The following is the text of the Advisory Voteadvisory vote on Executiveexecutive Compensation Resolutionresolution to be considered at the Meeting (the “Advisory Executive Compensation Resolution”):

RESOLVED, that the compensation paid to the Company’sCorporation’s named executive officers, as disclosed in this Circular pursuant to Item 402 of Regulation S-K, including the “Compensation Discussion and Analysis”, the compensation tables and narrative discussion be, and hereby is, APPROVED.

Unless a proxy is marked to give a different direction,The Board unanimously recommends that Shareholders vote FOR the Advisory Executive Compensation Resolution. The persons named in the enclosed form of proxy will vote FOR the approval of the compensation of our named executive officers as disclosed in this Circular.

Advisory Vote on the Frequency of Holding an Advisory Vote on Executive Compensation

The Dodd-Frank Act also enables shareholders to vote, on an advisory or non-binding basis, on how frequently they would like to cast an advisory vote on the compensation of our named executive officers. By voting on this proposal, Shareholders may indicate whether they would prefer an advisory vote on named executive officer compensation every one, two or three years. Shareholders may also, if they wish, abstain from casting Resolution, unless a vote on this proposal.

After careful consideration, the Board is recommending a vote in favor of holding an advisory vote on executive compensation every year. In reaching this recommendation, the BoardShareholder has considered the relevant legislative and regulatory requirements, the Company’s compensation programs and governance policies and evolving industry practices.

Shareholders may cast their vote on their preferred voting frequency by choosing the option of one year, two years or three years or may abstain from voting. In considering this vote, Shareholders may wish to review the information presented in connection with the advisory vote above and the “Compensation Discussion and Analysis”.

The Board will carefully consider the outcome of the vote when making future decisions regarding the frequency of advisory votes on executive compensation. However, this vote is advisory and not binding.

The Boardunanimously recommends a vote for the approval of an advisory vote on the compensation of our named executive officers to be undertaken every year.

Unless a proxy is marked to give a different direction, the persons namedspecified in the proxy will vote FOR an advisory vote every year on the compensation of our named executive officers.that his or her Common Shares are to be withheld from voting in respect thereof.

SPECIAL MATTERS

Approval of Unallocated Stock Option Plan ResolutionOptions

Pursuant to the rules of the Toronto Stock Exchange (“TSX”), the unallocated options, rights or other entitlements under a TSX listed issuer’s security based compensation arrangement that does not have a fixed maximum number of securities issuable (which includes the Corporation’s amended and restated stock option plan (the “Stock Option Plan”)), must be approved by a majority of the issuer’s directors and by the issuer’s security holders every three years. Since the Stock Option Plan does not have a fixed number of Common Shares issuable thereunder, but permits the issuance of up to an aggregate of 25% of the issued and outstanding Common Shares from time to time (currently representing 6,289,4653,024,954 options as of May 18, 2013)9, 2016), the Corporation is seeking shareholder approval at the Meeting of the unallocated options issuable under the Stock Option Plan. A description of the Stock Option Plan and all ofis included under the unallocated options issuable thereunder.heading “Other Information Regarding Management – Stock Option Plan”.

The Stock Option Plan and the unallocated options thereunder were last ratified by Shareholders on June 24, 201018, 2013 at the Annual and Special Meeting of Shareholders. As the three-year term prescribed by the TSX expires on June 24, 2013,18, 2016, an ordinary resolution will be placed before shareholders at the Meeting to reconfirmapprove the unallocated options under the Stock Option Plan and approve(the “Unallocated Option Resolution”). In addition to the unallocated options thereunder.Unallocated Option Resolution, the Corporation is also proposing certain amendments to the Stock Option Plan, as described below under the heading “— Amendments to Stock Option Plan”. There have been no other amendments to the Stock Option Plan as last ratified by Shareholders on June 24, 2010.18, 2013.

As of the date hereof, there are options outstanding to purchase 5,533,8072,417,255 Common Shares (representing approximately 22%20% of the aggregate number of issued and outstanding Common Shares), resulting in the Stock Option Plan currently having 755,658607,699 unallocated options (representing(currently representing approximately 3%5% of the aggregate number of issued and outstanding Common Shares)Shares as of May 9, 2016). If approval is obtained at the Meeting, the Corporation will not be required to seek further approval of the grant of unallocated options under the Stock Option Plan until the Corporation’s 20162019 annual shareholders’ meeting (provided that such meeting is held on or prior to June18, 2016)June 8, 2019).

If approval is not obtained at the Meeting, options which have not been allocated as of June 18, 2013that date and options which are outstanding as of June 18, 2013that date and are subsequently cancelled, terminated or exercised will not be available for a new grant of options.options until shareholder approval is obtained. Previously allocated options will continue to be unaffected by the approval or disapproval of the resolution. The granting of options has been a successful strategy used by the Corporation to attract and retain qualified employees and the loss of this incentive element from the overall employee compensation arrangements would be significant.

The unallocated options under the Stock Option Plan and unallocated options thereunder must be approved by asimple majority of the votes cast by the Shareholders voting in person or by proxy at the Meeting, other than the votes attaching to Common Shares beneficially held by insiders of the Corporation to whom options may be granted under the Stock Option Plan and associates and affiliates of such insiders. To the knowledge of the directors and senior officers of Adherex,Fennec, after reasonable enquiry, as of the date hereof such insiders and their respective associates and affiliates, as a group, beneficially owned, directly or indirectly, or exercised control or direction over 237,7831,416,536 Common Shares (which represents 11.71% of the issued and outstanding Common Shares as of the date hereof), and options and warrants to purchase an aggregate of 3,880,6641,375,796 Common Shares that are exercisable within the next sixty days.Unless otherwise directed, it is the intention of the management designees to vote proxies in the accompanying form in favor of this Stockthe Unallocated Option Plan Resolution.

The following is the text of the StockUnallocated Option Plan Resolution to be considered at the Meeting:

“BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT:

Amendments to Stock Option Plan

Currently, options granted under the Stock Option Plan must be exercised within a period of seven (7) years from the date of grant, failing which the participant’s right to purchase such Common Shares lapses. In connection with the matters described under the heading below “— Amendments to Executive Options”, the Corporation is proposing to amend the Stock Option Plan to permit an option granted under the Stock Option Plan to be exercised within eight years as well as deleting the ten-year term of the Stock Option Plan (together, the “Stock Option Plan Amendment”). An ordinary resolution will be placed before shareholders at the Meeting to approve the Stock Option Plan Amendment (the “Stock Option Plan Amendment Resolution”). A copy of the Stock Option Plan with the proposed amendments (the “Amended Plan”) is set out as Schedule “B” to this Circular, and the summary included herein is qualified in its entirety by reference to the text of the Amended Plan.

The Stock Option Plan Amendment Resolution must be approved by a simple majority of the votes cast by the Shareholders voting in person or by proxy at the Meeting, other than the votes attaching to Common Shares beneficially held by insiders of the Corporation to whom options may be granted under the Stock Option Plan, including the Corporation’s officers and directors, and associates and affiliates of such insiders.Unless otherwise directed, it is the intention of the management designees to vote proxies in the accompanying form in favor of the Stock Option Plan Resolution.

The following is the text of the Stock Option Plan Amendment Resolution to be considered at the Meeting:

“BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT:

a.          The Corporation’s Amended and Restated Stock Option Plan in the form set forth as Schedule “B” to the Corporation’s Management Information Circular dated May 9, 2016 is approved.

b.          Any director or officer is hereby authorized for and on behalf of the Corporation to take all actions and to execute all documents as may be desirable to give effect to this resolution.”

Amendments to Executive Options

If the matter set forth above under the heading “—Amendments to Stock Option Plan” are approved, the Corporation wishes to extend certain options held by certain of its insiders. The rules of the TSX require that any extension of the term options benefitting an insider and any extension of options where the exercise price of such options is below the current market price be approved by shareholders pursuant to Sections 613(i)ii) TSX Company Manual.

Mr. Andrade previously served as the Corporation’s Chief Financial Officer until August 2013. Pursuant to the new employment agreement between the Corporation and Robert Andrade dated November 13, 2016, the Corporation agreed to, subject to shareholder and applicable regulatory approvals, extend Mr. Andrade’s existing options to their original expiry date of seven years from the date of grant (instead of three years from his separation from the Corporation), provided that the expiry date of the options granted on August 18, 2010 would instead expire on August 18, 2018 if the Stock Option Plan Amendment is approved by the Corporation’s shareholders. The extension of Mr. Andrade’s options to their original expiry date is to avoid further dilution caused by new grants in connection with Mr. Andrade joining as the Corporation’s Chief Financial Officer.

* Or 8/18/2018, if the Stock Option Plan Amendment is approved.

Mr. Raykov, the Corporation’s Chief Executive Officer, also holds options that are scheduled to expire on August 18, 2017 and it is proposed that the expiry date of such options be extended in a manner consistent with Mr. Andrade’s options referred to above if the Stock Option Plan Amendment is approved. Similarly, the extension of Mr. Raykov’s options is intended to avoid further dilution caused by new grants following the expiry of such options in accordance with their terms. Accordingly, the Corporation’s shareholders are being asked to approve extension of the options in the manner set forth below:

* Subject to the Stock Option Plan Amendment being approved.

Messrs. Rallis and Skolsky, directors of the Corporation, also hold options that are scheduled to expire in 2018 and 2019, and it is proposed that the expiry date of such options be extended in a manner consistent with those options referred to above if the Stock Option Plan Amendment is approved. Accordingly, the Corporation’s shareholders are being asked to approve extension of the options in the manner set forth below:

* Subject to the Stock Option Plan Amendment being approved.

It is proposed that a total of 716, 348 options be extended as described above, which represents 5.9% of the Corporation’s issued and outstanding Common Shares as of the date hereof.

The resolution in respect of the foregoing proposed option extensions (the “Option Extension Resolution”) must be approved by a simple majority of the votes cast by the Shareholders voting in person or by proxy at the Meeting, other than the votes attaching to the 40,740 Common Shares beneficially held by Mr. Raykov (which represents 0.34% of the issued and outstanding Common Shares as of the date hereof). Messrs. Andrade, Rallis and Skolsky do not beneficially own any Common Shares.Unless otherwise directed, it is the intention of the management designees to vote proxies in the accompanying form in favor of the Option Extension Resolution.

The following is the text of the Option Extension Resolution to be considered at the Meeting:

“BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT:

* Or 8/18/2018, if the Stock Option Plan Amendment is approved.

*Subject to the Stock Option Plan Amendment being approved.

Approval of the Sale of Certain Assets

At the Meeting, the Corporation’s shareholders will be asked to consider and, if deemed advisable, to approve an ordinary resolution to approve a transaction involving the sale by the Corporation of certain assets relating to Eniluracil and Adh-1 technologies and development programs (the “Assets”) to Elion Oncology, LLC (the “Asset Sale”) pursuant to a purchase agreement dated May 9, 2016 (the “Purchase Agreement”). The following summary of the Asset Sale and Purchase Agreement included herein is qualified in its entirety to the Purchase Agreement attached to this Circular as Exhibit “C”.

Eniluracil (EU) is an oral irreversible dihydropyrimidine dehydrogenase (DPD) inhibitor, the enzyme responsible for rapidly breaking down 5-FU. Eniluracil was previously under development by GlaxoSmithKline (“GSK”), and we licensed the compound from GSK in July 2005. Adh -1 is an anti-cancer drug that selectively targets N-cadherin present on certain tumor cells and the established blood vessels that supply tumors. The Corporation does not currently have the resources to pursue the Eniluracil and ADH-1 programs. Accordingly, as previously disclosed by the Corporation, the Corporation concluded that it would be in the best interests of the Corporation’s shareholders and the cancer community to focus on seeking a partnership for Eniluracil and Adh -1.

Pursuant to the terms of the Purchase Agreement, the Corporation will receive US$40,000 on closing and continuing revenue share payments of 5% of the gross revenues derived from the Assets until the last to expire patents forming part of the Assets. The value for the Assets has been determined by negotiations between the purchaser and the Corporation. In addition to shareholder approval at the Meeting, the Asset Sale is subject to a number of closing conditions. Some of such conditions, including a satisfactory review of the Assets by Elion, are outside of the Corporation’s control. Accordingly, the Asset Sale may not close even if approved by our shareholders at the Meeting.

The resolution in respect of the Asset Sale (the “Asset Sale Resolution”) must be approved by a simple majority of the votes cast by the Shareholders voting in person or by proxy at the Meeting.Unless otherwise directed, it is the intention of the management designees to vote proxies in the accompanying form in favor of the Asset Sale Resolution.

The following is the text of the Asset Sale Resolution to be considered at the Meeting:

“BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT:

a.          the sale by the Corporation of its assets relating to Eniluracil and Adh-1 technologies and development programs, substantially on the terms set forth in a certain purchase agreement between the Corporation and Elion Oncology, LLC dated May 9, 2016 attached as Schedule “C” to the Corporation’s Management Information Circular dated May 9, 2016 is approved, ratified and confirmed; and

b.          any director or officer is hereby authorized for and on behalf of the Corporation to take all actions and to execute all documents as may be desirable to give effect to this resolution.”

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This discussion relates to the executive officersNamed Executive Officers listed in the Summary Compensation Table below, who are referred to as Named Executive Officers.below.

Mandate of the Compensation Committee

It is the task of the Compensation Committee to periodically review Adherex’sFennec’s compensation structure with respect to its Named Executive Officers, including its Chief Executive Officer, to ensure that AdherexFennec continues to attract and retain qualified and experienced individuals to its management team and to motivate these individuals to perform to the best of their ability and in Adherex’sFennec’s best interests. The Compensation Committee determines the compensation of the Named Executive Officers, evaluates and approves the compensation plans, policies and programs of the Corporation and recommends to the Board from time to time other incentive compensation plans that it determines should be considered.

In reviewing executive compensation, the Compensation Committee relies on the advice of the Chief Executive Officer regarding other executive officers and allows him to participate in the Committee’s deliberations on those executive officers. The Chief Executive Officer, however, is not allowed to participate in the Committee’s deliberations on his compensation. The Compensation Committee may not delegate any of its responsibilities to another entity or to an individual without the approval of the Board.

General Compensation Philosophy

The key components of executive officer compensation are salaries, cash incentive awards and stock options. Adherex’sFennec’s policy with respect to the compensation of Named Executive Officers is to establish annual goals with respect to corporate development and the individual areas of responsibility of each Named Executive Officers and then to review total compensation with respect to the achievement of these goals.

Salary and Non-Equity Incentive Awards

It is Adherex’sFennec’s policy that the base salaries paid to its Named Executive Officers reflect, in addition to the criteria set out above, the individual’s responsibility, experience and achievements. Each year the Compensation Committee sets a series of objectives for each executive and for the executive team as a whole to determine the opportunity for cash incentive awards. These objectives are prioritized and assigned potential values in light of overall company objectives, including with respect to scientific, clinical, regulatory, intellectual property, business and corporate development, and financial objectives. The Compensation Committee reviews both base salaries and cash incentive awards on at least an annual basis to ensure that the relevant criteria are satisfied.

Stock Options

The annual compensation considerations also include the awarding of stock options. The granting of options to the Named Executive Officers under the Stock Option Plan serves three primary purposes: (1) to recognize significant performance during the past year; (2) to provide long-term incentives for future efforts, since the value of the options is directly dependent on the market valuation of the Corporation; and (3) to retain individuals, as the options typically vest over time. When determining whether and how many new option grants will be made, the Compensation Committee takes into account the amount and terms of any outstanding options. The Compensation Committee generally considers the granting of options twice annually to all eligible employees, including executive officers. The Committee, in its discretion, may grant options at other times during a fiscal year to a Named Executive Officer for performance or other reasons. AdherexFennec does not require its Named Executive Officers to own a specific amount of Common Shares.

Analysis of Named Executive Officer Compensation

The Compensation Committee is charged with annually reviewing and approving corporate goals and objectives relevant to each of the Named Executive Officer’s compensation, evaluating each officer’s performance in light of those goals and objectives, and fixing and determining each Named Executive Officer’s level of salary and award of cash incentive payments and options based on this evaluation. In determining the long-term incentive component of each Named Executive Officer’s compensation, the Compensation Committee considers the Corporation’s performance and relative shareholder return, the value of similar incentive awards to other similarly situated executive officers at companies in the comparator group, the awards given to the Named Executive Officer in past years, and such other factors as the Compensation Committee considers relevant. Specifically, the Compensation Committee’s review and evaluation includes measurement of the following areas:

Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Circular with management and, based on that review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Circular.

Submitted by:       THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

Steven Skolsky, Chair

Chris Rallis

Khalid Islam

Compensation Committee Interlocks and Insider Participation

Steven Skolsky, David LiebermanChris Rallis and Chris RallisKhalid Islam are the current members of the Compensation Committee.None of these individuals was at any time during 20122015 or at any other time an officer or employee of ours. No interlocking relationship exists between any member of our Compensation Committee and any member of any other company’s board of directors or compensation committee.

The Board has determined that each member of the Compensation Committee is “independent” under applicable securities laws.

Summary Compensation Table

The following table sets out certain information respecting the compensation paid to our Chief Executive Officer, as well as Chief Financial Officer and any executive officer of the Company whose total compensation for the fiscal years ended December 31, 20122015 and December 31, 20112014 to our Chief Executive Officer and to our Chief Financial Officers, who were the only executives officer whose compensation exceeded $150,000.$100,000 for the fiscal year ended December 31, 2015 (collectively, the “Named Executive Officers”).

Rostislav Raykov

Mr. Raykov has been employed by AdherexFennec since July 2009, when he initially agreed to be compensated at the minimum wage.2009.  Pursuant to an employment agreement dated May 3, 2010 between RostislavMr. Raykov and Adherex,Fennec, Mr. Raykov is employed as Adherex’sFennec’s Chief Executive Officer.  Pursuant to this agreement, Mr. RaykovOfficer and: (a) receivesreceived an initial annual salary in the amount of $140,000, subject to annual adjustment by our Board of Directors, (b) upon approval by shareholders of the amendedour Stock Option Plan was granted options to purchase up to 5.0% of our common stock outstanding estimated by us to be outstanding upon completion of the 2010 Rights Offering, and (c) may receive annual bonuses at the sole discretion of the Board. In addition, conditioned upon the approval of Fennec's shareholder's at the Meeting, Fennec will extend certain of Mr. Raykov’s existing options in the manner described under the heading “Special Matters – Amendments to Executive Options”. If Mr. Raykov’s employment terminates due to a change of control of Adherex,Fennec, any then remaining unvested shares under his options shall immediately vest and be fully exercisable.  On August 18, 2010, Mr. Raykov was granted 971,885 options and on August 19, 2011 Mr. Raykov was granted 51,152 options pursuant to his employment agreement. Further, on November 20, 2012, Mr. Raykov was granted 150,000 options. If Mr. Raykov is dismissed from employment by us for any reason other than “cause,” we are obligated to pay Mr. Raykov severance compensation equal to twelve months of salary. The initial term of the agreement was for one year and the agreement automatically extends for additional one-year periods unless terminated by either party in accordance with the agreement.

Robert Andrade

Mr. Andrade has been employed by AdherexFennec since July 2009, when he initially agreed to be compensated at the minimum wage.November 2015. Mr. Andrade is employed as Fennec’s Chief Financial Officer. Pursuant to an employment agreement dated May 3, 2010 between Robert Andrade and Adherex, Mr. Andrade is employed as Adherex’s Chief Financial Officer.  Pursuant to this agreement,November 13, 2015, Mr. Andrade (a) receives an initial annual salary in the amount of $140,000,$165,000, and (b) upon approval by shareholders of the amended Stock Option Plan was granted options to purchase up to 5.0% of our common stock outstanding estimated by us to be outstanding upon completion of the Rights Offering, and (c) may receive annual bonuses at the sole discretion of the Board.  In addition, conditioned upon the approval of Fennec's shareholder's at the Meeting, Fennec will extend Mr. Andrade's existing options in the manner described under the heading “Special Matters – Amendments to Executive Options”. If Mr. Andrade’s employment terminates due to a change of control of Adherex,Fennec, any then remaining unvested shares under his options shall immediately vest and be fully exercisable. On August 18, 2010, Mr. Andrade was granted 971,885 options and on August 19, 2011 Mr. Andrade was granted 51,152 options pursuant to his employment agreement. Further, on November 20, 2012, Mr. Andrade was granted 150,000 options. If Mr. Andrade is dismissed from employment by us for any reason other than “cause,” we are obligated to pay Mr. Andrade severance compensation equal to twelve months of salary.

Dr. Thomas Spector

Dr. Spector has been employed by Adherex since July 2009, when he was initially paid a salary of $80,000 per year.  Pursuant to an employment agreement dated May 3, 2010 between Dr. Thomas Spector and Adherex, Dr. Spector is employed as Adherex’s Chief Scientific Officer.  Pursuant to this agreement, Dr. Spector (a) receives an annual salary in the amount of $150,000, (b) upon approval by shareholders of the amended Stock Option Plan was granted options to purchase up to 5.0% of our common stock outstanding estimated by us to be outstanding upon completion of the Rights Offering, and (c) may receive annual bonuses at the sole discretion of the Board.  If Dr. Spector’s employment terminates due to a change of control of Adherex, any then remaining unvested shares under his options shall immediately vest and be fully exercisable. On August 18, 2010, Dr. Spector was granted 971,885 options and on August 19, 2011 was granted 51,152 options pursuant to his employment agreement. Further, on November 20, 2012, Dr. Spector was granted 150,000 options. If Dr. Spector is dismissed from employment by us for any reason other than “cause,” we are obligated to pay Dr. Spector’s severance compensation equal to twelvesix months of salary.

In addition to suchtheir employment agreements, Dr. SpectorMr. Raykov and Messrs.Mr. Andrade, and Raykov, is eachare a party to a confidentiality and intellectual property agreement with us.the Corporation. 

In the employment agreements for each of Dr. SpectorMr. Andrade and Messrs. Andrade andMr. Raykov “cause” is generally defined as (1) material breach of the terms of the employment or intellectual property agreements; (2) failure to perform the duties inherent in Employee’s position in good faith and in a reasonable and appropriate manner; or (3) acts of fraud or embezzlement or other intentional misconduct which adversely affects the Company'sCorporation's business.

Equity Grants, Exercises and Holdings

The following table sets forth information concerning the number and value of unexercised options held by each Named Executive Officer as of December 31, 2012.2015. All executive awards vest and are exercisable immediately.

Executive Outstanding Equity Awards at December 31, 2015

Incentive Plan Awards – Value Vested or Earned During the Year

No options held by our Named Executive Officers vested during the year ended December 31, 2015.

Termination Benefits

In the event of his termination with us other than for cause, we will be obligated to pay Mr. Raykov a one-time severance payment of $180,000, which represents twelve months of his base salary.

In the event of his termination with us other than for cause, we will be obligated to pay Mr. Andrade a one-time severance payment of $82,500, which represents six months of his base salary.

Compensation of Directors

Director Compensation Table

The following table summarizes the compensation earned by or paid to the Company'sCorporation's non-executive directors for the year ended December 31, 20122015.

(1) Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718.

(2) Dollar

Equity Grants, Exercises and Holdings

The following table sets forth information concerning the number and value amountsof unexercised options held by each Named Executive Officer as of December 31, 2015. All executive awards vest and are based on individual grantsexercisable immediately.

Director Outstanding Equity Awards at December 31, 2015

Director Incentive Plan Awards – Value Vested During 2015

The following table details the value of 25,000director options on April 5, 2012, 27,778the vesting date that vested during 2015.

(1) The value of the vested option-based awards represents the aggregate dollar value that would have been realized if the options under the option-based award had been exercised on May 18, 2012at an exercisethe vesting date. The dollar value was computed by determining the difference between the closing market price of $0.18, and 14,286 options on November 20, 2012 at an exercise price of $0.35 to both Chris Rallis and Steve Skolsky and a grant of 33,333 options to Chris Rallis on August 20, 2012 at an exercise price of CAD$0.11 vested in fullthe Common Shares on the OTC at the deemed exercise on the vesting date of grant. All options expire 7 years fromand the date of grant.exercise price.

The annual compensation considerations for non-executive directors also include the awarding of stock options. TheWe believe that granting of options to the non-executive directors under the Stock Option Plan serves three primary purposes: (1) to recognize the significant time and effort commitments during the past year; (2) to provide long-term incentives for future efforts since the value of the options is directly dependent on the market valuation of the Corporation; and (3) to retain quality individuals as the options typically vest over time.individuals. When determining whether and how many new option grants will be made, the Compensation Committee takes into account the amount and terms of any outstanding options. AdherexFennec does not require its non-executive directors to own a specific amount of common stock.

Each ofChris A. Rallis and Steven D. Skolskyhas entered into an Independent Director Agreement with the Company,Corporation, dated as of August 25, 2011, which provides for (i) cash compensation in the form of USD$ 1,500 per board2,000 for each meeting of the Board attended and USD$500 for each committee meeting attended (other than committee meeting held before or after a Board meeting held on the same day), and (ii) non-cash compensation in the form of a grant of options to purchase shares of the Company’sCorporation’s common stock having an aggregate value equal to USD $5,000 (with price per share and exercise price based on the value of the Company’sCorporation’s common stock as of the date of grant) per board meeting attended. The options immediately vest when granted and are otherwise subject to the terms and conditions of the Company’s stock option plan, as amended.Stock Option Plan. The Independent Director AgreementAgreements also providesprovide for the reimbursement of such director’s reasonable travel and related expenses incurred in the course of attending board meetings.

Each of Adrian Haigh and Khalid Islam has entered into an Independent Director Agreement with the Corporation, dated as of April 25, 2014, which provides for (i) cash compensation in the form of USD$2,000 for each meeting of the Board attended and USD$500 for each committee meeting attended (other than committee meeting held before or after a Board meeting held on the same day), and (ii) non-cash compensation in the form of a grant of options to purchase 133,000 shares of the Corporation’s common stock. Such options shall vest: (i) as to 66,666 common shares, on the grant date; and (ii) as to 66,666 common shares, upon and subject to the Corporation obtaining PUMA for STS in the EU, provided they then remain on the Board at the time of such approval and that they have played a vital or precipitating part in obtaining such EU orphan drug designation, as reasonably determined by non-interested Board members. If the vesting conditions referred to in (ii) above have not occurred by December 31, 2017, the option to acquire the 66,666 common shares referred to in (ii) above shall be terminated and of no further force or effect. The Independent Director Agreements also provide for the reimbursement of such director’s reasonable travel and related expenses incurred in the course of attending board meetings.

In 2015, fees payable to the non-executive directors was increased to $2,500 per board meeting attended, with all other conditions set forth above remaining the same.

OTHER INFORMATION REGARDING MANAGEMENT

Stock Option Plan

The Amended and Restatedfollowing summary does not reflect the proposed Stock Option Plan approvedAmendment. The Stock Option Plan as last ratified by Shareholders on June 24, 201018, 2013 was adopted to develop the interest and incentive of eligible employees, directors and other service providers of the Corporation in the Corporation's growth and development by giving eligible Participants (as defined below) an opportunity to purchase Common Shares on a favourable basis, thereby advancing the interests of the Corporation, enhancing the value of the Common Shares for the benefit of all Shareholders and increasing the ability of the Corporation to attract and retain skilled and motivated individuals in the service of the Corporation. The maximum number of Common Shares that may be issued under the Stock Option Plan is a rolling maximum equal to 25% of the issued and outstanding Common Shares from time to time (as of May 18, 2013,9, 2016, this maximum percentage equals 6,289,465Common3,024,954 Common Shares). As of May 18, 20139, 2016 options for an aggregate of 5,533,8072,417,255 Common Shares have been granted and remain issued and outstanding under the Stock Option Plan (representing approximately 22%20% of the currently issued and outstanding Common Shares), options for 2,033173,663 Common Shares (post-consolidations) have been exercised under the Stock Option Plan (representing approximately 0.1%1.44% of the currently issued and outstanding Common Shares), since June 18, 2013, and the Stock Option Plan has 755,658607,690 unallocated options (representing approximately 3.1%5% of the currently issued and outstanding Common Shares).

Within the above aggregate limit of 25% of the issued and the issued and outstanding Common Shares from time to time, the Stock Option Plan contains no limits on the number or percentage of such options that may be granted to insiders of the Corporation or to any one person. The Board currently has the right, in its sole discretion, to alter, amend or discontinue the Stock Option Plan from time to time and at any time. However, no such amendment or discontinuation may alter or impair the rights or increase the obligations under the Stock Option Plan of Participants without the consent of the Participants. Further, any amendment to the Stock Option Plan is subject to prior regulatory approval. The Stock Option Plan’s amending procedures explicitly provide that shareholder approval is not required to implement any amendments, save and except for amendments related to (i) the maximum number of Common Shares or any other shares of the Corporation which are reserved for issuance under the Stock Option Plan (and under any other share compensation arrangement of the Corporation); (ii) a reduction in the exercise price for options held by insiders; and (iii) an extension to the term of options held by insiders. Examples of the amendments that may be made by the Board without shareholder approval include, without limitation, amendments related to (a) the vesting provisions of the Stock Option Plan or any option granted under the Stock Option Plan, (b) the early termination provisions of the Stock Option Plan or any option granted under the Stock Option Plan, (c) the addition of any form of financial assistance by the Corporation for the acquisition by all or certain categories of Participants, and the subsequent amendment of any such provision which is more favourable to such Participants, (d) the addition or modification of a cashless exercise feature, payable in cash or Common shares, which provides for a full deduction of the number of underlying Common Shares from the Stock Option Plan reserve, (e) changing the maximum percentage of Common Shares which are reserved for issuance under the Stock Option Plan to a maximum number of Common Shares not exceeding the number of Common Shares which then represents the maximum percentage previously approved by the Corporation’s security holders; (f) the suspension or termination under applicable laws (including, without limitation, the rules, regulations and policies of the TSX); and/or (g) general housekeeping matters.

Participation in the Stock Option Plan shall be limited to directors, employees and service providers who are designated from time to time by the Compensation Committee (each, a “Participant”). Board nominees or other associates or affiliates of the Corporation’s largest shareholder, Southpoint Capital Advisors, are not eligible to participate in the Stock Option Plan. Subject to the terms of the Stock Option Plan, the Compensation Committee determines the Participants designated to participate in the Stock Option Plan, the number of Common Shares such Participant is entitled to purchase and the price at which the Common Shares may be purchased and the applicable vesting period. The option price at which the Common Shares may be purchased under the Stock Option Plan is the fair market value of the Common Shares of the Corporation at the time of grant, which under the Stock Option Plan is the closing price of the Common Shares on the TSX on the trading day immediately preceding the date of grant (if the Common Shares are then listed on the TSX).

Options granted under the Stock Option Plan must be exercised within a period of seven (7) years from the date of grant, failing which the Participant's right to purchase such Common Shares lapses. The Stock Option Plan provides that should the expiry date of any vested stock option of a Stock Option Plan participant fall on, or within nine (9) trading days immediately following, a Black-Out Period, the expiry date of such a vested stock option will automatically be the date that is ten (10) trading days from the date the relevant Black-Out Period ends. Unless otherwise determined by the Compensation Committee and specifically set forth in the stock option agreement executed by the Participant, options vest and may be exercised by the Participant as to one-third on each of the first, second and third anniversaries of the date of grant. The Compensation Committee may, however, in its sole discretion by written notice to any Participant, accelerate the vesting of all or any of the options of a Participant. The Participant's rights under the options granted under the Stock Option Plan are not assignable or transferable by the Participant. The Corporation does not currently have any arrangements in place for financial assistance to facilitate the purchase of securities by Participants under the Stock Option Plan.

A Participant’s right to exercise options ceases following any of the following events (each of which, a “Participant Termination Date”): (i) if an employee, such Participant’s employment with the Corporation or any of its subsidiaries is terminated for any reason; (ii) if a director, such Participant ceases to be a director on the Board for any reason; or (iii) if a service provider, such Participant ceases to provide services to the Corporation. In such case, the Participant, or the Participant's legal representative, as the case may be, may only exercise such options that are then vested any time prior to the earlier of: the original expiry date of such option, or within 30 days of the Participant Termination Date, or if specifically approved by the Board, such later date which may not be more than three (3) years following the Participant Termination Date.

For U.S. federal income tax purposes, an optionee who is granted an incentive stock option under the Stock Option Plan will generally not recognize taxable income either at the time the option is granted or upon its exercise, although the exercise will increase the optionee’s alternative minimum taxable income by an amount equal to the difference, if any, between the fair market value of the shares at the time of exercise and the option's exercise price, and therefore may subject the optionee to the alternative minimum tax. Upon the sale or exchange of the shares more than two years after grant of the option and more than one year after exercising the option, any gain or loss will be treated as long-term capital gain or loss. If these holding periods are not satisfied, the optionee will recognize ordinary income at the time of sale or exchange equal to the difference between the exercise price and the lower of (i) the fair market value of the shares at the date of the option’s exercise or (ii) the sale price of the shares. AdherexFennec will be entitled to a deduction in the same amount as the ordinary income recognized by the optionee. Any gain or loss recognized on such a premature disposition of the shares in excess of the amount treated as ordinary income will be characterized as long-term or short-term capital gain or loss, depending on the optionee’s holding period with respect to such shares. Options that do not qualify as incentive stock options under the Stock Option Plan are referred to as nonstatutory options. Generally, an optionee will not recognize any taxable income at the time he or she is granted a nonstatutory option. Upon its exercise, however, the optionee will generally recognize taxable ordinary income measured as the excess of the then fair market value of the shares acquired over the exercise price of the option. Any taxable income recognized in connection with an option exercise by an optionee who is also one of our employees will be subject to tax withholding by us. AdherexFennec will be entitled to a tax deduction in the same amount as the ordinary income recognized by the optionee with respect to shares acquired upon exercise of a nonstatutory option. Upon resale of such shares by the optionee, any difference between the sales price received and the fair market value for the shares on the date of exercise of the option will be treated as long-term or short-term capital gain or loss, depending on the optionee’s holding period with respect to such shares.

Directors’ and Officers’ Liability Insurance

AdherexFennec has liability insurance for its directors and officers. The aggregate annual premium for that insurance is approximately $60,000$88,000 no part of which is payable by the directors and officers of the Corporation. The insurance coverage under the policy for each loss is limited to an annual aggregate of $5,000,000$7,500,000 for each policy year. The policy provides foris subject to a $150,000 deductible$250,000 retention for any non securities claim, made by the Corporation$500,000 for securities claims and $1,500,000 for any other claim made by the Corporationmerger objection suits and there shall be no deductibleretention for any claimnon-indemnifiable claim(s) made byagainst a director or officer.officer.

Indebtedness of Directors and Executive Officers

Section 13(k) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), prohibits AdherexFennec from making or arranging an extension of credit to its directors or executive officers in the form of a personal loan.

No individual, who is or was a director, executive officer or employee of Adherex,Fennec, nor any proposed nominee for election as a director of Adherex,Fennec, nor any associate of any one of them:

Interest of Informed Persons in Material Transactions

In accordance with theBusiness Corporations Act (British Columbia)( the “BCBCA”) BCBCA and our articles, directors who have a material interest in any person who is a party to a material contract or a proposed material contract with AdherexFennec are required to disclose that interest and abstain from voting on any resolution to approve that contract.

To the knowledge of Adherex,Fennec, except as disclosed below, no informed person or proposed nominee for election as a director of AdherexFennec and no associate or affiliate of the foregoing persons has or has had any material interest, direct or indirect, in any transaction since the commencement of Adherex’sFennec’s last completed financial period or in any proposed transaction which has materially affected or would materially affect AdherexFennec or any of its subsidiaries.

In accordance with regulations of the SEC, AdherexFennec must disclose in this Circular any transaction or series of transactions in Adherex’sFennec’s last two completed fiscal years to which AdherexFennec was a party and in which any director or executive officer of Adherex,Fennec, or any of their immediate family members had a direct or indirect material interest, if the amount involved exceeds the lesser of $120,000 or one (1) percent of the average of the Company’sCorporation’s total assets at year end for the last two completed fiscal years (a “Related Party Transaction”).

D. Scott Murray, a former executive officer, and Adherex entered into a Separation and Mutual Release Agreement, dated as of March 8, 2011, pursuant to which (a) each party thereto agreed to a mutual release of claims by such party and (b) we made a separation payment of $50,000 to Mr. Murray and granted Mr. Murray a three year period commencing July 10, 2009 to exercise any vested but unexpired stock options previously granted to him.

Except for the foregoing, to the knowledge of Adherex, there were no Related Party Transactions in the last two years that were required to be reported under Item 404(d) of Regulation S-K and there are none anticipated at this time to occur in fiscal 2013.

Performance Graph

The following line graph compares the percentage change, from December 31, 20072010 to December 31, 2012,2015, in cumulative total shareholder return for $100 (CAD$ for TSX and US$ for AMEX) invested in our common stock with cumulative total return of the AMEX Composite, the AMEX Biotechnology Index and the S&P/TSX Composite Total Return Index.

Securities Authorized for Issuance Under Equity Compensation Plan Information

The following table provides certain information with respect to securities authorized for issuance under equity incentive plans as of December 31, 20122015 (share and option numbers expressedamounts are in thousands):

* The Company’sCorporation’s current stock option plans allowsallow for the issuance of stock options denominated in both United States, or U.S., dollars and Canadian or CAD, dollars.  This table presents the number and weighted-average exercise price of outstanding options by the currency associated with the original grantsgrants. At December 31, 20122015 we had 1,3271,094,293 stock options denominated in U.S. dollars with a weighted-average exercise price of $0.67$1.77 and 4,1711,322,962 stock options denominated in CAD dollars with a weighted-average exercise price of CAD$0.78.2.39.  At December 31, 2012,2015, we had 791317,620 stock options available for future issuance.

REPORT ON CORPORATE GOVERNANCE

AdherexFennec believes that good corporate governance is important to ensure that AdherexFennec is managed for the long-term benefit of its shareholders. In connection with Adherex’sFennec’s commitment to comply with the standards of applicable securities legislation, AdherexFennec has continued to review Adherex’sFennec’s corporate governance practices and policies and has compared them to developing practices and regulation in Canada and the United States. In particular, AdherexFennec has considered developing rules and guidelines for corporate governance practices and policies, and related disclosures, promulgated by the Canadian Securities Administrators, the SEC as well as the Sarbanes-Oxley Act of 2002.

In February 2004, Adherex’sFennec’s Board adopted a Mandate of the Board of Directors, Corporate Governance Guidelines and a Code of Business Conduct and Ethics applicable to all officers, directors and employees of Adherex.Fennec. The Board also (i) restated the charter of the Audit Committee, (ii) established a separate Governance Committee and adopted a written charter for the committee, (iii) restated the charter of the Compensation Committee, and (iv) appointed a Leadan Independent Director. Since David Lieberman, an independent director, was appointed ChairChairman of the Board, no separate Lead Independent Director has been appointed.Board. Each of the various committee charters and other corporate governance documents are regularly reviewed with a view to determining if any updates are necessary or advisable.

Set out below is a description of certain corporate governance practices of the Corporation.

Shareholder Communications

Shareholders who wish to communicate with members of the Board of Directors, including the independent directors individually or as a group, may send correspondence to them care of the Chief Executive at our principal executive offices. Such communication will be forwarded to the intended recipient(s). AdherexFennec currently does not intend to have the Chief Executive screen this correspondence, but it may change this policy if directed by the Board due to the nature or volume of the correspondence.

Board of Directors

The boardBoard of directorsDirectors is composed of a majority of independent directors. The Board applies the definition of independence found in the rules of the SEC and in Canadian National Instrument 58-101 and National Policy 58-201. The Board has determined that threefour of the current five directors are “independent”, including the Chair of the Board, being Messrs. Lieberman, Rallis, Skolsky, Haigh and Skolsky.Islam. Only two directors haveone director has a material relationships with the Corporation and are therefore is not independent. Mr. Raykov, Chief Executive Officer of the Corporation and Mr. Andrade, Chief Financial Officer of the Corporation, areis considered to have a material relationship with the Corporation by virtue of theirhis executive officer positions. Adherexposition. Fennec is of the view that the composition of its Board reflects a diversity of background and experience that are important for effective corporate governance. Other directorships held by Board members are described in this Circular under the heading “Ordinary Matters – Election of Directors.”

During the financial year ended December 31, 2012,2015, the Board held one (1)meetingdevoted a portion of six meetings to discuss in the absence of directors who are not “independent,” and certain of the Committees also conducted executive sessions where all participants were independent directors. In order to facilitate open and candid discussion among its independent directors, the Corporate Governance Guidelines provide that independent directors should meet at least annually without the presence of management or non-independent directors, that the Chairman or Lead Independent Director is authorized to call additional meetings of the independent directors and that the Chairman or Lead Independent Director is authorized to act as the presiding director at such meetings and to develop the agenda for such meetings. In addition, each Board member is free to suggest the inclusion of items on any Board or Committee meeting agenda and suggest pre-meeting materials to either the Chair of the Board or the Lead Independent Director. At any meeting of the Board, each Board member is also free to raise subjects that are not on the agenda for that meeting. Furthermore, each Board committee, the Chairman and the Lead Independent Director, on behalf of the independent directors as a group, have the authority to hire legal, accounting, financial or other advisors as they may deem necessary in their best judgment, without the need to obtain the prior approval of any officer of the Corporation. The Chief Financial Officer of the Corporation will arrange for payment of the invoices of any such third party.

Directors’ Attendance

For the fiscal year ended December 31, 2012,2015, the Board met on six occasions, the Audit Committee met on fourfive occasions, the Compensation Committee met on fourseven occasions, and the Governance Committee met on threefive occasions.

The following table sets forth the attendance of directors at meetings of the Board, the Audit Committee, the Compensation Committee and the Governance Committee.Board.

The Board expects management to be responsible for the day-to-day operations of and to implement the approved strategic business plan within the context of authorized budgets and corporate policies and procedures. Management is expected to report regularly to the Board in a comprehensive, accurate, and timely fashion on Adherex’sFennec’s business and affairs.

AdherexFennec does not have a formal written policy regarding attendance of Board members at annual meetings of the shareholders. Adherex,Fennec, however, strongly encourages all directors to attend such meetings.

Mandate of the Board of Directors

The Board has the overall responsibility for the strategic planning and general management of Adherex’sFennec’s business and affairs. In fulfilling its responsibilities, the Board is responsible for, among other things:

The Board discharges its responsibilities directly and through committees that have specific areas of responsibility. The frequency of Board meetings and the nature of items discussed during the meetings depend on the opportunities or risks that AdherexFennec faces. The Board, directly and through its committees, has adopted a process whereby it assesses the risk factors that must be identified and managed to ensure Adherex’sFennec’s long-term viability.

The Board mandate generally describes the Board’s expectation of management and provides a list of specific matters for which management must obtain Board approval prior to implementation. The Board mandate also provides that the Board annually establish performance objectives for the CEO, which responsibility has been delegated to the Compensation Committee. In addition, the Board receives regular updates from management concerning the Corporation’s progress toward achieving corporate goals. The Board has also delegated to the Compensation Committee responsibility for evaluating the CEO’s compensation, which evaluation includes review of the CEO’s performance against annual performance objectives for the year and input from the Chairman, Lead Independent Director as well as other directors.

The Board Mandate is attached as Schedule “A”“A-1” to this Circular.

Position Descriptions

The Board Mandate and the Governance Committee Charter provide that the Board is responsible for the development of clear position descriptions for directors, including the Chair of the Board and the chair of each board committee; and, together with the Chief Executive Officer, a clear position description for the Chief Executive Officer, which includes delineating management’s responsibilities.

Board Leadership Structure

On December 9, 2015, Khalid Islam was elected Chairman of the Board. The Company’s boardBoard determined that in the best interest of directors has chosenthe Corporation the most effective leadership structure at this time is to separate the positionsroles of Chairman and Chief Executive OfficerOfficer. As an independent director, Dr. Islam is responsible for overseeing and Chairmanensuring the independence of the board. Keeping these positions separate allows the Company’s Chief Executive Officer to focus on developing and implementing the Company’s business plans and supervising the Company’s day-to-day operations and allows the Company’s Chairman to lead the board of directors in its oversight and advisory roles. Because of the many responsibilities of the board of directorsseparation between management and the significant time and effort required by each of the Chairman and the Chief Executive Officer to perform their respective duties, the Company believes that having separate persons in these roles enhances the ability of each to discharge those duties effectively and, as a corollary, enhances the Company’s prospects for success. The board of directors also believes that having separate positions provides a clear delineation of responsibilities for each position and fosters greater accountability of management.Board.

Risk Oversight

The Board of Directors has an active role, as a whole and also at the committee level, in overseeing the identification and management of our principal risks. The Board of Directors regularly receives reports from senior management on areas of material risk to our CompanyCorporation,including our credit, liquidity, operational, legal and regulatory risks. In carrying out its responsibilities under its charter, the Audit Committee reviews our major financial risk exposures and the steps management has taken to monitor and control such exposures, and it also meets periodically with management to discuss policies with respect to risk assessment and risk management. In addition, the Compensation Committee oversees the management of risks relating to our executive and non-executive compensation plans and arrangements, and the Governance Committee manages risks associated with the independence of the Board of Directors and potential conflicts of interest. While each committee oversees certain risks and the management of such risks, the entire Board of Directors is regularly informed through committee reports about such risks.

Ethical Business Conduct

In February 2004, Adherex’sFennec’s Board adopted a Mandate of the Board of Directors, Corporate Governance Guidelines and a Code of Business Conduct and Ethics (the “Code”) applicable to all officers, directors and employees of Adherex.Fennec. You can access the Code in the corporate governance section of Adherex’sFennec’s website atwww.adherex.comwww.fennecpharma.com.AdherexFennec undertakes to provide any person without charge, upon request, a copy of such code by writing to attn:Attn: Code of Ethics Request, Adherex TechnologiesFennec Pharmaceuticals Inc., 68 TW Alexander Drive, PO Box 13628, Research Triangle Park, North Carolina 27709. Adherex27709.Fennec is committed to adhering to applicable legal requirements and maintaining the highest standards of conduct and integrity. The Code is intended to promote those goals in conjunction with the Corporation’s Insider Trading Policy, Disclosure Policy and Audit Committee Complaint Procedures. The Code sets out the legal and ethical standards of conduct for personnel of AdherexFennec and addresses topics such as: reporting obligations and procedures; honest and ethical conduct and conflicts of interest; compliance with applicable laws and Corporation policies and procedures; confidentiality of corporate information; use of corporate assets and opportunities; public disclosure and books and records; and non-retaliation. The Board is not aware of any conduct of a director or officer that constitutes a departure from the Code and, as a result, since the beginning of Adherex’sFennec’s fiscal year ended December 31, 2012,2015, there have been no material change reports filed that pertain to such a departure.

The Code provides that the Governance Committee shall monitor and periodically evaluate compliance with the Code and its application to the Corporation’s business. In addition, the Code sets out the procedures adopted by the Audit Committee for the receipt, retention and treatment of complaints and concerns regarding accounting, internal accounting control, or auditing matters. In each case, the Code provides that the Corporation will not discipline, discriminate against or retaliate against any employee who reports a complaint or concern in good faith, whether or not the information is ultimately proven to be correct, or who cooperates in any investigation or inquiry thereof.

In order to ensure independent judgment in considering transactions or agreements in which a director or officer has a material interest, the Code contains a process that must be followed regarding the disclosure, consultation and approval of transactions involving potential conflicts of interest. As a first step, officers and directors must disclose such matters to the Chief Executive Officer and to the Chair or any other disinterested member of the Governance Committee charged with reviewing conflicts of interest. The Board has adopted rules for what activities constitute conflicts of interest and potential conflicts of interest, as well as procedures for determining whether a relationship or transaction constitutes a conflict of interest, the current versions of which are attached as appendices to the Code. Following disclosure, any officer or director must avoid or terminate any activity that involves an actual or reasonably apparent conflict of interest unless it is determined at the appropriate level that the activity is not a conflict of interest or is otherwise not harmful to the Corporation or improper. Disinterested members of the Governance Committee shall make any such determination.

In accordance with the BCBCA and our articles, directors who have a material interest in any person who is a party to a material contract or a proposed material contract with us are required to disclose that interest and abstain from voting on any resolution to approve that contract. In addition, no director, director nominee or officer may enter into anytransaction or relationship that is disclosable by such person or the Corporation pursuant to the BCBCA or by the Corporation pursuant to SEC rules without the prior approval of the disinterested members of the Governance Committees, and no such person may directly or indirectly approve, or represent the Corporation or the other party in arranging, the terms of any transaction between the Corporation and a party with which he/she has any relationship of a type that is disclosable by such person or the Corporation pursuant to the BCBCA or by the Corporation pursuant to SECrules. rules. All transactions between the Corporation and a party with which a director, officer or employee has such a relationship shall be on an arm’s length basis.

Orientation and Continuing Education

Responsibility for the oversight of orientation for new directors and continuing education programs for all directors with respect to the Corporation’s business and financial matters, corporate governance and other appropriate subjects is assigned to the Governance Committee under its charter. In this regard, the Governance Committee’s duties include ensuring the adequacy of the orientation and education program for new members of the Board.

The Governance Committee is also responsible for arranging continuing education for directors in order to ensure that directors maintain the skill and knowledge necessary to meet their obligations as directors. Given the Corporation’s limited resources, to date, no formal external continuing education programs have been sponsored by the Corporation but members of the Board are free to attend such programs as they determine necessary and in the Corporation’s best interest. The Corporation also provides directors with the opportunity to meet with senior management of the Corporation, including the Chief Financial Officer, and the General Counsel, as well as external advisors, at any time and such personnel and advisers are regularly invited to present at Board meetings or in connection with Board retreats to provide updates in legal, accounting, governance and other business developments. Some meetings are held at the Corporation’s premises, allowing directors the opportunity to gain additional insight into the Corporation’s operations. In addition, analyst reports and other information relating to the Corporation’s business and the industry in which it operates are presented at Board meetings and strategy sessions and industry-related articles of interest are distributed to Board members from time to time. Pursuant to each Committee charter, directors are permitted to obtain advice and assistance from internal or external advisors, including for the purposes of continuing education and developments relevant to board responsibilities.

Nomination of Directors

The Board does not have a nominating committee. Nominations to the Board are largely the result of recruitment efforts of the Chairman of the Board. Potential nominees are discussed with the Board as a whole. The Board feels that the current approach is appropriate.The full Board of Directors assumed the functions of a nominating committee. The Board of Directors believes that such action was appropriate because it believes that, in doing so, it gains access to the expertise and insight of its management and non-independent directors on the operations of the CompanyCorporation as they relate to an evaluation of a director candidate. The final determination to nominate a candidate is made by our independent directors, acting separately. The Board has not adopted a formal charter regarding the nominations process; but has adopted resolutions formalizing the nominations process.

The Chairman of the Board has the ongoing responsibility of assessing the effectiveness of the Board as a whole, the committees of the Board and the contribution of individual directors. Evaluation criteria include such factors as the attendance record of individual Board members and the effectiveness of their participation at Board meetings. Annually, the Chairman of the Board prepares and approves the list of nominees to be presented at the Annual Meetings of the Shareholders.

Term Limits

The Corporation has not adopted term limits for directors of the Corporation. The Board believes that the need to have experienced directors who are familiar with the business of the Corporation must be balanced with the need for renewal, fresh perspectives and a healthy skepticism when assessing management and its recommendations. In addition, as mentioned above the Board undertakes an assessment process that evaluates its effectiveness.

While term limits can help ensure the Board gains fresh perspective, imposing this restriction means the Board would lose the contributions of longer serving directors who have developed a deeper knowledge and understanding of the Corporation over time. The Board believes that term limits have the disadvantage of losing the contribution of directors who have been able to develop, over a period of time, increasing insight into the Corporation and its operations and thereby provide an increasing contribution to the Board as a whole.

Board and Senior Management Diversity

The Corporation believes that an effectively functioning Board is critical to its success, and that its Board must have the flexibility to adopt director election and composition practices that suit its unique needs and circumstances. The Corporation seeks the most qualified persons, regardless of gender or other characteristics unrelated to expertise and performance. Accordingly, the Corporation does not have written policies or set targets with respect to representation of women on the Board or as members of its senior management team. Such policies, while well intended, may create arbitrary and technical impediments to the selection of the most qualified persons. This approach enables the Corporation to make decisions regarding the composition of its Board and senior management team based on what is in the best interests of the Corporation and its shareholders. The Corporation has no female executive officer and there are no women on the Board.

Short-Selling

Pursuant to the Corporation’s Insider Trading Policy, which is applicable to its directors, officers and other employees, no such person may engage in short-selling of the Corporation’s securities or any trading in exchange-traded options with respect to the Corporation’s securities. Any director or executive officer who wishes to enter into another type of hedging arrangement must consult with the Compliance Officer as legal restrictions and/or public disclosures may be required. In addition, margin loans using the Corporation’s securities and other pledges of such securities present the risk that the pledgee will foreclose and sell the securities at a time when the Corporation’s personnel are prohibited from trading, with possibly serious collateral consequences. For this reason, such an arrangement may be risky and should not be undertaken without the prior written approval of the Compliance Officer.

Compensation

The Board is responsible for establishing director and executive officer compensation and reviewsreviews such compensation at least as often as annually. The Board believes that directors should be fairly compensated for undertaking the responsibilities associated with serving as a director. At the same time, director compensation should be consistent with market practices generally. The Board delegates to the Compensation Committee responsibility for periodically assessing market practices for director and executive officer compensation. In addition, the Compensation Committee evaluates director compensation in the context of evaluating director recruitment and retention.

The Compensation Committee operates under a written charter adopted by the Board. The Compensation Committee is currently composed entirely of independent directors: Mr. Skolsky (Chair), Mr. Rallis and Mr. Lieberman.Dr. Islam. The Compensation Committee held fourfive meetings in the fiscal year ending December 31, 2012.2015.

In addition to director compensation, the Compensation Committee of the Board determines the compensation to be paid to Adherex’sFennec’s executive officers and periodically reviews Adherex’sFennec’s compensation structure to ensure that AdherexFennec continues to attract and retain qualified and experienced individuals to Adherex’sFennec’s management team and motivate these individuals to perform to the best of their ability and in Adherex’sFennec’s best interests. Among other things, the Compensation Committee considers compensation levels of comparable positions in similarly sized organizations in the biotechnology industry. The Compensation Committee also administers the Stock Option Plan and approves new stock option grants.

Other Board Committees

The Board has created audit, compensation, and governance committees to ensure that the Board functions independently of management. It is also customary practice for directors (i) to regularly receive detailed information describing Adherex’sFennec’s performance, and (ii) when necessary, to speak directly with management regarding additional information required on particular matters of interest. Moreover, directors have access to information independent of management through Adherex’sFennec’s external auditors.

Audit Committee

On behalf of the Board, the Audit Committee of the Board retains, oversees and evaluates Adherex’sFennec’s independent auditors, reviews the financial reports and other financial information provided by Adherex,Fennec, including audited financial statements, and discusses the adequacy of disclosure with management and the auditors. The Audit Committee also reviews the performance of the independent auditors in the annual audit and in assignments unrelated to the audit, assesses the independence of the auditors, and reviews their fees. The Audit Committee is also responsible for reviewing Adherex’sFennec’s internal controls over financial reporting and disclosure.

The Audit Committee operates under a written charter adopted by the Board. Multilateral Instrument 52-110 – Audit Committees requires certain disclosures be cross-referenced with respect to the Audit Committee when soliciting proxies from Shareholders for the purpose of electing directors. The Corporation is relying on the exemption found in Part 7 of the Multilateral Instrument applicable to U.S. Listed Issuers. The Audit Committee met four times during the fiscal period endingyear ended December 31, 2012.2015. As required by the rules of the SEC and Canadian securities laws, the Audit Committee is composed entirely of independent directors, each of whom the Board has determined is “financially literate” for purposes of the applicable laws: Mr. Rallis (Chair),Mr. Lieberman,Skolsky and Mr. Skolsky.Haigh. In addition, the Board has determined that Mr. Rallis qualifies as an “audit committee financial expert,” as defined in Item 407(d)(5) of Regulation S-K promulgated by the SEC. A copy of the Corporation’s Audit Committee Charter is included as Schedule “A-2” to this Circular.

Audit Committee Report

The Audit Committee has (1) reviewed and discussed the audited financial statements with management, (2) discussed with Deloitte LLP, our independent registered public accounting firm, the matters required to be discussed by the Statement on Auditing Standards No. 61, and (3) received the written disclosures and the letter from Deloitte LLP required by the Independence Standards Board Standard No. 1, and has discussed their independence with the independent registered public accounting firm. Based upon these discussions and reviews, the Audit Committee recommended to the Board that the audited financial statements be included in the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 20122015 that we filed with the SEC on April1, 2013.March 28, 2016.

Deloitte LLP served as our independent registered public accounting firm and audited our consolidated financial statements for the year ended December 31, 2012.2015. Though the Audit Committee does not have formal pre-approval policies and procedures in place, it has pre-approved all of the services performed byDeloitte LLPas discussed below, as required by SEC regulation.

Audit Fees

The following table presents the aggregate fees for professional services and other services rendered by our independent auditors, Deloitte LLP in fiscal year 20122015 and 20112014 (in US dollars):

The Audit Committee does not have formal pre-approval policies and procedures,procedures; however, prior to the engagement by the registrant, the Audit Committee approved all of the services performed by Deloitte LLP as required by SEC regulation.

Submitted By:      THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

Chris A. Rallis, Chair

Steven D. Skolsky

Adrian J. Haigh

Governance Committee

The Governance Committee of the Board develops, recommends and oversees the effectiveness of Adherex’sFennec’s corporate governance guidelines. In addition, the Governance Committee oversees the orientation and education of directors and the process of evaluating the Board and its committees.

The Governance Committee of the Board is charged with nominating activities, including determining desired Board skills and attributes for directors, conducting appropriate and necessary evaluations of the backgrounds and qualifications of possible director candidates, and recommending director nominees for approval by the Board or the Shareholders.

The Governance Committee is currently composed three independent directors: Mr. Skolsky(Chair)Haigh (Chair), Mr. LiebermanDr. Islam and Mr. Rallis.Skolsky. The Governance Committee held threesix meetings in the fiscal year endingended December 31, 2012.2015.

Retention of Outside Advisors

Adherex’sFennec’s Corporate Governance Guidelines provide that thethe Board, each Board committee, the Chairman and the Lead Independent Director, on behalf of the independent directors as a group, shall have the authority to hire legal, accounting, financial or other advisors as they may deem necessary in their best judgment, without the need to obtain the prior approval of any officer of the Corporation. The Corporation will arrange for payment of the invoices of any such third party.

Section 16(a) Beneficial Ownership Reporting Compliance

We currently do not have any securities registered under Section 12 of the Exchange Act, as amended. Accordingly, our directors, officers, and stockholders beneficially owning more than 10% of our common stock are not required to comply with the reporting requirements of Section 16(a) of the Exchange Act.

SHAREHOLDER PROPOSALS FOR NEXT YEAR’S ANNUAL MEETING

The BCBCA permits certain eligible shareholders of the Corporation to submit shareholder proposals to the Corporation, which proposals may be included in a management proxy circular relating to an annual meeting of shareholders.Under SEC rules, shareholders Shareholders having proposals that they desire to present at the next year’s annual meeting of shareholders should, if they desire that such proposals be included in the Corporation’s proxy circular relating to such meeting, submit such proposals in time to be received by AdherexFennec not later than January 18, 2014.February 28, 2017. To be so included, all such submissions must comply with the requirements of the SEC’s Rule 14a-8 and you should pay close attention to that rule. Proposals should be mailed to the Secretary at Adherex TechnologiesFennec Pharmaceuticals Inc., PO Box 13628, 68 TW Alexander Drive, Research Triangle Park, NC 27709.

ADDITIONAL INFORMATION

Financial information for the financial year ended December 31, 20122015 is provided in the Corporation’s consolidated financial statements and management’s discussion and analysis (“MD&A”), which are included in the Annual Report. SecurityholdersSecurity holders who wish to be added to the mailing list for the annual and interim financial statements and MD&A should complete the appropriate sections of the proxy or contact the undersigned at PO Box 13628, 68 TW Alexander Drive, Research Triangle Park, North Carolina 27709.

The Corporation’s Annual Report on Form 10-K for the fiscal period ended December 31, 2012(including2015 (including the consolidated financial statements and MD&A) and other information relating to the Corporation is available on SEDAR atwww.sedar.com and atwww.sec.gov.

APPROVAL OF THE BOARD OF DIRECTORS

The contents of this Circular and its sending to Shareholders have been approved by the Board of Directors.

DATED at Research Triangle Park, North Carolina this 189^th day of May, 2013.2016.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ Rostislav Raykov

Rostislav Raykov

Chief Executive Officer

SCHEDULE “A”“A-1”

ADHEREX TECHNOLOGIESFENNEC PHARMACEUTICALS INC.

Mandate of the Board of Directors

The Board of Directors (the “Board”) of Adherex TechnologiesFennec Pharmaceuticals Inc. (the “Company”) is responsible for the stewardship of the Company. All directors 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 comparable circumstances.

The Board retains plenary authority and power to do all lawful acts and things as are not by law or otherwise directed or required to be exercised or done by the shareholders of the Company or in some other manner. In carrying out its responsibilities, the Board of Directors (or the committees of the Board of Directors duly constituted by the Board of Directors to the extent such delegation is permitted by law and is specifically made by the Board of Directors) shall have the following specific responsibilities:

and, where applicable, in accordance with the requirements of theCanada Business Corporations Act, the stock exchanges on which the Company lists its securities and securities regulatory authorities, as adopted or in force or amended from time to time.

In discharging its duties and responsibilities, the Board of Directors is expected to be fully diligent in its oversight to avoid fraud or abuse. Accordingly, the Board may conduct such examinations, investigations or inquiries, and engage such special legal, accounting or other advisors, at the expense of the Company, at such time or times and on such terms and conditions as the Board of Directors considers appropriate.

In addition to such other approvals as required by applicable law or the stock exchanges on which the Company lists its securities and securities regulatory authorities, the Board (or the committees of the Board duly constituted by the Board to the extent such delegation is permitted by law and is specifically made by the Board of Directors) shall review and approve:

The CEO, through the Senior management, is responsible for the day-to-day operations of the Company and for providing the Board, directly or through the Chair of the Board, the appropriate committee or the Lead Independent Director, with timely, complete and accurate information on such operations. The Board expects management to propose and, after Board approval, implement the Company's strategic plan and to be accountable for the Company's financial and competitive performance. The Board expects the Company's resources to be managed in a manner consistent with enhancing the value of the Company and with consideration for ethics and corporate social responsibility.

The Board may request that certain members of senior management attend all or any portion of a Board or committee meeting and may schedule presentations by managers who can provide additional insight based on their personal involvement in the matter or their particular expertise. Each director shall have complete access to any member of senior management. The Chief Financial Officer and the General Counsel of the Company shall each have access to meet separately with the Audit Committee and Governance Committee respectively, the Chairman and Lead Independent Director.

The Board may reasonably rely on the information provided to them by the Company’s senior management personnel and outside advisors and auditors.

The Company has developed a Disclosure Policy to facilitate consistent disclosure practices aimed at informative, timely and broad dissemination of material information to the market in compliance with applicable securities laws and the rules and policies of any exchange on which the Company’s securities are listed. The Disclosure Policy Committee established under the Disclosure Policy is responsible for overseeing and monitoring communications with, and responses to inquiries from, both institutional and individual investors and the financial community consistent with the objectives of the Company’s Disclosure Policy.

Company spokespersons as appointed by the Disclosure Policy Committee from time to time are available to shareholders by telephone, fax and e-mail and the Company maintains up-to-date material of interest to shareholders and investors on the Company’s web site at www.adherex.com.www.Fennec.com.

The Board of Directors shall review and assess the adequacy of the mandate of the Board on an annual basis.

Nothing in this Mandate is intended, or may be construed, to impose on any member of the Board a standard of care or diligence that is in any way more onerous or extensive than the standard required by law.

SCHEDULE “A-2”

FENNEC PHARMACEUTICALS INC.

Audit Committee Charter