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ADVANCED GRAVIS COMPUTER TECHNOLOGY LTD.
DIRECTORS', OFFICERS', AND EMPLOYEES' STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
Advanced Gravis Computer Technology Ltd. (the "Corporation") by
resolution of the Board of Directors of the Corporation (the "Board") has
established this Directors', Officers', and Employees' Stock Option Plan (the
"Plan") to encourage directors, officers and employees of the Corporation and
its subsidiaries ("Subsidiaries") to promote the financial interest, growth and
development of the Corporation by providing them with the opportunity through
options to acquire a proprietary interest in the Corporation.
2. ADMINISTRATION
The Plan shall be administered by the Compensation Committee (the
"Committee") appointed from time to time by the Board or, if no Committee has
been appointed by the Board, the Plan shall be administered by the Board (in
such case the Board shall hereinafter also be referred to as the "Committee").
The Committee shall include not less than three members of the Board, two of
whom are not officers or employees of the Corporation and who have not been
officers or employees of the Corporation within one year of their beginning
service on the Committee.
3. GRANT OF OPTIONS
From time to time the Committee may designate qualified directors,
officers and employees (including part-time employees and others who are engaged
to provide management or consulting services on an on-going basis, or who have
provided, or who are expected to provide services of value) of the Corporation
and its Subsidiaries ("Optionees") eligible to receive options ("Options") to
purchase common shares (the "Shares") of the Corporation. Nothing in the Plan or
in any Option shall confer any right on any employee to continue in the employ
of the Corporation or of its Subsidiaries or shall interfere in any way with the
right of the Corporation or of its Subsidiaries to terminate at any time the
employment of a person who is an Optionee under an Option.
The aggregate number of Shares subject to such Options, as provided in
clause 4 hereof, shall be granted by the Corporation subject to the approval of
the shareholders of the Corporation (or ratification by the shareholders
provided that no
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Shares are issued prior to such ratification), in accordance with the prevailing
rules and policies of the regulatory authorities having jurisdiction over the
affairs of the Corporation, (the "Regulatory Authorities") and to the approval
of the Committee from time to time.
4. SHARES SUBJECT TO OPTION
The Shares to be subject to Options under the Plan shall be authorized
but unissued common shares in the capital of the Corporation.
Options may be granted for an aggregate of up to 1,000,000 Shares,
subject to adjustment of such number pursuant to the provisions of clause 10
hereof. Such number of Shares shall be reserved for issuance under the Plan. The
aggregate number of Shares reserved for issuance under this Plan and any other
share compensation arrangement to any one person will not exceed 5%, and the
aggregate number of shares reserved for issuance to all insiders of the
Corporation will not exceed 10%, of the issued shares of the Corporation
outstanding from time to time (on a non-diluted basis) as determined in
accordance with applicable policies of The Toronto Stock Exchange (the
"Outstanding Issue"). The number of shares issued under this Plan and any other
share compensation arrangement within any one year period to any one insider and
such insider's associates will not exceed 5%, and the number of shares issued
under this Plan and any other share compensation arrangement within any one year
period to insiders will not exceed 10%, of the Outstanding Issue.
"Insiders" and "associates" have the meaning ascribed to those terms
under Section 627 of The Toronto Stock Exchange Company Manual.
Shares in respect of which Options expire or are surrendered, cancelled
or terminated are available for subsequent grants of Options. Options which are
surrendered for cancellation in connection with the re-grant to the same
optionee on different terms will be subject to prior regulatory approval.
5. OPTION PRICE
The Option price under the Plan to any Optionee shall be fixed by the
Committee when the Option is granted but may not be less than the closing price
of the Shares on the Toronto Stock Exchange on the trading day preceding the
date of the grant of the Option. In the event that there is no trade of the
Shares on the Toronto Stock Exchange on such trading day, then the Option price
of the Option shall not be less than the average of the closing bid and ask
prices of the Shares on such day.
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6. TERM AND VESTING OF OPTION
The period during which an Option is exercisable will commence one year
from the date the Option is granted in the case of an Optionee that on the date
of the grant of the Option is a member of the Board and is not an officer or
employee of the Corporation and has not been an officer or employee of the
Corporation within one year preceding the date of the grant. In the case of all
other Optionees, the period during which Options are exercisable will commence
one year from the date of grant (as to 25% of the Option) and, at the end of
each calendar quarter thereafter for the next 36 months (as to 6.25% per
quarter). Subject to the provisions of the Plan, the period during which an
Option can be exercised shall not exceed ten (10) years from the date the Option
is granted.
Notwithstanding the foregoing, in the event of a "formal bid" (as that
term is defined in the Securities Act (British Columbia)) for the issued and
outstanding common shares of the Corporation by any corporation, person or other
entity, then the Option shall vest immediately as to 100% upon the making of
such bid. Each Optionee holding an option at the time of such bid may exercise
his option, to the extent the option has not expired and has not been exercised,
cancelled, terminated or surrendered, so as to permit the Optionee to tender the
Shares received upon such exercise pursuant to such bid.
7. EVIDENCE OF OPTIONS
Each Option granted under the Plan shall be embodied in a written
option agreement (the "Option Agreement") between the Corporation and the
Optionee which shall give effect to and be consistent with the provisions of the
Plan.
8. EXERCISE OF OPTION
Subject to the provisions of the Plan and the Option Agreement applying
to such Option, an Option may be exercised from time to time, after vesting and
before expiry, by the Optionee delivering to the Corporation at its head office
a written notice of exercise, specifying the number of Shares (being a minimum
multiple of 100 shares or such lesser number as is equal to the number of
Options held by the Optionee or in respect of which exercise rights have been
vested pursuant to clause 6 hereof) with respect to which the Option is being
exercised, and accompanied by payment in cash, money order, certified cheque or
wire transfer of funds in full for the purchase price of the Shares then being
purchased.
The exercise of any Option will be contingent upon receipt by the
Corporation of payment in cash, money order, certified cheque or wire transfer
of funds of the full
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purchase price of the Shares which are subject to the exercised Option. No
Optionee or his or her legal representatives, legatees or distributees will be,
or will be deemed to be, a holder of any Shares with respect to which he or she
has been granted an Option under the Plan, unless and until certificates for
such Shares are issued to him or her, or them, under the terms of the Plan.
9. SHARE APPRECIATION RIGHTS
Notwithstanding the foregoing and at the sole discretion of the
Committee, an Optionee may under the Plan, by notice in writing to the
Corporation, surrender his right to purchase Shares pursuant to the outstanding
portion of an Option granted to him. In the event of such surrender, the
Optionee is entitled to receive on such terms and conditions as may be
prescribed by the Option Agreement relating to such Option, payment in cash or
Shares, or a combination thereof, equal in value to the difference, if any,
after deducting (a) the aggregate Option exercise price of such shares from (b)
the market price of such Shares determined by calculating the average of the
daily high and low board lot trading prices quoted on The Toronto Stock Exchange
for the Shares at the close of business on the five trading days immediately
preceding the day on which the Optionee submits the notice of surrender.
In no event shall stock appreciation rights be exercised at any time
earlier or later or to a greater extent than the Option to which they relate.
Stock appreciation rights under this clause 9 may be exercised only by
written notice to the head office of the Corporation, in a form satisfactory to
it. The Committee shall have sole discretion to consent to or to disapprove the
election of the Optionee to receive cash in full or partial settlement of the
stock appreciation rights.
If any Option is surrendered in part under this clause 9, it shall
remain in effect without change as to the number of Shares with respect to which
it has not been surrendered. Any surrender shall not affect the right of an
Optionee to be granted further Options.
The Committee may require as a condition of the surrender of an Option
for Shares, cash, or cash and Shares, that the person seeking to surrender the
Option shall, in any jurisdiction where the Corporation is required to withhold
any taxes with respect to such surrender, pay to the Corporation in cash an
amount sufficient to satisfy the Corporation's obligation.
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10. ADJUSTMENTS
Appropriate adjustments in the number of Shares that are subject to
Options and in the Option Price Per Share, both as to Options granted or to be
granted, may be made by the Board in its discretion, subject to the approval if
required of the Regulatory Authorities, to give effect to adjustments in the
number of Shares which result from divisions, consolidations or
reclassifications of the Shares; the reconstruction, reorganization or
recapitalization of the Corporation; or other relevant changes in the capital of
the Corporation. If the Corporation sells all or substantially all of its assets
as an entirety or substantially as an entirety, Options outstanding under the
Plan, to the extent that as of the date of such sale they have not expired and
have not been exercised, cancelled, terminated or surrendered, shall fully vest
and may be exercised in whole or in part at any time up to and including (but
not after) a date 30 days following the date of completion of such sale or prior
to the close of business on the date the Option expires, whichever is earlier.
11. MERGERS
If the Corporation proposes to amalgamate or merge with another body
corporate, the Corporation will give written notice thereof to Optionees at
least 30 days prior to the effective date of such amalgamation or merger to
enable them to exercise outstanding Options if they so elect, to the extent that
as of the date of such amalgamation or merger they have vested and have not
expired, and have not been exercised, cancelled, terminated or surrendered. The
Corporation shall use it best efforts to provide for the reservation and
issuance by the amalgamated corporation to each Optionee of the Corporation any
portion of whose Options remain outstanding and unexercised as of the effective
date of the amalgamation or merger, of a pro rata number of shares of the
amalgamated corporation (on the basis of the number of Shares as to which
Options remain outstanding and unexercised) at the same aggregate purchase price
adjusted according to the increase or decrease in the number of Shares resulting
from such amalgamation or merger.
12. AMENDMENT OR DISCONTINUANCE OF THE PLAN
Subject to any prior approval that may be required by the Regulatory
Authorities or by the shareholders of the Corporation, the Committee may amend
or discontinue the Plan at any time. If the approval or ratification by the
shareholders of the Corporation is required then no Shares will be issued
pursuant to such amendment prior to obtaining such approval or ratification. No
such amendment may alter or impair any Option previously granted to an Optionee
under the Plan without the consent of the Optionee.
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13. TERMINATION
If an Optionee ceases to be employed by or an officer of, or provide
services to, the Corporation or any of its Subsidiaries for cause, any option or
the unexercised portion thereof granted to such Optionee shall terminate
forthwith. If an Optionee ceases to be engaged to provide services to, employed
by or an officer of the Corporation or any of its Subsidiaries for any reason
(other than cause and other than as a result of death, retirement or
circumstances equating to retirement as determined by the Committee) or, in the
case of employees, shall receive notice from the Corporation or any of its
Subsidiaries of the termination of his or her employment (in each such case, the
"Termination") such Optionee may, but only within thirty (30) days next
succeeding such Termination, exercise his or her Option to the extent that he or
she was entitled to exercise such Option under clause 6 at the date of such
Termination, including the rights under clause 9. In the case of officers that
have been terminated other than for cause and other than as a result of death,
retirement, or circumstances equating to retirement as determined by the
Committee, and in the case of a director that ceases to act as director, such
Optionee may, but only within six months next succeeding such termination or
cessation, exercise his or her Option to the extent that he or she was entitled
to exercise such Option under clause 6 at the date of such termination or
cessation, including the rights under clause 9. To the extent that an option has
not fully vested as at the date of a Termination, or any such termination or
cessation in the case of an officer or director, no further vesting shall occur
after such date.
14. DEATH
Notwithstanding any other provision of the Plan, if any Optionee shall
die holding an Option which has vested and has not expired and which has not
been exercised, cancelled, terminated or surrendered, his or her executors,
administrators or legal personal representatives may, within one year after the
date of such death (but in no event later than the normal expiry date of such
Option if sooner under the provisions of clause 6 above), exercise the Option,
to the extent that the Optionee was entitled to exercise such Option under
clause 6 at the date of death, including the rights under clause 9. To the
extent that an option has not fully vested as at the date of death of the
Optionee, no further vesting shall occur after such date.
15. RETIREMENT
Notwithstanding any other provision of this Plan, if an Optionee shall
retire, or terminate his or her employment or office with the consent of the
Committee or the Board under circumstances equating to retirement, while holding
an Option which has vested and has not expired and which has not been fully
exercised, cancelled,
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terminated or surrendered, such Optionee may exercise the Option to the extent
that the Optionee was entitled to exercise such Option under clause 6 at the
date of retirement, or termination including the rights under clause 9, within
three years after the date of such retirement or termination (but in no event
later than the normal expiry date of such Option under the provisions of clause
6). The determination as to whether an Optionee has retired, or shall have
terminated his or her employment or office under circumstances equating to
retirement, shall be solely within the discretion of the Board or the Committee.
16. TRANSFERABILITY OF OPTIONS
An Option (including the rights granted under clause 9) may not be
transferred. An Option (including the rights granted under clause 9) may be
exercised only by the Optionee or his or her legal personal representative.
17. CANCELLATION AND REGRANT OF OPTIONS
The Committee may, subject to the prior approval of the Regulatory
Authorities and subject to any shareholder approval or ratification that may be
required, with the consent of the Optionee, cancel an existing Option and
regrant the Option at an Option price determined in the same manner as provided
in clause 5.
18. INTERPRETATION
The Plan shall be construed according to the laws of the Province of
British Columbia. The Plan shall also comply with the general requirements of
The Toronto Stock Exchange. In the event of any differences arising between the
provisions of the Plan and the requirements of The Toronto Stock Exchange, the
requirements of The Toronto Stock Exchange shall apply.
19. LIABILITY
No member of the Committee or any director or officer or employee of
the Corporation or any Subsidiaries shall be personally liable for any act taken
or omitted in good faith in connection with this Plan.
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