E-COM TECHNOLOGIES CORP.
2000 STOCK INCENTIVE PLAN
This 2000 Stock Incentive Plan (the "Plan") provides for the grant of
options to acquire common shares (the "Common Shares") and the issuance of
Common Shares in the capital of E-Com Technologies Corp., a corporation formed
under the laws of the State of Nevada (the "Corporation"). Stock options
granted under this Plan that qualify under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), are referred to in this Plan as
"Incentive Stock Options". Incentive Stock Options and stock options that do
not qualify under Section 422 of the Code ("Non-Qualified Stock Options")
granted under this Plan are referred to collectively as "Options". Common
Shares issued under the Plan are referred to in this Plan as "Incentive Stock".
1. PURPOSE
1.1 The purpose of this Plan is to retain the services of valued key
employees, officers, directors and consultants of the Corporation and such other
persons as the Plan Administrator shall select in accordance with Section 3
below, and to encourage such persons to acquire a greater proprietary interest
in the Corporation, thereby strengthening their incentive to achieve the
objectives of the shareholders of the Corporation, and to serve as an aid and
inducement in the hiring of new employees, officers and directors and to provide
an equity incentive to consultants and other persons selected by the Plan
Administrator.
1.2 This Plan shall at all times be subject to all legal requirements
relating to the administration of stock incentive plans, if any, under
applicable corporate laws, applicable United States federal and state securities
laws, the Code, the rules of any applicable stock exchange or stock quotation
system, and the rules of any foreign jurisdiction applicable to Options granted
to residents therein (collectively, the "Applicable Laws").
2. ADMINISTRATION
2.1 This Plan shall be administered initially by the Board of Directors of
the Corporation (the "Board"), except that the Board may, in its discretion,
establish a committee composed of two (2) or more members of the Board or two
(2) or more other persons to administer the Plan, which committee (the
"Committee") may be an executive, compensation or other committee, including a
separate committee especially created for this purpose. The Board or, if
applicable, the Committee is referred to herein as the "Plan Administrator".
2.2 If and so long as the Common Shares are registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Board shall consider in selecting the Plan Administrator and the
membership of any Committee, with respect to any persons subject or likely to
become subject to Section 16 of the Exchange Act, the provisions regarding (a)
"outside directors" as contemplated by Section 162(m) of the Code, and (b)
"Non-Employee Directors" as contemplated by Rule 16b-3 under the Exchange Act.
2.3 The Committee shall have the powers and authority vested in the Board
hereunder (including the power and authority to interpret any provision of the
Plan, any Option or any Incentive Stock). The members of any such Committee
shall serve at the pleasure of the Board. A majority of the members of the
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Committee shall constitute a quorum, and all actions of the Committee shall be
taken by a majority of the members present. Any action may be taken by a
written instrument signed by all of the members of the Committee and any action
so taken shall be fully effective as if it had been taken at a meeting.
2.4 Subject to the provisions of this Plan and any Applicable Laws, and with
a view to effecting its purpose, the Plan Administrator shall have sole
authority, in its absolute discretion, to:
(a) construe and interpret this Plan;
(b) define the terms used in the Plan;
(c) prescribe, amend and rescind the rules and regulations relating to this
Plan;
(d) correct any defect, supply any omission or reconcile any inconsistency
in this Plan;
(e) grant Options and issue Incentive Stock under this Plan;
(f) determine the individuals to whom Options shall be granted under this
Plan and whether the Option is an Incentive Stock Option or a Non-Qualified
Stock Option;
(g) determine the time or times at which Options shall be granted under this
Plan;
(h) determine the number of Common Shares subject to each Option, the
exercise price of each Option, the duration of each Option and the times at
which each Option shall become exercisable;
(i) determine all other terms and conditions of the Options;
(j) determine all restrictions on transfer, rights of first refusal,
repurchase provisions, forfeiture provisions, and other terms and conditions of
the Incentive Stock; and
(k) make all other determinations and interpretations necessary and
advisable for the administration of the Plan.
2.5 All decisions, determinations and interpretations made by the Plan
Administrator shall be binding and conclusive on all participants in the Plan
and on their legal representatives, heirs and beneficiaries.
3. ELIGIBILITY
3.1 Incentive Stock Options may be granted to any individual who, at the
time the Option is granted, is an employee of the Corporation or any Related
Corporation (as defined below) ("Employees").
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3.2 Non-Qualified Stock Options may be granted to Employees and to such
other persons, including directors, officers and consultants of the Corporation
or any Related Corporation, who are not Employees as the Plan Administrator
shall select, subject to any Applicable Laws.
3.3 Options may be granted in substitution for outstanding Options of
another corporation in connection with the merger, consolidation, acquisition of
property or stock or other reorganization between such other corporation and the
Corporation or any subsidiary of the Corporation. Options also may be granted
in exchange for outstanding Options.
3.4 Any person to whom an Option is granted under this Plan is referred to
as an "Optionee". Any person who is the owner of an Option or the holder of
Incentive Stock is referred to as a "Holder".
3.5 As used in this Plan, the term "Related Corporation" shall mean any
corporation (other than the Corporation) that is a "Parent Corporation" of the
Corporation or "Subsidiary Corporation" of the Corporation, as those terms are
defined in Sections 424(e) and 424(f), respectively, of the Code (or any
successor provisions) and the regulations thereunder (as amended from time to
time).
4. STOCK
4.1 The Plan Administrator is authorized to grant Options or issue Incentive
Stock for the acquisition of up to a total of 1,250,000 Common Shares. The
number of Common Shares with respect to which Options may be granted hereunder
is subject to adjustment as set forth in Section 5.1(n) hereof. In the event
that any outstanding Option expires or is terminated for any reason, the Common
Shares allocable to the unexercised portion of such Option may again be subject
to an Option granted to the same Optionee or to a different person eligible
under Section 3 of this Plan; provided however, that any cancelled Options will
be counted against the maximum number of Common Shares with respect to which
Options may be granted to any particular person as set forth in Section 3
hereof.
5. TERMS AND CONDITIONS OF STOCK INCENTIVE AGREEMENTS
5.1 Each Option granted and Common Share of Incentive Stock issued under
this Plan shall be evidenced by a written agreement approved by the Plan
Administrator (each an "Agreement"). Agreements may contain such provisions,
not inconsistent with this Plan or any Applicable Laws, as the Plan
Administrator in its discretion may deem advisable. All Options or Incentive
Stock also shall comply with the following requirements:
(a) Number of Common Shares and Type of Option
Each Agreement shall state the number of Common Shares to which it pertains and
whether the Option is intended to be an Incentive Stock Option or a
Non-Qualified Stock Option; provided that:
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(i) the number of Common Shares that may be reserved pursuant to the
exercise of Options granted to any person shall not exceed 5% of the issued and
outstanding Common Shares of the Corporation;
(ii) in the absence of action to the contrary by the Plan Administrator in
connection with the grant of an Option, all Options shall be Non-Qualified Stock
Options;
(iii) the aggregate fair market value (determined at the Date of Grant, as
defined below) of the Common Shares with respect to which Incentive Stock
Options are exercisable for the first time by the Optionee during any calendar
year (granted under this Plan and all other Incentive Stock Option plans of the
Corporation, a Related Corporation or a predecessor corporation) shall not
exceed U.S.$100,000, or such other limit as may be prescribed by the Code as it
may be amended from time to time (the "Annual Limit"); and
(iv) any portion of an Option which exceeds the Annual Limit shall not be
void but rather shall be a Non-Qualified Stock Option.
(b) Date of Grant
Each Agreement shall state the date the Plan Administrator has deemed to be the
effective date of the Option for purposes of this Plan (the "Date of Grant").
(c) Option Price
Each Agreement shall state the price per Common Share at which it is
exercisable. The Plan Administrator shall act in good faith to establish the
exercise price in accordance with Applicable Laws; provided that:
(i) the per Common Share exercise price for an Incentive Stock Option or any
Option granted to a "covered employee" as such term is defined for purposes of
Section 162(m) of the Code shall not be less than the fair market value per
Common Share at the Date of Grant as determined by the Plan Administrator in
good faith;
(ii) with respect to Incentive Stock Options granted to greater-than-ten
percent (>10%) shareholders of the Corporation (as determined with reference to
Section 424(d) of the Code), the exercise price per Common Share shall not be
less than one hundred ten percent (110%) of the fair market value per Common
Share at the Date of Grant as determined by the Plan Administrator in good
faith; and
(iii) Options granted in substitution for outstanding options of another
corporation in connection with the merger, consolidation, acquisition of
property or stock or other reorganization involving such other corporation and
the Corporation or any subsidiary of the Corporation may be granted with an
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exercise price equal to the exercise price for the substituted option of the
other corporation, subject to any adjustment consistent with the terms of the
transaction pursuant to which the substitution is to occur.
(d) Duration of Options
At the time of the grant of the Option, the Plan Administrator shall designate,
subject to Section 5.1(g) below, the expiration date of the Option, which date
shall not be later than ten (10) years from the Date of Grant; provided, that
the expiration date of any Incentive Stock Option granted to a greater-than-ten
percent (>10%) shareholder of the Corporation (as determined with reference to
Section 424(d) of the Code) and consultants of the Corporation shall not be
later than five (5) years from the Date of Grant. In the absence of action to
the contrary by the Plan Administrator in connection with the grant of a
particular Option, and except in the case of Incentive Stock Options as
described above, all Options granted under this Section 5 shall expire ten (10)
years from the Date of Grant.
(e) Option Vesting Schedule
No Option shall be exercisable until it has vested. The vesting schedule for
each Option shall be specified by the Plan Administrator at the time of grant of
the Option prior to the provision of services with respect to which such Option
is granted; provided, that if no vesting schedule is specified at the time of
grant, the Option shall vest according to the following schedule:
NUMBER OF YEARS PERCENTAGE OF TOTAL
FOLLOWING DATE OF GRANT OPTION VESTED
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One 25%
Two 50%
Three 75%
Four 100%
The Plan Administrator may specify a vesting schedule for all or any portion of
an Option based on the achievement of performance objectives established in
advance of the commencement by the Optionee of services related to the
achievement of the performance objectives. Performance objectives shall be
expressed in terms of objective criteria, including but not limited to, one or
more of the following: return on equity, return on assets, share price, market
share, sales, earnings per share, costs, net earnings, net worth, inventories,
cash and cash equivalents, gross margin or the Corporation's performance
relative to its internal business plan. Performance objectives may be in
respect of the performance of the Corporation as a whole (whether on a
consolidated or unconsolidated basis), a Related Corporation, or a subdivision,
operating unit, product or product line of either of the foregoing. Performance
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objectives may be absolute or relative and may be expressed in terms of a
progression or a range. An Option that is exercisable (in full or in part) upon
the achievement of one or more performance objectives may be exercised only
following written notice to the Optionee and the Corporation by the Plan
Administrator that the performance objective has been achieved.
(f) Acceleration of Vesting
The vesting of one or more outstanding Options may be accelerated by the Plan
Administrator at such times and in such amounts as it shall determine in its
sole discretion.
(g) Term of Option
(i) Vested Options shall terminate, to the extent not previously exercised,
upon the occurrence of the first of the following events:
A. the expiration of the Option, as designated by the Plan Administrator in
accordance with Section 5.1(d) above;
B. the date of an Optionee's termination of employment or contractual
relationship with the Corporation or any Related Corporation for cause (as
determined by the Plan Administrator, acting reasonably);
C. the expiration of three (3) months from the date of an Optionee's
termination of employment or contractual relationship with the Corporation or
any Related Corporation for any reason whatsoever other than cause, death or
Disability (as defined below) unless, in the case of a Non-Qualified Stock
Option, the exercise period is extended by the Plan Administrator until a date
not later than the expiration date of the Option; or
D. the expiration of one year (1) from termination of an Optionee's
employment or contractual relationship by reason of death or Disability (as
defined below) unless, in the case of a Non-Qualified Stock Option, the exercise
period is extended by the Plan Administrator until a date not later than the
expiration date of the Option.
(ii) Notwithstanding Section 5.1(g)(i) above, any vested Options which have
been granted to the Optionee in the Optionee's capacity as a director of the
Corporation or any Related Corporation shall terminate upon the occurrence of
the first of the following events:
A. the event specified in Section 5.1(g)(i)A above;
B. the event specified in Section 5.1(g)(i)D above; and
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C. the expiration of three (3) months from the date the Optionee ceases to
serve as a director of the Corporation or Related Corporation, as the case may
be.
(iii) Upon the death of an Optionee, any vested Options held by the Optionee
shall be exercisable only by the person or persons to whom such Optionee's
rights under such Option shall pass by the Optionee's will or by the laws of
descent and distribution of the Optionee's domicile at the time of death and
only until such Options terminate as provided above.
(iv) For purposes of the Plan, unless otherwise defined in the Agreement,
"Disability" shall mean medically determinable physical or mental impairment
which has lasted or can be expected to last for a continuous period of not less
than twelve (12) months or that can be expected to result in death. The Plan
Administrator shall determine whether an Optionee has incurred a Disability on
the basis of medical evidence acceptable to the Plan Administrator. Upon making
a determination of Disability, the Plan Administrator shall, for purposes of the
Plan, determine the date of an Optionee's termination of employment or
contractual relationship.
(v) Unless accelerated in accordance with Section 5.1(f) above, unvested
Options shall terminate immediately upon termination of employment of the
Optionee by the Corporation for any reason whatsoever, including death or
Disability.
(vi) For purposes of this Plan, transfer of employment between or among the
Corporation and/or any Related Corporation shall not be deemed to constitute a
termination of employment with the Corporation or any Related Corporation.
Employment shall be deemed to continue while the Optionee is on military leave,
sick leave or other bona fide leave of absence (as determined by the Plan
Administrator). The foregoing notwithstanding, employment shall not be deemed
to continue beyond the first ninety (90) days of such leave, unless the
Optionee's re-employment rights are guaranteed by statute or by contract.
(h) Exercise of Options
(i) Options shall be exercisable, in full or in part, at any time after
vesting, until termination. If less than all of the shares included in the
vested portion of any Option are purchased, the remainder may be purchased at
any subsequent time prior to the expiration of the Option term. Only whole
Common Shares may be issued pursuant to an Option, and to the extent that an
Option covers less than one (1) share, it is unexercisable.
(ii) Options or portions thereof may be exercised by giving written notice
to the Corporation, which notice shall specify the number of Common Shares to be
purchased, and be accompanied by payment in the amount of the aggregate exercise
price for the Common Shares so purchased, which payment shall be in the form
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specified in Section 5.1(i) below. The Corporation shall not be obligated to
issue, transfer or deliver a certificate representing Common Shares to the
Holder of any Option, until provision has been made by the Holder, to the
satisfaction of the Corporation, for the payment of the aggregate exercise price
for all Common Shares for which the Option shall have been exercised and for
satisfaction of any tax withholding obligations associated with such exercise.
During the lifetime of an Optionee, Options are exercisable only by the
Optionee.
(i) Payment upon Exercise of Option or Purchase of Incentive Stock
Upon the exercise of any Option or purchase of Incentive Stock, the aggregate
exercise or purchase price shall be paid to the Corporation in cash or by
certified or cashier's check. In addition, if pre-approved in writing by the
Plan Administrator who may arbitrarily withhold consent, the Holder may pay for
all or any portion of the aggregate exercise or purchase price by complying with
one or more of the following alternatives:
(i) by delivering to the Corporation freely trading Common Shares previously
held by such Holder, or by the Corporation withholding Common Shares otherwise
deliverable pursuant to exercise of the Option, which Common Shares received or
withheld shall have a fair market value at the date of exercise (as determined
by the Plan Administrator) equal to the aggregate exercise price to be paid by
the Optionee upon such exercise; or
(ii) by complying with any other payment mechanism approved by the Plan
Administrator at the time of exercise.
(j) No Rights as a Shareholder
A Holder shall have no rights as a shareholder with respect to any Common Shares
covered by an Option until such Holder becomes a record holder of such Common
Shares, irrespective of whether such Holder has given notice of exercise.
Subject to the provisions of Section 5.1(n) hereof, no rights shall accrue to a
Holder and no adjustments shall be made on account of dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights declared on, or created in, the Common Shares for which the
record date is prior to the date the Holder becomes a record holder of the
Common Shares covered by the Option, irrespective of whether such Holder has
given notice of exercise.
(k) Non-transferability of Options
Options granted under this Plan and the rights and privileges conferred by this
Plan may not be transferred, assigned, pledged or hypothecated in any manner
(whether by operation of law or otherwise) other than by will, by applicable
laws of descent and distribution, and shall not be subject to execution,
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attachment or similar process. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of any Option or of any right or privilege
conferred by this Plan contrary to the provisions hereof, or upon the sale, levy
or any attachment or similar process upon the rights and privileges conferred by
this Plan, such Option shall thereupon terminate and become null and void.
(l) Incentive Stock Issuance
Incentive Stock may be issued through direct and immediate issuances without any
intervening Option grants. Each such issuance of Incentive Stock shall be
evidenced by the Agreement that complies with the terms specified below:
(i) Purchase Price
The purchase price per share shall be fixed by the Plan Administrator and may be
less than, equal to or greater than the Fair Market Value on the issue date.
(ii) Vesting Provisions
A. Shares of Incentive Stock issued under the Plan may, in the discretion of
the Plan Administrator, be fully and immediately vested upon issuance or may
vest in one or more instalments over the Holder's period of employment or upon
attainment of specified performance objectives;
B. Any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) that the Holder may
have the right to receive with respect to the Holder's unvested shares of
Incentive Stock by reason of any stock dividend, stock split, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Shares as a class without the Company's receipt of
consideration shall be issued subject to (1) the same vesting requirements
applicable to the Holder's unvested shares of Incentive Stock and (2) such
escrow arrangements as the Plan Administrator shall deem appropriate;
C. The Holder shall have full stockholder rights with respect to any Common
Shares issued to the Holder under the Plan, even if the Holder's interest in
those shares is not vested. Accordingly, the Holder shall have the right to
vote such shares and to receive any regular cash dividends paid on such shares;
D. Should the Holder cease to remain in the Company's employ while holding
unvested shares of Incentive Stock issued under the Plan or should the
performance objectives not be attained with respect to such unvested shares of
Incentive Stock, then those Common Shares shall be immediately surrendered to
the Company for cancellation, and the Holder shall have no further stockholder
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rights with respect to those Common Shares. To the extent the surrendered
Common Shares were previously issued to the Holder for consideration paid in
cash or cash equivalent, the Company shall repay to the Holder the cash
consideration paid for the surrendered Common Shares and shall cancel the unpaid
principal balance of any outstanding payment mechanism of the Holder
attributable to the surrendered shares;
E. The Plan Administrator may in its discretion waive the surrender and
cancellation of one or more unvested shares of Incentive Stock (or other assets
attributable thereto) that would otherwise occur upon the non-completion of the
vesting schedule applicable to such Common Shares. Such waiver shall result in
the immediate vesting of the Holder's interest in the Common Shares as to which
the waiver applies. Such waiver may be effected at any time, whether before or
after the Holder's cessation of employment or the attainment or non-attainment
of the applicable performance objectives.
(iii) First Refusal Rights
Until such time as the Incentive Stock is first registered under Section 12 of
the Exchange Act, the Company shall have the right of first refusal with respect
to any proposed disposition by the Holder (or any successor in interest) of any
Incentive Stock issued under the Plan. Such right of first refusal shall be
exercisable in accordance with the terms established by the Plan Administrator
and set forth in the Agreement.
(iv) Repurchase Rights
All of the outstanding repurchase rights under the Plan shall terminate
automatically, and all the Incentive Stock subject to those terminated rights
shall immediately vest in full, in the event of any adjustment described in
Section 5.1(n), except to the extent: (1) those repurchase rights are assigned
to the successor corporation (or parent thereof) in connection with such
adjustment or (2) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is issued.
(v) Share Escrow / Legends
Unvested Common Shares may, in the Plan Administrator's discretion, be held in
escrow by the Company until the Holder's interest in such Common Shares vests or
may be issued directly to the Holder with restrictive legends on the
certificates evidencing those unvested Common Shares.
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(m) Securities Regulation and Tax Withholding
(i) Common Shares shall not be issued with respect to an Option or an award
of Incentive Stock unless the exercise of such Option and the issuance and
delivery of such Common Shares shall comply with all Applicable Laws, and such
issuance shall be further subject to the approval of counsel for the Corporation
with respect to such compliance, including the availability of an exemption from
prospectus and registration requirements for the issuance and sale of such
Common Shares. The inability of the Corporation to obtain from any regulatory
body the authority deemed by the Corporation to be necessary for the lawful
issuance and sale of any Common Shares under this Plan, or the unavailability of
an exemption from prospectus and registration requirements for the issuance and
sale of any Common Shares under this Plan, shall relieve the Corporation of any
liability with respect to the non-issuance or sale of such Common Shares.
(ii) As a condition to the exercise of an Option or the issuance of
Incentive Stock, the Plan Administrator may require the Holder to represent and
warrant in writing at the time of such exercise that the Common Shares are being
purchased only for investment and without any then-present intention to sell or
distribute such Common Shares. If necessary under Applicable Laws, the Plan
Administrator may cause a stop-transfer order against such Common Shares to be
placed on the stock books and records of the Corporation, and a legend
indicating that the Common Shares may not be pledged, sold or otherwise
transferred unless an opinion of counsel is provided stating that such transfer
is not in violation of any Applicable Laws, may be stamped on the certificates
representing such Common Shares in order to assure an exemption from
registration. The Plan Administrator also may require such other documentation
as may from time to time be necessary to comply with applicable securities laws.
THE CORPORATION HAS NO OBLIGATION TO UNDERTAKE REGISTRATION OF OPTIONS OR THE
COMMON SHARES ISSUABLE UPON THE EXERCISE OF OPTIONS OR THE ISSUANCE OF INCENTIVE
STOCK.
(iii) The Holder shall pay to the Corporation by certified or cashier's
check, promptly upon the issuance of Incentive Stock or the exercise of an
Option or, if later, the date that the amount of such obligations becomes
determinable, all applicable federal, state, local and foreign withholding taxes
that the Plan Administrator, in its discretion, determines to result upon
exercise of an Option or from a transfer or other disposition of Common Shares
acquired upon exercise of an Option or otherwise related to an Option or Common
Shares acquired in connection with an Option or an issuance of Incentive Stock.
Upon approval of the Plan Administrator, a Holder may satisfy such obligation by
complying with one or more of the following alternatives selected by the Plan
Administrator:
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A. by delivering to the Corporation freely trading Common Shares previously
held by such Holder or by the Corporation withholding Common Shares otherwise
deliverable pursuant to the exercise of the Option, which Common Shares received
or withheld shall have a fair market value at the date of exercise (as
determined by the Plan Administrator) equal to any withholding tax obligations
arising as a result of such exercise, transfer or other disposition;
B. by executing appropriate loan documents approved by the Plan
Administrator by which the Holder borrows funds from the Corporation to pay any
withholding taxes due under this Section 5.1(m)(iii), with such repayment terms
as the Plan Administrator shall select; or
C. by complying with any other payment mechanism approved by the Plan
Administrator from time to time.
(iv) The issuance, transfer or delivery of certificates representing Common
Shares pursuant to the exercise of Options or issuance of Incentive Stock may be
delayed, at the discretion of the Plan Administrator, until the Plan
Administrator is satisfied that the applicable requirements of all Applicable
Laws and the withholding provisions of the Code have been met and that the
Holder has paid or otherwise satisfied any withholding tax obligation as
described in Section 5.1(m)(iii) above.
(n) Adjustments Upon Changes In Capitalization
(i) The aggregate number and class of shares for which Options may be
granted under this Plan, the number and class of shares covered by each
outstanding Option, and the exercise price per share thereof (but not the total
price), and each such Option, shall all be proportionately adjusted for any
increase or decrease in the number of issued Common Shares of the Corporation
resulting from:
A. a subdivision or consolidation of shares or any like capital adjustment,
or
B. the issuance of any Common Shares, or securities exchangeable for or
convertible into Common Shares, to the holders of all or substantially all of
the outstanding Common Shares by way of a stock dividend (other than the issue
of Common Shares, or securities exchangeable for or convertible into Common
Shares, to holders of Common Shares pursuant to their exercise of options to
receive dividends in the form of Common Shares, or securities convertible into
Common Shares, in lieu of dividends paid in the ordinary course on the Common
Shares).
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(ii) Except as provided in Section 5.1(n)(iii) hereof, upon a merger (other
than a merger of the Corporation in which the holders of Common Shares
immediately prior to the merger have the same proportionate ownership of common
shares in the surviving corporation immediately after the merger),
consolidation, acquisition of property or stock, separation, reorganization
(other than a mere re-incorporation or the creation of a holding Corporation) or
liquidation of the Corporation, as a result of which the shareholders of the
Corporation, receive cash, shares or other property in exchange for or in
connection with their Common Shares, any Option granted hereunder shall
terminate, but the Holder shall have the right to exercise such Holder's Option
immediately prior to any such merger, consolidation, acquisition of property or
shares, separation, reorganization or liquidation, and to be treated as a
shareholder of record for the purposes thereof, to the extent the vesting
requirements set forth in the Option agreement have been satisfied.
(iii) If the shareholders of the Corporation receive shares in the capital
of another corporation ("Exchange Shares") in exchange for their Common Shares
in any transaction involving a merger (other than a merger of the Corporation in
which the holders of Common Shares immediately prior to the merger have the same
proportionate ownership of Common Shares in the surviving corporation
immediately after the merger), consolidation, acquisition of property or shares,
separation or reorganization (other than a mere re-incorporation or the creation
of a holding Corporation), all Options granted hereunder shall be converted into
options to purchase Exchange Shares unless the Corporation and the corporation
issuing the Exchange Shares, in their sole discretion, determine that any or all
such Options granted hereunder shall not be converted into options to purchase
Exchange Shares but instead shall terminate in accordance with, and subject to
the Holder's right to exercise the Holder's Options pursuant to, the provisions
of Section 5.1(n)(ii). The amount and price of converted options shall be
determined by adjusting the amount and price of the Options granted hereunder in
the same proportion as used for determining the number of Exchange Shares the
holders of the Common Shares receive in such merger, consolidation, acquisition
or property or stock, separation or reorganization. Unless accelerated by the
Board, the vesting schedule set forth in the option agreement shall continue to
apply to the options granted for the Exchange Shares.
(iv) In the event of any adjustment in the number of Common Shares covered
by any Option, any fractional shares resulting from such adjustment shall be
disregarded and each such Option shall cover only the number of full shares
resulting from such adjustment.
(v) All adjustments pursuant to Section 5.1(n) shall be made by the Plan
Administrator, and its determination as to what adjustments shall be made, and
the extent thereof, shall be final, binding and conclusive.
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(vi) The grant of an Option shall not affect in any way the right or power
of the Corporation to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure, to merge, consolidate or dissolve,
to liquidate or to sell or transfer all or any part of its business or assets.
6. EFFECTIVE DATE; AMENDMENT; SHAREHOLDER APPROVAL
6.1 Options may be granted and Incentive Stock may be issued by the Plan
Administrator from time to time on or after the date on which this Plan is
adopted by the Board (the "Effective Date").
6.2 Unless sooner terminated by the Board, this Plan shall terminate on the
tenth anniversary of the Effective Date. No Option may be granted or Incentive
Stock issued after such termination or during any suspension of this Plan.
6.3 Any Options granted by the Plan Administrator prior to the ratification
of this Plan by the shareholders of the Corporation shall be granted subject to
approval of this Plan by the holders of a majority of the Corporation's
outstanding voting shares, voting either in person or by proxy at a duly held
shareholders' meeting within twelve (12) months before or after the Effective
Date. If such shareholder approval is sought and not obtained, all Options
granted prior thereto and thereafter shall be considered Non-Qualified Stock
Options and any Options granted to Covered Employees will not be eligible for
the exclusion set forth in Section 162(m) of the Code with respect to the
deductibility by the Corporation of certain compensation.
7. NO OBLIGATIONS TO EXERCISE OPTION
7.1 The grant of an Option shall impose no obligation upon the Optionee to
exercise such Option.
8. NO RIGHT TO OPTIONS OR TO EMPLOYMENT
8.1 Whether or not any Options are to be granted under this Plan shall be
exclusively within the discretion of the Plan Administrator, and nothing
contained in this Plan shall be construed as giving any person any right to
participate under this Plan. The grant of an Option shall in no way constitute
any form of agreement or understanding binding on the Corporation or any Related
Corporation, express or implied, that the Corporation or any Related Corporation
will employ or contract with an Optionee for any length of time, nor shall it
interfere in any way with the Corporation's or, where applicable, a Related
Corporation's right to terminate Optionee's employment at any time, which right
is hereby reserved.
9. APPLICATION OF FUNDS
9.1 The proceeds received by the Corporation from the exercise of Options
shall be used for general corporate purposes, unless otherwise directed by the
Board.
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10. INDEMNIFICATION OF PLAN ADMINISTRATOR
10.1 In addition to all other rights of indemnification they may have as
members of the Board, members of the Plan Administrator shall be indemnified by
the Corporation for all reasonable expenses and liabilities of any type or
nature, including attorneys' fees, incurred in connection with any action, suit
or proceeding to which they or any of them are a party by reason of, or in
connection with, this Plan or any Option granted under this Plan, and against
all amounts paid by them in settlement thereof (provided that such settlement is
approved by independent legal counsel selected by the Corporation), except to
the extent that such expenses relate to matters for which it is adjudged that
such Plan Administrator member is liable for willful misconduct; provided, that
within fifteen (15) days after the institution of any such action, suit or
proceeding, the Plan Administrator member involved therein shall, in writing,
notify the Corporation of such action, suit or proceeding, so that the
Corporation may have the opportunity to make appropriate arrangements to
prosecute or defend the same.
11. AMENDMENT OF PLAN
11.1 The Plan Administrator may, at any time, modify, amend or terminate
this Plan or modify or amend Options granted under this Plan, including, without
limitation, such modifications or amendments as are necessary to maintain
compliance with the Applicable Laws. The Plan Administrator may condition the
effectiveness of any such amendment on the receipt of shareholder approval at
such time and in such manner as the Plan Administrator may consider necessary
for the Corporation to comply with or to avail the Corporation and/or the
Optionees of the benefits of any securities, tax, market listing or other
administrative or regulatory requirements.
Effective Date: December 11, 2000
