Document:

EX-10.41 2006 MANAGEMENT INCENTIVE PLAN

 

Exhibit 10.41

2006

Management

Incentive

Plan

PLAN DOCUMENT

 

 

GRAPHIC PACKAGING INTERNATIONAL, INC.

ANNUAL MANAGEMENT INCENTIVE PLAN

2006

Table of Contents

 

	 	 	 	 	 	 	 
	Section #	 	Subject	 	Page #
	 
	I

	 	Plan Purpose
	 	 	3	 
	II

	 	Financial Performance
	 	 	3	 
	III

	 	Award Determination and Approval
	 	 	3-4	 
	IV

	 	Individual Performance Factors
	 	 	4	 
	V

	 	Currency
	 	 	4	 
	VI

	 	Participation Level and New Participants
	 	 	5	 
	VII

	 	Revisions to Plan
	 	 	5	 
	VIII

	 	Form and Timing of Awards
	 	 	5-6	 
	IX

	 	Employees on Leave
	 	 	6	 
	X

	 	Termination, Death or Disability
	 	 	6	 
	XI

	 	Other Plan Design Considerations
	 	 	6-8	 

Attachment I — Corporate Financial Award Components and Performance Graph

Attachment II — Personalized Participation Statement

 

 

	I.	 	PLAN PURPOSE:
	 
	 	 	The purpose of the Annual Management Incentive Plan (“Annual Plan”)
is to offer a meaningful incentive award opportunity for key managers
who can make significant contributions to the growth and
profitability of Graphic Packaging International, Inc. (“Company”).
The Annual Plan is designed to emphasize management’s commitment to
financial success and to the Company’s ultimate purpose of delivering
a superior return on the investment of its shareholders.
	 
	II.	 	FINANCIAL PERFORMANCE:
	 
	 	 	Awards from the Annual Plan are financially-driven and for 2006 will
be based on Corporate Consolidated results. All Participants,
therefore, will have their award opportunity tied to overall Graphic
Packaging financial performance. Focusing on Corporate financial
results reinforces management’s essential obligation to the
shareholders to do everything possible to achieve the best result in
total Company performance. It will also promote better cooperation
and teamwork across Graphic Packaging’s global business operations
and support functions.
	 
	 	 	The 2006 Annual Plan is comprised of one financial award component —
EBITDA. Each Participant’s incentive award opportunity is based on
the specific Corporate financial goal established during the annual
operating plan approval process, and approved by Graphic Packaging’s
Board of Directors.
	 
	III.	 	AWARD DETERMINATION AND APPROVAL:
	 
	 	 	The Annual Plan is specifically designed to create substantial
incentive opportunity for the achievement of Graphic Packaging’s most
important financial goal: surpassing the 2006 Corporate EBITDA. For
the 2006 annual plan design, awards are generated when EBITDA
earnings exceed $285.0 million, “Threshold” achievement of plan.
96.7% achievement of Plan ($295.0 million) yields an award of 50% of
an individual’s target award. A full “Target” award is generated at
100% achievement of plan or $305.0 million. An award of 200% of an
individual’s target award is generated at 107% of plan or $327.0
million.

3

 

	 	 	Performance against Corporate EBITDA is expressed as a percentage of
the annual plan achieved or surpassed. As illustrated in Attachment
I, as Corporate financial performance increases along the horizontal
axis, the participant’s formula-driven financial award opportunity
correspondingly increases.
	 
	IV.	 	INDIVIDUAL PERFORMANCE FACTORS:
	 
	 	 	Potential payments (before individual performance factors) range from
0% to 200% of target bonus. The individual performance factor can be
up to + or — 25% of an individual’s target award. Individual
performance factors may include actual contributions to the Corporate
EBITDA goal. All adjustments to calculated awards based on
individual performance factors are determined by the President and
CEO. The total of all adjustments will not increase or decrease the
calculated bonus pool. If some awards are increased, others must be
decreased so there is no change to the pool.
	 
	 	 	All awards are calculated by the Corporate Human Resources group and
ultimately approved by the President and CEO of the Company. Awards
must also be approved by the Compensation and Benefits Committee of
the Board of Directors.
	 
	 	 	**** IF THE COMPANY FAILS TO MEET ANY OF OUR QUARTERLY FINANCIAL COVENANT MEASURES, NO
2006 INCENTIVE AWARDS WILL BE PAID. ****
	 
	V.	 	CURRENCY:
	 
	 	 	All Corporate, financial results will be stated on a U.S. dollar reporting basis for
purposes of determining actual performance against the annual operating plan.

4

 

	VI.	 	PARTICIPATION LEVEL AND NEW PARTICIPANTS:
	 
	 	 	Participation level is defined as the target incentive award
opportunity provided to Participants under the Annual Plan. Each
Participant’s approved participation level is determined and
communicated annually.
	 
	 	 	For Participants who change participation level during the
1st Quarter of a plan year, the change will become
effective retroactive to the first day of the plan year. If the
change occurs in the 4th Quarter of the plan year, it
will take effect on January 1st of the following year’s
plan. Changes occurring in the 2nd or 3rd
Quarter of the plan year will result in any awards earned calculated
on a strictly prorated basis for the number of months assigned to
each level of participation.
	 
	 	 	New Participants shall have any awards earned strictly prorated by
the number of months of participation in their first plan year,
except if hired during the 4th Quarter. In this event, their
participation will become effective the following year.
	 
	VII.	 	REVISIONS TO PLAN:
	 
	 	 	Revisions to annual financial performance goals for incentive plan
purposes may be considered to recognize circumstances beyond the
control of Plan participants. Such revisions will be rare in
practice and only respond to extraordinary and unforeseeable events.
It is understood that revisions may adjust for positive windfalls
as well as negative shortfalls.
	 
	VIII.	 	FORM AND TIMING OF AWARDS:
	 
	 	 	The annual incentive award is expressed as a percentage of a
Participant’s base salary actually earned during the plan year. All
awards under the Annual Plan will be paid in cash and in local
currency. Awards will be subject to all applicable social
insurance, income tax and other withholding requirements effective
at the time of payment.
	 
	 	 	Awards paid to Participants in hyper-inflationary countries will be
monetarily corrected to adjust for currency devaluation between the
close of the plan year and the award payment date.

5

 

	 	 	All earned awards will be paid during the 1st Quarter of the
business year following the close of the plan year.
	 
	IX.	 	EMPLOYEES ON LEAVE:
	 
	 	 	Awards for employees on approved leave will be prorated to exclude the time away from work.
Approved leaves include: sick, personal, family medical, and military leaves of absence.
	 
	X.	 	TERMINATION, DEATH, OR DISABILITY:
	 
	 	 	Awards will be paid to Participants who are actually employed and on the payroll on the last
day of the applicable plan year. A Participant whose employment terminates prior to the end
of the plan year shall forfeit any and all rights to an award from the Annual Plan except
for approved special circumstances. Specifically, those participants who terminate
employment due to death, disability, normal retirement, Company approved early retirement,
or who are displaced as a result of a position elimination will be paid a pro rata portion
of any award earned based on their date of termination. Such prorated payments will be made
at the time and in the form received by all other Participants. Any executive who is
entitled to a payment upon termination of employment under a Graphic Packaging Employment
Agreement shall not also be entitled to an award under the Annual Incentive Plan for the
year in which termination takes place.
	 
	XI.	 	OTHER PLAN DESIGN CONSIDERATIONS:
	 
	 	 	The Annual Plan will be managed by each Group executive and
administered by Corporate Compensation. All reported financial
results will be confirmed by the Chief Financial Officer upon
completion of the annual report of independent accountants. Awards
will be approved by the President and Chief Executive Officer and the
Compensation and Benefits Committee of the Board of Directors, as
appropriate. Communication of all awards will be provided by the
business unit’s senior management only upon written confirmation of
all required approvals.

6

 

	 	 	No Participant shall have the right to anticipate, alienate, sell,
transfer, assign, pledge, or encumber his or her right to receive any
award made under the Annual Plan.
	 
	 	 	No Participant shall have any lien on any assets of the Company by
reason of any award made under the Annual Plan.
	 
	 	 	The adoption of the Annual Plan or any modification or amendment
hereof does not imply any commitment to continue or adopt the same
plan, or any modification thereof, or any other plan for incentive
compensation for any succeeding year, provided that no such
modification or amendment shall adversely affect rights to receive
any amount to which any Participant has become entitled prior to such
modifications and amendments. The Company specifically reserves the
right to amend, modify, or terminate the Annual Plan at any time for
any reason. Neither the Annual Plan nor any award made under the
Annual Plan shall create any employment contract or imply any
relationship between the Company and any Participant, other than
employment terminable by either party at will.
	 
	 	 	No one may participate in the Annual Plan, or have any components of
it changed after initial notification of participation, without the
expressed written notice of approval by the Plan Administrators.
Every Annual Plan position and proposed additional positions are
reviewed for eligibility on an annual basis.
	 
	 	 	No one participating in another incentive plan may participate
concurrently in the Annual Plan, except where such other
participation is legally mandated and/or approved in writing by Plan
Administrators.
	 
	 	 	Eligible participants must maintain at least a “successful”
performance rating throughout the year to be eligible for payment of
an award regardless of corporate performance. Sustained performance
problems may result in permanent disqualification of participation in
the Annual Plan.
	 
	 	 	The Annual Plan design is dynamic and is reviewed annually by
executive management to insure that performance measures, their
relative weighting and award

7

 

	 	 	parameters address Graphic Packaging’s business strategy and its annual financial
objectives.

	 	 	 
	 	 	The President and Chief Executive Officer reserves the right to increase, decrease, or
eliminate any and all Annual Plan awards if, in the exercise of his business judgment, such
modifications would be in the best interest of the Company.

* * * *

8Ex-10.1

 

Exhibit 10.1

TM BIOSCIENCE CORPORATION

SHARE OPTION PLAN

 

 

TM BIOSCIENCE CORPORATION

INCENTIVE SHARE OPTION PLAN

     The
purpose of this Incentive Share Option Plan (the “Plan”) is to advance the interests
of Tm Bioscience Corporation (the “Corporation”) by (i) providing Eligible Persons (as defined
herein) with additional incentive; (ii) encouraging share ownership by Eligible Persons; (iii)
increasing the proprietary interest of Eligible Persons in the success of the Corporation; (iv)
encouraging Eligible Persons to remain with the Corporation or its Affiliates (as defined herein);
and (v) attracting new employees, officers, directors and Consultants (as defined herein) to the
Corporation or its Affiliates.

ARTICLE 1 GENERAL PROVISIONS

	1.1.	 	Previously Issued and Outstanding Options Continued
	 
	 	 	All options issued and outstanding under previous option agreements or previous option
grants are hereby continued as if issued or granted under this Plan.
	 
	1.2.	 	Administration

	 	(a)	 	This Plan will be administered by the Board or the
compensation committee
of the Board to which the Board may delegate authority to administer the Plan. In such
event, all references to the term “Board” will be deemed to include references to such
compensation committee.
	 
	 	(b)	 	Subject to the limitations of this Plan, the Board has the authority: (i)
to grant Options to purchase Shares to Eligible Persons; (ii) to
determine the terms,
including the limitations, restrictions and conditions, if any, upon such grants; (iii)
to interpret this Plan and to adopt, amend and rescind such administrative guidelines
and other rules relating to this Plan as it may from time to time deem advisable,
subject to required prior approval by any applicable Stock Exchange or Governmental
Entity; and (iv) to make all other determinations and to take all other actions in
connection with the implementation and administration of this Plan as it may
deem necessary or advisable. The Board’s guidelines, rules, interpretations
and determinations will be conclusive and binding upon all parties.

 

 

- 3 -

	1.3.	 	Interpretation
	 
	 	 	For the purposes of this Plan, the following terms will have the following meaning
unless otherwise defined elsewhere in this Plan:

	 	(a)	 	“Affiliate” means any corporation that is an affiliate of the Corporation
as defined under the Securities Act (Ontario);
	 
	 	(b)	 	“Board” means the Board of Directors of the Corporation or
the compensation committee thereof appointed in accordance with the Plan;
	 
	 	(c)	 	“Change of Control” means:

	 	(i)	 	a reorganization, amalgamation, merger or other business
combination (or a plan of arrangement in connection with any of the foregoing),
other than solely involving the Corporation and any one or more of its
Affiliates; with respect to which all or substantially all of the persons who
were the beneficial owners of the Shares immediately prior to such
reorganization, amalgamation, merger, business combination or plan of
arrangement do not, following the completion of such reorganization,
amalgamation, merger, business combination or plan of arrangement, beneficially
own, directly or indirectly, more than fifty percent (50%) of the resulting
voting shares on a fully-diluted basis;
	 
	 	(ii)	 	the sale to a person other than an Affiliate of the
Corporation of all or substantially all of the Corporation’s assets; or
	 
	 	(iii)	 	a change in the composition of the Board, which occurs at a
single meeting of the shareholders of the Corporation or upon the execution of
a shareholders’ resolution, such that individuals who are members of the Board
immediately prior to such meeting or resolution cease to constitute a majority
of the Board, without the Board, as constituted immediately prior to such
meeting or resolution, having approved of such change.

	 	(d)	 	“Consultant” means (i) an individual (including an individual whose services are
contracted for through a corporation), (ii) a corporation (in either case, designated by
the Board with whom the Corporation has a contract for substantial services), or (iii)
a member of the Scientific Advisory Board;
	 
	 	(e)	 	“Corporation” means Tm Bioscience Corporation or any
successor thereof;

 

 - 4 - 

	 	(f)	 	“Date of Grant” means the date on which a particular Stock Option is granted by the
Board;
	 
	 	(g)	 	“Disability” means, with respect to a Participant, the determination by the Corporation that a
Participant is eligible to receive, and the receipt by such Participant, of benefits under the
Corporation’s long-term disability plan, as such plan may be amended from time to time;
	 
	 	(h)	 	“Eligible Person” means, subject to all applicable law, any employee, officer, director or
Consultant of (i) the Corporation or (ii) any Affiliate of the Corporation (and includes any
such person who is on a leave of absence authorized by the Board or the board of directors of
any Affiliate). Notwithstanding the foregoing, a Participant will cease to be an Eligible
Person on earliest of: (a) the date of the Participant’s termination, retirement or cessation
of employment with or engagement by the Corporation or any of its Affiliates; (b) the date of
the Participant’s death; and (c) the date on which the Participant otherwise fails to meet the
criteria set forth under the definition of an Eligible Person. For greater certainty, a
Consultant will cease to be an Eligible Person if the services of any key individual referred
to in the Consultant’s contract are no longer available to the Corporation as required by the
contract.
	 
	 	(i)	 	“Exercise Price” means with respect to a Stock Option (a) if, on the Date of Grant, the
Shares are not listed on a Stock Exchange, such amount as the Board may determine as being
the fair value of the Shares as at that date (using generally accepted valuation practices);
and (b) if, on the Date of Grant, the Shares are listed on a Stock Exchange, the volume
weighted average trading price of the Shares on such Stock Exchange for the five (5) trading
days immediately preceding the day on which the Stock Option is granted (or, if no Shares
have been traded on such immediately preceding trading day, the simple average of the daily
high and low board lot trading prices of the Shares on the Stock Exchange for each trading
day falling not more than twenty trading days prior to the day on which the Stock Option is
granted), or such greater amount as the Board may designate; provided, however, that the
Exercise Price of a Stock Option shall not be less than the minimum Exercise Price required
by the applicable rules of the Stock Exchange;
	 
	 	(j)	 	“Expiry Date” means the date after which a particular Stock Option can no longer be
exercised, subject to amendment in accordance with the terms hereof;

 

 - 5 - 

	 	(k)	 	“Governmental Entity” means any applicable (a) multinational, federal, provincial, state,
municipal, local or other governmental or public department, commission, board, bureau or
agency, (b) any subdivision or authority of any of the foregoing, or (c) any
quasi-governmental body exercising (with proper jurisdiction) any regulatory or taxing
authority under or in respect of any of the above;
	 
	 	(I)	 	“Involuntary Termination” means

	 	(i)	 	in respect of any employee or officer of the Corporation or any of its
Affiliates:

	 	(A)	 	any express or implied termination by the Corporation or any
of its Affiliates of a Participant’s employment which is not due to the
termination of his or her employment for cause or on account of death or
Disability;
	 
	 	(B)	 	the assignment to a Participant of duties
materially inconsistent with his or her position, duties, responsibilities and
status immediately prior to the Change of Control, or a change in his or
her position, duties, responsibilities (including reporting
responsibilities), titles or offices in effect immediately prior to the Change
of Control, or any removal from or any failure to re-appoint him or her to any
of such positions, duties or offices;
	 
	 	(C)	 	any material reduction of the Participant’s
total compensation including base salary and
incentive compensation package, vacation entitlement or employee benefits,
which shall exclude, for greater certainty, a reduction caused by
the failure of the Corporation or its Affiliates or the employees to meet
incentive compensation targets or goals, provided that such incentive
compensation targets or goals are consistent with past
incentive compensation targets or goals;
	 
	 	(D)	 	a material reduction in the employee’s ability to
earn incentive compensation, which shall exclude, for greater certainty, a
reduction caused by the failure of the Corporation or its
Affiliates or the employees to meet incentive compensation targets or goals,
provided that such incentive compensation targets or goals are consistent
with past incentive compensation targets or goals; or

 

 - 6 - 

	 	(E)	 	any change in excess of 100 kilometres in the location at
which the Participant predominantly performs his or her duties without his or
her consent, except for required travel on business to an extent substantially
consistent with his or her business obligations immediately prior to the
Change of Control; and

	 	(ii)	 	in respect of the Participant who, to the extent he or she is a director of
the Corporation (and not an employee or officer of the Corporation or any of its
Affiliates), ceases to be a director for any reason other than as a result of
voluntary resignation, death or Disability, including, for greater certainty, ceasing
to be a director as a result of resignation following a request therefor or following
a material reduction in the director’s compensation, removal or failure to be elected
or appointed.

	 	(m)	 	“Notice of Grant” means the notice of grant attached hereto as Schedule “A”;
	 
	 	(n)	 	“Participant” means an Eligible Person to whom a Stock Option has been granted;
	 
	 	(o)	 	“Plan” means the Corporation’s incentive share option plan;
	 
	 	(p)	 	“Reserved for Issuance” means Shares which may be issued upon the exercise of Stock Options;
	 
	 	(q)	 	“Scientific Advisory Board” means the scientific advisory board of the Board in existence
from time to time, each member of which is appointed by the Board;
	 
	 	(r)	 	“Shares” means the common shares of the Corporation;
	 
	 	(s)	 	“Stock Option” means an option to purchase Shares from treasury granted hereunder to a
Participant;
	 
	 	(t)	 	“Stock Exchange” means the Toronto Stock Exchange or such other stock exchange or
over-the-counter quotation system on which the Shares are listed or quoted from time to time;
	 
	 	(u)	 	“Substitution Event” means (i) a Change of Control, or (ii) a merger, amalgamation,
arrangement, business combination or other transaction pursuant to which the Shares of the
Corporation are converted into, or exchanged for, other property, whether in the form of
securities of another corporation, cash or otherwise;

 

 - 7 - 

	 	(v)	 	“Termination Date” means the date on which a Participant ceases to be an Eligible
Person;
	 
	 	(w)	 	“Transfer” includes any sale, exchange, assignment, gift, bequest,
disposition, mortgage, charge, pledge, encumbrance, grant of security interest or
other arrangement by which possession, legal title or beneficial ownership passes from
one person to another, or to the same person in a different capacity, whether or not
voluntary or not voluntary and whether or not for value, and any agreement to effect
any of the foregoing; and
	 
	 	(x)	 	“Vesting Date” means the date or dates determined in accordance with Section
2(3) on and after which a particular Stock Option, or any part thereof, may be
exercised, subject to amendment from time to time in accordance with the terms hereof.

Words importing the singular number include the plural and vice versa and words importing
the masculine gender include the feminine.

This Plan is to be governed by and interpreted in accordance with the laws of the Province
of Ontario.

	1.4.	 	Shares Reserved

	 	(a)	 	Subject to Section 1.4(b), the total number of Shares Reserved for
Issuance under the Plan will be 13,600,000.
	 
	 	(b)	 	Effective upon the Toronto Stock Exchange amending its
Company Manual to
remove the requirement for stock option plans to specify a maximum number of securities
issuable under such plans, Section 1.4(a) above shall be deleted and the total number
of Shares Reserved for Issuance under the Plan shall be equal to 10% of the number of
Shares outstanding from time to time.

	1.5	 	Nonqualified Plan
	 
	 	 	For purposes of Section 422 of the United States Internal Revenue Code, this Plan will not
be treated as an Incentive Stock Option Plan.

ARTICLE 2 SHARE OPTION PLAN

	2.1.	 	Application
	 
	 	 	Grants of Stock Options to Eligible Persons shall be governed by this Article 2.

 

 - 8 - 

	2.2.	 	Grants

	 	(a)	 	Subject to this Plan, the Board will have the authority to determine
the limitations, restrictions and conditions, if any, in addition to
those set out in
this Plan, applicable to the exercise of a Stock Option, including,without limitation,
the nature and duration of the restrictions, if any, to be imposed upon the sale or
other disposition of Shares acquired upon exercise of the Stock Option. An Eligible
Person may receive Stock Options on more than one occasion under this Plan and may
receive separate Stock Options on any one occasion.
	 
	 	(b)	 	Subject to any required Stock Exchange or Governmental Entity approval,the
aggregate number of Shares reserved for issuance to any one person pursuant to Stock
Options granted under the Plan must not exceed 5% of the Shares outstanding at the time
of the grant.
	 
	 	(c)	 	Subject to any required Stock Exchange or Governmental Entity approval,the
number of Shares reserved for issuance to insiders of the Corporation pursuant to Stock
Options granted under the Plan must not exceed 10% of the Shares outstanding.
	 
	 	(d)	 	Subject to any required Stock Exchange or Governmental Entity approval,the
Corporation shall not, pursuant to Stock Options granted under the Plan, issue to
insiders of the Corporation, within a one-year period, a number of Shares exceeding 10%
of the Shares outstanding.
	 
	 	(e)	 	Subject to any required Stock Exchange or Governmental Entity approval,the
Corporation shall not, pursuant to Stock Options granted under the Plan, issue to any
one insider of the Corporation, and such insider’s associates, within a one-year period,
a number of Shares exceeding 5% of the Shares outstanding.

	2.3.	 	Expiry Date; Vesting of Options

	 	(a)	 	Subject to Section 2.5 and any applicable rules of the Stock Exchange, and
unless otherwise fixed by the Board at the time the particular Stock Option is granted
and set forth in the Notice of Grant, the Expiry Date of a Stock Option will be the
fifth (5th) anniversary of the Date of Grant.

 

 - 9 - 

	 	(b)	 	Subject to Section 2.3(c), Stock Options will vest over a four (4) year period and may be
exercised in whole or in part at any time from time to time as follows:

	 	 	 	 	 
	 	 	NUMBER OF STOCK OPTIONS
	PERIOD
	 	VESTED
	On the Date of Grant

	 	 	20	%
	On or after the first anniversary of
Date of Grant

	 	 	40	%
	On or after the second anniversary of
Date of Grant

	 	 	60	%
	On or after the third anniversary of
Date of Grant

	 	 	80	%
	On or after the fourth anniversary of
Date of Grant

	 	 	100	%

	 	(c)	 	Stock Options that are granted to members of the Scientific Advisory Board who are appointed
to a term of 24 months or less will vest in full on the date that such term is completed, and will
not vest until the completion of such term.

	2.4.	 	Exercise Price
	 
	 	 	The exercise price for the Shares underlying a Stock Option will be the Exercise
Price.
	 
	2.5.	 	Termination, Retirement, Death, Departure
	 
	 	 	Any Stock Option or part thereof not exercised within the Exercise Period will
terminate and become null, void and of no effect as of the day immediately following the
Expiry Date determined under Section 2.3 (a) hereof, unless the Expiry Date is determined
to be an earlier date as follows:

	 	(a)	 	Death - The Expiry Date of a Stock Option held by a Participant that had
vested immediately prior to his or her death will be the earlier of the expiry date
shown on the relevant Notice of Grant and the date that is one hundred and eighty
(180) days after the date of his or her death. Stock Options that are outstanding but
unvested immediately prior to a Participant’s death will immediately terminate and
become null, void and

 

 - 10 - 

	 	 	 	of no effect upon the death of the Participant. If a Participant dies, the legal
representatives of the Participant may exercise the Participant’s Stock Options
(which, by their terms, were exercisable on the date of death) prior to the Expiry
Date.
	 
	 	(b)	 	Disability - In the event a Participant ceases to be an Eligible Person as
a result of Disability, then the Expiry Date of a Stock Option that
had vested on the
date such Participant ceases to be an Eligible Person will be the earlier of the expiry
date shown on the relevant Notice of Grant and the date ninety (90) days following the
date such Participant ceases to be an Eligible Person. Stock Options that are
outstanding but unvested on the date such Participant ceases to be an Eligible Person
will immediately terminate and become null, void and of no effect.
	 
	 	(c)	 	Termination for Cause - If the employment of a
Participant who is an employee is
terminated for cause, all vested and unvested Stock Options held by such Participant
will immediately terminate and become null,void and of no effect on the date on which
the Corporation, or any of its Affiliates, gives a notice of termination for cause to
such Participant.
	 
	 	(d)	 	Voluntary Resignation - In the event a Participant ceases to be an
Eligible Person as a result of his or her voluntary resignation from any position
or employment with the Corporation or its Affiliates, then the Expiry
Date of a Stock
Option that had vested on the date such Participant ceases to be an Eligible Person will
be the earlier of the Expiry Date shown on the relevant Notice of Grant and the date
ninety (90) days following the date such Participant ceases to be an Eligible Person.
The Stock Options that are outstanding but unvested on the date such Participant ceases
to be an Eligible Person will immediately terminate and become null,
void and of no
effect.
	 
	 	(e)	 	Discretion of Board - Notwithstanding
Section 2.5(a), (b), (c) and (d) above,
but subject to applicable laws, rules and regulations of any applicable Stock Exchange
or Governmental Entity, the Board may, by prior notice to any Participant or his or her
legal representative, in its sole discretion, extend the Expiry Date of any Stock
Options in whole or in part.
	 
	 	2.6.	 	Notice of Grant
	 
	 	 	 	Each Stock Option must be confirmed, and will be governed, by a Notice of Grant in the
form of Schedule “A” (as the same may be amended from time to time) signed by the
Corporation and the Participant.

 

 - 11 - 

	2.7.	 	Shareholder Approval
	 
	 	 	Where required by the Stock Exchange or any Governmental Entity, shareholder approval to the
grant of Stock Options shall be obtained prior to the exercise of Stock Options granted to
insiders of the Corporation.
	 
	2.8.	 	Payment of Exercise Price; Exercise of Stock Options

	 	(a)	 	Stock Options may only be exercised by the Participant or his or her
legal representative. Participants may exercise their Stock Options,
subject to the
restrictions set out below, to acquire Shares by either electing
(i) the full payment
option by enclosing a bank draft or certified cheque in the amount of the aggregate
Exercise Price payable to the Corporation in full payment for such Shares, or (ii) the
cashless exercise option by which the Participant authorizes and directs (A) the
Corporation to issue and deliver the Shares issuable on the exercise of the
Participant’s Stock Options to an intermediary, and (B) the intermediary to sell all of
the Shares issuable upon the exercise of such Participant’s Stock Options, to remit the
net proceeds of such sale (after payment of brokerage commissions and
other transfer
costs) to pay the aggregate Exercise Price to the Corporation in full payment for such
Shares, and to remit to the Participant the balance, if any, of the net proceeds of the
sale of such Shares after the above payments. Stock Options may be exercised in whole
or in part only in respect of a whole number of Shares at any time or from time to
time during the Exercise Period by delivering to the Corporation a
notice of option
exercise (the “Exercise Notice”), substantially in the form
attached hereto as Schedule
“B” and, in the event the full payment option is selected by the Participant, a bank
draft or certified cheque in an amount equal to the aggregate Exercise Price of the
Shares to be purchased pursuant to the exercise of Stock Options.
	 
	 	(b)	 	Notwithstanding Section 2.8(a) hereof, but subject to Section 5,2,
a Participant must exercise Stock Options entitling the Participant
to acquire no less
than five hundred (500) Shares on each date on which Stock Options are exercised by such
Participant unless, on such date, the Participant holds Stock Options that, in
the aggregate, entitle the Participant to acquire fewer than five hundred (500)
Shares, in which case a Participant who chooses to exercise such Stock Options must
exercise all of his or her Stock Options on such date.
	 
	 	(c)	 	As soon as practicable following the receipt of the Exercise
Notice and, in the
event the full payment option is selected by the Participant, a bank draft or certified
cheque in accordance with Section 2.8(a), the Corporation will deliver to the
Participant a certificate for the Shares so purchased. If

 

 - 12 - 

	 	 	 	the number of Shares so purchased is less than the number of Shares subject to the
Stock Options, the Corporation will attach thereto a memorandum of the number of
Shares in respect of which the Stock Options have been exercised and will return a
written notice to the Participant concurrently with the delivery of the aforesaid
Share certificate stating the number of Shares that remain to be purchased under the
Stock Options.
	 
	 	(d)	 	The issue of Shares by the Corporation pursuant to the
exercise of any Stock
Option is subject to compliance with applicable laws, rules and regulations of all
Governmental Entities applicable to the issuance and distribution of such Shares and to
the requirements of any Stock Exchange on which the Shares may be listed or quoted,
including any requirements with respect to the legending of certificates representing
the Shares issued pursuant to the exercise of any Stock Option. The Participant agrees:
(i) to comply with all such laws, rules, regulations and
requirements, (ii) to furnish
to the Corporation any information, report and/or undertakings required to comply
with all such laws, rules, regulations and requirements, and (iii) to
fully cooperate with the Corporation in complying with such laws, rules,
regulations and requirements.
	 
	 	(e)	 	Upon the exercise of Stock Options, Eligible Persons who are
employed by the
Corporation or an Affiliate shall have withheld at source all income,social security
and other payroll taxes and withholdings required by law on the gain realized upon the
exercise.

	2.9.	 	Amendment of Option Terms
	 
	 	 	The Board may, subject to any necessary regulatory approval, at its discretion from
time to time, amend the Plan and the terms and conditions of any Stock Option thereafter to
be granted and, without limiting the generality of the foregoing, may make such amendment
for the purpose of complying with any changes in any relevant law, rule, regulation,
regulatory requirement or requirement of the Stock Exchange, or for any other purpose which
may be permitted by law, provided always that any such amendment will not alter the terms
or conditions of, or impair any right of any Participant pursuant to any Stock Option
awarded prior to such amendment without the consent of such Participant, unless such
amendment or alteration is required by any applicable Stock Exchange or Governmental
Entity.
	 
	2.10.	 	Assignment of Stock Options
	 
	 	 	Stock Options (and any rights thereunder) will not be assignable or transferable.

 

 - 13 - 

ARTICLE 3 ASSUMPTION OR SUBSTITUTION OF STOCK OPTIONS

	3.1.	 	Substitution

	 	(a)	 	In the event of a Substitution Event, then, unless Article 4 applies,
any surviving  or acquiring corporation will assume any Stock
Option outstanding under the Plan on the same terms and conditions as
the Plan or will
substitute or replace similar stock options (including an award to acquire the same
consideration paid to the securityholders in the transaction effecting the
Substitution Event) for those Stock Options outstanding under the Plan on the same terms
and conditions as the Plan,in each case at an exercise price for such replaced,
substituted or replacement option at such amount as the Board may determine
(usually generally accepted valuation practices) as being the fair value for
the underlying shares as at the date of such Substitution Event.
	 
	 	(b)	 	In the event any surviving or acquiring corporation neglects or refuses
(as evidenced in a press release or in the applicable merger
agreement or similar
definitive transaction document) to assume such Stock Options or to substitute or
replace similar stock options for those outstanding Stock Options under the Plan, then
with respect to any Stock Options held by Participants, the vesting of such Stock
Options (and, if applicable, the time during which such Stock Options may be exercised)
will be immediately accelerated so that such Stock Options will be fully vested. In
addition, in such event, outstanding Stock Options will terminate if not exercised
(if applicable) at or prior to such Substitution Event.
	 
	 	(c)	 	No fractional Shares or other security will be issued upon
the exercise of any
Stock Option and, accordingly, if as a result of a Substitution
Event, a Participant
would become entitled to a fractional Share or other security,such Participant will
have the right to acquire only the next lowest whole number of Shares or other security
and no payment or other adjustment will be made with respect to the fractional interest
so disregarded; provided, however, that a cash payment equal to the value of all
fractional interests disregarded pursuant to this Section 3.1 (c) shall be made to
a Participant if the number of Stock Options so disregarded exceeds
five percent (5%) of
the total number of Stock Options exercised by such Participant.
	 
	 	(d)	 	Notwithstanding any other provision of this Plan, in the
event of a potential
Substitution Event, the Board may, in its discretion:
(i) terminate, conditionally or
otherwise and on such terms as it sees fit, the Stock Options not exercised
following successful completion of such Substitution Event; and (ii)
accelerate the Vesting Date or otherwise

 

 - 14 - 

	 	 	 	modify the terms of the Stock Options to assist the Participants to obtain the
advantage of holding Shares during the Substitution Event. If the Substitution Event
referred to in this Article 3 is not completed during the time specified therein (as
the same may be extended), the Stock Options which vested pursuant to this Article 3
must be returned by the Participant to the Corporation and will be reinstated as
unvested Stock Options, and the original terms applicable to such Stock Options will
apply. If any of the Stock Options that vested pursuant to this Article 3 were
exercised, such Shares must be returned to the Corporation for cancellation. The
determination of the Board in respect of any such Substitution Event will for the
purposes of this Plan be conclusive and binding.
	 
	 	(e)	 	Upon the announcement or contemplation of any other event properly
characterized as a Substitution Event, the Board will have the discretion, without the
necessity or requirement for the agreement of any Participant, to accelerate the
Vesting Dates of all Stock Options, as it will see fit. The Board will promptly notify
each Participant in writing of any acceleration of the Vesting Dates.

ARTICLE 4 TAKE-OVER BIDS

	4.1.	 	Take-over Bids

	 	(a)	 	In the event of a potential change of control following a take-over bid
(as defined herein), then the Corporation will, immediately upon
receipt of the notice of
the offer, notify each Participant of the offer, with full particulars thereof. In the
event of a potential change of control following a take-over bid, the
Board may in its
discretion, accelerate the Vesting Date of all of a Participant’s unvested Stock
Options, such that all of a Participant’s Stock Options will immediately vest at such
time and the Vesting Date in connection with such Stock Options will be
adjusted accordingly. In such event, all Stock Options so vested will be
exercisable until their respective Expiry Dates so as to permit the Participant to
tender the Shares received upon such exercise pursuant to the bid or
offer. For purposes
of this Article 4, a “potential change of control following a takeover bid” will be
deemed to occur upon a formal bid or tender offer for Shares being made (other than by
the Corporation or Affiliate of the Corporation, or an employee benefit plan established
or maintained by the Corporation or an Affiliate) as a result of
which the offeror and
its affiliates would, if successful, beneficially own, directly or indirectly,
fifty percent (50%) or more of the Shares then outstanding.
	 
	 	(b)	 	Notwithstanding any other provisions of this Plan, in the event of a

 

 - 15 - 

	 	 	 	potential change of control following a take-over bid, the Board will have the
power, if determined appropriate (i) to terminate, conditionally or otherwise and on
such terms as it sees fit, the Stock Options not exercised following successful
completion of such event, and/or (ii) to modify the terms of the Stock Options to
assist the Participants to tender their securities into the take-over bid. For
greater certainty, in the event that the acquiring entity acquires one hundred
percent (100%) of the outstanding Shares following the take-over bid, the Board will
have the power, if determined appropriate, to terminate the Stock Options not
exercised upon the expiry of the time period for tendering to the acquiring entity
for purchase.
	 
	 	(c)	 	If the take-over bid referred to in Section 4.1(a) is not completed within the
time specified therein (as the same may be extended), the Stock Options that vested
pursuant to Section 4.1 (a) (if any) must be returned by the Participant to the
Corporation and will be reinstated as unvested Stock Options and the original terms
applicable to such Stock Options will apply. If any of the Stock Options that vested
pursuant to this Section 4.1 (a) (if any) were exercised, such Shares must be returned
to the Corporation for cancellation.

ARTICLE
5 MISCELLANEOUS

	5.1.	 	Involuntary Termination
	 
	 	 	In the event of a Substitution Event or a change of control (as defined below) and upon an
Involuntary Termination of the Participant at any time within the ninety day (90) day
period prior to or the one hundred and eighty (180) day period following the date of
completion of the transaction effecting such Substitution Event or change of control, all
of a Participant’s unvested Stock Options will immediately vest, and the Vesting Date in
connection with such Stock Options will be adjusted accordingly. For the purposes of this
section 5.1, a “change of control” will be deemed to occur upon a formal bid or tender
offer for Shares being made (other than by the Corporation or an Affiliate of the
Corporation or an employee benefit plan established or maintained by the Corporation or an
Affiliate) as a result of which the offeror and its affiliates acquires beneficial
ownership (directly or indirectly) of fifty percent (50%) or more of the Shares then
outstanding, or upon any issuance of Shares by the Corporation (whether by way of public
offering or private placement) that results in a single shareholder acquiring beneficial
ownership (directly or indirectly) of fifty percent (50%) or more of the Shares outstanding
after such issuance (provided that such shareholder did not, at the time of such issuance,
have beneficial ownership, direct or indirect, of fifty percent (50%) or more of the
Shares).

 

 - 16 - 

	5.2	 	Capital Adjustments
	 
	 	 	If there is any change in the outstanding Shares by reason of a stock dividend or
split, recapitalization, consolidation, combination or exchange of shares, or other
fundamental corporate change, the Board will make, subject to any prior approval required
of the Stock Exchange or other applicable Governmental Entities, if any, an appropriate
substitution or adjustment to the Shares or other securities of the Corporation, including
in (i) the number or kind of shares or other securities reserved for issuance pursuant to
this Plan; and (ii) the exercise price of those unexercised Stock Options; provided,
however, that no substitution or adjustment will obligate the Corporation to issue or sell
fractional shares.
	 
	5.3.	 	Non-Exclusivity
	 
	 	 	Nothing contained herein will prevent the Board from adopting other or additional
compensation arrangements for the benefit of any Eligible Person or Participant, subject
to any required Stock Exchange, regulatory or shareholder approval.
	 
	5.4.	 	Termination

	 	(a)	 	The Board may amend, suspend or terminate this Plan or any
portion there of at any
time in accordance with applicable legislation, and subject to any required regulatory
or shareholder approval. Subject to Articles 3 and 4 hereof, no amendment, suspension
or termination will alter or impair any Stock Options under the Plan, or any rights
pursuant thereto,granted previously to any Participant without the consent of
that Participant.
	 
	 	(b)	 	If this Plan is terminated, the provisions of this Plan
and any administrative guidelines, and other rules adopted by the
Board and in force
at the time of this Plan, will continue in effect as long as any
Stock Options under
the Plan or any rights pursuant thereto remain outstanding. However,
notwithstanding the termination of the Plan, the Board may make any amendments to the
Plan or Stock Options it would be entitled to make if the Plan were still in effect.

	5.5.	 	Compliance with Legislation
	 
	 	 	The Board may postpone or adjust any Stock Option or the issue of any Shares pursuant
to this Plan as the Board in its discretion may deem necessary in order to permit the
Corporation to effect or maintain qualification of this Plan or the Shares issuable
pursuant thereto under the securities laws of any applicable jurisdiction, or to determine
that the Shares and this Plan are exempt from such

 

 - 17 - 

	 	 	registration. The Corporation is not obligated by any provision of this Plan or any
grant hereunder to sell or issue shares in violation of any applicable law. In addition, if
the Shares are listed on a Stock Exchange, the Corporation will have no obligation to issue
any Shares pursuant to this Plan unless the Shares have been duly listed, upon official
notice of issuance, on the Stock Exchange on which the Shares are listed for trading.
	 
	5.6.	 	Effective Date
	 
	 	 	This Plan will become effective upon the approval of the Plan
by the Board.
	 
	5.7	 	Discretionary Share Withholding,
	 
	 	 	The Board, in its sole discretion, may provide that, when taxes are to be withheld in
connection with the exercise of a Stock Option, the Eligible Person may elect to make
payment for the withholding of federal, provincial/state and local taxes, including Social
Security and Medicare taxes (for Eligible Persons resident in the United States) or Canada
Pension Plan contributions and Employment Insurance premiums (for Eligible Persons resident
in Canada), by any or all of the following methods:

	 	(i)	 	delivering part or all of the payment in cash;
	 
	 	(ii)	 	delivering part or all of the payment in previously-owned
Shares, which shall be valued at their fair market value on the date the taxes
are required to be withheld; or
	 
	 	(iii)	 	requesting the Corporation to withhold from those Shares that
would otherwise be received upon exercise of the Stock Option, a number of
Shares having a fair market value on the date the taxes are required to be
withheld equal to the amount to be withheld.

	 	 	Any fractional share amount and any additional withholding not paid by the withholding or
surrender of Shares must be paid in cash. If no timely election is made, cash must be
delivered to satisfy all withholding requirements.

 

  

SCHEDULE “A”

NOTICE OF GRANT OF STOCK OPTIONS

TM BIOSCIENCE CORPORATION

Telephone: (416) 593-4323

Facsimile: (416)5934066

[Date]

[Name & Address] 

Dear [Name]:

This is to advise you that in recognition of your contribution to our business, you have been
selected to participate in the Incentive Share Option Plan (the “Plan”) of Tm
Bioscience Corporation (the “Corporation”). On                      you were granted a stock
option to acquire                     common shares of the Corporation at a price of $                    per
common share.

Your stock option is subject to the provisions of the Plan, a copy of which is attached to this
notice. The stock option granted to you by the Corporation will be vested in accordance the Plan
and as follows:

	 	 	 	 	 
	 	 	NUMBER OF STOCK OPTIONS
	PERIOD	 	VESTED
	On the Date of Grant

	 	 	20	%
	On or after the first anniversary of
Date of Grant

	 	 	40	%
	On or after the second anniversary of
Date of Grant

	 	 	60	%
	On or after the third anniversary of
Date of Grant

	 	 	80	%
	On or after the fourth anniversary of
Date of Grant

	 	 	100	%

The Expiry
Date of your stock option is.                                        .

 

- 2 -

The grant of options described above is strictly confidential and the information concerning
the number or price of common shares granted under this option should not be disclosed to anyone.

Yours sincerely,

•

 

 

SCHEDULE “B”

NOTICE OF OPTION EXERCISE

TM BIOSCIENCE CORPORATION

INCENTIVE SHARE OPTION PLAN

To:  Chief Financial Officer, Tm Bioscience Corporation (The “Corporation”)

          Please be advised that in connection with stock options granted to me under the Corporation’s
Incentive Share Option Plan pursuant to the Notice of Grant of Stock

Options dated                     (the “Stock Options”), the undersigned hereby wishes to
exercise his or her option to purchase                      common shares (the “Option
Shares”) in the capital of the Corporation at a price of $ ____ per share, for a total
payment of $
                    (the “Exercise Payment”). I hereby agree to assist the Corporation in the filing of, and will file on a timely basis, all reports that I may be required
to file under applicable securities laws. I understand that the fair market value assigned to my
Stock Options for income tax purposes will be the closing price of the common shares of the
Corporation on the TSX (or such other stock exchange or over the counter quotation system on which
the common shares may be listed or quoted from time to time) on the date of this exercise. I
further understand that this request to exercise my Stock Options is irrevocable.

          I elect (please check one option):

	o 	 	Full payment exercise — complete Part 1 of this notice in duplicate, sign and
return one original copy to the Corporation’s Chief Financial Officer.

	o	 	 Cashless exercise — complete Part 2 of this notice in triplicate, sign and return
one original copy to the Corporation’s Chief Financial Officer, one copy by fax and original
by courier to:

 

- 2 -

RBC Dominion Securities Inc.

Attention: Janet Cottrelle

Royal Bank Plaza, South Tower

Suite 3900, P.O. Box 88

Toronto, ON  M5J 2J2

Fax: (416) 842-2222

Tel: (416) 842-2380 OR 1-800-561-6431

Retain one copy of this Notice of Option Exercise for your records.

Part 1: For full payment exercise:

Please find enclosed a bank draft or certified cheque in the amount of
$                                        , representing the aggregate Exercise Payment payable to the
Corporation in full payment for the Option Shares.

The Option Shares issued on the exercise of my Stock Options specified above are to be registered
as follows:

	 	 	 
	 

(Print Registree’s Name)

	 	 
	 
	 	 
	 

(Address)

	 	 
	 
 
	 	 
	 
	 	 
	 

(Telephone Number)

	 	 
	 
	 	 
	 

	 	 
	(Facsimile Number)

	 	(Optionee’s Signature)
	 
	 	 
	 

	 	 
	(E-Mail Address)

	 	(Date)

 

- 3 -

Part 2: For cashless exercise:

I wish to use the services of RBC Dominion Securities Inc. to sell all of the Option Shares
issuable upon exercise by me of my Stock Options specified above, and to use the proceeds thereof
to pay the Exercise Payment. I therefore irrevocably authorize and direct the Corporation to:

	1.	 	Issue the Option Shares covered by my Stock Options as
specified in the accompanying Notice of
Option Exercise to RBC Dominion Securities Inc. on my behalf and to
deliver the Option Shares
to RBC Dominion Securities Inc.; and

	2.	 	In the event that the net proceeds of the sale of my Option Shares (after payment of
all commissions and other transfer costs) are less than the full Exercise Payment, to
withhold and deduct from any amounts payable to me by the Corporation, including my wages
or salary, the amount of such shortfall, and to apply such shortfall in full or partial payment
of the Exercise Payment.

and this shall be your good and sufficient authority for so doing.

I further irrevocably authorize and direct RBC Dominion Securities Inc. to:

	1.	 	Immediately sell on my behalf all of my Option Shares
specified above and to immediately remit
to the Corporation out of the net proceeds of such sale (after
payment of all commissions and
other transfer costs) an amount equal to the lesser of: (i) $ ___
being the Exercise Payment, payable to the Corporation in full payment for the Option Shares;
and (ii) the net proceeds of such sale; and

	2.	 	Remit to me the balance, if any, of the net proceeds of the sale of my Option Shares (after
the above payment),
and this shall be your good and sufficient authority for so
doing. 

	 	 	 I understand, acknowledge and agree that

	1.	 	These cashless exercise mechanics have been developed for my
convenience, and therefore I will
indemnify and hold harmless the Corporation and RBC Dominion
Securities Inc. from any losses,
liabilities, claims, damages, costs, charges or expenses which either
the Corporation or RBC
Dominion Securities Inc., as the case may be, may incur arising
directly or indirectly by
reason of the cashless exercise of my Stock Options.

	2.	 	The Corporation will issue the Option Shares (in registered form or book-entry form) in
the name of RBC Dominion Securities Inc. (or its nominee) as agent acting on my behalf.

	3.	 	In the event that the net proceeds of the sale of my Option Shares (after payment of
all
commissions and other transfer costs) are less than the full Exercise Payment, I
will immediately upon demand deliver to the Corporation, by certified cheque or bank draft, the

 

- 4 -

	 	 	amount of such shortfall, and the Corporation is authorized to deduct from any amounts
payable to me by the Corporation, including my wages or salary, the amount of such shortfall,
and to apply such shortfall in full or partial payment of the Exercise Payment.
	 
	4.	 	For the purpose of facilitating this cashless exercise of my Stock Options and payment of the
Exercise Payment, I hereby constitute and appoint the Corporation as my true and lawful
attorney with full power of substitution in my name and on my behalf, with no restriction or
limitation in that regard, and declare that such power of attorney may be exercised during any
subsequent legal incapacity on my part, to execute and deliver all such agreements and
documents and take such other actions as may be necessary to give effect to the cashless
exercise of my Stock Options and the payment by me to the Corporation of the full Exercise
Payment.

	 	 	 
	 

(Printed Name*)

	 	 
	 
	 	 
	 

(Address)

	 	 
	 
	 	 
	 

	 	 
	 

	 	(Optionee’s Signature)
	 
	 	 
	 

	 	 
	(S.I.N.)

	 	(Date)

*print your name exactly as it appears on the Notice of Grant of Stock Options

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00118-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00118-of-00352.parquet"}]]