EXHIBIT 10.14
HUB INTERNATIONAL LIMITED
EQUITY INCENTIVE PLAN
1. PURPOSES. The purposes of the HUB INTERNATIONAL LIMITED EQUITY
INCENTIVE PLAN, as amended from time to time (the "Plan"), are to advance the
interests of Hub International Limited, a corporation organized under the laws
of the province of Ontario, and any successor thereto (the "Company"), by
linking the personal interests of participants to those of the Company's
stockholders by providing Participants (as such term is defined below) with an
incentive for outstanding performance. The Plan is further intended to assist
the Company in its ability to motivate, and retain the services of, Participants
upon whose judgment, interest and special effort the successful conduct of the
Company's and its Subsidiaries' (as such term is defined below) operations is
largely dependent.
2. DEFINITIONS AND RULES OF CONSTRUCTION.
(a) Definitions. For purposes of the Plan, the following capitalized
words shall have the meanings set forth below:
"Account" means the bookkeeping record established by the
Company for each Participant. An Account is established only for
purposes of measuring the value of the Company's obligation to a
Participant in respect of Restricted Share Units and not to segregate
assets or to identify assets that may be used to settle Restricted
Share Units.
"Associate" has the meaning ascribed to such term in the
Securities Act (Ontario), as amended from time to time.
"Award" means an award made pursuant to the terms of the Plan
to an Eligible Individual (as hereinafter defined) in the form of Stock
Options, Restricted Shares or Restricted Share Units.
"Award Document" means an agreement, certificate or other type
or form of document or documentation approved by the Committee which
sets forth the terms and conditions of an Award. An Award Document may
be in written, electronic or other media may be limited to a notation
on the books and records of the Company and, unless the Committee
requires otherwise, need not be signed by a representative of the
Company or a Participant, provided that, if the Company is providing
financial assistance to a Participant, the Award Document shall include
a promissory note signed by the Participant.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations (including any
proposed regulations) promulgated thereunder.
"Committee" means the Compensation Committee of the Board, or
such other committee of the Board as may be designated from time to
time by the Board to administer the Plan.
"Common Stock" means the common shares of the Company.
"Date of Grant" means the date of grant of an Award as set
forth in the applicable Award Document.
"Disability" shall have the meaning ascribed to such term in
the Company's long- term disability plan. The Committee's determination
as to whether or not a Participant has incurred a Disability is final
and conclusive and binding on all persons.
"Effective Date" means May 10, 2002.
"Eligible Individual" means an individual described in Section
5(a) who is eligible for an Award under the Plan.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations promulgated
thereunder.
"Fair Market Value" means, for purposes of this Plan, unless
otherwise required by any applicable provision of the Code or any
regulations thereunder, the value of a Share on a particular date,
determined as follows:
(a) if the Common Stock is listed or admitted to
trading on such date on the Toronto Stock Exchange, any
national securities exchange or quoted through the Nasdaq
National Market System ("Nasdaq"), the greater of the closing
sale price of a Share as reported on: (i) the relevant
composite transaction tape, (ii) the principal exchange
(determined by trading value in the Common Stock) or (iii)
through Nasdaq, as the case may be, on such date, or in the
absence of reported sales on such date, the mean between the
highest reported bid and lowest reported asked prices reported
on such composite transaction tape or exchange or through the
Nasdaq, as the case may be, on such date; or
(b) if the Common Stock is not listed or quoted as
described in the preceding clause, but bid and asked prices
are quoted through Nasdaq, the mean between the highest
reported bid and lowest reported asked prices as quoted
through Nasdaq on such date; or
(c) if the Common Stock is not listed or quoted on
the Toronto Stock Exchange, any other national securities
exchange or through Nasdaq or, if pursuant to (a) and (b)
above the Fair Market Value is to be determined based
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upon the mean of the highest reported bid and lowest reported
asked prices provided that if the Committee determines that
such mean does not properly reflect the Fair Market Value, by
such other method as the Committee determines to be reasonable
and consistent with applicable law; or
(d) if the Common Stock is not publicly traded, such
amount as is determined by the Committee in good faith.
"Insider" has the meaning ascribed to such term in Section 627
of The Toronto Stock Exchange Company Manual.
"Option" means a stock option granted under Section 6, which
is not an "incentive stock option" within the meaning of Section 422 of
the Code.
"outstanding issue" has the meaning ascribed to such term in
Section 627 of The Toronto Stock Exchange Company Manual.
"Participant" means an Eligible Individual who has been
granted an Award under the Plan.
"Pro Rata Portion" means, in respect of a particular Award on
a particular date, the portion represented by the fraction A divided by
B, where A is the number of days from (but excluding) the date the
particular Award was granted until (and including) the particular date
and B is the number of days from (but excluding) the date the
particular Award was granted until (and including) the date when that
Award would have been fully vested.
"Restricted Period" means, with respect to any Restricted
Share or Restricted Share Unit, the period of time determined by the
Committee in accordance with the terms of the Plan during which such
Restricted Share or Restricted Share Unit is subject to the
restrictions set forth in the applicable Award Document.
"Restricted Share" means an Award of restricted shares of
Common Stock that has not vested or remains subject to forfeiture,
transfer or other restrictions in accordance with Section 7 and the
applicable Award Document
"Restricted Share Units" means an Award of restricted share
units of Common Stock that has not vested or remains subject to
forfeiture, transfer or other restrictions in accordance with Section 8
and the applicable Award Document
"Retirement" means a Participant's retirement at the age
regarded by the Company or a Subsidiary as the normal retirement age
for its employees in general, based upon the Company's or the
Subsidiary's normal employment and related policies and practices.
"Shares" means the shares of Common Stock and any shares or
other securities into which such Shares have been for whatever reason
changed or which have for
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whatever reason been substituted for, or distributed (as a dividend or
otherwise) upon, such Shares.
"Subsidiary" shall have the same meaning ascribed to such term
in the Securities Act (Ontario).
"Termination of Employment" means a Participant's termination
of employment or service with the Company or a Subsidiary for any
reason whatsoever (including, without limitation, as a result of
termination by the Company or a Subsidiary without cause) at a time
when the Participant is not (and is not imminently about to be) an
employee or a director of either the Company or any Subsidiary or
otherwise providing services to the Company.
(b) Rules of Construction. The masculine pronoun shall be deemed to
include the feminine pronoun and the singular form of a word shall be deemed to
include the plural form, unless the context requires otherwise. Unless the
context indicates otherwise, references to sections are to sections of the Plan.
3. ADMINISTRATION.
(a) Power and Authority of the Committee. The Plan shall be
administered by the Committee, which shall have full power and authority,
subject to the requirements of The Toronto Stock Exchange, where applicable, and
the express provisions hereof:
(i) to select Participants from the Eligible Individuals;
(ii) to make Awards in accordance with the Plan;
(iii) to determine the number of shares of Common Stock
subject to each Award;
(iv) to determine the terms and conditions of each Award,
including, without limitation, those related to
transferability, vesting, forfeiture and
exercisability and the effect, if any, of a
Participant's Termination of Employment, and
including the authority to adjust the terms of an
Award to comply with the laws, regulations or rules
of any applicable jurisdiction or stock exchange;
(v) to determine the terms and conditions of any
financial assistance provided to a Participant in
accordance with the Plan;
(vi) to amend the terms and conditions of an Award after
the granting thereof to a Participant in a manner
that either is not prejudicial to the rights of such
Participant in such Award or has been consented to in
writing by the Participant;
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(vii) to specify and approve the provisions of the Award
Documents delivered to Participants in connection
with their Awards;
(viii) to construe and interpret any Award Document
delivered under the Plan;
(ix) to prescribe, amend and rescind rules and procedures
relating to the Plan;
(x) subject to the provisions of the Plan and subject to
such additional limitations and restrictions as the
Committee may impose, to delegate to one or more
officers of the Company some or all of its authority
under the Plan;
(xi) to adopt, on behalf of the Company, one or more
sub-plans applicable to separate classes of
Participants who are subject to the laws of
jurisdictions outside of the United States and
Canada;
(xii) to employ such legal counsel, independent auditors
and consultants as it deems desirable for the
administration of the Plan and to rely upon any
opinion or computation received therefrom; and
(xiii) to make all other determinations (including, without
limitation, factual and legal determinations) and to
formulate such procedures as may be necessary or
advisable for the administration of the Plan.
(b) Plan Construction and Interpretation. The Committee shall have full
power and authority, subject to the express provisions hereof, to construe and
interpret the Plan.
(c) Corporate Governance. The administration of the Plan shall in all
respects be subject to the Company's Articles and By-laws, as may be amended
from time to time, and all applicable laws, regulations and rules.
(d) Determinations of Committee Final and Binding. All determinations
by the Committee in carrying out and administering the Plan and in construing
and interpreting the Plan shall be final, binding and conclusive for all
purposes and upon all interested persons. Every action, including an exercise of
discretion by the Committee, is wholly without precedent value for any purpose.
4. COMMON STOCK SUBJECT TO THE PLAN.
(a) Plan Limit. Subject to Section 10, the maximum aggregate number of
shares of Common Stock that may be issued in connection with Awards granted
under the Plan is 2,100,000 shares (the "Plan Limit"). Subject to compliance
with applicable laws, regulations and rules of any applicable jurisdiction or
stock exchange, Shares utilized in connection with the Plan may be purchased on
the open market or otherwise acquired, newly issued, treasury shares or any
combination thereof. Notwithstanding the foregoing, the maximum aggregate number
of
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Awards under the Plan which may be newly issued shares is limited to 500,000.
Subject to Section 10(b), the maximum number of shares of Common Stock that may
be subject to an Award granted to any Participant in any calendar year shall not
exceed 1,000,000 shares.
The Shares available for issuance under the Plan together with all of
the Company's other previously established or proposed share compensation
arrangements cannot, at any time, result in:
(i) the number of Shares reserved for issuance pursuant
to Options granted to Insiders exceeding 10% of the
outstanding issue;
(ii) the issuance to Insiders, within a one-year period,
of a number of Shares exceeding 10% of the
outstanding issue;
(iii) the issuance to any one Insider and such Insider's
Associates, within a one-year period, of a number of
Shares exceeding 5% of the outstanding issue; or
(iv) the number of Shares reserved for issuance to any one
Participant exceeding 5% of the outstanding issue.
(b) Rules Applicable to Determining Shares Available for Issuance. For
purposes of determining the number of Shares that remain available for issuance
under the Plan, the following Shares shall be added back to the Plan Limit and
again be available for Awards:
(i) the number of Shares withheld from any Award to
satisfy a Participant's tax withholding obligations
or, if applicable, to pay the exercise price of an
Option; and
(ii) the number of Shares underlying any Award that are
surrendered and cancelled without being exercised.
5. PARTICIPATION.
(a) Eligible Individuals. Awards may be granted by the Committee to
individuals ("Eligible Individuals") who are directors, officers or other key
employees of the Company or a Subsidiary with the potential to contribute to the
future success of the Company or its Subsidiaries. Awards shall not be affected
by any change of duties or positions so long as the holder continues to be a
director, officer, employee of, or consultant to, the Company or a Subsidiary.
(b) Awards to Participants. The Committee shall have no obligation to
grant any Eligible Individual an Award or to designate an Eligible Individual as
a Participant.
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6. STOCK OPTIONS. Options granted under the Plan shall be subject to
the following terms and conditions and shall contain such additional terms and
conditions as the Committee shall deem appropriate, not inconsistent with the
terms of the Plan and applicable law, regulations and rules:
(a) Award Document. The terms and conditions of each Option shall be
set forth in an Award Document in a form approved by the Committee, which shall
incorporate the Plan by reference. The vesting, forfeiture and other
restrictions applicable to an Option (which will include, without limitation,
restrictions on transferability) shall be determined by the Committee and shall
be set forth in the applicable Award Document.
(b) Form of Award. The Committee is authorized to grant Options to
Eligible Individuals. An Option shall entitle a Participant to purchase a
specified number of Shares during a specified time at an exercise price
determined in accordance with Section 6(c) below. An Option shall become
exercisable after or at the time such Option becomes vested as determined by the
Committee. An Option shall be exercisable during such period(s) as shall be
determined by the Committee and the Committee may, subject to regulatory
approval, extend the term of an Option after the Date of Grant. An Option which
is not exercised during its period of exercisability shall expire without any
payment to the Participant.
(c) Exercise Price. The exercise price per share of Common Stock
purchasable under an Option shall be fixed by the Committee on the Date of Grant
or, alternatively, shall be determined by a method specified by the Committee on
the Date of Grant; provided, that such exercise price shall not be less than the
Fair Market Value of a share of Common Stock on the Date of Grant.
(d) Method of Exercise. Subject to the provisions of the applicable
Award Document, the exercise price of an Option may be paid in cash, certified
check or bank check or a combination thereof, and, if the applicable Award
Document so provides, in whole or in part through the withholding of shares
subject to the Option with a value equal to the exercise price. The Committee
may also establish procedures pursuant to which an Option may be exercised
through a "cashless exercise" procedure involving a broker or dealer approved by
the Committee, that affords Participants the opportunity to sell immediately
some or all of the Shares underlying the exercised portion of the Option in
order to generate sufficient cash to pay the Option exercise price and/or to
satisfy the minimum required withholding tax obligations related to the Option.
(e) Unvested Options. The following provisions apply to the unvested
portion of an Option held by a Participant except to the extent, if any,
otherwise provided in the applicable Award Document:
(i) upon a Participant ceasing to be an Eligible
Individual for any reason other than death,
Disability or Retirement, the unvested portion of the
Option shall be forfeited and cancelled without any
payment to such Participant and shall not be
exercisable in whole or in part unless otherwise
provided by the Committee, the Plan or the Award
Document;
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(ii) upon a Participant ceasing to be an Eligible
Individual because of death or Disability, the Pro
Rata Portion of the unvested portion of an Option
shall immediately vest (the number of Shares under
such Option vesting being rounded to the next highest
whole number of Shares if such number would otherwise
include a fraction) and the remainder of such
unvested portion shall immediately be forfeited and
cancelled without any payment to such Participant;
and
(iii) upon a Participant ceasing to be an Eligible
Individual by reason of Retirement, the unvested
portion of an Option shall immediately vest in full.
Notwithstanding the foregoing, the Board may in any particular case, in its sole
discretion and without precedent value, suspend or vary the operation of the
foregoing provisions, based on such factors or criteria as the Committee may
determine in its sole discretion (including, without limitation, accelerating
the vesting of an Option, in whole or in part), but only (i) with prior approval
of the Toronto Stock Exchange and (ii) in a manner that is not adverse to the
Participant and complies with applicable laws, regulations and rules of any
applicable jurisdiction or stock exchange.
(f) Termination of Employment. Upon a Participant's death, Disability
or Retirement, the Participant shall, except to the extent, if any, otherwise
provided in the applicable Award Document, retain the right to exercise the
vested portion of any Option held by such Participant for the applicable term of
the Option. Upon a Participant's Termination of Employment for any reason other
than death, Disability or Retirement, the Participant shall, except to the
extent, if any, otherwise provided in the applicable Award Document, retain the
right to exercise the vested portion of any Option held by such Participant for
ninety days following such termination.
(g) Term of Option. Each Option shall be effective for such term as
shall be determined by the Committee and set forth in the applicable Award
Document; provided, however, that the term of any Option shall not exceed 10
years from the Date of Grant.
(h) Fractional Shares. No fractional Shares may be issued upon any
exercise of an Option, and the Committee may determine the manner, if any, in
which fractional share value shall be treated.
7. RESTRICTED SHARES. Restricted Shares awarded under the Plan shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions as the Committee shall deem appropriate, not inconsistent
with the terms of the Plan and applicable law, regulation and rules:
(a) Award Document. The terms and provisions of each Restricted Share
awarded under the Plan shall be set forth in an Award Document in a form
approved by the Committee, which shall incorporate the Plan by reference. The
vesting, forfeiture and other restrictions applicable to a Restricted Share
(which may include, without limitation, restrictions
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on transferability) shall be determined by the Committee and shall be set forth
in the applicable Award Document.
(b) Terms of Restricted Shares; Generally.
(i) Subject to Section 7(b)(iii), Restricted Shares may
be granted to any Eligible Individual by the
Committee, in its sole discretion, and shall comply
with the terms and conditions of the Plan and the
applicable Award Document.
(ii) Restricted Shares shall be held in escrow rather than
delivered to the Participant pending the release of
the applicable restrictions and the Participant shall
execute and deliver to the Company (1) an escrow
agreement satisfactory to the Committee and (2) the
appropriate blank stock powers with respect to the
Restricted Shares covered by such agreements. If a
Participant does not execute an escrow agreement and
stock powers, the Award shall be null and void.
Subject to the restrictions set forth in Section
7(d), the Participant shall generally have the rights
and privileges of a stockholder as to such Restricted
Shares, including the right to vote the Restricted
Shares and to receive dividends. In the sole
discretion of the Committee, cash dividends and stock
dividends with respect to the Restricted Shares may
be either currently paid to the Participant or
withheld by the Company for the Participant's account
and subject to such terms as determined by the
Committee. Cash dividends or stock dividends may, in
the sole discretion of the Committee, be subject to
the same restrictions as the underlying Restricted
Shares.
(iii) Unless such Restricted Shares are acquired on the
open market, Restricted Shares granted under the Plan
shall not be issued until the consideration for the
Restricted Shares is fully paid in money, property or
past service that is not less in value than the fair
equivalent of the money that the Company would have
received if the Restricted Shares had been issued for
money (as determined by the Board in its sole
discretion).
(c) Certificates. Upon the award of Restricted Shares, the Committee
shall cause a share certificate (or appropriate electronic entry) registered in
the name of the Participant to be issued and deposited together with the powers
with an escrow agent designated by the Committee. The Committee shall cause the
escrow agent to issue to a Participant a receipt evidencing any share
certificate held by it registered in the name of such Participant.
(d) Restrictions.
(i) Restricted Shares awarded to a Participant shall be
subject to the following restrictions until the
expiration of the Restricted Period,
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and to such other terms and conditions as may be set
forth in the applicable Award Document: (1) the
Participant shall not be entitled to delivery of the
share certificate; (2) the Shares shall be subject to
the restrictions on transferability set forth in the
Award Document; and (3) the Shares shall be subject
to forfeiture to the extent provided in Section 7(f)
and the applicable Award Document and, to the extent
such Shares are forfeited, the share certificates
shall be returned to the Company, and all rights of
the Participant to such Shares and as a stockholder
shall terminate without further obligation on the
part of the Company and all such Shares shall be
cancelled.
(ii) The Committee shall have the authority to remove any
or all of the restrictions on the Restricted Shares
whenever it may determine that, by reason of changes
in applicable laws or other changes in circumstances
arising after the date of the Award, such action is
appropriate.
(e) Restricted Period. The duration of the Restricted Period and the
other restrictions, if any, that shall be imposed upon the Restricted Shares
shall be determined by the Committee at the time each grant of Restricted Shares
is made and, at the discretion of the Committee, may be set forth in the
applicable Award Document. The Committee may, in any particular case, in its
sole discretion and without precedent value, reduce any Restricted Period or any
other restrictions regarding the transferability or forfeiture of all or a
portion of any Award.
(f) Termination of Employment. Unless otherwise determined by the
Committee, in its sole discretion, or specified in the applicable Award
Document:
(i) upon a Participant ceasing to be an Eligible
Individual by reason of death or Disability, the
Restricted Period applicable to each grant of
Restricted Shares to the Participant shall end as to
the Pro Rata Portion of the Restricted Shares (the
number of Restricted Shares so calculated being
rounded to the next highest whole number of
Restricted Shares if such number would otherwise
include a fraction), and the remainder of the
Restricted Shares comprising such grant shall be
forfeited and cancelled without any payment to such
Participant;
(ii) upon a Participant ceasing to be an Eligible
Individual by reason of Retirement, the Restricted
Period applicable to any Restricted Shares granted to
such Participant shall terminate; and
(iii) upon a Participant ceasing to be an Eligible
Individual for any reason other than death,
Disability or Retirement, all of the Participant's
Restricted Shares shall be forfeited without any
payment to such Participant.
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Notwithstanding the foregoing, the Committee may, in any particular case, in its
sole discretion, but with prior approval of the Toronto Stock Exchange, and
without precedent value, suspend or vary the operation of the foregoing
provisions, upon such terms and to such extent as it may determine, but only in
a manner that is not adverse to the Participant and complies with applicable
laws, regulations and rules of any jurisdiction or stock exchange.
(g) Delivery of Restricted Shares. Upon the expiration of the
Restricted Period with respect to any Restricted Share, the restrictions set
forth in Section 7(d) and the Award Document shall be of no further force or
effect with respect to such Restricted Share, provided that the Restricted Share
has not been forfeited. Upon such expiration, the Company shall deliver to the
Participant, without charge, a share certificate evidencing the Restricted
Shares which have not been forfeited and with respect to which the Restricted
Period has expired (to the nearest full share) and any cash dividends or share
dividends credited to the Participant's account with respect to such Restricted
Share and the interest thereon, if any.
8. RESTRICTED SHARE UNITS. Restricted Share Units shall consist of a
grant of units, each of which represents the right of the Participant to receive
one Share, subject to the following terms and conditions and shall contain such
additional terms and conditions as the Committee shall deem appropriate, not
inconsistent with the terms of the Plan and applicable law, regulations and
rules:
(a) Terms set forth in Award Document. The terms and provisions of each
Restricted Share Unit awarded under the Plan shall be set forth in an Award
Document in a form approved by the Committee, which shall incorporate the Plan
by reference. The vesting, forfeiture and other restrictions applicable to a
Restricted Share Unit (which may include, without limitation, restrictions on
transferability) shall be determined by the Committee and shall be set forth in
the applicable Award Document.
(b) Deferral. By their terms, Restricted Share Units are automatically
deferred upon grant as provided in the applicable Award Document. Pursuant to
rules and regulations adopted by the Committee, the Committee may permit a
Participant to further defer the settlement of a Restricted Share Unit until the
earlier of his or her (i) termination of employment or (ii) death. Amounts
deferred in accordance with the preceding sentence shall be noted in a
Participant's Account.
(c) Accounts. Upon the grant of a Restricted Share Unit, the Board
shall credit a Participant's Account with the number of Restricted Share Units
granted. In the event that the Company pays any cash or other dividend or makes
any other distribution in respect of the Common Stock, a Participant's Account
will be credited with an additional number of Restricted Share Units (including
fractions thereof) determined by dividing (i) the amount of cash, or the value
(as determined by the Board) of any securities or other property, paid or
distributed in respect of a Share by (ii) the Fair Market Value of a Share for
the date of such payment or distribution, and multiplying the result of such
division by (iii) the number of Restricted Share Units that were credited to a
Participant's Account immediately prior to the date of the dividend or other
distribution. Credits shall be made effective as of the date of the dividend or
other distribution in respect of the Common Stock. Dividends credited to a
Participant's Account may, in the sole discretion of the Committee, be either
currently paid to
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the Participant or withheld by the Company and credited to the Participant's
Account as additional Restricted Share Units. Dividends credited to a
Participant's Account may, in the sole discretion of the Committee, be subject
to the same restrictions as the underlying Restricted Share Units.
(d) Restrictions.
(i) Restricted Share Units awarded to a Participant shall
be subject to the following restrictions until the
expiration of the Restricted Period, and to such
other terms and conditions as may be set forth in the
applicable Award Document: (1) the Participant shall
not be entitled to delivery of the share certificate
and (2) the Restricted Share Units shall be subject
to forfeiture to the extent provided in Section 8(e)
and the applicable Award Document.
(ii) The Committee shall have the authority to remove any
or all of the restrictions on the Restricted Shares
Units whenever it may determine that, by reason of
changes in applicable laws or other changes in
circumstances arising after the date of the Award,
such action is appropriate.
(e) Restricted Period. The duration of the Restricted Period and the
other restrictions, if any, that shall be imposed upon the Restricted Share
Units shall be determined by the Committee at the time each grant of Restricted
Share Units is made and, at the discretion of the Committee, may be set forth in
the applicable Award Document. The Committee may, in any particular case, in its
sole discretion and without precedent value, reduce any Restricted Period or any
other restrictions regarding the transferability or forfeiture of all or a
portion of any Award.
(f) Termination of Employment. Unless otherwise determined by the
Committee, in its sole discretion, or specified in the applicable Award
Document:
(i) upon a Participant ceasing to be an Eligible
Individual by reason of death or Disability, the
Restricted Period applicable to each grant of
Restricted Share Units to the Participant shall end
as to the Pro Rata Portion of the Restricted Shares
Units (the number of Restricted Share Units so
calculated being rounded to the next highest whole
number of Restricted Share Units if such number would
otherwise include a fraction), and the remainder of
the Restricted Share Units comprising such grant
shall be forfeited and cancelled without any payment
to such Participant;
(ii) upon a Participant ceasing to be an Eligible
Individual by reason of Retirement, the Restricted
Period applicable to any Restricted Share Units
granted to such Participant shall terminate; and
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(iii) upon a Participant ceasing to be an Eligible
Individual for any reason other than death,
Disability or Retirement, all of the Participant's
Restricted Share Units shall be forfeited without any
payment to such Participant.
Notwithstanding the foregoing, the Committee may, in any particular case, in its
sole discretion, but with prior approval of the Toronto Stock Exchange, and
without precedent value, suspend or vary the operation of the foregoing
provisions, upon such terms and to such extent as it may determine, but only in
a manner that is not adverse to the Participant and complies with applicable
laws, regulations and rules of any applicable jurisdiction or stock exchange.
(g) Delivery of Shares. Upon the expiration of the Restricted Period
with respect to any Restricted Share Unit, the restrictions set forth in Section
8(d) and the Award Document shall be of no further force or effect with respect
to such Restricted Share Unit, provided that the Restricted Share Unit has not
been forfeited. Upon such expiration, the Company shall, in its sole discretion,
(i) deliver to the Participant a share certificate evidencing the Restricted
Share Units in such Participant's Account that have not been forfeited or (ii)
deliver to the Participant, cash equal to the Fair Market Value of the Shares
subject to such Restricted Share Units, or in a combination of Shares and cash.
(h) No Stockholder Rights. The crediting of Restricted Share Units to
an Account shall not confer on the relevant Participant any rights as a
stockholder of the Company.
9. GENERAL PROVISIONS.
(a) Non-Transferability of Award. Unless the Committee determines
otherwise in its sole discretion and subject to regulatory approval, no Award or
amount payable under, or interest in, the Plan shall be transferable by a
Participant except by will or the laws of descent and distribution or otherwise
be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge; provided, however, that the Committee
may, in its sole discretion and subject to such terms and conditions as it shall
specify, permit the transfer of an Award, other than an Option, for no
consideration to a Participant's family members or to one or more personal
holding companies which are controlled or wholly-owned by the Participant,
provided such Shares underlying an Award are owned directly or indirectly by the
Participant, his or her spouse, minor children or minor grandchildren, and/or
family trusts wholly-owned (directly or indirectly) by the Participant or his or
her immediate family (collectively, "Permitted Transferees"). Any Award
transferred to a Permitted Transferee shall be further transferable only by will
or the laws of descent and distribution or, for no consideration, to another
Permitted Transferee of the Participant. The Committee may, in its sole
discretion, permit transfers of Awards (other than an Option) other than those
contemplated by this Section 9(a). During the lifetime of the Participant, an
Option shall be exercisable only by the Participant or by a Permitted Transferee
to whom such Option has been transferred in accordance with this Section 9(a).
(b) Rights with Respect to Shares. A Participant shall have no rights
as a stockholder with respect to Shares covered by an Award until the date the
Participant or his nominee becomes the holder of record of such Shares, and
except as herein otherwise provided
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no adjustments shall be made for cash dividends or other distributions or other
rights as to which there is a record date preceding the date such person becomes
the holder of record of such shares. The Company shall not be entitled to
exercise any voting rights in respect of the Shares held by it unless the
Company has both sought and obtained instructions from a Participant, in which
case the Company shall exercise the voting rights in respect of the Shares which
are or may be transferable to such Participant upon the exercise of such
Participant's Options in accordance with the instructions of such Participant
(provided that, for greater certainty, nothing herein shall obligate the Company
to seek instructions from any or all of the Participants). Except as the
following may be varied by action taken under Section 9, the Company shall be
entitled (to the exclusion of any Participant) to all dividends and other
distributions in respect of the Shares held by it at all times prior to the
transfer of such Shares to a Participant upon the exercise of an Option.
(c) No Right to Continued Employment. No Eligible Individual or
Participant shall have any claim or right to receive grants of Awards under the
Plan. Nothing in the Plan or in any Award or Award Document shall confer upon
any Eligible Individual any right to continued employment or service with the
Company or any Subsidiary or interfere in any way with the right of the Company
or any Subsidiary to terminate the employment or service of any Eligible
Individual any time, with or without cause. Each Participant, by accepting an
Award, agrees with the Company and its Subsidiaries that he or she will not be
entitled to any damages, payment or claim with respect to or as a result of any
forfeiture of the Award that occurs as a result of the termination of the
Participant's employment or service with the Company or any Subsidiary,
regardless of the reason for or circumstances of such termination, or whether
such termination was or was not wrongful and of whether or not the period of
notice of termination given to the Participant was sufficient.
(d) Consent to Plan. By accepting any Award or other benefit under the
Plan, each Participant and each person claiming under or through such
Participant shall be conclusively deemed to have indicated his acceptance and
ratification of, and consent to, any action taken under the Plan by the Company,
the Board or the Committee.
(e) Wage and Tax Withholding. The Company or any Subsidiary is
authorized to withhold from any Award or any compensation or other payment to a
Participant amounts of withholding and other taxes with respect to the payment
of any federal, state, provincial or local taxes of any kind required by law to
be withheld in connection with any Award, and to take such other action as the
Committee may deem necessary or advisable to enable the Company and the
Participants to satisfy obligations for the payment of the minimum required
withholding obligations relating to any Award. This authority shall include
authority for the Company to withhold or receive Common Stock or other property
and to make cash payments in respect thereof in satisfaction of a Participant's
minimum required tax withholding obligations, either on a mandatory or elective
basis in the sole discretion of the Committee.
(f) Compliance with Laws. An Award may not be exercised, and no Shares
may be issued in connection with an Award, unless and until the Company has
determined that (i) the Company and the Participant have taken all actions under
the securities laws of both the United States and Canada and including any
applicable requirements of any stock exchange in
14
which the Common Stock is listed, (ii) the consideration for the Shares is fully
paid in money, property or past service that is not less in value than the fair
equivalent of the money that the Company would have received if the Shares had
been issued for money (as determined by the Board in its sole discretion) and
(iii) the issuance of such Shares complies with any other applicable laws.
(g) Unfunded Plan. The Plan is intended to constitute an "unfunded"
plan for incentive compensation. Nothing contained in the Plan (or in any Award
Documents or other documentation related thereto) shall give any Participant any
rights that are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of trusts and
deposit therein cash, Shares or other property or make other arrangements to
meet the Company's obligations under the Plan. Such trusts or other arrangements
shall be consistent with the "unfunded" status of the Plan unless the Committee
determines otherwise. The trustee of such trusts may be authorized to dispose of
trust assets and reinvest the proceeds in alternative investments, subject to
such terms and conditions as the Committee may specify.
(h) Other Employee Benefit Plans. Payments received by a Participant
under any Award made pursuant to the Plan shall not be included in, nor have any
effect on, the determination of benefits under any other employee benefit plan
or similar arrangement provided by the Company, unless otherwise specifically
provided for under the terms of such plan or arrangement or by the Committee.
(i) Compliance with Rule 16b-3. Notwithstanding anything contained in
the Plan or in any Award Document to the contrary, if the consummation of any
transaction under the Plan would result in the possible imposition of liability
on a Participant pursuant to Section 16(b) of the Exchange Act, the Committee
shall have the right, in its sole discretion, but shall not be obligated, to
defer such transaction or the effectiveness of such action to the extent
necessary to avoid such liability, but in no event for a period longer than six
months.
(j) Expenses. The costs and expenses of administering and implementing
the Plan shall be borne by the Company.
(k) Liability and Indemnification.
(i) Neither the Company nor any Subsidiary shall be
responsible in any way for any action or omission of
the Committee or any other fiduciaries in the
performance of their duties and obligations as set
forth in the Plan. Furthermore, neither the Company,
any Subsidiary nor the Committee shall be responsible
for any act or omission of any of their agents, or
with respect to reliance upon the advice of their
counsel, provided that the Company, the appropriate
Subsidiary or the Committee, as the case may be,
relied in good faith upon the action of such agent or
the advice of such counsel.
(ii) Neither the Company, any Subsidiary, the Committee,
nor any agent, employee, officer, director,
stockholder or member of any of
15
them, nor any other person shall have any liability
or responsibility to any Participant or otherwise
with respect to the Plan, except with respect to
fraud, bad faith or willful misconduct on their part
or as otherwise expressly provided herein.
(l) Cooperation of Parties. All parties to the Plan and any person
claiming any interest hereunder agree to perform any and all acts and execute
any and all documents and papers which are necessary or desirable for carrying
out the Plan or any of its provisions.
(m) Notices. Each notice relating to the Plan shall be in writing and
delivered by recognized overnight courier or certified mail to the proper
address or, optionally, to any individual personally. Except as otherwise
provided in any Award Document, all notices to the Company or the Committee
shall be addressed to it c/o the Company at its registered office, Attn:
Corporate Secretary. All notices to Participants, former Participants,
beneficiaries or other persons acting for or on behalf of such persons which are
not delivered personally to an individual shall be addressed to such person at
the last address for such person maintained in the records of the Committee or
the Company.
(n) Financial Assistance. The Committee shall determine, in its sole
discretion, the terms and conditions of any financial assistance that shall be
provided by the Company to a Participant in order to permit such Participant to
exercise an Option or to purchase Shares under the Plan; provided, however, that
such financial assistance shall not extend beyond the term of the Option or the
right to purchase Shares in respect of which the financial assistance is being
provided. The terms and conditions on which financial assistance may be provided
to a Participant, including any security for such financial assistance and
whether the Company shall have any recourse against such Participant for the
outstanding balance of the financial assistance after realization on such
security, shall be set forth in the Award Document.
10. RECAPITALIZATION OR REORGANIZATION.
(a) Authority of the Company and Shareholders. The existence of the
Plan, the Award Documents and the Awards granted hereunder shall not affect or
restrict in any way the right or power of the Company or the Shareholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any dividend or other distribution, any issue of
stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
(b) Change in Capitalization. Notwithstanding any provision of the Plan
or any Award Document, if there is any change in the outstanding Shares by
reason of a stock dividend or split, a recapitalization, or a consolidation,
combination or exchange of shares, or if there is any other change (including,
possibly, an extraordinary dividend) which the Committee in its sole discretion
determines is a sufficiently fundamental change to warrant the action
hereinafter described, the Committee shall make, subject to any prior approval
required of
16
relevant stock exchanges or other applicable regulatory authorities, if any, an
appropriate substitution or adjustment in (i) the exercise price of any
unexercised Options under the Plan; and/or (ii) the number and kind of shares or
other securities subject to unexercised Options under the Plan; provided,
however, that no substitution or adjustment will obligate the Company to
transfer fractional Shares. In the event of the reorganization or the
amalgamation, merger or consolidation of the Company with another corporation,
the Committee may make such provision for the protection of the rights of
Eligible Individuals and Participants as the Committee in its discretion deems
appropriate. The determination of the Committee, as to any such substitution or
adjustment or as to there being no need for the same, will be final and binding
on all parties.
11. EFFECTIVE DATE. The Plan shall become effective on the Effective
Date, subject to subsequent approval thereof by the Company's stockholders, and
shall remain in effect until it has been terminated pursuant to Section 12. If
the Plan is not approved by the stockholders, the Plan and all interests in the
Plan awarded to Participants shall be void ab initio and of no further force and
effect.
12. AMENDMENT; SUSPENSION AND TERMINATION.
Notwithstanding anything herein to the contrary, the Board or the
Committee may, at any time, terminate or, from time to time, amend, modify or
suspend the Plan; provided, however, that no amendment or modification which (i)
increases the Plan Limit or (ii) otherwise must be approved by stockholders
pursuant to applicable rules of an exchange or any requirements or any
requirements of the Code and the regulations promulgated thereunder, shall be
effective without stockholder approval. However, except as otherwise expressly
provided herein, no amendment, modification, suspension or termination of the
Plan shall alter the rights of any Participant existing at such time with
respect to an Award, except with the express written consent of such
Participant. The Plan shall continue until earlier terminated by the Company
pursuant to this Section 12. If the Plan is terminated, the provisions of the
Plan, and any administrative guidelines, regulations and other rules adopted by
the Committee with respect to the Plan which are in force at the time of such
termination, will continue in effect in respect of any Awards which are
outstanding at such time and any rights pursuant to any such Awards. However,
notwithstanding the termination of the Plan, the Committee may make any
amendments to the Plan or the Awards which it would have been entitled to make
if the Plan were still in effect.
With the consent of any applicable regulatory authorities, as may be
required, the Committee may, in its sole discretion and without precedent value,
amend or modify any particular outstanding Award(s) or, in circumstances which
the Committee deems appropriate (such a circumstance may, for instance, be a
change of control of the Company), all outstanding Awards, so as to:
(i) accelerate the Award's vesting or exercisability;
(ii) reduce any restrictions on the transferability,
vesting or exercisability of the Award; or
17
(iii) if the Company ceases to be subject to the terms of
the Exchange Act or there is a contemplated
transaction which would result in the Company ceasing
to be subject to the terms of the Exchange Act,
abbreviate the exercise period of all outstanding
Awards;
upon not less than 30 days' notice to all affected Participants and upon such
terms (including the possible reinstatement of Awards) as the Committee
determines.
13. GOVERNING LAW. The validity, construction and effect of the Plan,
any rules and regulations relating to the Plan, and any Award shall be
determined in accordance with the laws of the province of Ontario applicable to
contracts to be performed entirely within such state and without giving effect
to principles of conflicts of laws.
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