PHILSAR ELECTRONICS INC.
EMPLOYEE AND DIRECTOR STOCK OPTION PLAN
PLAN DESCRIPTION
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1. Purpose of the Plan
The purpose of the Employee and Director Stock Option Plan is to develop the
interest and incentive of eligible employees and directors of Philsar
Electronics Inc. [and its subsidiaries] (the "Company") in the Company's growth
and development by giving eligible employees and directors an opportunity to
purchase Common Shares on a favourable basis, thereby advancing the interests of
the Company, enhancing the value of the Common Shares for the benefit of all the
shareholders and increasing the ability of the Company to attract and retain
skilled and motivated individuals in the service of the Company.
The Board of Directors has approved the terms of this Plan.
2. Definitions
In this Plan:
(a) "Associate" has the meaning assigned by the Securities Act (Ontario),
as amended from time to time;
(b) "Board of Directors" means the board of directors of the Company;
(c) "Committee" means the appropriate compensation committee appointed by
the Board of Directors to administer the Plan. All references in the
Plan to the Committee means the Board of Directors if no Committee has
been appointed;
(d) "Common Shares" means the Class A Shares of the Company or, in the
event of an adjustment contemplated in Section 9 hereof, such other
Class A Shares to which a Participant may be entitled upon the
exercise of an Option as a result of such adjustment;
(e) "Date of Grant" means the date a Participant is granted an Option to
purchase Option Shares;
(f) "Director" means a person occupying the position of director on the
Board of Directors;
(g) "Employee" means an officer or full time permanent employee of the
Company or its subsidiaries;
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(h) "Exchange" means The Toronto Stock Exchange or, if the Common Shares
are not then listed and posted for trading on The Toronto Stock
Exchange, on such stock exchange on which such shares are listed and
posted for trading as may be selected by the Committee;
(i) "Exercise Date" means the date the Company receives from the
Participant a completed Stock Option Purchase Form with payment for the
Option Shares being purchased;
(j) "Insider" means:
(i) an insider of the Company as defined by the Securities Act
(Ontario) as amended from time to time, other than a person
who falls within such definition solely by virtue of being a
director or senior officer of a subsidiary of the Company; and
(ii) an Associate of any person who is an insider by virtue of
clause (i) of this definition;
(k) "Fair Market Value" at any date in respect of the Common Shares shall
be determined by the Committee in its sole discretion, unless the
Common Shares become listed and posted for trading on the Exchange, in
which case the Fair Market Value shall be equal to the closing price of
the Common Shares on the Exchange on the trading day immediately
preceding the date the shares are to be valued;
(l) "Option" means an option to purchase Common Shares from the treasury of
the Company granted to a Participant;
(m) "Option Price" means the price per share at which a Participant may
purchase Option Shares;
(n) "Option Shares" means the Common Shares of the Company which a
Participant is entitled to purchase under the Plan;
(o) "Outstanding Issue" means the number of Common Shares that are
outstanding immediately prior to any issuance of Option Shares,
excluding Option Shares issued pursuant to the Plan during the
preceding one year period;
(p) "Participants" means Directors and Employees to whom Option Shares are
granted pursuant to the Plan and which remain unexercised;
(q) "Plan" means the Philsar Electronics Inc. Employee and Director Stock
Option Plan;
(r) "Stock Option Agreement" means the stock option agreement to be entered
into between the Company and a Participant of the Plan upon the grant
of an Option to a Participant; and
(s) "Vesting Period" means the period(s) as stipulated in the Stock Option
Agreement that the Participant may purchase the Option Shares.
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3. Eligibility
Participation in the Plan shall be limited to Participants who are designated
from time to time by the Committee. Participation shall be voluntary and the
extent to which any Participant shall be entitled to participate in the Plan
shall be determined by the Committee.
4. Number of Option Shares and Limitations on Issuance
The aggregate number of Option Shares which may be reserved for issuance
hereunder shall not exceed the number to be determined by the Board of
Directors.
No fractional shares may be purchased or issued hereunder. Subject to the
foregoing, the number of Option Shares that a Participant is entitled to
purchase under the Plan will be determined by the Committee.
5. Price for Option Shares
The Committee shall advise each Participant designated to participate in the
Plan of the number of Option Shares such Participant is entitled to purchase and
the Option Price at which the Option Shares may be purchased and the Vesting
Period. The Option Price at which the Option Shares may be purchased under the
Plan shall be fixed by the Committee based upon the Fair Market Value of the
Common Shares of the Company. The Committee may impose performance thresholds
which will need to be met prior to vesting of any Options granted.
6. Exercise
Options granted under the Plan must be exercised within a period of 6 years from
the Date of Grant, failing which the Participant's right to purchase such Option
Shares lapses. The vesting periods within this 6 year period during which
Options or a portion thereof vest and may be exercised by the Participant shall
be determined by the Committee and shall be set forth in the Stock Option
Agreement to be executed by the Participant, the form of which shall be
consistent with the provisions of this Plan.
Notwithstanding the vesting period set forth in the Stock Option Agreement, the
Committee may, in its sole discretion, by written notice to any Participant,
accelerate the vesting of the Options such that the Options become immediately
fully vested. In such circumstances, the Committee may by written notice compel
the Participant to exercise the Options within 30 days of the date of such
written notice to exercise, failing which the Participant's right to purchase
such Option Shares lapses.
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The exercise of an Option shall be subject to the Option holder agreeing to be
bound by, and signing a counterpart to, any and all agreements of the Company
relating to Option holders.
7. Payment
The Participant from time to time and at any time after the vesting of any
Options and prior to the lapse of such Options, may elect to purchase all or a
portion of the Option Shares available for purchase by lump sum payment by
delivering to the Company at its registered office, a completed Stock Option
Purchase Form. Such Form shall specify the number of Option Shares the
Participant desires to purchase and shall be accompanied by payment in full of
the purchase price for such Option Shares. Payment may be made by cash,
certified cheque, bank draft, money order or the equivalent payable to the order
of Philsar Electronics Inc.
8. Share Certificates
Upon exercise of the Option and payment in full of the purchase price the
Company shall cause to be delivered to the Participant within a reasonable
period of time a duplicate certificate or certificates in the name of the
Participant representing the number of Option Shares the Participant has
purchased. The original share certificate shall be held in trust by the Company
for delivery to the holder when the shares are to be transferred, as authorized
by the Plan.
9. Adjustment in Shares
Appropriate adjustments in the number of Common Shares subject to the Plan and,
as regards Options granted or to be granted, in the number of Common Shares
optioned and in the Option Price, shall be made by the Committee to give effect
to the adjustments in the number of Common Shares resulting from sub-divisions,
consolidations or re-classification of the Common Shares or other relevant
changes in the authorized or issued capital of the Company.
In the event that the Company proposes to amalgamate, merge or consolidate with
any other corporation or to liquidate, dissolve or wind-up, the Company may, at
its option, give written notice thereof to any or all Participants holding
Options under the Plan in which case such Participants shall be entitled to
exercise all or a portion of the Options granted to such Participants, whether
or not such Options have previously vested, within the 30 days period next
following the giving of such notice. To the extent the proposed amalgamation,
merger or consolidation is not completed in a reasonable time, the Company may
purchase at the Option Price the Option Shares acquired by such Participant
pursuant to Options which would not have vested but for the acceleration of the
Vesting Period. Upon the expiration of such 30 day period, all rights of such
Participants to the Option Shares or to the exercise of the Options shall
terminate and cease to have any further force and effect.
10. Termination Of Participant For Any Reason
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a) In the event that an Employee's employment with the Company or any of its
subsidiaries is terminated for any reason or a Director shall cease to be a
Director on the Board of Directors for any reason, the Participant or the
Participant's legal representative, as the case may be, may elect to purchase at
the Option Price all or a portion of the remaining Option Shares subject to
Options that have vested at the time such employment or position on the Board of
Directors is terminated at any time during the 30 day period, or such later date
as determined by the Board of Directors, following the date of such termination
of employment or position on the Board of Directors (but in no event after the
lapse of any Options held) and to the extent the Company's Common Shares are not
listed on any Exchange, the Company may, in addition to any other right it may
have under the Stock Option Agreement, elect to purchase at Fair Market Value,
all of the Common Shares purchased by such Participant under this Plan. For the
purposes of this Plan, the transfer of the Employee's employment to the Company
or to any subsidiary of the Company shall not be considered a termination of
employment and the Employee's rights under the Option shall be the same as if
such transfer had not occurred.
b) In the event of an offer by a third party to purchase all the shares of the
Company, which offer shall be accepted by shareholders who collectively own
shares representing 51% or more of all of the voting shares of Company, the
Participant agrees that any shares owned by him/her at the time of such offer
shall be tendered for sale in accordance with the terms of such offer.
11. Transfer and Assignment
The Participant's rights under Options granted under the Plan are not assignable
or transferable by the Participant or subject to any other alienation, sale,
pledge or encumbrance by such Participant during the Participant's lifetime and
therefore the Options are exercisable during the Participant's lifetime only by
the Participant. The obligations of each Participant shall be binding on his or
her heirs, executors and administrators.
12. Employment and Board of Directors Position Non-Contractual
The granting of an Option to a Participant under the Plan does not confer upon
the Participant any right to continue in the employment of the Company or any
subsidiary of the Company or as a member of the Board of Directors, as the case
may be, nor does it interfere in any way with the rights of the Employee or of
the Company's rights to terminate the Employee's employment at any time or of
the shareholders' right to elect Directors.
13. Rights As Shareholders
Participants shall not have any rights as a shareholder with respect to Option
Shares until full payment has been made to the Company and a share certificate
or share certificates have been duly issued.
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14. Administration Of The Plan
The Plan shall be administered by the Committee. The Committee shall have the
power to interpret and construe the terms and conditions of the Plan and the
Options. Any determination by the Committee shall be final and conclusive on all
persons affected thereby unless otherwise determined by the Board of Directors.
The day-to-day administration of the Plan may be delegated to such officers and
employees of the Company or any subsidiary of the Company as the Committee shall
determine.
15. Employee Loans
The Committee may authorize the Company to lend or cause to be lent to Employees
such portion of the purchase price of the Option Shares under the Plan as an
Employee may request and the Committee administering the Plan may approve. The
terms and conditions of such loan which may be interest free, are to be
determined by the Committee.
16. Notices
All written notices to be given by the Participant to the Company may be
delivered personally or by registered mail, postage prepaid, addressed as
follows:
Philsar Electronics Inc.
81 Metcalfe St., 3rd floor
Ottawa, Ont. K1P 6K7
Tel: (613) 567-4604
Fax: (613) 567-5578
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Any notice given by the Participant pursuant to the terms of the Option shall
not be effective until actually received by the Company at the above address.
Any notice to be given to the Participant shall be sufficiently given if
delivered personally or by postage prepaid mail to the last address of the
Participant on the records of the Company and shall be effective seven days
after mailing.
17. Corporate Action
Nothing contained in the Plan or in the Option shall be construed so as to
prevent the Company or any subsidiary of the Company from taking corporate
action which is deemed by the Company or the subsidiary to be appropriate or in
its best interest, whether or not such action would have an adverse effect on
the Plan.
18. Amendments
The Board of Directors of the Company shall have the right, in its sole
discretion, to alter, amend or discontinue the Plan from time to time and at any
time. No such amendment or discontinuation, however, may, without the consent of
the Participant, alter or impair his rights or increase his obligations under
the Plan. Any amendment to the Plan may require the prior approval of the
Exchange and may require the approval of the Company's shareholders.
19. Termination Of Plan
Except as otherwise provided herein, Options may be granted only within the five
year period from the date the Plan has been adopted by the Board of Directors of
the Company.
20. Governing Law
The Plan is established under the laws of the Province of Ontario and the rights
of all parties and the construction and effect of each provision of the Plan
shall be according to the laws of the Province of Ontario and the laws of Canada
applicable therein.
21. Government Regulation
The Company's obligation to issue and deliver Common Shares under any Option is
subject to:
(a) the satisfaction of all requirements under applicable
securities law in respect thereof and obtaining all regulatory
approvals as the Company shall determine to be necessary or
advisable in connection with the authorization, issuance or
sale thereof, including shareholder approval, if required;
(b) the admission of such Common Shares to listing on any stock
exchange on which Common Shares may then be listed; and
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(c) the receipt from the Participant of such representations,
agreements and undertakings as to future dealings in such
Common Shares as the Company determines to be necessary or
advisable in order to safeguard against the violation of the
securities law of any jurisdiction.
In this connection, the Company shall take all reasonable steps to obtain such
approvals and registrations as may be necessary for the issuance of such Common
Shares in compliance with applicable securities law and for the listing of such
Common Shares on any stock exchange on which such Common Shares are then listed.
DATED this 18th day of December, 1997.
PHILSAR ELECTRONICS INC.
/s/ Luc Lussier
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Name: Luc Lussier
Title: President & CEO
