REPAP ENTERPRISES INC.
1987 DIRECTORS, OFFICERS AND EMPLOYEES
AMENDED STOCK OPTION PLAN
(THIRD AMENDMENT - 25 SEPTEMBER 1997)
PART 1 - PURPOSE AND PARTICIPANTS
1.01 Purpose. The purpose of the Repap Enterprises Inc. 1987 Directors, Officers
and Employees Stock Option Plan (the "Plan") is to provide an incentive to, and
serve to supplement the income of, certain Designated Participants, as herein
defined, of Repap Enterprises Inc. (the "Corporation") and its affiliates by
providing them with the opportunity to acquire a proprietary interest in the
Corporation through the grant of options ("Options") to purchase common shares
("Common Shares") of the Corporation, on the terms and conditions set forth in
the Plan.
1.02 Designated Participants. Designated Participants entitled to participate in
the Plan shall be those directors, officers or employees of the Corporation or
any of its affiliates (as defined in section 2(2) of the Canada Business
Corporations Act, as the same may be amended or replaced from time to time), who
are designated solely by a committee of two or more directors (the "1987 Stock
Option Committee"), in its absolute discretion, each of whom is appointed by the
board of directors of the Corporation (the "board of directors") and, during the
one year period prior to the appointment, who qualifies as a "disinterested
person" within the meaning of Rule 16b-3 under the United States Securities
Exchange Act of 1934 or any successor rule or regulation. A Designated
Participant shall also include a person who becomes a director, officer or
employee of the Corporation or of one of its affiliates within 30 days after his
designation as such by the 1987 Stock Option Committee.
Notwithstanding the foregoing, the 1987 Stock Option Committee shall not
designate an insider as a Designated Participant if the effect of that
designation could result, together with all of the Corporation's previously
established share compensation arrangements, at any time, in (i) the number of
Common Shares reserved for issuance to insiders exceeding 10% of the outstanding
issue; (ii) the issuance to insiders, within a one-year
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period, of a number of shares exceeding 10% of the outstanding issue; or (iii)
the issuance to any one insider and such insider's associates, within a one-year
period, of a number of Common Shares exceeding 5% of the outstanding issue. For
the purposes of the Plan, the terms "insider", "outstanding issue" and "share
compensation arrangements" shall have the meaning attributed to them
respectively by the Revised Policy on listed Company Share Incentive
Arrangements of The Toronto Stock Exchange dated March 22, 1994, as amended from
time to time.
PART 2 - TERMS RELATING TO THE PLAN
2.01 Shares. Subject to Section 2.08 of the Plan, the aggregate number of Common
Shares that may be purchased pursuant to Options granted under the Plan shall
not exceed in the aggregate 73,246,000 Common Shares. In the event that Options
granted under the Plan are surrendered, terminate or expire without being
exercised, in whole or in part, new Options may be subsequently granted by the
1987 Stock Option Committee, covering the Common Shares not purchased under the
such lapsed Options.
2.02 Participants. The participants in the Plan will be Designated Participants.
2.03 Number and Price of Optioned Common Shares. (a) The number of Common Shares
subject to an Option granted to a Designated Participant and, subject to
subsection 2.03(c) of the Plan, the price at which the Option may be exercised
(the "Option Price") shall be determined by resolution of the 1987 Stock Option
Committee, in its absolute discretion.
(b) The total number of Common Shares reserved for issuance under Options
and under any other employee stock option plans, options for services and
employee stock purchase plans of the Corporation, for any one person shall not
exceed five per cent (5%) of the outstanding Common Shares, from time to time;
but this limitation shall not affect any outstanding options or the right of any
person to exercise any such options granted pursuant to the terms of this Plan
or any other plan of the Corporation.
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(c) In no event shall the Option Price be less than the market price of the
Common Shares at the time of the grant of the Option. The market price at the
time of grant of an Option shall be the closing price of the Common Shares on
The Toronto Stock Exchange on the trading day on The Toronto Stock Exchange
preceding the day of the grant of that Option.
(d) If, as and when any Common Shares have been duly purchased and paid for
in cash under the terms of an Option granted under this Plan and in accordance
with the terms of the Option, those Common Shares shall be conclusively deemed
allotted and issued, at that time, as fully paid and non-assessable Common
Shares at the price paid therefor.
2.04 Consideration, Option Period and Payment. The term of the Option granted
hereunder (the "Option Period") shall be the period commencing on the day which
is the first business day immediately following the date of the grant and
terminating at 5 p.m. (Montreal time) on the tenth anniversary of the date of
the grant, except as the same may be reduced with respect to any Option as
provided in Sections 2.06 or 2.07 of the Plan covering cessation as a director,
officer or employee of the Corporation or any affiliates, as the case may be, or
death of the Designated Participant.
Unless otherwise determined by the board of directors, options may be
exercised (in each case to the nearest full share) at any time and from time to
time during the Option Period, in whole or in part, only after the end of the
first year from the date the Option is granted, as follows:
(a) After the end of the first year of the Option Period, the Designated
Participant may purchase up to 20% of the total number of Common Shares set
forth in his Option.
(b) After the end of the second year of the Option Period, the Designated
Participant may purchase an additional 20% of the total number of Common Shares
set forth in his Option plus any Common Shares not purchased in accordance with
Subsection 2.04 (a) of the Plan.
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(c) After the end of the third year of the Option Period, the Designated
Participant may purchase an additional 20% of the total number of Common Shares
set forth in his Option plus any Common Shares not purchased in accordance with
Subsections 2.04 (a) and 2.04 (b) of the Plan.
(d) After the end of the fourth year of the Option Period, the Designated
Participant may purchase an additional 20% of the total number of Common Shares
set forth in his Option plus any Common Shares not purchased in accordance with
Subsections 2.04 (a), 2.04 (b) and 2.04 (c) of the Plan.
(e) After the end of the fifth year of the Option Period, the Designated
Participant may purchase any Common Shares set forth in his Option which have
not previously been purchased in accordance with Subsections 2.04 (a), 2.04 (b),
2.04 (c) and 2.04 (d) of the Plan.
The board of directors may prescribe the date or dates upon which Options
may become exercisable and may establish any criteria which must be met in order
for all or any Options to become exercisable.
Except as set forth in Sections 2.06 and 2.07 of this Plan, no Option may
be exercised unless the Designated Participant is at the time of such exercise a
director, officer or employee of the Corporation or of one of its affiliates and
shall have been a director, officer or employee continuously since the grant of
his Option, subject to Section 1.02 of the Plan.
The exercise of any Option will be contingent upon receipt by the
Corporation (i) of a duly signed written notice of exercise substantially in the
form attached as Schedule A, specifying the number of Common Shares with respect
to which the Option is being exercised and (ii) a certified cheque or bank draft
for the full purchase price of Common Shares with respect to which the Option is
exercised. No Designated Participant or his legal representatives will be, or
will be deemed to be, a holder of any Common Shares subject to an Option under
this Plan, unless and until certificates for such Common Shares are issued to
him or them under the terms of the Plan.
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A Designated Participant shall have no right whatsoever as a shareholder of
the Corporation in respect of any of the Common Shares covered by his Option
(including any right to receive dividends or other distributions therefrom or
thereunder) other than in respect of optioned Common Shares in respect of which
the Designated Participant shall have exercised his Option to purchase under
this Plan and which the optionee shall have actually taken up and paid for in
full.
(f) Each Option shall be subject to the requirement that if at any time the
1987 Stock Option Committee shall determine that the listing, registration or
qualification of the Common Shares subject thereto upon any securities exchange
or under any applicable securities law or the consent or approval of any
governmental or regulatory body is necessary or desirable in connection with the
issue or purchase of the Common Shares subject thereto, then no such Option may
be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the 1987 Stock Option Committee.
2.05 Transferability. The Option granted pursuant to the Plan shall not be
transferable otherwise than by will or by the laws of descent and distribution
and during the lifetime of a holder of an Option shall be exercisable only by
him.
2.06 Ceasing to be a Director, Officer or Employee. If a Designated Participant
shall cease to be a director, officer or employee of the Corporation and its
affiliates for any reason other than death, retirement at normal retirement age
or any other reason acceptable to the Corporation (as determined by the 1987
Stock Option Committee), he may, but only during the Option Period or until 5:00
p.m. (Montreal time) on the 90th day following the date on which he ceased to be
a director, officer or employee, whichever first occurs, exercise his Option to
the extent that he was entitled to exercise it at the date of such cessation.
Upon the expiration of such period, the Option previously granted under this
Plan to said Designated Participant shall ipso facto cease and terminate and be
of no further force or effect whatsoever, except only to the extent of the
number of Common Shares then duly purchased and paid for.
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Nothing contained in the Plan, nor in any Option granted pursuant to the
Plan, shall as such confer upon a Designated Participant any right with respect
to continuance as a director, officer or employee of the Corporation or one of
its affiliates.
2.07 Death of Designated Participant. In the event of the death of a Designated
Participant, the Option previously granted to him shall be exercisable only
during the Option Period or until 5:00 p.m. (Montreal time) on the 180th day
following the date of death of said Designated Participant, whichever occurs
first, and then only:
(a) by the person or persons to whom the Designated Participant's rights
under the Option shall pass by the Designated Participant's will or the laws of
descent and distribution; and
(b) if and to the extent that he was entitled to exercise the Option at the
date of his death.
Upon the expiration of such period, the Option previously granted under
this Plan to the said Designated Participant shall ipso facto cease and
terminate and be of no further force or effect whatsoever, except only to the
extent of the number of Common Shares then duly purchased and paid for.
2.08 Adjustment in Common Shares Subject to the Plan. (a) In the event of any
subdivision or redivision of the Common Shares of the Corporation into a greater
number of Common Shares at any time after the date of this Plan and prior to the
expiry time of the Option held by any Designated Participant, the Corporation
shall deliver to such Designated Participant at the time of any subsequent
exercise of his Option in accordance with the terms hereof, in lieu of the
number of Common Shares to which he was theretofore entitled upon such exercise,
but for the same aggregate consideration payable therefor, such number of Common
Shares as such Designated Participant would have held as a result of such
subdivision or redivision if on the record date thereof the Designated
Participant had been the registered holder of the number of Common Shares to
which he was theretofore entitled upon such exercise.
(b) In the event of any consolidation of the Common Shares of the
Corporation into a lesser number of Common Shares at any time after the date of
this
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Plan and prior to the expiry time of an Option held by any Designated
Participant, the Corporation shall deliver to such Designated Participant at the
time of any subsequent exercise of his Option in accordance with the terms
hereof, in lieu of the number of Common Shares to which he was therefore
entitled upon such exercise, but for the same aggregate consideration payable
theretofor, such number of Common Shares as such Designated Participant would
have held as a result of such consolidation if on the record date thereof the
Designated Participant had been the registered holder of the number of Common
Shares to which he was theretofore entitled upon such exercise.
(c) If at any time prior to the expiry time of the Option held by a
Designated Participant the Common Shares of the Corporation shall be
reclassified, reorganized or otherwise changed, otherwise than as specified in
Subsections 2.08 (a) and (b) of the Plan or, subject to amendment or
discontinuance of this Plan pursuant to its terms and conditions, the
Corporation shall consolidate, merge or amalgamate with or into another
corporation (the corporation resulting or continuing from such consolidation,
merger or amalgamation being herein called the "Successor Corporation"), the
Designated Participant shall be entitled to receive upon the subsequent exercise
of his Option in accordance with the terms hereof and shall accept in lieu of
the number of Common Shares then subscribed for, but for the same aggregate
consideration payable therefor, the aggregate number of shares of the
appropriate class and other securities of the Corporation or the Successor
Corporation (as the case may be) and other consideration from the Corporation or
the Successor Corporation (as the case may be) that the Designated Participant
would have been entitled to receive as a result of such reclassification,
reorganization or other change of shares or, as a result of such consolidation,
merger or amalgamation, if on the record date of such reclassification,
reorganization or other change of shares or the effective date of such
consolidation, merger or amalgamation, as the case may be, he had been the
registered holder of the number of Common Shares to which he was immediately
theretofore entitled upon such exercise.
(d) Any fractional Common Shares or other shares resulting from any
adjustment under Section 2.08 (a), (b) or (c) of the Plan shall be eliminated.
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PART 3 - GENERAL
3.01 Exercise of Options. No benefits or rights accruing to any Designated
Participant in accordance with the terms and conditions of the Plan shall be
transferrable unless specifically provided herein. During the lifetime of a
Designated Participant any benefits or rights may only be exercised by the
Designated Participant.
3.02 Record Keeping. The Corporation shall maintain a register in which shall be
recorded: (i) the name and address of each Designated Participant, (ii) the
number of Options granted to a Designated Participant, (iii) the number of
Common Shares under Options and (iv) the number of Common Shares subscribed and
paid for pursuant to said Options.
3.03 Necessary Approvals. The obligation of the Corporation to issue and deliver
Common Shares in accordance with the Plan is subject to any approvals which may
be required from any regulatory authority or stock exchange having jurisdiction
over the securities of the Corporation. If any Common Shares cannot be issued to
any Designated Participant for whatever reason, the obligation of the
Corporation to issue such Common Shares shall terminate and any Option exercise
price paid to the Corporation will be returned to the Designated Participant.
3.04 Common Shares. As used in this Plan, "Common Shares" means Common Shares in
the capital of the Corporation, subject to Section 2.08 of the Plan.
3.05 Administration and Amendment of the Plan. (a) The Plan will be administered
by the 1987 Stock Option Committee. The board of directors may, from time to
time, remove members from the 1987 Stock Option Committee or add members
thereto, and vacancies in the 1987 Stock Option Committee, however caused, shall
be filled by action of the board of directors. Subject to the provisions of the
Plan, the 1987 Stock Option Committee shall have sole authority, in its absolute
discretion, to determine the time and frequency when Options shall be granted,
the terms of such Options and the number of Common Shares for which Options
shall be granted. The grant of Options under the Plan shall be effected by
execution of a stock option agreement in the form
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approved by the 1987 Stock Option Committee. The 1987 Stock Option Committee
shall have the authority to do everything necessary and appropriate to
administer the Plan, including, without limitation, interpreting the Plan and
executing all instruments, undertakings, applications and writings as they, in
their absolute discretion, consider necessary for the implementation of rules
and regulations by the 1987 Stock Option Committee for administering the Plan
and from time to time amending or rescinding such rules or regulations. Any
interpretation or construction of any provision of the Plan and any decision or
determination by the 1987 Stock Option Committee shall be final, conclusive and
binding on all optionees and their successors, and upon all other persons
claiming under or through any of them. All administration costs of the Plan
shall be paid by the Corporation.
(b) Subject to the prior approval of The Toronto Stock Exchange and any
other stock exchange on which the Common Shares are listed for trading, the
board of directors reserves the right to amend, modify or terminate the Plan at
any time if and when it is advisable in the absolute discretion of the board of
directors, except with respect to any Options then outstanding under the Plan;
provided, however, that, without the approval of a majority of the Corporation's
shareholders, no amendment or modification may be made which would (i)
materially increase the benefits accruing to Designated Participants under the
Plan, (ii) materially increase the number of Common Shares which may be issued
under the Plan (except by operation of Section 2.08 of the Plan) or (iii)
materially modify the requirements as to eligibility for participation in the
Plan.
(c) Should changes be required in this Plan by any securities commission,
stock exchange or other governmental or regulatory body of any jurisdiction to
which this Plan or the Corporation now is or hereafter becomes subject, such
changes shall be made in this Plan as are necessary to conform with such
requirements and, if such changes are approved by the board of directors, this
Plan, as amended, shall be filed with the records of the Corporation and shall
remain in full force and effect in its amended form.
3.06 Escrow. Common Shares to be issued upon exercise of an Option shall be
escrowed if required by any applicable law, regulation, regulatory body or stock
exchange, and the Designated Participant shall, upon request by the Corporation,
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execute an escrow agreement in form required or requested by such regulatory
body, stock exchange or the Corporation and no Common Shares shall be issued on
exercise of an Option if such escrow agreement is not entered into by the
Designated Participant.
3.07 Legal Opinion. Common Shares to be issued upon exercise of an Option to a
Designated Participant who is not residing in Canada shall be subject to the
receipt, by the Corporation, of a favourable legal opinion addressed to the
Corporation by a legal counsel designated by the Corporation, establishing that
all formalities, registration, consent, approval and filing required under any
applicable laws, if any, have been done or obtained in order to issue Common
Shares to such Designated Participant.
3.08 No Representation or Warranty. The Corporation makes no representation or
warranty as to the future market value of any Common Shares issued in accordance
with the provisions of the Plan.
3.09 Interpretation. The Plan will be governed by and construed in accordance
with the laws of Canada and of the Province of Quebec.
3.10 Language. The Corporation and the Designated Participant who is a party to
a Stock Option Agreement to which this Plan is annexed state their express wish
that this Plan and all documents related thereto be drafted in the English
language only; la societe le participant désigné qui est partie à une convention
d'option à laquelle est annexé ce régime ont, par les présentes, exprimé leur
volonté expresse que ce régime, de même que tous les documents y afférents,
soient rédigés en anglais seulement.
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SCHEDULE A
REPAP ENTERPRISES INC.
1987 Directors, Officers and Employees Stock Option Plan
Exercise of Option
The undersigned hereby exercises the option to purchase
___________________ Common Shares in the capital of Repap Enterprises Inc. at a
price per share of $_____________________ granted to him by agreement dated
_____________________________ and tenders a cheque therefore in the amount of
$_____________________.
Dated this _____________day of __________________________
19_______.
____________________________________
Signature of Designated Participant
____________________________________
____________________________________
____________________________________
____________________________________
Name and Address of
Designated Participant
