IMAGICTV INC.
EMPLOYEE SHARE OPTION PLAN
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1. Purpose of the Plan
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The purpose of the ImagicTV Inc. (the "Corporation") Employee Share Option
Plan (the "Plan") is to provide a means whereby the Corporation, by issuing
options ("Options") to purchase Class C Common Non-Voting shares of the
Corporation (the "Plan Shares") to current and future eligible employees,
consultants, managers, and directors (each an "Optionholder") of the Corporation
or its Affiliates (as defined in the Canada Business Corporations Act), may
motivate Optionholders to exert their best efforts on behalf of the Corporation.
2. Number of Shares Available under the Plan
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(a) The maximum aggregate number of Plan Shares, subject to adjustment as
provided in clause (b) hereof, for which Options may be granted by the
Corporation under the Plan shall be 2,289,622 Class C Common Non-Voting shares
or such greater number of shares reserved from time to time by the Board of
Directors of the Corporation (the "Board") for issue under the Plan.
(b) In the event of any change in the issued shares of the Corporation, of
either voting or non-voting shares, ("Shares"), by reason of any
recapitalization, consolidation, Share-split or any similar change, the number
and kind of shares which thereafter may be offered and sold to Optionholders
under the Plan pursuant to Options may be appropriately adjusted consistent with
such change in such manner as the Board may deem equitable. For greater
certainty, no adjustment under this clause (b) shall be required upon any
dilution due to new investment in the Corporation through the issuance of new
Shares.
(c) If an offer to purchase all of the Shares or substantially all of the
assets of the Corporation (the "Offer") is accepted by shareholders holding at
least fifty-one percent (51%) of the Class A Common Voting shares, the Board
may, in its sole discretion, deal with the Options issued under the Plan in the
manner it deems fair and reasonable in light of the circumstances of the Offer.
Without limiting the generality of the foregoing, in connection with the closing
of a sale pursuant to an Offer, the Board may, without any action or consent
required on the part of any Optionholder, (i) deem any or all Options (whether
exercisable or not) under the Plan to have been exercised and the underlying
Plan Shares to have been tendered to the Offer, and apply a portion of the
Optionholder's proceeds from the closing of the Offer to the Exercise Price
payable by that Optionholder for the exercise of his or her Options, (ii) cancel
the Options and pay to a Optionholder the amount that the Optionholder would
have received, after deducting the Exercise Price of the Options, had the
Options been exercised and the underlying Plan Shares sold pursuant to the
Offer, (iii) exchange unexercisable Options, or any portion of them, for options
to purchase shares in the capital of
the acquiror or any corporation which results from an amalgamation, merger or
similar transaction involving the Corporation made in connection with the
closing of a sale pursuant to the Offer or (iv) take such other actions, and
combinations of the foregoing actions, as it deems fair and reasonable under the
circumstances.
3. Administration of the Plan
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The Plan shall be administered by the Board. The Board may interpret the
Plan, prescribe, amend and rescind any rules and regulations necessary or
appropriate for the administration of the Plan, and make such other
determinations and take such other action as it deems necessary or advisable.
Furthermore, the Board may, in its discretion, supercede the terms of the Plan
pursuant to the terms of any individual option agreement made under the Plan.
Any interpretation, determination or other action made or taken by the Board
shall be final and binding on all parties concerned. In this Plan and in the
Exhibits hereto any word importing the masculine gender includes the feminine
gender.
4. Operation of the Plan
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(a) General Operation. Under the Plan, Options to purchase Plan Shares
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may be granted to Optionholders (including eligible employees of the Corporation
as determined under clause (b) hereof). The actual number of Options to purchase
Plan Shares to be granted to each Optionholder, the Exercise Price, the Date of
Grant, the Vesting Commencement Date (all as defined in the Share Option
Agreement between the Optionholder and the Corporation pursuant to which the
Options were granted to the Optionholder (the "Option Agreement")), and such
other terms and conditions of the Option will be determined from time to time by
the Board in its sole discretion.
(b) Eligibility of Optionholders. In order to become eligible to
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participate in the Plan, an Optionholder must be an employee, manager,
consultant, or director of the Corporation or its Affiliates.
(c) Termination.
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(i) Unless otherwise determined by the Board, if an Optionholder's
employment, engagement, or association with the Corporation terminates for
any reason, other than death, disability, or retirement, any Option held by
such Optionholder shall thereupon immediately terminate, except that such
Option, to the extent then exercisable, may be exercised for the lesser of
either 60 days or the balance of the Option term. Notwithstanding the
foregoing, if an Optionholder's employment, engagement, or association with
the Corporation terminates for cause, any Option held by such Optionholder
shall thereupon immediately terminate, whether exercisable or not, provided
that the Corporation will be required to honour the issuance of exercisable
Options for which a Notice of Exercise was given to the Corporation prior
to the notice of termination.
(ii) If an Optionholder's employment, engagement, or association with the
Corporation terminates by reason of death, disability or retirement, any
Option held by such Optionholder may thereafter be exercised by the
Optionholder or his legal representatives, to the extent exercisable at the
time of such death, disability or retirement, as applicable, or to such
other extent as the Board may determine, for a period of 60 days (in the
event of retirement), six (6) months (in the event of disability), or 12
months (in the event of death), or such other period as the Board may
specify, from the date of such death, disability or retirement, or until
the expiration of the stated term of such Option, whichever period of the
shorter.
(d) Improper Transfer
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Options granted under the Plan are not assignable or transferable by the
Optionee or subject to any other alienation, sale, pledge or encumbrance by such
Optionee except by will or by the laws of descent and distribution. During the
Optionee's lifetime, Options shall be exercisable only by the Optionee. The
obligations of each Optionee shall be binding on his or her heirs, executors and
administrators.
(e) Exercise of Options.
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(i) Unless otherwise specified by the Board at the time of granting an
Option, and except as otherwise provided in this Plan, each Option shall be
exercisable in the following instalments:
Percentage of Total Number of Plan Exercise Period
Shares Which May Be Purchased
25% From the first anniversary of the VCD to and including
the seventh anniversary of the VCD.
25% From the second anniversary of the VCD to and
including the seventh anniversary of the VCD.
25% From the third anniversary of the VCD to and
including the seventh anniversary of the VCD.
25% From the fourth anniversary of the VCD to and
including the seventh anniversary of the VCD.
As stated in the Option Agreement, the "VCD" shall mean the Vesting Commencement
Date which is the Date of Grant (being the date that the Options were granted to
the Optionholder) or such date as set by the Board, but it shall not be earlier
than the date of commencement of employment, engagement or association with the
Corporation by the Optionholder.
(ii) Once an instalment becomes exercisable it shall remain exercisable
until expiration or termination of the Option, unless otherwise specified
herein or by the Board. Each Option or instalment may be exercised at any
time or from time to time, in whole or in part, for up to the total number
of Plan Shares with respect to which it is then exercisable. The Board
shall have the right to accelerate the date upon which any instalment of
any Option is exercisable. Subject to any accelerated termination as set
forth in this Plan, each Option shall, unless otherwise specified by the
Board, expire on the seventh (7th) anniversary of its VCD provided that, in
no event, shall the Exercise Period of an Option exceed seven (7) years
from its VCD.
(f) Exercise Price. The Exercise Price for the Plan Shares offered to
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Optionholders pursuant to Options under the Plan will be determined from time to
time by the Board with reference to the value of the Corporation and the number
of Shares issued and outstanding. If, as and when any Plan Shares have been duly
purchased and paid for in cash under the terms of an Option granted under the
Plan and in accordance with the terms of such Option and this Plan, such Plan
Shares shall be conclusively deemed allotted as fully paid and non-assessable
Shares at the price paid therefor.
(g) No Rights as Shareholder. No Optionholder shall have any rights as a
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shareholder with respect to any Plan Shares prior to the date of issuance to him
of a certificate or certificates for such Plan Shares.
(h) No Rights to Continued Employment. The Plan and any Options or Plan Shares
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offered or sold under the Plan shall not confer upon any Optionholder who is an
employee any right with respect to continuance of employment with the
Corporation, nor shall they interfere in any way with the right of the
Corporation to terminate an Optionholder's employment.
(i) Non-transferability. Subject to section 4(d) herein, any Options granted
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under this Plan may only be exercised during the lifetime of the Optionholder by
such Optionholder personally and no assignment or transfer of Options whether
voluntary, involuntary, by operation of law or otherwise, shall vest any
interest or right in such Options whatsoever in any assignee or transferee, and
immediately upon any assignment or transfer, or any attempt to make the same,
such Options shall terminate and be of no further force or effect.
(j) Conditions of Exercise. Each Optionholder shall agree that, prior to and as
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a condition of the exercise by him or her of any Options granted pursuant to
this Plan, the Optionholder shall become a party to and be bound by the
Unanimous Shareholders Agreement dated as of !December 17, 1999, as amended from
time to time, among all of the shareholders of the Corporation, a copy of the
current version of which is attached hereto as Schedule 1. In addition, each
Optionholder shall, when requested to do so by the Corporation, sign and deliver
all such documents relating to the granting or exercise of Options deemed
necessary or desirable by the Corporation. In the event that an Optionholder
refuses or neglects to so execute any transfers, consents, or other documents as
required
pursuant to this Plan, the Optionholder hereby irrevocably appoints the Chief
Executive Officer of the Corporation as his or her true and lawful attorney to
execute any such documentation.
(k) Conditions of Grant of Options: Each Optionholder shall agree that, prior
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to and as a condition of being granted any Options pursuant to this Plan, the
Optionholder shall agree to be bound by the terms of the Confidentiality and
Proprietary Rights Policy attached hereto as Schedule 2 and forming part of this
Plan, as amended from time to time. In addition, each Optionholder shall, when
requested to do so by the Corporation, sign and deliver all such documents
relating to implementation of the Confidentiality and Proprietary Rights Policy
deemed necessary or desirable by the Corporation. In the event that an
Optionholder refuses or neglects to so execute any transfers, consents, or other
documents as required pursuant to this Plan, and in particular, the
Confidentiality and Proprietary Rights Policy, the Optionholder hereby
irrevocably appoints the Chief Executive Officer of the Corporation as his or
her true and lawful attorney to execute any such documentation.
5. Manner of Exercising Option
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(a) When Options are exercisable under this Plan, an Optionholder must take the
following actions:
(i) Execute and deliver to the Corporation a Notice of Exercise for the
Plan Shares for which the Option is exercised in the form as attached to
the Option Agreement.
(ii) Pay the aggregate Exercise Price (as set out in the Option Agreement)
for the purchased Plan Shares by cash or cheque made payable to the
Corporation.
Except to the extent the sale and remittance procedure is utilized in
connection with the Option exercise, payment of the Exercise Price must
accompany the Notice of Exercise delivered to the Corporation the Notice
of Exercise delivered to the Corporation in connection with the Option
exercise.
(iii) Furnish to the Corporation appropriate documentation that the
Optionee (or his/her heirs, successors or assigns) has the right to
exercise this Option.
(iv) Make appropriate arrangements with the Corporation for the
satisfaction of all income tax requirements applicable to the Option
exercise.
(a) As soon as practical after the Exercise Date, the Corporation
shall issue to the Optionholder a certificate for the purchased Plan
Shares.
(b) In no event may this Option be exercised for any fractional
shares.
6. Withholding Taxes. The exercise of each Option granted under this Plan
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shall be subject to the condition that, if at any time, the Corporation shall
determine in its discretion that the satisfaction of withholding tax or other
withholding liabilities is necessary or desirable in respect of such exercise,
such exercise shall not be effective unless such withholding has been effected
to the satisfaction of the Corporation. In such circumstances, the Corporation
may require an Optionholder to pay to the Corporation, in addition to and in the
same manner as the Exercise Price for the Plan Shares, such amount as the
Corporation is obliged to remit to the relevant taxing authority in respect of
the exercise of the Option. Any such additional payment shall be due no later
than the date as of which any amount with respect to the Option exercised first
becomes includable in the gross income of the Optionholder for tax purposes.
7. Limitation. The Corporation makes no representation or warranty as to the
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future market value of any Plan Shares issued in accordance with the provisions
of the Plan. The Corporation cannot guarantee that the Optionholder will not
suffer a loss of all or a portion of his Exercise Price if the Plan Shares
diminish in value.
8. Regulatory Issues. The obligation of the Board to sell and deliver Plan
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Shares in accordance with the Plan is subject to the approval of any
governmental authority having jurisdiction or any Share exchanges on which the
Shares are or may be listed for trading which may be required in connection with
the authorization, issuance or sale of such Plan Shares by the Board and the
compliance with all applicable laws, regulations and policies, including without
limitation, the Securities Act of New Brunswick, other applicable securities
legislation and the Canada Business Corporations Act. If any Plan Shares cannot
be issued to any Optionholder for any reason including, without limitation, the
failure to obtain such approval, then the obligation of the Corporation to issue
such Plan Shares shall terminate and any Exercise Price monies paid by the
Optionholder to the Corporation shall be returned to the Optionholder.
9. Option Agreement
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The Corporation shall grant Options to the Optionholder pursuant to such
form of option agreement as the Board may approve from time to time.
10. Amendment and Termination of the Plan
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(i) This Plan amends and restates the "Key Employee Share Option Plan"
effective as of February 3, 1998, (the "Initial Plan") and, to the extent that
there are any discrepancies between the terms and conditions of the Initial Plan
with the Plan, the terms of the Plan will prevail and all Optionholders granted
Options under the Initial Plan have provided their consent to this amendment.
For greater certainty, the terms of this Plan apply to all Options, whether
granted pursuant to the terms of the Initial Plan or this Plan.
(ii) Notwithstanding anything else contained in the Plan, the Board, may
from time to time amend, suspend or terminate the Plan, provided that no such
amendment, suspension or termination shall detract, or purport to detract, from
rights previously granted to an Optionholder under the Plan without the consent
of the Optionholder.
11. Governing Law
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The Plan is established under the laws of the Province of New Brunswick,
and the rights of all parties in the construction and effect of each provision
of the Plan and each Option Agreement made pursuant hereto shall be according to
the laws of the Province of New Brunswick. The parties hereby attorn to the
non-exclusive jurisdiction of the courts of the Province of New Brunswick in
respect of any dispute arising under the Plan and any Option Agreement made
pursuant hereto.
Dated as of December 17/th/, 1999.
ImagicTV Inc.
______________________________________
President
NOTICE OF EXERCISE
I, , Optionholder, hereby notify ImagicTV Inc. (the
"Corporation") that I elect to purchase _____________ shares of the
Corporation's Class C Common Non-Voting shares (the "Plan Shares") at the Option
exercise price of $___________ per share (the "Exercise Price") pursuant to that
certain option (the "Option") granted to me under the Corporation's 1999
Employee Share Option Plan (the "Plan") on _______________, 199____ (Date of
Grant).
Concurrently with the delivery of this Notice of Exercise to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Plan Shares in accordance with the provisions of the Plan and shall deliver
whatever additional documents may be required by the Plan as a pre-condition for
such exercise. I understand and agree that the receipt of the Plan Shares is
conditional upon my becoming a party to the Unanimous Shareholders Agreement of
the Corporation, if I am not already a party thereto.
___________________, 200_ _________________________________________
Date Optionholder Name
_________________________________________
Signature
Address:_________________________________
_________________________________
Print name in exact manner it is to
appear on the Share certificate: _________________________________________
Address to which certificate _________________________________________
is to be sent, if different
from address above: _________________________________________
Social Insurance Number: _________________________________________
Accepted:
ImagicTV Inc.
By: _________________________________________
Its: ________________________________________