EXHIBIT 99.1
FORM OF INDUCEMENT OPTION AGREEMENT
THIS AGREEMENT is made as of the _____ day of _____, 0000
X X X X X X X:
XXXXX CORPORATION LIMITED, a corporation
incorporated under the laws of Ontario, Canada
(i) ("Xxxxx")
- and -
[EXECUTIVE NAME]
(the "Executive")
RECITALS:
Whereas as an inducement to enter into an employment relationship with
Xxxxx North America, Inc. and/or Xxxxx, Xxxxx granted to the Executive options
(the "Options") to purchase up to [no. of shares] Series 1 Preference Shares in
accordance with the terms and conditions set out in the resolution of the Board
approving the grant of Options (the "Board Resolution") passed on December 11,
2000.
And whereas at the Annual and Special Meeting of Shareholders held on
April 18, 2002, the shareholders of Xxxxx passed a resolution approving the
amendment of the terms of the Options (the "Shareholders' Resolution") to (i)
remove the cash-out provision; and (ii) replace the right to exercise each
Option for one Series 1 Preference Share with the right to exercise each Option
for one common share of Xxxxx.
And whereas the Board has passed a resolution approving the amendments of
the Options in the manner contemplated in recital 2 above.
And whereas the Parties have entered into this Option Agreement to reflect
the amended terms of the Options.
THEREFORE, the Parties agree as follows:
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ARTICLE 1
INTERPRETATION
1.1 As used in this Option Agreement:
"BOARD" means the Board of Directors of Xxxxx;
"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;
"CHANGE OF CONTROL" shall mean any of the following: (i) (A) the
acquisition of direct or indirect beneficial ownership (as determined
under Rule 13d-3 promulgated under the Exchange Act), in the aggregate, of
securities of Xxxxx representing thirty percent (30%) or more of the total
combined voting power of Xxxxx'x then issued and outstanding voting
securities entitled to vote in the general election for directors by any
person or entity or group of associated persons or entities (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) acting in
concert (other than Xxxxx or its Subsidiaries or any employee benefit plan
of either) (a "Person"), provided that, if a buyback of shares by Xxxxx
causes the Person to attain such limit, such limit shall not be deemed
attained unless and until such Person acquires any such voting securities
of Xxxxx after the buyback that caused the level to be attained; (B) the
amalgamation, merger or consolidation of Xxxxx with any Person other than
(a) an amalgamation, merger or consolidation which would result in the
voting securities of Xxxxx outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving or parent entity) fifty
percent (50%) or more of the combined voting power (based on normal issue
voting) of the voting securities of Xxxxx or such surviving or parent
entity outstanding immediately after such amalgamation, merger or
consolidation in substantially the same proportion as immediately prior to
such amalgamation, merger or consolidation; or (b) an amalgamation, merger
or consolidation effected to implement a recapitalization of Xxxxx (or
similar transaction) in which no Person is or becomes the beneficial
owner, directly or indirectly (as determined under Rule 13d-3 promulgated
under the Exchange Act), of securities representing more than the amounts
set forth in (A) above; (C) the approval by the shareholders of Xxxxx of
any plan or proposal for the complete liquidation or dissolution of Xxxxx;
or (D) the sale or other disposition of all or substantially all of the
assets of Xxxxx other than the sale or other disposition of all or
substantially all of the assets of Xxxxx either (x) to a person or persons
who beneficially own, directly or indirectly, at least fifty percent (50%)
or more of the combined voting power (based on normal issue voting) of the
voting securities of Xxxxx at the time of the sale, or (y) in a manner
such that after such sale or other disposition the ultimate parent entity
of the acquirer is, directly or indirectly, owned (based on normal issue
voting) at least fifty percent (50%) by shareholders who immediately prior
to such transaction owned at least fifty percent (50%) of the voting power
(based on normal issue voting) of Xxxxx immediately prior to such
transaction in materially the same proportion as owned by such
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shareholders immediately prior to such transaction; or (ii) during any
period of not more than twenty-four (24) consecutive months, individuals
who at the beginning of such period constitute the Board, and any new
director (other than a director designated by a person who has entered
into agreement with Xxxxx to effect a transaction described in clause (i)
or whose initial assumption of office is in connection with an actual or
threatened "election contest" relating to the election of the directors of
Xxxxx (as such terms are used in Rule 14a-11 under the Exchange Act))
whose election by the Board or nomination for election by Xxxxx'x
shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously
so approved, cease for any reason to constitute at least a majority
thereof. Only the first Change in Control after the date hereof shall be
deemed a Change in Control hereunder;
"COMMITTEE" means the Management Resources Committee of the Board or such
other committee as the Board may appoint from time to time;
"COMMON SHARES" means the common shares in the capital of Xxxxx;
"CURRENT MARKET VALUE" means, with respect to the Common Shares on any
particular day, the closing price per Common Share on the immediately
preceding trading day on the principal stock exchange on which the Common
Shares are then listed (which shall be The Toronto Stock Exchange as long
as the Common Shares are listed on such exchange), or, if not then so
listed, shall be: (i) if the Common Shares are otherwise publicly traded,
the fair market value of a Common Share on such date as determined in
accordance with the method determined for such purpose by the Committee;
or (ii) if the Common Shares are not otherwise publicly traded, the fair
market value of a Common Share on such date shall be the fair market value
of a Common Share on such date as determined by the Committee;
"DATE OF GRANT" means December 11, 2000;
"DISABILITY" means disability as interpreted in accordance with Xxxxx'x
disability policies applicable to the Executive;
"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 Cdn. $3.65 per Common Share as adjusted in
accordance with the provisions of Article 5 and Article 6;
"FISCAL YEAR" means each calendar year ending December 31;
"NOTICE" shall have the meaning ascribed thereto in Article 12 hereof;
"OPTIONS" shall have the meaning ascribed thereto in the recitals hereof;
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"OPTION AGREEMENT" means this Option Agreement;
"OPTION EXERCISE FORM" means the form of option exercise form attached as
Schedule "A" hereto;
"OPTION SHARES" has the meaning ascribed thereto in Section 2.1;
"PARTIES" means Xxxxx and the Executive, and "Party" means any one of
them;
"RETIREMENT" means retirement as interpreted in accordance with Xxxxx'x
retirement policies applicable to the Executive;
"SERIES 1 PREFERENCE SHARES" means the Series 1 Preference Shares in the
capital of Xxxxx;
"SUBSIDIARY" means, with respect to Xxxxx, (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 Xxxxx, and (b) any partnership in which Xxxxx 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; and
"TIME OF EXPIRY" means the expiry time of the Options as determined
pursuant to Article 3.
1.2 Time is of the essence in the performance of the Parties' respective
obligations.
1.3 Unless otherwise specified, all references to money amounts are to
Canadian currency.
1.4 The division of this Option Agreement into sections and the insertion of
headings are for convenience of reference and shall not affect the
interpretation hereof.
1.5 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.
1.6 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.
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1.7 Whenever any payment is to be made or action to be taken under this Option
Agreement is required to be made or taken on a day other than a Business
Day, such payment shall be made or action taken on the next Business Day
following such day.
1.8 This Option Agreement constitutes the entire agreement between the Parties
with respect to the subject matter hereof and there are no representations
or warranties of any kind not contained herein. This Option Agreement
supercedes all previous agreements and may not be amended or modified in
any respect except by written instrument signed by the Parties and
approved by The Toronto Stock Exchange.
1.9 The invalidity of any provision of this Option Agreement or any covenant
herein contained shall not affect the validity of any other provision or
covenant herein contained.
ARTICLE 2
GRANTING OF OPTIONS AND VESTING
2.1 The Parties hereby acknowledge and agree that (i) the Options have been
granted by Xxxxx to the Executive pursuant to the terms and conditions
contained in the Board Resolution; and (ii) the terms and conditions of
the Options as contained in the Board Resolution were amended pursuant to
a further resolution of the Board and approved pursuant to the
Shareholders' Resolution as a result of which the Options are now subject
exclusively to the terms and conditions contained in this Option Agreement
and are exercisable only as provided in this Option Agreement.
2.2 Each Option entitles the Executive to purchase, at or prior to the Time of
Expiry, one Common Share (collectively, the "Option Shares") at the
Exercise Price per share, subject to the terms and conditions set forth
herein.
2.3 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 December 11, 2004 all of
the Options shall have become vested and exercisable.
2.4 All of the Options shall immediately be vested and fully exercisable upon
the occurrence of any of the following events: (i) a Change of Control; or
(ii) the termination of the Executive's employment by Xxxxx as a result of
the Executive's retirement, disability or death.
2.5 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.
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2.6 The Executive and Xxxxx acknowledge that the Options are non-qualified
stock options for the purposes of United States income tax legislation.
2.7 Notwithstanding any other provision hereof, the number of Option Shares
reserved for issuance to any one person shall not exceed 5% of the total
issued and outstanding Common Shares at any given time.
ARTICLE 3
TERM, TERMINATION AND TIME OF EXPIRY
3.1 This Option Agreement shall terminate, and the Options shall expire and
become null and void, on the earliest to occur of:
(i) 5:00 p.m. (Toronto time), on December 11, 2010;
(ii) the termination of the Executive's employment by Xxxxx for any
reason other than retirement, disability or death;
(iii) the date which is one year following the termination of the
Executive's employment with Xxxxx as a result of retirement or
disability (the terms "retirement" and "disability" shall be
interpreted in accordance with the Xxxxx retirement and disability
policies applicable to the Executive);
(iv) the date which is one year following the Executive's death (whether
or not the Executive continued to be employed by Xxxxx at the time
of his or her death).
ARTICLE 4
EXERCISE OF OPTIONS
4.1 The Executive may exercise the Options at any time or from time to time
during the Term, in whole or in part by submitting to Xxxxx a fully
executed Option Exercise Form, accompanied by payment in full by the
Executive to Xxxxx of the 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; (iii) through a procedure
whereby the Executive delivers irrevocable instructions to a broker
approved by the Committee to deliver promptly to Xxxxx an amount equal to
the applicable Exercise Price either upon exercise or sale, as approved by
the Committee; or (iv) 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 or provided for. Upon any such
exercise, Xxxxx 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 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 Xxxxx this Option Agreement.
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4.3 No fractional shares shall be issued upon exercise of Options.
4.4 The 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 Nothing herein contained or done pursuant hereto shall obligate the
Executive to purchase or pay for, or obligate Xxxxx 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 Xxxxx 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. Xxxxx further covenants and agrees that, during the period
within which the Options may be exercised, Xxxxx will at all times have
authorized and reserved, for the purpose of issue upon exercise of the
Options, a sufficient number of authorized but unissued Common Shares when
and as required to provide for the exercise of the Options.
4.7 The Executive shall have full ownership rights with respect to each Common
Shares 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 Xxxxx; and (iii) Xxxxx
shall have issued and delivered such Common Share to the Executive.
ARTICLE 5
CORPORATE CHANGES
5.1 The existence of the Options shall not affect in any way the right or
power of Xxxxx or the shareholders of Xxxxx to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes in
the capital structure or business of Xxxxx, or any merger, amalgamation,
arrangement, or consolidation of Xxxxx, or any issue of Common Shares or
Series 1 Preference 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 Xxxxx, 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 The number of Common Shares which may be purchased upon exercise of an
Option shall be subject to adjustment from time to time upon the
occurrence of any of the events set out
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below (each, a "Corporate Change") and in the manner provided as follows.
In the event of:
(a) any subdivision, redivision or change of the Common Shares at any
time prior to the Time of Expiry into a greater number of Common
Shares, Xxxxx shall deliver, at the time of any exercise thereafter
of the Option Agreement, such additional number of Common Shares as
would have resulted from such subdivision, redivision or change if
the exercise of the Option had been made immediately prior to the
date of such subdivision, redivision or change on delivery of an
amount, in accordance with Article 4, as adjusted to reflect such
subdivision, redivision or change and the Exercise Price per Common
Share shall be correspondingly reduced; or
(b) any consolidation or change of the Common Shares at any time prior
to the Time of Expiry into a lesser number of Common Shares, then
the number of shares deliverable by Xxxxx on any exercise thereafter
of the Option Agreement shall be reduced to such number of Common
Shares as would have resulted from such consolidation or change if
the exercise of the Option Agreement had been made immediately prior
to the date of such consolidation or change on delivery of an
amount, in accordance with Article 4, as adjusted to reflect such
consolidation or change and the Exercise Price per Common Share
shall be correspondingly increased.
5.3 Except as hereinbefore expressly provided, the issue by Xxxxx 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 Xxxxx 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.
5.4 If any change in the outstanding Common Shares or any other event occurs
as to which the other provisions of this Section 5 are not strictly
applicable or, if strictly applicable, would not fairly protect the
purchase rights of the Executive in accordance with such provisions, then
the Board shall make an adjustment in the number or class of shares
available under the Option Agreement, the Exercise Price or the
application of such provisions, so as to protect such purchase rights as
aforesaid. The adjustment shall be such as will give the Executive, upon
exercise for the same aggregate Exercise Price, the total number, class
and kind of shares as it would have owned had the Option Agreement been
exercised immediately prior to the event and had it continued to hold such
shares until after the event requiring adjustment.
ARTICLE 6
ADJUSTMENTS
6.1 For the purposes of Article 5:
(a) Any adjustment shall be made successively whenever Corporate Change
shall occur, subject to the following provisions:
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(i) all calculations shall be made to the nearest Common Share;
(ii) no adjustment shall be made in the number of Common Shares
which may be subscribed for upon exercise of the Option
Agreement 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
Xxxxx shall have the right to deduct from all amounts paid in cash, or to
otherwise require, prior to the issuance or delivery of any Common Shares,
payment by the Executive of any taxes required by law to be withheld. In the
case of payments in the form of Common Shares, the Executive shall be required
to pay to Xxxxx the amount of any taxes required to be withheld with respect to
such shares; in lieu thereof, Xxxxx shall have the right to sell without notice
or to permit the Executive to elect to have Xxxxx sell, a sufficient number of
shares to cover the amount required to be withheld, or to withhold any such
amount from the Executive's salary. Any fraction of a Common Share required to
satisfy such tax obligations shall be disregarded and the amount due shall be
paid instead in cash by the Executive.
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 Xxxxx or any other matters or any rights whatsoever as a
shareholder of Xxxxx. 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 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 assignment or transfer or attempt to assign
or transfer, the Options and this Option Agreement will terminate and be of no
further force or effect.
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ARTICLE 10
FURTHER ASSURANCES
Xxxxx 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 Xxxxx 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.
ARTICLE 11
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 Xxxxx at:
Xxxxx Corporation Limited
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
(b) in the case of a Notice to the Executive, at:
[Executive Name]
[Street Address]
[City, State Zip Code]
[Fax 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.
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ARTICLE 12
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the Province of
Ontario and the laws of Canada applicable therein and shall be treated, in all
respects, as an Ontario contract.
IN WITNESS WHEREOF this Option Agreement has been executed as of the date first
written above.
XXXXX CORPORATION LIMITED
By:
-------------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: Senior Vice President, General
Counsel & Assistant Secretary
SIGNED, SEALED & DELIVERED
In the presence of:
------------------------------------ ----------------------------------
Witness [Executive Name]
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SCHEDULE "A"
XXXXX CORPORATION LIMITED
OPTION EXERCISE FORM
(ii) TO: Xxxxx Corporation Limited (the "Corporation")
1. Defined terms have the meaning set out in the Option Agreement executed
between the Corporation and ________________ (the "Executive") dated as of
April 18, 2002.
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 Cdn. $3.65 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 _____________, .
--------------------------------
[Executive Name]
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