VIQ SOLUTIONS INC.
DEFERRED SHARE UNIT PLAN
The purpose of this Deferred Share Unit Plan is to provide non-employee directors of VIQ Solutions Inc. (the “Corporation”) with the opportunity to acquire Deferred Share Units of the Corporation in order to allow them to participate in the long-term success of the Corporation and to promote a greater alignment of their interests with the interests of the Corporation’s shareholders.
For purposes of the Plan:
(a) “Applicable Withholding Amounts” is defined in Section 4.7 of the Plan;
(b) “Black Out Period” means the period of time when, pursuant to any policies of the Corporation, any securities of the Corporation may not be traded by certain persons as designated by the Corporation, including any Participant that holds a DSU;
(c) “Board” means the Board of Directors of the Corporation as may be constituted from time to time;
(d) “Committee” means the Compensation Committee of the Board or such other committee of the Board as may be appointed by the Board to administer the Plan, provided, however, that if no Compensation Committee is in existence at any particular time and the Board has not appointed another committee of the Board to administer the Plan, all references in the Plan to “Committee” shall at such time be in reference to the Board;
(e) “Corporation” means VIQ Solutions Inc. and its successors and assigns;
(f) “Deferred Share Unit” or “DSU” means a unit equivalent in value to a Share, credited by means of a bookkeeping entry in the books of the Corporation in accordance with Article 4;
(g) “Distribution Date” is defined in Section 4.6;
(h) “Dividend Equivalents” means a bookkeeping entry whereby each Deferred Share Unit is credited with the equivalent amount of the dividend paid on a Share in accordance with Section 4.3;
(i) “Dividend Market Value” means the Fair Market Value per Share on the dividend record date;
(j) “Eligible Director” means an individual who is, at the relevant time, a member of the Board but who is not also an employee of the VIQ Group;
(k) “Exchange” means the TSXV or, if the Shares are not then listed and posted for trading on the TSXV, such stock exchange on which such Shares are listed and posted for trading as may be selected for such purpose by the Board;
(l) “Fair Market Value” with respect to a Share, as at any date, means the weighted average of the prices at which the Shares traded on the TSXV (or, if the Shares are not then listed and posted for trading on the TSXV or are then listed and posted for trading on more than one stock exchange, on such stock exchange on which the majority of the trading volume and value of the Shares occurs) for the five (5) trading days on which the Shares traded on the said exchange immediately preceding such date. In the event that the Shares are not listed and posted for trading on any stock exchange, the Fair Market Value shall be the fair market value of the Shares as determined by the Board in its sole discretion, acting reasonably and in good faith;
(m) “Insider” has the meaning ascribed thereto in the TSX Company Manual, as amended from time to time;
(n) “Participant” means an Eligible Director who is granted DSU’s in accordance with Section 4.1 hereof;
(o) “Payment Shares” is defined in Section 4.7;
(p) “Person” means any individual, sole proprietorship, partnership, firm, entity, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, fund, organization or other group of organized persons, government, government regulatory authority, governmental department, agency, commission, board, tribunal, dispute settlement panel or body, bureau, court, and where the context requires any of the foregoing when they are acting as trustee, executor, administrator or other legal representative;
(q) “Plan” means this Deferred Share Unit Plan as amended, restated, supplemented or otherwise modified from time to time;
(r) “Security Based Compensation Arrangement” has the meaning ascribed thereto in Part VI of the TSX Company Manual, as amended from time to time;
(s) “Separation Date” means the date on which the Participant ceases service as a director of, and is not at that time an employee or officer of, the VIQ Group;
(t) “Share” means a common share of the Corporation or, in the event of an adjustment contemplated by Section 4.9, such other number or type of securities as the Committee may determine;
(u) “Subsidiary” has the meaning ascribed thereto in the Securities Act (Alberta);
(v) “TSX” means the Toronto Stock Exchange;
(w) “TSX Company Manual” means the Toronto Stock Exchange Company Manual, as amended from time to time;
(x) “TSXV” means the TSX Venture Exchange; and
(y) “VIQ Group” means collectively, the Corporation and any entity that is a Subsidiary of the Corporation from time to time, and any other entity designated by the Board from time to time as a member of the VIQ Group for the purposes of this Plan (and, for greater certainty, including any successor entity of any of the aforementioned entities).
2.2. Certain Rules of Interpretation
(a) Whenever the Board or, where applicable, the Committee or any sub-delegate of the Committee is to exercise discretion in the administration of the terms and conditions of this Plan, the term “discretion” means the sole and absolute discretion of the Board or the Committee or the sub-delegate of the Committee, as the case may be.
(b) As used herein, the terms “Article” and “Section” mean and refer to the specified Article or Section of this Plan.
(c) Words importing the singular include the plural and vice versa and words importing any gender include any other gender.
(d) Unless otherwise specified, all references to money amounts are in Canadian currency.
ADMINISTRATION OF THE PLAN
3.1. Administration of the Plan
(a) Except for matters that are under the jurisdiction of the Board as specified under the Plan or as required by law and subject to Section 3.1(b), this Plan will be administered by the Committee and the Committee has sole and complete authority, in its discretion, to:
(i) interpret the Plan and prescribe, modify and rescind rules and regulations relating to the Plan;
(ii) exercise rights reserved to the Corporation under the Plan;
(iii) prescribe forms for notices to be prescribed by the Corporation under the Plan; and
(iv) make all other determinations and take all other actions as it considers necessary or advisable for the implementation and administration of the Plan.
The Committee’s determinations and actions under this Plan are final, conclusive and binding on the Corporation, the Participants and all other Persons.
(b) To the extent permitted by applicable law, the Committee may, from time to time, delegate to any specified officer of the Corporation all or any of the powers of the Committee. In such event, the specified officer will exercise the powers delegated to it by the Committee in the manner and on the terms authorized by the Committee. Any decision made or action taken by the specified officer arising out of or in connection with the administration or interpretation of this Plan in this context is final, binding and conclusive on the Corporation, the Participants and all other Persons.
Any individual who at the relevant time is an Eligible Director is eligible to participate in the Plan. Eligibility to participate does not confer upon any individual a right to receive an award of Deferred Share Units pursuant to the Plan.
3.3. Exemption from Plan Participation
Notwithstanding any other provision of the Plan, if a Participant is resident in a jurisdiction in which an award of Deferred Share Units under the Plan might be considered to be income which is subject to taxation at the time of such award, the Participant may elect not to participate in the Plan by providing a written notice to the Chief Financial Officer of the Corporation.
3.4. Discretionary Relief
Notwithstanding any other provision hereof, the Board may, in its sole discretion, waive any condition set out herein if it determines that specific individual circumstances warrant such waiver.
DEFERRED SHARE UNITS
4.1. Grant of Deferred Share Units
(a) The Committee may, from time to time in its sole discretion, grant DSUs to Eligible Directors and upon such grant, such Eligible Directors shall become Participants in this Plan. In respect of each grant of DSUs, the Committee shall determine:
1. the number of DSUs allocated to the Participant; and
2. such other terms and conditions of the DSUs applicable to each grant.
(b) The Corporation shall not make any grant of DSUs pursuant to the Plan unless and until such grant or issuance and delivery can be completed in compliance with all applicable laws, including tax regulations, and all other regulations, rules, orders of governmental or regulatory authorities and the requirements of all applicable stock exchanges upon which Shares are listed. The Corporation shall be obligated to take all reasonable action to comply with any such laws, regulations, rules, orders or requirements.
(c) Certificates will not be issued to evidence DSUs. Book entry accounts, to be known as the “Deferred Share Unit Account” shall be maintained by the Corporation for each Participant and will be credited with DSUs granted to a Participant from time to time.
(d) The term during which an DSU may be outstanding shall, subject to the provisions of this Plan requiring or permitting the acceleration or the extension of the term, be such period as may be determined from time to time by the Board or the Committee, but subject to the rules of any stock exchange or other regulatory body having jurisdiction.
Deferred Share Units will be fully vested upon being granted and credited to a Participant’s account.
4.3. Credits for Dividends
A Participant’s account shall be credited with Dividend Equivalents in the form of additional Deferred Share Units as of each dividend payment date in respect of which normal cash dividends are paid on the Shares. Such Dividend Equivalents shall be computed by dividing: (a) the amount obtained by multiplying the amount of the dividend declared and paid per Share by the number of Deferred Share Units recorded in the Participant’s account on the record date for the payment of such dividend, by (b) the Dividend Market Value, with fractions computed to three decimal places. The foregoing does not obligate the Corporation to declare or pay dividends on Shares and nothing in this Plan shall be interpreted as creating such an obligation.
4.4. Limits on Issuances
Notwithstanding any other provision of this Plan:
(a) the maximum number of Shares issuable pursuant to outstanding DSUs at any time shall be limited to 2,000,000 Shares, provided that: (i) the maximum number of Shares issuable pursuant to outstanding DSUs and all other Security Based Compensation Arrangements, shall not exceed 10.0% of the Shares outstanding from time to time; and (ii) upon any DSU granted hereunder having Payment Shares issued thereunder pursuant to the terms hereof, or upon expiring or terminating for any reason in accordance with the terms of the Plan without Payment Shares being issued in respect thereof, such number of exercised, expired or terminated DSU’s shall not be available for granting hereunder;
(b) the number of Shares reserved for issuance to any one Participant under all Security Based Compensation Arrangements will not exceed 5.0% of the issued and outstanding Shares;
(c) the number of Shares issuable to Insiders, at any time, under all Security Based Compensation Arrangements, shall not exceed 10.0% of the issued and outstanding Shares;
(d) the number of Shares issued to Insiders, within any one year period, under all Security Based Compensation Arrangements, shall not exceed 10.0% of the issued and outstanding Shares;
(e) the number of DSUs granted to any one Participant in any 12 month period shall not exceed 1.0% of the issued and outstanding Shares, as calculated at the date the DSU’s are granted; and
(f) the number of DSUs granted to Insiders, in aggregate, in any 12 month period shall not exceed 2.0% of the issued and outstanding Shares, as calculated at the date the DSU’s are granted.
For the purposes of this Section 4.4, any increase in the issued and outstanding Shares (whether as a result of the issue of Shares pursuant to DSUs or otherwise) will result in an increase in the number of Shares that may be issued pursuant to DSUs outstanding at any time and any increase in the number of DSUs granted will, upon the issue of Shares pursuant thereto, make new grants available under this Plan. Further, if the acquisition of Shares by the Corporation for cancellation should result in the foregoing tests no longer being met, this shall not constitute non-compliance with this Section 4.4 for any awards outstanding prior to such purchase of Shares for cancellation.
DSUs that are cancelled, terminated or expired shall result in the Shares that were reserved for issuance thereunder being available for a subsequent grant of DSUs pursuant to this Plan to the extent of any Shares issuable thereunder that are not issued under such cancelled, terminated or expired DSUs.
4.5. Reporting of Deferred Share Units
Statements of the Deferred Share Unit accounts will be provided by the Corporation to Participants on an annual basis.
4.6. Distribution Date
A Participant shall have the right to receive Payment Shares (as defined below) in respect of Deferred Share Units recorded in the Participant’s account in accordance with Section 4.7, on one of the following dates (the “Distribution Date”):
(a) the Separation Date; or
(b) such later date as the Participant may elect by written notice delivered to the Chief Financial Officer of the Corporation prior to the Separation Date, provided that in no event shall a Participant be permitted to elect a date which is later than December 1 of the calendar year following the calendar year in which the Separation Date occurs.
4.7. Distribution of Deferred Share Units in Payment Shares
(a) The Corporation shall, within 10 business days after the Distribution Date, issue to the Participant a number of treasury Shares (the “Payment Shares”) equal to the number of Deferred Share Units in the Participant’s account that became payable on the Distribution Date.
(b) As a condition to the issue of treasury Shares in settlement of any Deferred Share Units, the Corporation may require the Participant to first pay to the Corporation, or the Corporation may deduct, an amount equivalent to the minimum amount of taxes and other minimum amounts as the Corporation may be required by law to withhold, as the Corporation determines (the “Applicable Withholding Amounts”) or the Corporation may take such other steps as it considers to be necessary or appropriate, including the sale of Payment Shares on behalf of the Participant, in order to provide to the Corporation the Applicable Withholding Amounts. The Corporation shall advise the Participant in writing of any Applicable Withholding Amounts required in connection with the issue of Shares in settlement of Deferred Share Units.
(c) The Corporation shall not be required to issue or cause to be delivered treasury Shares or issue or cause to be delivered certificates evidencing Shares to be delivered in settlement of any DSUs, unless and until such issuance and delivery can be completed in compliance with the applicable laws, regulations, rules, orders of governmental or regulatory authorities and the requirements of all applicable stock exchanges upon which Shares are listed. The Corporation shall be obligated to take all reasonable action, on a timely basis, to comply with any such laws, regulations, rules, orders, or requirements.
(d) If Shares may not be issued pursuant to any DSUs due to any Black Out Period, such Share issuance shall occur seven business days following the end of the Black Out Period (or such longer period as permitted by applicable regulatory authorities and approved by the Committee).
4.8. Death of Participant Prior to Distribution
Upon the death of a Participant prior to the distribution of the Payment Shares in respect of Deferred Share Units credited to the account of such Participant under the Plan, the Payment Shares shall be issued to the estate of such Participant on or about the thirtieth (30th) day after the Corporation is notified of the death of the Participant or on a later date elected by the Participant’s estate in the form prescribed for such purposes by the Corporation and delivered to the Chief Financial Officer of the Corporation not later than twenty (20) days after the Corporation is notified of the death of the Participant, provided that such elected date is no later than the last business day of the calendar year following the calendar year in which the Participant dies so that payment can be made on or before such last business day. The number of Payment Shares issued shall be equivalent to the number which would have been issued to the Participant pursuant to and subject to Section 4.7, on the basis that the day on which the Participant dies, or the date elected by the estate, as applicable, is the Distribution Date. Upon payment in full of the value of all of the Deferred Share Units that become payable under this Section 4.8, less any Applicable Withholding Amounts, the Deferred Share Units shall be cancelled and no further payments will be made from the Plan in relation to the Participant.
4.9. Adjustments to Deferred Share Units
In the event of any subdivision, consolidation, stock dividend, capital reorganization, reclassification, exchange, or other change with respect to the Shares, or a consolidation, amalgamation, merger, spin-off, sale, lease or exchange of all or substantially all of the property of the Corporation or other distribution of the Corporation’s assets to shareholders (other than the payment of dividends in respect of the Shares as contemplated by Section 4.3), the account of each Participant and the Deferred Share Units outstanding under the Plan shall be adjusted in such manner, if any, as the Board may in its discretion deem appropriate to preserve, proportionally, the interests of Participants under the Plan.
4.10. [Intentionally Deleted]
(a) A Participant shall be solely responsible for reporting and paying income tax payable in respect of the Shares received by the Participant under this Plan. The Corporation will provide each Participant who is resident in Canada with (or cause each Participant to be provided with) a T4 slip or such information return as may be required by applicable law to report income, if any, arising upon the grant or exercise of rights under this Plan by a Participant who is resident in Canada for income tax purposes.
(b) Further to Section 4.7(a) and (b) of this Plan, the Corporation shall have the power and the right to deduct or withhold, or require (as a condition of exercise) a Participant to remit to the Corporation, the Applicable Withholding Amounts to satisfy, in whole or in part, federal, provincial, and local taxes, domestic or foreign, required by law to be withheld with respect to any taxable event arising as a result of this Plan, including the grant or exercise of Deferred Share Units granted under this Plan. With respect to Applicable Withholding Amounts, the Corporation shall have the irrevocable right to (and the Participant consents to the Corporation) setting off any amounts required to be withheld, in whole or in part, against amounts otherwise owing by the Corporation to such Participant (whether arising pursuant to the Participant relationship as an officer or employee of the Corporation or as a result of the Participant providing services on an ongoing basis to the Corporation or otherwise), or may make such other arrangements as are satisfactory to the Participant and the Corporation. In addition, the Corporation may elect, in its sole discretion, to satisfy the Applicable Withholding Amounts, in whole or in part, by withholding such number of Payment Shares as it determines are required to be sold by the Corporation, as trustee, to satisfy the Applicable Withholding Amounts net of selling costs (which costs shall be the responsibility of the Participant and which shall be and are authorized to be deducted from the proceeds of sale). The Participant consents to such sale and grants to the Corporation an irrevocable power of attorney to effect the sale of such Payment Shares and acknowledges and agrees that the Corporation does not accept responsibility for the price obtained on the sale of such Payment Shares. Any reference in this Plan to the issuance of Payment Shares or a payment of cash is expressly subject to this paragraph 4.11(b).
5.1. Amendment, Suspension, or Termination of Plan
(a) The Board may amend or discontinue this Plan or amend any DSU at any time without the consent of a Participant, provided that such amendment shall not adversely alter or impair any DSU previously granted under the Plan, except as otherwise permitted hereunder. In addition, the Board may, by resolution, amend this Plan and any DSU granted under it without shareholder approval, provided however, that at any time while the Shares are listed for trading on the TSXV the Board will not be entitled to amend this Plan or any DSU granted under it without shareholder approval and, if applicable, TSXV approval: (i) to increase the maximum number of Shares issuable pursuant to this Plan; (ii) to extend the term of a DSU; (iii) to permit the assignment or transfer of a DSU other than as provided for in this Plan; (iv) to add to the categories of persons eligible to participate in this Plan; (v) to remove or amend Sections 4.4(a), 4.4(c) or 4.4(d) of this Plan; (vii) to remove or amend this Section 5.1(a); or (vii) in any other circumstances where TSXV and shareholder approval is required by the TSXV.
(b) Without limitation of Section 5.1(a), the Board may correct any defect or supply any omission or reconcile any inconsistency in this Plan in the manner and to the extent deemed necessary or desirable, may establish, amend, and rescind any rules and regulations relating to this Plan, and may make such determinations as it deems necessary or desirable for the administration of this Plan.
(c) If the Board terminates or suspends the Plan, previously credited DSUs may, at the Committee’s election, be distributed to Participants or may remain outstanding and in effect in accordance with the terms of the Plan. If DSUs remain outstanding after Plan termination or suspension, such DSUs shall not be entitled to Dividend Equivalents unless, at the time of termination or suspension, the Committee determines that the entitlement to Dividend Equivalents after termination or during suspension, as applicable, should be continued. Subject to the foregoing sentence, if the Board terminates or suspends the Plan, no new Deferred Share Units will be credited to the account of a Participant.
(d) The Board shall not require the consent of any affected Participant in connection with a termination of the Plan in which Payment Shares are issued to the Participant in respect of all such Deferred Share Units.
(e) The Plan will terminate on the date upon which no further DSUs remain outstanding.
5.2. Compliance with Laws
The administration of the Plan shall be subject to and made in conformity with all applicable laws and any applicable regulations of a duly constituted regulatory authority. Should the Committee, in its sole discretion, determine that it is not feasible or desirable to carry out a distribution of Deferred Share Units due to such laws or regulations, its obligation shall be satisfied by means of an equivalent cash payment (equivalence being determined on a before-tax basis). If the Committee determines that the listing, registration or qualification of the Shares subject to this Plan upon any securities exchange or under any provincial, state, federal or other applicable law, or the consent or approval of any governmental body or stock exchange is necessary or desirable, as a condition of, or in connection with, the crediting of DSUs or the issue of Payment Shares hereunder, the Corporation shall be under no obligation to credit DSUs or issue Payment Shares hereunder unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.
5.3. Reorganization of the Corporation
The existence of any Deferred Share Units shall not affect in any way the right or power of the Corporation or its shareholders to make or authorize any adjustment, recapitalization, reorganization or other change in the Corporation’s capital structure or its business, or to create or issue any bonds, debentures, shares or other securities of the Corporation or to amend or modify the rights and conditions attaching thereto or to effect the dissolution or liquidation of the Corporation, or any amalgamation, combination, merger or consolidation involving the Corporation or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar nature or otherwise.
Rights and obligations under the Plan may be assigned by the Corporation to a successor in the business of the Corporation, any company resulting from any amalgamation, reorganization, combination, merger or arrangement of the Corporation, or any company acquiring all or substantially all of the assets or business of the Corporation.
5.5. DSU’s Non-Transferable
Except as required by law, the rights of a Participant hereunder are not capable of being assigned, transferred, alienated, sold, encumbered, pledged, mortgaged or charged and are not capable of being subject to attachment or legal process for the payment of any debts or obligations of the Participant.
5.6. Participation is Voluntary; No Additional Rights
The participation of any Participant in the Plan is entirely voluntary and not obligatory and shall not be interpreted as conferring upon such Participant any rights or privileges other than those rights and privileges expressly provided in the Plan. In particular, participation in the Plan does not constitute a condition of employment or service nor a commitment on the part of the Corporation to ensure the continued employment or service of such Participant. Nothing in this Plan shall be construed to provide the Participant with any rights whatsoever to participate or continue participation in this Plan or to compensation or damages in lieu of participation, whether upon termination of service as an Eligible Director or otherwise. The Corporation does not assume responsibility for the personal income or other tax consequences for the Participants and they are advised to consult with their own tax advisors.
5.7. No Shareholder Rights
Under no circumstances shall Deferred Share Units be considered Shares or other securities of the Corporation, nor shall they entitle any Participant to exercise voting rights or any other rights attaching to the ownership of Shares or other securities of the Corporation, nor shall any Participant be considered the owner of Shares by virtue of the award of Deferred Share Units.
5.8. Unfunded and Unsecured Plan
Unless otherwise determined by the Board, the Plan shall be unfunded and the Corporation will not secure its obligations under the Plan. To the extent any Participant or his or her estate holds any rights by virtue of a grant of Deferred Share Units under the Plan, such rights (unless otherwise determined by the Board) shall be no greater than the rights of an unsecured creditor of the Corporation.
5.9. Market Fluctuations
No amount will be paid to, or in respect of, a Participant under the Plan to compensate for a downward fluctuation in the price of Shares, nor will any other form of benefit be conferred upon, or in respect of, a Participant for such purpose. The Corporation makes no representations or warranties to Participants with respect to the Plan or the Shares whatsoever. In seeking the benefits of participation a Participant agrees to accept all risks associated with a decline in the market price of Shares.
5.10. Participant Information
Each Participant shall provide the Corporation with all information (including personal information) required by the Corporation in order to administer the Plan. Each Participant acknowledges that information required by the Corporation in order to administer the Plan may be disclosed to the Board and other third parties in connection with the administration of the Plan. Each Participant consents to such disclosure and authorizes the Corporation to make such disclosure on the Participant’s behalf.
Every director of the Corporation will at all times be indemnified and saved harmless by the Corporation from and against all costs, charges and expenses whatsoever including any income tax liability arising from any such indemnification, that such director may sustain or incur by reason of any action, suit or proceeding, taken or threatened against the director, otherwise than by the Corporation, for or in respect of any act done or omitted by the director in respect of this Plan, such costs, charges and expenses to include any amount paid to settle such action, suit or proceeding or in satisfaction of any judgment rendered therein.
5.12. Effective Date of the Plan
This Plan becomes effective on a date to be determined by the Board.
5.13. Governing Law
The Plan shall be governed by, and interpreted in accordance with, the laws of the Province of Alberta and the laws of Canada applicable therein, without regard to principles of conflict of laws.
APPROVED by the Board this ___ day of _________, 2015.
VIQ Solutions Inc.
1 800 263 9947