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EXHIBIT 10.3
[LOGO OF IMAGICTV]
ImagicTV Inc.
FORM OF 2000 SHARE OPTION PLAN
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1. Purpose
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The purposes of the ImagicTV 2000 Share Option Plan (the "Plan") are to attract,
retain and motivate directors, officers, key employees and consultants of the
Company and its Subsidiaries and to provide to such persons incentives and
awards for superior performance.
2. Definitions
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As used in this Plan the following terms have the following meanings:
(a) "Agreement" has the meaning set forth in Section 6 below.
(b) "Award" means an Option.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means a termination of the Participant's employment with the
Company or one of its Subsidiaries (a) for "cause" as defined in an employment
agreement applicable to the Participant, or (b) in the case of a Participant who
does not have an employment agreement that defines "cause", because of: (i) any
act or omission that constitutes a material breach by the participant of any of
his obligations under his employment agreement with the Company or one of its
Subsidiaries or the applicable Agreement; (ii) the continued failure or refusal
of the Participant to substantially perform the duties reasonably required of
him as an employee of the Company or one of its Subsidiaries; (iii) any wilful
and material violation by the Participant of any law or regulation applicable to
the business of the Company or one of its Subsidiaries, or the Participant's
conviction of a felony, or any wilful perpetration by the Participant of a
common law fraud; or (iv) any other wilful misconduct by the Participant which
is materially injurious to the financial condition or business reputation of, or
is otherwise materially injurious to, the Company or any of its Subsidiaries.
(e) "Code" means the United States Internal Revenue Code of 1986, as
amended.
(f) "Committee" means a committee of the Board comprised of at least two
directors selected by the Board to administer the Plan, each of whom shall be a
Nonemployee Director and to the extent necessary for any Award intended to
qualify as "performance-based compensation" (as defined in Section 162(m) of the
Code and the regulations promulgated thereunder) to so qualify, the Committee
shall consist of at least two Directors each of whom shall be an Outside
Director. For purposes of the preceding sentence, if one or more members of the
Committee is not a Nonemployee Director and an Outside Director but recuses
himself or herself or abstains from voting with respect to a particular action
taken by the Committee, then the Committee, with respect to that action, shall
be deemed to consist only of the members of the Committee who
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have not recused themselves or abstained from voting. Subject to applicable law,
the Committee may delegate its authority under the Plan to any other person or
persons.
(g) "Common Share" means a common share in the capital of the Company.
(h) "Company" means ImagicTV Inc., a corporation incorporated under the
laws of Canada .
(i) "Change of Control" of the Company means the acquisition of Control of
the Company by any person.
(j) "Control" of the Company or of another corporation means ownership of
shares to which are attached greater than 50% of the votes that may be cast to
elect directors of such corporation.
(k) "Date of Grant" means the date specified by the Committee on which an
Award shall become effective (which date shall not be earlier than the date on
which the Committee takes action with respect thereto), or if not specified by
the Committee then the date of employment, the date of engagement in the case of
a consultant or the date of appointment in the case of a Nonemployee Director.
(l) "Eligible Individual" means an officer, employee or consultant of the
Company, or any of its Subsidiaries, or a person who is a director of the
Company or any of its Subsidiaries and who is not also an employee of the
Company or any of its Subsidiaries at the Date of Grant, or any personal holding
corporation controlled by any such person, the shares of which are held directly
or indirectly by such person or such person's spouse, minor children or minor
grandchildren, or any registered retirement savings plan or registered
educational savings plan for the sole benefit of any such person.
(m) "Fair Market Value" of a Common Share on a given date means the higher
of the closing price of a Common Share on such date (or the most recent trading
date if such date is not a trading date) on the NASDAQ/National Market System,
The Toronto Stock Exchange and such national exchange, if any, as may be
designated by the Board.
(n) "Incentive Stock Option" means an Option satisfying the requirements
of Section 422 of the Code and designated by the Committee as an Incentive Stock
Option.
(o) "Nonemployee Director" means a director of the Company who is a
"nonemployee director" within the meaning of Rule 16b-3.
(p) "Nonqualified Stock Option" means an Option which is not an Incentive
Stock Option.
(q) "Option" means the right to purchase a Common Share upon exercise of
an option granted pursuant to the Plan.
(r) "Option Price" means the purchase price per Common Share payable on
exercise of an Option, as determined by the Committee in its sole discretion
(subject to the terms of the
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Plan) and as set forth in the applicable Agreement, subject to adjustment as
provided in Section 10.
(s) "Outside Director" means a director of the Company who is an "outside
director" within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder.
(t) "Parent" means any corporation which is a parent corporation (within
the meaning of Section 424(e) of the Code) with respect to the Company.
(u) "Participant" means a person to whom an Award is to be made under the
Plan in the discretion of the Committee and who is on the Date of Grant of such
Award an Eligible Individual.
(v) "Permanent Disability" means a physical or mental disability or
infirmity of the Participant that prevents the normal performance of
substantially all of his duties as an employee of the Company or any Subsidiary,
which disability or infirmity shall exist for any continuous period of 180 days
within any twelve-month period.
(w) "Rule 16b-3" means Rule 16b-3 under the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder.
(x) "Subsidiary" means (i) except as provided in subsection (ii) below,
any corporation which is a subsidiary corporation (within the meaning of Section
424(f) of the Code) with respect to the Company, and (ii) in relation to the
eligibility to receive Awards other than Incentive Stock Options, any
corporation or other entity in which the Company owns or controls, directly or
indirectly, not less than 50% of the total combined voting power represented by
all voting securities or other voting interests in such entity.
(y) "Successor Corporation" means a corporation, or a parent or subsidiary
thereof (within the meaning of Section 424 of the Code), which issues or
assumes a stock option in a transaction to which Section 424(a) of the Code
applies.
(z) "Ten-Percent Stockholder" means an Eligible Individual, who, at the
time an Incentive Stock Option is to be granted to him or her, owns (within the
meaning of Section 422(b)(6) of the Code) stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company, or of a
Parent or a Subsidiary.
(aa) "TSE Manual" means The Toronto Stock Exchange Company Manual, as may
be amended from time to time.
(bb) "Vested Options" means, as of any date, Options which by their terms
are exercisable on such date.
3. Administration of the Plan
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(a) The Plan shall be administered, and Awards shall be granted hereunder,
by or under the authority of the Committee. A majority of the Committee shall
constitute a quorum, and the action of the members of the Committee present at
any meeting at which a quorum is present, or acts unanimously approved in
writing, shall be the acts of the Committee.
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(b) The interpretation and construction by the Committee of any provision
of the Plan or of any Agreement, and any determination by the Committee pursuant
to any provision of this Plan or of any Agreement shall be final and conclusive.
No member of the Committee shall be liable for any such action or determination
made in good faith.
4. Shares Available Under Plan
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The maximum number of Common Shares which may be issued upon the exercise
of Options granted under the Plan is 1,879,185 Common Shares, subject to
adjustment as provided in Section 9. Such shares may be shares previously issued
or treasury shares or a combination of the foregoing. Any Common Shares which
are subject to Options which expire or which have been surrendered without being
exercised in full shall again be available for issuance under this Plan.
5. Options
(a) The Committee may, from time to time and upon such terms and
conditions as it may determine, authorize the granting of Options provided,
however, that:
(i) at no time shall the number of Common Shares reserved for
issuance to any one Participant under the Plan or any other share compensation
arrangement exceed 5% of the outstanding issue of Common Shares;
(ii) at no time shall the number of Common Shares reserved for
issuance pursuant to Options granted to "insiders" (as that term is defined in
Section 627 of the TSE Manual) exceed 10% of the outstanding issue of Common
Shares;
(iii) under no circumstances shall insiders be issued in excess of
10% of the outstanding issue of Common Shares within any one-year period
pursuant to the exercise of Options granted under the Plan or any other share
compensation arrangement;
(iv) under no circumstances shall any one insider and that insider's
"associates" (as that term is defined in Section 627 of the TSE Manual) be
issued in excess of 5% of the outstanding issue of Common Shares within any one-
year period pursuant to the exercise of Options granted under the Plan or any
other share compensation arrangement;
(v) at no time shall the term of an Option exceed 10 years (five
years in the case of an Incentive Stock Option granted to a Ten-Percent
Stockholder); and
(vi) at no time shall Incentive Stock Options be granted to persons
other than Eligible Individuals who are employees of the Company, any of its
Subsidiaries or any Successor Corporation.
(b) To the extent that the aggregate Fair Market Value (determined as of
the Date of the Grant) of Common Shares with respect to which Incentive Stock
Options granted under the Plan and "incentive stock options" (within the meaning
of Section 422 of the Code) granted under all other plans of the Company or its
Subsidiaries (in either case determined without regard to this Section 5(b)) are
exercisable by a Participant for the first time during any calendar year exceeds
$100,000, such Incentive Stock Options shall be treated as Nonqualified Stock
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Options. In applying the limitation in the preceding sentence in the case of
multiple Option grants, Options which were intended to be Incentive Stock
Options shall be treated as Nonqualified Stock Options according to the order in
which they were granted such that the most recently granted Options are first
treated as Nonqualified Stock Options.
6. Agreement
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The terms and conditions of each Option shall be embodied in a written
agreement (the "Agreement") in a form approved by the Committee which shall
contain terms and conditions not inconsistent with the Plan and which shall
incorporate the Plan by reference. Options granted under the Plan shall comply
with the following terms and conditions:
(i) Each Agreement shall specify the number of Common Shares for
which Options have been granted.
(ii) Each Agreement shall specify the Option Price, which shall not
be less than 100% of the Fair Market Value per Common Share on the Date of Grant
(110% in the case of an Incentive Stock Option granted to a Ten-Percent
Stockholder).
(iii) As a condition to being granted an Option, each Participant
shall (A) agree in writing to be bound by the terms of the confidentiality and
proprietary rights policy of the Company, as such policy may be amended by the
Company from time to time, and (B) when requested to do so by the Company, sign
and deliver such documents relating to the implementation of such
confidentiality and proprietary rights policy, as deemed necessary or desirable
by the Company.
(iv) Each Agreement shall specify that the Option Price shall be
payable in cash or by cheque acceptable to the Company.
(v) Successive grants may be made to the same Participant whether
or not any Options previously granted to such Participant remain unexercised.
(vi) Unless otherwise specified by the Committee at the time of
granting an Option, and except as otherwise provided in the Plan, the Agreement
shall specify that each Option shall have a term of seven years and shall be
exercisable in the following instalments:
(A) 25% of the Option shall be exercisable from the first anniversary
of the Date of Grant to and including the seventh anniversary of
the Date of Grant;
(B) 25% of the Option shall be exercisable from the second
anniversary of the Date of Grant to and including the seventh
anniversary of the Date of Grant;
(C) 25% of the Option shall be exercisable from the third anniversary
of the Date of Grant to and including the seventh anniversary of
the Date of Grant; and
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(D) 25% of the Option shall be exercisable from the fourth
anniversary of the Date of Grant to and including the seventh
anniversary of the Date of Grant,
provided however that in the case of an Incentive Stock Option granted to a Ten-
Percent Stockholder, Options exercisable under clauses 6(vi)(A) through 6(vi)(D)
shall be exercisable only until the fifth anniversary of the Date of Grant.
Except as otherwise provided in Section 7 and Section 8, once an instalment
becomes exercisable it shall remain exercisable until expiration of the Option's
term, unless otherwise specified in the Plan, an Agreement or by the Committee.
Each Option or instalment may be exercised at any time or from time to time, in
whole or in part, for up to the total number of Common Shares with respect to
which it is then exercisable. In the event of a termination of a Participant's
employment by reason of death or Permanent Disability, 50% of such Participant's
unexercised Options shall become Vested Options if such Options were less than
50% vested at the time of such termination.
(vii) No Option shall be exercisable more than 10 years from the
Date of Grant.
(viii) Each Option granted under the Plan shall be subject to such
additional terms and conditions, not inconsistent with the Plan, which are
prescribed by the Committee and set forth in the applicable Agreement.
(ix) As soon as practicable following the exercise of any Options,
a certificate evidencing the number of Common Shares issued in connection with
such exercise shall be issued in the name of the Participant or as the
Participant shall otherwise, in writing, direct.
(x) The Committee may, in its discretion, permit Participants to
elect to defer the issuance of Common Shares upon the exercise of one or more
Nonqualified Stock Options granted pursuant to the Plan. The terms and
conditions of such deferral shall be determined at the time of the grant of the
Option or thereafter and shall be set forth in the Agreement evidencing the
Option.
7. Termination of Employment, Consulting Agreement or Term of Office
(a) In the event that a Participant's employment, consulting arrangement
or term of office with the Company or one of its Subsidiaries terminates for any
reason, unless the Committee or the Board determines otherwise, any Options
which have not become Vested Options shall terminate and be cancelled without
any consideration being paid therefor.
(b) In the event that a Participant's employment with the Company or one
of its Subsidiaries is terminated without Cause, or the Participant's employment
is terminated by reason of the Participant's voluntary resignation (including by
reason of retirement), death or Permanent Disability, or a Participants'
consulting arrangement or term of office is terminated without Cause, the
Participant (or the Participant's estate) shall be entitled to exercise the
Participant's Options which have become Vested Options as of the date of
termination for a period of 60 days following the date of termination, or such
longer period as the Committee or the Board determines at the time of grant or
thereafter, subject to regulatory approval.
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(c) In the event that a Participant's employment, consulting arrangement
or term of office with the Company or one of its Subsidiaries is terminated for
Cause, such Participant's Vested Options shall terminate and be cancelled
without any consideration being paid therefor.
8. Changes of Control
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Notwithstanding Sections 5, 6 and 7 or the provisions of any Agreement, the
Committee may in its sole discretion accelerate the vesting and the
exercisability of any Option or a portion thereof granted to any or all
Participants at the time of grant or at any time thereafter. If Options are
accelerated in connection with or in anticipation of a proposed Change of
Control, and if, for any reason, such Change of Control does not occur, the
acceleration of the vesting and exercisability of the Options shall be retracted
and the vesting and exercisability of the Options shall instead proceed in the
manner provided in Sections 5, 6, 7 and 8 or an Agreement, as applicable.
9. Transferability
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No Option shall be transferable or assignable by a Participant other than
by will or the laws of descent and distribution, provided, however, that
Nonqualified Stock Options may be transferred if approved by the Committee or
the Board and by any regulatory authority having jurisdiction or stock exchange
on which the Common Shares subject to Options are listed. Options shall be
exercisable during the Participant's lifetime only by the Participant or by the
Participant's guardian or legal representative.
10. Adjustments
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(a) Subject to applicable law, the Committee shall make or provide for
such adjustments in the maximum number of Common Shares specified in Section 4,
the number of Common Shares covered by outstanding Options granted hereunder,
and/or the Option Price applicable to such Options as the Committee in its sole
discretion may determine is equitably required to prevent dilution or
enlargement of the rights of Participants that otherwise would result from any
stock dividend, stock split, combination of shares, recapitalization or other
change in the capital structure of the Company, merger, consolidation, spin-off,
reorganization, extraordinary dividend, partial or complete liquidation,
issuance of rights or warrants to purchase securities or any other corporate
transaction or event having an effect similar to any of the foregoing.
(b) Except as otherwise provided in an Agreement, in the event of (i) the
liquidation or dissolution of the Company or (ii) a merger or consolidation of
the Company (a "Transaction"), the Plan and the Options issued hereunder shall
continue in effect in accordance with their respective terms, except that
following a Transaction either (A) each outstanding Option shall be treated as
provided for in the agreement entered into in connection with the Transaction or
(B) if not so provided in such agreement, each Participant shall be entitled to
receive in respect of each Common Share subject to any outstanding Option, upon
exercise of the Option, the same number and kind of stock, securities, cash,
property or other consideration that each holder of a Common Share was entitled
to receive in the Transaction in respect of a Share; provided, however, that
such stock, securities, cash, property, or other consideration shall remain
subject to all of the conditions, restrictions and performance criteria which
were applicable to the
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Options prior to such Transaction. The treatment of any Option as provided in
this subsection 10(b) shall be conclusively presumed to be appropriate for
purposes of subsection 10(a).
(c) Any such adjustment, described in subsections 10(a) and 10(b) above,
in the Common Shares (i) subject to outstanding Incentive Stock Options
(including any adjustments in the Option Price) shall be made in such manner as
not to constitute a modification as defined by Section 424(h)(3) of the Code and
only to the extent otherwise permitted by Sections 422 and 424 of the Code or
(ii) subject to outstanding Awards that are intended to qualify as "performance-
based compensation" (as defined in Section 162(m) of the Code and the
regulations promulgated thereunder) shall be made in such a manner as not to
adversely affect the treatment of the Awards as "performance-based
compensation".
11. Fractional Shares
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The Company shall not be required to issue any fractional Common Shares
pursuant to the Plan. The Committee may provide for the elimination of fractions
or for the settlement of fractions in cash.
12. Withholding Taxes
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The Company and its Subsidiaries shall have the right to require any
individual entitled to receive Common Shares pursuant to an Option to remit to
the Company, prior to the delivery of any certificates evidencing such shares,
any amount sufficient to satisfy any Canadian or United States federal, state,
provincial or local tax withholding requirements. Prior to the Company's
determination of such withholding liability, such individual may make an
irrevocable election to satisfy, in whole or in part, such obligation to remit
taxes by directing the Company to withhold Common Shares that would otherwise be
received by such individual.
13. Registration and Resale Restrictions
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(a) An Option shall not be exercisable unless and until (i) a registration
statement under the United States Securities Act of 1933, as amended, has been
duly filed and declared effective pertaining to the Common Shares subject to
such Option, and such Common Shares shall have been qualified under applicable
state "blue sky" laws, or (ii) the Committee, in its sole discretion, determines
that such registration, qualification and status is not required as a result of
the availability of an exemption from such registration, qualification, and
status under such laws.
(b) Common Shares issuable upon exercise of an Option may be subject to
resale restrictions imposed by securities laws of applicable Canadian
jurisdiction pursuant to which, if applicable, Common Shares may not be sold or
otherwise disposed of in Canada, except pursuant to a prospectus, a
discretionary exception or a statutory exemption available only in specific
limited circumstances, until the Company has been a "reporting issuer", as
defined under applicable Canadian securities laws, for at least 12 months (18
months in the case of a "control person", as defined under applicable Canadian
securities laws) or such shorter period as may in the future be mandated by
legislative and/or regulatory change.
(c) If a Participant makes a disposition, within the meaning of Section
424(c) of the Code and the regulations promulgated thereunder, of any Common
Share issued to such Participant pursuant to the exercise of an Incentive Stock
Option within the two-year period
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commencing on the day after the date of transfer of such Common Share to the
Participant pursuant to such exercise, the Participant shall, within 10 days of
such disposition, notify the Company thereof, by delivery of written notice to
the Company at its principal executive office.
14. Shareholder Rights
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A Participant shall have no rights as a shareholder with respect to any
Common Shares issuable upon exercise of an Option until a certificate or
certificates evidencing such shares shall have been issued to such Participant,
and no adjustment shall be made for dividends or distributions or other rights
in respect of any Common Share for which the record date is prior to the date
upon which the Participant shall become the holder of record thereof.
15. Breach of Restrictive Covenants
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If (i) a Participant is bound by an employment or other agreement
(including, without limitation, the Company's confidentiality and proprietary
rights policy) with the Company or any of its Subsidiaries or affiliates and
(ii) such Participant materially breaches any of the restrictive covenants set
forth in such employment or other agreement (including, without limitation, any
restrictive covenants relating to non-competition, non-solicitation or
confidentiality), then all of such Participant's Options (whether or not Vested
Options) shall terminate and be cancelled without consideration being paid
therefor.
16. Amendments, Etc.
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(a) The Plan shall terminate on the day preceding the tenth anniversary of
the date of its adoption by the Board and no Award may be granted thereafter.
(b) The Board may terminate the Plan sooner and may at any time and from
time to time alter, amend or suspend the Plan in whole or in part, and the
Committee may, subject to applicable legal requirements at any time and from
time to time waive any provision of any Option or Agreement; provided, however,
that no termination or amendment of the Plan or any waiver of any provision of
any Option or Agreement may, without the consent of the Participant to whom any
Award shall previously have been granted, adversely affect the rights of such
Participant in such Award; provided further, however, that amendments shall be
subject to (x) the approval of a majority of the Common Shares entitled to vote
if the Committee determines that such approval is necessary in order for the
Company to rely on the exemptive relief provided under Rule 16b-3 and (y) all
other approvals, whether regulatory, shareholder or otherwise, which are
required by law, The Toronto Stock Exchange or any other applicable securities
exchange.
(c) The Board may make such changes as may be necessary or appropriate to
comply with the rules and regulations of any government authority, or to obtain
for Eligible Individuals granted Incentive Stock Options the tax benefits under
the applicable provisions of the Code and regulations promulgated thereunder.
(d) The Plan shall not confer upon a Participant any right with respect to
continuance of employment or other service with the Company or any Subsidiary,
nor will it interfere in any way with any right the Company or any Subsidiary
would otherwise have to terminate such Participant's employment or other service
at any time.
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17. Prior Share Option Plan
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The Plan shall not affect the options granted under the share option plan
of the Company adopted in February 1998, as amended (the "Prior Plan"). All
options granted under the Prior Plan shall continue to be governed by such plan.
Options granted hereunder shall not be subject to the terms and conditions of
the Prior Plan.
18. Effective Date and Approval
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The Plan was adopted on, and is effective as of November 9, 2000. The
voting shareholders of the Company approved the Plan by resolution dated
November [ ], 2000.
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19. Governing Law
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The Plan and all rights hereunder shall be construed in accordance with and
governed by the laws of the Province of New Brunswick and the laws of Canada
applicable therein.
