5, 2014 Age: 62	Greg Gubitz is the Chief Executive Officer of HLS. Mr. Gubitz is the former Senior Vice President, Corporate Development and General Counsel of Biovail. Mr. Gubitz is a seasoned executive and business lawyer with significant transaction, investment and operating experience. Mr. Gubitz is a non-practicing lawyer in the Law Society of Ontario and holds a Bachelor of Arts degree and an LLB from McGill University.	Greg Gubitz is the Chief Executive Officer of HLS. Mr. Gubitz is the former Senior Vice President, Corporate Development and General Counsel of Biovail. Mr. Gubitz is a seasoned executive and business lawyer with significant transaction, investment and operating experience. Mr. Gubitz is a non-practicing lawyer in the Law Society of Ontario and holds a Bachelor of Arts degree and an LLB from McGill University.	Greg Gubitz is the Chief Executive Officer of HLS. Mr. Gubitz is the former Senior Vice President, Corporate Development and General Counsel of Biovail. Mr. Gubitz is a seasoned executive and business lawyer with significant transaction, investment and operating experience. Mr. Gubitz is a non-practicing lawyer in the Law Society of Ontario and holds a Bachelor of Arts degree and an LLB from McGill University.	Greg Gubitz is the Chief Executive Officer of HLS. Mr. Gubitz is the former Senior Vice President, Corporate Development and General Counsel of Biovail. Mr. Gubitz is a seasoned executive and business lawyer with significant transaction, investment and operating experience. Mr. Gubitz is a non-practicing lawyer in the Law Society of Ontario and holds a Bachelor of Arts degree and an LLB from McGill University.
	Board/Committee Membership		Principal Occupation(s) (for the past 5 years)
	Board		Chief Executive Officer of HLS since June 2014; Chief Executive Officer of Grosvenor Ventures since 2007
Securities of the Company	of the Company	beneficially owned, or controlled or directed, directly or indirectly

Common Shares (#)		Options (#)		Equity-Settled Founder PSUs (#)
670,000		454,246		65,000

J. SPENCERLANTHIER Toronto, Ontario, Canada Director since: August 10, 2015 Age: 79	J. Spencer Lanthier is an independent Director and the Lead Director of HLS. Mr. Lanthier served as the Chair of the board of directors of Ellis-Don Inc. and has also previously served as a director of, among other companies, the following publicly-listed companies: TMX Group Inc., Torstar Corporation, Biovail Corporation and Rona Inc. Mr. Lanthier is a former Chairman and Chief Executive Officer of KPMG Canada and served as the Lead Director of the Bank of Canada. Mr. Lanthier is also the Founding Chair of the 30% Club Canada. Mr. Lanthier is a Chartered Professional Accountant, Chartered Accountant and holds a honorary Doctor of Laws degree from the University of Toronto.	J. Spencer Lanthier is an independent Director and the Lead Director of HLS. Mr. Lanthier served as the Chair of the board of directors of Ellis-Don Inc. and has also previously served as a director of, among other companies, the following publicly-listed companies: TMX Group Inc., Torstar Corporation, Biovail Corporation and Rona Inc. Mr. Lanthier is a former Chairman and Chief Executive Officer of KPMG Canada and served as the Lead Director of the Bank of Canada. Mr. Lanthier is also the Founding Chair of the 30% Club Canada. Mr. Lanthier is a Chartered Professional Accountant, Chartered Accountant and holds a honorary Doctor of Laws degree from the University of Toronto.
	Board/Committee Membership	Principal Occupation(s) (for the past 5 years)
	Board (Lead Director) Audit Committee C&G Committee	Corporate Director
Securities of the Company	of the Company beneficially owned, or	controlled or directed, directly or indirectly
Common Shares (#)		Options (#)
0		82,004

YVONBASTIEN Sutton, Québec, Canada Director since: August 10, 2015 Age: 72	Yvon Bastien is an independent Director of HLS. Mr. Bastien has extensive experience as an executive in the pharmaceutical industry. He was the Chief Executive Officer of Sanofi Canada and Jouveinal Canada and has held executive positions with, among other companies, Ciba Geigy (Switzerland), Laboratories Debat (France), Ely Lilly, IMS Canada and Delta Healthcare. He has previously served as the Chair of the board of directors of Telesta Therapeutics Inc., Helix BioPharma Corp., Trillium Health Care Products Inc., the St. Bernard Soap Company, Enobia Pharma Corp. and PainCeptor Pharma Corporation.	Yvon Bastien is an independent Director of HLS. Mr. Bastien has extensive experience as an executive in the pharmaceutical industry. He was the Chief Executive Officer of Sanofi Canada and Jouveinal Canada and has held executive positions with, among other companies, Ciba Geigy (Switzerland), Laboratories Debat (France), Ely Lilly, IMS Canada and Delta Healthcare. He has previously served as the Chair of the board of directors of Telesta Therapeutics Inc., Helix BioPharma Corp., Trillium Health Care Products Inc., the St. Bernard Soap Company, Enobia Pharma Corp. and PainCeptor Pharma Corporation.
	Board/Committee Membership	Principal Occupation(s) (for the past 5 years)
	Board C&G Committee (Chair)	Corporate Director
Securities of the Company	of the Company beneficially owned, or	controlled or directed, directly or indirectly
Common Shares (#)		Options (#)
0		76,674

RODNEYHILL Toronto, Ontario, Canada Director since: March 12, 2018 Age: 52	Rodney Hill is an independent Director of HLS and is the nominee selected by the Claims Administrator under the Claims Administration and Escrow Agreement. Mr. Hill has extensive experience in business management, risk management, finance and accounting. He is currently the Chief Risk Officer of Ontario Municipal Employees Retirement System Administration Corporation (“OMERS”) which has approximately C$95 billion of net assets under management. Mr. Hill joined OMERS in 2011 as EVP & Chief Auditor and moved to his current position in 2015. Prior to joining OMERS, Mr. Hill spent over 20 years working at PricewaterhouseCoopers and the last 10 years as a Partner specializing in auditing complex public and private companies in a variety of sectors including pharmaceuticals. Mr. Hill holds an Honours degree in Accounting with Computing from University of Kent at Canterbury. He is an Associate of the Institute of Chartered Accountants in England and Wales (ACA-UK) and a Chartered Professional Accountant (CPA, CA) in Canada.	Rodney Hill is an independent Director of HLS and is the nominee selected by the Claims Administrator under the Claims Administration and Escrow Agreement. Mr. Hill has extensive experience in business management, risk management, finance and accounting. He is currently the Chief Risk Officer of Ontario Municipal Employees Retirement System Administration Corporation (“OMERS”) which has approximately C$95 billion of net assets under management. Mr. Hill joined OMERS in 2011 as EVP & Chief Auditor and moved to his current position in 2015. Prior to joining OMERS, Mr. Hill spent over 20 years working at PricewaterhouseCoopers and the last 10 years as a Partner specializing in auditing complex public and private companies in a variety of sectors including pharmaceuticals. Mr. Hill holds an Honours degree in Accounting with Computing from University of Kent at Canterbury. He is an Associate of the Institute of Chartered Accountants in England and Wales (ACA-UK) and a Chartered Professional Accountant (CPA, CA) in Canada.
	Board/Committee Membership	Principal Occupation(s) (for the past 5 years)
	Board Audit Committee (Chair)	Chief Risk Officer of OMERS since November 2015; EVP and Chief Auditor of Ontario Municipal Employees Retirement System prior to October 2015
Securities of the Company	of the Company beneficially owned, or controlled or directed, directly or indirectly
Common Shares (#)		Options (#)
	0	20,254

DONDEGOLYER Chatham, New Jersey, USA Director since: March 12, 2018 Age: 58	Don DeGolyer is an independent Director of HLS. Mr. DeGolyer has over 30 years of pharmaceutical experience building and leading top tier performing organizations. Mr. DeGolyer is currently the Founder & Chief Executive Officer of Vertice Pharma where he also serves as a member of its board of directors. He was previously the Chief Operating Officer of Endo Pharmaceuticals where he built one of the fastest growing Specialty Pharmaceuticals businesses. He also served as President & Chief Executive Officer of Sandoz North America as it became the second largest generics company in the world. Mr. DeGolyer began his career at Pfizer, Johnson & Johnson and then Novartis, progressing through various roles of increasing responsibility. Mr. DeGolyer holds a Bachelor of Arts from the University of Rochester and a Master of Business Administration from Fairleigh Dickinson University. Mr. DeGolyer currently serves on the board of Tyme Technologies, Inc. (NASDAQ: TYME).
	Board/Committee Membership	Principal Occupation(s) (for the past 5 years)
	Board C&G Committee	Chief Executive Officer of Vertice Pharma since November 2015; Chief Operating Officer of Endo International plc from August 2013 – July 2015
Securities of the Company	of the Company beneficially owned, or controlled or directed, directly or indirectly
Common Shares (#)		Options (#)
0		20,254

LAURA BREGE Portola Valley, California USA Director since: March 21, 2019 Age: 62	Laura Brege is an independent Director of HLS. Ms. Brege has extensive experience in the life sciences industry, as both an executive and a board member. Ms. Brege is Advisor to biotechnology companies since 2015; Managing Director of Cervantes Life Science Partners, LLC from 2015- 2017; President, CEO and Board Member of Nodality, Inc. from 2012 to 2015. Ms. Brege holds a B.A. from Ohio University and an M.B.A. from the University of Chicago. Ms. Brege currently serves on the boards of Acadia Pharmaceuticals Inc. (NASDAQ: ACAD), Pacira BioSciences, Inc. (NASDAQ: PCRX), Portola Pharmaceuticals, Inc. (NASDAQ: PTLA), and Mirum Pharmaceuticals, Inc. (NASDAQ: MIRM).	Laura Brege is an independent Director of HLS. Ms. Brege has extensive experience in the life sciences industry, as both an executive and a board member. Ms. Brege is Advisor to biotechnology companies since 2015; Managing Director of Cervantes Life Science Partners, LLC from 2015- 2017; President, CEO and Board Member of Nodality, Inc. from 2012 to 2015. Ms. Brege holds a B.A. from Ohio University and an M.B.A. from the University of Chicago. Ms. Brege currently serves on the boards of Acadia Pharmaceuticals Inc. (NASDAQ: ACAD), Pacira BioSciences, Inc. (NASDAQ: PCRX), Portola Pharmaceuticals, Inc. (NASDAQ: PTLA), and Mirum Pharmaceuticals, Inc. (NASDAQ: MIRM).
	Board/Committee Membership	Principal Occupation(s) (for the past 5 years)
	Board Audit Committee	Advisor to biotechnology companies since 2015; Managing Director of Cervantes Life Science Partners, LLC from 2015-2017; President, CEO and Board Member of Nodality, Inc. from 2012 to 2015.
Securities of the Company	of the Company beneficially owned,	or controlled or directed, directly or indirectly
Common Shares (#)		Options (#)
0		11,695

Board and Committee Meetings Held and Attendance of Directors

Each Director is expected to attend all meetings of the Board and any committee of which he or she is a member.

The chart below illustrates the number of Board meetings held during the year ended December 31, 2019.

Directors	Board of Directors	Audit Committee	C&G Committee
William Wells	8 of 8	n/a	n/a
Greg Gubitz	8 of 8	n/a	n/a
J. Spencer Lanthier	8 of 8	4 of 4	7 of 7
Yvon Bastien	8 of 8	n/a	7 of 7
Rodney Hill	8 of 8	4 of 4	n/a
Don DeGolyer	8 of 8	n/a	7 of 7
Daniel Tassé(1)	1 of 2	1 of 1	n/a
Laura Brege(2)	6 of 6	3 of 3	n/a

Notes:

(1) Mr. Tassé resigned effective March 21, 2019.

(2) Ms. Brege became a director of the Corporation effective March 21, 2019.

Majority Voting Policy

HLS has adopted a majority voting policy. Pursuant to the policy, shareholders vote for the election of individual directors at each annual meeting of shareholders, rather than for a fixed slate of directors. Further, in an uncontested election of directors at an applicable meeting of shareholders, any nominee for director who does not receive a greater number of votes “for” his or her election than votes “withheld” from such election (a “ Majority Withhold Vote ”) shall promptly tender his or her resignation to the Chairman of the Board (the “ Chairman ”) following the applicable meeting of shareholders. A director who tenders his or her resignation under this policy may not participate in any portion of a meeting of the C&G Committee or the Board at which the resignation is considered. However, such director shall remain active and engaged in all other C&G Committee activities, deliberations and decisions during this C&G Committee process. The C&G Committee will promptly consider such tendered resignation and recommend to the Board the action to be taken with respect to such tendered resignation. The recommendation of the C&G Committee may be to accept or reject the resignation on such basis as the C&G Committee

determines appropriate, provided that the C&G Committee shall recommend the acceptance of the resignation if there are no exceptional circumstances present that would support rejection of the resignation In any event, the resignation will be accepted or rejected within 90 days of the applicable meeting of shareholders. The Board must promptly disclose its decision, including reasons for its decision, via press release. The Corporation shall provide a copy of such press release to the TSX.

If the Board determines not to accept the resignation, the press release must fully state the reasons for that decision. In making its recommendation to the Board, the C&G Committee is authorized to consider all factors it deems relevant to the best interests of the Corporation, including without limitation: (i) any stated reasons why shareholders withheld their vote with respect to the subject director; (ii) what the C&G Committee believes to be the underlying reasons for the Majority Withhold Vote, including whether these reasons relate to the incumbent director’s performance as a director, whether these reasons relate to the Company or another corporation, and whether these reasons are curable and alternatives for effecting any cure; (iii) the other policies of the Company; (iv) the overall composition of the Board, including whether accepting the resignation would cause the Company to fail to meet the requirements of any applicable corporate or securities laws and the rules of the Toronto Stock Exchange; and (v) whether the resignation of the director could result in the triggering of change in control or similar provisions under any contract by which the Company is bound and, if so, the potential impact thereof. If a resignation is accepted, the Board may leave the resultant vacancy in the Board unfilled until the next annual meeting of shareholders, fill the vacancy through the appointment of a director whom the Board considers to merit the confidence of HLS’s shareholders, reduce the size of the Board, or call a special meeting of the shareholders to consider the election of a nominee recommended by the Board to fill the vacant position.

Interlocking Directorships

The Board does not set a formal limit on the number of interlocking board memberships. The C&G Committee reviews director interlocks as part of its annual evaluation of director independence. As of the date hereof, there are no public company board interlocks among the nominated Directors.

Cease Trade Orders

To the knowledge of the Company, no proposed Director (nor any personal holding company of any such individual) is, as of the date of this Circular, or was within ten years before the date of this Circular, a director, chief executive officer or chief financial officer of any company (including the Company), that: (i) was subject to a cease trade order (including a management cease trade order), an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, in each case that was in effect for a period of more than 30 consecutive days (collectively, an “ Order ”), that was issued while the individual was acting in the capacity as a director, chief executive officer or chief financial officer; or (ii) was subject to an Order that was issued after the individual ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that individual was acting in the capacity as director, chief executive officer or chief financial officer.

Bankruptcies

To the knowledge of the Company, no proposed Director (nor any personal holding company of any such individual): (i) is, as of the date of this Circular, or has been within the ten years before the date of this Circular, a director or executive officer of any company (including the Company) that, while that individual was acting in that capacity, or within a year of that individual ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or (ii) has, within the ten years before the date of this Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold its assets, except that Laura Brege was a director of Angiotech Pharmaceuticals Inc. (“ Angiotech ”) in January 2011 when it filed for bankruptcy protection under Canada’s Companies’ Creditors Arrangement Act (the “CCAA”). On April 6, 2011, following the unanimous approval by Angiotech’s creditors of its proposed plan of arrangement under the CCAA, the Supreme Court of British Columbia approved of the plan of arrangement under the CCAA.

Penalties or Sanctions

To the knowledge of the Company, no proposed Director (nor any personal holding company of any such individual) has been subject to: (i) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable Shareholder in deciding whether to vote for the proposed Director.

Directors’ Compensation

Director compensation is set by the Board on recommendation of the C&G Committee and in accordance with director compensation guidelines and principles established by the C&G Committee. Under these guidelines and principles, the Board seeks to maintain director compensation at a level that is competitive with the median director compensation at comparable companies in the peer group. However given the Company’s relatively young history, the Board has aimed to align compensation towards the lower quartile of the peer group, with the intention to move compensation levels towards the median over a multi-year period based on the Company’s performance. HLS has established a flat fee director compensation model that awards Directors a mix of cash and equity, in the form of Options.

The annual flat fees Directors are eligible to receive effective April 1, 2019 are summarized in the following table:

	Annual Retainers and Fees	Annual Retainers and Fees
Non-Executive Directors	Cash	Equity
Lead Director	$57,462	$80,000
Board Member	$44,129	$63,333
Per Meeting Attendance Fee	Nil	Nil
Chair of the Audit Committee	$15,904	Nil
Chair of the Compensation and Governance Committee	$11,799	Nil
Non-Chair member of Audit Committee	$6,667	Nil
Non-Chair member of Compensation & Governance Committee	$5,000	Nil

Directors who are also officers of HLS do not receive compensation for acting in the capacity of a Director.

The following table sets out all amounts of compensation provided to the non-executive Directors of HLS and Former HLS for the company’s most recently completed financial year:

Name	Cash fees earned ($)(1)(2)(3)	Option-based awards ($)	Total ($)
J. Spencer Lanthier(4) (5)	68,725	69,581	138,306
Yvon Bastien(4)	53,671	55,083	108,754
Rodney Hill(4) (5)	53,385	55,083	108,469
Don DeGolyer	47,036	55,083	102,120
Laura Brege(6)	39,368	55,083	94,451
Daniel Tassé(7)	9,242	0	9,242

Notes:

(1) Directors do not receive per meeting fees for Board or Committee meetings. They only receive flat fee retainers.

(2) From January 1 to March 31, 2019, independent directors of HLS received annual cash compensation of $38,258 other than the Lead Director who received annual cash compensation of $44,924. The Chair of the Audit Committee received additional annual cash compensation of $11,807 and Members of the Audit Committee received additional annual cash compensation of $3,333. The Chair of the C&G Committee received additional annual cash compensation of $8,599 and Members of the C&G Committee received additional annual cash compensation of $2,500. All amounts are paid quarterly in arrears..

(3) Effective April 1, 2019, independent directors of HLS receive annual cash compensation of $44,129 other than the Lead Director who receives annual cash compensation of $57,462. The Chair of the Audit Committee receives additional annual cash compensation of $15,904 and Members of the Audit Committee receive additional annual cash compensation of $6,667. The Chair of the C&G Committee receives additional annual cash compensation of $11,799 and Members of the C&G Committee receive additional annual cash compensation of $5,000. All amounts are paid quarterly in arrears.

(4) Each of Messrs. Lanthier, Bastien and Hill was paid in Canadian dollars, which have been converted from Canadian dollars to U.S. dollars at exchange rates based on the annual exchange rate reported by the Bank of Canada, being US$0.7536 per C$1.00 for the year ended December 31, 2019.

(5) Mr. Hill was appointed Chair of the Audit Committee of the Corporation effective June 21, 2019, succeeding Mr. Lanthier who remained a Member of the Audit Committee.

(6) Ms. Brege became a director of the Corporation effective March 21, 2019.

(7) Mr. Tassé resigned effective March 21, 2019.

Outstanding Option-Based and Share-Based Awards

The following table sets out all option-based awards outstanding as of December 31, 2019 for all non-executive Directors of HLS. The value of option-based awards outstanding is based on a closing share price of C$25.50 on December 31, 2019 and an exchange rate of US$0.7699 per C$1.00, being the rate reported by the Bank of Canada for December 31, 2019.

	Option-based Awards	Option-based Awards
Name	Number of	Option exercise	Option	Value of unexercised in-
	securities	price	expiration date	the-money options
	underlying	($)		($)
	unexercised

	options
J. Spencer Lanthier	10,811 14,773 28,220 28,200	C$8.34 C$15.55 $10.00 $9.25	22-Aug-25 7-Jun-26 17-Nov-26 12-Mar-28	142,803 113,132 271,759 292,716
Yvon Bastien	8,559 11,695 28,220 28,200	C$8.34 C$15.55 $10.00 $9.25	22-Aug-25 7-Jun-26 17-Nov-26 12-Mar-28	113,056 89,561 271,759 292,716
Rodney Hill	8,559 11,695	C$8.34 C$15.55	22-Aug-25 7-Jun-26	113,056 89,561
Don DeGolyer	8,559 11,695	C$8.34 C$15.55	22-Aug-25 7-Jun-26	113,056 89,561
Laura Brege	11,695	C$15.55	7-Jun-26	89,561

Value Vested During the Year

The table below sets out all options held by non-executive Directors of HLS and Former HLS that vested during the year ended December 31, 2019.

Name	Option-based awards – Value vested
	during the year ($)
J. Spencer Lanthier(1)	63,109
Yvon Bastien(2)	60,472
Rodney Hill(3)	10,023
Don DeGolyer(4)	10,023
Laura Brege	0

Notes:

(1) Mr. Lanthier holds the following options that vested in 2019:
7,055 options, representing 25% of the 28,220 HLS options granted on November 17, 2016 with an exercise price of $10.00 per Common Share, vested in 2019;
7,050 options, representing 25% of the 28,200 HLS options granted on March 12, 2018 with an exercise price of $9.25 per Common Share, vested in 2019, and
2,703 options, representing 25% of the 10,811 HLS options granted to him on August 22, 2018 with an exercise price of C$8.34 per share on, vested in 2019.
(2) Mr. Bastien holds the following options that vested in 2019:
7,055 options, representing 25% of the 28,220 HLS options granted on November 17, 2016 with an exercise price of $10.00 per Common Share, vested in 2019;
7,050 options, representing 25% of the 28,200 HLS options granted on March 12, 2018 with an exercise price of $9.25 per Common Share, vested in 2019, and

 2,140 options, representing 25% of the 8,559 HLS options granted on August 22, 2018 with an exercise price of C$8.34 per Common Share, vested in 2019.

(3) Mr. Hill was awarded 8,559 HLS options with an exercise price of C$8.34 per share on August 22, 2018 of which 25% or 2,140 options vested in 2019.

(4) Mr. DeGolyer was awarded 8,559 HLS options with an exercise price of C$8.34 per share on August 22, 2018 of which 25% or 2,140 options vested in 2019.

REAPPOINTMENT OF AUDITOR

It is proposed that Ernst & Young LLP, the current auditor of the Company, be reappointed as the auditor of the Company, to hold office until the close of the next annual meeting of Shareholders, or until a successor is appointed, and that the Directors be authorized to fix Ernst & Young LLP’s remuneration. The Audit Committee has recommended to the Board, and the Board has approved, the nomination of Ernst & Young LLP for such reappointment. Ernst & Young LLP has been the auditor of the Company (including Former HLS) since June 2015.

See the heading “Audit Committee Information” in this Circular for further details regarding the services of the auditor provided to HLS, the fees paid to the auditor for those services and information regarding the Audit Committee of the Company.

It is the intention of the individuals named in the enclosed form of proxy to vote FOR the reappointment of Ernst & Young LLP as auditor of HLS to hold office until the close of the next annual meeting of Shareholders and in favour of authorizing the Directors to fix the remuneration of the auditor, unless specifically instructed in the proxy to withhold such vote.

STATEMENT OF GOVERNANCE PRACTICES

Director Independence

Currently, the Board is comprised of seven Directors, five of whom are considered to be independent within the meaning of Section 1.4 of National Instrument 52-110 – Audit Committees (“ NI 52-110 ”), being Messrs. Lanthier, Bastien, Hill, DeGolyer, and Ms. Brege. Messrs. Wells and Gubitz are not considered to be independent Directors since they serve as executive officers of the Company. If the individuals nominated for election as Directors at the Meeting are elected, the Board will be comprised of seven Directors, five of whom will be considered to be independent within the meaning of Section 1.4 of NI 52-110.

The Company has taken steps to ensure that adequate structures and processes are in place to permit the Board to function independently of management of the Company. Since the Chair of the Board, Mr. Wells, is an executive officer of the Company, Mr. Lanthier, an independent Director, has been appointed as to act as Lead Director and to provide independent leadership to the Board. Both HLS’s Audit Committee and its C&G Committee are comprised entirely of independent Directors. See “— Position Descriptions ” for a description of Mr. Lanthier’s responsibilities as Lead Director.

The independent Directors hold in camera sessions, without the non-independent Directors and members of management present, during regularly scheduled Board meetings. The independent Directors held eight in camera sessions in 2019.

Board Mandate

The Board operates under the Board of Directors Mandate set out at Annex A to this Circular, pursuant to which it provides governance and stewardship to the Company and its business. The Mandate also describes the Board’s responsibility for, among other things: participating in the development of and adopting a strategic plan for the Company; supervising the activities and managing the affairs of the Company; defining the roles and responsibilities of management and delegating management authority to the Chief Executive Officer; reviewing and approving the business and investment objectives to be met by management; assessing the performance of and overseeing management; identifying and managing risk exposure; ensuring the integrity and adequacy of the Company’s internal controls and management information systems; succession planning; establishing committees of the Board, where required or prudent, and defining their mandate; ensuring effective and adequate communication with shareholders, other stakeholders and the public; and monitoring the integrity and ethics of the Company.

Board Committees

Audit Committee

HLS’s Audit Committee consists of Rodney Hill ( Chair), Laura Brege and J. Spencer Lanthier, all of whom meet the requirements for independence under NI 52-110.

The Board has adopted a written charter for the Audit Committee setting out its responsibilities. The text of the Audit Committee’s Charter is available on the Company’s website and in its annual information form for the year ended December 31, 2019, which is available under the Company’s profile on SEDAR at www.sedar.com.

C&G Committee

The C&G Committee consists of Yvon Bastien (Chair), Don DeGolyer and J. Spencer Lanthier, all of whom are independent for the purposes of National Instrument 58-101 – Disclosure of Corporate Governance Practices and NI 52-110 . The Board has adopted a written charter for the C&G Committee setting out its responsibilities with respect to compensation, nomination and governance matters, as described below under the headings “— Nomination and Election of Directors ”, “— Orientation and Continuing Education ”, “— Compensation ” and “— Assessments ”.

Messrs. Bastien, Lanthier and DeGolyer have many years of direct experience with the design, implementation or oversight of compensation programs that is relevant to their responsibilities on the C&G Committee, and they draw upon that experience to make decisions on the suitability of the Company’s compensation policies and practices. Mr. DeGolyer is currently the Chairman of the Compensation Committee of Tyme Technologies, Inc. Mr. Bastien has served on the board of a number of publicly-listed companies, including serving as the Chair of the Compensation Committee of both Telesta Therapeutics Inc. and Helix BioPharma Corp. Additionally, he and Mr. DeGolyer each served as executive officers with increasing seniority, at a number of different pharmaceutical and specialty life sciences companies, where they were each involved in compensation decisions during their respective tenures. Mr. Lanthier has served in numerous leadership roles in both the public and private sectors, including as a director of several publicly-listed companies.

Position Descriptions

The Board has adopted a written position description for the Chair of the Board, which sets out the Chair’s key responsibilities, including: providing leadership to foster the effectiveness of the Board; together with the Lead Director, preparing the agenda and leading the activities and meetings of the Board; chairing Board and shareholder meetings; ensuring an effective relationship between the Board and senior management of the Company; consulting with the C&G Committee on candidates for nomination to the Board; working with the Chief Executive Officer to ensure the Board is provided with the resources necessary to carry out its responsibilities; and ensuring the Directors receive information required for proper performance of their duties and that the appropriate committee structure is in place.

The Board has also adopted a written position description for the Lead Director of the Board, which sets out the Lead Director’s key responsibilities, including: providing leadership to ensure that the Board functions independently of management of the Company and other non-independent directors; working with the Chair to ensure that the appropriate committee structure is in place and assisting the C&G Committee in making recommendations for appointment to such committees; suggesting items of importance for consideration on the agenda for each meeting of the Board; in the absence of the Chair, chairing Board meetings, including stimulating debate, providing adequate time for discussion of issues, facilitating consensus, encouraging full participation and discussion by individual directors and confirming that clarity regarding decision-making is reached and accurately recorded; in addition, chairing each board meeting at which only non-management directors are present; and providing recommendations and advice to the C&G Committee on candidates for nomination or appointment to the Board.

The Board has also adopted a written position description for each of the Board committee Chairs which sets out the key responsibilities of the Chair of each Board committee, including duties relating to: providing leadership to foster the effectiveness of the Board committee; ensuring there is an effective relationship between the Board and the Board committee; preparing the agenda for each meeting of the Board committee; ensuring that all committee members receive information required for proper performance of their duties; chairing Board committee meetings; and providing additional services required by the Board and the Board committee.

The Board has also adopted a position description for the Chief Executive Officer which sets out the key responsibilities of the Chief Executive Officer, including: developing and recommending to the Board a long-term strategy and vision for the Company that is consistent with creating shareholder value; providing leadership and vision, maintaining a high level of employee morale and motivation, with a view to ensuring the implementation of the Company’s strategy; fostering a corporate culture that promotes integrity and ethical values throughout the organization; developing and motivating executive officers, and providing overall management to ensure the effectiveness of the leadership team; developing and recommending to the Board annual business plans and budgets that support the Company’s long-term strategy; ensuring that succession plans are in place for the Company; and serving as the Company’s chief spokesperson.

Orientation and Continuing Education

The C&G Committee reviews, monitors and makes recommendations regarding new Director orientation and the ongoing development of existing Directors. The committee is responsible for recommending to the Board an appropriate annual process to evaluate the Board and each of the committees, and the responsibilities of each of the Directors individually.

The C&G Committee also coordinates the continuing education program for Directors in order to maintain or enhance their skills and abilities as Directors, as well as ensuring that their knowledge and understanding of the Company and its business remains current. The Company’s Board members are expected to keep themselves current with industry trends and developments, while the Company provides Directors with continuous education opportunities and programs throughout the year, by way of presentations on key business areas, business updates and site visits. In September 2019, a Board meeting was held at the Company’s offices in Montreal, Canada where, among other things, management and Company staff members provided the Directors with a live demonstration of the operation of the CSAN® Pronto[TM] device.

Ethical Business Conduct

The Board has adopted a Code of Conduct (the “ Code ”) applicable to each Director, officer, employee and representative of the Company and its subsidiaries, including part-time, contract, and temporary employees. The Code provides a set of ethical standards for conducting the business and affairs of the Company with honesty, integrity and in accordance with high ethical and legal standards. The Code is available on the Company’s website at www.hlstherapeutics.com, on the Company’s profile on SEDAR at www.sedar.com and upon request from the General Counsel of the Company, at 10 Carlson Court, Suite 701, Etobicoke, Ontario M9W 6L2.

The Code has been designed to define and clarify legal and ethical expectations for all HLS personnel and includes standards concerning ethical decision making and compliance, conflicts of interest, insider trading, timely disclosure commitments, confidential information, and ethical relationships with healthcare professionals. The Code also provides information about potentially challenging situations that may arise during the normal course of business.

HLS requires that all personnel participate annually in training on the Code. As part of this annual training, all personnel must certify their understanding of and compliance with the principles of the Code and related HLS policies and procedures.

The C&G Committee is responsible for receiving reports from the Chief Executive Officer regarding breaches of the Code, and in turn reporting those breaches to the Board. The Committee also reviews investigations and any resolutions of complaints received under the Code and reports annually to the Board thereon.

The Company has also adopted a Complaints Reporting and Whistleblower Policy to receive, retain and address all complaints received by the Company regarding accounting, internal accounting controls or auditing matters, fraud/theft, workplace violence and other issues; an Insider Trading Policy to avoid civil and criminal insider trading violations; and a Disclosure Policy to ensure that the Company’s disclosure obligations are met.

Nomination and Election of Directors

The C&G Committee is currently responsible for, in consultation with the Chairman of the Board, the Lead Director and the Chief Executive Officer, annually or as required, recruiting and identifying individuals qualified to become new Board members and recommending to the Board new Director nominees for the next annual meeting of Shareholders.

The C&G Committee, which consists entirely of independent Directors, is responsible for periodically reviewing the size of the Board, with a view to determining the impact of the number of Directors on the effectiveness of the Board, and identifying potential nominees to the Board, reviewing their qualifications and experience, determining their independence as required under all applicable corporate and securities laws, and recommending to the Board the nominees for consideration by, and presentation to, the shareholders at the Company’s next annual meeting. In making its recommendations, the C&G Committee considers the competencies and skills that the Board considers to be necessary for the Board as a whole to possess, the competencies and skills that the Board considers each existing Director to possess, as well as the competencies and skills each new nominee will bring to the boardroom. The C&G Committee also considers the amount of time and resources that nominees have available to fulfill their duties as Board members or committee members, as applicable.

The C&G Committee may also recommend for Board approval the removal of a Director from the Board or a Board committee if he or she is no longer qualified to serve as a Director under applicable requirements or for any other reason the C&G Committee considers appropriate.

Compensation

HLS’s C&G Committee’s purpose is to (i) determine and make recommendations with respect to all forms of compensation to be granted to the Chief Executive Officer, and review the Chief Executive Officer’s recommendations respecting compensation of the other senior executives of the Company; and (ii) oversee corporate governance of the Company.

The C&G Committee’s responsibilities include reviewing and recommending to the Board the compensation of the Chief Executive Officer and other officers of HLS appointed by the Board; reviewing and recommending to the Board the compensation policies, plans and programs for HLS’s executive officers and other senior management, as well as its overall compensation plans and structure; reviewing and discussing with management and recommending to the Board the

compensation-related disclosure to be included for use in any annual reports, prospectuses, proxy circulars or information circulars; recommending to the Board the compensation for Directors; and administering the Company’s Third Amended and Restated Stock Option Plan and share compensation arrangements.

The C&G Committee seeks to ensure an objective process for determining compensation through compliance with the Board’s conflicts of interest guidelines. The C&G Committee reviews the various compensation elements both individually and in total to seek alignment with HLS’s compensation program objectives. The C&G Committee then makes recommendations on all executive pay, short-term incentives and long-term incentive options to the Board for approval.

For more information about the process of determining compensation, please refer to the discussion under the heading “ Statement of Executive Compensation – Director and Named Executive Officer Compensation ” in this Circular.

Other Board Committees

The Board does not have any standing committees other than the Audit Committee and the C&G Committee .

Assessments

The C&G Committee, in consultation with the Chair of the Board, is responsible for ensuring that an appropriate system is in place to evaluate the effectiveness of the Board, the Board committees and individual Directors, with a view to ensuring that they are fulfilling their respective responsibilities and duties and working effectively together as a unit. The assessment includes an annual questionnaire that each director must complete. The annual questionnaire covers a range of topics including: (i) individual self-assessment; (ii) assessment of the Board and committee performance and effectiveness; and (iii) an assessment of peer performance at the Board level and at the committee level. An online service is used to collect the results of the completed questionnaires, and provide them to the Chair of the C&G Committee in an aggregate and anonymized format. The Chair of the C&G Committee then reviews and analyzes the data, together with the members of the C&G Committee, and additional feedback is sought and received from Directors where necessary or appropriate. The C&G Committee then prepares and presents to the Board a report that contains the recommendations of the C&G Committee to improve the effectiveness of the Board in light of the results of the annual performance evaluation. The C&G Committee’s report includes the aggregated data and any other items that, in the opinion of the Chair of the C&G Committee, warrant reporting to the Board.

Succession Planning

The Board is responsible for overseeing the succession planning processes of the Company with respect to senior management and director positions. At least annually, the Board reviews the succession plans of the Company for the Executive Chair, the Chief Executive Officer, the President & Chief Operating Officer, the Chief Financial Officer, and other executive officers, including the appointment, training and monitoring of such positions. It also reviews the skills and experience of Board members to ensure continued alignment with the Company’s needs.

Director Term Limits

The Company does not currently have a policy with respect to Board member term limits and mandatory retirement. The Company was initially formed in 2015 and went public in 2018, at which time three new independent directors joined the Board, bringing the total number of independent directors to five. At this stage of the Company’s development, the Board feels that these types of policies would not be appropriate. The Company currently benefits from a depth of industry and governance experience on the Board, and implementing these policies would have the effect of forcing directors to resign from the Board who have expertise and insight in the highly specialized industry in which the Company operates. The Company continues to periodically monitor director performance through the formal annual assessment process described above, and, together with input from the Company’s external third party advisory firm, Global Governance Advisors (“ GGA ”), the Company periodically analyzes the skills and experience necessary for the Board and evaluate the need for director changes to ensure that the Company has highly knowledgeable and motivated Board members, while ensuring that new perspectives are available to the Board.

Diversity

Board of Directors

The Board recognizes the benefits that diversity brings to the Company. The Board aims to be composed of directors who have a range of perspectives, insights and views in relation to the issues affecting HLS. This belief in diversity is reflected in the Board’s ongoing consideration of whether diverse attributes are sufficiently represented on the Board, and is an important component of the selection process for new Board members.

The C&G Committee has emphasized the Board’s commitment to the recruitment of women by making the identification of candidates who are women a key search criterion in the director selection and nomination process. In order to

promote the specific objective of gender diversity on the Board, the selection process for Board appointees and nominees for election ensures that appropriate efforts are made to include women in the list of candidates being considered for a Board position and, in any event, that at least one woman is included in the short list of candidates being considered for a Board position. This process resulted in the appointment in 2019 of Laura Brege, the Company’s first female Director. Following the annual meeting and assuming that all nominees for Director are elected, one of seven Directors (14%) on the Board will be a woman. The Board recognizes the value of the contribution of members with diverse characteristics and perspectives on the Board and is committed to ensuring that women, in particular, are represented on the Board.

Management

HLS believes that a diversity of backgrounds, opinions and perspectives and a culture of inclusion helps to create a healthy and dynamic workplace, which improves overall business performance. HLS recognizes the value of ensuring that the Company has leaders who are from diverse backgrounds. The Company prides itself on developing its employees internally and providing them with opportunities to advance their careers. To support the Company’s senior management diversity objectives, the Chief Executive Officer, President and Chief Operating Officer, together with the C&G Committee will, when considering, recommending and reviewing recommendations for the appointment of candidates for senior management positions:

consider diversity criteria, including, but not limited to, the level of representation of women, when determining the optimum composition of senior management;
consider and, if deemed necessary, implement policies to address impediments to diversity in the workplace;
review potential candidates from a variety of backgrounds and perspectives, with the Company’s diversity objectives in mind;
regularly review the level of diversity at all levels of the Company;
consider initiatives designed to identify, support and develop diverse employees with leadership potential;
continue to identify new ways to entrench diversity, including gender diversity, as a cultural priority across the organization; and
in addition to its own searches, as and when appropriate from time to time, engage qualified independent external advisors to conduct a search for candidates to help achieve the Company’s diversity objectives in relation to senior management.

Currently, no executive officer positions at the Company are held by women.

HLS has not adopted a target for the number of women in executive officer or senior leadership positions as the Board has determined this would not necessarily result in the identification or selection of the best candidates. HLS does, however, understand the benefits of a diverse workforce and is committed to promoting diversity (including gender diversity) among its senior leadership and will consider the level of female representation and other areas of diversity, outlined above, when deliberating on hires and promotions regarding all senior leadership positions, including executive officers. Furthermore, HLS will continue to evaluate the appropriateness of adopting targets in the future.

STATEMENT OF EXECUTIVE COMPENSATION

The following discussion describes the significant elements of the Company’s executive compensation program, with particular emphasis on the process for determining compensation payable to the Company’s named executive officers (“ NEOs ”) for fiscal year 2019, being Executive Chairman William Wells, Chief Executive Officer Greg Gubitz, President and Chief Operating Officer Gilbert Godin, Chief Financial Officer Tim Hendrickson and Chief Commercial Officer Sanjiv Sharma. The following also summarizes certain material changes the Company intends to adopt for its executive compensation program for fiscal year 2020.

Oversight and Description of Director and Named Executive Officer Compensation

HLS’s C&G Committee sets guidelines for determining the short-term and long-term compensation of executive officers based on their performance, the compensation of executive officers at comparable companies, compensation in previous years, the experience and skills of the officer, and any other factor the committee determines to be relevant. The C&G Committee , in its discretion, recommends annual and long-term performance goals and objectives for the executive officers to the Board. The C&G Committee evaluates the performance of the Chief Executive Officer and the other named executive officers in light of the approved performance goals and objectives. The C&G Committee makes recommendations to the Board with respect to incentive-based compensation plans and equity-based plans, including the Company’s Third Amended and

Restated Stock Option Plan. The C&G Committee also reviews and recommends the compensation for independent directors and committee members for approval by the Board on an annual basis.

The Board approves the compensation of the named executive officers based on the recommendations of the C&G Committee. In the case of the named executive officers other than the Chief Executive Officer, these approvals and recommendations reflect consideration of the recommendations of the Chief Executive Officer, which are based on similar factors to those that are considered by the C&G Committee in establishing its recommendation respecting the compensation of the Chief Executive Officer.

Compensation Objectives

HLS’s compensation program for its executive officers is designed to attract, retain, motivate and engage highly skilled and experienced individuals who excel in their field. The objective of the program is to focus HLS’s executives on the key business factors that affect shareholder value and to align their compensation with HLS’s business and financial objectives and the long-term interests of Shareholders.

The Board of Directors is responsible for identifying and mitigating any risk associated with HLS’s compensation policies and practices that could incentivize an executive officer or other employee to take inappropriate or excessive risk, or that could otherwise have a material adverse effect on HLS.

Use of Independent Compensation Consultants

The C&G Committee reviews NEO compensation packages annually to ensure that NEOs are being compensated in line with industry practices. To assist in executing its responsibilities, the C&G Committee engages independent compensation advisors.

Over the past two years, GGA has been engaged by the Company to advise the C&G Committee on compensation matters, including conducting an executive compensation benchmarking review.

GGA is an independent compensation advisor with significant executive compensation experience. GGA is independent of management and highly qualified. Over the past two years, GGA has helped the C&G Committee by (i) providing compensation research and data, and education on emerging trends and best practices, (ii) providing performance management planning, (iii) reviewing and designing incentive plans, and (iv) conducting comprehensive compensation reviews of the compensation levels for HLS’s directors and named executive officers (including developing the compensation philosophy and peer group and conducting an in-depth market analysis of compensation levels and designs of organizations that operate within a comparable sector and are of a similar scale to HLS). All work conducted by GGA is pre-approved by the C&G Committee and GGA does not provide any non-Board approved services to the Company. The C&G Committee takes GGA’s reports and recommendations into consideration when assessing compensation structure and awards, but ultimately makes its own decisions and recommendations for the Board to approve.

GGA’s fees incurred in the two most recently completed fiscal years are as follows:

Fiscal year	Executive Compensation-Related	All Other Fees
	Fees
2019	$24,483	$0
2018	$50,481	$0

During 2018, GGA was retained to provide the C&G Committee with advice and recommendations related to executive and director compensation programs following the Arrangement, including the establishment of a peer group for HLS and reviewing the existing incentive plans as HLS transitioned to a public company. This included advice on HLS’s Performance Share Unit (“ PSU ”) plan design and appropriate market competitive grant levels.

Since GGA’s original engagement in 2018, several of the companies that were included in HLS’s peer group no longer exist, or have significantly restructured their operations. Accordingly, during 2019, GGA was retained to provide the C&G Committee with advice and recommendations related to the executive compensation program given the Company’s growth and graduation to the TSX. This included reviewing the continued appropriateness of the original 2018 peer group and competitiveness of HLS’s compensation levels against an updated peer group along with incentive recommendations to remain competitive against HLS’s peers and the broader pharmaceutical marketplace.

During 2019, HLS updated the Company’s peer group to take into account the following characteristics:

public companies operating primarily in North America and listed on a major stock exchange;
market capitalization within a range of approximately between 0.25 and 4 times the size of HLS; and

strong focus on the specialty pharmaceutical and biotechnology sector.

Given the evolving nature of HLS’s operations and the approval of Vascepa® in Canada, this resulted in the following changes in the peer group:

The C&G Committee considered, among other things, the Executive Compensation Report prepared by GGA in connection with its consideration and review of the compensation of the Chief Executive Officer and other executive officers of the Company for 2019 when setting compensation levels for 2020.

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2018 Peer Group
REMOVED: ADDED:
Aralez Pharmaceuticals Inc. AMAG Pharmaceuticals, Inc. ADVANZ PHARMA Corp.
Cardiome Pharma Corp. Amarin Corporation plc Akebia Therapeutics, Inc.
Cipher Pharmaceuticals Inc. ANI Pharmaceuticals, Inc. Antares Pharma, Inc.
Depomed, Inc. BioDelivery Sciences Intl., Inc. Aurinia Pharmaceuticals Inc.
Sucampo Pharmaceuticals, Inc. Eagle Pharmaceuticals, Inc. Catalyst Pharmaceuticals, Inc.
Intersect ENT, Inc. Retrophin, Inc. Dermira, Inc.
Zogenix, Inc. Vanda Pharmaceuticals Inc. Knight Therapeutics Inc.
Lexicon Pharmaceuticals, Inc.
Osmotica Pharmaceuticals plc
Pacira BioSciences, Inc.
Supernus Pharmaceuticals, Inc.
Theratechnologies Inc.
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2019 Peer Group

In the analysis of the appropriate level and components of compensation for the NEOs, GGA surveyed and summarized, and the Board considered the summary of, the compensation practices of these pharmaceutical companies. Because HLS is a growth stage company, the Board considers it appropriate to use a peer group with a range of market capitalization, revenues and assets to set compensation for the NEOs.

The Board has evaluated competitive pay around the median of the peer group. Given the Company’s relatively young history, the Board initially aimed to align compensation towards the lower quartile of the peer group and, in light of the Company’s recent growth, compensation levels have progressed toward the median of the peer group, in accordance with the Board’s stated intention that compensation levels move towards the median over a multi-year period based on HLS’s performance.

Elements of Compensation Program

Compensation for executive officers is comprised primarily of four main components:

base salary;
short-term incentive compensation;
participation in long-term incentive arrangements, including the Company’s Stock Option Plan and PSU Plan; and
additional benefit items.

Each component plays a role in meeting HLS’s compensation objectives. The mix of compensation is designed to reward short-term results and to motivate long-term performance. The compensation levels of HLS’s executive officers reflect to a significant degree the varying roles and responsibilities of HLS’s executive officers. The appropriate level of compensation for the NEOs is determined by the Board with the input and recommendations of the C&G Committee on an annual basis.

There are no pension plans at HLS but the Company does make contributions to employees’ retirement savings, including a Deferred Profit-Sharing Plan and Group RRSP in Canada and a 401(k) plan in the United States.

The following table explains the elements of compensation that the Company adopted for fiscal year 2019. The Company assesses each component separately, and together these are considered total compensation. Short-term compensation (consisting of base salary and cash bonuses) and long-term compensation together make up each executive’s total direct compensation. The Company has also highlighted certain amendments implemented for fiscal year 2020 in our executive compensation program.

Component	Objective/Rationale
(A) Short-term Compensation	• Awarded based on performance, the executive’s position in the company and relative to our peer group.
(i) Base Salary	• Forms the basis for attracting talent, and comparing to and remaining competitive with the market. • Fixed, and used to determine other aspects of HLS’s compensation and benefits. • Established at the beginning of the year. • To align with the compensation philosophy, base salary levels aim to align with the median of the peer group over time, but also take into account the NEO’s performance and tenure in the organization. Base salary levels are also set taking into account the relative size of HLS against its peer group.
	Changes for 2020 • The Company has determined to increase NEO base salaries in 2020 by 4.7% in light of the Company’s 2019 performance.
(ii) Annual Cash Bonus (STIP)	• Links pay to corporate achievements. • Variable and paid in cash following year-end results based on annual performance. Bonuses are not paid unless a threshold level of performance is achieved, with performance benchmarks being specified in a detailed scorecard of corporate performance that contain metrics and weightings that align to the business and reflect the recommendations of GGA. • Scorecards consist of a mix of corporate, financial and operational metrics. Each NEO is measured by the same corporate performance metrics. • The target STIP opportunity varies as between NEOs, ranges between 50% and 75% of base salary and is associated with expected annual performance results. • Capped at 150% of target STIP opportunity.
	Changes for 2020 • The Company has determined not to change target bonus levels in 2020
(B) Long-term Compensation (LTIP)	• The Company has historically granted long-term incentives in the form of Options and PSUs. However, in 2019 no PSUs were granted. With the exception of certain Options granted prior to the completion of the Arrangement, which vest over a four-year period and have a 10-year term to expiry, Options are intended to vest over a four-year period and have a seven-year term to expiry. Options are granted to align with HLS’s peer group prevalence and reward management for performance on a longer term basis. • PSUs are intended to vest based on the achievement of specific future performance over a three-year time horizon. HLS views PSUs as an industry best practice to ensure management compensation is appropriately linked with share price performance. • Quantities of grants of Options and PSUs are determined by the Board on the recommendation of the C&G Committee, which is based, in part, on recommendations provided to the C&G Committee by GGA. • Designed to (i) promote a further alignment of interests between management and shareholders of the Company; (ii) associate a portion of management’s compensation with the returns achieved by shareholders of the Company; and (iii) to attract and retain employees with the knowledge, experience and expertise required by the Company.

	Changes for 2020 • Options will continue to be granted to NEOs and Directors with reference to the number of Options available for future grants under the Third Amended and Restated Stock Option Plan.
(C) Other Compensation	• Participation in HLS’s employee group benefits plans is provided to each NEO where available. • Contributions are provided to the NEOs’ retirement savings plans, including RRSP, DPSP and 401(k) accounts, as applicable. • There is no pension plan for the NEOs. • Designed to be competitive overall with equivalent positions.

Base salary

Individual salaries are determined by each officer’s experience, expertise, performance and expected contributions to HLS. The C&G Committee uses industry studies and market data for comparable businesses to assist in setting a range of base salaries for positions. However, these studies and data are only one factor that is reviewed in determining base salary for each executive officer position.

Short-term incentive compensation

The STIP award for the NEOs in 2019 was based on the actual achievement versus target achievement levels set by the Board with respect to certain corporate performance indicators as set out below. The STIP as defined in more detail on the following page contains predefined Threshold, Target and Maximum performance hurdles for corporate objectives. The Target STIP award is set as a percentage of the executive’s base salary. If target performance is achieved the STIP would be awarded at 100% of the bonus opportunity. If threshold performance is achieved, 50% of the STIP may be awarded and if maximum performance is achieved the STIP may award up to 150% of the Target STIP. The payout opportunity is defined below per executive:


	Executive Chair	CEO	President & COO	CFO	CCO

Target STIP (% of Base Salary)	55%	75%	75%	50%	50%
STIP Award Range (% of Base Salary)	0-82.5%	0-112.5%	0-112.5%	0-75%	0-75%
Below Threshold (% of Target)	0%	0%	0%	0%	0%
Threshold Performance (% of Target)	50%	50%	50%	50%	50%
Target Performance (% of Target)	100%	100%	100%	100%	100%
Maximum Performance (% of Target)	150%	150%	150%	150%	150%

HLS utilizes short-term incentive compensation to reward its executive officers, including the named executive officers, primarily for the achievement of corporate performance goals recommended by the C&G Committee and approved by the Board in the course of setting the Company’s quarterly and annual budgets. Total bonus payable as short-term incentive compensation cannot exceed 150% of the individual’s target level of annual short-term incentive compensation, despite any overachievement of criteria.

The short-term incentive compensation payable to the NEOs for 2019 was determined based on objective criteria relating to the areas set out in the table below that were approved by the Board, and scored as follows:


Corporate Goal	Target	Actual Performance	Comments

Corporate Development	25%	12.5%	Payout was based on the Company’s actual performance related to acquiring or in-licensing additional products or businesses, and in particular the exclusive in-licensing of PERSERIS for the Canadian market by HLS.
Capital Structuring and Financing	10%	20%	Payout was based on the Company’s actual performance related to achieving objectives related to accessing public equity markets, and in particular the closing of a bought deal prospectus offering of Common Shares, including the exercise in full of the underwriters’ over-allotment option, for aggregate gross proceeds of approximately C$50 million.
Financial and Commercial Performance	20%	4%	Payout was based on the Company’s actual performance related to achieving specific financial and commercial objectives, including market share, revenues and operating income excluding non-cash items.
Operational Accomplishments	45%	60%	Payout was based on the Company’s actual performance related to achieving operational and development milestones that had impact in 2019 and subsequent years, and in particular (i) the granting of priority review status by Health Canada to HLS for its new drug submission for Vascepa; (ii) the approval of Vascepa by Health Canada for use in patients; and (iii) the addition of Vascepa to Health Canada’s Register of Innovative Drugs.

On an aggregate basis, the annual scorecard results represented 96.5% of the target award for each NEO, and accordingly a payout of 96% was made to each of the Company’s NEOs for 2019.

Long-term incentives

Long-term incentive compensation is a fundamental component of HLS’s executive compensation program. HLS utilizes long-term incentive compensation, in the form of Options and Performance Share Units, to strengthen retention and align compensation with returns to HLS shareholders.

Options are granted annually by the Board, in quantities based in part on recommendations provided to the C&G Committee by GGA, and to ensure compensation for HLS’s NEOs that is competitive to suitable peers in the marketplace. In 2019, Option grants were made to NEOs and Directors, at a level lower than target grant levels, to ensure sufficient room to enable a company-wide grant of Options to all permanent employees, and to further stay within the limits set out in the Third Amended and Restated Stock Option Plan as previously approved by the Company’s shareholders. This prudent action will allow HLS to continue to make grants under the Third Amended and Restated Stock Option Plan in 2020 and future years.

For more information, see “– Stock Options Plan and Other Incentive Plans – Third Amended and Restated Stock Option Plan. ”

Performance Share Units (“ PSUs ”) have also been granted historically by the Board to the Company’s NEOs and selected additional key employees under the terms of the Company’s performance share unit plan (the “ Performance Share Unit Plan ”), in order to (i) promote a further alignment of interests between employees and the shareholders of the Company; (ii) associate a portion of employees’ compensation with the returns achieved by shareholders of the Company; and (iii) attract and retain employees with the knowledge, experience and expertise required by the Company.

In 2018, a total of 600,000 PSUs were granted to: (i) the NEOs (56.7% of the total grant) based in part on recommendations provided to the C&G Committee by GGA; (ii) five additional key executives (36.7% of the total grant) identified by the Board and management; and (iii) to 13 other key employees (6.7% of the total grant) who, in the opinion of the Board and management, are collectively best situated to influence the positive trajectory and performance of the Company. These awards will be settled, based on performance measured at the end of the three year measurement period, in cash, and

will therefore be non-dilutive to existing shareholders. For more information, see “– Stock Option Plan and Other Incentive Plans –Performance Share Unit Plan ”.

Stock Option Plan and Other Incentive Plans

Third Amended and Restated Stock Option Plan

The Company’s Stock Option Plan was amended and restated on May 22, 2018, and received Shareholder approval on June 22, 2018. The Stock Option Plan was further amended and restated on January 25, 2019, in order to make certain changes necessary in connection with the Company’s graduation to the TSX on February 7, 2019.

The following summary of the Third Amended and Restated Stock Option Plan is intended as a summary only and does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the full text of the Third Amended and Restated Stock Option Plan.

The Third Amended and Restated Stock Option Plan is a fundamental component of HLS’s executive compensation program. The primary purposes of the Third Amended and Restated Stock Option Plan are (i) to promote an alignment of interests of the officers, employees and consultants of the Company and its subsidiaries with those of the Shareholders; (ii) to associate officers’ and employees’ compensation with the returns achieved by Shareholders; and (iii) to attract and retain employees with the knowledge, experience and expertise required by the Company and its subsidiaries.

The Third Amended and Restated Stock Option Plan provides for awards of Options. The plan is open to officers, directors, employees and consultants engaged by HLS or its affiliates. It provides that the Board has the authority to determine the individuals to whom Options will be granted, the number of Options to be granted and the vesting and other terms and conditions of such grants. It also provides that in no event may an Option remain exercisable beyond the tenth anniversary of the date of grant.

Subject to adjustment in connection with a reorganization or recapitalization of the Company, the total number of Common Shares reserved and available for grant and issuance pursuant to the Third Amended and Restated Stock Option Plan shall be a rolling number equal to 10% of the total issued and outstanding Common Shares from time to time. Any unissued Common Shares in respect of which Options are granted but that are subject to issuance upon exercise of an Option but cease to be issuable under such Option for any reason (other than exercise of such Option), including without limitation, expiry of the Option or surrender of the Option pursuant to an option exchange program, will again be available for grant and issuance in connection with future Options granted under the Third Amended and Restated Stock Option Plan. The aggregate number of Options that may be granted to any one participant in a 12 month period may not exceed 5% of the issued and outstanding Common Shares, calculated as of the date of grant to such participant. At all times the Company is required to reserve and keep available a sufficient number of Common Shares as will be required to satisfy the requirements of all outstanding Options granted under the Third Amended and Restated Stock Option Plan.

Notwithstanding the foregoing, the Third Amended and Restated Stock Option Plan provides that no Options may be granted to (a) any insiders of the Company if the total number of Common Shares issuable to all insiders under the Third Amended and Restated Stock Option Plan or any other security-based compensation arrangement of HLS would exceed 10% of the then issued and outstanding Common Shares, and (b) any insiders of the Company if the total number of Common Shares issued to all insiders of the Company within any one year period under the Third Amended and Restated Stock Option Plan or any other security-based compensation arrangement of HLS would exceed 10% of the then issued and outstanding Common Shares (collectively, the “ Plan Restrictions ”). The Third Amended and Restated Stock Option Plan also provides that, excluding one-time sign-on grants, the award value (based on a Black-Scholes calculation or such other similar and acceptable methodology, applied consistently and appropriately as determined by the Board of Directors) of any grants of Options (together with the award value of all other rights granted under any other security based compensation arrangements of the Company) to any one non-employee Director is not permitted to exceed $100,000 per year.

The Board has the discretion to make amendments which it may deem necessary, without having to obtain Shareholder approval, provided that, among other things, no such amendment would be made to the extent that such amendment would materially adversely affect the existing rights of a participant with respect to any then outstanding awards, as determined by HLS acting in good faith, without such participant’s consent in writing. The Board has the authority to make the following amendments, without requiring Shareholder approval: (a) amendments to the terms and conditions of the Third Amended and Restated Stock Option Plan that are necessary to ensure that it complies with applicable law and regulatory requirements, including the requirements of any applicable stock exchange; (b) amendments respecting the administration of or eligibility for participation in the Third Amended and Restated Stock Option Plan; (c) amendments respecting the terms and conditions on which Options may be granted, including relating to the term of such an Option and the vesting schedule; (d) the addition of, and any subsequent amendment to, a financial assistance provision; and (e) amendments that are of a “housekeeping” nature. The Third Amended and Restated Stock Option Plan also provides that Shareholder approval is required in the case of, among other things: (i) any amendment to the maximum number or percentage of Common Shares issuable under the plan; (ii) any

amendment that would reduce the exercise price of Options; (iii) any amendment to the Plan Restrictions; and (vi) any amendment granting additional powers to the Board to amend the Third Amended and Restated Stock Option Plan.

Options are generally granted with an exercise price equal to the last reported sale price of the Common Shares on the TSX (or, prior to the graduation to the TSX, on the TSX Venture Exchange) preceding the date of grant and, with the exception of certain Options granted prior to the completion of the Arrangement, generally vest over a four year period and have a seven year term to expiry. Options are not transferable or assignable, other than by will or by the laws of descent and distribution. The Company does not provide any financial assistance to holders of Options.

In the event that a holder of Options ceases to be employed by or to provide services to the Company (other than by reason of death, disability or termination for cause), Options held by such holder that have vested will expire on the earlier of the 90[th] day following the termination of employment or provision or service and the initial expiry date of such Options, and Options held by such holder that have not vested will expire upon the termination of employment or provision or service.

Founder Performance Share Unit Agreements

HLS entered into performance share unit agreements (each, a “ Founder PSU Agreement ”) with each of William Wells, Greg Gubitz, Gilbert Godin and Joe MacLean (each, a “ Founder PSU Grantee ”) on June 25, 2015, as amended, pursuant to which each Founder PSU Grantee was granted 260,000 Performance Share Units (each, a “ Founder PSU ”). The first three tranches of the Founder PSUs, representing in aggregate 75% (or 195,000) of the Founder PSUs granted to each Founder PSU Grantee, did not vest and were forfeited on June 25, 2019 as a result of the failure to achieve the share price vesting condition. Provided that the Founder PSU Grantee remains an officer, director, employee or consultant of HLS, the fourth and final tranche of 25% (or 65,000) of the Founder PSUs will vest upon the fair market value of Common Shares reaching US$50.00 before fifth anniversary of the grant date.

Under the Founder PSU Agreements, the number of Founder PSUs is subject to adjustment in the case of certain events, including a stock split, combination or exchange of shares. The Founder PSU Agreements provide that any unvested Founder PSUs vest on the effective date of any change of control of HLS.

The Founder PSU Agreement between HLS and each of William Wells, Gilbert Godin and Joe MacLean was amended on May 24, 2018 to provide that such PSU Grantee is entitled, upon vesting of each Founder PSU, to receive the cash value of the Founder PSUs. The PSU Agreement between HLS and Greg Gubitz provides that Mr. Gubitz is entitled, upon the vesting of each Founder PSU, to one Common Share.

Performance Share Unit Plan

The Board adopted the Performance Share Unit Plan on May 22, 2018. Under the Performance Share Unit Plan, a maximum of 600,000 Performance Share Units (each, a “ PSU ”) may be granted and, in June 2018 the Company granted 600,000 PSUs under the Performance Share Unit Plan. Each PSU entitles the holder to receive a cash payout, up to a maximum payout of C$20.00 per PSU, if the terms and conditions of the Performance Share Unit, including those described below, are met. Unless otherwise determined by the Board, the Performance Share Unit Plan will be administered by the C&G Committee. Unless otherwise determined by the Board or the C&G Committee and set out in a grant agreement, PSUs will vest based on performance metrics tied to the volume weighted average price of the Common Shares over the 90 trading days prior to the end of the 36[th] month following the grant date, according to the following table:

Reference Volume-Weighted Average Price	Vesting*
C$20.00 or higher	100% of Target PSUs Vest
C$18.00	50% of Target PSUs Vest
C$15.00	25% of Target PSUs Vest
Less than C$15.00	0% of Target PSUs Vest
* Vesting of PSUs between the Reference Volume-Weighted Average Prices outlined above will be based on linear interpolation between each such reference price.

The Performance Share Unit Plan provides that the C&G Committee may make proportionate adjustments to the PSUs in the event of certain changes in the capital of the Company. Each PSU Agreement provides that any unvested PSUs vest on the effective date of any change of control of HLS.

Additional Benefit Plans

NEOs in Canada and the United States are entitled to participate in employee group benefit plans offered by HLS to its employees, including HLS’s comprehensive group benefit plan administered by Sun Life Financial in Canada, and

Independent Blue Cross in the United States. The Company does not offer a group employee benefit plan for employees in Barbados. As a result, the Company has purchased a separate employee benefit plan for Mr. Wells, which provides substantially similar benefits as provided to other HLS employees.

Summary Compensation Table

The following table sets forth information regarding compensation earned by each NEO in fiscal year 2019 for HLS’s last three completed fiscal years.

Name and principal position	Year	Salary ($)	Share-based awards ($)	Option- based awards ($)(6)	Non-equity incentive plan compensation ($)	Non-equity incentive plan compensation ($)	All other ($)(8)	Total compensation ($)
					Annual(7)	LTIP
Greg Gubitz(1)(2) Chief Executive Officer	2019	468,772	0	503,150	337,516	0	12,748	1,322,185
	2018	438,647	221,850	234,339	289,507	0	38,094	1,222,437
	2017	432,117	0	0	299,628	0	31,811	763,556
Tim Hendrickson(2)(3) Chief Financial Officer	2019	230,020	0	199,793	110,410	0	10,261	550,484
	2018	201,008	130,500	72,105	61,911	0	16,064	481,588
	2017	182,441	0	63,480	61,410	0	15,750	323,081
William Wells(1)(4) Executive Chairman	2019	390,780	0	287,597	206,332	0	12,827	897,536
	2018	386,425	182,700	139,353	187,030	0	11,615	907,123
	2017	386,425	0	0	262,692	0	10,364	659,481
Gilbert Godin(1) President and Chief Operating Officer	2019	469,231	0	503,150	337,846	0	11,200	1,321,427
	2018	442,800	221,850	234,339	292,248	0	11,000	1,202,237
	2017	435,605	0	0	296,124	0	10,800	742,529
Sanjiv Sharma(5) Chief Commercial Officer	2019	309,348	0	131,498	148,487	0	11.200	600,534
	2018	296,027	130,500	90,738	130,252	0	11,000	658,518
	2017	269,104	0	63,480	148,007	0	10,764	491,355

Notes:

(1) Mr. Wells and Mr. Gubitz received no compensation for their service as directors of HLS and Former HLS during the years ended December 31, 2017, 2018 and 2019 and Mr. Godin received no compensation for his service as a director of Former HLS during the years ended December 31, 2017 and 2018.

(2) Each of Messrs. Gubitz and Hendrickson was paid in Canadian dollars, which have been converted from Canadian dollars to U.S. dollars at exchange rates based on the annual exchange rate reported by the Bank of Canada, being US$0.7701 per C$1.00 for the year ended December 31, 2017, US$0.7718 per C$1.00 for the year ended December 31, 2018, and US$0.7536 per C$1.00 for the year ended December 31, 2019.

(3) Mr. Hendrickson was promoted from Vice President, Finance & Administration to Chief Financial Officer of HLS on September 6, 2018.

(4) Mr. Wells is employed by the Company’s subsidiary Heritage Life Sciences (Barbados) Inc.

(5) Mr. Sharma is employed by the Company’s subsidiary HLS Therapeutics (USA), Inc. Mr. Sharma was promoted from Vice President, Commercial Operations to Chief Commercial Officer on September 6, 2018.

(6) The grant date fair value of option-based awards was determined using the Black-Scholes option pricing model in accordance with International Financial Reporting Standards, which is the same method used for determining accounting fair value. The Black-Scholes model was selected as it is a widely used financial method for determining the fair value of Options. The assumptions used in the calculation of the fair value of Options include volatility of 42% and expected average life of 7 years for options granted on August 22, 2018 and June 7, 2019 and 10 years for options granted on March 30, 2017 and March 12, 2018. Any difference between the estimated grant date fair value and the accounting fair value is due to the use of different assumptions.

(7) Amounts represent short-term incentive plan compensation earned in each year.

(8) For Mr. Wells, these amounts represent payments to an individual health plan. For Messrs. Gubitz and Hendrickson, these amounts represent contributions made by HLS in respect of their participation in HLS’s deferred profit-sharing plan and to their retirement savings plans. For Messrs. Godin and Sharma, these amounts represent contributions made by HLS to their 401(k) retirement plans.

Outstanding Option-Based and Share-Based Awards

The following table sets out all option-based awards outstanding as of December 31, 2019 for all NEOs of HLS. The value of unexercised in-the-money options and payout value of PSUs and Founder PSUs that have not vested is based on a closing share price of C$25.50 on December 31, 2019 and an exchange rate of US$1 per C$1.2989, being the rate reported by the Bank of Canada for December 31, 2019.

		Option-based Awards	Option-based Awards		Share-based Awards	Share-based Awards	Share-based Awards
Name	Number of	Option	Option	Value of	Number of	Market or	Market or
	securities	exercise	expiration date	unexercised	PSUs and	payout	payout
	underlying	price ($)		in-the-money	Founder	value of	value of
	unexercised			options	PSUs that	PSUs and	vested PSUs
	options			($)	have not	Founder	and
	(#)(2)				vested	PSUs that	Founder
					(#)	have not	PSUs not
						vested	paid out or

						($)(1)	distributed
							($)

Greg Gubitz	253,308 94,112 106,826	$10.00 C$8.34 C$15.55	11-Aug-25 22-Aug-25 7-Jun-26	2,439,356 1,243,129 818,079	150,000	1,308,830	0
Tim Hendrickson	12,000 28,958 42,419	$10.00 C$8.34 C$15.55	30-Mar-27 22-Aug-25 7-Jun-26	115,560 382,507 324,847	50,000	769,900	0
William Wells	253,308 55,695 61,061	$10.00 C$8.34 C$15.55	11-Aug-25 22-Aug-25 7-Jun-26	2,439,356 735,677 467,608	135,000	1,077,860	0
Gilbert Godin	253,308 94,112 106,826	$10.00 C$8.34 C$15.55	11-Aug-25 22-Aug-25 7-Jun-26	2,439,356 1,243,129 818,079	150,000	1,308,830	0
Sanjiv Sharma	15,246 12,000 5,875 27,027 27,919	$10.00 $10.00 $9.25 C$8.34 C$15.55	11-Aug-25 30-Mar-27 12-Mar-28 22-Aug-25 7-Jun-26	146,819 115,560 60,983 357,001 213,805	50,000	769,900	0

Notes:

(1) The PSU vesting is subject to a 36 month cliff vest of 0%, or a range from 25% to 100% depending on certain performance metrics occurring prior to August 17, 2021. The PSU payout will be zero in 2021 if performance is below the minimum threshold. See “ Performance Share Unit Plan ” above.

Value on Pay-Out or Vesting of Incentive Plan Awards

The table below sets out all incentive compensation held by all NEOs of HLS that vested during the year ended December 31, 2019 or was earned during the year ended December 31, 2019 but had not been paid out as of December 31, 2019.

Name	Option-based awards – Value	Share-based awards –	Non-equity incentive plan
	vested during the year	Value vested during the	compensation – Value earned
	($)	year	during the year
		($)	($)
Greg Gubitz	110,212	0	337,516
Tim Hendrickson	39,690	0	110,410
William Wells	65,223	0	206,332
Gilbert Godin	110,212	0	337,846
Sanjiv Sharma	47,389	0	148,487

Performance Graph

The following graph compares the total cumulative shareholder return for $100 invested in HLS Common Shares (with any cash dividends reinvested into Common Shares) on the TSX Venture Exchange and TSX with the S&P/TSX Composite Total Return Index and S&P/TSX SmallCap Total Return Index for the period commencing March 14, 2018 and ending December 31, 2019.

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Total Shareholder Return Performance Graph
Since March 14, 2018
$250.00
$225.00
$200.00
$175.00
$150.00
$125.00
$100.00
$75.00
$50.00
March 14, 2018 June 14,2018 September 14,2018 December 31,2018 March 14, 2019 June 14,2019 September 13,2019 December 31,2019
HLS Therapeutics $100.00 $85.33 $68.61 $126.47 $133.86 $136.45 $128.49 $225.76
S&P/TSX Composite Index $100.00 $105.13 $103.86 $93.84 $106.04 $108.32 $111.71 $115.31
S&P/TSX SmallCap Index $100.00 $105.29 $100.80 $86.99 $96.92 $94.23 $97.82 $100.77
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During the period above, total shareholder returns for HLS were approximately 125.8%, compared to 15.3% for the S&P/TSX Composite Index and 0.8% for the S&P/TSX Small Cap Index. During that same period, the total compensation received by HLS’s NEOs has been positioned below the median of the Company’s peer group, with the intention to move competitive compensation levels towards the median over a multi-year period to reflect, among other things, the achievement of strategic initiatives and the corresponding increase in total shareholder return. Short-term incentive payouts increased in 2019, as a reflection of the Company’s performance.

Compensation Risk Oversight and Assessment

The Board believes the current structure of the Company’s executive compensation arrangements is focused on longterm value and is designed to correlate to the long-term performance of the Company. It is the practice of the C&G Committee and the Board to consider all factors related in an executive’s performance, including risk taking and any risk-mitigation efforts, in determining compensation. For example the STIP is based on a balanced approach to measuring corporate

performance and the annual payouts are capped at 150% of Target. In addition, a substantial portion of the executive compensation is subject to company performance and long-term vesting conditions.

All employees, including NEOs and directors, are prohibited from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars, or units of exchange funds) that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by the NEO or director.

Termination and Change of Control Benefits for NEOs

Greg Gubitz . Mr. Gubitz is party to an employment agreement with the Company. Effective as of April 1, 2020, Mr. Gubitz’s base salary is $500,000 and his target short-term incentive compensation is 75% of his base salary. Mr. Gubitz is entitled to terminate his employment without good reason by providing no less than 90 days’ written notice to HLS. Under his employment agreement, if HLS terminates Mr. Gubitz’s employment without cause or Mr. Gubitz terminates his employment for good reason, Mr. Gubitz is entitled to (i) a lump sum payment equal to two times his base salary and two times his target level of annual short-term incentive compensation, (ii) a pro-rated portion of his short-term incentive compensation for the year in which his employment was terminated and (iii) the continuation of benefits for a period of two years following termination (or, at Mr. Gubitz’s option, pay in lieu of such coverage). Under the terms of his employment agreement, Mr. Gubitz has agreed (i) not to disclose, other than in the normal and proper course of his employment, any confidential or proprietary information relating to HLS’s operations or business and (ii) for a period of 12 months following the termination of his employment, not to compete with HLS in Canada or the U.S. Except as otherwise disclosed, Mr. Gubitz is not entitled to any benefits or payments on a change of control of HLS.

Tim Hendrickson . Mr. Hendrickson is party to an employment agreement with HLS. Pursuant to the terms of his employment agreement, Mr. Hendrickson’s base salary, effective as of April 1, 2020, is $250,000 and his target short-term incentive compensation is 50% of his base salary. Under his employment agreement, if HLS terminates Mr. Hendrickson’s employment without cause or Mr. Hendrickson terminates his employment for good reason, Mr. Hendrickson is entitled to (i) a lump sum payment ranging from two to twelve times his monthly salary and a percentage of his target level of annual shortterm incentive compensation ranging from 0% - 50%, in each case depending on length of service, (ii) a pro-rated portion of his short-term incentive compensation for the year in which his employment was terminated and (iii) the continuation of benefits for the period of severance following termination (or, at Mr. Hendrickson’s option, pay in lieu of such coverage). In the event of a change of control resulting in the involuntary termination of Mr. Hendrickson without cause by HLS or by Mr. Hendrickson for good reason, which termination occurs within the first 12 months of a change of control and subject to certain conditions being met, Mr. Hendrickson is entitled to, in addition to any benefits or compensation accrued and target incentive compensation earned and due to Mr. Hendrickson but not yet paid as of the termination date: a lump sum payment equal to one times his base salary, plus one times the annual target incentive compensation, any unvested equity compensation awards shall be automatically accelerated and be 100% vested and exercisable in accordance with the terms of the stock option plan and benefits for a period of one year.

William Wells . Mr. Wells is party to an employment agreement with Heritage Life Sciences (Barbados) Inc., a subsidiary of the Company. Mr. Wells’ cumulative base annual earnings, effective as of April 1, 2020, are $400,000 and his target short-term incentive compensation is 55% of his base annual earnings. Mr. Wells is entitled to terminate his employment without good reason by providing no less than 90 days’ written notice to HLS. Under his employment agreement, if HLS terminates Mr. Wells’s employment without cause or Mr. Wells terminates his employment for good reason, Mr. Wells is entitled to (i) a lump sum payment equal to two times his base salary and two times his target level of annual short-term incentive compensation, (ii) a pro-rated portion of his short-term incentive compensation for the year in which his employment was terminated and (iii) the continuation of benefits for a period of 18 months following termination (or, at Mr. Wells’s option, pay in lieu of such coverage). Under the terms of his employment agreement, Mr. Wells has agreed (i) not to disclose, other than in the normal and proper course of his employment, any confidential or proprietary information relating to HLS’s operations or business and (ii) for a period of 12 months following the termination of his employment, not to compete with HLS in Canada or the U.S. Except as otherwise disclosed, Mr. Wells is not entitled to any benefits or payments on a change of control of HLS.

Gilbert Godin . Mr. Godin is subject to an employment agreement with HLS Therapeutics (USA), Inc., a subsidiary of the Company. Mr. Godin’s base salary, effective as of April 1, 2020, is $500,000 and his target short-term incentive compensation is 75% of his base salary. Mr. Godin is entitled to terminate his employment without good reason by providing no less than 90 days’ written notice to HLS. Under his employment agreement, if HLS terminates Mr. Godin’s employment without cause or Mr. Godin terminates his employment for good reason, Mr. Godin is entitled to (i) a lump sum payment equal to two times his base salary and two times his target level of annual short-term incentive compensation, (ii) a pro-rated portion of his short-term incentive compensation for the year in which his employment was terminated and (iii) the continuation of benefits for a period of 18 months following termination (or, at Mr. Godin’s option, pay in lieu of such coverage). Under the terms of his employment agreement, Mr. Godin has agreed (i) not to disclose, other than in the normal and proper course of his

employment, any confidential or proprietary information relating to HLS’s operations or business and (ii) for a period of 12 months following the termination of his employment, not to compete with HLS in Canada or the U.S. Except as otherwise disclosed, Mr. Godin is not entitled to any benefits or payments on a change of control of HLS.

Sanjiv Sharma . Mr. Sharma is subject to an employment agreement with HLS Therapeutics (USA), Inc., a subsidiary of the Company. Pursuant to the terms of his employment agreement, Mr. Sharma’s base salary, effective as of April 1, 2020, is $325,000 and his target short-term incentive compensation is 50% of his base salary. Under his employment agreement, if HLS terminates Mr. Sharma’s employment without cause or Mr. Sharma terminates his employment for good reason, Mr. Sharma is entitled to: (i) a lump sum payment ranging from three to twelve times his monthly salary and a percentage of his target level of annual short-term incentive compensation ranging from 0% - 75%, in each case depending on length of service, and (ii) a pro-rated portion of his short-term incentive compensation for the year in which his employment was terminated.. In the event of a change of control resulting in the involuntary termination of Mr. Sharma without cause by HLS or by Mr. Sharma for good reason, which termination occurs within the first 12 months of a change of control and subject to certain conditions being met, Mr. Sharma is entitled to, in addition to any benefits or compensation accrued and target incentive compensation earned and due to Mr. Sharma but not yet paid as of the termination date: a lump sum payment equal to one times his base salary, plus one times the annual target incentive compensation, any unvested equity compensation awards shall be automatically accelerated and be 100% vested and exercisable in accordance with the terms of the Third Amended and Restated Stock Option Plan and benefits for a period of one year.

The table below sets out details of the estimated incremental payments from HLS to each of the NEOs if such NEO had been terminated without cause or had terminated his employment for good reason on December 31, 2019:

NEO	Lump Sum Payment ($)	Prorated STIP Payment ($)	Benefits Continuation ($)	Total
				($)
Greg Gubitz	1,662,500	337,516	14,674	2,014,690
Tim Hendrickson	220,313	110,410	5,503	336,226
William Wells	1,215,919	206,332	19,241	1,441,492
Gilbert Godin	1,662,500	337,846	44,859	2,045,205
Sanjiv Sharma	425,766	148,487	31,083	605,336

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets out information as at May 15, 2020 with respect to compensation plans under which equity securities of HLS are authorized for issuance to employees and others.

Plan Category	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 available for future issuance under equity compensation plans (excluding securities reflected in column a)
Equity compensation plans approved by securityholders (Third Amended and Restated Stock Option Plan)(1)	2,478,871	$9.63	630,191
Equity compensation plans not approved by securityholders(2)	65,000	N/A	Nil
Total	2,543,871		630,191

Notes:

(1) Reflects Common Shares issuable pursuant to the Company’s existing “Third Amended and Restated Stock Option Plan See “ Third Amended and Restated Stock Option Plan of the Company ”.

(2) Reflects Common Shares issuable pursuant to the Founder PSUs held by Mr. Gubitz. See “ – Stock Option Plans and Other Incentive Plans – Founder Performance Share Unit Agreements ”.

Security Based Award Burn Rate for the Last Three Years

Pursuant to TSX rules, HLS is required to calculate and disclose the annual “burn rate” of its for the three most recently completed financial years. The annual burn rate is equal to the number of Options granted in the applicable year, divided by the weighted average number of Common Shares outstanding in that year, expressed as a percentage. The Company’s average burn rate over the last three financial years is 1.5%.


As of December 31, 2019	2019	2018	2017

Number of Options issued	590,480	629,510	71,100
Weighted average number of Common Shares outstanding	29,360,830	26,952,523	25,277,997
Burn rate	2.0%	2.3%	0.3%

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

No Directors, executive officers or proposed nominees for election as Directors (or any associates thereof) are indebted to the Company and the Company has not guaranteed or otherwise agreed to provide assistance in the maintenance or servicing of any indebtedness of any Director, executive officer or proposed nominee for election as a Director (or any associates thereof).

AUDIT COMMITTEE INFORMATION

In accordance with NI 52-110, additional information regarding the Company’s audit committee may be found under the heading “Auditor and Audit Committee Information” in the Company’s annual information form for the year ended December 31, 2019, which is available under the Company’s SEDAR profile at www.sedar.com.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

HLS is not aware of any material interest, direct or indirect, of: (i) any informed person of HLS or any associate or affiliate of any informed person, in any transaction since the commencement of HLS’s most recently completed financial year, or in any proposed transaction, that has materially affected or would materially affect HLS or any of its Subsidiaries; or (ii) any person who has been a Director or executive officer of HLS at any time since the beginning of the last financial year, or any associate or affiliate of any such person, in any matter to be acted upon at the Meeting.

ADDITIONAL INFORMATION

Additional information relating to the Company can be found on the Company’s profile on the SEDAR website at www.sedar.com. Additional financial information is provided in the audited consolidated financial statements and management’s discussion and analysis of Former HLS for the year ended December 31, 2019 and in the unaudited consolidated financial statements and management’s discussion and analysis of the Company for the three-month period ended March 31, 2020. Copies of this Circular, the audited consolidated financial statements of the Company as at and for the year ended December 31, 2019, and related management’s discussion and analysis, and the unaudited consolidated financial statements of the Company for the three-month period ended March 31, 2020, and related management’s discussion and analysis, may be obtained without charge by writing to the Corporate Secretary of the Company at 10 Carlson Court, Suite 701, Etobicoke Ontario, M9W 6L2.

APPROVAL OF THE DIRECTORS

The contents of this Circular and the sending thereof to the shareholders of the Company have been approved by the Board.

Dated at Toronto, Ontario, this 19[th] day of May, 2020.

BY ORDER OF THE BOARD OF DIRECTORS OF HLS THERAPEUTICS INC.

“Ryan C. Lennox”

RYAN C. LENNOX Corporate Secretary and General Counsel

ANNEX A

BOARD MANDATE

1. Purpose

The members of the Board of Directors (the “Board”) have the duty to supervise the management of the business and affairs of HLS Therapeutics Inc. (the “Company”). The Board, directly and through its committees and the chair of the Board (the “Chair”), shall provide direction to senior management, generally through the Chief Executive Officer, to pursue the best interests of the Company.

2. Duties and Responsibilities

The Board shall have the specific duties and responsibilities outlined below.

Strategic Planning

(a) Strategic Plans

The Board will adopt a strategic plan for the Company. At least annually, the Board shall review and, if advisable, approve the Company’s strategic planning process and the Company’s annual strategic plan. In discharging this responsibility, the Board shall review the plan in light of management’s assessment of emerging trends, the competitive environment, the opportunities for the business of the Company, risk issues, and significant business practices and products.

(b) Business and Capital Plans

At least annually, the Board shall review and, if advisable, approve the Company’s annual business and capital plans as well as policies and processes generated by management relating to the authorization of major investments and significant allocation of capital.

(c) Monitoring

At least annually, the Board shall review management’s implementation of the Company’s strategic, business and capital plans. The Board shall review and, if advisable, approve any material amendments to, or variances from, these plans.

Risk Management

(d) General

At least annually, the Board shall review reports provided by management of principal risks associated with the Company’s business and operations, review the implementation by management of appropriate systems to manage these risks, and review reports by management relating to the operation of, and any material deficiencies in, these systems.

(e) Verification of Controls

The Board shall verify that internal, financial, non-financial and business control and management information systems have been established by management.

Human Resource Management

(f) General

At least annually, the Board shall review a report of the Board’s Compensation and Governance Committee concerning the Company’s approach to human resource management and executive compensation.

(g) Succession Review

At least annually, the Board shall review the succession plans of the Company for the Chair, the Chief Executive Officer and other executive officers, including the appointment, training and monitoring of such persons.

(h) Integrity of Senior Management

The Board shall, to the extent feasible, satisfy itself as to the integrity of the Chief Executive Officer and other executive officers of the Company and that the Chief Executive Officer and other senior officers strive to create a culture of integrity throughout the Company.

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Corporate Governance

(i) General

At least annually, the Board shall review a report of the Compensation and Governance Committee concerning the Company’s approach to corporate governance.

(j) Director Independence

At least annually, the Board shall review a report of the Compensation and Governance Committee that evaluates the director independence standards established by the Board and the Board’s ability to act independently from management in fulfilling its duties.

(k) Ethics Reporting

The Board has adopted a written Code of Business Conduct and Ethics (the “Code”) applicable to directors, officers and employees of the Company. At least annually, the Board shall review the report of the Compensation and Governance Committee relating to compliance with, or material deficiencies from, the Code and approve changes it considers appropriate. The Board shall review reports from the Compensation and Governance Committee concerning investigations and any resolutions of complaints received under the Code.

(l) Board of Directors Mandate Review

At least annually, the Board shall review and assess the adequacy of its Mandate to ensure compliance with any rules of regulations promulgated by any regulatory body and approve any modifications to this Mandate as considered advisable.

Communications

(m) General

The Board has adopted a Disclosure Policy for the Company. At least annually, the Board, in conjunction with the Chief Executive Officer, shall review the Company’s overall Disclosure Policy, including measures for receiving feedback from the Company’s stakeholders, and management’s compliance with such policy. The Board shall, if advisable, approve material changes to the Company’s Disclosure Policy.

(n) Shareholders

The Company endeavors to keep its shareholders informed of its progress through periodic reports and press releases in accordance with applicable law and the principles of good governance and productive shareholder engagement. Directors and management meet with the Company’s shareholders at the annual meeting and are available to respond to questions at that time. In addition, the Company shall maintain on its website a contact email address that will permit shareholders to provide feedback directly to the Chair of the Board.

3. Composition

General

The composition and organization of the Board, including: the number, qualifications and remuneration of directors; the number of Board meetings; Canadian residency requirements; quorum requirements; meeting procedures and notices of meetings are required by the Business Corporations Act (Ontario) (the “OBCA”), the Securities Act (Ontario) (the “Act”) and the articles and by-laws of the Company, subject to any exemptions or relief that may be granted from such requirements.

Each director must have an understanding of the Company’s principal operational and financial objectives, plans and strategies, and financial position and performance. Directors must have sufficient time to carry out their duties and not assume responsibilities that would materially interfere with, or be incompatible with, Board membership. Directors who experience a significant change in their personal circumstances, including a change in their principal occupation, are expected to advise the chair of the Compensation and Governance Committee.

Independence

A majority of the Board must be independent. “Independent” shall have the meaning, as the context requires, given to it in National Policy 58-201 Corporate Governance Guidelines , as may be amended from time to time.

4. Committees of the Board

The Board has established the following committees: the Compensation and Governance Committee, and the Audit Committee. Subject to applicable law, the Board may establish other Board committees or merge or dispose of any Board committee.

A-2

Committee Mandates

The Board has approved mandates for each Board committee and shall approve mandates for each new Board committee. At least annually, each mandate shall be reviewed by the Compensation and Governance Committee and any suggested amendments brought to the Board for consideration and approval.

Delegation to Committees

The Board has delegated to the applicable committee those duties and responsibilities set out in each Board committee’s mandate.

Consideration of Committee Recommendations

As required by applicable law, by applicable committee mandate or as the Board may consider advisable, the Board shall consider for approval the specific matters delegated for review to Board committees.

Board/Committee Communication

To facilitate communication between the Board and each Board committee, each committee chair shall provide a report to the Board on material matters considered by the committee at the first Board meeting after the committee’s meeting.

5. Meetings

The Board will meet as often as it considers appropriate to fulfill its duties, but in any event at least once per quarter. The Chair is primarily responsible for the agenda and for supervising the conduct of the meeting. Any director may propose the inclusion of items on the agenda, request the presence of, or a report by any member of senior management, or at any Board meeting raise subjects that are not on the agenda for that meeting.

Meetings of the Board shall be conducted in accordance with the Company’s by-laws. Such by-laws may be amended from time to time in accordance with the requirements of the OBCA.

Secretary and Minutes

The Corporate Secretary, his or her designate or any other person the Board requests shall act as secretary of Board meetings. Minutes of Board meetings shall be recorded and maintained by the Corporate Secretary or his designee and subsequently presented to the Board for approval.

Meetings Without Management

The independent members of the Board shall hold regularly scheduled meetings, or portions of regularly scheduled meetings, at which non-independent directors and members of management are not present.

Directors’ Responsibilities

Each director is expected to attend all meetings of the Board and any committee of which he or she is a member. Directors will be expected to have read and considered the materials sent to them in advance of each meeting and to actively participate in the meetings.

Access to Management and Outside Advisors

The Board shall have unrestricted access to management and employees of the Company. The Board shall have the authority to retain and terminate external legal counsel, consultants or other advisors to assist it in fulfilling its responsibilities and to set and pay the respective reasonable compensation of these advisors without consulting or obtaining the approval of any officer of the Company. The Company shall provide appropriate funding, as determined by the Board, for the services of these advisors.

Service on Other Boards and Audit Committee

Directors may serve on the boards of other public companies so long as these commitments do not materially interfere and are compatible with their ability to fulfill their duties as a member of the Board. Directors must advise the Chair in advance of accepting an invitation to serve on the board of another public company.

6. Management

Position Descriptions for Directors

The Board has approved position descriptions for the Chair, the Lead Director, and the chair of each Board committee. At least annually, the Board shall review such position descriptions.

A-3

Position Description for Chief Executive Officer

The Board has approved a position description for the Chief Executive Officer, which includes delineating management’s responsibilities. The Board has also approved the corporate goals and objectives that the Chief Executive Officer has responsibility for meeting. At least annually, the Board shall review a report of the Compensation Committee reviewing this position description and such corporate goals and objectives.

7. Director development and evaluation

Each new director shall participate in the Company’s initial orientation program and each director shall participate in the Company’s continuing director development programs. At least annually, the Board shall review the Company’s initial orientation program and continuing director development programs.

8. No Rights Created

This Mandate is a statement of broad policies and is intended as a component of the flexible governance framework within which the Board, assisted by its committees, directs the affairs of the Company. While it should be interpreted in the context of all applicable laws, regulations and listing requirements, as well as in the context of the Company’s Articles and by-laws, it is not intended to establish any legally binding obligations.



REVIEW AND APPROVAL

Approved By:	Board of Directors	Adopted:	March 12, 2018

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QUESTIONS AND FURTHER ASSISTANCE

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HLS Therapeutics Inc. — Proxy Solicitation & Information Statement 2020

47563_rns_2020-05-22_27c918f3-3968-41f8-b195-bd81f950246f.pdf