EXHIBIT 4.4
FORM OF INDUCEMENT OPTION AGREEMENT
XXXXX XXXXXXX INCORPORATED
OPTION AGREEMENT
THIS AGREEMENT is made as of [ ] day of [ ]
B E T W E E N:
XXXXX XXXXXXX INCORPORATED, a corporation
continued under the laws of Canada
(i) (the "COMPANY")
- and -
[NAME], of the City of ______________ in the
State of ________________
(the "EXECUTIVE")
RECITALS:
A. As an inducement to enter into an employment relationship with the Company,
the Company has agreed to grant the Executive non-assignable, non-transferable
rights (the "OPTIONS") to purchase up to [number] common shares in the share
capital of the Company (the "COMMON SHARES") pursuant to the terms of this
option agreement (the "OPTION AGREEMENT").
B. The Executive and the Company entered into an employment relationship
effective as of [date].
C. The Board approved the grant of the Options to the Executive on the terms
and conditions set out in a resolution of the Board passed on [date] (the
"BOARD RESOLUTION").
D. The Parties have entered into this Option Agreement to set out the terms
and conditions applicable to the Options granted to the Executive.
THEREFORE, the Parties agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
"Board" means the Board of Directors of the Company;
"Board Resolution" shall have the meaning ascribed thereto in the recitals
hereof;
"Business Day" means a day, other than a Saturday or Sunday, on which the
principal commercial banks located at Toronto, Ontario and New York, New York
are open for business during normal banking hours;
"Cause" shall have the meaning ascribed to it in Annex A to the Letter Agreement
between the Executive and the Company dated [date];
"Change of Control" shall have the meaning ascribed to it in Annex A of the
Letter Agreement between the Executive and the Company dated [date];
"Committee" means the Board of Directors and, to the extent permitted by
applicable law and the Company's articles, the Compensation Committee to the
extent the Board of Directors has delegated to the Compensation Committee all or
any powers conferred on the Board of Directors in respect of this Option
Agreement;
"Common Shares" shall have the meaning ascribed thereto in the recitals hereof;
"Date of Grant" means, [date];
"Disability" shall have the meaning ascribed thereto in the Company's Short Term
Disability and Long Term Disability policies in effect at the time of the
Executive's Disability;
"Employment Contract" shall have the meaning ascribed thereto in Section 1.3
hereof;
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended;
"Exercise Date" means the date on which the Option is exercised in accordance
with the provisions of Article 4;
"Exercise Price" means $[price] per Common Share, being the closing price per
Common Share on the New York Stock Exchange on [date], as adjusted in
accordance with the provisions of Article 5 and Article 6;
"Good Reason" shall have the meaning ascribed to it in Annex A to the Letter
Agreement between the Executive and the Company dated [date];
"Notice" shall have the meaning ascribed thereto in Article 14 hereof;
"Options" shall have the meaning ascribed thereto in the recitals hereof;
"Option Agreement" means this Option Agreement, including all schedules and all
amendments or restatements, as permitted, and references to "Article" or
"Section" mean the specified Article or Section of this Option Agreement;
"Option Exercise Form" means the form of option exercise notice attached as
Schedule "A" hereto to be given in writing and signed by the Executive
confirming the Executive's intention to exercise a particular Option;
"Option Shares" means the Common Shares issuable upon the valid exercise of the
Options;
"Parties" means the Company and the Executive, and "Party" means any one of
them;
"Retirement" shall mean no earlier than the date on which the Executive is 55
years of age or older and has accrued 5 years of service with the Company;
"Subsidiary" means, with respect to the Company, (a) any corporation of which
more than 50% of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether, at the time, stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, owned by the Company, and
(b) any partnership in which the Company has a direct or indirect interest
(whether in the form of voting or participation in profits or capital
contribution) of more than 50%;
"Term" means the period of time commencing on the date hereof and expiring at
the Time of Expiry;
"Termination Date" means the date the Executive ceases to be employed by the
Company or a Subsidiary, as applicable, and shall be the earliest of the
following dates:
- the date on which the Executive gives the Company or a Subsidiary, as
applicable, notice of resignation;
- the date on which the Company or a Subsidiary, as applicable, gives the
Executive notice of termination of employment, (whether or not for cause); or
- the date the Executive ceases to provide services to the Company or a
Subsidiary; and
"Time of Expiry" means the expiry time of the Options as determined pursuant to
Article 3.
1.2 CERTAIN RULES OF INTERPRETATION
In this Agreement:
(a) AMENDMENTS - This Option Agreement may not be amended or modified in
any respect except by written instrument signed by the Parties.
(b) CURRENCY - Unless otherwise specified, all references to money amounts
are to lawful currency of the United States of America.
(c) GOVERNING LAW - This Option Agreement is a contract made under and
shall be governed by and construed in accordance with the laws of the Province
of Ontario and the federal laws of Canada applicable in the Province of Ontario.
(d) HEADINGS - Headings of Articles and Sections are inserted for
convenience of reference only and shall not affect the construction or
interpretation of this Option Agreement.
(e) NO STRICT CONSTRUCTION - The language used in this Option Agreement is
the language chosen by the Parties to express their mutual intent, and no rule
of strict construction shall be applied against any Party.
(f) NUMBER AND GENDER - When used in this Option Agreement, the masculine
gender includes the feminine and neutral genders and vice versa, and the
singular includes the plural and vice versa, where the context so requires, and
the terms "herein", "hereby", "hereunder", "hereof", "this Option Agreement" and
similar provisions refer to this Option Agreement as a whole and not to any
particular section or other portion hereof unless the context otherwise permits.
(g) SEVERABILITY - If, in any jurisdiction, any provision of this Option
Agreement or its application to any Party or circumstance is restricted,
prohibited or unenforceable, such provision shall, as to such jurisdiction, be
ineffective only to the extent of such restriction, prohibition or
unenforceability without invalidating the remaining provisions of this Option
Agreement and without affecting the validity or enforceability of such provision
in any other jurisdiction or without affecting its application to other Party or
circumstances.
(h) TIME - Time is of the essence in the performance of the Parties'
respective obligations.
(i) TIME PERIODS - Unless otherwise specified, time periods within or
following which any payment is to be made or act is to be done shall be
calculated by excluding the day on which the period commences and including the
day on which the period ends and by extending the period to the next Business
Day following if the last day of the period is not a Business Day.
1.3 ENTIRE AGREEMENT
This Option Agreement and the agreements and other documents required to be
delivered pursuant to this Option Agreement constitute the entire agreement
between the Parties and set out all the covenants, promises, warranties,
representations, conditions, understandings and agreements between the Parties
pertaining to the subject matter of this Option Agreement and supersede all
prior agreements, understandings, negotiations and discussions, whether oral or
written; provided, however that in the event any provision of this Agreement
conflicts with or is inconsistent with the terms of the Executive's written
employment contract with the Company or any Subsidiary existing on the date
hereof (the "Employment Contract"), the provisions of such Employment Contract
shall govern. There are no covenants, promises, warranties, representations,
conditions, understandings or other agreements, oral or written, express,
implied or collateral between the Parties in connection with the subject matter
of this Option Agreement except as specifically set forth in this Option
Agreement, any Employment Contract and any document required to be delivered
pursuant to this Agreement.
ARTICLE 2
GRANTING OF OPTIONS AND VESTING
2.1 GRANT OF OPTIONS
The Parties hereby acknowledge and agree that the Options have been granted by
the Company to the Executive pursuant to the terms and conditions contained in
the Board Resolution and that, except as provided in Section 1.3, such Options
are subject exclusively to the terms and conditions contained in this Option
Agreement and are exercisable only as provided in this Option Agreement.
2.2 ENTITLEMENT
Each Option entitles the Executive to purchase, at or prior to the Time of
Expiry, one Common Share at the Exercise Price per Common Share, subject to the
terms and conditions set forth herein. In the aggregate, the Company has granted
250,000 Options to the Executive.
2.3 VESTING
Subject to Section 2.4: (i) none of the Options shall be vested or exercisable
until the date that is one year following the Date of Grant; (ii) twenty-five
percent (25%) of the Options shall become vested and exercisable, subject to the
terms and conditions of this Option Agreement, on the date that is one year
following the Date of Grant; and (iii) an additional twenty-five percent (25%)
of the Options shall become vested and exercisable, subject to the terms and
conditions of this Option Agreement, on each of the dates that is two years,
three years and four years following the Date of Grant such that on April 7,
2007 all of the Options shall have become vested and exercisable.
Notwithstanding any other provision of this Option Agreement, Options shall
cease to vest upon the occurrence of the Termination Date.
2.4 ACCELERATION OF VESTING
Upon any termination by the Company of the Executive without Cause or
termination by the Executive for Good Reason following a Change in Control, all
of the Options shall vest 100% immediately either as of the termination date (in
the case of termination by the Company without Cause or termination by the
Executive for Good Reason) or prior to the Change in Control becoming effective
(solely in the event that upon or in connection with such Change in Control the
Executive's employment is terminated without Cause or the Executive terminates
his employment for Good Reason), as applicable. Any termination by the Company
without Cause or termination by the Executive for Good Reason which takes place
within six (6) months prior to a Change in Control shall be, presumptively, a
termination following a Change in Control.
2.5 VESTING UPON DEATH, RETIREMENT OR DISABILITY
All of the Options shall immediately be vested and fully exercisable (i) in
whole in the event that the Executive's employment with the Company or a
Subsidiary is terminated upon the occurrence of his death, Retirement or
Disability during the Restricted Period.
2.6 COMPANY DISCRETION REGARDING VESTING
The Committee may, subject to regulatory approval if required, waive the
limitations on exercisability set forth in Section 2.3 at any time in whole or
in part based on such factors, if any, as the Committee shall determined in its
sole discretion.
2.7 ACKNOWLEDGEMENT
The Executive and the Company acknowledge that the Options are non-qualified
stock options for the purposes of United States income tax legislation.
ARTICLE 3
TERM, TERMINATION AND TIME OF EXPIRY
This Option Agreement shall terminate, and the Options shall expire and become
null and void, on the earliest to occur of (the "TIME OF EXPIRY"):
(a) 5:00 p.m. (Toronto time), on [date];
(b) the date that this 180 days from the Termination Date of the
Executive's employment with the Company or a Subsidiary, as applicable, for any
reason other than dismissal for cause, Retirement, Disability or death provided,
however, that no further vesting of Options shall occur following the
Termination Date;
(c) the date which is one year following the termination of the
Executive's employment with the Company as a result of Retirement or Disability,
provided, however, that no further vesting of Options shall occur following the
Termination Date;
(d) the date which is one year following the Executive's death (whether or
not the Executive continued to be employed by the Company at the time of his or
her death), provided, however, that no further vesting of Options shall occur
following the Termination Date; or
(e) on the Termination Date in the event that the Executive's employment
with the Company or a Subsidiary, as applicable, is terminated for cause and for
greater certainty no further vesting of Options shall occur following the
Termination Date.
ARTICLE 4
EXERCISE OF OPTIONS
4.1 EXERCISE OF OPTIONS
The Executive may exercise vested Options at any time or from time to time
during the Term by submitting to the Company a fully executed Option Exercise
Form, accompanied by payment in full by the Executive to the Company of the
aggregate applicable Exercise Price for the Option Shares to be purchased in
connection with such Option exercise either: (i) in cash; (ii) by certified
cheque or bank draft; or (iii) on such other terms and conditions as may be
acceptable to the Committee (including, without limitation, the relinquishment
of Options). No Common Shares shall be issued until payment therefor, as
provided herein, has been made. Upon any such exercise, the Company shall
forthwith cause certificates registered in the name of the Executive
representing the aggregate number of the Common Shares as the Executive shall
have then validly exercised Options to acquire to be delivered to the Executive.
4.2 DELIVERY OF OPTION AGREEMENT
If upon the exercise of Options pursuant to Section 4.1, no further Option
Shares remain available for issuance under this Option Agreement, the Executive
shall, at the time of delivery of the Option Exercise Form, also deliver to the
Company this Option Agreement.
4.3 FRACTIONAL SHARES
No fractional shares shall be issued upon exercise of Options.
4.4 TIMING OF OPTION EXERCISE
Vested Options may be exercised at any time or from time to time as aforesaid
during the Term and, at the Time of Expiry, the Options and this Option
Agreement shall expire and terminate. The Options may be exercised, and are
exercisable, only to the extent permissible in accordance with applicable law.
For greater certainty from and after the Time of Expiry, the Options and this
Option Agreement and the rights represented hereby shall be void and of no
effect.
4.5 NO OBLIGATION TO PURCHASE OPTION SHARES
Nothing herein contained or done pursuant hereto shall obligate the Executive to
purchase or pay for, or obligate the Company to issue, any Option Shares except
those Option Shares in respect of which the Executive shall have validly
exercised the Option to purchase hereunder and in the manner herein provided.
4.6 COMPANY COVENANTS
The Company covenants and agrees that all the Common Shares which may be issued
upon the valid exercise of the Options will, upon issuance, be duly authorized,
validly issued and non-assessable and free from all pre-emptive rights of any
shareholder in connection with such exercise but subject to any legend
requirements or other restrictions imposed by applicable law. The Company
further covenants and agrees that, during the period within which the Options
may be exercised, the Company will at all times have authorized a sufficient
number of authorized but unissued Common Shares when and as required to provide
for the exercise of the Options.
4.7 RIGHTS ASSOCIATED WITH COMMON SHARES
The Executive shall have full ownership rights with respect to each Common Share
that is the subject of an Option upon the occurrence of, and shall not be deemed
for any purpose to be the owner of any Common Share that is the subject of an
Option until, (i) such Common Share shall have been issued in accordance with
this Option Agreement; (ii) all requirements under applicable law and
regulations with respect to such exercise shall have been complied with to the
satisfaction of the Company; and (iii) the Company shall have issued and
delivered such Common Share to the Executive.
ARTICLE 5
CORPORATE CHANGE
5.1 RIGHT TO AFFECT CORPORATE CHANGES
The existence of the Options shall not affect in any way the right or power of
the Company or the shareholders of the Company to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the capital
structure or business of the Company, or any merger, amalgamation, arrangement,
or consolidation of the Company, or any issue of Common Shares, or any issue of
bonds, debentures, preferred or prior preference stock ahead of or allocating
the Common Shares or rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding whether of a similar character or
otherwise.
5.2 ADJUSTMENT TO OPTIONS
In the event of any change in the outstanding Common Shares by reason of any
stock dividend or split, recapitalization, amalgamation, arrangement, merger,
consolidation, spinoff, combination or exchange of shares or other corporate
change, or any distributions to common shareholders other than regular cash
dividends, the Committee may make such substitution or adjustment, if any, as it
deems to be equitable, as to the number or kind of shares, Common Shares or
other securities issued or reserved for issuance pursuant to outstanding Options
(including adjustments to the number of Options and the Exercise Price of
outstanding Options). Except pursuant to the previous sentence, the number of
Options or Exercise Price of outstanding Options may not be reduced.
5.3 NO ADJUSTMENT
Except as hereinbefore expressly provided, the issue by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
for cash or property or labour or service, either on direct sale or on the
exercise of rights or warrants to subscribe therefor, or on conversion of shares
or obligations of the Company convertible into such shares or other securities,
shall not affect, and/or an adjustment by reason thereof shall not be made with
respect to the number or price of Common Shares issuable on exercise of the
Option.
ARTICLE 6
ADJUSTMENTS
For the purposes of Article 5:
(a) Any adjustment shall be made successively whenever an event requiring
an adjustment shall occur, subject to the following provisions:
(i) all calculations shall be made to the nearest whole Common
Share;
(ii) no adjustment shall be made in the number of Common Shares
which may be subscribed for upon exercise of an Option unless it would
require a change of at least one whole Common Share;
(iii) any adjustments made shall be determined by the Committee and
such determination shall be final and conclusive.
ARTICLE 7
WITHHOLDING TAX
The Company shall have the right to deduct from any payment made pursuant to
this Option Agreement, the amount of any taxes required by law to be withheld
therefrom, or to require the Executive to pay to the Company such amount
required to be withheld, prior to the issuance or delivery of any Common Shares.
The Committee may, in its discretion, permit the Executive to make such
arrangements as the Company may require to satisfy such withholding obligation.
ARTICLE 8
NO VOTING OR DIVIDEND RIGHTS
Nothing contained in this Option Agreement shall be construed as conferring upon
the Executive the right to vote or to consent or to receive notice as a
shareholder of the Company or any other matters or any rights whatsoever as a
shareholder of the Company. No dividends or interest (if any) shall be payable
or accrued in respect of the Options or the interest represented hereby or the
Common Shares purchasable hereunder until, and only to the extent that, the
Options shall have been validly exercised.
ARTICLE 9
NON-TRANSFERABILITY
The Options and this Option Agreement shall not be transferable or assignable by
the Executive otherwise than by will or the laws of descent and distribution,
and shall be exercisable during the lifetime of the Executive only by the
Executive or his or her legal guardian or representative and after death only by
the Executive's legal representative. No assignments or transfers of the Options
and this Option Agreement, whether voluntary, involuntary, by operation of law
or otherwise, vests any interest or right whatsoever in any assignee or
transferee and, immediately upon any purported assignment or transfer or attempt
to assign or transfer the Options or this Option Agreement, the Options and this
Option Agreement will terminate and be of no further force or effect.
ARTICLE 10
NOTICES
Any notice or other writing required or permitted to be given under this Option
Agreement or for the purposes of this Option Agreement (in this Section referred
to as a "NOTICE") shall be in writing and shall be sufficiently given if
delivered, or if sent by prepaid registered mail or if transmitted by facsimile
or other form of recorded communication tested prior to transmission to such
Party:
(a) in the case of a Notice to the Company at:
Xxxxx Xxxxxxx Incorporated
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, XX
00000-0000
Attention: Executive Vice President-Business and Legal Affairs
Fax: (000) 000-0000
(b) in the case of a Notice to the Executive, at:
[name]
Xxxxx Xxxxxxx Incorporated
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Phone: [number]
or at such other address as the Party to whom such Notice is to be given shall
have last notified the Party giving the same in the manner provided in this
Section. Any Notice delivered to the Party to whom it is addressed as provided
above shall be deemed to have been given and received on the day it is so
delivered at such address, provided that if such day is not a Business Day then
the Notice shall be deemed to have been given and received on the next Business
Day. Any Notice sent by prepaid registered mail shall be deemed to have been
given and received on the fifth Business Day following the date of its mailing.
Any Notice transmitted by facsimile or other form of recorded communication
shall be deemed given and received on the first Business Day after its
transmission.
ARTICLE 11
MISCELLANEOUS
11.1 REPRESENTATION OF THE EXECUTIVE
The Executive agrees and represents that his acquisition of the Options and/or
Common Shares is voluntary and that the purchase or continued holding of Common
Shares by the Executive shall not be construed as giving the Executive any right
to be retained in the employ of the Company or any Subsidiary. Further, the
Company and its Subsidiaries expressly reserve the right at any time to dismiss
the Executive free from any liability, or any claim under this Option Agreement,
except as provided herein.
11.2 INTERPRETATION AND ADMINISTRATION
The Committee (or its delegate, within limits established by the Committee)
shall have the authority to interpret this Option Agreement, to establish, amend
and rescind any rules and regulations relating to the Options and to make all
other determinations necessary or advisable for the administration or
interpretation of this Option Agreement. The Committee may correct
any defect, supply any omission or reconcile any inconsistency in the Option
Agreement in the manner and to the extent it shall deem desirable to carry out
its intended purpose. The determinations of the Committee in respect of the
interpretation and administration of this Option Agreement, as described herein,
shall be final and conclusive. No member of the Committee shall be liable for
any such action or determination made in good faith.
11.3 FURTHER ASSURANCES
The Company and the Executive shall, with reasonable diligence, do all such
things and provide all such reasonable assurances as may be required to
consummate the transactions contemplated by this Option Agreement and each of
the Company and the Executive shall provide such further documents or
instruments as may be reasonably necessary or desirable to effect the purpose of
this Option Agreement and to carry out its provisions.
11.4 HEIRS, SUCCESSORS AND ASSIGNS
The provisions of this Agreement shall extend to and be binding upon the heirs,
attorneys, guardians, estate trustees, administrators, executors, trustees,
legatees, successors and permitted assigns of the Executive and the Company.
IN WITNESS OF WHICH this Option Agreement has been executed as of the date first
written above.
XXXXX XXXXXXX INCORPORATED
By:
------------------------------------
Name:
Title:
SIGNED, SEALED & DELIVERED [NAME]
In the presence of:
------------------------------------ ------------------------------------
Witness
SCHEDULE "A"
XXXXX XXXXXXX INCORPORATED
OPTION EXERCISE FORM
(ii) TO: Xxxxx Xxxxxxx Incorporated (the "CORPORATION")
1. Defined terms have the meaning set out in the Option Agreement executed
between the Corporation and [name] (the "EXECUTIVE") dated as of [date],
2003.
2. The undersigned Executive hereby subscribes for __________ Common Shares
of the Corporation (or such number of Common Shares or other securities or
property to which such subscription entitles the undersigned in lieu
thereof or in addition thereto under the provisions of the Option
Agreement) pursuant to the Option Agreement at U.S. $[price] per Common
Share prior to 5:00 p.m. on the Time of Expiry (or the adjusted dollar
amount per Common Share at which the undersigned is entitled to purchase
such Common Shares under the provisions of the Option Agreement) on the
terms specified in the Option Agreement.
DATED this day of , .
-----------------------------
[name]
Executive
