Document:

EXHIBIT
10.60

 

SIGMA SYSTEMS GROUP (CANADA) INC.

AMENDED
AND RESTATED 2002 CALIFORNIA STOCK INCENTIVE PLAN

1.             Purpose

The purpose of this
Amended and Restated 2002 California Stock Incentive Plan (the “Plan”) of SIGMA
SYSTEMS GROUP (CANADA) INC. (the “Company”), a corporation incorporated under
the Business Corporations Act (Ontario) (the “OBCA”), is to advance the
interests of the Company’s shareholders by enhancing the Company’s ability to
attract, retain and motivate persons who are residents of the State of
California and who make (or are expected to make) important contributions to
the Company by providing such persons with equity ownership opportunities and
performance-based incentives and thereby better aligning the interests of such
persons with those of the Company’s shareholders.  Except where the context otherwise requires, the term “Company”
shall include any of the Company’s present or future subsidiaries, as such term
is defined under the OBCA, and any other business venture (including, without limitation,
joint venture or limited liability company) in which the Company has a
controlling interest, as determined by the Board of Directors of the Company
(the “Board”).  When applied in
connection with Participants (as defined below) who are citizens, residents or
other persons subject to the federal income tax laws of the United States of
America (“U.S. Participants”), the term “Company” shall include any of the
Company’s present or future parent or subsidiary corporations as defined in
Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder (the “Code”).

2.             Eligibility

(a)           Subject to subsection (b) below, and
to the extent permitted under applicable law, all of the Company’s employees,
officers, directors and consultants who are residents of the State of
California are eligible to be granted options, restricted stock awards, or
other stock-based awards (each, an “Award”) under the Plan.  Each person who has been granted an Award
under the Plan shall be deemed a “Participant”.

(b)           Notwithstanding subsection (a) above,
the number of Participants under this Plan that are not “accredited investors”
(as such term is defined in Rule 501 of Regulation D promulgated under the
Securities Act of 1933, as amended) shall in no event exceed 35.

3.             Administration and Delegation

(a)           Administration by Board of
Directors.  The Plan will be
administered by the Board.  The Board
shall have authority to grant Awards and to adopt, amend and repeal such
administrative rules, guidelines and practices relating to the Plan as it shall
deem advisable.  The Board may correct
any defect, supply any omission or reconcile any inconsistency in the Plan or
any Award in the manner and to the extent it shall deem expedient to 

 

carry the Plan into effect and it shall be the sole
and final judge of such expediency.  All
decisions by the Board shall be made in the Board’s sole discretion and shall
be final and binding on all persons having or claiming any interest in the Plan
or in any Award.  No director or person
acting pursuant to the authority delegated by the Board shall be liable for any
action or determination relating to or under the Plan made in good faith.

(b)           Appointment of Committees.  To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a “Committee”).  All references in the Plan to the “Board”
shall mean the Board or a Committee of the Board to the extent that the Board’s
powers or authority under the Plan have been delegated to such Committee.

4.             Stock Available for Awards.  Subject to adjustment under Section 9,
Awards may be made under the Plan for (i) up to 300,000 shares of the Company’s
Class B Preferred Shares (the “Class B Preferred Shares”) and (ii) up to
300,000 shares of the Company’s Non-Voting Common Shares (the “Non-Voting
Common Shares”; such Class B Preferred Shares and Non-Voting Common Shares
being referred to herein, collectively, as the “Shares”), and such number of
Class B Preferred Shares and Non-Voting Common Shares shall be reserved for
issuance under the Plan.  Awards under
the Plan may, but need not be, based on “units” consisting of a combination of
Class B Preferred Shares and Non-Voting Common Shares.  If any Award expires or is terminated,
surrendered or canceled without having been fully exercised or is forfeited in
whole or in part (including as the result of the Shares subject to such Award
being repurchased by the Company at the original issuance price pursuant to a
contractual repurchase right) or results in any Shares not being issued, the
unused Shares covered by such Award shall again be available for the grant of
Awards under the Plan, subject, however, in the case of Incentive Stock Options
(as hereinafter defined) granted to U.S. Participants, to any limitations under
the Code.

5.             California Residents.  At no time while there is any Option (as defined below)
outstanding and held by a Participant who was a resident of the State of
California on the date of grant of such Option, shall the total number of
Shares issuable upon exercise of all outstanding options and the total number
of Shares provided for under any stock bonus or similar plan of the Company
exceed the applicable percentage as calculated in accordance with the
conditions and exclusions of Section 260.140.45 of the California Code of
Regulations, based on the shares of the Company which are outstanding at the
time the calculation is made.

6.             Stock Options

(a)           General.  The Board may grant options to purchase
Shares (each, an “Option”) and determine the number of Class B Preferred Shares
and/or Non-Voting Common Shares to be covered by each Option, the exercise
price of each Option and the conditions and limitations applicable to the
exercise of each Option, including conditions relating to applicable federal,
provincial, state or foreign securities laws, as it considers necessary or
advisable.  For U.S. tax purposes, an
Option granted to a U.S. Participant which is not intended to be an Incentive
Stock Option (as defined below) shall be designated a “Nonstatutory Stock
Option”.

 

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(b)           Incentive Stock Options for U.S.
Participants.  An Option granted to
a U.S. Participant that the Board intends to be an “incentive stock option” as
defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be
granted to employees of the Company and shall be subject to and shall be
construed consistently with the requirements of Section 422 of the Code.  The Company shall have no liability to a
Participant, or any other party, if an Option (or any part thereof) which is
intended to be an Incentive Stock Option is not an Incentive Stock Option.

(c)           Exercise Price.  The Board shall establish the exercise price
at the time each Option is granted and specify it in the applicable option
agreement.

(d)           Duration of Options.  Each Option shall be exercisable at such
times and subject to such terms and conditions as the Board may specify in the
applicable option agreement.

(e)           Exercise of Option.  Options may be exercised by delivery to the
Company of a written notice of exercise signed by the proper person or by any
other form of notice (including electronic notice) approved by the Board,
together with payment in full as specified in Section 6(f) for the number of
Class B Preferred Shares and/or Non-Voting Common Shares for which the Option
is exercised.

(f)            Payment Upon Exercise.  Shares purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:

(1)           in cash or by check, payable to the
order of the Company, it being permissible for the Company, at its discretion,
to lend such cash or the funds for such check to the Participant pursuant to a
promissory note in form and substance acceptable to the Company;

(2)           except as the Board may, in its sole
discretion, otherwise provide in an option agreement, by (i) delivery of an
irrevocable and unconditional undertaking by a creditworthy broker to deliver
promptly to the Company sufficient funds to pay the exercise price and any
required tax withholding or (ii) delivery by the Participant to the Company of
a copy of irrevocable and unconditional instructions to a creditworthy broker
to deliver promptly to the Company cash or a check sufficient to pay the
exercise price and any required tax withholding;

(3)           if and when the Class B Preferred
Shares or the Non-Voting Common Shares are registered under the Securities
Exchange Act of 1934 (the “Exchange Act”), by delivery of Class B Preferred
Shares or Non-Voting Common Shares, as the case may be, owned by the
Participant valued at their fair market value as determined by (or in a manner
approved by) the Board in good faith (“Fair Market Value”), provided (i) such method
of payment is then permitted under applicable law and (ii) such Class B
Preferred Shares or Non-Voting Common Shares, as the case may be, if acquired
directly from the Company, were owned by the Participant at least six months
prior to such delivery;

(4)           to the extent permitted by the Board,
in its sole discretion, by payment of such other lawful consideration as the
Board may determine; or

 

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(5)           by any combination of the above
permitted forms of payment.

(g)           Substitute Options.  In connection with a merger or consolidation
(or similar transaction) of an entity with the Company or the acquisition by
the Company of property or stock of an entity, the Board may grant Options in
substitution for any options or other stock or stock-based awards granted by
such entity or an affiliate thereof. 
Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 6 or in Section 2.

7.             Restricted Stock

(a)           Grants.  The Board may grant Awards entitling
recipients to acquire Class B Preferred Shares and/or Non-Voting Common Shares,
subject to the right of the Company to repurchase all or part of such shares at
their issue price or other stated or formula price from the recipient in the
event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, a “Restricted Stock Award”).

(b)           Terms and Conditions.  The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase and the issue price, if any.

(c)           Stock Certificates.  Any stock certificates issued in respect of
a Restricted Stock Award shall be registered in the name of the Participant
and, unless otherwise determined by the Board, deposited by the Participant,
together with a stock power of attorney endorsed in blank, with the Company (or
its designee).  At the expiration of the
applicable restriction periods, the Company (or such designee) shall deliver
the certificates no longer subject to such restrictions to the Participant or
if the Participant has died, to the beneficiary designated, in a manner
determined by the Board, by a Participant to receive amounts due or exercise
rights of the Participant in the event of the Participant’s death (the
“Designated Beneficiary”).  In the
absence of an effective designation by a Participant, Designated Beneficiary
shall mean the Participant’s estate.

8.             Other Stock-Based Awards

The Board shall have the
right to grant other Awards in accordance with applicable laws based upon Class
B Preferred Shares and/or Non-Voting Common Shares having such terms and
conditions as the Board may determine, including, without limitation, the grant
of Shares based upon certain conditions, the grant of securities convertible
into Class B Preferred Shares and/or Non-Voting Common Shares and the grant of
stock appreciation rights.

9.             Adjustments for Changes in Capitalization and Certain
Other Events

(a)           Changes in Capitalization.  In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares (including, without limitation, the automatic
conversion of the Class B Common Shares and the 

 

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Non-Voting Common Shares into shares of the Company’s
Voting Common Shares pursuant to the terms of the Company’s Articles of
Incorporation), spin-off or other similar change in capitalization or event, or
any distribution to holders of Class B Preferred Shares or Non-Voting Common
Shares, as the case may be, other than a normal cash dividend, (i) the number
and class of securities available under this Plan, (ii) the number and class of
securities and exercise price per Share subject to each outstanding Option,
(iii) the repurchase price per Share subject to each outstanding Restricted
Stock Award, and (iv) the terms of each other outstanding Award shall be
appropriately adjusted by the Company (or substituted Awards may be made, if
applicable) to the extent the Board shall determine, in good faith, that such
an adjustment (or substitution) is necessary and appropriate.  If this Section 9(a) applies and Section
9(c) also applies to any event, Section 9(c) shall be applicable to such event,
and this Section 9(a) shall not be applicable.

(b)           Liquidation or Dissolution.  In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date.  The Board
may specify the effect of a liquidation or dissolution on any Restricted Stock
Award or other Award granted under the Plan at the time of the grant of such
Award.

(c)           Reorganization Events

(1)           Definition.  A “Reorganization Event” shall mean:  (A) any amalgamation, merger, arrangement,
consolidation or similar transaction of the Company with or into another entity
as a result of which all of the shares of the Company are converted into or
exchanged for the right to receive cash, securities or other property; or (B)
any exchange of all of the shares of the Company for cash, securities or other
property pursuant to a share exchange transaction.

(2)           Effect on Options.  Upon the occurrence of a Reorganization
Event, or the execution by the Company of any agreement with respect to a
Reorganization Event, the Board shall provide that all outstanding Options
shall be assumed, or equivalent options shall be substituted, by the acquiring
or succeeding corporation (or an affiliate thereof).  For purposes hereof, an Option shall be considered to be assumed
if, following consummation of the Reorganization Event, the Option confers the
right to purchase, for each Share subject to the Option immediately prior to
the consummation of the Reorganization Event, the consideration (whether cash,
securities or other property) received as a result of the Reorganization Event
by holders of Class B Preferred Shares or Non-Voting Common Shares, as the case
may be, for each Share held immediately prior to the consummation of the
Reorganization Event (and if holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
Class B Preferred Shares or Non-Voting Common Shares, as the case may be; provided,
however, that if the consideration received as a result of the
Reorganization Event is not solely common stock of the acquiring or succeeding
corporation (or an affiliate thereof), the Company may, with the consent of the
acquiring or succeeding corporation, provide for the consideration to be
received upon the exercise of Options to consist solely of common stock of the
acquiring or succeeding corporation (or an affiliate thereof) equivalent in
fair market value to the per Share consideration received by 

 

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holders of Class B Preferred Shares or Non-Voting
Common Shares, as the case may be, as a result of the Reorganization Event.

Notwithstanding the
foregoing, if the acquiring or succeeding corporation (or an affiliate thereof)
does not agree to assume, or substitute for, such Options, then the Board
shall, upon written notice to the Participants, provide that all then
unexercised Options will become exercisable in full as of a specified time
prior to the Reorganization Event and will terminate immediately prior to the
consummation of such Reorganization Event, except to the extent exercised by
the Participants before the consummation of such Reorganization Event; provided,
however, that in the event of a Reorganization Event under the terms of
which holders of the Class B Preferred Shares or the Non-Voting Common Shares,
as the case may be, will receive upon consummation thereof a cash payment for
each Class B Preferred Share or Non-Voting Common Share, as the case may be,
surrendered pursuant to such Reorganization Event (the “Acquisition Price”), then
the Board may instead provide that all outstanding Options shall terminate upon
consummation of such Reorganization Event and that each Participant shall
receive, in exchange therefor, a cash payment equal to the amount (if any) by
which (A) the Acquisition Price multiplied by the number of Shares subject to
such outstanding Options (whether or not then exercisable), exceeds (B) the
aggregate exercise price of such Options. 
To the extent all or any portion of an Option becomes exercisable solely
as a result of the first sentence of this paragraph, upon exercise of such
Option, the Participant shall receive Shares subject to a right of repurchase
by the Company or its successor at the Option exercise price.  Such repurchase right (1) shall lapse at the
same rate as the Option would have become exercisable under its terms and (2)
shall not apply to any Shares subject to the Option that were exercisable under
its terms without regard to the first sentence of this paragraph.

If any Option provides
that it may be exercised for Shares which remain subject to a repurchase right
in favor of the Company, upon the occurrence of a Reorganization Event, any
Shares of restricted stock received upon exercise of such Option shall be
treated in accordance with Section 9(c)(3) as if they were a Restricted Stock
Award.

(3)           Effect on Restricted Stock Awards.  Upon the occurrence of a Reorganization
Event, the repurchase and other rights of the Company under each outstanding
Restricted Stock Award shall inure to the benefit of the Company’s successor
and shall apply to the cash, securities or other property which the Shares
subject to such Restricted Stock Award were converted into or exchanged for
pursuant to such Reorganization Event in the same manner and to the same extent
as they applied to such Shares.

(4)           Consequences of a Reorganization
Event on Other Awards.  The Board
shall specify the effect of a Reorganization Event on any other Award granted
under the Plan at the time of the grant of such Award.

10.           General Provisions Applicable to
Awards

(a)           Transferability of Awards.  Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred,
pledged or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the 

 

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Participant, shall be exercisable only by the
Participant.  References to a Participant,
to the extent relevant in the context, shall include references to authorized
transferees.

(b)           Documentation.  Each Award shall be evidenced in such form
(written, electronic or otherwise) as the Board shall determine in its sole and
absolute discretion.  Each Award may
contain terms and conditions in addition to those set forth in the Plan.

(c)           Board Discretion.  Except as otherwise provided by the Plan,
each Award may be made alone or in addition or in relation to any other
Award.  The terms of each Award need not
be identical, and the Board need not treat Participants uniformly.  The granting of an Award to a Participant at
any time shall neither entitle such Participant to receive, nor preclude such
Participant from receiving, any subsequent Awards.

(d)           Termination of Status.  The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence,
termination or other change in the employment or other status of a Participant
and the extent to which, and the period during which, the Participant, the
Participant’s legal representative, conservator, guardian or Designated
Beneficiary may exercise rights under the Award.

(e)           Withholding.  Each Participant shall pay to the Company,
or make provision satisfactory to the Board for payment of, any taxes required
by law to be withheld in connection with Awards to such Participant no later
than the date of the event creating the tax liability.  Except as the Board may otherwise provide in
an Award, when the class of securities to which an Award relates is registered
under the Exchange Act, Participants may satisfy such tax obligations in whole
or in part by delivery of shares of such class, including shares retained from
the Award creating the tax obligation, valued at their Fair Market Value; provided,
however, that the total tax withholding where shares are being used to
satisfy such tax obligations cannot exceed the Company’s minimum statutory
withholding obligations (based on minimum statutory withholding rates for federal
and state tax purposes, including payroll taxes, that are applicable to such
supplemental taxable income).  The
Company may, to the extent permitted by law, deduct any such tax obligations
from any payment of any kind otherwise due to a Participant.  Other than compliance with its withholding
obligations under applicable federal, provincial, state or foreign laws, the
Company does not assume any responsibility for the income or other tax
consequences arising from any Awards to any Participants.

(f)            Amendment of Award.  The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and, for U.S. Participants, converting an Incentive Stock Option
to a Nonstatutory Stock Option, provided that the Participant’s consent
to such action shall be required unless the Board determines that the action,
taking into account any related action, would not materially and adversely
affect the Participant.

(g)           Conditions on Delivery of Shares.  The Company will not be obligated to deliver
any Shares pursuant to the Plan or to remove restrictions from Shares
previously delivered under the Plan until (i) all conditions of the Award have
been met or removed to the satisfaction of the Company, (ii) in the
opinion of the Company’s counsel, all 

 

7

 

other legal matters in connection with the issuance
and delivery of such Shares have been satisfied, including any applicable
securities laws and any applicable stock exchange or stock market rules and
regulations, and (iii) the Participant has executed and delivered to the
Company such representations or agreements as the Company may consider appropriate
to satisfy the requirements of any applicable laws, rules or regulations.

(h)           Acceleration.  The Board may at any time provide that any
Award shall become immediately exercisable in full or in part, free of some or
all restrictions or conditions, or otherwise realizable in full or in part, as
the case may be.

11.           Miscellaneous

(a)           No Right To Employment or Other
Status.  No person shall have any
claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any
other relationship with the Company. 
The Company expressly reserves the right at any time to dismiss or
otherwise terminate its relationship with a Participant free from any liability
or claim under the Plan, except as expressly provided in the applicable Award.

(b)           No Rights as Shareholder.  Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
shareholder with respect to any Shares to be distributed with respect to an
Award until becoming the record holder of such Shares.  Notwithstanding the foregoing, in the event
the Company effects a split of the Class B Preferred Shares and/or the
Non-Voting Common Shares by means of a stock dividend and the exercise price of
and the number of Class B Preferred Shares or Non-Voting Common Shares, as the
case may be, subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such dividend),
then an optionee who exercises an Option between the record date and the
distribution date for such stock dividend shall be entitled to receive, on the
distribution date, the stock dividend with respect to the Shares acquired upon
such Option exercise, notwithstanding the fact that such Shares were not
outstanding as of the close of business on the record date for such stock
dividend.

(c)           Effective Date and Term of Plan.  The Plan shall become effective on the date
on which it is adopted by the Board.  No
Awards shall be granted under the Plan after the completion of ten years from
the earlier of (i) the date on which the Plan was adopted by the Board or (ii)
the date the Plan was approved by the Company’s shareholders, but Awards
previously granted may extend beyond that date.

(d)           Amendment of Plan.  The Board may amend, suspend or terminate
the Plan or any portion thereof at any time in its sole and absolute
discretion.

(e)           Authorization of Sub-Plans.  The Board may from time to time establish
one or more sub-plans under the Plan for purposes of satisfying applicable blue
sky, securities or tax laws of various jurisdictions.  The Board shall establish such sub-plans by adopting supplements
to this Plan containing (i) such limitations on the Board’s discretion under
the Plan as the Board deems necessary or desirable or (ii) such additional
terms and conditions 

 

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not otherwise inconsistent with the Plan as the Board
shall deem necessary or desirable.  All
supplements adopted by the Board shall be deemed to be part of the Plan, but
each supplement shall apply only to Participants within the affected
jurisdiction and the Company shall not be required to provide copies of any
supplement to Participants in any jurisdiction which is not the subject of such
supplement.

(f)            Compliance with Applicable Laws.  If any provision of the Plan or any Award
contravenes any law, rules or regulations of any governmental authority,
regulatory authority, stock exchange or similar entity, then such provision
shall be deemed to be amended to the extent required to bring such provision
into compliance with such law, rule or regulation.

(g)           Amendment and Restatement.  This Amended and Restated 2002 Stock
Incentive Plan amends and restates and supersedes in all respects the 2002
Stock Incentive Plan previously adopted by the Board.

(h)           Governing Law.  The provisions of the Plan and all Awards
made hereunder shall be governed by and interpreted in accordance with the laws
of the Province of Ontario and the federal laws of Canada applicable therein.

 

 

9EXHIBIT
10.61

 

 

SIGMA SYSTEMS GROUP (CANADA) INC.

 

Nonstatutory Stock Option
Agreement

 

1.             Grant of Option.

On October 6, 2001 (the
“Grant Date”),  Sigma Systems Group
(Canada) Inc. (“Sigma Canada”) granted to Stephen Nicolle (the “Participant”) an
option (“Base Option”) to purchase 4,500,000 shares of Sigma Canada Class B
Preferred Shares (each, a “Class B Preferred Share”) pursuant to the
Nonstatutory Stock Option Agreement (Base) dated October 6, 2001, and in
October, 2001, the Participant purchased from Sigma Canada a total of 4,500,000
shares of Sigma Canada Non-Voting Common Shares (each, a “Common Share”; with
such Class B Preferred Shares and Common Shares being referred to herein,
collectively, as the “Sigma Canada Shares”) pursuant to the Restricted Stock
Agreement (Base) dated October 6, 2001 (“RSA”). As of August 7, 2002, the
Participant was vested in 1,218,750  of the Common Shares and 1,218,750  of
the Class B Preferred Shares subject to the Base Option (“Vested Sigma Canada
Shares”) and unvested in 3,281,250 of the Common Shares and 3,281,250 of the
Class B Preferred Shares subject to the Base Option (the “Unvested Sigma Canada
Shares”).

Sigma Canada and 1430416
Ontario Inc. (“Holdco”) amalgamated (the “Amalgamation”) to form the
amalgamated company, Sigma Systems Group (Canada) Inc. (the “Company”),
effective as of August 9, 2002.  In
connection with the Amalgamation, Holdco and the Participant executed an
agreement regarding the “Offer and Agreement to Purchase Non-Voting Common
Shares granted under the Restricted Stock Agreement (Base) among Stephen
Nicolle and Sigma Systems Group (Canada) Inc.” (“Holdco Offer”) pursuant to
which Holdco purchased all of the 4,500,000 Common Shares and paid for such
shares, in part, with the granting of an option (“Holdco Option”) to purchase
the 3,281,250 unvested Common Shares. 
The Holdco Offer also stated that (a) the Holdco Option would be subject
to the same terms as applied to the Common Shares issued under the RSA mutatis
mutandis; (b) the Holdco Option and the Base Option to purchase
3,281,250 of the unvested Class B Preferred Shares (“Unvested Base Option”)
would be assumed by the Company in connection with the Amalgamation; (c) the
Holdco Option and the Unvested Base Option would be terminated and exchanged
for an option (the “Unit Option”) to purchase 3,281,250 units (each, a “Unit”),
with each Unit consisting of one Company Class B Share and one Company Class C
Share, and the agreements evidencing the Unvested Base Option shall govern the
Unit Option mutatis
mutandis except that (i) the exercise price per Unit will be U.S.
$0.30; (ii) the Participant will not receive any vesting acceleration with
respect to the Unit Option for any reason or as a result of any event,
including but not limited to the Amalgamation and the Share Purchase (as
defined below) or the Participant’s termination of employment from Sigma
Canada, the Company or Liberate Technologies at any time for any reason and
(iii) the Participant cannot use a promissory note to pay the exercise price of
the Unit Option.

Pursuant to the Share
Purchase Agreement dated July 24, 2002, among Liberate Technologies, 2014120
Ontario Inc., a wholly-owned subsidiary of Liberate (“Purchase Sub”), 

 

the Company, certain
holders of the Company’s capital stock (the “Holders”) and Arjun Jasuja, as the
representative of the Holders (the “Share Purchase Agreement”), Purchase Sub
acquired all of the outstanding shares of capital stock of the Company (the
“Share Purchase”).

This agreement (the
“Agreement”) evidences the Unit Option (hereinafter, the “option”) granted by
the Company on August 9, 2002 at an exercise price per Unit of U.S. $0.30 in
exchange for the Holdco Option and Unvested Base Option.

Unless earlier terminated, the option granted
hereunder shall expire at 11:59 p.m. (Toronto time) on October 6, 2011  (the
“Final Exercise Date”).

It is intended that the option evidenced by this
Agreement shall not be an incentive stock option as defined in Section 422 of
the U.S. Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder (the “Code”). 
Except as otherwise indicated by the context, (i) the term
“Participant”, as used in this Agreement, shall be deemed to include any person
who acquires the right to exercise the option granted hereby validly under its
terms and (ii) the term “Company” shall include any of the Company’s present or
future parent or subsidiary corporations as defined in Sections 424(e) or (f)
of the Code.

2.             Vesting Schedule.

The option granted hereunder will become vested as to
93,750 of the 3,281,250 Units upon the completion of each successive,
continuousone-month  period of service with the Company, with
the first of such 93,750 Units becoming vested on August 11, 2002, so that all
of the unvested Units shall be vested by June 11, 2005.  In computing the number of months during
which Participant shall have been employed with the Company, (i) each month of
employment shall be deemed to commence on the 11th day of such month
and (ii) a full month of employment shall be counted if employment continued
for a period of more than fourteen (14) days in such month.

The right of exercise shall be cumulative so that to
the extent the option is not exercised in any period to the maximum extent
permissible it shall continue to be exercisable, in whole or in part, with
respect to all Units for which it is vested until the earlier of the Final
Exercise Date or the termination of the option granted hereunder pursuant to
Section 3 hereof.

Notwithstanding the vesting schedule set forth in this
Agreement, the Participant may elect to exercise any or all of the unvested
portion of the option granted hereunder; provided, however, that
(i) the Units received upon the exercise of such unvested portion shall be
subject to a right of repurchase by the Company at the option exercise price
and (ii) such repurchase right shall lapse at the same rate as the portion of
the option so exercised would have become vested under the terms hereof.  If requested to do so by the Company, as a
condition to the exercise by the Participant of an unvested portion of the
option granted hereunder, the Participant shall enter into a Restricted Stock
Agreement with respect to the Units to be received upon such exercise.  Such Restricted Stock Agreement shall be on
terms substantially similar to the RSA. 
WITHOUT LIMITING THE GENERALITY OF SECTION 7 HEREOF, THE PARTICIPANT
ASSUMES ALL RESPONSIBILITY FOR HIS TAX LIABILITY THAT MAY ARISE AS A RESULT OF
ANY EXERCISE OF AN UNVESTED PORTION OF THE OPTION GRANTED 

 

2

 

HEREUNDER, AND THE PARTICIPANT ACKNOWLEDGES THAT IT IS
HIS SOLE RESPONSIBILITY TO TIMELY MAKE ANY DESIRED FILINGS WITH THE INTERNAL
REVENUE SERVICE, INCLUDING, WITHOUT LIMITATION, A FILING UNDER SECTION 83(B) OF
THE INTERNAL REVENUE CODE.

3.             Exercise of Option.

(a)           Form
of Exercise.  Each election to
exercise the option granted hereunder shall be in writing in the form attached
hereto as Exhibit A, signed by the Participant, and received by the Company at
its principal office, accompanied by this Agreement, and payment in full in the
manner set forth in paragraph (b) below. 
The Participant may purchase less than the number of Units covered
hereby, provided that no partial exercise of the option granted hereunder may
be for any fractional Units or for fewer than ten whole Units.

(b)           Payment
Upon Exercise.  Units purchased upon
the exercise of the option granted hereunder shall be paid for as follows:

(1)           in
cash or by check, payable to the order of the Company;

(2)           if
and when the Units are registered under the Securities Exchange Act of 1934
(the “Exchange Act”), by delivery of Units owned by the Participant valued at
their fair market value as determined by (or in a manner approved by) the
Company in good faith (“Fair Market Value”), provided (i) such method of
payment is then permitted under applicable law and (ii) such securities, if
acquired directly from the Company, were owned by the Participant at least six
months prior to such delivery; or

(3)           by
any combination of the above permitted forms of payment.

(c)           Continuous
Relationship with the Company Required. 
Except as otherwise provided in this Section 3, the option granted
hereunder may not be exercised unless the Participant, at the time he exercises
the option, is, and has been at all times since the Grant Date, an employee,
officer or director of, or consultant or advisor to, the Company or any parent
or subsidiary of the Company as defined in Section 424(e) or (f) of the Code
(an “Eligible Participant”).

(d)           Termination
of Relationship with the Company. 
If the Participant ceases to be an Eligible Participant for any reason,
then the right to exercise the option granted hereunder shall terminate  one
year after such cessation (but in no event after the Final Exercise Date); provided,
however, that the option shall be exercisable only for that portion of
the option that had become vested on the date of such cessation.

4.             Adjustments for Changes in Capitalization and Certain Other Events.

(a)           Changes
in Capitalization.  In the event of
any stock split, reverse stock split, stock dividend, recapitalization,
combination of shares, reclassification of shares, spin-off or other similar
change in capitalization or event, or any distribution to holders of Units, as
the case may be, other than a normal cash dividend, the number and class of
securities and exercise price of the option granted hereunder shall be
appropriately adjusted by the Company to the extent the 

 

3

 

Company shall determine, in good faith, that such an
adjustment is necessary and appropriate. 
If this Section 4(a) applies and Section 4(c) also applies to any event,
Section 4(c) shall be applicable to such event, and this Section 4(a) shall not
be applicable.

(b)           Liquidation
or Dissolution.  In the event of a
proposed liquidation or dissolution of the Company, the Company shall upon
written notice to the Participant provide that the option granted hereunder, to
the extent not then exercised, will terminate effective upon such liquidation
or dissolution, except to the extent exercised before such effective date.

(c)           Reorganization
and Change in Control Events.  Upon
the occurrence of a Reorganization Event (regardless of whether such event also
constitutes a Change in Control Event), or the execution by the Company of any
agreement with respect to a Reorganization Event (regardless of whether such
event will result in a Change in Control Event), the Company shall provide that
the option granted hereunder shall be assumed, or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof) and shall continue to become vested in accordance with the original
vesting schedule set forth herein.  For
purposes hereof, the option granted hereunder shall be considered to be assumed
if, following consummation of the Reorganization Event, the option confers the
right to purchase, for each Unit subject to the option immediately prior to the
consummation of the Reorganization Event, the consideration (whether cash,
securities or other property) received as a result of the Reorganization Event
by holders of Units, as the case may be, for each Unit held immediately prior
to the consummation of the Reorganization Event (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of such outstanding securities).

Notwithstanding the foregoing, if the acquiring or
succeeding corporation (or an affiliate thereof) does not agree to assume, or
substitute for, the option granted hereunder, then the Company shall, upon
written notice to the Participant, provide that the option granted hereunder
will terminate immediately prior to the consummation of such Reorganization
Event, except to the extent exercised by the Participant to purchase vested
Units before the consummation of such Reorganization Event; provided, however,
that in the event of a Reorganization Event under the terms of which holders of
Units will receive upon consummation thereof a cash payment for each Unit
surrendered pursuant to such Reorganization Event (the “Acquisition Price”),
then the Company may instead provide that the then unexercised portion of the
option granted hereunder shall terminate upon consummation of such
Reorganization Event and that Participant shall receive, in exchange therefor,
a cash payment equal to the amount (if any) by which (A) the Acquisition Price
multiplied by the number of vested Units subject to such unexercised portion of
the option, exceeds (B) the aggregate exercise price of such vested Units.

For purposes of this Agreement “Reorganization Event”
shall mean:

(i)            any amalgamation, arrangement,
merger, consolidation or similar transaction of the Company with or into
another entity as a result of which all of the Units of the Company are
converted into or exchanged for the right to receive cash, securities or other
property; or

 

4

 

(ii)           any exchange of all of the Units for
cash, securities or other property pursuant to a share exchange transaction.

For purposes of this
Agreement “Change in Control Event” shall mean: (i) a merger,
reorganization, or sale of all or substantially all of the assets of the
Company in which the shareholders of the Company immediately prior to such
transaction do not possess more than 50% of the voting power of the surviving
entity (or its parent) immediately after such 
transaction in the same proportion to one another after the transaction
as before it; or (ii) any transaction or series of related transactions by
which voting securities representing the right to elect a majority of the
members of the Company’s Board of Directors are transferred to a single person
or to a group of persons acting in concert with respect to electing directors
of the Company.

5.             Right of First Refusal.

(a)           If
the Participant proposes to sell, assign, transfer, pledge, hypothecate or
otherwise dispose of, by operation of law or otherwise (collectively,
“transfer”) any securities acquired upon exercise of this option, then the
Participant shall first give written notice of the proposed transfer (the
“Transfer Notice”) to the Company.  The
Transfer Notice shall name the proposed transferee and state the number of such
securities that the Participant proposes to transfer (the “Offered Shares”),
the price per Unit and all other material terms and conditions of the transfer.

(b)           For
30 days following its receipt of such Transfer Notice, the Company shall have
the option to purchase all (but not less than all) of the Offered Shares at the
price and upon the terms set forth in the Transfer Notice.  In the event the Company elects to purchase
all of the Offered Shares, it shall give written notice of such election to the
Participant within such 30-day period. 
Within 10 days after his receipt of such notice, the Participant shall
tender to the Company at its principal offices the certificate or certificates
representing the Offered Shares, duly endorsed in blank by the Participant or
with duly endorsed stock powers attached thereto, all in a form suitable for
transfer of the Offered Shares to the Company. 
Promptly following receipt of such certificate or certificates, the
Company shall deliver or mail to the Participant a check in payment of the purchase
price for the Offered Shares; provided, however, that if the
terms of payment set forth in the Transfer Notice were other than cash against
delivery, the Company may pay for the Offered Shares on the same terms and
conditions as were set forth in the Transfer Notice; and provided, further,
however, that any reasonable delay in making such payment shall not
invalidate the Company’s exercise of its option to purchase the Offered Shares.

(c)           If
the Company does not elect to acquire all of the Offered Shares, the
Participant may, within the 30-day period following the expiration of the
option granted to the Company under subsection (b) above, transfer the Offered
Shares to the proposed transferee, provided, however, that such
transfer shall not be on terms and conditions more favorable to the transferee
than those contained in the Transfer Notice. 
Notwithstanding any of the above, all Offered Shares transferred
pursuant to this Section 5 shall remain subject to the right of first refusal
set forth in this Section 5 and such transferee shall, as a condition to such
transfer, deliver to the 

 

5

 

Company
a written instrument confirming that such transferee shall be bound by all of
the terms and conditions of this Section 5.

(d)           After
the time at which the Offered Shares are required to be delivered to the
Company for transfer to the Company pursuant to subsection (b) above, the
Company shall not pay any dividend to the Participant on account of such
Offered Shares or permit the Participant to exercise any of the privileges or
rights of a shareholder with respect to such Offered Shares, but shall, in so
far as permitted by law, treat the Company as the owner of such Offered Shares.

(e)           The
following transactions shall be exempt from the provisions of this Section 5:

(1)           any
transfer of securities to or for the benefit of any parent, spouse, child or
grandchild of the Participant, or to a trust for their benefit;

(2)           any
transfer pursuant to an effective registration statement filed by the Company
under the Securities Act of 1933, as amended (the “Securities Act”) or pursuant
to a prospectus filed in accordance with the securities laws of any Province of
Canada; and

(3)           the
sale of all or substantially all of the shares of capital stock of the Company
(including pursuant to an amalgamation, arrangement, merger, consolidation or
similar transaction);

provided, however, that in the case of a
transfer pursuant to clause (1) above, such securities shall remain subject to the
right of first refusal set forth in this Section 5 and such transferee shall,
as a condition to such transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of the terms and
conditions of this Section 5.

(f)            The
Company may assign its rights to purchase Offered Shares in any particular
transaction under this Section 5 to one or more persons or entities.

(g)           The
provisions of this Section 5 shall terminate upon the earlier of the following
events:

(1)           the
closing of the sale of Units in an underwritten public offering pursuant to an
effective registration statement filed by the Company under the Securities Act
or pursuant to a prospectus filed in accordance with the securities laws of any
Province of Canada; and

(2)           the
sale of all or substantially all of the capital stock, assets or business of
the Company, by merger, consolidation, sale of assets or otherwise (other than
an amalgamation, arrangement, merger, consolidation or similar transaction in
which all or substantially all of the individuals and entities who were
beneficial owners of the Company’s common shares immediately prior to such
transaction beneficially own, directly or indirectly, more than 75% of the
outstanding securities entitled to vote generally in the election of directors
of the resulting, surviving or acquiring corporation in such transaction).

(h)           The
Company shall not be required (a) to transfer on its books any of the
securities which shall have been sold or transferred in violation of any of the
provisions set forth 

 

6

 

in this
Section 5, or (b) to treat as owner of such securities or to pay dividends to
any transferee to whom any such securities shall have been so sold or transferred.

6.             Agreement in Connection with Public
Offering.

The Participant agrees, in connection with the initial
underwritten public offering of the Company’s securities pursuant to a
registration statement under the Securities Act or pursuant to a prospectus filed
in accordance with the securities laws of any Province of Canada, (i) not to
sell, make short sale of, loan, grant any options for the purchase of, or
otherwise dispose of any Units held by the Participant (other than those
securities included in such offering) without the prior written consent of the
Company or the underwriters managing such initial underwritten public offering
of the Company’s securities for a period of 180 days from the effective date of
such offering, and (ii) to execute any agreement reflecting clause (i) above as
may be requested by the Company or the managing underwriters at the time of
such offering.  Subject to the
foregoing, if such initial public offering is conducted in accordance with the
Securities Act, then promptly upon completion of such offering, the Company
agrees to file in accordance with the Securities Act a Registration Statement
on Form S-8 (or any applicable successor form or form for a foreign issuer)
registering the equity securities then issuable upon any unexercised portion of
the option granted hereunder.  If such
initial public offering is conducted in Canada, the Company agrees to take such
reasonable action under applicable Canadian securities laws to provide comparable
liquidity to the Participant of the equity securities issuable upon any then
unexercised portion of the option granted hereunder.

7.             Withholding.

(a)           No
Units will be issued pursuant to the exercise of this option unless and until
the Participant pays to the Company, or makes provision satisfactory to the
Company for payment of, any federal, state, local or foreign withholding taxes
required by law to be withheld in respect of this option.

(b)           The
Participant has reviewed with the Participant’s own tax advisors the federal,
state, local and foreign tax consequences arising from this option grant and
the transactions contemplated hereby (including the consequences of the
exercise of any unvested portion of this option).  The Participant is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents.  The Participant understands that the
Participant (and not the Company) shall be responsible for the Participant’s
own tax liability that may arise as a result of this option grant or the
transactions contemplated by this Agreement.

(c)           Notwithstanding
any provision of this or any other agreement between the Company and the
Participant, the Company shall have the right to withhold any federal, state,
local or foreign taxes required by law to be withheld with respect to this
option or with respect to the Units acquired upon exercise of this option.  In the event that, for any reason, the
Company does not withhold, or the Participant does not pay, such taxes, then
the Participant shall be obligated to pay such taxes to the Company on demand
by the Company.

8.             Nontransferability of Option.

 

7

 

 

This option may not be sold, assigned, transferred,
pledged or otherwise encumbered by the Participant, either voluntarily or by
operation of law, except by will or the laws of descent and distribution, and,
during the lifetime of the Participant, this option shall be exercisable only
by the Participant.

9.             No Right to Employment or Other Status.

The grant of this option shall not be construed as
giving the Participant the right to continued employment or any other
relationship with the Company.

10.           No Rights as Shareholder.

The Participant shall have no rights as a shareholder
with respect to any Units to be distributed under this Agreement until becoming
the record holder of such Units.

11.           Governing Law.

The provisions of this Agreement shall be governed by
and interpreted in accordance with the laws of the Commonwealth of
Massachusetts, without regard to any applicable conflicts of law.

[THE REMAINDER OF THIS
PAGE IS INTENTIONALLY LEFT BLANK]

 

8

 

IN WITNESS
WHEREOF, the Company has caused this option to be executed under its corporate
seal by its duly authorized officer. 
This option shall take effect as a sealed instrument.

 

	
  Dated: 
  August 9, 2002

  	
  SIGMA SYSTEMS GROUP (CANADA) INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

 

 

 

PARTICIPANT’S ACCEPTANCE

The undersigned hereby accepts the foregoing option
and agrees to the terms and conditions thereof.

 

 

	
   

  	
   

  
	
   

  	
  STEPHEN NICOLLE

  

 

 

 

9

 

 

 

EXHIBIT A

 

NOTICE OF STOCK
OPTION EXERCISE

	
  Date:

  	
   

  	
   

  	
   

  

 

Sigma Systems Group
(Canada) Inc.

55 York Street, Suite
1100

Toronto, Ontario M5J 1R7

 

Attention:  Treasurer

 

Dear Sir or Madam:

 

I am the holder of a Stock Option Agreement (the
“Agreement”) granted to me by Sigma Systems Group (Canada) Inc. (the “Company”)
for the purchase of 3,281,250 Units at a purchase price of US$0.30 per Unit.

I hereby exercise my option to purchase _________
Units for which I have enclosed [DESCRIBE PAYMENT METHOD] in the amount of
$___.  Please register my certificates
for the Units as follows:

	
   

  	
  Name(s):

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Tax I.D. #:

  	
   

  	
   

  

 

I represent, warrant and covenant as follows:

1.             I
am purchasing the Units for my own account for investment only, and not with a
view to, or for sale in connection with, any distribution of the Units or the
securities into which the Units are convertible in violation of the Securities
Act of 1933 (the “Securities Act”), or any rule or regulation under the
Securities Act.

2.             I
have had such opportunity as I have deemed adequate to obtain from
representatives of the Company such information as is necessary to permit me to
evaluate the merits and risks of my investment in the Company.

3.             I
have sufficient experience in business, financial and investment matters to be
able to evaluate the risks involved in the purchase of the Units and to make an
informed investment decision with respect to such purchase.

 

A-1

 

4.             I
can afford a complete loss of the value of the Units and am able to bear the
economic risk of holding the Units and the securities into which the Units are
convertible for an indefinite period.

5.             I
understand that (i) the Units and the securities into which the Units are
convertible have not been registered under the Securities Act and are
“restricted securities” within the meaning of Rule 144 under the Securities
Act, (ii) the Units and the securities into which the Units are convertible
cannot be sold, transferred or otherwise disposed of unless they are
subsequently registered under the Securities Act or an exemption from
registration is then available; (iii) in any event, the exemption from
registration under Rule 144 will not be available for at least one year and
even then will not be available unless a public market then exists for the
Units or the securities into which the securities are convertible, adequate
information concerning the Company is then available to the public, and other
terms and conditions of Rule 144 are complied with; and (iv) there is now no
registration statement on file with the Securities and Exchange Commission with
respect to any securities of the Company and the Company has no obligation or
current intention to register the Units or the securities into which the Units
are convertible under the Securities Act.

	
  Very truly yours,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Signature)

  	
   

  

 

 

 

A-2

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