Document:

ex_122809.htm

Exhibit 10.1

 

 

DIAMEDICA THERAPEUTICS INC.

STOCK OPTION PLAN

 

Amended and Restated December 21, 2017

 

	
			1.

				
			The Plan

			

 

A stock option plan (the "Plan") pursuant to which options (hereinafter, an "Option" or "Options") to purchase common shares or such other shares or other securities as may be substituted therefor or may be acquired by a Participant (as defined in Section 6 hereof) upon the exercise of an Option the terms of which have been modified in accordance with section 15 below (collectively, the "Shares") in the capital of DiaMedica Therapeutics Inc. (the "Corporation") may be granted to the Participants is hereby established on the terms and conditions herein set forth.

 

	
			2.

				
			Purpose

			

 

The purpose of this Plan is to advance the interests of the Corporation by encouraging the directors, officers and key employees of the Corporation and consultants retained by the Corporation to acquire Shares, thereby:

 

	 	
			(a)

				
			increasing the proprietary interests of such persons in the Corporation;

			

 

	 	
			(b)

				
			aligning the interests of such persons with the interests of the Corporation's shareholders generally;

			

 

	 	
			(c)

				
			encouraging such persons to remain associated with the Corporation; and

			

 

	 	
			(d)

				
			furnishing such persons with an additional incentive in their efforts on behalf of the Corporation.

			

 

	
			3.

				
			Administration

			

 

	 	
			(a)

				
			This Plan shall be administered by the board of directors of the Corporation (the "Board").

			

 

	 	
			(b)

				
			Subject to the terms and conditions set forth herein, the Board is authorized to provide for the granting, exercise and method of exercise of Options, all on such terms as it shall determine in its sole discretion. In addition, the Board shall have the authority to:

			

 

	 	
			(i)

				
			construe and interpret this Plan and all option agreements entered into hereunder;

			

	 	
			(ii)

				
			prescribe, amend and rescind rules and regulations relating to this Plan; and

			

	 	
			(iii)

				
			make all other determinations necessary or advisable for the administration of this Plan. All determinations and interpretations made by the Board shall be binding on all Participants (as hereinafter defined) and on their legal, personal representatives and beneficiaries of the Participants.

			

 

	 	
			(c)

				
			Notwithstanding the foregoing or any other provision contained herein, the Board shall have the right to delegate the administration and operation of this Plan, in whole or in part, to a committee of the Board or to the President or any other officer of the Corporation. Whenever used herein, the term “Board” shall be deemed to include any committee or officer to which the Board has, fully or partially, delegated responsibilities and/or authority relating to the Plan or the administration and operation of the Plan pursuant to this section 3.

			

 

 

 

 

	 	
			(d)

				
			Options to purchase the Shares granted hereunder shall be evidenced by an agreement, signed on behalf of the Corporation and by the person to whom an Option is granted, which agreement shall be in such form as the Board shall approve, as amended from time to time by the Board.

			

 

	
			4.

				
			Shares Subject to Plan

			

 

	 	
			(a)

				
			Subject to section 15 below, the securities that may be acquired by Participants under this Plan shall consist of authorized but unissued common shares of the Corporation.

			

 

	 	
			(b)

				
			The aggregate number of Shares reserved for issuance under this Plan shall not exceed ten (10%) percent of the issued shares of the Corporation at the relevant time and the aggregate number of Shares reserved for issuance under any compensation or incentive mechanism or plan (including deferred share unit plans or employee stock option plans, if any) granted by the Corporation, including this Plan, shall not exceed ten (10%) percent of the issued shares of the Corporation at the relevant time.

			

 

	 	
			(c)

				
			If any Option granted under this Plan shall expire or terminate for any reason without having been exercised in full, any unpurchased Shares to which such Option relates shall be available for the purposes of the granting of Options under this Plan.

			

 

	
			5.

				
			Maintenance of Sufficient Capital

			

 

The Corporation shall at all times during the term of this Plan ensure that the number of Shares it is authorized to issue shall be sufficient to satisfy the requirements of this Plan.

 

	
			6.

				
			Eligibility and Participation

			

 

	 	
			(a)

				
			The Board may from time to time, in its sole discretion, grant an Option to any Participant, upon such terms, conditions and limitations as the Board may determine, including the terms, conditions and limitations set forth herein and pursuant to the terms and conditions of an individual option agreement set forth as Schedule "A", provided that Options granted to any Participant shall be approved by the applicable shareholders of the Corporation if the rules of the TSX Venture Exchange (the “Exchange”) require such approval. A reduction in the exercise price of an Option previously granted to a Participant who is currently an Insider, as defined by the Exchange, shall receive approval from the disinterested shareholders of the Corporation.

			

 

	 	
			(b)

				
			The Board may, in its discretion, select any of the following Persons to participate in this Plan, provided that any such Person, at the time of issuance, was:

			

 

	 	
			(i)

				
			a member of the Board of the Corporation or any subsidiary of the Corporation;

			

 

	 	
			(ii)

				
			a senior officer of the Corporation or any subsidiary of the Corporation;

			

 

	 	
			(iii)

				
			an Employee of the Corporation, or any subsidiary of the Corporation;

			

 

	 	
			(iv)

				
			a Management Company Employee of the Corporation or any subsidiary of the Corporation; or

			

 

	 	
			(v)

				
			a Consultant retained by the Corporation or any subsidiary of the Corporation;

			

 

	 	
			(vi)

				
			a Consultant retained to carry out Investor Relations Activities for the Corporation.

			

 

Any such person having been selected for participation in this Plan by the Board is herein referred to as a "Participant". When such Participant is an Employee, Consultant or Management Company Employee, the Corporation represents that the Participant is a bona fide Employee, Consultant or Management Company Employee.

 

2

 

 

	
			(c)

				
			Where used herein:

			

 

"Consultant" means an individual (or a company controlled by such individual) who:

 

	 	
			(i)

				
			provides ongoing consulting services to the Corporation or any subsidiary of the Corporation under a written contract, and

			

 

	 	
			(ii)

				
			possesses technical, business or management expertise of value to the Corporation or any subsidiary of the Corporation, and

			

 

	 	
			(iii)

				
			spends a significant amount of time and attention on the business and affairs of the Corporation or any subsidiary of the Corporation; and

			

 

	 	
			(iv)

				
			has a relationship with the Corporation of any subsidiary of the Corporation that enables the individual to be knowledgeable about the business and affairs of the Corporation.

			

 

"Employee" means:

 

	 	
			(i)

				
			an individual who is considered an employee under the Income Tax Act (Canada) (i.e. for whom income tax, employment insurance and CPP deductions must be made at source); or

			

 

	 	
			(ii)

				
			an individual who works full time for the Corporation providing services normally provided by an employee and who is subject to the same control and direction by the Corporation over the details and methods of work as an employee of the Corporation, but for whom income tax deductions are not made at source; or

			

 

	 	
			(iii)

				
			an individual who works for the Corporation on a continuing and regular basis for a minimum amount of time per week providing services normally provided by an employee and who is subject to the same control and direction of the Corporation over the details and methods of work as an employee of the Corporation, but for whom income tax deductions are not made at source.

			

 

"Investor Relations Activities" means activities or oral or written communications, by or on behalf of the Corporation or a shareholder of the Corporation, that promote or reasonably could be expected to promote the purchase or sale of securities of the Corporation, but does not include:

 

	 	
			(i)

				
			the dissemination of information provided, or records prepared, in the ordinary course of business of the Corporation:

			

 

	 	
			a.

				
			to promote the sale of products or services of the Corporation; or

			

 

	 	
			b.

				
			to raise public awareness of the Corporation,

			

 

that cannot reasonably be considered to promote the purchase or sale of securities of the Corporation;

 

	 	
			(ii)

				
			activities or communications necessary to comply with the requirements of:

			

 

	 	
			a.

				
			any and all securities laws applicable to the Corporation; or

			

 

	 	
			b.

				
			requirements of the Exchange or the by-laws, rules or other regulatory instruments of any other self regulatory body or exchange having jurisdiction over the Corporation;

			

 

3

 

 

	 	
			(iii)

				
			communications by a publisher of, or writer for, a newspaper, magazine or business or financial publication, that is of general and regular paid circulation, distributed only to subscribers to it for value or to purchaser of it, if:

			

 

	 	
			a.

				
			the communication is only through the newspaper, magazine or publication; and

			

 

	 	
			b.

				
			the publisher or writer receives no commission or other consideration other than for acting in the capacity of publisher or writer; or

			

 

	 	
			(iv)

				
			activities or communications that may be otherwise specified by the Exchange.

			

 

"Management Company Employees" means individuals employed by a Person providing management services to the Corporation, which are required for the ongoing successful operation of the business enterprise of the Corporation, but excluding a Person engaged in Investor Relations Activities;

 

"Person" means a corporation, incorporated association or organization, body corporate, partnership, trust, association or other entity other than an individual, or an individual.

 

	
			7. 

				
			Exercise Price

			

 

The Board shall, at the time an Option is granted under this Plan, fix the exercise price at which Shares may be acquired upon the exercise of such Option provided that the minimum exercise price shall not be less than the Discounted Market Price. The Discounted Market Price is the Market Price of the Shares, less a discount which shall not exceed 25% if the Market Price is $0.50 or less, 20% if the Market Price is from $0.51 to $2.00 and 15% if the Market Price is above $2.00. Where used herein " Market Price" means, subject to certain exceptions required by the rules of the Exchange, the last daily closing price of the Shares before either the issuance of the news release or the filing of a price reservation form (Form 4N) required to fix the price at which the securities are issued or deemed to be issued.

 

	
			8. 

				
			Number of Optioned Shares

			

 

The number of Shares that may be acquired under an Option granted to a Participant shall be determined by the Board as at the time the Option is granted, provided that:

 

	 	
			(a)

				
			no more than 5% of the issued shares of the Corporation may be granted to any one Participant (not including a Consultant or an employee conducting investor relation activities) in any 12 month period (unless the Corporation has obtained disinterested shareholder approval within the meaning of Exchange policies);

			

 

	 	
			(b)

				
			Insiders (as defined by the Exchange) may not be granted more than ten percent (10%) of the total number of issued and outstanding Shares within a twelve (12) month period (calculated on a non-diluted basis);

			

 

	 	
			(c)

				
			at no time shall the number of Shares reserved for issuance under stock options granted to Insiders exceed 10% of the issued and outstanding Shares;

			

 

	 	
			(c)

				
			no more than 2% of the issued shares of the Corporation may be granted to any one Consultant in any 12 month period; and

			

 

	 	
			(d)

				
			no more than an aggregate of 2% of the issued shares of the Corporation may be granted to all persons employed in Investor Relations Activities, in any 12 month period.

			

 

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			9.

				
			Term

			

 

The period during which an Option may be exercised (the "Option Period") shall be determined by the Board at the time the Option is granted, subject to any vesting limitations which may be imposed by the Board in its sole unfettered discretion at the time such Option is granted, provided that:

 

	 	
			(a)

				
			for a Participant other than a person employed in Investor Relations Activities, no Option shall be exercisable for a period exceeding ten (10) years from the date the Option is granted unless otherwise specifically provided by the Board and authorized by the Exchange, if applicable;

			

 

	 	
			(b)

				
			for a Participant employed in Investor Relations Activities, no Option shall be exercisable for a period exceeding twelve (12) months from the date the Option is granted, with no more than one-fourth (1/4) of the Options vesting in any three (3) month period;

			

 

	 	
			(c)

				
			the Option Period shall be automatically reduced in accordance with Sections 11 and 12 below upon the occurrence of any of the events referred to therein; and

			

 

	 	
			(d)

				
			no Option in respect of which shareholder approval is required under the rules of any Exchange shall be exercisable until such time as the Option has been approved by the shareholders of the Corporation.

			

 

If the end of the Option Period occurs during a Blackout Period applicable to the Participant, or within five business days after the expiry of a Blackout Period applicable to the relevant Participant, then the end of such Option Period for that Option will be the date that is the tenth business day after the expiry date of the Blackout Period. Where used herein “Blackout Period” means the period during which the relevant Participant is prohibited from exercising an Option due to trading restrictions imposed by the Corporation in accordance with its securities trading policies governing trades by Directors, Officers and Employees in the Corporation’s securities. The Blackout Period must be formally imposed by the Corporation pursuant to its internal trading policies as a result of the bona fide existence of undisclosed Material Information (as defined in applicable securities legislation), and the Blackout Period must expire upon the general disclosure of such undisclosed Material Information. The automatic extension of a Participant’s options will not be permitted where the Participant or the Corporation is subject to a cease trade order (or similar order under applicable securities laws) in respect of the Corporation’s securities.

 

10.     Method of Exercise of Option

 

	 	
			(a)

				
			Except as set forth in Sections 11 and 12 below or as otherwise determined by the Board, no Option may be exercised unless the holder of such Option is, at the time the Option is exercised, a Participant.

			

 

	 	
			(b)

				
			Options may be exercised in whole or in part and may be exercised on a cumulative basis where a vesting limitation has been imposed at the time of grant.

			

 

	 	
			(c)

				
			Any Participant (or his legal, personal representative) wishing to exercise an Option shall deliver to the Corporation, at its principal office in the City of Winnipeg, Manitoba:

			

 

	 	
			(i)

				
			a written notice expressing the intention of such Participant (or his or her legal, personal representative) to exercise his or her Option and specifying the number of Shares in respect of which the Option is exercised; and

			

 

	 	
			(ii)

				
			a cash payment, cheque or bank draft, representing the full purchase price of the Shares in respect of which the Option is exercised.

			

 

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			(d)

				
			Upon the exercise of an Option as aforesaid, the Corporation shall use its reasonable efforts to forthwith deliver, or cause the registrar and transfer agent of the Shares to deliver, to the relevant Participant (or his or her legal, personal representative) or to the order thereof, a certificate representing the aggregate number of fully paid and non-assessable Shares as the Participant (or his or her legal, personal representative) shall have then paid for.

			

 

	
			11.

				
			Ceasing to be a Director, Officer, Employee or Consultant

			

 

If any Participant shall cease to be a member of the Board, senior officer, Employee, Management Company Employee or Consultant of the Corporation or any subsidiary of the Corporation for any reason other than death, permanent disability or normal retirement, his or her Option will terminate at 5:00 p.m. (Minneapolis time) on the earlier of the date of the expiration of the Option Period and:

 

	 	
			(a)

				
			for Participants other than those employed in Investor Relations Activities, 90 days after the date such Participant ceases to be a member of the Board, senior officer, Employee, Management Company Employee or Consultant of the Corporation, or any subsidiary of the Corporation; and

			

 

	 	
			(b)

				
			for Participants employed in Investor Relations Activities, 30 days after the date such Participant ceases to be employed in Investor Relations Activities.

			

 

If such cessation or termination is by reason of substantial breach or cause on the part of the Participant, the Options shall be automatically terminated forthwith and shall be of no further force or effect.

 

Neither the selection of any person as a Participant nor the granting of an Option to any Participant under this Plan shall

 

	 	
			(c)

				
			confer upon such Participant any right to continue as a director, senior officer, Employee, Management Company Employee or Consultant of the Corporation, or any subsidiary of the Corporation as the case may be, or

			

 

	 	
			(d)

				
			be construed as a guarantee that the Participant will continue as a member of the Board, senior officer, Employee, Management Company Employee or Consultant of the Corporation, or any subsidiary of the Corporation as the case may be.

			

 

	
			12.

				
			Death, Permanent Disability or Normal Retirement of a Participant

			

 

In the event of the death, permanent disability or normal retirement of a Participant, any Option previously granted to such Participant shall be exercisable until the end of the Option Period or until the expiration of 12 months or a period determined by the board, after the date of death, permanent disability or normal retirement of such Participant, whichever is earlier, and then, in the event of death or permanent disability, only:

 

	 	
			(a)

				
			by the Participant or person or persons to whom the Participant's rights under the Option shall pass by the Participant's Will or by applicable law; and

			

 

	 	
			(b)

				
			to the extent that the Participant was entitled to exercise the Option as at the date of his death or permanent disability.

			

 

	
			13.

				
			Rights of Participants

			

 

No person entitled to exercise any Option granted under this Plan shall have any of the rights or privileges of a shareholder of the Corporation in respect of any Shares issuable upon exercise of such Option until such Shares have been paid for in full and issued to such person.

 

6

 

 

	
			14.

				
			Proceeds from Exercise of Options

			

 

The proceeds from any sale of Shares issued upon the exercise of Options shall be added to the general funds of the Corporation and shall thereafter be used from time to time for such corporate purposes as the Board may determine and direct.

 

	
			15.

				
			Adjustments

			

 

	 	
			(a)

				
			Notwithstanding any other provision of this Plan, in the event of any change in the outstanding Shares of the Corporation by reason of any stock dividend, split, recapitalization, reclassification, amalgamation, merger, consolidation, combination or exchange of Shares or distribution of rights to holders of Shares or any other form of corporate reorganization whatsoever, an equitable adjustment shall be made to any Options then outstanding and the exercise price in respect of such Options.

			

 

	 	
			(b)

				
			Adjustments under this section 15 shall be made by the Board, whose determination as to what adjustments shall be made, and the extent thereof, shall be final, binding and conclusive. No fractional Shares shall be issued under this Plan on any such adjustment.

			

 

	
			16.

				
			Transferability

			

 

All benefits, rights and Options accruing to any Participant in accordance with the terms and conditions of this Plan shall not be transferable or assignable except, where qualified, to a Registered Retirement or similar plan where the Participant is the annuitant thereof, or to a family trust controlled by the Participant. During the lifetime of a Participant, any Options granted hereunder may only be exercised at the direction of the Participant and in the event of the death or permanent disability of a Participant, by the person or persons to whom the Participants rights under the Option pass by the Participant's Will or by applicable law.

 

	
			17.

				
			Amendment and Termination of Plan

			

 

	 	
			(a)

				
			Subject to any specific limitations contained in the Plan, the Board reserves the right, in its absolute discretion, to at any time amend, modify or terminate the Plan.

			

 

	 	
			(b)

				
			Notwithstanding subparagraph 17(a), the Board may not, without approval of the holders of a majority of the issued and outstanding equity securities of the Corporation present and voting in person or by proxy at a meeting of holders of such securities, amend the Plan or an Option to:

			

 

	 	
			a.

				
			increase the number of Shares reserved for issuance under the Plan;

			

	 	
			b.

				
			make any amendment that would reduce the Exercise Price of an outstanding Option granted to an Insider (including a cancellation and reissue of an Option to an Insider at a reduced Exercise Price);

			

	 	
			c.

				
			amend or delete section 9 to extend the term of any Option beyond the Option Period of the Option or, except as already contemplated under section 9, allow for the Option Period of an Option to be greater than 10 years;

			

	 	
			d.

				
			permit assignments, or exercises other than by the Participant, of Options beyond that contemplated by section 16, except for an amendment that would permit the assignment of an Option for estate planning or estate settlement purposes; and

			

	 	
			e.

				
			amend the Plan to provide for other types of compensation through equity issuance.

			

 

Pursuant to section 6(a) hereof, the amendments referred to at section 17(b)(b) shall require the approval of disinterested shareholders of the Corporation.

 

7

 

 

	 	
			(c)

				
			Without limiting the generality of subparagraph 17(a), the Board may make the following amendments to the Plan without obtaining shareholder approval:

			

 

	 	
			a.

				
			amendments to the terms and conditions of the Plan necessary to ensure that the Plan complies with the applicable regulatory requirements, including without limitation Exchange policies or the rules of any national securities exchange or system on which the Shares are then listed or reported, or by any regulatory body having jurisdiction with respect thereto;

			

	 	
			b.

				
			making adjustments to outstanding Options in the event of certain corporate transactions;

			

	 	
			c.

				
			the addition of a cashless exercise feature, payable in cash or securities, whether or not such feature provides for a full deduction of the number of underlying securities from the Plan reserve;

			

	 	
			d.

				
			a change to the termination provisions of a security or the Plan which does not entail an extension beyond the original Option Period;

			

	 	
			e.

				
			amendments to the provisions of the Plan respecting administration of the Plan and eligibility for participation under the Plan;

			

	 	
			f.

				
			amendments to the provisions of the Plan respecting the terms and conditions on which options may be granted pursuant to the Plan, including the provisions relating to the Subscription Price, the option period, and the vesting schedule;

			

	 	
			g.

				
			amendments in order to ensure that the Plan and the Options granted hereunder comply with applicable law from time to time, including without limitation requirements contained in the Income Tax Act (Canada), as amended; and

			

	 	
			h.

				
			amendments to the Plan that are of a “housekeeping nature”.

			

 

	
			18. 

				
			Necessary Approvals

			

 

The obligation of the Corporation to issue and deliver Shares in accordance with this Plan is subject to applicable securities legislation and to the receipt of any approvals that may be required from any regulatory authority to stock exchange having jurisdiction over the securities of the Corporation. If Shares cannot be issued to a Participant upon the exercise of an Option (for any reason whatsoever) the obligation of the Corporation to issue such Shares shall terminate and any funds paid to the Corporation in connection with the exercise of such Option will be returned to the relevant Participant as soon as practicable.

 

	
			19. 

				
			Stock Exchange Rules

			

 

This Plan and any option agreements entered into hereunder shall comply with the requirements from time to time of the Exchange.

 

	
			20. 

				
			Right to Issue Other Shares

			

 

The Corporation shall not by virtue of this Plan be in any way restricted from declaring and paying stock dividends, issuing further shares of any class of the Corporation, including, without limitation, Shares, varying or amending its share capital or corporate structure or conducting its business in any way whatsoever.

 

	
			21. 

				
			Notice

			

 

Any notice required to be given by this Plan shall be in writing and shall be given by registered mail, postage prepaid or delivered by courier or by facsimile transmission addressed, if to the Corporation, at the principal address of its wholly owned subsidiary, DiaMedica USA Inc., in Minneapolis, Minnesota (being currently: Two Carlson Parkway, Suite 260, Minneapolis, Minnesota 55447, USA), Attention: The President; or if to a Participant, to such Participant at his or her address as it appears on the books of the Corporation or in the event of the address of any such Participant not so appearing then to the last known address of such Participant; or if to any other person, to the last known address of such person.

 

Gender

 

Whenever used herein words importing the masculine gender shall include the feminine and neuter genders and vice versa.

 

8

 

 

	
			22. 

				
			Interpretation

			

 

This Plan will be governed by and construed in accordance with the laws of the Province of British Columbia, and the federal laws of Canada applicable therein.

 

DATED this 21st day of December, 2017.

 

DiaMedica Therapeutics Inc. 

Per: /s/ Rick Pauls

 

Per: President and Chief Executive Officer

 

9ex_122827.htm

Exhibit 10.3

 

 

DIAMEDICA INC.

(the "Company")

AMENDED AND RESTATED DEFERRED SHARE UNIT PLAN 

FOR DIRECTORS AND EXECUTIVE OFFICERS

 

 

PART l - GENERAL PROVISIONS

 

Purpose

 

1.1          The purpose of this Plan is to provide an alternative form of compensation to satisfy annual and special bonuses payable to Directors and Executive Officers and to satisfy fees that may be payable to Directors for acting as directors of the Company. This form of compensation promotes a greater alignment of interests amongst Directors and Executive Officers and the Company's shareholders.

 

Definitions

 

1.2           In this Plan,

 

Annual Board Retainer means that annual retainer paid by the Company to a Director, but does not include Chair Fees, Committee Fees and Meeting Fees.

 

Applicable Withholding Tax has the meaning set forth in Section 3.4;

 

Awarded Amount has the meaning set forth in Section 2.1;

 

Board means the Board of Directors of the Company;

 

Chair means the chair of the Board;

 

Chair Fees means the fees or retainers, other than Meeting Fees, the Annual Board Retainer and Committee Fees, paid by the Company to a Director for service as the Chair and as chairperson of a committee of the Board;

 

Committee means the Governance and Compensation Committee of the Board, or any other persons designated by the Board to perform the duties contemplated herein;

 

Committee Fees means the fees or retainers, other than Meeting Fees, the Annual Board Retainer and Chair Fees, paid by the Company to a Director for service on a committee of the Board;

 

Company means DiaMedica Inc.;

 

Deferred Share Unit means a right granted by the Company to an Eligible Person to receive, on a deferred payment basis, a Share or the Fair Market Value thereof, or a combination thereof on the terms contained in this Plan;

 

Director means any Director of the Company, or a subsidiary of the Company, appointed and approved by the Board or the shareholders;

 

Eligible Person means any person who is a Director or Executive Officer;

 

 

 

 

Executive Officer means the Chief Executive Officer, President, Chief Financial Officer and any senior officer of the Company, or any subsidiary of the Company or any persons acting in any such capacity on behalf of the Company or subsidiary of the Company;

 

Fair Market Value means the five-day volume weighted average trading price as calculated in accordance with the TSXV Policies as at, and including, the relevant determination date or such other applicable date referenced herein provided that such date is a business day and if it is not then calculated as at and including the last business day which proceeded such applicable date referenced herein, except that if the Shares are not listed on the TSXV, the Fair Market Value will be the value established by the Board based on the five-day average closing price per Share on any other public exchange on which the Shares are listed calculated as at, and including, the relevant determination date or such other applicable date referenced herein provided that such date is a business day and if it is not then calculated as at and including the last business day which proceeded such applicable date referenced herein, or if the Shares are not listed on any public exchange, by the Board based on its determination of the fair value of a Share;

 

Director Fees means the aggregate total of the Annual Board Retainer, Chair Fees, Committee Fees, Meeting Fees and any other fees payable to a Director;

 

Insider means an insider as defined in the TSXV Policies;

 

Meeting Fees means the fees or retainers, other than the Annual Board Retainer, Chair Fees, and Committee Fees, paid by the Company to a Director for attending meetings of the Board or any committee of the Board;

 

Option means the right to purchase Shares granted pursuant to the Company's stock option plan approved by the Board, as may be amended from time to time in accordance with its terms, or any successor plan accepted for filing by the TSXV;

 

Outstanding Issue means the number of Shares outstanding on a non-diluted basis;

 

Plan means this Amended and Restated Deferred Share Unit Plan, as amended from time to time;

 

Reserved for Issuance refers to Shares that may be issued in the future upon the exercise of Deferred Share Units which have been or are granted pursuant to this Plan;

 

Section 409A means Section 409A of the United States Internal Revenue Code of 1986, as amended, and any applicable United States Treasury Regulations and other binding regulatory guidance thereunder;

 

Separation from Service of a US Taxpayer means the date the US Taxpayer incurs a separation from service with the Company within the meaning of U.S. Treas. Regs. § 1.409A-1(h);

 

Service Provider means a person who is a bona fide director, officer, employee or consultant of the Company or its affiliates, and also includes a company, of which 100% of the share capital is beneficially owned by one or more such persons;

 

Share means a common share in the capital of the Company;

 

2

 

 

Share Compensation Arrangement means the Plan described herein and any other stock option, stock option plan, employee stock purchase plan or any other compensation or incentive mechanism involving the issuance or potential issuance of shares to one or more Eligible Persons, including a share purchase from treasury which is financially assisted by the Company by way of a loan, guaranty or otherwise;

 

Specified Employee means a US Taxpayer who meets the definition of “specified employee,” as defined in Section 409A(a)(2)(B)(i) of the Code;

 

Terminated Service means that the Eligible Person has ceased to be a Director or Executive Officer, other than as a result of death;

 

Total Compensation for a particular Eligible Person means the aggregate of:

 

	 	
			(a)

				
			the discretionary annual bonus determined by the Board for which Directors or Executive Officers are eligible, and

			

 

	 	
			(b)

				
			a bonus, that is not an annual bonus, that may be awarded to a Director or Executive Officer at the discretion of the Board; and

			

 

	 	
			(c)

				
			Director Fees.

			

 

TSXV means the TSX Venture Exchange;

 

US Taxpayer means an Eligible Person whose compensation from the Company is subject to Section 409A.

 

Effective Date

 

1.3          Subject to the acceptance by the TSXV, this Plan will be effective immediately after the approval of the shareholders of the Company at the Company’s Annual and Special Meeting to be held September 22, 2011.

 

Administration

 

1.4          The Board will, in its sole and absolute discretion, but taking into account relevant corporate, securities and tax laws,

 

(a)      interpret and administer this Plan,

 

(b)      establish, amend and rescind any rules and regulations relating to this Plan, and

 

(c)      make any other determinations that the Board deems necessary or desirable for the administration of this Plan.

 

The Board may correct any defect or any omission or reconcile any inconsistency in this Plan in the manner and to the extent the Board deems, in its sole and absolute discretion, necessary or desirable. Any decision of the Board in the interpretation and administration of this Plan will be final, conclusive and binding on all parties concerned. All expenses of administration of this Plan will be borne by the Company.

 

3

 

 

Delegation

 

1.5          The Board may, to the extent permitted by law, delegate any of its responsibilities under this Plan and powers related thereto (including, without limiting the generality of the foregoing, those referred to under Section 1.4) to the Committee or to one or more officers of the Company and all actions taken and decisions made by the Committee or by such officers in this regard will be final, conclusive and binding on all parties concerned, including, but not limited to, the Company, the Eligible Person, and their legal representatives.

 

 

 

PART 2 - AWARDS UNDER THIS PLAN

 

Determination of Deferred Share Units

 

2.1          The Board will, in its sole and absolute discretion, decide at the time of declaring or awarding any Total Compensation to any Eligible Person the amount (the "Awarded Amount") of the Total Compensation that will be satisfied in the form of Deferred Share Units.

 

Issue of Deferred Share Units

 

2.2          The number of Deferred Share Units (including fractional Deferred Share Units, computed to three digits) to be credited to an Eligible Person for services will be determined by dividing the Awarded Amount by the Fair Market Value as at the last trading day before the date the Awarded Amount is declared by the Board.

 

Maximum Shares Reserved

 

2.3          Subject to adjustment as provided for herein, the maximum aggregate number of Shares that may be Reserved for Issuance pursuant to this Plan is 2,000,000 Shares.

 

2.4          In no event may the number of Shares that are Reserved for Issuance to any one person pursuant to Deferred Share Units and Options exceed 5% of the Outstanding Issue.

 

2.5          The maximum aggregate number of Shares that, under all Share Compensation Arrangements,

 

(a)     may be Reserved for Issuance to Insiders of the Company, may not exceed 10% of the Outstanding Issue at any time, and

 

(b)     may be issued to Insiders within a one-year period, may not exceed 10% of the Outstanding Issue.

 

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2.6          For the purposes of Section 2.5, Shares issuable to an Insider pursuant to a Deferred Share Unit or other entitlement that was granted before the person became an Insider will be excluded in determining the number of Shares issuable to Insiders.

 

Shares Not Acquired

 

2.7          Any Shares not acquired under a Deferred Share Unit granted under the Plan which has expired or been cancelled or terminated may be made the subject of a further Deferred Share Unit pursuant to the provisions of the Plan.

 

Dividend Equivalents

 

2.8          On any date on which a cash dividend is paid on Shares, an Eligible Person's account will be credited with the number of Deferred Share Units (including fractional Deferred Share Units, computed to three digits) calculated by,

 

(a)     multiplying the amount of the dividend per Share by the aggregate number of Deferred Share Units that were credited to the Eligible Person's account as of the record date for payment of the dividend, and

 

(b)     dividing the amount obtained in Section 2.8(a) by the Fair Market Value on the date on which the dividend is paid.

 

Eligible Person's Account

 

2.9          A written confirmation of the balance in each Eligible Person's account will be sent by the Company to the Eligible Person upon request of the Eligible Person.

 

Adjustments and Reorganizations

 

2.10       In the event of any dividend paid in shares, share subdivision, combination or exchange of shares, merger, consolidation, spin-off or other distribution of Company assets to shareholders, or any other change in the capital of the Company affecting Shares, the Board, in its sole and absolute discretion, will make, with respect to the number of Deferred Share Units outstanding under this Plan, any proportionate adjustments as it considers appropriate to reflect that change.

 

PART 3 - TERMINATION OF SERVICE

 

Termination of Service 

 

3.1          An Eligible Person who has Terminated Service may elect to receive one Share in respect of each whole Deferred Share Unit credited to the Eligible Person's account (determined in accordance with Section 3.2) net of Applicable Withholding Tax, by filing with the President of the Company a notice of redemption in the form prescribed from time to time by the Company on or before December 15 of the first calendar year commencing after the date on which the Eligible Person has Terminated Service. If the Eligible Person fails to file such notice on or before that December 15, the Eligible Person will be deemed to have filed with the President of the Company a notice of redemption on that December 15 and will be deemed to have elected to redeem all of his or her Deferred Share Units. The date on which a notice is filed or deemed to be filed with the Secretary of the Company is the "Filing Date". The Company may defer the Filing Date to any other date if such deferral is, in the sole opinion of the Company, desirable to ensure compliance with Section 4.3.

 

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Issuance of Shares

 

3.2          The issuance of the Shares will be made by the Company as soon as reasonably possible following the Filing Date. In no event will the issuance be made later than December 31 of the first calendar year commencing after the Eligible Person has Terminated Service. Fractional Shares may not be issued, and where an Eligible Person would be entitled to receive a fractional Share in respect of any fractional Deferred Share Unit, the Company will pay to such Eligible Person, in lieu of such fractional Share, cash equal to its Fair Market Value, calculated as at the Filing Date.

 

3.3.     Notwithstanding the foregoing provisions of Section 3.1 and Section 3.2, if an Eligible Person is a US Taxpayer, then the following rules shall apply relating to the redemption of Deferred Share Units and issuance of Shares:

 

(a)     Deferred Share Units which become redeemable under Section 3.1 shall be redeemed only if the event giving rise to Terminated Service is a Separation from Service; and

 

(b)     the redemption date shall be any date determined by the Company (and not the US Taxpayer) to occur as soon as reasonably possible (but not later than two months) after the Separation from Service, without a notice of filing required by the Eligible Person, except that if the US Taxpayer is determined to be a Specified Employee, the redemption date shall be the first day of the seventh month after the Separation from Service of the US Taxpayer.

 

Death

 

3.4          In the event of the death of an Eligible Person, the Company will, within two months of the Eligible Person's death, pay cash equal to the Fair Market Value of the Shares which would be deliverable to the Eligible Person if the Eligible Person had Terminated Service in respect of the Deferred Share Units credited to the deceased Eligible Person's account (net of any Applicable Withholding Tax) to or for the benefit of the legal representative of the Eligible Person. The Fair Market Value will be calculated on the date of death of the Eligible Person.

 

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Applicable Withholding Tax

 

3.5          The Company is authorized to deduct such taxes and other amounts as it may be required by law to withhold ("Applicable Withholding Tax"), in such manner as it determines, including, without limiting the generality of the foregoing, by delivering fewer Shares than an Eligible Person otherwise would have received. The Company may require Eligible Persons, as a condition of receiving Shares otherwise to be delivered to them under this Plan, to deliver undertakings to, or indemnities in favour of, the Company respecting the payment by such Eligible Persons of applicable income or other taxes.

 

PART 4 - GENERAL

 

Non-Transferability

 

4.1          Deferred Share Units and all other rights, benefits or interests in this Plan are non-transferable and may not be pledged or assigned or encumbered in any way and are not subject to attachment or garnishment, except that if the Eligible Person dies, the legal representatives of the Eligible Person will be entitled to receive the amount of any payment otherwise payable to the Eligible Person hereunder in accordance with the provisions hereof.

 

No Right to Service

 

4.2          Neither participation in this Plan nor any action under this Plan will be construed to give any Eligible Person a right to be retained in the service of the Company.

 

Applicable Trading Policies

 

4.3          The Board and each Eligible Person will ensure that all actions taken and decisions made by the Board or the Eligible Person, as the case may be, pursuant to this Plan comply with any applicable securities laws and policies of the Company relating to insider trading or "blackout" periods.

 

Successors and Assigns

 

4.4          This Plan will enure to the benefit of and be binding upon the respective legal representatives of the Eligible Person.

 

Plan Amendment

 

4.5          The Board reserves the right, in its absolute discretion, to at any time amend, modify or terminate the Plan without obtaining shareholder approval as it deems necessary or appropriate, but no amendment will, without the consent of the Eligible Person or unless required by law, adversely affect the rights of an Eligible Person with respect to Deferred Share Units to which the Eligible Person is then entitled under this Plan.

 

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4.6          Notwithstanding Section 4.5, the Board may not, without approval of the holders of a majority of the issued and outstanding equity securities of the Company present and voting in person or by proxy at a meeting of holders of such securities, amend the Plan or a Deferred Share Unit to:

 

(a)     increase the number of Shares reserved for issuance under the Plan;

 

(b)     permit assignments, or exercises other than by the Eligible Person, of Deferred Share Units beyond that contemplated by Section 4.1, except for an amendment that would permit the assignment of a Deferred Share Unit for estate planning or estate settlement purposes; and

 

(c)     amend the Plan to provide for other types of compensation through equity issuance, unless the change to the Plan or a Deferred Share Unit results from the application of Section 2.10.

 

4.7          Without limiting the generality of Section 4.5, the Board may make the following amendments to the Plan without obtaining shareholder approval:

 

(a) amendments to the terms and conditions of the Plan necessary to ensure that the Plan complies with the applicable regulatory requirements, including without limitation the TSXV Policies or the rules of any national securities exchange or system on which the Shares are then listed or reported, or by any regulatory body having jurisdiction with respect thereto;

 

(b)     making adjustments to outstanding Deferred Share Units in the event of certain corporate transactions;

 

(c)     a change to the termination provisions of a security or the Plan which does not entail an extension beyond the original termination date;

 

(d)     amendments to the provisions of the Plan respecting administration of the Plan and eligibility for participation under the Plan, including, without limitation, to expand the class of Eligible Persons to include any or all Service Providers; and

 

(e)     amendments to the Plan that are of a "housekeeping nature".

 

Plan Termination

 

4.8          The Board may terminate this Plan at any time, but no termination will, without the consent of the Eligible Person or unless required by law, adversely affect the rights of an Eligible Person with respect to Deferred Share Units to which the Eligible Person is then entitled under this Plan. In no event will a termination of this Plan accelerate the time at which the Eligible Person would otherwise be entitled to receive any Shares or cash in respect of Deferred Share Units hereunder.

 

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Governing Law

 

4.9          This Plan and all matters to which reference is made in this Plan will be governed by and construed in accordance with the laws of Manitoba and the laws of Canada applicable therein.

 

Reorganization of the Company

 

4.10          The existence of this Plan or Deferred Share Units will not affect in any way the right or power of the Company or its shareholders to make or authorize any adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business, or to create or issue any bonds, debentures, shares or other securities of the Company or to amend or modify the rights and conditions attaching thereto or to effect the dissolution or liquidation of the Company, or any amalgamation, combination, merger or consolidation involving the Company or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar nature or otherwise.

 

No Shareholder Rights

 

4.11          Deferred Share Units are not considered to be Shares or securities of the Company, and an Eligible Person whose account is credited with Deferred Share Units will not, as such, be entitled to exercise voting rights or any other rights attaching to the ownership of Shares of other securities of the Company, or be considered the owner of Shares by virtue of such crediting of Deferred Share Units.

 

No Other Benefit

 

4.12          No amount will be paid to, or in respect of, an Eligible Person under this Plan to compensate for a downward fluctuation in the price of a Share, nor will any other form of benefit be conferred upon, or in respect of, an Eligible Person for such purpose.

 

Unfunded Plan

 

4.13          For greater certainty, this Plan will be an unfunded plan, including for tax purposes. Any Eligible Person holding Deferred Share Units or related accruals under this Plan will have the status of a general unsecured creditor of the Company with respect to any relevant rights hereunder.

 

 

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