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Exhibit 10.16
FLONETWORK INC.
SHARE INCENTIVE PLAN
1. Purpose
The purpose of this Share Incentive Plan, as amended and restated from
time to time (the "Plan") of FloNetwork Inc., a corporation incorporated under
the laws of Ontario, Canada (the "Company"), is to advance the interests of the
Company's shareholders by enhancing the Company's ability to attract, retain and
motivate persons who make (or are expected to make) important contributions to
the Company by providing such persons with equity ownership opportunities and
performance-based incentives and thereby better aligning the interests of such
persons with those of the Company's shareholders. Except where the context
otherwise requires, the term "Company" shall include any of the Company's
present or future subsidiary corporations as defined in Section 424(f) of the
Internal Revenue Code of 1986, as amended, and any regulations promulgated
thereunder (the "Code") and any other business venture (including, without
limitation, joint venture or limited liability company) in which the Company has
a significant interest, as determined by the Board of Directors of the Company
(the "Board").
2. Eligibility
All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options, restricted share awards, or other share-based
awards (each, an "Award") under the Plan. Each person who has been granted an
Award under the Plan shall be deemed a "Participant".
3. Administration, Delegation
(a) Administration by Board of Directors. The Plan will be administered
by the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable.
The Board 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 shall
deem expedient to carry the Plan into effect and it shall be the sole and final
judge of such expediency. All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good faith.
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(b) Delegation to Executive Officers. To the extent permitted by
applicable law, the Board may delegate to one or more executive officers of the
Company the power to make Awards and exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the maximum number
of shares subject to Awards and the maximum number of shares for any one
Participant to be made by such executive officers.
(c) Appointment of Committees. To the extent permitted by applicable
law, the Board may delegate any or all of its powers under the Plan to one or
more committees or subcommittees of the Board (each a "Committee"). All
references in the Plan to the "Board" shall mean the Board or a Committee or the
executive officer referred to in Section 3(b) to the extent that the Board's
powers or authority under the Plan have been delegated to such Committee or
executive officer.
(d) Accounts and Statements. The Company shall maintain records of the
details of each Option granted to each Participant under the Plan, including the
date of grant, Designated Amount and the Option Price of each Option, the number
of common shares of the Company ("Common Shares") in respect of which the Option
has been exercised and the maximum number of Common Shares which the Participant
may still purchase under the Option. Upon request therefor from a Participant
and at such other times as the Company shall determine, the Company shall
furnish the Participant with a statement setting forth the details of his
Options. Such statement shall be deemed to have been accepted by the Participant
as correct unless written notice to the contrary is given to the Company within
30 days after such statement is given to the Participant.
4. Shares Available for Awards
(a) Number of Shares. Awards may be made under the Plan for up to
11,000,000 Common Shares of the Company; provided, however, that the number of
Common Shares reserved for issuance under the Plan shall be automatically
increased every January 1, beginning in 2001, by the lesser of (i) 3,500,000
Common Shares, (ii) 4% of the Company's outstanding Common Shares on such date,
and (iii) a lesser amount determined by the Board. The numbers of Common Shares
referenced in this Section 4(a) shall be subject to adjustment as provided in
Section 8 hereof. If any Award expires or is terminated, surrendered or
canceled without having been fully exercised or is forfeited in whole or in
part or results in any Common Shares not being issued, the unused Common Shares
covered by such Award shall again be available for the grant of Awards under
the Plan, subject, however, in the case of Incentive Share Options (as
hereinafter defined), to any limitation required under the Code.
(b) Per-Participant Limit. Subject to adjustment under Section 8, for
Awards granted after the Common Shares are registered under the Securities
Exchange Act of 1934 (the "Exchange Act"), the maximum number of Common Shares
with respect to which Awards may be granted to any Participant under the Plan
shall be 1,750,000 per calendar year. The per-Participant limit described in
this Section 4(b) shall be construed and applied consistently with Section
162(m) of the Code ("Section 162(m)").
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5. Share Options
(a) General. From time to time, the Board may grant one or more options
to a Participant to purchase Common Shares (each, an "Option") in accordance
with the Plan and determine the number of Common Shares to be covered by each
Option, the exercise price of each Option and the conditions and limitations
applicable to the exercise of each Option, including conditions relating to
applicable federal or state securities laws, as it considers necessary or
advisable. An Option which is not intended to be an Incentive Share Option (as
hereinafter defined) shall be designated a "Nonstatutory Share Option".
(b) Incentive Share Options. An Option that the Board intends to be an
"incentive share option" as defined in Section 422 of the Code (an "Incentive
Share Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Share Option is not an Incentive Share Option.
(c) Exercise Price. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement.
(d) Duration of Options. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Board may specify in the
applicable option agreement.
(e) Exercise of Option. Options may be exercised by delivery to the
Company of a written notice of exercise signed by the proper person or by any
other form of notice (including electronic notice) approved by the Board
delivered in accordance with Section 10, together with payment in full as
specified in Section 5(f) for the number of shares for which the Option is
exercised.
(f) Payment Upon Exercise. Common Shares purchased upon the exercise of
an Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may, in its sole discretion, otherwise
provide in an option agreement, by (i) delivery of an irrevocable and
unconditional undertaking by a creditworthy broker to deliver promptly to the
Company sufficient funds to pay the exercise price or (ii) delivery by the
Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash or
a check sufficient to pay the exercise price;
(3) when the Common Shares are registered under the Exchange Act,
by delivery of Common Shares owned by the Participant valued at their fair
market
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value as determined by (or in a manner approved by) the Board in good faith
("Fair Market Value"), provided (i) such method of payment is then permitted
under applicable law and (ii) such Common Shares were owned by the Participant
at least six months prior to such delivery;
(4) to the extent permitted by applicable law and the Board, in
its sole discretion by (i) delivery of a promissory note of the Participant to
the Company on terms determined by the Board, or (ii) payment of such other
lawful consideration as the Board may determine; or
(5) by any combination of the above permitted forms of payment.
(g) Substitute Options. In connection with a merger or consolidation of
an entity with the Company or the acquisition by the Company of property or
shares of an entity, the Board may grant Options in substitution for any options
or other shares or share-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5.
6. Restricted Shares
(a) Grants. The Board may grant Awards entitling recipients to acquire
Common Shares, subject to the right of the Company to repurchase all or part of
such shares at their issue price or other stated or formula price (or to require
forfeiture of such shares if issued at no cost) from the recipient in the event
that conditions specified by the Board in the applicable Award are not satisfied
prior to the end of the applicable restriction period or periods established by
the Board for such Award (each, a "Restricted Share Award"). Any Common Shares
repurchased by the Company shall be canceled in accordance with applicable law.
(b) Terms and Conditions. The Board shall determine the terms and
conditions of any such Restricted Share, including the conditions for repurchase
(or forfeiture) and the issue price, if any. Any share certificates issued in
respect of a Restricted Share Award shall be registered in the name of the
Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a share power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
7. Other Share-Based Awards
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The Board shall have the right to grant other Awards based upon the
Common Shares having such terms and conditions as the Board may determine,
including the grant of shares based upon certain conditions, the grant of
securities convertible into Common Shares and the grant of share appreciation
rights.
8. Adjustments for Changes in Common Shares and Certain Other Events
(a) Changes in Capitalization. In the event of any share split, reverse
share split, share dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Shares other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the per-Participant limit set forth in Section 4(b), (iii) the number and
class of securities and exercise price per share subject to each outstanding
Option, (iv) the repurchase price per share subject to each outstanding
Restricted Share Award, and (v) the terms of each other outstanding Award shall
be appropriately adjusted by the Company (or substituted Awards may be made, if
applicable) to the extent the Board shall determine, in good faith, that such an
adjustment (or substitution) is necessary and appropriate. If this Section 8(a)
applies and Section 8(c) also applies to any event, Section 8(c) shall be
applicable to such event, and this Section 8(a) shall not be applicable.
(b) Liquidation or Dissolution. In the event of a proposed liquidation
or dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation or
dissolution on any Restricted Share Award or other Award granted under the Plan
at the time of the grant of such Award.
(c) Acquisition Events
(1) Definition. An "Acquisition Event" shall mean: (a) any
merger, consolidation or amalgamation of the Company with or into another entity
as a result of which the Common Share is converted into or exchanged for the
right to receive cash, securities or other property or (b) any exchange of
shares of the Company for cash, securities or other property pursuant to a
statutory share exchange transaction or plan of arrangement.
(2) Consequences of an Acquisition Event on Options. Upon the
occurrence of an Acquisition Event, or the execution by the Company of any
agreement approved by the Board with respect to an Acquisition Event, the Board
shall provide that all outstanding Options shall be assumed, or equivalent
options shall be substituted, by the acquiring or succeeding corporation (or an
affiliate thereof). For purposes hereof, an Option shall be considered to be
assumed if, following
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consummation of the Acquisition Event, the Option confers the right to purchase,
for each Common Share subject to the Option immediately prior to the
consummation of the Acquisition Event, the consideration (whether cash,
securities or other property) received as a result of the Acquisition Event by
holders of Common Share for each Common Share held immediately prior to the
consummation of the Acquisition Event (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Common Shares); provided, however, that if the consideration
received as a result of the Acquisition Event is not solely common shares of the
acquiring or succeeding corporation (or an affiliate thereof), the Company may,
with the consent of the acquiring or succeeding corporation, provide for the
consideration to be received upon the exercise of Options to consist solely of
common shares of the acquiring or succeeding corporation (or an affiliate
thereof) equivalent in fair market value to the per share consideration received
by holders of outstanding Common Shares as a result of the Acquisition Event.
(3) Notwithstanding the foregoing, if the acquiring or
succeeding corporation (or an affiliate thereof) does not agree to assume, or
substitute for, such Options, then the Board shall, upon written notice to the
Participants, provide that all then unexercised Options will become exercisable
in full as of a specified time prior to the Acquisition Event and will terminate
immediately prior to the consummation of such Acquisition Event, except to the
extent exercised by the Participants before the consummation of such Acquisition
Event; provided, however, that in the event of an Acquisition Event under the
terms of which holders of Common Shares will receive upon consummation thereof a
cash payment for each Common Share surrendered pursuant to such Acquisition
Event (the "Acquisition Price"), then the Board may instead provide that all
outstanding Options shall terminate upon consummation of such Acquisition Event
and that each Participant shall receive, in exchange therefor, a cash payment
equal to the amount (if any) by which (A) the Acquisition Price multiplied by
the number of Common Shares subject to such outstanding Options (whether or not
then exercisable), exceeds (B) the aggregate exercise price of such Options.
(4) Consequences of an Acquisition Event on Restricted Share
Awards. Upon the occurrence of an Acquisition Event, the repurchase and other
rights of the Company under each outstanding Restricted Share Award shall inure
to the benefit of the Company's successor and shall apply to the cash,
securities or other property which the Common Shares converted into or exchanged
for pursuant to such Acquisition Event in the same manner and to the same extent
as they applied to the Common Shares subject to such Restricted Share Award.
(5) Consequences of an Acquisition Event on Other Awards. The
Board shall specify the effect of an Acquisition Event on any other Award
granted under the Plan at the time of the grant of such Award.
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(d) Fractional Common Shares. No fractional Common Shares shall be
issued upon the exercise of an Option nor shall any script certificates in lieu
therefor be issuable at any time. Accordingly, if as a result of any adjustment
under Section 8, a Participant would otherwise have become entitled to a
fractional common share upon the exercise of an Option, he or she shall have the
right to purchase only the next lower whole number of Common Shares and no
payment or other adjustment will be made with respect to the fractional
interests so disregarded.
9. General Provisions Applicable to Awards
(a) Transferability of Awards. Except as the Board may otherwise
determine or provide in an Award, Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during the life of the Participant, shall be
exercisable only by the Participant. References to a Participant, to the extent
relevant in the context, shall include references to authorized transferees.
(b) Documentation. Each Award shall be evidenced by a written
instrument in such form as the Board shall determine. Each Award may contain
terms and conditions in addition to those set forth in the Plan.
(c) Board Discretion. Except as otherwise provided by the Plan, each
Award may be made alone or in addition or in relation to any other Award. The
terms of each Award need not be identical, and the Board need not treat
Participants uniformly.
(d) Termination of Status. The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
(e) Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, when the Common Shares are registered under the Exchange
Act, Participants may, to the extent then permitted under applicable law,
satisfy such tax obligations in whole or in part by delivery of Common Shares,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value. The Company may, to the extent permitted by law, deduct
any such tax obligations from any payment of any kind otherwise due to a
Participant.
(f) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award
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of the same or a different type, changing the date of exercise or realization,
and converting an Incentive Share Option to a Nonstatutory Share Option,
provided that the Participant's consent to such action shall be required unless
the Board determines that the action, taking into account any related action,
would not materially and adversely affect the Participant.
(g) Conditions on Delivery of Shares. The Company will not be obligated
to deliver any Common Shares pursuant to the Plan or to remove restrictions from
shares previously delivered under the Plan until (i) all conditions of the Award
have been met or removed to the satisfaction of the Company, (ii) in the opinion
of the Company's counsel, all other legal matters in connection with the
issuance and delivery of such shares have been satisfied, including any
applicable securities laws and any applicable stock exchange or stock market
rules and regulations, and (iii) the Participant has executed and delivered to
the Company such representations or agreements as the Company may consider
appropriate to satisfy the requirements of any applicable laws, rules or
regulations.
(h) Acceleration. The Board may at any time provide that any Options
shall become immediately exercisable in full or in part, that any Restricted
Share Awards shall be free of restrictions in full or in part or that any other
Awards may become exercisable in full or in part or free of some or all
restrictions or conditions, or otherwise realizable in full or in part, as the
case may be.
10. Miscellaneous.
(a) Shareholders' Agreement. Upon issuance of any Common Shares upon
the exercise of an Award, the Participant receiving such shares shall agree, in
writing, to be bound by the terms of the Second Amended and Restated
Shareholders' Agreement dated as of November 24, 1999, as amended from time to
time, by and among the Company and persons and entities who are signatories
thereto.
(b) Right To Employment or Other Status. No person shall have any
claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award. Unless otherwise determined by the Board, neither any period
of notice, if any, nor any payment in lieu thereof, or combination thereof, upon
termination of employment shall be considered as extending the period of
employment for the purposes of the Plan.
(c) No Rights As Shareholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a shareholder with respect to any Common Shares to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event
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the Company effects a split of the Common Shares by means of a share dividend
and the exercise price of and the number of shares subject to such Option are
adjusted as of the date of the distribution of the dividend (rather than as of
the record date for such dividend), then an optionee who exercises an Option
between the record date and the distribution date for such share dividend shall
be entitled to receive, on the distribution date, the share dividend with
respect to the Common Shares acquired upon such Option exercise, notwithstanding
the fact that such shares were not outstanding as of the close of business on
the record date for such share dividend.
(d) Effective Date and Term of Plan. The Plan shall become effective as
of the date on which it is adopted by the Board, but no Award granted to a
Participant that is intended to comply with Section 162(m) shall become
exercisable, vested or realizable, as applicable to such Award, unless and until
the Plan has been approved by the Company's shareholders to the extent
shareholder approval is required by Section 162(m) in the manner required under
Section 162(m) (including the vote required under Section 162(m)). No Awards
shall be granted under the Plan after the completion of ten years from the
earlier of (i) the date on which the Plan was adopted by the Board or (ii) the
date the Plan was approved by the Company's shareholders, but Awards previously
granted may extend beyond that date.
(e) Amendment of Plan. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, provided that to the extent required by
Section 162(m), no Award granted to a Participant that is intended to comply
with Section 162(m) after the date of such amendment shall become exercisable,
realizable or vested, as applicable to such Award, unless and until such
amendment shall have been approved by the Company's shareholders as required by
Section 162(m) (including the vote required under Section 162(m)).
(f) Governing Law. The provisions of the Plan and all Awards made
hereunder shall be governed by, and interpreted in accordance with, the laws of
the Province of Ontario, Canada and the federal laws of Canada applicable
therein, without regard to any applicable conflicts of law principles.
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