NOVOPHARM BIOTECH INC.
1996 SHARE INCENTIVE PLAN
DATED FOR REFERENCE MARCH 29, 1996
ARTICLE 1
PURPOSE AND INTERPRETATION
PURPOSE
1.1 The purpose this Share Incentive Plan will be to advance the interests of
the Company by encouraging equity participation in the Company through the
acquisition of Common Shares of the Company.
DEFINITIONS
1.2 In the Plan
ASSOCIATE has the meaning assigned by the Securities Act;
BOARD means the board of directors of the Company;
CHANGE OF CONTROL means the acquisition by any person or by any person
and its joint actors (as such term is defined in the Securities Act),
whether directly or indirectly, of voting securities (as such term is
defined in the Securities Act) of the Company which,' when added to all
other voting securities of the Company at the time held by such person
and its joint actors, totals for the first time not less than 35% of
the outstanding voting securities of the Company;
COMMON SHARES means common shares without par value in the capital of
the Company;
COMPANY means Novopharm Biotech Inc.;
DIRECTOR means a director of the Company or any of its subsidiaries;
EFFECTIVE DATE for an Option means the date of grant thereof;
EMPLOYEE means an individual who is an employee of the Company or of
any subsidiary or affiliate Company including the Novopharm Biotech
Partnership;
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EXPIRY DATE means the day on which an Option lapses as specified in the
Commitment therefor;
INSIDER means
(i) an insider as defined in the Securities Act, other than a
person who fits within that definition solely by virtue of
being a director or senior officer of a subsidiary of the
Company, and
(ii) an Associate of any person who is an insider by virtue of
Section (i);
NOVOPHARM BIOTECH PARTNERSHIP means the Partnership formed between the
Company and Novopharm Limited;
OPTION means the right to purchase Common Shares granted hereunder to a
Service Provider;
OPTION COMMITMENT means the notice of grant of an Option delivered by
the Company hereunder to a Service Provider and substantially in the
form of Schedule "A" hereto;
OPTIONED SHARES means Common Shares subject to an Option;
OPTIONEE means an individual to whom an Option is granted by the
Company under the Plan;
OUTSTANDING ISSUE means the number of Common Shares outstanding on a
non-diluted basis excluding shares issued pursuant to share
compensation arrangements over the preceding one-year period;
PARTICIPANT means a person that becomes an Optionee or is issued Common
Shares under the Share Bonus Plan;
PLAN means the Share Option Plan the terms of which are set out herein;
REGULATORY APPROVAL means the approval of the Vancouver Stock Exchange,
the Toronto Stock Exchange or any other securities regulatory agency
that may have jurisdiction in the circumstances;
RESERVED FOR ISSUANCE refers to Common Shares that may be issued in the
future upon the exercise of stock options which have been granted;
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SECURITIES ACT means the Securities Act, S.B.C. 1985, c. 83, as amended
from time to time;
SERVICE PROVIDER means
(i) an employee or director of the Company or of any of its
subsidiaries or affiliates including the Novopharm Biotech
Partnership, and
(ii) any other person or company engaged to provide directly
or indirectly ongoing management consulting and other research
or collaboration services to the Company or any of its
subsidiaries or affiliates, including the Novopharm Biotech
Partnership;
SHARE COMPENSATION ARRANGEMENT means the Plan described herein and any
other stock option, stock option plan, employee stock purchase plan or
any other compensation or incentive mechanism involving the issuance or
potential issuance of shares to one or more Service Providers,
including a share purchase from treasury which is financially assisted
by the Company by way of a loan, guaranty or otherwise;
SUBSCRIPTION PRICE means the amount payable per Common Share on the
exercise of an Option, as determined in accordance with section 3.1;
TAKE OVER BID has the meaning assigned to that term in the Securities
Act but excludes an exempt take over bid pursuant to section 80 of the
Securities Act.
ARTICLE 2
SHARE OPTION PLAN
ESTABLISHMENT OF SHARE OPTION PLAN
2.1 There is hereby established a Share Option Plan to recognize contributions
made by Service Providers and to create an incentive for their continuing
relationship with the Company and its subsidiaries and affiliates. Any share
options granted by the Company prior to the date hereof, all of which are listed
in Schedule B hereto, are not included hereunder or affected hereby.
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ELIGIBILITY
2.2 Options to purchase unissued Common Shares may be granted hereunder to
Service Providers.
INCORPORATION OF TERMS OF SHARE OPTION PLAN
2.3 Subject to specific variations approved by the Board, all terms and
conditions set out herein will be incorporated into and form part of an Option
granted hereunder.
MAXIMUM SHARES TO BE ALLOTTED
2.4 The maximum aggregate number of Common Shares that are Reserved for Issuance
under the Plan is 1,500,000 Common Shares.
LIMITATIONS ON ISSUE
2.5 The number of Common Shares Reserved for Issue to any person under this Plan
shall in no event exceed 5% of the then Outstanding Issue.
2.6 No Option may be granted if, together with any other Share Compensation
Arrangement, it could result, at any time, in
(a) the number of Common Shares that may be Reserved for Issuance under
the Plan pursuant to Share Compensation Arrangements (including stock
options under any pre-existing share compensation arrangement) granted
to Insiders exceeding 10% of the then Outstanding Issue,
(b) the number of Common Shares that may be issued to Insiders within a
one year period exceeding 10% of the Outstanding Issue (or 5% to any
one Insider and his or her associates), and
(c) the number of Common Shares Reserved for Issuance to any one
Insider and such Insider's associates pursuant to Share Compensation
Arrangements (including stock options under any pre-existing Share
Compensation Arrangement) exceeding within one year 5% of the
Outstanding Issue.
SHARES NOT ACQUIRED
2.7 Any Common Shares not acquired under an Option which has expired or been
cancelled or terminated may be made the subject of a further Option pursuant to
the provisions of the Plan.
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POWERS OF THE BOARD
2.8 The Board will be responsible for the general administration of the Plan and
the proper execution of its provisions, the interpretation of the Plan and the
determination of all questions arising hereunder. Without limiting the
generality of the foregoing, the Board has the power to
(a) allot Common Shares for issuance in connection with Options granted
under the Plan,
(b) grant Options hereunder,
(c) subject to Regulatory Approval, amend, suspend, terminate or
discontinue the Plan, or revoke or alter any action taken in connection
therewith, except that no amendment or suspension of [he Plan will,
without the written consent of all Optionees, alter or impair any
Option granted under the Plan,
(d) save and except for the provisions of Section 2.8(a), delegate all
or such portion of its powers hereunder as it may determine to one or
more committees of the Board, either indefinitely or for such period of
time as it may specify, and thereafter each such committee may exercise
the powers and discharge the duties of the Board in respect of the Plan
so delegated to the same extent as the Board is hereby authorized so to
do, and
(e) may in its sole discretion reduce the benefits that may be granted
to Service Providers under the Plan but may not increase such benefits.
ARTICLE 3
TERMS AND CONDITIONS OF OPTIONS
SUBSCRIPTION PRICE
3.1 The Subscription Price per Optioned Share shall be the greater of:
(a) the closing price for the Common Shares an the stock exchange on
which the Common Shares of the Company are traded at the date of the
grant on the last trading day before the date of grant of the Option;
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(b) if the Board determines that the Subscription Price determined in
Section (a) is not a representative price, the weighted average of the
trading prices for the Common Shares on the five trading days before
the date of grant of the Option;
(c) if the Company's Common Shares are listed on more than one stock
exchange at the date of grant of the Option, then as calculated in (a)
and (b) above using the trading price or prices on the stock exchange
on which a majority of the Common Shares are listed; or
(d) if the Common Shares arc not listed on a stock exchange then the
price determined by the Board using good faith discretion.
TERM OF OPTION
3.2 (a) Subject to Section 3.2(b) and (c), the term of an Option will be
five years from the Effective Date thereof.
(b) If the Board determines that in the case of an Optionee
(i) hired or appointed for special purposes not expected to
exceed five years,
(ii) likely to retire within five years from the date of
grant, or
(iii) whose employment or appointment is otherwise subject to
special circumstances (such circumstances to be determined by
the Board in its discretion),
it is desirable to grant to such an Optionee an Option which may be
wholly exercised during a period less than five years from the
Effective Date or for which the vesting of rights should be varied, the
Board shall have the power to vary the terms of that Optionee's Option
in such manner as in its discretion the Board shall determine. In no
event will the term of any Option be longer than 10 years.
(c) The Board may provide in the case of a particular Optionee that in
the event of a Change of Control or Take Over Bid, the Option held by
that Optionee may be exercised by the Optionee in full at any time or
from time to rime on or before its Expiry Date.
VESTING OF OPTION RIGHTS
3.3 Subject to Section 3.4, Options granted under the Plan shall vest and be
cumulatively exercisable in instalments at a rate to be fixed by the Board which
will generally be in equal
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thirds over a 36-month period. Options may be exercised only after vesting and
may not be exercised after the tenth anniversary of the grant of the Option.
Vesting, at the discretion of the Board, will generally be subject to:
(a) the Service Provider remaining employed by or continuing to provide
services to the Company or any of its subsidiaries and affiliates
including the Novopharm Biotech Partnership and receiving a
satisfactory performance review by the Company or its subsidiary or
affiliate during the vesting period; or
(b) remaining as a Director of the Company or any of its subsidiaries
or affiliates during the vesting period.
VARIATION OF VESTING PERIODS
3.4 At the time an Option is granted the Board may determine with respect to any
Service Provider that it is desirable to grant to the Service Provider an Option
for which the vesting of rights should be other than as provided in Section 3.3,
and may fix such vesting period for that Option as it may, in its sole
discretion, determine to be appropriate. However, in no event will any Option be
exercisable after the tenth anniversary of the granting of such Option.
OPTIONEE CEASING TO BE DIRECTOR, EMPLOYEE OR SERVICE PROVIDER
3.5 No Option may be exercised after the Optionee, if a Director has ceased to
be a Director or if an Employee or other Service Provider has left the employ or
service of the Company or any of its subsidiaries and affiliates, except as
follows:
(a) in the case of the death of an Optionee, any Option held by him at
the date of death shall become exercisable, whether or not the Optionee
was eligible to exercise the Option at the date of the Optionee's
death, in whole or in part but only by the person or persons to whom
the Optionee's rights under the Option shall pass by the Optionee's
will or laws of descent and distribution. All such Options shall be
exercisable only for six months after the date of death or prior to the
expiration of the term of the Option in respect thereof, whichever is
sooner unless the Board otherwise determines to extend such period;
(b) if an Optionee ceases to be an Employee or Service Provider to the
Company or any of its subsidiaries or affiliates (other than as a
result of termination with cause) or ceases to act as a Director of the
Company or a subsidiary of the Company, an Option held by such Optionee
may be exercised following the date an which such Optionee ceases to be
so employed or providing services or ceases to be a Director, as the
case may be for a period of thirty (30) days (unless the Board
determines to
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extend this period in special circumstances) but only to the extent
that the Optionee was eligible to exercise the Option at the date the
Optionee ceased to be an Employee, Service Provider or Director of the
Company or any subsidiary or affiliate of the Company; and
(c) in the case of an Optionee being dismissed from employment or
service for cause, the Option and all option rights that had accrued to
the Optionee to the date of termination shall immediately terminate;
but provided that in no event may the term of the Option exceed 10 years.
NON ASSIGNABLE
3.6 Subject to Section 3.5(a) an Option shall be exercisable only by the
Optionee to whom it is granted and shall not be assignable.
ADJUSTMENT OF THE NUMBER OF OPTIONED SHARES
3.7 The number of Common Shares subject to an Option will be subject to
adjustment in the events and in the manner following:
(a) in the event of a subdivision of Common Shares as constituted on
the date hereof, at any time while an Option is in effect, into a
greater number of Common Shares, the Company will thereafter deliver at
the time of purchase of Optioned Shares hereunder, in addition to the
number of Optioned Shares in respect of which the right to purchase is
then being exercised, such additional number of Common Shares as result
from the subdivision without an Optionee making any additional payment
or giving any other consideration therefor,
(b) in the event of a consolidation of the Common Shares as constituted
on the date hereof, at any time while an Option is in effect, into a
lesser number of Common Shares, the Company will thereafter deliver and
an Optionee will accept, at the time of purchase of Optioned Shares
hereunder, in lieu of the number of Optioned Shares in respect of which
the right to purchase is then being exercised, the lesser number of
Common Shares as result from the consolidation,
(c) in the event of any change of the Common Shares as constituted on
the date hereof, at any time while an Option is in effect, the Company
will thereafter deliver at the time of purchase of Optioned Shares
hereunder the number of shares of the appropriate class resulting from
the said change as an Optionee would have been entitled to receive in
respect of the number of Common Shares so purchased had the right to
purchase been exercised before such change,
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(d) in the event of a capital reorganization, reclassification or
change of outstanding equity shares (other than a change in the par
value thereof) of the Company, a consolidation, merger or amalgamation
of the Company with or into any other company or a sale of the property
of the Company as or substantially as an entirety at any time while an
Option is in effect, an Optionee will thereafter have the right to
purchase and receive, in lieu of the Optioned Shares immediately
theretofore purchasable and receivable upon the exercise of the Option,
the kind and amount of shares and other securities and property
receivable upon such capital reorganization, reclassification, change,
consolidation, merger, amalgamation or sale which the holder of a
number of Common Shares equal to the number of Optioned Shares
immediately theretofore purchasable and receivable upon the exercise of
the Option would have received as a result thereof. The subdivision or
consolidation of Common Shares at any time outstanding (whether with or
without par value) will not be deemed to be a capital reorganization or
a reclassification of the capital of the Company for the purposes of
this Section 3.7(d),
(e) an adjustment will take effect at the time of the event giving rise
to the adjustment, and the adjustments provided for in this Section are
cumulative,
(f) the Company will not be required to issue fractional shares in
satisfaction of its obligations hereunder. Any fractional interest in a
Common Share that would, except for the provisions of this Section
3.7(f), be deliverable upon the exercise of an Option will be cancelled
and not be deliverable by the Company, and
(g) if any questions arise at any time with respect to the Subscription
Price or number of Optioned Shares deliverable upon exercise of an
Option in any of the events set out in this Section 3.7, such questions
will be conclusively determined by the Company's auditors, or, if they
decline to so act, any other firm of Chartered Accountants, in
Vancouver, British Columbia or Toronto, Ontario that the Company may
designate and who will have access to all appropriate records and such
determination will be binding upon the Company and all Optionees.
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ARTICLE 4
PROCEDURE
OPTION COMMITMENT
4.1 Upon grant of an Option hereunder, the Secretary of the Company will deliver
to the Optionee an Option Commitment detailing the terms of his or her Option
and upon such delivery the Service Provider will be a Participant in the Plan
and have the right to purchase the Optioned Shares at the Subscription Price set
out therein.
MANNER OF EXERCISE
4.2 An Optionee who wishes to exercise his Option may do so by delivering
(a) a written notice to the Company specifying the number of Optioned
Shares being acquired pursuant to the Option, and
(b) cash or a certified cheque payable to the Company for the aggregate
Subscription Price for the Optioned Shares being acquired.
DELIVERY OF CERTIFICATE
4.3 Not later than five days after receipt of the notice of exercise described
in Section 4.2 and payment in full for the Optioned Shares being acquired, the
Company will direct its transfer agent to issue a certificate to the Optionee
for the appropriate number of Optioned Shares.
ARTICLE 5
GENERAL
TRANSFERABILITY
5.1 The benefits, rights and options accruing to any Optionee under any of the
Plan will not be transferable by any Optionee other than in the manner provided
for in the Plan. During the lifetime of an Optionee, all benefits, rights and
options may only be exercised by the Optionee or by his guardian or legal
representative.
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EMPLOYMENT AND SERVICES
5.2 Nothing contained in the Plan will confer upon any Optionee any right with
respect to employment or provision of services with the Company or any
subsidiary or affiliate of the Company, or interfere in any way with the right
of the Company to terminate the Optionee's employment or service at any time.
Participation in the Plan by an Optionee will be voluntary.
NO REPRESENTATION OR WARRANTY
5.3 The Company makes no representation or warranty as to the future market
value of Common Shares issued in accordance with the provisions of the Plan.
INTERPRETATION
5.4 The Plan will be governed and construed in accordance with the laws of the
Province of British Columbia.
AMENDMENT OF THE PLAN
5.5 The Board reserves the right, in its absolute discretion, to at any time
amend, modify or terminate the Plan. Any amendment to any provision of the Plan
will be subject to any necessary approvals by any stock exchange or regulatory
body having jurisdiction over the securities of the Company.