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Exhibit 99.3

AURINIA PHARMACEUTICALS INC.

NOTICE OF ANNUAL GENERAL MEETING

OF SHAREHOLDERS

TO BE HELD ON

June 8, 2016

and

MANAGEMENT INFORMATION CIRCULAR

Dated April 27, 2016

AURINIA PHARMACEUTICALS INC.

Notice of Annual General Meeting of Shareholders

NOTICE is hereby given that the Annual General Meeting (the “Meeting”) of shareholders of Aurinia Pharmaceuticals Inc. (the “Company”) will be held at 1200 Waterfront Centre, 200 Burrard Street, Vancouver, British Columbia on Wednesday, June 8, 2016, at 9:00 AM, Pacific Time, for the following purposes:

1.	to fix the number of directors at six (6);
2.	to elect the directors for the ensuing year;
3.	to receive the audited consolidated financial statements of the Company for the financial year ended December 31, 2015, and the report of the auditors thereon;
4.	to re-appoint PricewaterhouseCoopers LLP, Chartered Professional Accountants, as auditors of the Company and to authorize the Company’s audit committee to fix the auditors’ remuneration;
5.	to consider and, if deemed appropriate, approve, by ordinary resolution, an amendment to the Company's stock option plan; and
6.	to transact such further and other business as may properly be brought before the Meeting or any adjournment thereof.

Management of the Company is soliciting proxies on the accompanying form of proxy (the “Proxy”). Shareholders who are unable to attend the Meeting are requested to complete, date, sign and return the Proxy so that as large a representation of shareholders as possible may be had at the Meeting. Specific details of the matters being put before the Meeting, in particular with respect to the election of the directors, are set forth in more detail in the accompanying management information circular.

A copy of the management information circular, a supplemental mailing list reply form, a Proxy and a return envelope accompany this notice of meeting.

The board of directors (the “Board”) has determined that only holders of record of the common shares at the close of business on April 22, 2016 will be entitled to vote in respect of the items set out in this notice of meeting at the Meeting. The Board has also determined 9:00 AM, Pacific Time, on June 6, 2016 as the time before which proxies to be used or acted upon at the Meeting or any adjournment thereof must be deposited with the Company’s transfer agent. Failure to properly complete or deposit a Proxy may result in its invalidation.

DATED this 27^th day of April, 2016.

 

Table of Contents

APPENDIX “A” – STATEMENT OF CORPORATE GOVERNANCE PRACTICES
APPENDIX “B” – MANDATE OF THE BOARD OF DIRECTORS
APPENDIX “C” – BLACKLINE OF STOCK OPTION PLAN

MANAGEMENT INFORMATION CIRCULAR

PART 1
VOTING INFORMATION

This management information circular (the “Circular”) is furnished in connection with the solicitation by the management of Aurinia Pharmaceuticals Inc. (the “Company”) of proxies to be voted at the annual general meeting of shareholders (each a “Shareholder”) of the Company (the “Meeting”), to be held at 1200 Waterfront Center, 200 Burrard Street, Vancouver, British Columbia, on June 8, 2016, at 9:00 AM, Pacific Time, for the purposes set forth in the accompanying notice of the Meeting, and at any adjournment thereof. Except as otherwise stated, the information contained herein is given as at April 22, 2016, and all dollar amounts and references to $ or to US$ are to United States dollars and references to CDN$ are to Canadian dollars, unless otherwise indicated. The 2015 annual average exchange rate for conversion of US dollars into Canadian dollars was US$1.00 = CDN$1.2787 based upon the Bank of Canada noon rate.

1.1	SOLICITATION OF PROXIES

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

1.2	APPOINTMENT AND REVOCATION OF PROXIES

The persons named in the Proxy are directors of the Company (“Directors”) or officers of the Company (“Officers”). Each Shareholder is entitled to appoint any other person to represent him at the Meeting, and at any adjournment thereof.

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

A Shareholder giving a Proxy pursuant to this solicitation may revoke any such Proxy by an instrument in writing executed by the Shareholder or by their attorney duly authorized in writing, or if the Shareholder is a corporation, executed under its corporate seal or by an officer or attorney duly authorized in writing, and deposited with the Company, c/o Computershare Investor Services Inc., Attention: Proxy Department, 100 University Avenue, 9^th Floor, North Tower, Toronto, Ontario M5J 2Y1, at any time up to 48 hours preceding the time of the Meeting, or any adjournment thereof, or with the Chair of the Board on the day of the Meeting, at the Meeting or any adjournment thereof, before any vote is cast under the Proxy’s authority.

1.3	REGISTERED SHAREHOLDERS

Shareholders at the close of business on April 22, 2016 will be entitled to vote at the Meeting, or any adjournment thereof, either in person or by proxy, in respect of all matters which may properly come before the Meeting, or any adjournment thereof.

1.4	NON-REGISTERED SHAREHOLDERS

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

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

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Management of the Company does not intend to pay for intermediaries to forward the meeting materials to objecting beneficial owners under NI 54-101 and any such objecting beneficial holder will not receive the meeting materials unless the objecting beneficial holder’s intermediary assumes the cost of delivery.

1.5	DESCRIPTION OF THE COMPANY

The Company is organized pursuant to the provisions of the Business Corporations Act (Alberta) (the “ABCA”) and is registered extra-provincially in the Province of British Columbia pursuant to the provisions of the Business Corporations Act (British Columbia).

1.6	VOTING OF PROXIES

The persons named in the Proxy will vote or withhold from voting the Common Shares in respect of which they are appointed in accordance with the directions of the Shareholders appointing them.

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

a.	FOR fixing the number of directors at six (6);
b.	FOR the election of each of the nominees for election as a Director of the Company set forth in this Circular;
c.	FOR the appointment of PricewaterhouseCoopers LLP, Chartered Accountants, as auditors of the Company and the authorization of the Company’s audit committee (the “Audit Committee”) to fix the auditors’ remuneration; and
d.	FOR the approval of the Plan Amendment as set forth and described in the Section entitled “Amendment to the Stock Option Plan”.

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

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

1.7	VOTING SHARES AND PRINCIPAL HOLDERS THEREOF

The Company is authorized to issue an unlimited number of Common Shares without nominal or par value. As at April 22, 2016, there were 32,287,419 Common Shares issued and outstanding as fully paid and non-assessable, each carrying the right to one vote per Common Share. To the knowledge of the Directors and Officers, as at April 22, 2016, no person beneficially owned, directly or indirectly, or exercised control or direction over, Common Shares of the Company carrying 10% or more of the voting rights attached to all outstanding voting Common Shares of the Company, except as follows:

*	Common Shares held by ILJIN Life Science Co., Ltd. and ILJIN Semiconductor Co., Ltd.

1.8	NOTICE AND ACCESS

The Company is sending proxy-related materials for the Meeting to beneficial Shareholders using the “notice and access” provisions of National Instrument 51-102 – Continuous Disclosure Obligations (“NI 54-101. Pursuant to these provisions, the Company provides Shareholders with a notice on how they may access the Circular electronically instead of providing a paper copy.

The Company will not be using “notice and access” for the delivery of the proxy-related materials to its registered Shareholders.

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PART 2
BUSINESS OF THE MEETING

2.1	ELECTION OF DIRECTORS

The following table states the names of all of the persons proposed to be nominated for election as Directors, their municipality, province or state and country of residence, their age, their principal occupation, their position in the Company (if any), the period during which each proposed nominee has served as a Director and the number of Common Shares beneficially owned, directly or indirectly, by each of them or over which they exercise control or direction. Each of the nominees is currently a Director of the Company.

The persons named in the Proxy intend to cast the votes to which the Common Shares represented by such Proxy are entitled FOR fixing the number of directors to be elected at the Meeting at six (6) and FOR the election of each of the nominees to the board of directors of the Company (the “Board”) set forth in this Circular, unless otherwise directed by the shareholders instructing them.

Management does not contemplate that any of the nominees will be unable to serve as a Director, but, if that should occur for any reason at or prior to the Meeting, the persons named in the Proxy reserve the right to vote for another nominee at their discretion, unless instructions have been received from a particular Shareholder to withhold its Common Shares from voting with respect to the election of Directors.

If elected, each Director elected will hold office until the next annual meeting of Shareholders or until his successor is duly elected, unless his office is earlier vacated in accordance with the bylaws of the Company.

Notes:

(1)	Member of the Audit Committee of the Company.
(2)	Member of the Compensation Committee of the Company.
(3)	Member of the Governance & Nomination Committee of the Company.

The Company has adopted a majority voting policy where any nominee proposed for election as a Director is required to forthwith tender their resignation if the Director receives more withheld votes than for votes (i.e., a majority of withheld votes) at any meeting where Shareholders vote on the uncontested election of Directors. An uncontested election means the number of Director nominees for election is the same as the number of Directors to be elected to the Board. Within 90 days of the relevant Shareholders’ meeting, the Board will make its determination whether or not to accept the resignation and issue a press release either announcing the resignation of the Director or explaining the reasons justifying its decision not to accept the resignation. The Board will accept the resignation absent exceptional circumstances and such resignation will be effective when accepted by

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the Board. A Director who tenders a resignation pursuant to this policy will not participate in any meeting of the Board or any committee at which the resignation is considered.

At the meeting of the Shareholders held on August 15, 2013, the Company’s by-laws were amended to include advance notice provisions (the “Advance Notice Provisions”) that requires that advance notice to the Company must be provided in circumstances where nominations of persons for election to the Board are made by Shareholders other than pursuant to: (i) a "proposal" made in accordance with the ABCA; or (ii) a requisition of the Shareholders made in accordance with the ABCA.

Among other things, the Advance Notice Provisions fixes a deadline by which holders of record of Common Shares must submit Director nominations to the secretary of the Company prior to any annual or special meeting of Shareholders and sets forth the specific information that a Shareholder must include in the written notice to the secretary of the Company for an effective nomination to occur. No person will be eligible for election as a Director unless nominated in accordance with the provisions of the Advance Notice Provisions.

In the case of an annual meeting of Shareholders, notice to the Company must be made not less than 30 nor more than 65 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 60 days after the date on which the first public announcement of the date of the annual meeting was made, notice may be made not later than the close of business on the tenth day following such public announcement.

In the case of a special meeting of Shareholders (which is not also an annual meeting), notice to the Company must be made not later than the close of business on the tenth day following the day on which the first public announcement of the date of the special meeting was made.

The Board may, in its sole discretion, waive any requirement of the Advance Notice Provisions.

A biography for each of the proposed nominees to the Board is set out below.

Richard M. Glickman, L.L.D. (Hon), Chair of the Board

Dr. Glickman presently serves as the Company’s Chair of the Board. He previously served as the Interim Executive Chair of the Company for the period September 20, 2013 to February 28, 2014 and as Acting Interim CEO for the period October 22, 2013 to November 5, 2013. He was a co-founder of the privately held Aurinia Pharma Corp. which was acquired by the Company. He was a co-founder, Chair and CEO of Aspreva Pharmaceuticals Inc. Prior to establishing Aspreva Pharmaceuticals Inc., Dr. Glickman was the co-founder and CEO of StressGen Biotechnologies Corporation. Since 2000, Dr. Glickman has served as the Chair of the Board of Vigil Health Solutions Inc., a healthcare services company, as Lead Director for Cardiome Pharma Corp., as founding Chair of the board of Essa Pharmaceuticals Inc., and as Chair of the board of Engene Inc. He has served on numerous biotechnology and community boards including roles as Chair of B.C Biotech., Director of the Canadian Genetic Disease Network, a member of the federal government’s National Biotechnology Advisory Committee, a member of the British Columbia Innovation Council and as a Director for the Vancouver Aquarium.

Charles A. Rowland, Jr., Director, President and CEO

Charles A. Rowland, Jr., CPA, MBA, was appointed Chief Executive Officer of Aurinia on April 11, 2016. He previously served as the chair of the audit committee of the Company from July 14, 2014 until his appointment as CEO. He previously was the Vice President and Chief Financial Officer of ViroPharma Incorporated, an international biopharmaceutical company, until it was acquired by Shire plc in January 2014. He has 35 years of diversified experience across a broad field of financial areas. Prior to joining ViroPharma in 2008, Mr. Rowland was the Executive Vice President and Chief Financial Officer, as well as the interim Co-Chief Executive Officer, for Endo Pharmaceuticals Inc., a specialty pharmaceutical company with a primary focus in pain management, where he served from 2006 to 2008. Mr. Rowland previously held positions of increasing responsibility at Biovail Corporation, Breakaway Technologies, Inc., Pharmacia Corporation, Novartis AG and Bristol-Myers Squibb Co. He is a member of the board of directors and chairs the audit committee of Bind Therapeutics, Inc., as of May 2014, Vitae Pharmaceuticals, Inc., as of September 2014, and Blueprint Medicines Corporation, as of March 2015. He is also a member of the supervisory board and chairs the audit committee of Nabriva Therapeutics, AG as of January 2015. He is the chair and member of the compensation committee at Blueprint Medicines and Nabriva Therapeutics, respectively. Previously, he served on the board of Idenix Pharmaceuticals until its acquisition by Merck. Mr. Rowland holds an M.B.A. with a finance concentration from Rutgers University and a B.S. in Accounting from Saint Joseph’s University.

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Benjamin Rovinski, PhD, Director, Chair of the Compensation Committee

Dr. Benjamin Rovinski has 27 years of investment, operational, managerial and research experience in the healthcare sector. He joined Lumira Capital in 2001, where he is a Managing Director, with an investment focus on mid to late-stage private and public life sciences companies. Prior to joining Lumira Capital, Dr. Rovinski held several senior management positions in the biotechnology sector, including 13 years at Sanofi Pasteur where he was a senior scientist and director of molecular virology. He led global research and development programs in the areas of HIV/AIDS and therapeutic cancer vaccines, bringing several of them through to clinical-stage. Dr. Rovinski received a PhD in biochemistry from McGill University in Montréal and did postdoctoral studies in molecular oncology and retrovirology at the Ontario Cancer Institute in Toronto. He obtained his undergraduate degree from Rice University in Houston. Dr. Rovinski's current and past board roles and investment responsibilities include several private and public companies, including GI Therapeutics; Vascular Pharmaceuticals; KAI Pharmaceuticals (acquired by Amgen); Morphotek (acquired by Eisai); Cervelo Pharmaceuticals; Health Hero Network (acquired by Bosch); Avalon Pharmaceuticals (NASDAQ: AVRX; acquired by Clinical Data, Inc.); Inovise Medical, Inc.; Protana; Signature Biosciences; and SGX Pharmaceuticals (NASDAQ: SGXP; acquired by Eli Lilly). He also serves on the board of directors of Life Sciences Ontario and the steering committee of the Toronto Regional Board of Trade’s Health Science Cluster initiative. He has published over 25 scientific articles and reviews and is the recipient of 31 issued patents.

Hyuek Joon Lee, PhD, Director

Dr. Hyuek Joon Lee is the Director of New Business Development for ILJIN Group and is responsible for mergers and acquisitions, and managing overseas investments, joint ventures and subsidiaries. As of October 2014 he joined the board of directors of Life Science Enterprises in Massachusetts, a privately held company focusing on advanced biomaterials that promote bone repair. Dr. Lee has over 18 years of experience in consulting, management, business development and strategic planning in a number of industries including information technology, chemical and media. Dr. Lee obtained his B.S. in Chemistry from Seoul National University, and his M.S.E. and Ph.D. in Chemical Engineering from the University of Michigan, Ann Arbor.

David R.W. Jayne, MD FRCP FRCPE FMedSci, Director

Dr. David R.W. Jayne is Director of the Vasculitis and Lupus Clinic and Reader in Vasculitis at The University of Cambridge, UK. Dr. Jayne received his bachelor of surgery degree and medical degree from Cambridge University, Cambridge, England. He received postgraduate training at several London hospitals and Harvard University. He is a fellow of the Royal Colleges of Physicians of London and Edinburgh, and the Academy of Medical Science. He is a certified nephrologist and an Honorary Consultant Physician at Addenbrooke’s Hospital, Cambridge UK. Dr. Jayne is a medical advisor to UK, US, and EU regulatory bodies, patient groups, and professional organizations. He has published more than 250 peer-reviewed journal articles, book chapters, and reviews. He was elected the first President of the European Vasculitis Society in 2011 and is a member of the ERA-EDTA immunopathology working group. Dr. Jayne’s research includes investigator-initiated international trials and the introduction of newer therapies in vasculitis and SLE with collaborators in five continents.

Gregory M. Ayers, MD, PhD, Director, Chair of the Audit Committee

Dr. Ayers is a consultant to the medical device and biopharmaceutical industry providing clinical and regulatory advice to various companies. He has over 25 years of experience working with medical device start-up companies. He began his career in industry at InControl, Inc., the developer of the first implantable atrial defibrillator, where he served as Vice President of Clinical Affairs. InControl was acquired by Guidant in 1999. He was a Venture Partner at MPM Capital when he founded CryoCor, Inc. (NasdaqNM: CRYO), a medical technology company headquartered in San Diego, CA that developed products using cryogenic technology to treat arrhythmias, where he also served as President & CEO until March 2006. CryoCor was sold to Boston Scientific in 2007. He served on the board of directors of Hemosense, Inc. (AMEX: HEM), where he also served as interim CEO until April 2002. Hemosense was sold to Inverness Medical in 2008. While at MPM he served as medical director, interim CEO or member of the board of directors for 8 other portfolio companies including Alsius and ARYX pharmaceuticals (Nasdaq: ARYX). Dr. Ayers is also co-founder of IMedPro, a German based consulting company for small US companies seeking European approval or early marketing of their medical products, where he has worked with 7 additional start-up medical device companies. He has served as a medical consultant for Heartstream, a company that pioneered the use of AEDs (automatic external defibrillator). He is a founder of SonarMed, Inc. an Indianapolis based medical device company developing products for critical care medicine, where he served as Executive and Chairman of the Board until April 2008. He served as acting Medical Director of Catheter Robotics, Inc., a New Jersey based company. He was President and CEO of ViewRay, a Cleveland based oncology company. Dr. Ayers served as Chief Medical Officer of Heart Metabolics, Ltd., an Irish company focused on securing registration for perhexiline in the treatment of hypertropic cardiomyopathy. Dr. Ayers is a fellow of the American College of Cardiology, the American Institute of Medical and Biological Engineering and the Heart Rhythm Society. He holds 21 U.S. patents, and has published over 200 book chapters, scientific abstracts and manuscripts. Dr. Ayers received his B.S. and Ph.D. in Biomedical Engineering from Purdue University, and his M.D. from Indiana University.

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2.1.1

Corporate Cease Trade Orders, Bankruptcies, Penalties or Sanctions

To the knowledge of the Directors and Officers of the Company, no proposed Director of the Company:

(a)	is, as at the date of this Circular, or has been, within ten years before the date of this Circular, a director, CEO or CFO of any company, that:

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

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

2.1.2

Directors’ Attendance at Board and Committee Meetings

The following table sets forth the number of meetings held by the Board and each of its committees during the fiscal year ended December 31, 2015, and the attendance of each Director (in the case of committees of the Board, the attendance of each member of such committees) at those meetings.

Notes:

	(1)	Mr. Zaruby was not entitled to attend one meeting of the board of directors due to potential conflicts of interests.
	(2)	Was appointed as a Director on May 26, 2015.
	(3)	Served as a Director until May 26, 2015.
	(4)	Served as a Director until March 6, 2015.

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2.1.3

Other Board Memberships

The following table identifies the Directors who also act as directors for other reporting issuers.

 

2.1.4

Directors’ and Officers’ Insurance and Indemnification

The Company maintains Director and Officer liability insurance, which, subject to the provisions contained in the policy, protects the Directors and Officers, as such, against certain claims made against them in these capacities. Such insurance provides for an aggregate of $20,000,000 annual protection against liability (less a deductible of up to $250,000 payable by the Company depending on the nature of the claim). The annualized premium for this coverage is $202,500.

The Company has entered into indemnification agreements with each of its Directors and Officers and the officers of its subsidiaries. The indemnification agreements generally require that the Company indemnify and hold the indemnitees harmless to the greatest extent permitted by law for liabilities arising out of the indemnitees’ service to the Company or its subsidiaries as Directors and Officers, provided that the indemnitees acted honestly and in good faith and in a manner the indemnitees reasonably believed to be in or not opposed to the Company’s best interests and, with respect to criminal and administrative actions or proceedings that are enforced by monetary penalty, the indemnitees had no reasonable grounds to believe that his or her conduct was unlawful. The indemnification agreements also provide for the advancement of defense expenses to the indemnitees by the Company.

2.2	PRESENTATION OF FINANCIAL STATEMENTS AND AUDITOR’S REPORT

The audited consolidated financial statements of the Company, the report of the auditors thereon, and management’s discussion and analysis thereof for the financial year ended December 31, 2015 will be tabled at the Meeting, but the approval of the Shareholders in respect thereto is not required.

2.3	APPOINTMENT AND REMUNERATION OF AUDITORS

The Board recommends that Shareholders vote for the appointment of PricewaterhouseCoopers LLP, Chartered Professional Accountants, as auditors of the Company and the authorization of the Audit Committee to fix the auditors’ remuneration. The persons named in the Proxy intend to cast the votes to which the Common Shares represented by such Proxy are entitled FOR the reappointment of PricewaterhouseCoopers LLP, Chartered Professional Accountants, as auditors of the Company for the term expiring with the next annual meeting of Shareholders, and to authorize the Audit Committee to fix their remuneration, unless otherwise directed by the Shareholders appointing them. PricewaterhouseCoopers LLP were the auditors for the predecessor corporation, Isotechnika Inc., since 1996 and became the auditors for the Company on June 18, 2009.

Principal Accountant Fees and Services

The aggregate fees recorded for professional services rendered by PricewaterhouseCoopers LLP for the Company for the years ended December 31, 2015 and 2014, respectively, are as follows:

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Notes:

(1)	These fees include professional services provided by the external auditor for the statutory audits of the annual financial statements. The total for 2015 is comprised of $39,375 related to interim billings for the 2015 audit and $45,026 related to fees for the 2014 audit billed in 2015. The total for 2014 ($167,871) consisted of $37,916 related to interim billings for the 2014 audit and $129,955 related to fees for the 2013 audit billed in 2014.
(2)	These fees relate to performing review engagement services on the Company’s quarterly financial statements and other audit related services.
(3)	These fees include professional services for tax compliance, tax advice, tax planning and various taxation matters.
(4)	These fees for 2015 include professional services for assistance with filing the Short Form Base Shelf Prospectus dated October 16, 2015. The fees for 2014 included professional services related to the filing of Form 40-F Registration Statement as required in conjunction with obtaining the NASDAQ listing.

2.4	AMENDMENT TO THE STOCK OPTION PLAN

The Shareholders initially approved the current stock option plan (the “Stock Option Plan”) at the June 28, 2012 annual meeting (and re-approved most recently on May 7, 2014). Under the Stock Option Plan, the Board may, in its discretion, grant options to purchase Common Shares to Directors, Officers, employees and consultants of the Company or any of its subsidiaries.

At the Meeting, Shareholders will be asked to consider, and if thought advisable, pass an ordinary resolution approving an amendment to the Stock Option Plan to increase the maximum number of Common Shares reserved for issuance under the Stock Option Plan from 10% to 12.5% of the outstanding Common Shares of the Company at the time of grant (representing an increase of 807,185 Common shares as at April 22, 2016) (the “Plan Amendment”). As at April 22, 2016, an aggregate of 2,838,037 Common Shares (or 8.8% of the total number of issued and outstanding Common Shares) were issuable under the Stock Option Plan pursuant to outstanding options, leaving 390,705 Common Shares available for future issuance under the Stock Option Plan. If the Plan Amendment is approved, as at April 22, 2016, the maximum number of Common Shares issuable under the Stock Option Plan would be 4,035,927 and 1,197,890 Common Shares would be available for future issuance under the Stock Option Plan.

The Plan Amendment was approved by the Board on April 22, 2016. A blackline copy of the Stock Option Plan showing the Plan Amendment is attached as Appendix “C”.

There are no other amendments proposed to the Stock Option Plan, the terms of which are described below under the heading “3.3 Equity Compensation Plan –Stock Option Plan”. The Board continues to believe that stock options are an important element of the Corporation’s compensation structure. The Board believes that the increased maximum number available for issuance under the Stock Option Plan is desirable in order to permit the Company to continue to accomplish the purposes of the Stock Option Plan and to provide for the ability of the Company to grant future options.

Under the Stock Option Plan and the requirements of the Toronto Stock Exchange (the “TSX”), the Plan Amendment must be approved by the Shareholders. The TSX has reviewed and conditionally approved the Plan Amendment, subject to Shareholder approval. Consequently, at the Meeting, Shareholders will be asked to consider and, if thought advisable, pass an ordinary resolution ratifying and approving the Plan Amendment.

The text of the resolution is set out below:

“BE IT RESOLVED, as an ordinary resolution that:

	1.	The proposed amendment to the Company's stock option plan (the “Stock Option Plan”), as substantially described in the Information Circular of the Company dated April 27, 2016 (the “Plan Amendment”), is hereby ratified, confirmed and approved.
	2.	Any one director or officer of the Company be and is hereby authorized and directed to do all such acts and things and to execute and deliver all such documents, instruments and assurances as in the opinion of such director or officer may be necessary or desirable to give effect to the foregoing resolution and to give effect to the Stock Option Plan, as amended without limitation including appropriate applications to and filing with the Toronto Stock Exchange to list the increase in the number of common shares of the Company as necessary, and executing and delivering such other documents as may be necessary or desirable, such determination to be conclusively evidenced by the taking of any such actions by such director or officer.”

The Board recommends that Shareholders vote for the approval of the Plan Amendment. The persons named in the Proxy intend to cast the votes to which the Common Shares represented by such Proxy are entitled FOR the approval of the Plan Amendment, unless otherwise directed by the Shareholders appointing them.

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PART 3
STATEMENT OF EXECUTIVE COMPENSATION

3.1	COMPENSATION OF EXECUTIVES

Composition and Mandate of the Compensation Committee

The Company’s compensation committee (the “Compensation Committee”) consists of Benjamin Rovinski (Chair), Dr. Hyuek Joon Lee and Dr. Gregory Ayers. All members of the Compensation Committee are independent. The Compensation Committee is charged, on behalf of the Board, to discuss, review and approve compensation applicable to executive officers, including determining the benchmarks, criteria and performance metrics upon which executive compensation such as base salary, annual cash incentive, equity compensation and other benefits are based. The Compensation Committee approves, among other things, the compensation of each of the Company’s Named Executive Officers (defined below), other than the CEO (whose compensation is determined by the Board.

All members of the Compensation Committee have direct experience that is relevant to their responsibilities in executive compensation, as set out below:

• Benjamin Rovinski, the Chair of the Compensation Committee, has served on the Boards of several biotechnology companies for the past 14 years, and he has been a member of numerous compensation and audit committees. Dr.
  Rovinski also was responsible for the design and implementation of benefit programs and compensation of senior non- executive employees in his previous capacity as Senior Scientist and Head of the Molecular Virology Department at Sanofi Pasteur. In that leadership role, he also oversaw global project teams and implemented various performance management systems for the evaluation of corporate and strategic objectives and performance of senior level project team members.

• Dr. Joon Lee has served as director and managing director in a number of companies in Korea, where he participated in the processes of evaluating corporate objectives and performance reviews of senior level managers and employees. As of October 2014 he joined the board of directors of Life Science Enterprises in Massachusetts, a privately held company focusing on advanced biomaterials that promote bone repair, and oversaw performance reviews, compensation and benefit packages of the senior management. In addition, his experience as a founding member of an information technology start-up grants him added insight into the dynamics of early stage companies.

• Dr. Gregory Ayers has held senior management positions with more than 20 biotechnology and pharmaceutical, publicly traded and privately held, companies over the past two decades. He has served as CEO, Chief Medical Officer, Medical Director, Vice President Medical Affairs and as a member of the board of directors. He has had over 2,000 employees reporting to him and has put into place performance review processes, compensation packages and benefit packages for early stage companies shortly after their formation and with new employee hires. He has served as a member of the compensation committee on a number of private and public companies where he has been a board member.

3.1.1

Compensation Discussion and Analysis

The following compensation discussion and analysis provides information regarding all significant elements of compensation paid, awarded or otherwise provided by the Company to its Named Executive Officers (defined below). Specific information is provided for Stephen Zaruby, President and CEO, and Dennis Bourgeault, CFO, and the three other most highly compensated executive officers or individuals whose total compensation for the year ended December 31, 2015, individually, was more than $150,000: namely, Dr. Neil Solomons, Chief Medical Officer., Michael Martin, Chief Operating Officer and Robert Huizinga, Vice President, Clinical Affairs (collectively, the “Named Executive Officers” or the “NEOs”).

Information about the compensation awarded to the NEOs can be found in the “Summary Compensation Table” and related compensation tables below.

The Company’s executive compensation program and strategy is designed to:

• Assist the Company in attracting and retaining talented executives;

• Provide a strong incentive for executives and key employees to work toward achievement of the Company’s goals and strategic objectives;

• Align management’s interests with that of Shareholders and other stakeholders;

• Motivate executives towards the creation of long term Shareholder value;

• Be competitive with other companies of similar size and business.

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To further these objectives the Compensation Committee designs pay and performance systems that reflect the level of job responsibility with specific considerations while aligning the Company’s compensation programs with those of similar clinical stage pharmaceuticals companies. It also aligns the annual cash incentive (bonus) program to the achievement of objectives that will drive future success and enhance Shareholder value by linking a significant portion of the bonus program to overall corporate performance and attainment of specific value enhancing goals.

Annually, commencing in 2014, specific and measureable performance objectives are defined for each executive officer.

For 2015, the objectives, against which the executive officers were evaluated, included product development goals/milestones, organizational and business development objectives and budget targets. There were no measurable performance goals based on share price or earnings per share.

The Company’s compensation program and strategy for its executive officers consists primarily of three main elements, base salary, an annual cash incentive (bonus) and equity-based compensation, consisting of the grants of stock options.

Base salary is intended to provide a base compensation that reflects the executive’s experience and responsibilities and which is competitive with salaries of executives with similar responsibilities and experience at comparable companies. Base salary provides regular compensation for assuming the responsibilities of the position and is paid in cash.

The annual cash incentive is intended to provide a greater incentive for executive officers to work toward achievement of the Company’s goals and strategic objectives.

The equity-based compensation is intended to better align the compensation of the CEO, other executive officers and key employees with the long-term interests of the Shareholders and reward the achievement of the long term strategic goals and objectives of the Company. The equity-based compensation, which consists of the granting of time-release stock options, is awarded on a prospective, go-forward basis, to motivate, reward and retain executive officers, rather than as compensation for performance in the prior year. The stock options are awarded on a discretionary basis by the Compensation Committee, based on the combination of recommendations of independent third party executive compensation consultants, contractual requirements and/or subjective assessments by the Compensation Committee.

Role of Executive Officers in Compensation Decisions

The Compensation Committee assesses the performance of the Company’s CEO and makes recommendations to the Board, and the Board approves all decisions regarding his compensation. The Compensation Committee consults with and receives input and recommendations from the CEO regarding the performance, assessment and compensation of all the other executive officers and determines the compensation of such executives. Although the Compensation Committee generally considers recommendations from the CEO, decisions regarding the compensation of the Company’s executive officers are made by the Compensation Committee and may reflect factors and consideration other than information and recommendations provided by the CEO.

Setting Executive Compensation

Performance goals are determined early in the year for each executive officer and relate to milestones and/or achievements which help to facilitate the Company’s overall goals and objectives. These performance goals are assessed by the Compensation Committee. These objectives can be altered at the discretion of the Compensation Committee if appropriate due to changes in business factors or conditions.

The Company annually determines the corporate objectives for purposes of the annual cash incentive bonus program during the first quarter of the fiscal year. Following the end of the year, the Compensation Committee assesses the achievement of such objectives with input from the CEO and based on such assessment, determines an aggregate cash incentive bonus of each executive officer. The Compensation Committee then recommends to the Board that the bonus to each executive officer be approved and paid.

The awarding of equity-based compensation is subject to the discretion of the Compensation Committee and Board, exercised annually, and is not subject to any minimum amount.

As part of its review of management compensation and incentive programs, the Compensation Committee, in conjunction with the CEO, periodically retains external independent consultants to review and provide benchmark data of a comparator group of companies.

In the third quarter of 2014, the Company engaged Arnosti Consulting, Inc. (“Arnosti”) to assist in benchmarking and providing advice on the total direct compensation (base salary, annual short and long-term incentives) for the NEOs. The Compensation Committee must pre-approve any additional services that Arnosti would provide to the Company at the request of management of

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the Company. As part of its benchmarking and review process, Arnosti developed a comparator group, comprising 23 US-listed development stage companies (the “2014 Peer Group”). The Company’s market capitalization at the time fell into the middle of the market cap range. The equity data used by Arnosti was obtained from Radford’s 2014 Global Life Sciences survey (mid-size public company data used for equity benchmarking). The 2014 Peer Group consisted of the following 23 public companies:

Arnosti provided the Compensation Committee with its recommendations regarding NEO total direct compensation based on the benchmarking work it performed. The Compensation Committee considered the advice from Arnosti where appropriate and in conjunction with its own assessment of competitive compensation requirements the Committee adjusted base salary levels as indicated in section 3.1.6.

In general, the Company targets to achieve competitive compensation based on a comparator group. Individual elements comprise base salary, bonus and total direct compensation (total cash compensation plus long-term incentive awards). The elements of compensation are targeted towards the 50% percentile of the comparator group, with the variable bonus component targeted at approximately the 75% percentile offset by a lower base salary component.

Executive Compensation-Related Fees

There were no fees in 2015 paid to any compensation consultant. Fees billed by Arnosti for services relating to Director and executive compensation provided by Arnosti in 2014 were US$19,033.

All Other Fees

The Company did not pay any fees to Arnosti for any other services in 2015 or 2014.

3.1.2

Managing Compensation Risk

On an annual basis, or otherwise more frequently as circumstances require, the Compensation Committee considers whether the executive compensation programs create or incentivize any inappropriate risk-taking. It is important to undertake such an analysis because it is expected that going forward annual performance-based incentives will continue to play a primary role in NEO’s and other senior management’s compensation programs. Therefore, the Company must ensure that these incentives do not result in actions being taken that are not in the long-term interest of the Company. The compensation plan and program utilized for the NEOs in 2015 considered both short-term incentives and long-term incentives to enhance the balance between risk and reward in relation to the Company’s overall business strategy and to further discourage the taking of unnecessary or excessive risks.

2015 Executive Compensation Elements

For the fiscal year ended December 31, 2015 the principal components of compensation for the Company’s CEO and the other NEOs consisted of base salary, annual cash incentive bonus program and equity-based program consisting of stock option grants.

a)	Base Salary

In November, 2013, Mr. Zaruby was appointed President and CEO of the Company with a base salary of $490,000. His base salary did not change. See also “Employment Contracts with Named Executive Officers”. The CEO’s base salary was approved by the Board based on the recommendation of the Compensation Committee at the time. In determining recommendations for his total compensation as the new CEO, the Compensation Committee considered Mr. Zaruby’s experience and expertise and the needs of the Company and CEO compensation with companies of a similar size and nature.

The base salary levels for the other NEOs of the Company are based on the executive’s overall experience and responsibilities and are reviewed at least annually. The salaries of the NEOs were determined primarily on the basis of the Compensation Committee’s review of an independent compensation review conducted by Arnosti as noted above in conjunction with the CEO’s assessment of each executive officer’s performance during the prior year. See “Employment Contracts with Named Executive Officers” for the base salary information including the amount and timing of the base salary increases.

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b)	Annual Cash Incentive Bonus Program

The annual cash incentive bonus program which formally commenced January 1, 2014, generally provides a performance-based cash incentive to NEOs. The program awards individual performance that leads to the achievement of annual corporate objectives.

The executive officers, pursuant to their employment agreements, are entitled to receive a target annual cash bonus. The 2015 annual cash bonus target for the CEO was 70% of base salary and 40% (30% in 2014) for the other NEOs. However, the actual cash bonus that each NEO receives can be lower than the target value based on the formula for determining the amount of actual cash bonus that each NEO may be entitled to under the incentive program, and may be subject to further adjustments at the discretion of the Compensation Committee and the Board. The annual cash bonus target for the other NEO’s was increased to 40% for 2015 to better align the bonus target to the variable bonus component target of the 75% percentile noted above.

The Compensation Committee, subsequent to the end of the year, reviewed and approved bonuses to be paid based on the achievement of the performance objectives that had been set and approved by the Compensation Committee at the beginning of the 2015 fiscal year. The Company accrued the amount of the approved bonuses in 2015 as they were earned by the NEOs during the year. The Company paid the bonuses in the first quarter of 2016.

At the beginning of 2015, key corporate objectives were set by the Board of Directors to represent a broad range of activities that span the Company’s business. The 2015 corporate objectives were as set out on the table below. The weights are intended to reflect the relative priority, importance and impact of each objective on the Company’s success.

For 2015 the corporate objectives were as follows:

The Compensation Committee determined that a 55% score appropriately reflected the Company’s overall corporate performance result against its targeted achievement level.

Mr. Zaruby, as CEO, was eligible, pursuant to his employment agreement, for a bonus based on 70% of base salary upon achieving specific corporate performance objectives as approved by the Board. For the year ended December 31, 2015, he earned a bonus of $188,650 based on the overall corporate performance result of 55%.

In 2015, Messrs. Solomons, Martin, Bourgeault and Huizinga were entitled to receive bonuses based on 40% of base salary weighted 60% as to corporate objectives as listed above and 40% as to personal objectives as agreed and approved by the CEO. For these NEOs the 40% personal objective result component is based on each NEO’s achievement of his individual goals (set at the beginning of each year) as assessed by the CEO and Compensation Committee. The Compensation Committee awarded bonuses to these NEOs which ranged from 73% to 80% of the combined corporate and personal objectives for 2015.

For the year ended December 31, 2015, Messrs. Solomons, Martin, Bourgeault and Huizinga earned bonuses of $78,120, $62,814, $58,482 and $60,000 respectively, related to the achievement of specific 2015 objectives.

c)	Option-based Awards

The Shareholders approved the current stock option plan (the “Stock Option Plan”) at the June 28, 2012 annual meeting. Under the Stock Option Plan the Board may, in its discretion, grant options to purchase Common Shares to Directors, Officers, employees and consultants of the Company or any of its subsidiaries. The exercise price of options under the Stock Option Plan must not be less than the closing price of the Common Shares on the TSX immediately preceding the date of the grant.

The Company makes grants under the Stock Option Plan on a prospective going-forward basis. The options granted to executive officers and other key employees are granted by the Board, based on the recommendations of the Compensation Committee and

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CEO. In determining whether or not to make option grants, the Board, the Compensation Committee and the CEO take into account previous and other awards of stock options to the grantees, relative ownership position and length of service to the Company.

The number of stock options granted to the NEOs in 2015 was as follows:

In 2014, the Company granted Mr. Zaruby 742,200 stock options as pursuant to his employment agreement he was entitled to receive stock options in an amount equal to 6% of the outstanding capital stock of the Company determined as of November 6, 2013 and subject to the TSX Venture Exchange and the Company’s insider trading guidelines and the blackout provisions therein. However, no options were granted in the 2013 financial year as a result of insider trading guidelines and the blackout provisions therein.

No stock options were granted to the other NEOs in either of 2013 or 2014. The number of stock options granted in 2015 reflected that no stock options had been granted in the previous two years.

3.1.3

Performance Graph

The following chart sets out the performance of the Common Shares on the TSX and TSX Venture Exchange for the past five years, as compared to the most appropriate index (the S&P TSX Composite Index), assuming an investment of $100 at the beginning of such period.

The Common Shares were traded under the symbol “ISA” on the TSX from the commencement of the applicable period to September 27, 2013. The Common Shares commenced trading on the TSX Venture Exchange on September 30, 2013 under the same symbol. On October 23, 2013, the Company changed its name to Aurinia Pharmaceuticals Inc. and commenced trading under the symbol “AUP”, remaining on the TSX Venture Exchange. On that same date, the Company conducted a consolidation of its Common Shares on a 50:1 basis. The Company recommenced trading on the TSX under the symbol “AUP” on June 2, 2014.

The values set out in the graph below have been adjusted to reflect the consolidation having occurred throughout the entire period.

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During the periods covered by this performance graph, the Company has undergone significant management changes, specifically in the makeup of its NEOs. The Company does not accordingly consider it appropriate to comment on the relationship between the performance of its Common Shares and the changes in executive compensation for the entire period.

Further, the trend in overall compensation paid to the NEO’s over the past five years has generally not tracked the performance of the market price of the common shares nor has it tracked the S&P/TSX Composite Index during the period. The Company has not included market price targets of the common shares as a component of the Company’s executive compensation program and strategy.

3.1.4

Anti-Hedging Protection

The Company has a written code of business conduct (the “Code”) for its Directors, Officers and employees, which is filed on the Company’s website at www.auriniapharma.com. The Code requires that all employees act at all times in full compliance with all laws applicable to the business of the Company. The Board implemented a written anti-hedging policy for all employees, Directors and senior officers of the Company on March 8, 2012. This policy specifically prohibits a Director or NEO from purchasing financial instruments designed to hedge or offset a decrease in market value of any Common Shares granted as compensation or held, directly or indirectly, by the NEO or Director.

3.1.5

Summary Compensation Table

The following table details the compensation information for each of the Company’s three most recently completed financial years for the NEOs.

Notes:

	(1)	Mr. Zaruby was appointed President and CEO of the Company on November 6, 2013. The 2013 salary amount represents remuneration paid to Mr. Zaruby from November 6, 2013 to December 31, 2013. Mr. Zaruby did not receive any additional remuneration relating to his position as a Director. Mr. Zaruby resigned as President and CEO and Director of the Company on April 10, 2016.
	(2)	The remuneration of Messrs. Solomons, Martin, Bourgeault and Huizinga is paid in CDN dollars which is converted into US dollars at an average quarterly rate.
	(3)	Calculated as of the grant date using the Black-Scholes option pricing model. The value shown is calculated by multiplying the number of stock options granted by the Canadian dollar exercise price at the time of grant by the Black-Scholes valuation factor and converting the value into US$ using the Bank of Canada closing rate on the date of granting of the options. The value is the same as the accounting fair value of the full grant, but is not adjusted by the vesting schedule.

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	(4)	Calculation based on 257,234 options at an exercise price of CDN$4.25; Black-Scholes valuation factor = CDN$2.6066 – converted into US$ at a rate of US$1.00 = CDN$1.1827 plus 191,283 options at an exercise price of CDN$4.45; Black-Scholes valuation factor = CDN$2.7106 – converted into US$ at a rate of US$1.00 = CDN$1.3086.
	(5)	Calculation based on 742,200 options at an exercise price of CDN$3.50; Black-Scholes valuation factor = CDN$2.7617 – converted into US$ at a rate of US$1.00 = CDN$1.0959.
	(6)	Calculation based on 147,439 options at an exercise price of CDN$4.25; Black-Scholes valuation factor = CDN$2.6066 – converted into US$ at a rate of US$1.00 = CDN$1.1827 plus 93,337 options at an exercise price of CDN$4.45; Black-Scholes valuation factor = CDN$2.7106 – converted into US$ at a rate of US$1.00 = CDN$1.3086.
	(7)	Annual incentive plan amount in 2014 for Mr. Bourgeault was composed of bonus accrual of $90,809 for 2014 and cash payment of $45,687 for 2013.
	(8)	Dr. Solomons became Chief Medical Officer of the Company on September 20, 2013 pursuant to the Plan of Arrangement with Aurinia Pharma Corp. 2013 salary amount represents remuneration paid to Dr. Solomons from October 5, 2013 to December 31, 2013.
	(9)	Calculation based on 147,439 options at an exercise price = CDN$4.25; Black-Scholes valuation factor = CDN$2.6066 – converted into US$ at a rate of US$1.00 = CDN$1.1827.
	(10)	Annual incentive plan amount in 2014 for Dr. Solomons was composed of bonus accrual of $67,835 for 2014 and cash payment of $67,567 for 2013.
	(11)	Mr. Martin became Chief Operating Officer of the Company on September 20, 2013 pursuant to the Plan of Arrangement with Aurinia Pharma Corp. 2013 salary amount represents remuneration paid to Mr. Martin from October 5, 2013 to December 31, 2013.
	(12)	Annual incentive plan amount in 2014 for Mr. Martin was composed of bonus accrual of $70,600 for 2014 and cash payment of $52,325 for 2013.
	(13)	Calculation based on 100,008 options at an exercise price of CDN$4.25; Black-Scholes valuation factor = CDN$2.6066 – converted into US$ at a rate of US$1.00 = CDN$1.1827 plus 31,529 options at an exercise price of CDN$4.45; Black-Scholes valuation factor = CDN$2.7106 – converted into US$ at a rate of US$1.00 = CDN$1.3086.
	(14)	Annual incentive plan amount in 2014 for Mr. Huizinga was composed of bonus accrual of $49,716 for 2014 and cash payment of $27,709 for 2013.
	(15)	The total amount of other annual compensation including perquisites for any NEO on an aggregate basis, generally including group insurance benefits, does not exceed the lesser of $50,000 and 10% of their annual cash compensation.

3.1.6

Narrative Discussion of Compensation

The following is a summary of the employment agreements for each of the NEOs of the Company:

Stephen Zaruby, President and CEO

On November 6, 2013, Mr. Zaruby entered into an employment agreement with the Company for the position of President and CEO. The agreement provided that Mr. Zaruby devote his sole skill and efforts to discharging his duties to the Company on a full-time and exclusive basis. In addition to his base salary of $490,000, which was reviewed annually by the Board, Mr. Zaruby was eligible to receive a cash bonus with a target payment of 70% of his base salary if the Board, in its sole discretion, determined that the Company’s performance had met certain short-term and long-term business performance objectives established from time to time by the Board, subject to any rules the Company may develop regarding the bonus scheme. Mr. Zaruby was also entitled to receive a one-time cash bonus upon the Company successfully completing an equity financing raising aggregate proceeds of at least $25 million. Mr. Zaruby was entitled to receive stock options in an amount equal to 6% of the outstanding capital stock of the Company determined as of November 6, 2013 and subject to the TSX Venture Exchange and the Company’s insider trading guidelines and the blackout provisions therein. In addition, Mr. Zaruby was entitled to participate in the Company’s benefits program and to vacation of six weeks per year.

Pursuant to Mr. Zaruby’s employment agreement, termination and change of control benefits were as follows:

(a)	In the event that Mr. Zaruby’s employment is terminated by the Company without cause after the first year of his employment, he would be entitled to receive a payment in lieu of notice equivalent to 12 months’ of his then current base salary, plus one additional month’s base salary for each full year of employment, up to a maximum of 18 months in the aggregate, plus such other sums, if granted, pursuant to the performance bonus and financing success bonus sections of the employment agreement. In addition, the Company is to maintain health, medical and dental benefits pursuant to the benefits section of the employment agreement for the duration of the notice period. All of Mr. Zaruby’s unexercised vested options would be exercisable over a period of 90 days pursuant to the terms and conditions under which the stock options were granted, subject to the prior expiry of his stock options in accordance with their terms.
(b)	In the event that Mr. Zaruby’s employment is terminated by the Company without cause or by the executive for “good reason” within 12 months following a change in control of the Company, Mr. Zaruby would be entitled to receive a lump sum payment in lieu of notice equal to two years’ of his then current base salary, plus such other sums, if granted, pursuant to the performance bonus and financing success bonus sections of the employment agreement. In addition, the Company is to maintain health, medical and dental benefits pursuant to the benefits section of the employment agreement for the duration of the pay in lieu of notice period. All of Mr. Zaruby’s unexercised stock options would fully vest and would be exercisable over a period of 90 days pursuant to the terms and conditions under which the stock options were granted, subject to the prior expiry of his stock options in accordance with their terms.

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(c)

In the event that employment is terminated as a result of the death or permanent disability of Mr. Zaruby, Mr. Zaruby or his estate or legal representative would not be entitled to receive any additional compensation other than the salary, bonus, benefits, or other sums due up to and including the termination date. All vested stock options would be exercisable over a period of one year from the date of termination.

Neil Solomons, MD, Chief Medical Officer

On September 12, 2012, Dr. Neil Solomons entered into an employment agreement with Aurinia Pharma Corp. for the position of Chief Medical Officer in consideration for an annual salary of CDN$297,000. The employment agreement became effective 15 days after the completion of the Plan of Arrangement between Aurinia Pharma Corp. and the Company on September 20, 2013. The agreement provides that Dr. Solomons will devote his sole skill and efforts to discharging his duties to the Company on a full-time and exclusive basis. In addition to his base salary, which is reviewed annually by the Board, Dr. Solomons is eligible to receive a cash bonus with a target payment of 30% of his base salary if the Board, in its sole discretion, determines that the Company’s performance has met certain short-term and long-term business performance objectives established from time to time by the Board, subject to any rules the Company may develop regarding the bonus scheme. Dr. Solomons is entitled to receive stock options pursuant to the Stock Option Plan as may be determined by the Board from time to time. In addition, Dr. Solomons is entitled to participate in the Company’s benefits program and to paid vacation of six weeks per year. Effective January 1, 2014 Dr. Solomons’ base salary was increased to CDN$310,000. Effective January 1, 2015 Dr. Solomons’ base salary was increased to CDN$325,500 and the annual cash bonus target was increased from 30% to 40%. Dr. Neil Solomons agreed to non-competition, non-solicitation, non-disclosure and assignment of intellectual property provisions in favour of the Company.

Pursuant to Dr. Solomons’ employment agreement, termination and change of control benefits are as follows:

(a)	In the event that Dr. Solomons’ employment is terminated by the Company without cause after the second year of his employment, he will be entitled to receive a payment in lieu of notice equivalent to 12 months’ of his then current base salary, plus one additional month’s base salary for each full year of employment, up to a maximum of 18 months in the aggregate, plus such other sums, if granted, pursuant to the performance bonus section of the employment agreement. In addition, the Company is to maintain the benefits pursuant to the benefits section of the employment agreement for the duration of the notice period. All of Dr. Solomons’ unexercised vested options would be exercisable over a period of 90 days pursuant to the terms and conditions under which the stock options were granted, subject to the prior expiry of his stock options in accordance with their terms.
(b)	In the event that Dr. Solomons’ employment is terminated by the Company without cause or by the executive for “good reason” within 12 months following a change in control of the Company, Dr. Solomons is entitled to receive a lump sum payment in lieu of notice equal to 150% of 12 months of his then current base salary, plus such other sums, if granted, pursuant to the performance bonus section of the employment agreement. In addition, the Company is to maintain the benefits pursuant to the benefits section of the employment agreement during the 12 month period. All of Dr. Solomons’ unexercised stock options would fully vest and would be exercisable over a period of 90 days pursuant to the terms and conditions under which the stock options were granted, subject to the prior expiry of his stock options in accordance with their terms.

Michael Martin, Chief Operating Officer

On September 12, 2012, Michael Martin entered into an employment agreement with Aurinia Pharma Corp. for the position of Chief Operating Officer in consideration of an annual salary of CDN$230,000. The employment agreement became effective 15 days after the completion of the Plan of Arrangement between Aurinia Pharma Corp. and the Company on September 20, 2013. The agreement provides that Mr. Martin will devote his sole skill and efforts to discharging his duties to the Company on a full-time and exclusive basis. His salary is reviewed at least annually by the Company. Effective January 1, 2014 Mr. Martin’s base salary was increased to CDN$265,000. On November 1, 2014 Mr. Martin’s base salary was increased to CDN$290,000 pursuant to the independent compensation review process conducted in 2014. Mr. Martin was eligible to receive a cash bonus with a target payment of 30% of his base salary if the Board, in its sole discretion, determines that the Company’s performance has met certain short-term and long-term business performance objectives established from time to time by the Board, subject to any rules the Company may develop regarding the bonus scheme. Effective January 1, 2015 the annual cash bonus target was increased from 30% to 40%. Mr. Martin is entitled to receive stock options pursuant to the Stock Option Plan as may be determined by the Board from time to time. In addition, Mr. Martin is entitled to participate in the Company’s benefits program and to paid vacation of six weeks per year. Michael Martin agreed to non-competition, non-solicitation, non-disclosure and assignment of intellectual property provisions in favour of the Company.

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Pursuant to Mr. Martin’s employment agreement, termination and change of control benefits are as follows:

(a)	In the event that Mr. Martin’s employment is terminated by the Company without cause after the second year of his employment, he will be entitled to receive a payment in lieu of notice equivalent to 12 months’ of his then current base salary, plus one additional month’s base salary for each full year of employment, up to a maximum of 18 months in the aggregate, plus such other sums, if granted, pursuant to the performance bonus section of the employment agreement. In addition, the Company is to maintain the benefits pursuant to the benefits section of the employment agreement for the duration of the notice period. All of Mr. Martin’s unexercised vested options would be exercisable over a period of 90 days pursuant to the terms and conditions under which the stock options were granted, subject to the prior expiry of his stock options in accordance with their terms.
(b)	In the event that Mr. Martin’s employment is terminated by the Company without cause or by the executive for “good reason” within 12 months following a change in control of the Company, Mr. Martin is entitled to receive a lump sum payment in lieu of notice equal to 150% of 12 months of his then current base salary, plus such other sums, if granted, pursuant to the performance bonus section of the employment agreement. In addition, the Company is to maintain the benefits pursuant to the benefits section of the employment agreement during the 12 month period. All of Mr. Martin’s unexercised stock options would fully vest and would be exercisable over a period of 90 days pursuant to the terms and conditions under which the stock options were granted, subject to the prior expiry of his stock options in accordance with their terms.

Dennis Bourgeault, CFO

Dennis Bourgeault entered into a new employment agreement for an indeterminate term, effective June 19, 2009, respecting his employment as an executive of the Company in consideration for an annual salary of CDN$200,000, replacing the previous employment contract entered into on January 1, 2006, as amended on April 30, 2008. The agreement provides that the Executive shall devote his sole skill and efforts to discharging his duties to the Company on a full-time and exclusive basis. His salary is reviewed at least annually by the Company. Effective January 1, 2014 Mr. Bourgeault’s base salary was increased to CDN$220,000. On November 1, 2014 Mr. Bourgeault’s base salary was increased to CDN$270,000 pursuant to the independent compensation review conducted in 2014. In addition to his base salary, Mr. Bourgeault is entitled to participate in the Company’s benefits program and is eligible to receive a cash bonus based upon the achievement of certain corporate performance goals as the Board may establish from time to time and ratified by the Board for each calendar year in accordance with the bonus plan. Effective January 1, 2015 the annual cash bonus target was increased from 30% to 40%. Mr. Bourgeault is also entitled to receive stock options pursuant to the Stock Option Plan as may be determined by the Board from time to time. He is entitled to six weeks of paid vacation each year.

Mr. Bourgeault is also entitled to receive a retention incentive, granted to him in 2012, whereby he shall receive 0.1675% of royalty licensing revenue for royalties received on the sale of voclosporin by licensees and/or 0.025% of net sales of voclosporin sold directly by the Company, to be paid quarterly as that revenue is received by the Company, provided that he is employed by or a consultant to the Company or one of its subsidiaries at the time such amount is payable. Should he cease to be employed by or cease to be a consultant to the Company or one of its subsidiaries, payment obligation to him shall cease. Should the Company sell substantially all of the assets of voclosporin to a third party or transfer those assets to another party in a merger in a manner such that this payment obligation is no longer operative, he will be entitled to receive 0.025% of the value attributable to voclosporin in the transaction, provided that he is serving as an executive officer of the Company at the time of the transaction. Should his employment be terminated without “cause” as set forth in his employment agreement, the employment condition for payment shall not apply. Mr. Bourgeault agreed to non-competition, non-solicitation, non-disclosure and assignment of intellectual property provisions in favour of the Company.

Pursuant to Mr. Bourgeault’s employment agreement, termination and change of control benefits are as follows:

(a)

In the event that Mr. Bourgeault’s employment is terminated (i) by the Company without just and sufficient cause; (ii) by the executive for “good reason”; or (iii) by the Company or by the executive for “good reason” following a change in control of the Company, Mr. Bourgeault is entitled to receive a cash payment in an amount equal to one month of his base salary then in effect per year of service to a maximum of 18 months, any bonus earned by the executive as of the termination date and the cash value of benefits and perquisites provided to the executive with respect to the immediately preceding fiscal year. In the case of (i) or (ii) above, all of his unexercised stock options, including options based on the achievement of certain performance criteria, whether or not actually achieved, would fully vest and would be exercisable over a period of 90 days pursuant to the terms and conditions under which the stock options were granted, subject to the prior expiry of his stock options in accordance with their terms. In the case of (iii) above, all of his unexercised stock options, with the exception of options based on the achievement of certain performance criteria, would fully vest and

17

would be exercisable over a period of 90 days pursuant to the terms and conditions under which the stock options were granted, subject to the prior expiry of his stock options in accordance with their terms.

(b)

In the event that employment is terminated as a result of the death or permanent disability of Mr. Bourgeault, Mr. Bourgeault or his estate or legal representative would not be entitled to receive any additional compensation other than the salary, bonus, benefits, or other sums due up to and including the termination date. All stock options, including options based on the achievement of certain performance criteria, whether or not actually achieved, would fully vest and be exercisable over a period of one year from the date of termination.

Robert Huizinga

Under an employment agreement between the Company and Robert B. Huizinga dated January 1, 2012, Mr. Huizinga was appointed Vice President, Clinical Affairs of the Company in consideration for an initial annual salary of CDN$152,250. This salary is reviewed at least annually by the Company. Effective January 1, 2014 Mr. Huizinga’s base salary was increased to CDN$200,000. On November 1, 2014 Mr. Huizinga’s base salary was increased to CDN$250,000 pursuant to the independent compensation review process conducted in 2014. The agreement provides that Mr. Huizinga shall devote his sole skill and efforts to discharging his duties to the Company on a full-time and exclusive basis. In addition to his base salary, Mr. Huizinga is entitled to participate in the Company’s benefits program and is eligible to receive a cash bonus based upon the achievement of certain corporate performance goals as the Board may establish from time to time and ratified by the Board for each calendar year in accordance with the bonus plan. Effective January 1, 2015 the annual cash bonus target was increased from 30% to 40%. Mr. Huizinga is entitled to receive stock options pursuant to the Stock Option Plan as may be determined by the Board from time to time. He is entitled to six weeks of paid vacation each year.

Mr. Huizinga is also entitled to receive a retention incentive, granted to him in 2012, whereby he shall receive 0.1675% of royalty licensing revenue for royalties received on the sale of voclosporin by licensees and/or 0.025% of net sales of voclosporin sold directly by the Company, to be paid quarterly as that revenue is received by the Company, provided that he is employed by or a consultant to the Company or one of its subsidiaries at the time such amount is payable. Should he cease to be employed by or cease to be a consultant to the Company or one of its subsidiaries, payment obligation to him shall cease. Should the Company sell substantially all of the assets of voclosporin to a third party or transfer those assets to another party in a merger in a manner such that this payment obligation is no longer operative, he will be entitled to receive 0.025% of the value attributable to voclosporin in the transaction, provided that he is serving as an officer of the Company at the time of the transaction. Should his employment be terminated without “cause” as set forth in his employment agreement, the employment condition for payment shall not apply. Mr. Huizinga agreed to non-competition, non-solicitation, non-disclosure and assignment of intellectual property provisions in favour of the Company.

Pursuant to Mr. Huizinga’s employment agreement, termination and change of control benefits are as follows:

(a)	In the event that Mr. Huizinga’s employment is terminated (i) by the Company without just and sufficient cause; (ii) by Mr. Huizinga for “good reason”; or (iii) by the Company or by Mr. Huizinga for “good reason” following a change in control of the Company, Robert Huizinga is entitled to receive a cash payment in an amount equal to one month of his base salary then in effect per year of service to a maximum of 18 months, any bonus earned by Mr. Huizinga as of the termination date and the cash value of benefits and perquisites provided to Mr. Huizinga with respect to the immediately preceding fiscal year. In the case of (i) or (ii) above, all of his unexercised stock options, including options based on the achievement of certain performance criteria, whether or not actually achieved, would fully vest and would be exercisable over a period of 90 days pursuant to the terms and conditions under which the stock options were granted, subject to the prior expiry of his stock options in accordance with their terms. In the case of (iii) above, all of his unexercised stock options, with the exception of options based on the achievement of certain performance criteria, would fully vest and would be exercisable over a period of 90 days pursuant to the terms and conditions under which the stock options were granted, subject to the prior expiry of his stock options in accordance with their terms.
(b)	In the event that employment is terminated as a result of the death or permanent disability of Mr. Huizinga, Mr. Huizinga or his estate or legal representative would not be entitled to receive any additional compensation other than the salary, bonus, benefits, or other sums due up to and including the termination date. All stock options, including options based on the achievement of certain performance criteria, whether or not actually achieved, would fully vest and be exercisable over a period of one year from the date of termination.

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Estimated Termination Payments

The table below reflects amounts that would have been payable to each NEO if his employment had been terminated on December 31, 2015 either (i) without cause, or (ii) following or in connection with a change in control.

Notes:

	(1)	Severance amount is comprised of 14 months’ salary in the sum of $571,667 plus 2015 accrued bonus of $188,650 and accrued vacation pay of $33,680. The bonus was paid out in the first quarter of 2016.
	(2)	Severance amount is comprised of two years’ salary in the sum of $980,000 plus 2015 accrued bonus of $188,650 and accrued vacation pay of $33,680. The bonus was paid out in the first quarter of 2016.
	(3)	Severance amount is comprised of 17 months’ salary in the sum of $303,131 plus accrued bonus of $58,482, accrued vacation pay of $39,272 and the value of benefits in the immediately preceding year in the amount of $7,349. The bonus was paid out in the first quarter of 2016.
	(4)	Severance amount is comprised of 14 months’ salary in the sum of $300,952 plus accrued bonus of $78,120 and accrued vacation pay of $26,203. The bonus was paid out in the first quarter of 2016.
	(5)	Severance amount is comprised of 18 months’ salary in the sum of $386,939 plus accrued bonus of $78,120 and accrued vacation pay of $26,203. The bonus was paid out in the first quarter of 2016.
	(6)	Severance amount is comprised of 14 months’ salary in the sum of $268,129 plus accrued bonus of $62,814 and accrued vacation pay of $6,475. The bonus was paid out in the first quarter of 2016.
	(7)	Severance amount is comprised of 18 months’ salary in the sum of $344,738 plus accrued bonus of $62,814 and accrued vacation pay of $6,475. The bonus was paid out in the first quarter of 2016.
	(8)	Severance amount is comprised of 13 months’ salary in the sum of $214,635 plus accrued bonus of $60,000, accrued vacation pay of $31,364 and the value of benefits in the immediately preceding year in the amount of $7,866. The bonus was paid out in the first quarter of 2016.
	(9)	Represents the value of unvested in-the-money options that would vest upon termination of employment as at December 31, 2015. Closing share price on TSX on December 31, 2015 was CDN$3.48.

3.1.7	Incentive Plan Awards

a)

Outstanding Share-Based Awards and Option Based Awards

The following table indicates for each of the NEOs all awards outstanding at the end of the 2015 financial year.

19

Note:

(1)	Closing share price on TSX on December 31, 2015 was CDN$3.48.

b)

Value Vested or Earned on Incentive Plan Awards during the Most Recently Completed Fiscal Year

The following table indicates for each of the NEOs the value on vesting of all awards during the 2015 financial year.

Notes:

(1)	The value reflected in the above chart relates to the in-the-money value of options at the date of the vesting.
(2)	The value vested during the year has been converted into US$ using the Bank of Canada closing rate on the date of granting of the options.

3.2	COMPENSATION OF DIRECTORS

As at December 31, 2015, the Board consisted of six non-executive Directors (Messrs. Glickman, Rovinski, Ayers, Jayne, Ayers and Lee) and Stephen Zaruby, President and CEO. Mr. von Emster served as a Board member for the period January 1, 2015 to March 6, 2015. Messrs. Park and Kim served as Board members for the period January 1, 2015 to May 26, 2015.

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Summary Compensation Table:

The following table provides details of the total compensation awarded to the Directors who were not NEOs of the Company during the 2015 financial year.

Notes:

(1)	Stephen Zaruby did not receive separate compensation for acting as a Director.
(2)	Calculated as of the grant date using the Black-Scholes option pricing model. The value shown is calculated by multiplying the number of stock options granted by the Canadian dollar exercise price at the time of grant by the Black-Scholes valuation factor and converting the value into US$ using the Bank of Canada closing rate on the date of granting of the options. The value is the same as the accounting fair value of the full grant, but is not adjusted by the vesting schedule.
(3)	Exercise price = CDN$4.25; Black-Scholes valuation factor = CDN$2.606588 – converted into US$ at a rate of US$1.00 = CDN$1.1827.
(4)	Exercise price = CDN$4.31; Black-Scholes valuation factor = CDN$2.338124 – converted into US$ at a rate of US$1.00 = CDN$1.2408.
(5)	Messrs. Park and Kim served on the Board for the period January 1, 2015 to May 26, 2015.
(6)	Kurt von Emster served on the Board for the period January 1, 2015 to March 6, 2015.

In the third quarter of 2014, the Compensation Committee engaged Arnosti, an external independent compensation consultant to assess the market competitiveness of director compensation at the Company against a comparator group of publicly listed companies.

See Section 3.1.1 above for a list of the 2014 Peer Group. As a result, effective November 4, 2014 the Board eliminated meeting fees. This change was based on a recommendation of the Compensation Committee after consultation with Arnosti.

In 2015 non-management Directors, other than the Chair of the Board, received an annual retainer fee of $40,000 for acting as Board members. The Chair of the Board was entitled to an annual retainer of $100,000. The Chair of the Compensation Committee and Governance & Nomination Committee were each entitled to an additional $10,000 annual retainer and the Chair of the Audit Committee was entitled to an additional $15,000 annual retainer. Each member of the Compensation Committee and Governance & Nomination Committee were entitled to an additional $5,000 annual retainer and each member of the Audit Committee were entitled to an additional $7,500 annual retainer.

Effective November 4, 2014 the Board approved the annual grant of 10,000 stock options to non-management Board members commencing in the first quarter of 2015 and the grant of 20,000 stock options upon the election or appointment of a new Board member.

The Company granted 10,000 stock options to each of the non-management Directors Glickman, Rovinski, Rowland, Park, Kim and von Emster on January 6, 2015 at a price of CDN$4.25. The options are exercisable for five years and vest in equal amounts over 12 months.

On June 2, 2015, the Company granted to each of the new Board members, Jayne, Ayers and Lee, 20,000 stock options at a price of CDN$4.31. The options are exercisable for five years and vest in equal amounts over 12 months.

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Outstanding Share-Based Awards and Option-Based Awards

The following table indicates for Directors who were not NEOs all awards outstanding at the end of the 2015 financial year.

Note:

(1)	Closing share price on the TSX on December 31, 2015 was CDN$3.48.

Value Vested or Earned on Incentive Plan Awards During the Most Recently Completed Fiscal Year:

The following table indicates for each of the Directors who were not NEOs the value on vesting of all awards during the 2015 financial year.

Notes:

(1)	The value reflected in the above chart relates to the in-the-money value of options at the date of the vesting.
(2)	The value vested during the year has been converted into US$ using the Bank of Canada closing rate on the date of granting of the options.
(3)	Messrs. Park and Kim served on the Board for the period January 1, 2015 to May 26, 2015
(4)	Kurt von Emster served on the Board for the period January 1, 2015 to March 6, 2015.

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3.3	EQUITY COMPENSATION PLAN

3.3.1

Stock Option Plan

The Shareholders approved the Stock Option Plan at the June 28, 2012 annual meeting. The following is a summary of the material terms of the Stock Option Plan:

• Administration. The Stock Option Plan is administered by the Board (or a committee thereof) which has the power to (i) grant options, (ii) reserve Common Shares for issuance upon the exercise of options, (iii) determine the terms, limitations, restrictions and conditions respecting option grants, (iv) interpret the Stock Option Plan and adopt, amend and rescind such administrative guidelines and other rules and regulations relating to the Stock Option Plan , and (v) make all other determinations and take all other actions in connection with the implementation and administration of the Stock Option Plan.

• Number of Securities Issuable. The Stock Option Plan is a rolling stock option plan that reserves, for issuance pursuant to stock options, a maximum number of Common Shares equal to 10% of the outstanding Common Shares of the Company at the time the Common Shares are reserved for issuance. As at April 22, 2016 an aggregate of 2,838,037 Common Shares (or 8.8% of the total number of issued and outstanding Common Shares) are issuable under the Stock Option Plan pursuant to outstanding options.

• Eligible Persons. “Service Providers” are eligible to receive grants of options under the Stock Option Plan. “Service Providers” is defined as bona fide directors, officers, employees, management company employees and consultants and also includes a company of which 100% of the share capital is beneficially owned by one or more individual Service Providers.

• Shareholder Approval. The Stock Option Plan must be approved by the Shareholders every three years. The Shareholders re-approved the Stock Option Plan on May 7, 2014.

• Grants to One Person. The number of Common Shares reserved for issue to any one person under the Stock Option Plan may not exceed 5% of the outstanding Common Shares at the time of grant.

• Insiders. Without the prior approval of the Shareholders, the number of Common Shares being issuable to insiders under the Stock Option Plan at any time, when combined with all of the Company’s other share compensation arrangements, shall not exceed 10% of the issued and outstanding Common Shares, and the number of Common Shares issued to insiders under the Stock Option Plan, when combined with all of the Company’s other share compensation arrangements, shall not exceed 10% of the issued and outstanding Common Shares in any 12 month period.

• Exercise Price. The exercise price of options under the Stock Option Plan will be set by the Board at the time of grant and cannot be less than the Market Price (defined in the Stock Option Plan as the closing trading price for the Common Shares on the TSX on the day immediately prior to the date of grant).

• Vesting. Vesting of options is at the discretion of the Board. Options become exercisable only after they vest in accordance with the respective commitment and exercise form.

• Term of Options. Options granted under the Stock Option Plan will have a maximum term of ten years from their date of grant.

• No Assignment. All options will be exercisable only by the optionee to whom they are granted and are non-assignable and non-transferable.

• Termination of Exercise Right. No option may be exercised after an optionee has left the employ or service of the Company except as follows:

	o	in the event of an optionee’s death, any vested option held by the optionee at the date of death will be exercisable by the optionee’s lawful personal representatives, heirs or executors until the earlier of 12 months after the date of death and the date of expiration of the term otherwise applicable to such option;
	o	in the event of an optionee’s disability, any vested option held by the optionee will be exercisable until the earlier of 12 months after the date the Board makes a determination of disability and the date of expiration of the term otherwise applicable to such option;
	o	generally speaking, vested options will expire 90 days after the date the optionee ceases to be employed by, provide services to, or be a Director or Officer of, the Company, and any unvested options shall immediately terminate.

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• Change in Control. Upon a change in control or takeover bid, vesting can be accelerated in accordance with the provisions set out in the Stock Option Plan.

• Extension of Expiry Period. If an option which has been previously granted is set to expire during a period in which trading in securities of the Company by the option holder is restricted by a black-out, or within nine business days of the expiry of a black-out, the expiry date of the option will be extended to ten business days after the trading restrictions are lifted.

• Amendments Requiring Shareholder Approval. Shareholder approval is required for the following amendments to the Stock Option Plan:

	o	an increase to the aggregate percentage of securities issuable under the Stock Option Plan;
	o	a reduction in the exercise price of an outstanding option;
	o	an extension of the term of any option beyond the expiry date;
	o	any amendment to permit assignments or exercises other than by the optionee other than as set out in the Stock Option Plan;
	o	amendment to the individuals eligible to receive options under the Stock Option Plan;
	o	an amendment to the Stock Option Plan to provide for other types of compensation through equity issuance, other than an amendment in the nature of a substitution and/or adjustment made by the Board in response to a change to, event affecting, exchange of, or corporate change or transaction affecting the Common Shares; and
	o	an amendment which is required to be approved by Shareholders under applicable law (including, without limitation, applicable TSX policies).

• Amendments Without Shareholder Approval. Subject to the policies of the TSX, the Stock Option Plan may be amended without Shareholder approval for the following:

	o	amendments of a “housekeeping” nature;
	o	amendments necessary to comply with the provisions of applicable law;
	o	amendments respecting the administration of the Stock Option Plan;
	o	any amendment to the vesting provisions of the Stock Option Plan or any option;
	o	any amendment to the early termination provisions of the Stock Option Plan or any option, whether or not such option is held by an insider, provided such amendment does not entail an extension beyond the original expiry date;
	o	any amendments necessary to suspend or terminate the Stock Option Plan; and
	o	any other amendment not requiring Shareholder approval under applicable law (including, without limitation, applicable TSX policies).

Pursuant to the Plan Amendment, it is proposed that the maximum number of Common Shares which may be issued under the Stock Option Plan will be 12.5% of the outstanding Common Shares on the date of grant of an option. This represents 4,035,927 Common Shares, an increase of 807,185 Common Shares, as of April 22, 2016. For more information, see “Part 2 Business of the Meeting – 2.4 Amendment to the Stock Option Plan”.

3.3.2

Pension Plan Benefits

The Company does not provide retirement benefits for Directors or Officers.

3.4	SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table indicates the number of Common Shares to be issued upon the exercise of outstanding options, the weighted average exercise price of such outstanding options and the number of Common Shares remaining for future issuance under the Stock Option Plan as at December 31, 2015.

24

Note:

(1)	Under the Stock Option Plan, any increase in the number of outstanding Common Shares will result in an increase in the number of Common Shares that are available to be issued under the plan in the future, and any exercise of an option previously granted under the Stock Option Plan will result in an additional option being available for grant under the Stock Option Plan.

3.5	INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

No Directors, Officers and employees or former Directors, Officers and employees of the Company were indebted to the Company as at December 31, 2015.

PART 4
REPORT ON CORPORATE GOVERNANCE AND OTHER ITEMS

“Corporate governance” is the process and structure used to direct and manage the business and affairs of the Company to achieve the Shareholders’ objectives. The CSA has adopted National Policy 58-201 – “Corporate Governance Guidelines” (“NP 58-201”) to provide guidance to Canadian reporting issuers regarding corporate governance. NP 58-201 relates to a number of significant governance issues, including the proper role of the Board, its structure and composition and its relationship with Shareholders and management. The CSA has also adopted National Instrument 58-101 – “Disclosure of Corporate Governance Practices” requiring that disclosure be made by a listed corporation of its corporate governance practices. A complete description of the Company’s corporate governance practices, with specific references to NP 58-201, is attached hereto as Appendix “A”. The Board has reviewed the disclosure set out in Appendix “A”.

The Board continues to periodically review corporate governance proposals made by the CSA. As new standards become effective, the Board will review and amend, where necessary and appropriate, its’ corporate governance practices and eligibility of the members of the Board on each committee and shall, if necessary, make appropriate changes.

4.1	COMMITTEES OF THE BOARD

The Board has three standing committees: the Audit Committee, Governance & Nomination Committee and the Compensation Committee. The following are descriptions of the three standing committees of the Board:

Audit Committee

Members: Gregory M. Ayers (Chair), Richard Glickman and Benjamin Rovinski

The Audit Committee is presently composed of three independent Directors, all of whom are “financially literate” as that term is defined in National Instrument 52-110 – Audit Committees (“NI 52-110”). Please refer to the description of the Audit Committee set out in the Company’s annual information form for the year ended December 31, 2015 (the “AIF”), including the information required to be disclosed under NI 52-110, available on the SEDAR website at www.sedar.com.

Compensation Committee

Members: Benjamin Rovinski (Chair), Gregory M. Ayers and Hyuek Joon Lee.

The Compensation Committee is presently composed of three independent Directors.

The Compensation Committee is responsible for ensuring that effective human resources and compensation policies and procedures are in place for the Company, including oversight of Director, officer and employee remuneration and compensation, employment contracts, together with oversight of the evaluation of management of the Company;

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Governance & Nomination Committee

Members: Richard Glickman (Chair), David Jayne and Hyuek Joon Lee.

The Company’s corporate governance committee (the “Governance & Nomination Committee”) is presently composed of three independent Directors.

The Governance & Nomination Committee assists the Board in fulfilling its responsibilities in relation to the monitoring and oversight of the quality and effectiveness of the Company’s governance practices and policies, considering nominees for the Board and considering any conflicts of interest.

Communications, Insider Trading, Confidential Information and Disclosure Policies

The Board is committed to an effective communications policy with all stakeholders including Shareholders, suppliers, advertisers, employees, agents and members of the investment community. The Company is committed to complying with all laws, regulations and policies which are applicable to it, as well as to best practices in the field. This commitment is evidenced, notably, by the adoption by the Company of a corporate disclosure policy, fraud policy and insider trading policy.

The Audit Committee reviews in advance all press releases which disclose financial results. Other continuous disclosure documents, including, without limitation, proxy-related materials and the AIF are reviewed by the executive team and, where appropriate, the Board. Where required, these documents are also approved by the Board.

4.2	INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

Since January 1, 2015, the Company has had no material transaction with an “informed person” (as that term is defined under applicable securities laws).

4.3	SHAREHOLDER PROPOSALS

Shareholders who comply with the applicable provisions of the ABCA are, subject to certain conditions in the ABCA, entitled to have the Company include in its information circular any matter that the person proposes to raise at an annual meeting. Any Shareholder who intends to make such a proposal to be considered by the Company for the next annual general meeting must have arranged for the Company to receive the proposal no later than March 9, 2017.

4.4	ADDITIONAL INFORMATION

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

4.5	APPROVAL BY DIRECTORS

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

DATED this 27th day of April, 2016.

ON BEHALF OF THE BOARD OF DIRECTORS OF AURINIA PHARMACEUTICALS INC.

(signed) “Charles A. Rowland, Jr.”	(signed) “Richard Glickman”
Charles A. Rowland, Jr., Director and President	Richard Glickman, Chair of the Board

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APPENDIX A
STATEMENT OF CORPORATE GOVERNANCE PRACTICES

The Company is committed to the highest standards of corporate governance. The Board and each of its committees have continued to refine the Company’s governance policies and procedures in light of recent regulatory initiatives that have been adopted to improve corporate governance.

Effective June 30, 2005 National Instrument 58-101 Disclosure of Corporate Governance Practices (“NI 58-101”) and National Policy 58-201 Corporate Governance Guidelines (“NP 58-201”) were adopted in Canada. NI 58-101 requires issuers to disclose the corporate governance practices that they have adopted. NP 58-201 provides guidance on corporate governance practices. In addition, the Company is subject to National Instrument 52-110 – Audit Committees, which has been adopted in various Canadian provinces and territories and which prescribes certain requirements in relation to audit committees.

The Board will continue to review the Company’s corporate governance practices on an ongoing basis in response to the evolving regulatory standards.

A-1

A-2

A-3

A-4

A-5

A-6

APPENDIX B

MANDATE OF THE BOARD OF DIRECTORS

Introduction

The primary responsibility of the board of directors (“Board”) of Aurinia Pharmaceuticals Inc. (the “Company”) is to oversee the management of the business and to pursue the best interests of the Company. The Board has plenary power and exercises overall responsibility for the management and supervision of the affairs of the Company.

Board Size and Criteria

Pursuant to the Articles of the Company, the Board must consist of at least one (1) director and not more than twenty (20) directors. The By-laws of the Company require that at least one quarter (1/4) of the Company's directors be resident Canadians, and that at least two (2) of the Company's directors must not be officers or employees of the Company or a subsidiary of the Company. A majority of the directors of the Board shall be independent within the meaning of National Instrument 52-110 Audit Committees.

Board Meetings

In order for the Board to transact business, a majority of the directors must be present. The Board shall meet on a regular basis and shall schedule a sufficient number of meetings (whether in person or by teleconference) to carry out its mandate, which shall occur at least once each quarter.

Reports from Committees/Subsidiaries

Unless waived by the Board, 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. Each board of a material subsidiary that does not have the same directors as the Board shall provide a report to the Board on material matters considered by the subsidiary board at the first Board meeting after the subsidiary's meeting.

Chairman

The Board shall appoint a Chairman of the Board who shall have responsibility to ensure that the Board discharges its duties and responsibilities.

Outside Advisors

The Board shall have the authority to retain, at the Company's expense, independent advisors and consultants to advise the Board as it determines necessary to carry out its duties and to fix the remuneration of such advisors and consultants. The Board may request any officer or employee of the Company, or the Company's internal or external auditors or legal counsel to attend a meeting of the Board or to meet with any directors of, or consultants to, the Board.

Governance

The Board has responsibility for developing the Company's approach to governance issues although the Governance & Nomination Committee plays a key role by recommending and reporting on governance issues, including ethical conduct, to the Board. The Board may delegate specific governance issues to other committees of the Board. The Board is responsible for establishing the appropriate procedures to ensure that the Board, Board committees and individual directors can function independently of management.

General Duties

It is the duty of the directors of the Company to manage, or supervise the management of, the business and affairs of the Company. In exercising his or her duties, every director shall act honestly and in good faith with a view to the best interests of the Company and exercise the care, diligence and skill that a reasonably prudent person would exercise in similar circumstances. Each director shall also comply with the provisions of the Business Corporations Act (Alberta), and the By-laws of the Company.

Directors' Duties and Responsibilities

The Board has responsibility for stewardship of the Company, including:

B-1

• to the extent feasible, satisfying itself as to the integrity of the Chief Executive Officer (the “CEO”) and other executive officers (as defined in National Instrument 51-102 Continuous Disclosure Obligations) and that the CEO and other executive officers create a culture of integrity throughout the organization;
• adopting a strategic planning process and approving, on at least an annual basis, a strategic plan which takes into account, among other things, the opportunities and risks of the business;
• the identification of the principal risks of the Company's business, and ensuring the implementation of appropriate systems to manage these risks;
• overseeing succession planning (including appointing, training and monitoring senior management);
• adopting a communication and disclosure policy for the Company;
• overseeing the Company's internal control and management information systems;
• developing the Company's approach to corporate governance, including developing a set of corporate governance principles and guidelines that are specifically applicable to the Company; and
• reviewing and disclosing, no less than annually, measures for receiving feedback from stakeholders.

In addition to the above, the Board shall:

• with the assistance of the Compensation Committee, review and ratify the employment, appointment, grade levels and compensation of the top five executive employees of the Company, or any additional employees directly reporting to the CEO, and approve all senior officer appointments;
• with the assistance of the Compensation Committee, develop a position description for the Chief Executive Officer, which together with other board approved policies and practices, should provide for a definition of the limits to management's responsibilities, and approve the objectives of the Company to be met by the Chief Executive Officer;
• with the assistance of the Compensation Committee, ensure the performance of the Chief Executive Officer is evaluated at least annually;
• with the assistance of the Compensation Committee, develop a process to evaluate the effectiveness of each director and the Board as a whole on no less than an annual basis;
• review and approve the strategic plan, the annual business plan and accompanying capital plan and financial operations budget, including all material capital expenditures;
• approve material divestitures, acquisition and financial commitments;
• with the assistance of the Audit Committee, approve the annual audited financial statements, Management's Discussion and Analysis (“MD&A”), Annual Information Form, management information circular and other annual public documents of the Company;
• either approve the quarterly reports to the shareholders, including the unaudited interim quarterly statements and the quarterly MD&A, or delegate the responsibility to the Audit Committee;
• determine the content and frequency of management reports;
• review any recommendations from regulators or the external auditors respecting their assessment of the effectiveness of the internal controls that come to their attention in the conduct of their work; and

Further the Board will also consider periodically or annually as the case may be:

In Respect of Operations of the Board

In Respect of Governance

B-2

In Respect of Board Composition and Director Nominations

In Respect of Reporting and Disclosure Requirements

B-3

APPENDIX C

BLACKLINE OF STOCK OPTION PLAN

AURINIA PHARMACEUTICALS INC.

(the “Company”)

STOCK OPTION PLAN

AS RE-APPROVED BY THE SHAREHOLDERS OF THE COMPANY ON
MAY 7, 2014

ARTICLE 1
PURPOSE AND INTERPRETATION

Purpose

1.1 The purpose of the Plan is to advance the interests of the Company by encouraging equity participation in the Company through the acquisition of Common Shares of the Company. It is the intention of the Company that this Plan will at all times be in compliance with the rules and policies of the Toronto Stock Exchange and any inconsistencies between this Plan and the TSX Policies whether due to inadvertence or changes in TSX Policies will be resolved in favour of the latter.

Definitions

1.2 In this Plan:

“Affiliate” has the meaning assigned by the TSX Policies;

“Black-out Period” means the period during which the relevant Optionee is prohibited from exercising an Option due to trading restrictions imposed by the Company in accordance with its securities trading policies governing trades in the Company’s securities; “Board” means the board of directors of the Company or any committee thereof duly empowered or authorized to grant Options under this Plan; “Business Day” means a day that the TSX is open for trading; “Change in Control” includes situations where after giving effect to the contemplated transaction and as a result of such transaction:

where such Person or combination of Persons did not previously hold a sufficient number of voting securities to affect materially control of the Company or the resulting company. In the absence of evidence to the contrary, any Person or combination of Persons acting in concert by virtue of an agreement, arrangement, commitment or understanding, holding more than 20% of the voting securities of the Company or the resulting company is deemed to materially affect the control of the Company or the resulting company; “Common Shares” means common shares in the capital of the Company providing such class is listed on the TSX; “Company” means Aurinia Pharmaceuticals Inc. or any successor thereto, and includes an Affiliate; “Consultant” means an individual or a consultant Company, other than an Employee, Officer or Director who:

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“Consultant Company” means for an individual Consultant, a company or partnership of which the individual is an employee, shareholder or partner; “Continuously Employed” shall mean the absence of any interruption or termination of service. Continuous Employment with the Company shall not be considered interrupted in the case of the sick leave, military leave or any other leave of absence approved by the Company or in the case of transfers between location of the Company; provided that the individual continues to be an Employee of the Company; “Directors” means the directors of the Company as may be elected or appointed from time to time; “Disability” shall mean any physical, mental or other health condition which substantially impairs the Optionee’s ability to perform his or her assigned duties for 120 days or more in any 240 day period or that can be expected to result in death. The Board shall determine whether an Optionee has incurred a Disability on the basis of medical evidence acceptable to the Board. Upon making a determination of Disability, the Board shall, for the purposes of the Plan, determine the date of the Optionee’s termination of employment; “Distribution” has the meaning assigned by the Securities Act, and generally refers to a distribution of securities by the Company from treasury;

“Employee” means:

and may include an Officer;

“Exercise Price” means the amount payable per Common Share on the exercise of an Option, as determined in accordance with the terms hereof; “Expiry Date” means the day on which an Option lapses as specified in the Option Commitment therefor or in accordance with the terms of this Plan; “Grant Date” for an Option means the date of grant thereof by the Board; “Insider” means an insider as defined in the TSX Policies; “Investor Relations Activities” means generally any activities or communications that can reasonably be seen to be intended to or be primarily intended to promote the merits or awareness of or the purchase or sale of securities of the Company; “Management Company Employee” means an individual employed by another individual or a corporation providing management services to the Company which are required for the ongoing successful operation of the business enterprise of the Company, but excluding a corporation or individual engaged primarily in Investor Relations Activities;

“Market Price” means:

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“Officer” means a duly appointed senior officer of the Company;

“Option” means the right to purchase Common Shares granted hereunder to a Service Provider;

“Option Commitment” means the notice of grant of an Option delivered by the Company hereunder to a service Provider and substantially in the form of Schedule “A” hereto;

“Optioned Shares” means Common Shares that may be issued in the future to a Service Provider upon the exercise of an Option;

“Optionee” means the recipient of an Option hereunder;

“Outstanding Shares” means at the relevant time, the number of outstanding Common Shares of the Company from time to time;

“Participant” means a Service Provider that becomes an Optionee;

“Person” means a company or an individual;

“Plan” means this Stock Option Plan, the terms of which are set out herein or as may be amended;

“Plan Shares” means the total number of Common Shares which may be reserved for issuance as Optioned Shares under the Plan as provided in §2.2;

“Regulatory Approval” means the approval of the TSX and any other securities regulatory authority that may have lawful jurisdiction over the Plan and any Options issued hereunder;

“Securities Act” means the Securities Act, R.S.A. 2000, c. S-4, as amended from time to time;

“Service Provider” means an individual who is a bona fide Director, Officer, Employee, Management Company Employee or Consultant, and also includes a company of which 100% of the share capital is beneficially owned by one or more individual Service Providers;

“Share Compensation Arrangement” means any Option under this Plan but also includes any other stock option, stock option plan, employee stock purchase plan or any other compensation or incentive mechanism involving the issuance or potential issuance of Common Shares to a Service Provider;

“Shareholder Approval” means approval by a majority of the votes cast by eligible shareholders at a duly constituted shareholders’ meeting;

“Take Over Bid” means a take over bid as defined in the Securities Act;

“TSX” means The Toronto Stock Exchange and any successor thereto; and

“TSX Policies” means the rules, regulations and policies of the TSX as amended from time to time.

ARTICLE 2
STOCK OPTION PLAN

Establishment of Stock Option Plan

2.1 There is hereby established a stock option plan to recognize contributions made by Service Providers and to create an incentive for their continuing assistance to the Company.

Maximum Plan Shares

2.2 The maximum aggregate number of Plan Shares that may be reserved for issuance under the Plan at any point in time is 1012.5% of the Outstanding Shares at the time the Plan Shares are reserved for issuance, unless this Plan is amended pursuant to the requirements of the TSX Policies.

2.3 Unless otherwise determined in the discretion of the Board, the number of Plan Shares that may be reserved for issuance under the Plan to any one Optionee will not exceed 5% of the Outstanding Shares on a non-diluted basis, less any Common Shares reserved for issuance to such Optionee under Share Compensation Arrangements other than this Plan.

Eligibility

2.4 Options to purchase Common Shares may be granted hereunder to Service Providers from time to time by the Board. Service Providers that are corporate entities will be required to undertake in writing not to effect or permit any transfer of ownership or option of any of its shares, nor issue more of its shares so as to indirectly transfer the benefits of an Option, as long as such Option remains outstanding, unless the written permission of the TSX and the Company is obtained.

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Options Granted Under the Plan

2.5 All Options granted under the Plan will be evidenced by an Option Commitment in the form attached to this Plan as Schedule “A”, showing the number of Optioned Shares, the term of the Option, a reference to vesting terms, if any, and the Exercise Price.

2.6 Subject to specific variations approved in accordance with this Plan, all terms and conditions set out herein will be deemed to be incorporated into and form part of an Option Commitment made hereunder.

Options Not Exercised

2.7 In the event an Option granted under the Plan expires unexercised or is terminated by reason of dismissal of the Optionee for cause or is otherwise lawfully cancelled prior to exercise of the Option, the Optioned Shares that were issuable thereunder will be returned to the Plan and will be eligible for reissue. For greater certainty Options which are exercised thereupon increase the number available to the Plan by the relevant percentage of Outstanding Shares as provided hereunder.

Administration of Plan

2.8 The Board will be responsible for the general administration of the Plan and the proper execution of its provisions, the interpretation of the Plan and the determination of all questions arising hereunder.

2.9 Without limiting the generality of the foregoing, but subject to the provisions of this Plan, the Board has the power to:

Regulatory Approval

2.10 This Plan will be subject to the approval of any regulatory authority whose approval is required. Any Options granted under this Plan prior to such approvals being given will be conditional upon such approvals being given, and no such Options may be exercised unless and until such approvals are given.

Compliance with Legislation

2.11 The Company will not be required to issue any Common Shares under the Plan unless such issuance is in compliance with all applicable laws, regulations, rules, orders of governmental or regulatory authorities and the requirements of any stock exchange upon which Common Shares of the Company are listed. The Company will not in any event be obligated to take any action to comply with any such laws, regulations, rules, orders or requirements.

ARTICLE 3
TERMS AND CONDITIONS OF OPTIONS

Exercise Price

3.1 The Exercise Price of an Option will be set by the Board at the time such Option is granted under this Plan, and cannot be less than the Market Price.

Term of Option

3.2 Subject to the application of §3.10, an Option can be exercisable for a maximum of 10 years from the Grant Date, unless otherwise determined in the discretion of the Board.

Vesting of Options

3.3 No Option shall be exercisable until it is vested. The vesting schedule of each Option will be as determined in the discretion of the Board at the time of the grant of the Option.

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Optionee Ceasing to be Director, Officer, Employee or Service Provider

3.4 No Option may be exercised after the Optionee, if a Director or Officer, has ceased to be a Director or Officer or, if an Employee or other Service Provider has left the employ or service of the Company, except as follows:

but provided that in no event may the term of the Option exceed 10 years, unless determined in the discretion of the Board.

Acceleration of Vesting

3.5 Notwithstanding the provisions of §3.4(a) and §3.4 (b), if, in the case of an Optionee who is an Employee, that Optionee’s employment terminates by reason of death or Disability, any Option held by such Employee who has been Continuously Employed by the Company for a minimum of three (3) years shall become fully vested and exercisable and may thereafter be exercised during the term of the Option set forth in §3.4(a) and §3.4 (b).

3.6 Notwithstanding the provisions of §3.4(c), if an Optionee’s employment is terminated by the Company without cause then, provided that the Optionee has been Continuously Employed by the Company for a minimum of three (3) years, then all Options shall become fully vested and exercisable and may thereafter be exercised during the term of the Option set forth in §3.4(c).

3.7 Change in Control. In the event of a Change in Control or Take Over Bid, any and all Options that are outstanding at the time of the occurrence of such event shall become immediately vested and fully exercisable for the periods indicated (each such exercise period referred to as an “Acceleration Window”):

The exercisability of any Option which remains unexercised following the expiration of an Acceleration Window shall be governed by the vesting schedule and all other terms of the Option Commitment respecting such Option.

Non Assignable

3.8 Subject to §3.4(a), all Options will be exercisable only by the Optionee to whom they are granted and will not be assignable or transferable.

Adjustment of the Number of Optioned Shares

3.9 If there is a change in the outstanding Common Shares by reason of any share consolidation, or split, reclassification or other capital reorganization, or a stock dividend, arrangement, amalgamation, merger or combination, or any other change to, event affecting, exchange of or corporate change or transaction affecting the Common Shares, the Board will make, as it deems advisable and subject to requisite Regulatory Approval, appropriate substitution and/or adjustment in:

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and if the Company undertakes an arrangement or is amalgamated, merged or combined with another corporation, the Board will make such provision for the protection of the rights of Participants as it deems advisable.

Adjustment of Options Expiring During Black-out Period

3.10 Should the Expiry date for an Option fall within a Black-out Period, or within the period that is nine Business Days immediately following the expiration of a Black-out Period, such Expiry Date will be automatically adjusted without any further act or formality to that day which is the tenth Business Day after the end of the Black-out Period, such tenth Business Day to be considered the Expiry Date for such Option for all purposes under the Plan. Notwithstanding any other provision of this Plan, the tenth Business Day period referred to in this §3.10 may not be extended by the Board.

ARTICLE 4
COMMITMENT AND EXERCISE PROCEDURES

Option Commitment

4.1 Upon grant of an Option hereunder, an authorized officer of the Company will deliver to the Optionee an Option Commitment detailing the terms of such Options and upon such delivery the Optionee will be subject to the Plan and have the right to purchase the Optioned Shares at the Exercise Price set out therein, subject to the terms and conditions hereof.

Manner of Exercise

4.2 An Optionee who wishes to exercise his Option may do so by delivering:

Notwithstanding anything else contained in this Plan, the Company may, from time to time, implement such other procedures and conditions as it determines appropriate with respect to the payment, funding or withholding of amounts required by law to be withheld on the exercise of Options under this Plan.

Delivery of Certificate and Hold Periods

4.3 As soon as practicable after receipt of the notice of exercise described in §4.2 and payment in full for the Optioned Shares being acquired, the Company will direct its transfer agent to issue to the Optionee the appropriate number of Optioned Shares. The transfer agent will either issue a certificate representing the Optioned Shares or a written notice in the case of uncertificated Common Shares. Such issued certificate or written notice, as the case may be, will bear a legend stipulating any resale restrictions required under applicable securities laws.

ARTICLE 5
AMENDMENTS TO PLAN OR OPTIONS

Amendments Generally

5.1 The Board may, at any time and from time to time, amend, suspend, terminate or discontinue the Plan or an Option, or revoke or alter any action taken pursuant to the Plan or an Option, except that no amendment, suspension, termination or discontinuance of the Plan will adversely alter or impair any Option without the written consent of the applicable participant and is subject to those provisions of applicable law (including, without limitation, the TSX Policies), if any, that require the approval of shareholders or any governmental or regulative body.

5.2 With the consent of the affected Participants, the Board may amend or modify any outstanding Option in any manner to the extent that the board would have the authority to initially grant such award as so modified or amended.

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Amendments by Board

5.3 Without limiting the generality of §5.1, the Board may make the following types of amendments to the Plan without seeking Shareholder Approval:

Amendments Requiring Shareholder Approval

5.4 The Board may not, without approval of the holders of a majority of the issued and outstanding equity securities of the Company present and voting in person or by proxy at a meeting of holders of such securities, amend the Plan or an Option to do any of the following:

5.5 Where Shareholder Approval is sought for amendments under §5.4(b) or §5.4(c) above, the votes attached to Common Shares held directly or indirectly by Insiders benefiting from the amendment will be excluded. In the event of any conflict between §5.3 and §5.4 above, the latter will prevail to the extent of any conflict.

Amendment Subject to Approval

5.6 If the amendment of an Option requires Regulatory Approval or Shareholder Approval, such amendment may be made prior to such approvals being given, but no amended Options may be exercised unless and until such approvals are given.

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ARTICLE 6
INSIDER PARTICIPATION LIMIT

Insider participation subject to Disinterested Shareholder Approval

6.1 None of the following actions will become effective without first obtaining Shareholder Approval:

6.2 Where Shareholder Approval is sought for an action under §6.1, the votes attached to Common Shares held directly or indirectly by Insiders benefiting from the action will be excluded.

ARTICLE 7
GENERAL

Employment and Services

No Representation or Warranty

Interpretation

Effective Date of Plan

Adoption of Plan

 

 

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SCHEDULE “A”

STOCK OPTION PLAN

OPTION COMMITMENT

Notice is hereby given that, effective this ______ day of , 20___ (the “Effective Date”) A U R I N I A P H A R M A C E U T I C A L S I N C . (the “Company”) has granted to (the “Service Provider”), an Option to acquire Common Shares (“Optioned Shares”) up to 5:00 p.m. Edmonton Time on the ______ day of , 20___ (the “Expiry Date”) at an Exercise Price of CDN$ per share.

Vesting: Optioned Shares may be acquired as follows:

Term: The term of this Option is from the date of grant, unless otherwise determined by the board of directors of the Company.

The grant of the Option evidenced hereby is made subject to the terms and conditions of the Company’s Stock Option Plan, the terms and conditions of which are hereby incorporated herein.

To exercise your Option, deliver to the Company a written notice specifying the number of Optioned Shares you wish to acquire, together with cash, certified cheque or bank draft payable to the Company for the aggregate Exercise Price and the aggregate of any amounts required by law to be withheld by the Company on the exercise of such Option, or separate cash payments, or certified cheques or bank drafts for such exercise Price and such amount to be withheld. Notwithstanding the foregoing, the Service Provider may be obligated to comply with such other procedures and conditions implemented by the Company with respect to the payment, funding or withholding of such amounts to be withheld.

A certificate or a written notice, in the case of uncertificated shares, for the Optioned Shares so acquired will be issued by the transfer agent of the Company as soon as practicable after receipt by the Company thereof.

AURINIA PHARMACEUTICALS INC.

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Aurinia Pharmaceuticals Inc.
1203 – 4464 Markham Street
Victoria, BC V8Z 7X8
www.auriniapharma.com