Exhibit 4.2


 


DRAGONWAVE
INC.


 




 





Fourth Amended and Restated Key Employee Stock Option/Stock
Issuance Plan




(as adopted and effective on April 3, 2000 and amended and restated on

May 27, 2002, November 10, 2003, June 20, 2005 and March 23,
2007)




 





 

















 


DRAGONWAVE INC.


 


Fourth
Amended and Restated Key Employee Stock Option/Stock Issuance Plan


 


(as
adopted and effective on April 3, 2000 and amended and restated

on May 27, 2002 on November 10, 2003, June 20, 2005 and March 23,
2007)


 


ARTICLE ONE:

GENERAL PROVISIONS


 


1.1                                 Definitions.  In the Plan:


 


(a)                                  “Acquirer”
means the successor to all or substantially all of the assets or capital shares
of the Corporation, or any other successor of the business of the Corporation
as determined by the Board, in either case pursuant to a Corporate Event, and
includes the affiliated entities of any such successor;


 


(b)                                 “Award”
means a grant of Options pursuant to the Option Grant Program or the issuance
of Shares pursuant to the Stock Issuance Program;


 


(c)                                  “Black Out
Period” means a period during which a Participant is prohibited
by the Corporation from exercising Options pursuant to the Corporation’s
Insider Trading Policy, as in effect from time to time;


 


(d)                                 “Board”
means the board of directors of the Corporation;


 


(e)                                  “Code”
means the United States Internal Revenue Code of 1986, as amended, and
applicable regulations promulgated thereunder;


 


(f)                                    “Compensation
Committee” means the compensation committee of the Board;


 


(g)                                 “Consultant”
means:


 


(i)                                     a person who: (A.) is engaged
to provide services to the Corporation or a Related Entity, other than services
provided in relation to a distribution (as such term is defined in the
Securities Act); (B.) provides the services under a written contract with the
Corporation or a Related Entity; and (C.) in the reasonable opinion of the Plan
Administrator, spends or will spend a significant amount of time and attention
on the affairs and business of the Corporation or a Related Entity, and
includes, for an individual Consultant, a Consultant Company or Consultant
Partnership of such individual; and


 


(ii)                                  any person who is not a
resident of Canada who is designated by the Plan Administrator as a Consultant
having regard to applicable securities laws;


 


(h)                                 “Consultant
Company” means, for an individual consultant, a company of which
the individual consultant is an employee or shareholder;


 

















 


(i)                                     “Consultant
Partnership” means, for an individual consultant, a partnership
of which the individual consultant is an employee or partner;


 


(j)                                     “Corporate
Event” means: (i) a merger, amalgamation, consolidation,
reorganization or arrangement of the Corporation with or into another
corporation (other than a merger, amalgamation, consolidation, reorganization
or arrangement of the Corporation with one or more of its Related Entities); (ii) a
tender offer for all or substantially all of the outstanding Shares; (iii) the
sale of all or substantially all of the assets of the Corporation; or (iv) any
other acquisition of the business of the Corporation as determined by the
Board;


 


(k)                                  “Corporation”
means DragonWave Inc., a corporation incorporated under the Canada Business Corporations Act, and
includes any successor corporation thereto;


 


(l)                                     “Date of
Grant” means the date specified by the Board as the date of
grant of an Option, such date not to be earlier than the date such grant is
approved by the Board;


 


(m)                               “Date of
Issue” means the date specified by the Board as the date of
issuance of an Award of shares pursuant to the Stock Issuance Program, such
date not to be earlier than the date such issuance is approved by the Board;


 


(n)                                 “Director”
means a member of the Board or a member of the board of directors of a Related
Entity;


 


(o)                                 “Employee”
means a person employed by the Corporation or a Related Entity, and, with
respect to the grant of any Incentive Stock Option, who is an employee for the
purposes of Section 422 of the Code;


 


(p)                                 “Executive
Officer” has the meaning ascribed to the term “executive officer”
in NI 45-106;


 


(q)                                 “Incentive
Stock Option” means an Option that is labelled or described as
an Incentive Stock Option and which qualifies as an Incentive Stock Option
within the meaning of Section 422(b) of the Code;


 


(r)                                    “Insider”
has the meaning set forth in the Securities Act, but excludes a director or
senior officer of a Related Entity unless such director or senior officer:  (a) in the ordinary course receives or
has access to material facts or material changes concerning the Corporation
before the material facts or material changes are generally disclosed; (b) is
a director or senior officer of a major subsidiary (as such term is defined
under applicable securities laws) of the Corporation; or (c) is an insider
of the Corporation (within the meaning of the Securities Act) in a capacity
other than as a director or senior officer of a Related Entity.


 


(s)                                  “Listing
Date” means the closing of the listing of the Corporation’s
Shares on the TSX and/or the admission of such Shares for trading on the
Alternative Investment Market of the London Stock Exchange plc.


 


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(t)                                    “NI 45-106”
means National Instrument 45-106 — Prospectus and Registration Exemptions,
promulgated under the Securities Act, as such instrument may be amended from
time to time, or any successor instrument thereto;


 


(u)                                 “Non-Statutory
Stock Option” means an Option granted to a Participant who is a
resident of the United States which is not intended to be or does not qualify
as an Incentive Stock Option;


 


(v)                                 “Officer”
means an Executive Officer of the Corporation or a Related Entity duly
appointed by the Board or the board of directors of a Related Entity, as
applicable;


 


(w)                               “Option”
means a contract complying with the provisions of the Plan between the
Corporation and a Participant pursuant to which the Participant has a right to
subscribe for unissued Shares, and includes an Incentive Stock Option and a
Non-Statutory Stock Option;


 


(x)                                   “Option
Agreement” has the meaning set forth in Section 2.4 below;


 


(y)                                 “Optioned
Shares” means Shares subject to issuance pursuant to an Option;


 


(z)                                   “Option
Grant Program” means the option grant program in effect under
the terms of the Plan as described and defined in Section 1.4 below;


 


(aa)                            “Outstanding
Issue” means the number of Shares outstanding on a non-diluted
basis immediately prior to the issuance in question; excluding, for the
purposes of Section 1.6(a)(i), Shares issued by the Corporation as or
under Share Compensation Arrangements (including the Plan) during the preceding
one (1) year period;


 


(bb)                          “Participant”
means a Consultant, Officer, Director or Employee, or former Consultant,
Officer, Director or Employee who continues to hold an Award;


 


(cc)                            “Permitted
Assign” has the meaning ascribed to the term “permitted assign”
in NI 45-106;


 


(dd)                          “Plan”
means this Fourth Amended and Restated Key Employee Stock Option/Stock Issuance
Plan, as the same may be amended from time to time;


 


(ee)                            “Plan
Administrator” means the Compensation Committee, or if a
Compensation Committee is not appointed, the Board, in either case acting in
the capacity as administrator of the Plan;


 


(ff)                                “Related
Entity” has the meaning ascribed to the term “related entity” in
NI 45-106;


 


(gg)                          “Repurchase
Right” has the meaning set forth in Section 3.1;


 


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(hh)                          “Restricted
Stock” means Shares issued pursuant to the Stock Issuance
Program that are subject to the Repurchase Right in favour of the Corporation,
as contemplated by Section 3.1 below;


 


(ii)                                  “Securities
Act”
means the Securities Act (Ontario), as the same
may be amended from time to time;


 


(jj)                                  “Service
Termination Date” means:


 


(i)                                     in the event of the death of a
Participant who is a natural person, the date of such death;


 


(ii)                                  in the event of a termination
with or without cause by the Corporation or a Related Entity (whether such
termination occurs with or without any or adequate reasonable notice, or with
or without any or adequate compensation in lieu of such reasonable notice), of
the employment of a Participant who is an Officer or Employee, the date that
actual notice of termination or dismissal is given by the Corporation to the
Participant (without reference to a “notice period” or “severance period” or
any other period after the date that actual notice of termination is given) as
determined by the Plan Administrator;


 


(iii)                               in the event of the voluntary
resignation of a Participant who is a an Officer, Employee or Director from his
or her employment or term of office, the date of such resignation;


 


(iv)                              in the event of the termination
by the Corporation or a Related Entity of the term of office of a Participant
who is a Director (other than a Director who is also an Officer), the date of
the Participant’s last day of service as a director;


 


(v)                                 in the event of the
termination of the consulting agreement or arrangement of a Participant who is
a Consultant, the last day of the Consultant’s service to the Corporation as a
Consultant (whether or not the termination of the Participant’s consulting
agreement or arrangement is effected in compliance with any termination
provisions contained in the Participant’s consulting agreement or arrangement)
as determined by the Plan Administrator; or


 


(vi)                              in the event of the
termination of the Participant’s service as a Consultant, Officer, Director or
Employee for any reason not listed above (including the retirement or
disability of the Participant), the date of such termination of service as
determined by the Plan Administrator;


 


(kk)                            “Share
Compensation Arrangement” means a plan or program established or
maintained by the Corporation providing for the acquisition of securities of
the Corporation by persons described in the definition of “Participant” as  compensation or as an incentive or benefit
for services provided by such persons, 


 


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and including all “security based compensation
arrangements” as such term is used in the TSX Company Manual;


 


(ll)                                  “Shareholder
Approval” has the meaning set forth in Section 4.3;


 


(mm)                      “Shares”
means the Common Shares without nominal or par value in the capital of the
Corporation, and, in the event of an adjustment contemplated by Section 1.9
hereof, such other shares or securities to which a Participant may be entitled
as a result of such adjustment;


 


(nn)                          “Stock Issuance
Program” means the stock issuance program in effect under the
terms of the Plan as defined and described in Section 1.4 below;


 


(oo)                          “Stock
Purchase Agreement” means an agreement evidencing the issuance
of Shares pursuant to the Stock Issuance Program, in the form designated by the
Plan Administrator from time to time;


 


(pp)                          “Ten
Percent Shareholder Participant” means a Participant to whom an
Incentive Stock Option is granted pursuant to the provisions of the Plan who
is, on the date of the grant, the owner of stock (as determined under Section 424(d) of
the Code) possessing more than 10% of the total combined voting power of all
classes of stock of the Corporation or its parent, if any, or its subsidiary
corporations (as defined in Code Section 424(e)); and


 


(qq)                          “TSX”
means the Toronto Stock Exchange.


 


1.2                                 Amendment and
Restatement.  The DragonWave
Inc. Third Amended and Restated Key Employee Stock Option/Stock Issuance Plan
is hereby amended and restated in the form hereof effective on the Listing
Date.


 


1.3                                 Purpose.  The purpose of
the Plan is to provide Consultants, Officers, Directors and Employees with a
proprietary interest in the Corporation in order to:


 


(a)                                  increase the interest in the
Corporation’s welfare of those individuals who share primary responsibility for
the management, growth and protection of the business of the Corporation;


 


(b)                                 furnish an incentive to such
individuals to continue providing their services to the Corporation and its
Subsidiaries; and


 


(c)                                  provide a means through which
the Corporation and its Subsidiaries may attract qualified persons to engage as
Consultants, Officers, Directors and Employees.


 


1.4                                 Shares
Subject to the Plan. 
The
Shares subject to Awards under the Plan shall be authorized but unissued
Shares.  The maximum aggregate number of
Shares issued and issuable pursuant to the terms of the Plan shall be equal to
fifteen (15%) of the number of issued and outstanding Shares at the time of
determination, provided that, Shares which: (i) by reason of the expiration,
cancellation or termination of an unexercised Option are no longer subject to
purchase pursuant to an Option granted under the Plan, or (ii) are 


 


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repurchased pursuant to the Corporation’s Repurchase
Right contemplated by Article 3, shall be returned to the pool of Shares
issuable hereunder and may be made subject to additional Awards granted or
issued pursuant to the Plan.


 


The Plan shall be divided into two (2) separate equity
programs:  (i) the option grant
program, under which eligible Participants may, at the discretion of the Plan
Administrator, be granted Options (the “Option Grant Program”);
and (ii) the Stock Issuance Program, under which eligible Participants
may, at the discretion of the Plan Administrator, be issued Shares directly,
either through the immediate purchase by the Participant of such Shares or as a
bonus for services rendered to the Corporation (or any Related Entity) (the “Stock Issuance Program”).  Effective on and as of the Listing Date, the
Corporation shall not make any new Awards of Shares pursuant to the Stock
Issuance Program (provided, that, for avoidance of doubt, such restriction
shall not affect the rights and obligations of the Corporation and the Plan
Administrator pursuant to the Plan with respect to Awards of Shares pursuant to
the Stock Issuance Program made prior to the Listing Date).


 


1.5                                 Administration.  The Plan shall
be administered by the Plan Administrator. 
No Director shall take any action with respect to Awards granted or
issued to such Director.  The Corporation
shall pay all costs associated with the administration of the Plan.  The Plan Administrator shall have full and
final authority in its discretion, but subject to the provisions of the Plan:


 


(a)                                  with respect to the Option
Grant Program:


 


(i)                                     to determine from time to time
the individuals to whom Options shall be granted;


 


(ii)                                  to determine the number of
Shares to be covered by each Option;


 


(iii)                               subject to Section 1.8(a) below,
to determine the time or times at which Options shall be granted and shall vest
and/or become exercisable;


 


(iv)                              to designate Options as
Incentive Stock Options or Non-Statutory Options, as applicable; and


 


(v)                                 to make all other
determinations with regard to the Option Grant Program and the grant of
Options, and the terms and conditions of such Options, permitted pursuant to
the Plan;


 


(b)                                 with respect to the Stock
Issuance Program:


 


(i)                                     to determine from time to time
the individuals to whom Shares shall be issued;


 


(ii)                                  to determine the number of
Shares to issue to any Participant;


 


(iii)                               to determine the time or times
at which Shares shall be issued;


 


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(iv)                              subject to Section 1.8(a) below,
to determine the number of such Shares that shall be issued as Restricted Stock
and when and in what circumstances the Corporation’s Repurchase Right over any
such shares of Restricted Stock shall lapse; and


 


(v)                                 to make all other
determinations with regard to the Stock Issuance Program and Awards granted
thereunder permitted pursuant to the Plan;


 


(c)                                  to interpret the Plan;


 


(d)                                 to make, amend and rescind rules and
regulations relating to the Plan;


 


(e)                                  to determine the terms and
provisions of the instruments by which Options shall be evidenced and Shares
shall be issued;  and


 


(f)                                    to make all other
determinations necessary or advisable for the administration of the Plan.


 


Notwithstanding the foregoing, no amendment to the Plan that materially
and adversely affects the rights and privileges pursuant to the terms of the
Plan of any Option granted or Shares issued under the Plan may be effected
without the consent, in writing, of the affected Participant (provided, that,
amendments to the Plan referred to in Article 4, Section 4.3(a), (c),
(d), (e), (g), (i), (j) and (k) shall be deemed to not materially or
adversely amend such rights and privileges).


 


The Plan Administrator may act upon recommendations received from
senior management of the Corporation.


 


Subject to obtaining the prior approval of the TSX if required by the
rules, regulations and policies of the TSX, nothing contained in the Plan, any
Option or any Stock Purchase Agreement shall be construed in any way so as to
prevent the Corporation or any Related Entity from taking any corporate action
that is deemed by the Corporation or the Related Entity to be appropriate or in
its best interest, even if such action would have an adverse effect on the
Plan.


 


No member of the Board, and no member of the compensation committee
appointed as Plan Administrator, shall be liable for any action or
determination relating to or under the Plan made in good faith.  All decisions made by the Plan Administrator
shall be made in the Plan Administrator’s sole discretion (but in accordance
with the terms and provisions of the Plan) and shall be final and binding on
all persons having or claiming any interest in the Plan or in any Award.


 


1.6                                 Restrictions.


 


(a)                                  No Award shall be made at any
time to any Insider if such Award, together with all of the Corporation’s
previously established or proposed Share Compensation Arrangements, including
the Plan, could result, at any time, in:


 


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(i)                                     the number of Shares issued to
Insiders pursuant to the Plan, together with all of such other Share
Compensation Arrangements, within any one (1) year period exceeding ten
percent (10%) of the Outstanding Issue; or


 


(ii)                                  the number of Shares issuable
to Insiders at any time pursuant to the Plan and all such other Share
Compensation Arrangements exceeding ten percent (10%) of the Outstanding Issue.


 


(b)                                 No fractional Shares may be
purchased or issued under the Plan.


 


1.7                                 Pricing
of Awards.  The purchase price of Shares
subject to an Award granted pursuant to the Plan shall be determined by the
Plan Administrator on the Date of Grant, as follows:


 


(a)                                  the purchase price of Shares
subject to an Award made under the Plan shall, subject to any other requirement
of the TSX and any other stock exchange or market on which the Shares are then
listed or admitted, be equal to the volume weighted average trading price for a
Share (calculated by dividing the total value of Shares traded by the total
volume of Shares traded for the relevant period) as quoted on such exchange or
market (or, if such Shares are listed on more than one exchange or market, the
exchange or market where the majority of the trading volume and value of the
Shares occurs) for the five (5) market trading days immediately prior to
the Date of Grant (in the case of an Award of Options) or the Date of Issue (in
the case of an Award of Restricted Stock); and


 


(b)                                 notwithstanding sub-section (a) above,
the purchase price of Shares subject to an Incentive Stock Option granted under
the Plan to a Ten Percent Shareholder Participant shall be not less than 110%
of the fair market value of the Shares on the Date of Grant as determined in
good faith by the Board at the Date of Grant.


 


1.8                                 Vesting/Lapse
of Repurchase Rights.


 


(a)                                  Unless otherwise approved by
the Board, and subject to any earlier termination of the Options as provided in
the Plan, all Options granted under the Plan shall vest, as to twenty-five
percent (25%) of the Optioned Shares, on the one-year anniversary of the Date
of Grant, and thereafter, 1/36th of the remaining Optioned Shares shall vest at
the end of each month, such that all Optioned Shares subject to issuance
pursuant to the Option shall be vested on that date which is four (4) years
after the Date of Grant.


 


(b)                                 Unless otherwise approved by
the Board, and subject to any earlier termination of the service of the
Participant as contemplated in Article 3, Section 1 below or the
Participant’s Stock Purchase Agreement, the Corporation’s Repurchase Right with
respect to Restricted Stock awarded under the Plan shall lapse, as to
twenty-five percent (25%) of the Restricted Stock, on the one-year anniversary
of the Date of Issue, and thereafter, as to 1/36th of the remaining Restricted
Stock at the end of each month, such that the Repurchase Right applicable to
all such Restricted Stock shall have lapsed in its entirety on that date which
is four (4) years after the Date of Issue.


 


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1.9                                 Adjustments.  Subject to Section 1.4, the Plan
Administrator may adjust the number and kind of Shares available for Awards,
and the number and kind of Shares subject to outstanding Options and the
exercise price of Options granted hereunder, to effect a change in
capitalization of the Corporation, such as a stock dividend, stock split,
reverse stock split, share combination, exchange of shares, merger,
consolidation, reorganization, liquidation, or the like, of or by the
Corporation.


 


1.10                           Changes
in Service. 
Notwithstanding any other term or provision of this Plan, unless the
Plan Administrator, in its discretion, otherwise determines, at any time and
from time to time, Awards are not affected by a change of employment or office
or consulting arrangement within or among the Corporation or a Related Entity
for so long as the Participant continues to be a Consultant, Officer, Director
or Employee of the Corporation or a Related Entity.


 


1.11                           Lock-up.  If requested in writing by the Corporation or
any underwriter of the securities of the Corporation, each Participant shall
agree not to sell or otherwise transfer or dispose of the Shares held by the
Participant as a result of the exercise of any Options or an issuance pursuant
to the Stock Issuance Program for a period not to exceed 180 days following the
effective date of a registration statement or receipt date of a (final)
prospectus of the Corporation and, at the Corporation or such underwriter’s
request, shall sign a lock-up agreement to such effect.


 


ARTICLE TWO:

STOCK OPTION PROGRAM


 


2.1                                 Stock
Option Program Restrictions.  No Option
shall extend for a period of more than ten (10) years from the Date of
Grant, provided, that, no Incentive Stock Option granted to a Ten Percent
Shareholder Participant shall extend for a period of more than five (5) years
from its Date of Grant.  No Incentive
Stock Option may be granted after ten (10) years from the earlier of the
date that the Plan is adopted and the date the first amendment and restatement
of the Plan was approved by the shareholders of the Corporation in accordance
with Section 422 of the Code. 
Unless otherwise approved by the Board, the term and expiry date of any
Option granted after the date of this Plan shall be five (5) years from
Date of Grant of such Option.


 


2.2                                 Participants.


 


(a)                                  Subject to clause (b) below,
the Plan Administrator may, from time to time, select particular Consultants,
Officers, Directors and Employees to whom Awards are to be granted or issued,
and upon the grant or issuance of such Awards, the selected individuals shall
become Participants under the Plan.


 


(b)                                 For each financial year of the
Corporation, the maximum number of common shares issuable pursuant to Options
granted to a Director by virtue of his or her service as a Director in that
financial year, is that number of common shares equal to 0.05% of the
Outstanding Issue as at the last day of such financial year


 


2.3                                 Grant of Options.  Options may be
granted by the Corporation pursuant to the recommendations of the Plan Administrator.
All grants of Options shall be approved by 


 


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the Board. Options granted hereunder shall be
evidenced by a written stock option agreement (the “Option
Agreement”) (which may be in the form of the confirmation letter
annexed hereto as Schedule A) executed by the Corporation and the Participant,
containing such terms and provisions as are recommended and approved from time
to time by the Plan Administrator, but subject to and not more favourable than
the terms of the Plan.  The Plan
Administrator may from time to time require additional terms which the Plan
Administrator deems necessary or advisable. 
The Corporation shall execute Option Agreements upon instruction from
the Plan Administrator.


 


2.4                                 Incentive Stock Options. 
Incentive Stock Options may only be granted to Employees who are
resident in the United States.  To the
extent that Options designated as Incentive Stock Options become exercisable by
a Participant for the first time during any calendar year for Shares having a
fair market value greater than US$100,000, the portion of such Options which
exceeds such amount shall not be treated as Incentive Stock Options but instead
shall be treated as Non-Statutory Stock Options.  For the purposes of this Section 2.5,
Options designated as Incentive Stock Options shall be taken into account in
the order in which they were granted, and the fair market value of Shares shall
be determined as of the Date of Grant of the Option with respect to such Shares.  If the Code is amended to provide for a
different limitation than that set forth in this Section 2.5, such
different limitation shall be deemed incorporated herein effective as of the
date and with respect to such Options as may be required or permitted by such
amendment to the Code.  If an Option is
treated as a Non-Statutory Option in part by reason of the limitation set forth
in this Section 2.5, the Participant may designate which portion of such
Option the Participant is exercising at any given time.  In the absence of such designation, the
Participant shall be deemed to have exercised the Incentive Stock Option
portion of the Option first.  The
Corporation shall have no liability to a Participant, or any other party, if
any Option (or any part thereof) intended to be an Incentive Stock Option is
not an Incentive Stock Option.


 


2.5                                 Restrictions.  The Plan Administrator may at the time of
granting an Option or at any subsequent time impose such restrictions, if any,
on issuance, voluntary disposition and release from escrow of any Options
including, without limitation, permitting exercise of Options only in
instalments over a period of years.


 


2.6                                 Exercise and Payment. 
Subject to the provisions of the Plan, an Option may be exercised from
time to time by delivery to the Corporation at its registered office of a
written notice of exercise addressed to the Secretary of the Corporation
specifying the number of Shares with respect to which the Option is being
exercised.  Full payment for Shares
purchased upon the exercise of an Option shall be delivered to the Corporation
either by: (i) cash or by certified cheque or money order, or (ii) subject
to applicable securities laws, the rules of the TSX or any stock exchange
or market on which the Shares are then listed or admitted to trading, and any
other requirements of the Plan Administrator, by the actual delivery or deemed
delivery or assignment to the Corporation of Shares having a fair market value
(as determined by the Plan Administrator) equal to the purchase price, or (iii) by
such other consideration and method of payment approved by the Plan
Administrator, or (iv) by any combination of the foregoing. No Shares
shall be issued until full payment has been made and a Participant shall have
none of the rights of a shareholder of the Corporation in respect of 


 


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the Shares subject to an Option until such Shares have
been taken up, paid for in full as provided above and issued to the Participant
and the Participant has executed such other documents as may be required under
the Plan and the Option Agreement governing the granted Option.


 


2.7                                 Transferability of Options.  An
Incentive Stock Option shall not be assignable or transferable by any
Participant and, subject to Section 2.9(a) hereof, may be exercised
during the life of the Participant only by the Participant.  An Option other than an Incentive Stock
Option is assignable or transferable solely to a Permitted Assign and only with
the prior written consent of the Plan Administrator.  The obligations of each Participant pursuant
to the Plan and any Option shall be binding on his or her heirs, executors,
administrators, successors and permitted assigns.


 


2.8                                 Rights in
Event of Termination.


 


(a)                                  Death.  If a Participant who is a natural person dies
while a Consultant, Officer, Director or Employee, then any Options held by the
Participant that are exerciseable on the date of death shall continue to be
exerciseable by the executor or the administrator of the Participant’s estate
until the earlier of:  (A) the date
which is one hundred and twenty (120) days after the date of the Participant’s
death; and (B) the date on which the particular Option otherwise
expires.  Any Options held by the
Participant that were not exerciseable at the date of the Participant’s death
shall immediately expire and be cancelled on such date.


 


(b)                                 Without
Cause Termination/Voluntary Resignation — Officers and Employees.  Where, in the case of a Participant who is an
Officer (including a Director who is also an Officer) or an Employee, the
Participant’s employment or term of office terminates by reason of:  (i) termination by the Corporation or a
Related Entity without cause (whether such termination occurs with or without
any or adequate reasonable notice, or with or without any or adequate
compensation in lieu of such reasonable notice), or (ii) voluntary
resignation by the Participant, then any Options held by the Participant that
are exercisable at the Service Termination Date (as defined in Section 1.1(ii) or
(iii), respectively) shall continue to be exerciseable by the Participant until
the earlier of:  (A) the date which
is thirty (30) days after such Service Termination Date; and (B) the date
on which the particular Option otherwise expires.  Any Options held by the Participant that are
not exercisable at such Service Termination Date shall immediately expire and
be cancelled on such Service Termination Date.


 


(c)                                  Termination
Other than by Reason of Breach of Fiduciary Duty/Termination by Voluntary
Resignation — Directors.  Where, in the
case of a Participant that is a Director (other than a Director who is also an
Officer), the Director’s term of office terminates by reason of:  (i) termination by the Corporation or a
Related Entity other than for breach of fiduciary duty; or (ii) voluntary
resignation by the Participant, then any Options held by the Participant that
are exercisable at the Service Termination Date (as defined in Section 1.1(ii),
(iv) or (iii), respectively) continue to be exercisable by the Participant
until the earlier of:  (A) the date
which is thirty (30) days after such Service Termination Date; and (B) the
date on 


 


11

















 


which the particular Option otherwise expires.  Any Options held by the Participant that are
not exercisable at such Service Termination Date shall immediately expire and
be cancelled on such Service Termination Date.


 


(d)                                 Termination
by Reason of Breach of Fiduciary Duty/For Cause Termination.  Where a Participant’s service to the
Corporation or a Related Entity as an Officer, Director or Employee is
terminated by the Corporation or a Related Entity for cause or for breach of
fiduciary duty, then any Options held by the Participant, whether or not exercisable
on the date of such termination, immediately expire and are cancelled on such
date at a time determined by the Plan Administrator, in its sole discretion.


 


(e)                                  Termination
of Consulting Arrangements.  Where, in the
case of a Participant who is a Consultant:


 


(i)                                     the Participant’s consulting
agreement or arrangement terminates by reason of:  (A) termination by the Corporation or a
Related Entity for any reason whatsoever other than for breach of the
consulting agreement or arrangement (whether or not such termination is
effected in compliance with any termination provisions contained in the
Participant’s consulting agreement or arrangement), or (B) voluntary
termination by the Participant, then any Options held by the Participant that
are exercisable at the Service Termination Date (as defined in Section 1.1(ii)(v)),
continue to be exercisable by the Participant until the earlier of:  (A) the date that is thirty (30) days
from such Service Termination Date; and (B) the expiry date of the
particular Option.  Any Options held by
the Participant that are not exercisable at such Service Termination Date shall
immediately expire and be cancelled on such date; and


 


(ii)                                  the Participant’s consulting
agreement or arrangement is terminated by the Corporation or a Related Entity
for breach of the consulting agreement or arrangement then any Options held by
the Participant, whether or not such Options are exercisable at such Service
Termination Date, immediately expire and are cancelled on such Service
Termination Date at a time determined by the Plan Administrator, in its
discretion.


 


(f)                                    Other
Termination of Service.  If the
Participant’s service as a Consultant, Officer, Director or Employee terminates
for any reason not referred to above (including retirement or disability), then
any Options held by the Participant that are exercisable at the Service
Termination Date (as defined in Section 1.1(ii)(vi)) continue to be
exerciseable by the Participant until the earlier of:  (A) the date which is thirty (30) days
after such Service Termination Date; and (B) the date on which the
particular Option otherwise expires.  Any
Options held by the Participant that are not exercisable at such Service
Termination Date shall immediately expire and be cancelled on such Service Termination
Date.


 


2.9                                 Black Out
Periods.  Notwithstanding the foregoing,
except in the case of Incentive Stock Options, if an Option expires, terminates
or is cancelled (other than an expiry, 


 


12

















 


termination or cancellation pursuant to Section 2.8(d) or
2.8(e) above) within or immediately after a Black Out Period, the
Participant may elect for the term of such Option to be extended to the date
which is then (10) business days after the last day of the Black Out
Period; provided, that, the expiration date as extended by this sub-section (g) will
not in any event be beyond the later of: (i) December 31 of the
calendar year in which the Option was otherwise due to expire; and (ii) the
15th day of the third month following the month in which the Option was
otherwise due to expire.


 


2.10                           Liquidation
or Dissolution.  In the event
of the proposed dissolution, liquidation or winding-up of the Corporation, to
the extent that an Option has not been previously exercised, it will terminate
immediately prior to the consummation of such proposed action.


 


ARTICLE THREE:

STOCK ISSUANCE PROGRAM


 


3.1                                 Stock
Issuance Terms. 
Shares may be issued under the Stock Issuance Program through direct and
immediate issuances from treasury without any intervening Option grants.  Each such share issuance shall be evidenced
by a Stock Purchase Agreement which complies with the terms specified below and
otherwise contains such terms and provisions as may be prescribed by the Plan
Administrator from time to time. Shares issued by the Corporation pursuant to
the Stock Issuance Program shall be subject to a repurchase right in favour of
the Corporation, exercisable at the original price paid by the Participant for
the Restricted Stock (the “Repurchase Right”), that will lapse in one or
more instalments as provided in Section 1.8(b) above over the
Participant’s period of service to the Corporation as a Consultant, Officer,
Director or Employee.  Subject to Section 3.3,
if a Participant ceases to be a Consultant, Officer, Director or Employee for
any reason, the Corporation shall have the right at any time within ninety (90)
days after the Service Termination Date to purchase from the Participant all or
any portion of the Restricted Stock in respect of which, on such Service
Termination Date, the Corporation’s Repurchase Right has not lapsed in
accordance with Section 1.8(b) hereof, unless waived in accordance
with Section 3 either before or after the Participant so ceases to be a
Consultant, Officer, Director or Employee.


 


3.2                                 Security
for Repurchase Right.  On the
purchase by a Participant of Restricted Stock as contemplated above, the Plan
Administrator may require the Participant, as a condition to the issuance of
the Restricted Stock, to execute such escrow instructions, assignments, powers
of attorney or other documents as the Plan Administrator may deem necessary or
desirable to act as security for the Participant’s faithful performance of his
obligations under the Corporation’s Repurchase Right.


 


3.3                                 Waiver of
Repurchase Right.  The Board may
in its discretion waive the repurchase of one or more shares of Restricted
Stock which would otherwise occur upon the termination of the Participant’s
service to the Corporation.  Such waiver
shall result in the immediate lapse of the Corporation’s Repurchase Right with
respect to those Shares to which the waiver applies.


 


13





















 


ARTICLE FOUR:

MISCELLANEOUS


 


4.1                                 Merger, Amalgamations, Sale of Assets, Winding-Up, etc.  In the event of a Corporate Event, the Board
in its sole discretion (but subject to obtaining the prior approval of the TSX
if required by the rules, regulations and policies of the TSX) may, without any
action or consent of the Participants, provide for: (a) the continuation
or assumption of outstanding Options by or to the Acquirer; (b) the
substitution of Options and/or Restricted Stock for options and/or shares of
restricted stock and/or other securities of the Acquirer; (c) the
substitution of Options and/or Restricted Stock with a cash incentive program
of the Acquirer; (d) the acceleration of the vesting of, or early lapse of
repurchase rights applicable to, Awards, and, in the case of outstanding
Options the right to exercise such Options, to a date prior to or on the date
of the Corporate Event, and the expiration of outstanding Options to the extent
not timely exercised by the date of the Corporate Event or such other date as
may be designated by the Board; (e) the cancellation of all or any portion
of the outstanding Options and/or Restricted Stock by a cash payment and/or
other consideration receivable by the holders of Shares of the Corporation as a
result of the Corporate Event:  (i) in
the case of Options, equal to the excess, if any, of the fair market value (as
determined by the Board), on the date of the Corporate Event, over the exercise
price of the Shares subject to the outstanding Options or portion thereof being
cancelled (provided, that, for greater certainty, if the purchase price of the
Options exceeds such fair market value, the Board shall have the ability to
cancel such Options without any payment of consideration to the Participant),
or (ii) in the case of Restricted Stock, equal to the fair market value
(as determined by the Board), on the date of the Corporate Event, of the
Restricted Stock; or (f) such other actions or combinations of the
foregoing actions as it deems fair and reasonable in the circumstances.  Upon the occurrence of a Corporate Event, to
the extent that an Acquirer has by appropriate action assumed the Corporation’s
obligations under the Plan, the vesting, Repurchase Right and other rights of
the Corporation under each outstanding Award and any related agreement shall
inure to the benefit of the Acquirer and shall apply to the cash, securities or
other property into which the Shares were converted or exchanged for pursuant
to such Corporate Event in the same manner and to the same extent as they
applied to the Shares subject to the Award.


 


4.2                                 Withholding
Taxes.  The Corporation’s obligation to deliver
Restricted Stock or Shares issuable on the exercise of an Option shall be
subject to the Participant’s satisfaction of all applicable income, employment
and non-resident withholding tax obligations. 
Without limiting the generality of the foregoing, the Corporation shall
have the right to deduct from payments of any kind otherwise due to the
Participant any taxes of any kind required by law to be withheld with respect
to any Shares.


 


4.3                                 Amendment or Discontinuation.  Subject to Section 1.5 above, the
Plan may be amended, altered or discontinued by the Board at any time, subject
to obtaining: (i) any necessary approval of any applicable regulatory
authority including, without limitation, the TSX if the Shares are listed on
the TSX or any other stock exchange or market on which the Shares are then
listed or admitted to trading; and (ii) if required by the rules of
the TSX if the Shares are listed on the TSX, the approval of the shareholders
of the Company in accordance with the rules, regulations and policies of the
TSX at a duly 


 


14

















 


constituted meeting of shareholders (“Shareholder Approval”).  Notwithstanding the foregoing, the following
amendments to the Plan may be made by the Board without Shareholder Approval:


 


(a)                                  amendments of a technical,
clerical or “housekeeping” nature, or to clarify any provision of the Plan,
including without limiting the generality of the foregoing, any amendment for
the purpose of curing any ambiguity, error or omission in the Plan or to
correct or supplement any provision of the Plan that is inconsistent with any
other provision of the Plan;


 


(b)                                 suspension or termination of
the Plan;


 


(c)                                  amendments to respond to
changes in legislation, regulations, instruments (including NI 45-106), stock
exchange rules (including the rules, regulations and policies of the TSX
or AIM) or accounting or auditing requirements;


 


(d)                                 amendments respecting
administration of the Plan;


 


(e)                                  any amendment to the definition
of “Consultant”, “Officer”, “Director” or “Employee” or otherwise relating to
the eligibility of any service provider of the Corporation or a Related Entity
to receive an Award;


 


(f)                                    changes to the vesting
provisions, or conditions for the lapse of any Repurchase Right, for any
outstanding Option or Restricted Stock, except with respect to Awards held by
any Insider;


 


(g)                                 amendments to reduce the
exercise price or purchase price of an Option, except with respect to an Option
granted to an Insider;


 


(h)                                 amendments to termination
provisions of the Plan or any outstanding Option, provided no such amendment
may result in an extension of any outstanding Option held by an Insider beyond
its original expiry date;


 


(i)                                     adjustments to reflect stock
dividends, stock splits, reverse stock splits, share combinations or other
alterations of the capital stock of the Corporation;


 


(j)                                     amendments to permit Awards
granted under the Plan to be transferable;


 


(k)                                  amendments necessary to
qualify any or all Incentive Stock Options for such favourable federal income
tax treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code; and


 


(l)                                     any other amendment, whether
fundamental or otherwise, not requiring shareholder approval under applicable
law (including, without limitation, the rules, regulations and policies of the
TSX).


 


Shareholder Approval will be required for the following types of
amendments:


 


15

















 


(i)                                     amendments to the number of
Shares issuable under the Plan, including an increase to a fixed maximum number
of Shares or a change from a fixed maximum number of Shares to a fixed maximum
percentage;


 


(ii)                                  amendments (a) reducing
the exercise price or purchase price of an Option held by an Insider, or (b) extending
the term of an Option that benefits an Insider; and


 


(iii)                               amendments required to be
approved by shareholders under applicable law (including, without limitation,
the rules, regulations and policies of the TSX).


 


In the event of any conflict between subsections (a) to (l) and
subsections (i) to (iii), above, the latter shall prevail to the extent of
any conflict.


 


4.4                                 Employment.  The Plan and any Award granted under the Plan
do not confer upon the Participant any right to be employed or engaged or to
continued employment or engagement by the Corporation or any Related Entity.


 


4.5                                 No Right to be Granted an Option.  Nothing in the Plan shall be construed so as
to give any Consultant, Director, Officer or Employee any right to receive an
Award.


 


4.6                                 No Obligation to Exercise Option.  The granting of an Option pursuant to the
Plan shall not impose any obligation upon the Participant to exercise such
Option.


 


4.7                                 Regulatory
Requirements.  While the Plan is intended to satisfy SEC Rule 701
and NI 45-106, Awards may be made under the Plan in reliance upon other
securities law exemptions, as applicable, and to the extent another exemption
is relied upon, the terms of the Plan which are required only because of SEC Rule 701
or NI 45-106, as applicable, need not apply. 
The Corporation’s obligation to issue and deliver Shares pursuant to any
Award is subject to the availability, on terms and conditions reasonably
satisfactory to the Corporation, of an exemption from prospectus and
registration requirements in respect of the issuance, sale and delivery of such
Shares under applicable securities and “blue sky” laws.


 


4.8                                 Gender and Number.  Words importing gender shall include the
masculine, feminine and neuter genders. 
Words importing the singular include the plural and vice versa.


 


4.9                                 Governing Law.  The Plan shall be construed in accordance
with the laws of the Province of Ontario and the laws of Canada applicable
therein, with regard to the conflict of laws principles of such jurisdiction.


 


DATED this 23rd day of March,
2007.


 


	
   

  	
  DRAGONWAVE
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  “Peter Allen”

  
	
   

  	
   

  	
  President

  



 


16

















 


Schedule A


 


[LETTERHEAD
OF DRAGONWAVE INC.]


 


PERSONAL AND CONFIDENTIAL


 


[Address
of Participant]


 


 


Dear [Name
of Participant];


 


I am pleased to advise that you have been
granted an option (the “Option”) to purchase Common Shares of DragonWave Inc. (“Dragonwave”)
under the Fourth Amended and Restated Key Employee Stock Option/Stock Issuance
Plan (the “Plan”).  This letter sets
forth the terms and conditions of the Option, which are as follows:


 


	
  Number of
  Common Shares subject to the Option:

  	
   

  	
  [ ]
  (the “Optioned Shares”)

  
	
   

  	
   

  	
   

  
	
  Date of
  grant/vesting start date:

  	
   

  	
  [ ]
  (the “Vesting Start Date”)

  
	
   

  	
   

  	
   

  
	
  Exercise
  price (per share):

  	
   

  	
  [ ]

  
	
   

  	
   

  	
   

  
	
  Vesting:

  	
   

  	
  Twenty-five
  percent (25%) of the Optioned Shares shall vest on the one-year anniversary
  of the Vesting Start Date, and thereafter, 1/36th of
  the remaining Optioned Shares shall vest at the end each month, such that all
  Optioned Shares shall be vested on that date which is four (4) years
  after the Vesting Start Date.

  
	
   

  	
   

  	
   

  
	
  Exercise:

  	
   

  	
  The Option
  shall only be exercisable with respect to vested Optioned Shares.

  
	
   

  	
   

  	
   

  
	
  Expiry Date:

  	
   

  	
  [ ]

  
	
   

  	
   

  	
   

  
	
  Type of
  Option 

  	
   

  	
            
  Incentive Stock Option 

  
	
  (U.S.
  Employees only):

  	
   

  	
            
  Non-Qualified Stock Option

  



 


The Option shall be subject in all respects
to the terms and conditions of the Plan, a copy of which is attached, as the
same may be amended from time to time. 
We encourage you to review the Plan in detail.


 


As a condition to the grant of your Option,
you are required to indicate your agreement to comply with the terms and
conditions of the Plan by signing the acknowledgement at the foot of 


 


17

















 


this letter.  Please return one original signed copy of
this letter to DragonWave, and retain a second copy, together with the Plan,
for your files.


 


The Option is intended to provide you with
an opportunity to share in the potential future growth of DragonWave.  It recognizes your value to DragonWave and
the significant impact that your ideas, enthusiasm and hard work will have in
making DragonWave a success.


 


It is through working together as a team
that we can make DragonWave a leader in our field.


 


Yours very truly,


 


	
   

  	
  DRAGONWAVE INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


I understand and agree that my Option is
subject in all respects to the terms and conditions of the Plan, as the same
may be amended from time to time.  I have
read, understood and agree to comply with the Plan.


 


 


	
   

  	
   

  	
   

  
	
  [Name of Participant]

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Witness

  	
   

  	
   

  



 


18
















 


AMENDMENT NO. 2009-1 TO THE
CORPORATION’S FOURTH AMENDED AND RESTATED 

KEY EMPLOYEE STOCK OPTION/STOCK ISSUANCE PLAN


 


1.                                       Capitalized terms
not otherwise defined in this Amendment No. 2009-1 shall have the
respective meanings set forth in the Corporation’s Fourth Amended and Restated
Key Employee Stock Option/Stock Issuance Plan.


 


2.                                       This Amendment No. 2009-1 sets forth the terms
and conditions of an Option exchange program for Officers (including, for
greater certainty, Officers who are also Directors) (the “Management Option
Exchange Program”).  The Management
Option Exchange Program will not be open to Directors who are not also
Officers.


 


3.                                       The participation of any Officer in the Management
Option Exchange Program is voluntary. 
Any Options that are eligible for the Management Option Exchange Program
that are not voluntarily exchanged by a holder pursuant
to such program shall continue in effect unchanged (i.e., a holder shall be
permitted, in the holder’s discretion, to exchange only a portion of such holder’s
outstanding Options under the Management Option Exchange Program without
affecting other Options held by such holder).


 


4.                                       Pursuant
to the Management Option Exchange Program, the Corporation shall be permitted
to exchange Options held by Officers that are outstanding as of May 14,
2009 (any Options so exchanged being hereafter referred to as the “Exchanged
Options”) for new Options (the “New Options”). 
The exchange will occur on a 1:1 basis, such that the New Options will
be exercisable for the same number of Shares as the Exchanged Options.


 


5.                                       The
exercise price of the New Options (the “Exchange Price”) will be equal to the
greater of the five-day volume weighted average trading price for a Common
Share as at the close of trading on:


 


(i)                                     May 14,
2009 (being $3.38 per share), and


 


(ii)                                the
date of the Meeting, or if on such date there is any material information
(within the meaning of the rules and policies of the TSX) that has not
been publicly disclosed, the date that is five trading days after disclosure of
such material information.


 


6.                                       The
New Options shall expire six (6) years after the original date of grant of
the corresponding Exchanged Options.


 


7.                                       The
New Options shall vest over a period of five (5) years from the original
date of grant of the corresponding Exchanged Options.


 


8.                                       The
option exchange under the Management Option Exchange Program shall be effective
after the close of trading on the date of determination of the Exchange
Price.  Any Exchanged Options shall be
cancelled.


 


9.                                       The
Management Option Exchange Program shall be administered by the Plan
Administrator.  Notwithstanding any other
term or provisions of this Amendment No. 2009-1, the Plan Administrator
retains the authority to not proceed with the Management Option Exchange
Program, even if shareholder approval for such program is obtained.


 


19

















 


AMENDMENT NO. 2009-2 TO THE
CORPORATION’S FOURTH AMENDED AND RESTATED 

KEY EMPLOYEE STOCK OPTION/STOCK ISSUANCE PLAN


 


1.                                       Capitalized terms
not otherwise defined in this Amendment No. 2009-2 shall have the
respective meanings set forth in the Corporation’s Fourth Amended and Restated
Key Employee Stock Option/Stock Issuance Plan.


 


2.                                       The Corporation shall be permitted to extend the expiry dates for
period of up to one (1) year for the following grants of Options to
Insiders of the Corporation:


 


	
  Name of Option Holder

  	
   

  	
  Date of Grant

  	
   

  	
  Number of Shares

  Subject to Option

  	
   

  	
  Exercise Price

  (per share)

  	
   

  	
  Expiry Date (1)

  
	
  Peter Allen

  	
   

  	
  June 22, 2006

  	
   

  	
  235,000

  	
   

  	
  $

  	
  2.46

  	
   

  	
  June 22, 2010

  
	
  Russell Frederick

  	
   

  	
  June 22, 2006

  	
   

  	
  70,000

  	
   

  	
  $

  	
  2.46

  	
   

  	
  June 22, 2010

  
	
  Erik Boch

  	
   

  	
  June 22, 2006

  	
   

  	
  100,000

  	
   

  	
  $

  	
  2.46

  	
   

  	
  June 22, 2010

  
	
  David Farrar

  	
   

  	
  June 22, 2006

  	
   

  	
  80,000

  	
   

  	
  $

  	
  2.46

  	
   

  	
  June 22, 2010

  
	
  Brian McCormack

  	
   

  	
  June 22, 2006

  	
   

  	
  60,000

  	
   

  	
  $

  	
  2.46

  	
   

  	
  June 22, 2010

  
	
  Alan Solheim

  	
   

  	
  June 22, 2006

  	
   

  	
  80,000

  	
   

  	
  $

  	
  2.46

  	
   

  	
  June 22, 2010

  



 










(1) The original
expiry date is listed in this column.  As
a result of this Amendment No. 2009-2, the Corporation is authorized to
extend the expiry dates in this column by a period of up to one (1) year.


 


3.                                       Notwithstanding
any other term or provision of this Amendment No. 2009-2, the Plan
Administrator retains the authority to not proceed with the extension of the
expiry dates of Options contemplated herein, even if shareholder approval for
such extension is obtained.”


 


20





















 


AMENDMENT NO. 2009-1E TO THE
CORPORATION’S FOURTH AMENDED AND RESTATED 

KEY EMPLOYEE STOCK OPTION/STOCK ISSUANCE PLAN


 


1.                                       Capitalized terms
not otherwise defined in this Amendment No. 2009-1E shall have the
respective meanings set forth in the Corporation’s Fourth Amended and Restated
Key Employee Stock Option/Stock Issuance Plan.


 


2.                                       This Amendment No. 2009-1E sets forth the terms
and conditions of an Option exchange program for non-executive
employees of the Corporation (the “Non-Executive
Option Exchange Program”).


 


3.                                       The participation of any non-executive employee of
the Corporation in the Non-Executive Option Exchange Program is voluntary.  Any
non-executive employee of the Corporation who opts not to participate in the
Non-Executive Option Exchange Program will retain any Options that are
otherwise eligible for the Non-Executive Option Exchange Program.


 


4.                                       Pursuant to the Non-Executive Option Exchange
Program, the Corporation shall be permitted to exchange Options held by non-executive employees of
the Corporation that are outstanding as of May 14, 2009 (the “Exchanged
Options”) for new Options (the “New Options”).  The exchange will occur on a 1:1
basis, such that the New Options will be exercisable for the same number of
Shares as the Exchanged Options.


 


5.                                       The
exercise price of the New Options shall be equal to the five-day volume
weighted average trading price for a Share (calculated by dividing the total
value of Shares traded by the total volume of Shares traded for the relevant
period) as quoted on the TSX at the close of trading on May 14, 2009.


 


6.                                       The
New Options shall expire six (6) years after the original date of grant of
the corresponding Exchanged Options.


 


7.                                       The
New Options shall vest over a period of five (5) years from the original
date of grant of corresponding Exchanged Options.


 


8.                                       The
option exchange under the Non-Executive
Option Exchange Program shall be effective after the close of trading on May 14.
2009.  Any Exchanged Options forfeited as
a result of the exchange shall be cancelled.


 


9.                                       The Non-Executive Option Exchange Program
shall be administered by the Plan Administrator.  Notwithstanding any other term or provisions
of this Amendment 2009-1E, the Plan Administrator retains the authority to not
proceed with the Non-Executive
Option Exchange Program.


 


21





















 


AMENDMENT NO. 2009-2E TO THE
CORPORATION’S FOURTH AMENDED AND RESTATED 

KEY EMPLOYEE STOCK OPTION/STOCK ISSUANCE PLAN


 


1.                                       Capitalized terms
not otherwise defined in this Amendment No. 2009-2E shall have the
respective meanings set forth in the Corporation’s Fourth Amended and Restated
Key Employee Stock Option/Stock Issuance Plan.


 


2.                                       The
Corporation shall be permitted to extend the expiry dates for period of up to
one (1) year for an aggregate of 205,600 Options granted to non-executive
employees of the Corporation which were granted between June 22, 2006 and January 15,
2007, have an option exercise price of $2.46, and expire four (4) years
from the date of grant.


 


3.                                       Notwithstanding
any other term or provisions of this Amendment 2009-2E, the Plan Administrator
retains the authority to not
proceed with the extension of the expiry dates of Options contemplated herein.


 


22