EXHIBIT 10.8
COREL CORPORATION
EQUITY INCENTIVE PLAN
Section 1. Purpose. The purposes of this Corel Corporation Equity
Incentive Plan (the "Plan") are to encourage selected employees, officers,
directors and consultants of, and other individuals providing services to, Corel
Corporation (together with any successor, the "Company") and its Affiliates (as
defined below) to acquire a proprietary interest in the growth and performance
of the Company, to generate an increased incentive to contribute to the
Company's future success and prosperity thus enhancing the value of the Company
for the benefit of its shareholders, and to enhance the ability of the Company
and its Affiliates to attract and retain exceptionally qualified individuals
upon whom, in large measure, the sustained progress, growth and profitability of
the Company depend.
Section 2. Definitions. As used in the Plan, the following terms
will have the meanings set out below:
"Affiliate" means, with respect to any entity, any entity that,
directly or through one or more intermediaries, is controlled by such entity,
including any entity in which such entity owns a significant equity interest, as
determined by the Committee.
"Award" means any Option, Share Appreciation Right, Restricted
Share, Restricted Share Unit, Performance Share Unit, or Other Share-Based Award
granted under the Plan.
"Award Agreement" means any written agreement, contract or other
instrument or document evidencing any Award granted under the Plan.
"Board" means the Board of Directors of the Company.
"Cause", as used in connection with the termination of a
Participant's employment, means (1) with respect to any Participant employed
under a written employment agreement with the Company or an Affiliate of the
Company which agreement includes a definition of "cause," "cause" as defined in
that agreement or, if that agreement contains no such definition, a material
breach by the Participant of that agreement, or (2) with respect to any other
Participant, the failure to perform adequately in carrying out the Participant's
employment responsibilities, including any directives from the Board, or the
Participant engaging in behavior in the Participant's personal or business life
as to lead the Committee in its reasonable judgment to determine that it is in
the best interests of the Company to terminate the Participant's employment.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated under it.
"Committee" means the Compensation Committee of the Board, provided,
however, to the extent deemed necessary or appropriate, a committee other than
the Compensation Committee may be designated by the Board to administer the Plan
and such other committee may be vested with any of the powers and
responsibilities hereunder and shall be
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considered the Committee for any and all of such purposes hereunder. To the
extent the Company desires to grant Incentive Stock Options, such committee
shall be composed of not less than two directors of the Company, neither of whom
shall be employees of the Company or its Affiliates and each of whom shall
otherwise be "outside directors" for purposes of Section 162(m) of the Code. To
the extent the Company is no longer a "foreign private issuer" as defined in
Exchange Act Rule 3b-4 and wishes to have a "Qualified Plan" as defined in Rule
16b-3(b)(4), such committee shall be composed of not less than two directors of
the Company, each of whom are "non-employee directors" for purposes of Exchange
Act Section 16 and Rule 16b-3 thereunder.
"Common Shares" means any or all, as applicable, of the common
shares of the Company and any other securities or property as may become the
subject of Awards, or become subject to Awards, pursuant to an adjustment made
under Section 4(b) of the Plan and any other securities of the Company or any
Affiliate or any successor that may be so designated by the Committee.
"Consultant" means any consultant of, or other individual providing
services to, the Company or any Affiliate, provided that, for purposes of Awards
made to individuals in Canada, a consultant means a person that (1) is engaged
to provide services to the Company and/or an Affiliate, other than services
provided in relation to a distribution of securities, (2) provides the services
under a written contract with the Company and/or the Affiliate and (3) spends or
will spend a significant amount of time and attention on the affairs and
business of the Company and/or the Affiliate.
"Control Person" means, with respect to any entity, a person that
controls such entity.
"Employee" means any employee of the Company or of any Affiliate.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended.
"Fair Market Value" means (1) with respect to any property other
than the Common Shares, the fair market value of that property determined by
those methods or procedures as may be established from time to time by the
Committee and (2) with respect to the Common Shares, the closing sale price
reported for such Common Shares on the date of reference on the Principal
Market. If there is no closing sale price reported on any such date, the Fair
Market Value will be determined by the Committee in accordance with the
regulations promulgated under Section 2031 of the Code, or by any other
appropriate method selected by the Committee.
"Good Reason", as used in connection with the termination of a
Participant's employment, means (1) with respect to any Participant employed
under a written employment agreement with the Company or an Affiliate of the
Company, "good reason" or similar term as defined in that written agreement or,
if such agreement contains no such definition, a material breach by the Company
of that agreement, or (2) with respect to any other Participant, a failure
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by the Company to pay that Participant any amount otherwise vested and due and a
continuation of that failure for 30 business days following notice to the
Company of that failure.
"Incentive Stock Option" means an option granted under Section 6(a)
of the Plan that is intended to meet the requirements of Section 422 of the Code
or any successor provision.
"insider" has the same meaning as found in the Securities Act
(Ontario), as amended, and also includes associates and affiliates of the
insider; and "issuances to insiders" includes direct and indirect issuances to
insiders.
"Non-Qualified Stock Option" means an option granted under Section
6(a) of the Plan that is not intended to be an Incentive Stock Option. Any stock
option granted by the Committee which is not designated an Incentive Stock
Option will be deemed a Non-Qualified Stock Option.
"Option" means an Incentive Stock Option or a Non-Qualified Stock
Option.
"Other Share-Based Award" means any right granted under Section
6(e)(i) of the Plan.
"Participant" means any individual granted an Award under the Plan.
"Performance Share Unit" means any right granted under Section 6(e)
of the Plan.
"Person" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
government or political subdivision of a government.
"Principal Market" means the principal stock exchange, quotation
system or other market on which the Common Shares are listed, admitted to
trading, posted for trading or quoted upon which has occurred the greatest
trading volume of the Common Shares for the six months (or, to the extent the
Common Shares have not been listed, admitted to trading, posted for trading or
quoted for at least six months, the next longest period since the Common Shares
were initially listed, admitted to trading, posted for trading or quoted) prior
to the date of reference, provided, however, that to the extent deemed necessary
or appropriate, the Principal Market shall be as determined by the Committee in
accordance with applicable law, rules and regulations.
"Released Securities" means securities that were Restricted Shares
but with respect to which all applicable restrictions have expired, lapsed or
been waived in accordance with the terms of the Plan or the applicable Award
Agreement.
"Restricted Shares" means any Common Shares granted under Section
6(c) of the Plan, any right granted under Section 6(c) of the Plan that is
denominated in Common Shares or any other Award under which issued and
outstanding Common Shares are held subject to certain restrictions.
"Restricted Share Unit" means a right to receive a Common Share or
the Fair Market Value of a Common Share granted under Section 6(d) of the Plan.
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"Securities Act" means the United States Securities Act of 1933, as
amended.
"Share Appreciation Right" means any right granted under Section
6(b) of the Plan.
"Significant Event" means, unless otherwise defined in an Award
Agreement or a written employment agreement between the Company and a
Participant (which definition shall govern), the occurrence of any of the
following events: (1) a person or group of persons becomes the beneficial owner
of securities of the Company constituting 50% or more of the voting power of all
outstanding voting securities of the Company, (2) a majority of the Company's
Board as of the date of adoption of this Plan (including any successors approved
by the then existing Board) cease to constitute a majority of the Board; (3) a
merger, consolidation, amalgamation or arrangement of the Company (or a similar
transaction) occurs, unless after the event, 50% or more of the voting power of
the combined company is beneficially owned by the same person or group of
persons as immediately before the event; or (4) the Company's shareholders
approve a plan of complete liquidation or winding-up of the Company, or the sale
or disposition of all or substantially all the Company's assets (other than a
transfer to an Affiliate of the Company); provided that the following shall not
constitute a Significant Event: (i) any person or group of persons becoming the
beneficial owner of the threshold of securities specified in (1) as a result of
the acquisition of securities by the Company or a subsidiary which, by reducing
the number of securities outstanding, increases the proportional number of
securities beneficially held by that person or group of persons, (ii) any
acquisition of securities directly from the Company in connection with a bona
fide financing or series of financings by the Company, (iii) any acquisition by
an employee benefit plan (or related trust) sponsored or maintained by the
Company or its Affiliates or (iv) beneficial ownership by Corel Holdings, L.P.,
its Affiliates and/or its Control Persons or any increased ownership by any of
them.
"U.S. Participant" means any Participant residing in the United
States or who is a U.S. citizen.
Section 3. Administration.
(a) The Plan will be administered by the Committee subject to the
Committee reporting to the Board as required by the
Committee's mandate.
(b) Subject to the terms of the Plan and applicable law, and in
addition to other express powers and authorizations conferred
on the Committee by the Plan, the Committee will have full
power and authority to, subject to the Plan: (1) designate
Participants; (2) determine the type or types of Awards to be
granted to an eligible Employee or other individual under the
Plan; (3) determine the number and classification of Common
Shares to be covered by (or with respect to which payments,
rights or other matters are to be calculated in connection
with) Awards; (4) determine the terms and conditions of any
Award; (5) determine whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash,
Common Shares, other securities, other Awards or other
property, or canceled, forfeited or suspended, and the method
or methods by which
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Awards may be settled, exercised, canceled, forfeited or
suspended; (6) determine requirements for the vesting or
exercisability of Awards or performance criteria to be
achieved in order for Awards to vest, the acceleration of
vesting or the waiver of forfeiture or other restrictions on
awards; (7) determine whether, to what extent and under what
circumstances cash, Common Shares, other securities, other
Awards, other property and other amounts payable with respect
to an Award under the Plan will be deferred either
automatically or at the election of the holder or of the
Committee; (8) interpret and administer the Plan and any
instrument or agreement relating to, or Award made under, the
Plan; (9) establish, amend, suspend or waive any rules and
regulations and appoint any agents as it will deem appropriate
for the proper administration of the Plan; (10) determine
whether awards will be adjusted for dividend entitlements;
(11) amend or adjust the terms and conditions of outstanding
Awards; (12) implement an Award exchange program, (13) arrange
for financing by broker-dealers (including payment by the
Company of commissions) and establish award exercise
procedures, (14) establish procedures for payment of
withholding tax obligations with cash or shares and (15) make
any other determination and take any other action that the
Committee deems necessary or desirable for the administration
of the Plan.
(c) Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other
decisions under or with respect to the Plan or any Award will
be within the sole discretion of the Committee, may be made at
any time and will be final, conclusive and binding upon all
Persons, including the Company, any Affiliate, any
Participant, any holder or beneficiary of any Award, any
shareholder and any Employee.
(d) Any reference in this Plan to the date of termination or
cessation or a Participant's employment shall mean the
Participant's last day of active employment and shall not
include any period of statutory, contractual or reasonable
notice or any period of deemed employment.
(e) Notwithstanding the foregoing, the maximum number of Common
Shares underlying or relating to Awards which may be granted
to any one Participant under this Plan in any calendar year
will not exceed 500,000 Common Shares, subject to the
adjustments provided in Section 4(b), and no Awards under this
Plan will be granted after December 31, 2015.
(f) Notwithstanding anything to the contrary in this Plan:
(i) the maximum number of securities of the Company issuable
to insiders at any time under (A) this Plan and (B) all
of the Company's other security based compensation
arrangements, shall not exceed ten percent (10%) of the
Company's total issued and outstanding securities,
subject to the adjustments provided in Section 4(b); and
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(ii) the maximum number of securities of the Company issued
to insiders within any one year period under (A) this
Plan and (B) all of the Company's other security based
compensation arrangements, shall not exceed ten percent
(10%) of the Company's total issued and outstanding
common shares, subject to the adjustments provided in
Section 4(b).
Section 4. Common Shares Available for Awards.
(a) Common Shares Available. Subject to adjustment as provided in
Section 4(b):
(i) Calculation of Number of Common Shares Available. The
number of Common Shares available for granting Awards
under the Plan initially will be 2,850,000 any or all of
which Awards may be or may be based on Common Shares,
any other related security or any combination. In
addition, no more than 500,000 Common Shares may be
issued on the exercise of Incentive Stock Options and no
more than 700,000 Common Shares may be issued as
Restricted Shares.
(ii) Shares Becoming Again Available. If, after the effective
date of the Plan, any Common Shares covered by an Award
granted under the Plan or to which such an Award relates
lapses, expires, terminates or is forfeited; are settled
in cash; or otherwise terminate or are canceled without
the delivery of Common Shares or other consideration,
and Common Shares surrendered to the Company as payment
of exercise price, withholding tax or as part of an
Award exchange program will to that extent again be, or
will become, available for granting Awards under the
Plan.
(iii) Accounting for Awards. For purposes of this Section 4,
(A) if an Award is denominated in or based upon Common
Shares, the number of Common Shares covered by
that Award or to which that Award relates will be
counted on the date of grant of that Award against
the total number of Common Shares available for
granting Awards under the Plan and against the
maximum number of Awards available to any
Participant; and
(B) Awards not denominated in Common Shares may be
counted against the total number of Common Shares
available for granting Awards under the Plan and
against the maximum number of Awards available to
any participant in that amount and at such time as
the
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Committee determines under procedures adopted by
the Committee consistent with the purposes of the
Plan;
provided, however, that Awards that operate in tandem
with (whether granted simultaneously with or at a
different time from), or that are substituted for, other
Awards may be counted or not counted under procedures
adopted by the Committee in order to avoid double
counting.
Any Common Shares that are delivered by the Company, and
any Awards that are granted by, or become obligations
of, the Company, through the assumption by the Company
or an Affiliate of, or in substitution for, outstanding
awards previously granted by an acquired company will,
in the case of Awards granted to Participants who are
executive officers or directors of the Company, be
counted against the Common Shares available for granting
Awards under the Plan.
(iv) Sources of Common Shares Deliverable Under Awards. Any
Common Shares delivered pursuant to an Award may
consist, in whole or in part, of authorized and unissued
Common Shares or of outstanding Common Shares acquired
on the open market.
(b) Adjustments. In the event that the Committee determines that
any dividend or other distribution (whether in the form of
cash, Common Shares, other securities or other property),
recapitalization, stock split, stock dividend, reverse stock
split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase or exchange of Common Shares
or other securities of the Company, issuance of warrants or
other rights to purchase Common Shares or other securities of
the Company, or other similar corporate transaction or event
affects the Common Shares such that an adjustment is
determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan, then
the Committee will, in any manner as it may deem equitable,
adjust any or all of (1) the number and kind of Common Shares
(or other securities or property) which thereafter may be made
the subject of Awards, (2) the number and kind of Common
Shares (or other securities or property) subject to
outstanding Awards, and (3) the grant or exercise price with
respect to any Award or, if deemed appropriate, make provision
for a cash payment to the holder of an outstanding Award;
provided, however, that the number of Common Shares subject to
any Award denominated in Common Shares will always be a whole
number.
(c) Significant Events. If a Significant Event occurs, and unless
otherwise provided in an Award Agreement or a written
employment contract between the Company and a Participant and
except as otherwise set out in
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this paragraph, the Committee, in its sole discretion, may
provide that (1) the successor corporation will assume each
Award or replace it with a substitute Award, (2) the Awards
will become exercisable or vested in whole or in part upon
written notice, (3) the Awards will be surrendered for a cash
payment, or (4) any combination of the foregoing will occur.
Awards to Participants who are directors of the Company shall
automatically become exercisable and vested in full on the
occurrence of a Significant Event. If a U.S. Participant is
entitled to receive payments that would qualify as excess
"parachute payments'" under Section 280G of the Code, those
payments may be reduced so that the participant is not subject
to the excise tax under Section 4999 of the Code if such a
reduction would result in the U.S. Participant receiving a
greater after-tax payment.
Section 5. Eligibility. Any Employee, including any officer or
employee-director of the Company or of any Affiliate, and any Consultant of the
Company or any Affiliate will be eligible to be designated a Participant. A
non-employee director will be eligible to receive Non-Qualified Stock Options
under the Plan. No more than 500,000 Common Shares may be the subject of the
total Awards granted to any one Participant in any calendar year. In the case of
any "specified employee" who is a U.S. Participant, distributions may not be
made prior to the date which is 6 months after the date of separation from
service (or, if earlier, the date of death of the Employee). For purposes of the
preceding sentence, a specified employee is a key employee (as defined in
section 416(i) of the Code without regard to paragraph (5) thereof).
Section 6. Awards.
(a) Options. The Committee is hereby authorized to grant to
eligible individuals options to purchase Common Shares (each,
an "Option") which will contain the following terms and
conditions and with any additional terms and conditions, in
either case not inconsistent with the provisions of the Plan,
as the Committee determines:
(i) Exercise Price. The purchase price per Common Share
purchasable under an Option will be determined by the
Committee; provided, however, that the exercise price
will not be less than one hundred percent (100%) of the
Fair Market Value of a Common Share on the date of grant
of that Option, or any other price as required under
Section 6(a)(iv).
(ii) Time and Method of Exercise. Subject to the terms of
Section 6(a)(iii), the Committee will determine the time
or times at which an Option may be exercised in whole or
in part, and the method or methods by which, and the
form or forms (including, without limitation, cash,
Common Shares, outstanding Awards, or other property, or
any combination thereof, having a Fair Market Value on
the exercise date equal to the relevant exercise price)
in
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which, payment of the exercise price with respect
thereto may be made or deemed to have been made.
(iii) Exercisability Upon Death, Retirement and Termination of
Employment. Subject to the condition that no Option may
be exercised in whole or in part after the expiration of
the Option period specified in the applicable Award
Agreement:
(A) Subject to the terms of paragraph (D) below, upon
the death of a Participant while employed or
within three (3) months of retirement or
disability as defined in paragraph (B) below, the
Person or Persons to whom such Participant's
rights with respect to any Option held by such
Participant are transferred by will or the laws of
descent and distribution may, prior to the
expiration of the earlier of: (1) the outside
exercise date determined by the Committee at the
time of granting the Option, or (2) twelve (12)
months after such Participant's death, purchase
any or all of the Common Shares with respect to
which such Participant was entitled to exercise
such Option immediately prior to such
Participant's death, and any Options not so
exercisable will lapse on the date of such
Participant's death;
(B) Subject to the terms of paragraph (D) below, upon
termination of a Participant's employment with the
Company (x) as a result of retirement pursuant to
a retirement plan of the Company or an Affiliate
or disability (as determined by the Committee) of
such Participant, (y) by the Company other than
for Cause, or (z) by the Participant with Good
Reason, such Participant may, prior to the
expiration of the earlier of: (1) the outside
exercise date determined by the Committee at the
time of granting the Option, or (2) three (3)
months after the date of such termination,
purchase any or all of the Common Shares with
respect to which such Participant was entitled to
exercise any Options immediately prior to such
termination, and any Options not so exercisable
will lapse on such date of termination;
(C) Subject to the terms of paragraph (D) below, upon
termination of a Participant's employment with the
Company under any circumstances not described in
paragraphs (A) or (B) above, such Participant's
Options will be immediately canceled to the extent
not theretofore exercised;
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(D) Upon (i) the death of the Participant, or (ii)
termination of the Participant's employment with
the Company (x) by the Company other than for
Cause (y) by the Participant with Good Reason or
(z) as a result of retirement or disability as
defined in paragraph (B) above, the Company will
have the right to cancel all of the Options such
Participant was entitled to exercise at the time
of such death or termination (subject to the terms
of paragraphs (A) or (B) above) for a payment in
cash equal to the excess, if any, of the Fair
Market Value of one Common Share on the date of
death or termination over the exercise price of
such Option for one Common Share times the number
of Common Shares subject to the Option and
exercisable at the time of such death or
termination; and
(E) Upon expiration of the respective periods set out
in each of paragraphs (A) through (B) above, the
Options of a Participant who has died or whose
employment has been terminated will be canceled to
the extent not theretofore canceled or exercised.
(F) For purposes of paragraphs (A) through (D) above,
the period of service of an individual as a
director or Consultant of the Company or an
Affiliate will be deemed the period of employment.
(iv) Incentive Stock Options. The following provisions will
apply only to Incentive Stock Options granted under the
Plan:
(A) No Incentive Stock Option will be granted to any
eligible Employee who, at the time such Option is
granted, owns securities possessing more than ten
percent (10%) of the total combined voting power
of all classes of securities of the Company or of
any Affiliate, except that such an Option may be
granted to such an Employee if, at the time the
Option is granted, the exercise price is at least
one hundred ten percent (110%) of the Fair Market
Value of the Common Shares (determined in
accordance with Section 2) subject to the Option,
and the Option by its terms is not exercisable
after the expiration of five (5) years from the
date the Option is granted; and
(B) To the extent that the aggregate Fair Market Value
of the Common Shares with respect to which
Incentive Stock Options (without regard to this
subsection) are exercisable for the first time by
any individual during any calendar year (under all
plans of the Company and its Affiliates) exceeds
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$100,000, such Options will be treated as
Non-Qualified Stock Options. This subsection will
be applied by taking Options into account in the
order in which they were granted. If some but not
all Options granted on any one day are subject to
this subsection, then such Options will be
apportioned between Incentive Stock Option and
Non-Qualified Stock Option treatment in such
manner as the Committee will determine. For
purposes of this subsection, the Fair Market Value
of any Common Shares will be determined, in
accordance with Section 2, as of the date the
Option with respect to such Common Shares is
granted.
(b) Share Appreciation Rights. The Committee is hereby authorized
to grant to eligible Employees "Share Appreciation Rights."
Each Share Appreciation Right will consist of a right to
receive the excess of (1) the Fair Market Value of one Common
Share on the date of exercise or, if the Committee will so
determine in the case of any such right other than one related
to any Incentive Stock Option, at any time during a specified
period before or after the date of exercise over (2) the grant
price of the right as specified by the Committee, which will
not be less than one hundred percent (100%) of the Fair Market
Value of one Common Share on the date of grant of the Share
Appreciation Right, which amount will be satisfied in cash or
in Common Shares with a Fair Market Value determined as at the
applicable date, equal to such amount or in a combination
thereof. Subject to the terms of the Plan and any applicable
Award Agreement, the grant price, term, methods of exercise,
methods of settlement and any other terms and conditions of
any Share Appreciation Right granted under the Plan will be as
determined by the Committee. The Committee may impose such
conditions or restrictions on the exercise of any Share
Appreciation Right as it may deem appropriate, provided that
Share Appreciation Rights may be payable on a deferred basis
only to the extent provided for in the applicable Award
Agreement. Share Appreciation Rights may be granted in
conjunction with a related Option or separately as a
free-standing Share Appreciation Right.
(c) Restricted Shares.
(i) Issuance. The Committee is hereby authorized to grant to
eligible Employees "Restricted Shares" which will
consist of the right to receive, by purchase or
otherwise, Common Shares which are subject to such
restrictions as the Committee may impose (including,
without limitation, any limitation on the right to vote
such Common Shares or the right to receive any dividend
or other right or property), which restrictions may
lapse separately or in combination at such time or
times, in such installments or otherwise, as the
Committee may deem appropriate.
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(ii) Registration. Restricted Shares granted under the Plan
may be evidenced in such manner as the Committee may
deem appropriate, including, without limitation,
book-entry registration or issuance of a share
certificate or certificates. In the event any share
certificate is issued in respect of Restricted Shares
granted under the Plan, that certificate will be
registered in the name of the Participant and will bear
an appropriate legend referring to the terms, conditions
and restrictions applicable to those Restricted Shares.
(iii) Forfeiture. Except as otherwise determined by the
Committee, upon termination of a Participant's
employment for any reason during the applicable
restriction period, all of the Participant's Restricted
Shares which had not become Released Securities by the
date of termination of employment will be forfeited and
reacquired by the Company; provided, however, that the
Committee may, when it finds that a waiver would be in
the best interests of the Company, waive in whole or in
part any or all remaining restrictions with respect to
the Participant's Restricted Shares. Unrestricted Common
Shares, evidenced in any manner as the Committee will
deem appropriate, will be issued to the holder of
Restricted Shares promptly after those Restricted Shares
become Released Securities.
(d) Restricted Share Units. The Committee is hereby authorized to
grant to eligible Employees "Restricted Share Units" each of
which will consist of the right to receive one Common Share or
cash equal to the Fair Market Value of one Common Share,
subject to the terms of any applicable Award Agreement and
which are subject to such restrictions as the Committee may
impose which restrictions may lapse separately or in
combination at any time or times, in such installments or
otherwise, as the Committee may deem appropriate. The
Committee may impose any conditions or restrictions on the
exercise of Restricted Share Units as it may deem appropriate.
The Committee may also grant Restricted Share Units that are
designated as "Deferred Share Units", which may have all of
the rights and restrictions that may be applicable to
Restricted Share Units, except that the Deferred Share Units
may not be redeemed for Common Shares or cash equal to the
Fair Market Value of Common Shares until the Participant has
ceased to hold all offices, employment and directorships with
the Company and its Affiliates.
(e) Performance Share Units.
(i) The Committee is hereby authorized to grant to eligible
Employees "Performance Share Units." Each Performance
Share Unit will consist of a right, (i) denominated or
payable in cash, Common Shares, other securities or
other property (including, without
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limitation, Restricted Shares), and (ii) which will
confer on the holder thereof rights valued as determined
by the Committee and payable to, or exercisable by, the
holder of the Performance Share Unit, in whole or in
part, upon the achievement of such performance goals
during such performance periods as the Committee will
establish.
(ii) The initial value of a Performance Share Unit will be
established by the Committee at the date of grant and,
to the extent related to Common Shares, other securities
or other property will initially be equal to 100% of the
Fair Market Value of a Common Share, such other security
or such other property on the date of grant.
(iii) Subject to the terms of the Plan and any applicable
Award Agreement, the performance goals to be achieved
during any performance period, the length of any
performance period, the amount of any Performance Share
Unit granted, the termination of a Participant's
employment and the amount of any payment or transfer to
be made pursuant to any Performance Share Unit will be
determined by the Committee and by the other terms and
conditions of any Performance Share Unit.
(iv) The Committee will issue performance goals prior to the
commencement of the performance period to which such
performance goals pertain. The performance goals may be
based upon the achievement of corporation-wide,
divisional or individual goals, or any other basis
determined by the Committee. The Committee may modify
the performance goals as necessary to align them with
the Company's corporate objectives if there is a
subsequent material change in the Company's business,
operations or capital or corporate structure.
(f) Other Share-Based Awards. The Committee is hereby authorized
to grant to eligible Employees "Other Share-Based Awards."
Each Other Share-Based Award will consist of a right (1) which
is other than an Award or right described in Section 6(a),
(b), (c), (d) or (e) above and (2) which is denominated or
payable in, valued in whole or in part by reference to, or
otherwise based on or related to, Common Shares (including,
without limitation, securities convertible into Common Shares)
as are deemed by the Committee to be consistent with the
purposes of the Plan; provided, however, that such right will
comply, to the extent deemed desirable by the Committee, with
applicable law. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee will determine the
terms and conditions of Other Share-Based Awards. Common
Shares or other securities delivered pursuant to a purchase
right granted under this Section 6(e)(i) will be purchased for
such consideration, which may be paid by such method or
methods and in such form or forms,
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including, without limitation, cash, Common Shares, other
securities, other Awards, other property, or any combination
thereof, as the Committee will determine.
(g) General.
(i) No Cash Consideration for Awards. Awards may be granted
for no cash consideration or for such minimal cash
consideration as may be required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards
may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in
substitution for any other Award, except that in no
event will an Incentive Stock Option be granted together
with a Non-Qualified Stock Option in such a manner that
the exercise of one Option affects the right to exercise
the other. Awards granted in addition to or in tandem
with other Awards may be granted either at the same time
as or at a different time from the grant of such other
awards.
(iii) Forms of Payment Under Awards. Subject to the terms of
the Plan and of any applicable Award Agreement, payments
or transfers to be made by the Company or an Affiliate
upon the grant, exercise or payment of an Award may be
made in such form or forms as the Committee will
determine, including, without limitation, cash, Common
Shares, other securities, other Awards, or other
property, or any combination thereof, and may be made in
a single payment or transfer, in installments, or on a
deferred basis, in each case in accordance with rules
and procedures established by the Committee. Such rules
and procedures may include, without limitation,
provisions for the payment or crediting of reasonable
interest on installment or deferred payments. In
accordance with the above, the Committee may elect (1)
to pay a Participant (or such Participant's permitted
transferee) upon the exercise of an Option in whole or
in part, in lieu of the exercise thereof and the
delivery of Common Shares thereunder, an amount of cash
equal to the excess, if any, of the Fair Market Value of
one Common Share on the date of such exercise over the
exercise price of such Option for one Common Share times
the number of Common Shares subject to the Option or
portion thereof so exercised or (2) to settle other
share-denominated Awards in cash. The Committee may
provide for financing by broker-dealers (including
payment by the Company of commissions) and may establish
procedures (including broker-dealer assisted cashless
exercise) for payment of withholding tax obligations in
cash or in Common Shares.
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(iv) Limits on Transfer of Awards.
(A) No award (other than Released Securities), and no
right under any such Award, may be assigned,
alienated, pledged, attached, sold or otherwise
transferred or encumbered by a Participant
otherwise than by will or by the laws of descent
and distribution (or, in the case of Restricted
Shares, to the Company) and any such purported
assignment, alienation, pledge, attachment, sale
or other transfer or encumbrance will be void and
unenforceable against the Company or any
Affiliate.
(B) Each award, and each right under any Award, will
be exercisable during the Participant's lifetime
only by the Participant or, if permissible under
applicable law, by the Participant's guardian or
legal representative.
(v) Terms of Awards. The term of each Award will be for such
period as may be determined by the Committee; provided,
however, that in no event will the term of any Option
exceed a period of ten years from the date of its grant.
(vi) Common Share Certificates. All certificates for Common
Shares delivered under the Plan pursuant to any Award or
the exercise thereof will be subject to any stop
transfer orders and other restrictions as the Committee
may deem advisable under the Plan or the rules,
regulations, and other requirements of the Securities
and Exchange Commission, any stock exchange upon which
such Common Shares are then listed, and any applicable
federal, state, provincial or territorial securities
laws, and the Committee may cause a legend or legends to
be put on any such certificates to make appropriate
reference to such restrictions.
(vii) Delivery of Common Shares or Other Securities and
Payment by Participant of Consideration. No Common
Shares or other securities will be delivered pursuant to
any Award until payment in full of any amount required
to be paid pursuant to the Plan or the applicable Award
Agreement is received by the Company. Such payment may
be made by such method or methods and in such form or
forms as the Committee will determine, including,
without limitation, cash, Common Shares, other
securities, other Awards or other property, or any
combination thereof; provided that the combined value,
as determined by the Committee, of all cash and cash
equivalents and the Fair Market Value of any such Common
Shares or other property so tendered to the Company, as
of the date of such tender, is at least equal to the
full amount required to be
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paid pursuant to the Plan or the applicable Award
Agreement to the Company.
Section 7. Amendments; Adjustments and Termination. Except to the
extent prohibited by applicable law and unless otherwise expressly provided in
an Award Agreement or in the Plan:
(a) Amendments to the Plan. Subject to Section 7(g) and the
requirements of applicable law, rules and regulations, the
Board may amend, alter, suspend, discontinue, or terminate the
Plan without the consent of any shareholder, Participant,
other holder or beneficiary of an Award, or other Person;
provided, however, that, subject to the Company's rights to
adjust Awards under Section 7(e) and (f), any amendment,
alteration, suspension, discontinuation, or termination that
would impair the rights of any Participant, or any other
holder or beneficiary of any Award previously granted, will
not to that extent be effective without the consent of that
Participant, other holder or beneficiary of an Award, as the
case may be; and provided further, however, that
notwithstanding any other provision of the Plan or any Award
Agreement, without the approval of the shareholders of the
Company no amendment, alteration, suspension, discontinuation,
or termination will be made that would:
(i) increase the total number of Common Shares available for
Awards under the Plan, except as provided in Section 4;
or
(ii) otherwise cause the Plan to cease to comply with any tax
or regulatory requirement, including for these purposes
any approval or other requirement.
(b) Section 409A of the Code. This Plan will be construed and
interpreted to comply with Section 409A of the Code to the
extent required to preserve the intended tax consequences of
this Plan. The Company reserves the right to amend this Plan
to the extent it reasonably determines is necessary in order
to preserve the intended tax consequences of this Plan in
light of Section 409A of the Code and any regulations or
guidance under that section. In no event will the Company be
responsible if Awards under this Plan result in penalties to a
U.S. Participant under Section 409A of the Code.
(c) Section 162(m) of the Code. Performance-based awards to U.S.
Participants must be made by an independent committee. Awards
to any Participant whom the independent committee determines
to be a "covered employee" under Section 162(m) of the Code
may be subject to restrictions, including the establishment of
performance goals, as necessary for the Award to meet the
requirements set out in the Code for performance-based
compensation.
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(d) Amendments to Awards. The Committee may waive any conditions
or rights under, amend any terms of, or alter, suspend,
discontinue, cancel or terminate, any Award previously
granted, prospectively or retroactively; provided, however,
that, subject to the Company's rights to adjust Awards under
Section 7(e) and (f), any amendment, alteration, suspension,
discontinuation, cancellation or termination that would impair
the rights of any Participant or holder or beneficiary of any
Award previously granted, will not to that extent be effective
without the consent of the Participant or holder or
beneficiary of an Award, as the case may be.
(e) Adjustment of Awards Upon Certain Acquisitions. In the event
the Company or any Affiliate assumes outstanding employee
awards or the right or obligation to make future awards in
connection with the acquisition of another business or another
corporation or business entity, the Committee may make any
adjustments, not inconsistent with the terms of the Plan, in
the terms of Awards as it deems appropriate in order to
achieve reasonable comparability or other equitable
relationship between the assumed awards and the Awards granted
under the Plan as so adjusted.
(f) Adjustments of Awards Upon the Occurrence of Certain Unusual
or Nonrecurring Events. The Committee is hereby authorized to
make adjustments in the terms and conditions of, and the
criteria included in, Awards in recognition of unusual or
non-recurring events (including, without limitation, the
events described in Section 4(b) or Section 4(c)) affecting
the Company, any Affiliate, or the financial statements of the
Company or any Affiliate, or of changes in applicable laws,
regulations, or accounting principles, whenever the Committee
determines that those adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan.
(g) Termination. The Plan will automatically terminate on January
1, 2016 unless we elect to terminate it sooner.
Section 8. General Provisions.
(a) No Right to Awards. No Employee or other Person will have any
claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Employees, or
holders or beneficiaries of Awards under the Plan. The terms
and conditions of Awards need not be the same with respect to
each recipient.
(b) Delegation. Subject to the terms of the Plan and applicable
law, the Committee may delegate to one or more officers or
managers of the Company or any Affiliate, or to a committee of
such officers or managers, the authority, subject to such
terms and limitations as the Committee will
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determine, to grant Awards to, or to cancel, modify, waive
rights with respect to, alter, discontinue, suspend, or
terminate Awards.
(c) Correction of Defects, Omissions, and Inconsistencies. The
Committee may correct any defect, supply any omission, or
reconcile any inconsistency in the Plan or any Award in the
manner and to the extent it will deem desirable to carry the
Plan into effect.
(d) Withholding. The Company or any Affiliate will be authorized
to withhold from any Award granted, from any payment due or
transfer made under any Award or under the Plan or from any
compensation or other amount owing to a Participant the amount
(in cash, Common Shares, other securities, other Awards, or
other property) of withholding, taxes or other amounts payable
by the Company, any Affiliate or the Participant and which are
due or payable in respect of an Award, its exercise, or any
payment or transfer under such Award or under the Plan and to
take any other action as may be necessary in the opinion of
the Company or Affiliate to satisfy all obligations for the
payment of those taxes. Neither the Corporation nor any
Participating Company shall be held responsible for any tax or
other liabilities or consequences which result from the
Participant's participation in this Plan, including any
employment related taxes or benefit costs, whether or not such
costs are the primary responsibility of the Corporation or any
Participating Company.
(e) No Limit on Other Compensation Arrangements. Nothing contained
in the Plan will prevent the Company or any Affiliate from
adopting or continuing in effect other or additional
compensation arrangements, and those arrangements may be
either generally applicable or applicable only in specific
cases.
(f) No Right to Employment. The grant of an Award will not be
construed as giving a Participant the right to be retained in
the employ, as an officer or director or as a Consultant of
the Company or any Affiliate. Further, the Company or an
Affiliate may at any time dismiss a Participant from
employment, as an office or director or as a Consultant, ,
free from any liability, or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award
Agreement.
(g) Governing Law. The validity, construction, and effect of the
Plan and any rules and regulations relating to the Plan will
be determined in accordance with the laws of the Province of
Ontario and the federal laws of Canada applicable in Ontario.
(h) Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable
in any jurisdiction or as to any Person or Award under any law
deemed applicable by the Committee, that provision will be
construed or deemed amended to conform to
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applicable laws, or if it cannot be construed or deemed
amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, that
provision will be stricken as to that jurisdiction, Person or
Award and the remainder of the Plan and any such Award will
remain in full force and effect.
(i) No Trust or Fund Created. Neither the Plan nor any Award will
create or be construed to create a trust or separate fund of
any kind or a fiduciary relationship between the Company or
any Affiliate and a Participant or any other Person. To the
extent that any Person acquires a right to receive payments
from the Company or any Affiliate pursuant to an Award, that
right will be no greater than the right of any unsecured
general creditor of the Company or any Affiliate.
(j) No Fractional Common Shares. No fractional Common Shares will
be issued or delivered pursuant to the Plan or any Award, and
the Committee will determine whether cash, other securities,
or other property will be paid or transferred in lieu of any
fractional Common Shares or whether those fractional Common
Shares or any rights thereto will be canceled, terminated, or
otherwise eliminated.
(k) Headings. Headings are given to the Sections and subsections
of the Plan solely as a convenience to facilitate reference.
Those headings will not be deemed in any way material or
relevant to the construction or interpretation of the Plan or
any provision of the Plan.
Section 9. Adoption, Approval, Effective Date and Termination Date
of the Plan. The Plan will be adopted by the Board of Directors and the
shareholders of the Company prior to the completion of the Company's initial
public offering (the "IPO") and will become effective immediately prior to the
closing of the IPO.