Document:

drq-ex101_199.htm

			
	
 
	
 
	
Exhibit 10.1

 

2017 OMNIBUS INCENTIVE PLAN OF DRIL-QUIP, INC.

 

DIRECTOR RESTRICTED STOCK AWARD AGREEMENT

 

THIS DIRECTOR RESTRICTED STOCK AWARD AGREEMENT (this “Award”) is made as of October 28, 2019 (the “Grant Date”), by and between Dril-Quip, Inc., a Delaware corporation (the “Company”), and __________________ (the “Grantee”).

W I T N E S S E T H:

WHEREAS, pursuant to the 2017 Omnibus Incentive Plan of Dril-Quip, Inc. (the “Plan”), the Compensation Committee (the “Committee”) of the Board of Directors of the Company (the “Board”) has determined that it would be in the interest of the Company and its stockholders to grant restricted shares of Company common stock, par value $0.01 per share (the “Common Stock”), as provided herein, in order to encourage the Grantee to continue to serve as a member of the Board, to encourage the sense of proprietorship of the Grantee in the Company and to stimulate the active interest of the Grantee in the development and financial success of the Company.

NOW THEREFORE, the Company awards the restricted shares of Common Stock (“Restricted Stock”) to the Grantee, subject to the following terms and conditions of this Award:

1.Grant of Restricted Stock.  Subject to the terms and conditions contained herein, including, but not limited to, Section 2 of this Award, the Company hereby grants to the Grantee an award of _____ shares of Restricted Stock under the Plan.  Capitalized terms used, but not otherwise defined, herein shall have the meanings set forth in the Plan.  

As of the Grant Date, as determined by the Committee, the shares of Restricted Stock will be (i) registered in a book entry account (“Account”) in the name of the Grantee or (ii) evidenced by the issuance of stock certificates, which certificates will be registered in the name of the Grantee and will bear an appropriate legend referring to the terms, conditions, and restrictions applicable to the Restricted Stock.  Any certificates issued that evidence the shares of Restricted Stock shall be held in custody by the Company or, if specified by the Committee, by a third party custodian or trustee, until the restrictions on such shares shall have lapsed, and, as a condition of this Award, the Grantee shall deliver a stock power, duly endorsed in blank, relating to the shares of Restricted Stock.  The Restricted Stock will constitute issued and outstanding shares of Common Stock for all corporate purposes.

2.Vesting Schedule; Settlement.  

(a)Except as provided in Section 2(b) below, the restrictions on the shares of Restricted Stock shall lapse, and the shares shall vest, in full on the first anniversary of the Grant Date, provided, however, that the Grantee has continuously served as a member of the Board from the Grant Date through such vesting date.  Any fractional shares shall be rounded-up to the next whole share (not to exceed the total number of shares of Restricted Stock granted under this Award).  If the Grantee does not continuously serve as a member of the Board until the vesting 

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Exhibit 10.1

 

date specified above, then all shares of then outstanding Restricted Stock shall be forfeited immediately after the Grantee ceases to be a member of the Board.

(b)Notwithstanding the foregoing, the Restricted Stock shall become fully vested and the restrictions shall lapse as of the date of the occurrence of a Change of Control; provided, however, that the Grantee has continuously served as a member of the Board at all time since the Grant Date.

(c)As soon as administratively feasible, but in no event later than 30 days following the vesting and lapse of restrictions on the Restricted Stock, the Company will cause to be removed from the Account the restrictions or, if requested in writing to the Committee, cause to be issued and delivered to the Grantee (in certificate or electronic form) shares of Common Stock equal to the number of shares of Restricted Stock that have vested.

3.Voting and Dividend Rights.  During the period in which the restrictions provided herein are applicable to the Restricted Stock, the Grantee shall have the right to vote the shares of Restricted Stock.  Subject to the forfeiture condition described below, Grantee shall be entitled to receive any cash dividends paid with respect to the Restricted Stock during the Restricted Period, but such dividends shall be held by the Company and paid, without any interest, within 10 days following the lapse of the restriction on the underlying shares of Restricted Stock.  In the event shares of Restricted Stock are forfeited, cash dividends paid with repsect to such shares during the Restriction Period shall also be forfeited.  Any dividend or distribution payable with respect to shares of Restricted Stock that shall be paid or distributed in shares of Common Stock shall be subject to the same restrictions provided for herein, and the shares so paid or distributed shall be deemed Restricted Stock subject to all terms and conditions herein.  Any dividend or distribution (other than cash or Common Stock) payable or distributable on shares of Restricted Stock, unless otherwise determined by the Committee, shall be subject to the terms and conditions of this Award to the same extent and in the same manner as the Restricted Stock is subject; provided that the Committee may make such modifications and additions to the terms and conditions (including restrictions on transfer and the conditions to the timing and degree of lapse of such restrictions) that shall become applicable to such dividend or distribution as the Committee may provide in its absolute discretion.

4.Transfer Restrictions.  Except as expressly provided in the Plan or herein, the shares of Restricted Stock are non-transferable and may not otherwise be assigned, pledged, hypothecated or otherwise disposed of and shall not be subject to execution, attachment or similar process.  Upon any attempt to effect any such disposition, or upon the levy of any such process, the award provided for herein shall immediately become null and void, and the shares of Restricted Stock shall be immediately forfeited to the Company.

5.Incorporation of Plan Provisions.  This Award and the award of Restricted Stock hereunder are made pursuant to the Plan and are subject to all of the terms and provisions of the Plan as if the same were fully set forth herein. In the event that any provision of this Award conflicts with the Plan, the provisions of the Plan shall control.  The Grantee acknowledges receipt of a copy of the Plan and agrees that all decisions under and interpretations of the Plan by the Committee shall be final, binding and conclusive upon the Grantee.

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Exhibit 10.1

 

6.No Rights to Continued Service.  Nothing contained in this Award shall confer upon the Grantee any right to continued service as a member of the Board, or limit in any way the right of the Board to terminate or modify the terms of the Grantee’s service at any time.

7.Notice.  Unless the Company notifies the Grantee in writing of a different procedure, any notice or other communication to the Company with respect to this Award shall be in writing and shall be delivered personally or sent by first class mail, postage prepaid to the following address:

Dril-Quip, Inc.

6401 N. Eldridge Parkway

Houston, Texas 77041

Attn: Corporate Secretary

Any notice or other communication to the Grantee with respect to this Award shall be in writing and shall be delivered personally, shall be sent by first class mail, postage prepaid, to the Grantee’s address as listed in the records of the Company on the Grant Date, unless the Company has received written notification from the Grantee of a change of address, or shall be sent to the Grantee’s e-mail address specified in the Company’s records.

8.Miscellaneous.

(a)THIS AWARD SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS.

(b)The granting of this Award shall not give the Grantee any rights to future grants.

(c)This Award, including the relevant provisions of the Plan, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, both written and oral, with respect to the subject hereof.  

(d)This Award may be executed in one or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.

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Exhibit 10.1

 

DRIL-QUIP, INC.

By:

Name: Blake T. DeBerry

Title: President and Chief Executive Officer

 

 

 

The Grantee acknowledges receipt of a copy of the Plan, represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Award subject to all of the terms and provisions hereof and thereof.

GRANTEE

 

[Name]

4Blueprint

 

 

 

 

 

EDESA BIOTECH, INC.

2019 EQUITY INCENTIVE COMPENSATION PLAN

 

 

 

 

 

EDESA BIOTECH, INC.

2019 EQUITY INCENTIVE COMPENSATION PLAN

 

	

1 Purpose

	
 

	

1

	

2 Definitions

	
 

	

1

	

3 Administration.

	
 

	

6

	

4 Shares Subject to Plan.

	
 

	

7

	

5 Eligibility; Per-Participant Limitations

	
 

	

9

	

6 Specific Terms of Awards.

	
 

	

9

	

7 Certain Provisions Applicable to Awards.

	
 

	

12

	

8 Change in Control.

	
 

	

15

	

9 General Provisions.

	
 

	

17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EDESA BIOTECH, INC.

2019 EQUITY INCENTIVE COMPENSATION PLAN

 

1. Purpose.
The purpose of this 2019 EQUITY INCENTIVE COMPENSATION PLAN (the
“Plan”) is to assist Edesa Biotech, Inc., a British
Columbia corporation, and its Related Entities (as hereinafter
defined) in attracting, motivating, retaining and rewarding
high-quality executives and other employees, officers, directors,
consultants and other persons who provide services to the Company
or its Related Entities by enabling such persons to acquire or
increase a proprietary interest in the Company in order to
strengthen the mutuality of interests between such persons and the
Company’s shareholders, and providing such persons with
performance incentives to expend their maximum efforts in the
creation of shareholder value. This Plan is an amendment and
restatement of the Company’s 2017 Incentive Compensation
Plan, as amended and restated effective as of January 27, 2017 (the
“Initial Plan”), the terms and conditions of which are
superseded hereby, except as explicitly set forth
herein.

 

2. Definitions. For purposes of
the Plan, the following terms shall be defined as set forth below,
in addition to such terms defined in Section 1 hereof and elsewhere
herein.

 

(a) “Award” means
any Option, Restricted Share Award or Restricted Share Unit Award,
granted to a Participant under the Plan.

 

(b) “Award
Agreement” means any written agreement, contract or
other instrument or document evidencing any Award granted pursuant
to this Plan.

 

(c) “Beneficiary”
means the person, persons, trust or trusts that have been
designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the
benefits specified under the Plan upon such Participant’s
death or to which Awards or other rights are transferred if and to
the extent permitted under Section 9(b) hereof. If, upon a
Participant’s death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means
the Participant’s estate.

 

(d) “Beneficial
Owner” and “Beneficial
Ownership” shall have the meaning ascribed to such
term in Rule 13d-3 under the Exchange Act and any successor to such
Rule.

 

(e) “Board” means
the Company’s Board of Directors.

 

(f) “Cause” shall,
with respect to any Participant, have the meaning specified in the
Award Agreement. In the absence of any definition in the Award
Agreement, “Cause” shall have the equivalent meaning or
the same meaning as “cause” or “for cause”
set forth in any employment, consulting, or other agreement for the
performance of services between the Participant and the Company or
a Related Entity or, in the absence of any such agreement or any
such definition in such agreement, such term shall mean (i) the
failure by the Participant to perform, in a reasonable manner, his
or her duties as assigned by the Company or a Related Entity, (ii)
any violation or breach by the Participant of his or her
employment, consulting or other similar agreement with the Company
or a Related Entity, if any, (iii) any violation or breach by the
Participant of any non-competition, non-solicitation,
non-disclosure and/or other similar agreement with the Company or a
Related Entity, (iv) any act by the Participant of dishonesty or
bad faith with respect to the Company or a Related Entity, (v) use
of alcohol, drugs or other similar substances in a manner that
adversely affects the Participant’s work performance, or (vi)
the commission by the Participant of any act, misdemeanor, or crime
reflecting unfavorably upon the Participant or the Company or any
Related Entity. The good faith determination by the Committee of
whether the Participant’s Continuous Service was terminated
by the Company for “Cause” shall be final and binding
for all purposes hereunder.

 

 

1

 

 

(g) “Change in
Control” means a Change in Control as defined in
Section 8(b) of the Plan.

 

(h) “Code” means
the Internal Revenue Code of 1986, as amended from time to time,
including regulations thereunder and successor provisions and
regulations thereto.

 

(i) “Committee”
means a committee designated by the Board to administer the Plan;
provided, however, that if the Board fails to designate a committee
or if there are no longer any members on the committee so
designated by the Board, or for any other reason determined by the
Board, then the Board shall serve as the Committee. Except as may
otherwise be permitted under applicable law, the Committee shall
consist of at least two directors, each of whom shall be (i) a
“non-employee director” within the meaning of Rule
16b-3 (or any successor rule) under the Exchange Act, unless
administration of the Plan by “non-employee directors”
is not then required in order for exemptions under Rule 16b-3 to
apply to transactions under the Plan, and (ii)
“Independent.

 

(j) “Company” means
Edesa Biotech, Inc., a British Columbia corporation, and any
successor thereto.

 

(k) “Consultant”
means any consultant or advisor who provides services to the
Company or any Related Entity, so long as (i) such person renders
bona fide services that are not in connection with the offer and
sale of the Company’s securities in a capital-raising
transaction, (ii) such person does not directly or indirectly
promote or maintain a market for the Company’s securities,
and (iii) the identity of such person would not preclude the
Company from offering or selling securities to such person pursuant
to the Plan in reliance on a registration of those securities on a
Form S-8 Registration Statement under the Securities Act of
1933.

 

(l) “Continuous
Service” means the uninterrupted provision of services
to the Company or any Related Entity in any capacity of Employee,
Director, Consultant or other service provider. Continuous Service
shall not be considered to be interrupted in the case of (i) any
leave of absence approved by management of the Company, (ii)
transfers among the Company, any Related Entities, or any successor
entities, in any capacity of Employee, Director, Consultant or
other service provider, or (iii) any change in status as long as
the individual remains in the service of the Company or a Related
Entity in any capacity of Employee, Director, Consultant or other
service provider (except as otherwise provided in the Award
Agreement). An approved leave of absence shall include sick leave,
military leave, or any other authorized personal
leave.

 

(m) “Covered
Employee” means the Person who, as of the end of the
taxable year, is considered a “covered employee” for
purposes of Section 162(m) of the Code.

 

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

 

 

2

 

 

(o) “Disability”
means a permanent and total disability (within the meaning of
Section 22(e) of the Code), as determined by a medical doctor
satisfactory to the Committee.

 

(p) “Dividend
Equivalent” means a right, granted to a Participant
under Section 6(g) hereof, to receive cash, Shares, other Awards or
other property equal in value to dividends paid with respect to a
specified number of Shares, or other periodic
payments.

 

(q) “Effective
Date” means the effective date of the Plan, which was
December 18, 2013.

 

(r) “Effective
Date of Restated Plan” means the effective date of
this Plan, as amended and restated, which was October 16,
2019.

 

(s) “Eligible
Person” means each officer, Director, Employee,
Consultant and other person who provides services to the Company or
any Related Entity. The foregoing notwithstanding, only Employees
of the Company, or any parent corporation or subsidiary corporation
of the Company (as those terms are defined in Sections 424(e) and
(f) of the Code, respectively), shall be Eligible Persons for
purposes of receiving any Incentive Stock Options. An Employee on a
leave of absence approved by management of the Company shall be
considered as still in the employ of the Company or a Related
Entity for purposes of eligibility for participation in the
Plan.

 

(t) “Employee”
means any person, including an officer or Director, who is an
employee of the Company or any Related Entity, or is a prospective
employee of the Company or any Related Entity (conditioned upon and
effective not earlier than, such person becoming an employee of the
Company or any Related Entity). The payment of a director’s
fee by the Company or a Related Entity shall not be sufficient to
constitute “employment” by the Company.

 

(u) “Exchange Act”
means the Securities Exchange Act of 1934, as amended from time to
time, including rules thereunder and successor provisions and rules
thereto.

 

(v) “Fair Market
Value” means the fair market value of Shares, Awards
or other property on the date as of which the value is being
determined, as determined by the Committee, or under procedures
established by the Committee, subject to the
following:

 

(i)           If,
on such date, the Shares are listed on a national or regional
securities exchange or market system, the Fair Market Value of a
Share shall be the closing price of a Share (or the mean of the
closing bid and asked prices of a Share if the Share is so quoted
instead) as quoted on the Nasdaq Stock Market, LLC or such other
national or regional securities exchange or market system
constituting the primary market for the Share, as reported in The
Wall Street Journal or such other source as the Company deems
reliable. If the relevant date does not fall on a day on which the
Share has traded on such securities exchange or market system, the
date on which the Fair Market Value shall be established shall be
the last day on which the Share was so traded prior to the relevant
date, or such other appropriate day as shall be determined by the
Committee, in its discretion.

 

 

3

 

 

(ii)           If,
on such date, the Share are not listed on a national or regional
securities exchange or market system, the Fair Market Value of a
Share shall be as determined by the Committee in good faith without
regard to any restriction other than a restriction which, by its
terms, will never lapse.

 

(w) “Good Reason”
shall, with respect to any Participant, have the meaning specified
in the Award Agreement. In the absence of any definition in the
Award Agreement, “Good Reason” shall have the
equivalent meaning or the same meaning as “good reason”
or “for good reason” set forth in any employment,
consulting or other agreement for the performance of services
between the Participant and the Company or a Related Entity or, in
the absence of any such agreement or any such definition in such
agreement, such term shall mean (i) the assignment to the
Participant of any duties inconsistent in any material respect with
the Participant’s duties or responsibilities as assigned by
the Company or a Related Entity, or any other action by the Company
or a Related Entity which results in a material diminution in such
duties or responsibilities, excluding for this purpose an action
which is remedied by the Company or a Related Entity promptly after
receipt of notice thereof given by the Participant; (ii) any
material failure by the Company or a Related Entity to comply with
its obligations to the Participant as agreed upon, other than a
failure which is remedied by the Company or a Related Entity
promptly after receipt of notice thereof given by the Participant;
(iii) the Company’s or Related Entity’s requiring the
Participant to be based at any office or location outside of fifty
miles from the location of employment or service as of the date of
Award, except for travel reasonably required in the performance of
the Participant’s responsibilities; or (iv) a material breach
by the Company or any Related Entity of any employment, consulting
or other agreement under which the Participant provides services to
the Company or any Related Entity. For purposes of this Plan, upon
termination of a Participant’s Continuous Service, Good
Reason shall not be deemed to exist unless the Participant’s
termination of Continuous Service for Good Reason occurs within 6
months following the initial existence of one of the conditions
specified in clauses (i) through (iv) above, the Participant
provides the Company or the Related Entity for which the
Participant provides services with written notice of the existence
of such condition with 90 days after the initial existence of the
condition, and the Company fails to remedy the condition within 30
days after its receipt of notice.

 

(x) “Incentive Stock
Option” means any Option intended to be designated as
an incentive stock option within the meaning of Section 422 of the
Code or any successor provision thereto.

 

(y) “Independent”,
when referring to either the Board or members of the Committee,
shall have the same meaning as used in the rules of the Listing
Market.

 

(z) “Incumbent
Board” means the Incumbent Board as defined in Section
8(b)(ii) hereof.

 

(aa) “Listing
Market” means any national securities exchange on
which any securities of the Company are listed for trading, and if
not listed for trading, by the rules of the Nasdaq Stock
Market.

 

 

4

 

 

(bb) “Option”
means a right granted to a Participant under Section 6(b) hereof,
to purchase Shares or other Awards at a specified price during
specified time periods.

 

(cc) “Optionee”
means a person to whom an Option is granted under this Plan or any
person who succeeds to the rights of such person under this
Plan.

 

(dd)  “Parent”
means any corporation (other than the Company), whether now or
hereafter existing, in an unbroken chain of corporations ending
with the Company, if each of the corporations in the chain (other
than the Company) owns stock possessing 50% or more of the combined
voting power of all classes of stock in one of the other
corporations in the chain.

 

(ee) “Participant”
means a person who has been granted an Award under the Plan which
remains outstanding, including a person who is no longer an
Eligible Person.

 

(ff) “Person”
shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d)
and 14(d) thereof, and shall include a “group” as
defined in Section 13(d) thereof.

 

(gg) “Related
Entity” means any Parent or Subsidiary, and any
business, corporation, partnership, limited liability company or
other entity designated by the Committee in which the Company, a
Parent or a Subsidiary holds a substantial ownership interest,
directly or indirectly and with respect to which the Company may
offer or sell securities pursuant to the Plan in reliance upon
registration on a Form S-8 Registration Statement under the
Securities Act of 1933.

 

(hh) “Restricted
Share” means any Share issued with such risks of
forfeiture and other restrictions as the Committee, in its sole
discretion, may impose (including any restriction on the right to
vote such Share and the right to receive any dividends), which
restrictions may lapse separately or in combination at such time or
times, in installments or otherwise, as the Committee may deem
appropriate.

 

(ii) “Restricted
Share Award” means an Award granted to a Participant
under Section 6(d) hereof.

 

(jj) “Restricted
Share Unit” means a right to receive Shares, including
Restricted Share, cash measured based upon the value of Shares, or
a combination thereof, at the end of a specified deferral
period.

 

(kk) “Restricted
Share Unit Award” means an Award of Restricted Share
Units granted to a Participant under Section 6(e)
hereof.

 

(ll) “Restriction
Period” means the period of time specified by the
Committee that Restricted Share Awards shall be subject to such
restrictions on transferability, risk of forfeiture and other
restrictions, if any, as the Committee may impose.

 

(mm) “Rule
16b-3” means Rule 16b-3, as from time to time in
effect and applicable to the Plan and Participants, promulgated by
the Securities and Exchange Commission under Section 16 of the
Exchange Act.

 

 

5

 

 

(nn) “Shares”
means the common shares of the Company, no par value per share, and
such other securities as may be substituted (or resubstituted) for
Shares pursuant to Section 9(c) hereof.

 

(oo) “Subsidiary”
means any corporation or other entity in which the Company has a
direct or indirect ownership interest of 50% or more of the total
combined voting power of the then outstanding securities or
interests of such corporation or other entity entitled to vote
generally in the election of directors or in which the Company has
the right to receive 50% or more of the distribution of profits or
50% or more of the assets on liquidation or
dissolution.

 

(pp) “Substitute
Awards” means Awards granted or Shares issued by the
Company in assumption of, or in substitution or exchange for,
awards previously granted, or the right or obligation to make
future awards, by a company (i) acquired by the Company or any
Related Entity, (ii) which becomes a Related Entity after the date
hereof, or (iii) with which the Company or any Related Entity
combines.

 

3. Administration.

 

(a) Authority
of the Committee

 

. The
Plan shall be administered by the Committee, except to the extent
(and subject to the limitations imposed by Section 3(b) hereof) the
Board elects to administer the Plan, in which case the Plan shall
be administered by only those members of the Board who are
Independent members of the Board, in which case references herein
to the “Committee” shall be deemed to include
references to the Independent members of the Board. The Committee
shall have full and final authority, subject to and consistent with
the provisions of the Plan, to select Eligible Persons to become
Participants, grant Awards, determine the type, number and other
terms and conditions of, and all other matters relating to, Awards,
prescribe Award Agreements (which need not be identical for each
Participant) and rules and regulations for the administration of
the Plan, construe and interpret the Plan and Award Agreements and
correct defects, supply omissions or reconcile inconsistencies
therein, and to make all other decisions and determinations as the
Committee may deem necessary or advisable for the administration of
the Plan. In exercising any discretion granted to the Committee
under the Plan or pursuant to any Award, the Committee shall not be
required to follow past practices, act in a manner consistent with
past practices, or treat any Eligible Person or Participant in a
manner consistent with the treatment of any other Eligible Persons
or Participants. Decisions of the Committee shall be final,
conclusive and binding on all persons or entities, including the
Company, any Related Entity or any Participant or Beneficiary, or
any transferee under Section 9(b) hereof or any other person
claiming rights from or through any of the foregoing persons or
entities.

 

(b) Manner of Exercise of
Committee Authority. The Committee, and not the Board, shall
exercise sole and exclusive discretion with respect to any Award to
an Independent Director. The express grant of any specific power to
the Committee, and the taking of any action by the Committee, shall
not be construed as limiting any power or authority of the
Committee. The Committee may delegate to members of the Board, or
officers or managers of the Company or any Related Entity, or
committees thereof, the authority, subject to such terms and
limitations as the Committee shall determine, to perform such
functions, including administrative functions as the Committee may
determine to the extent that such delegation will not result in the
loss of an exemption under Rule 16b-3(d)(1) for Awards granted to
Participants subject to Section 16 of the Exchange Act in respect
of the Company. The Committee may appoint agents to assist it in
administering the Plan.

 

 

6

 

 

(c) Limitation
of Liability. The Committee and
the Board, and each member thereof, shall be entitled to, in good
faith, rely or act upon any report or other information furnished
to him or her by any officer or Employee, the Company’s
independent auditors, Consultants or any other agents assisting in
the administration of the Plan. Members of the Committee and the
Board, and any officer or Employee acting at the direction or on
behalf of the Committee or the Board, shall not be personally
liable for any action or determination taken or made in good faith
with respect to the Plan, and shall, to the extent permitted by
law, be fully indemnified and protected by the Company with respect
to any such action or determination.

 

4. Shares
Subject to Plan.

 

(a) Limitation
on Overall Number of Shares Available for Delivery Under
Plan. Subject to
adjustment as provided in Section 9(c) hereof, the total number of
Shares reserved and available for delivery under the Plan after the
Effective Date of Restated Plan shall be the sum of (i) 800,000
plus (ii) the number of Shares remaining available for delivery
under the Plan as of the Effective Date of Restated Plan. Any
Shares that are subject to Awards of Options shall be counted
against this limit as one (1) Share for every one (1) Share
granted. Any Shares that are subject to Awards other than Options
shall be counted against this limit as one and one-half (1.5)
Shares for every one (1) Share granted. Any Shares delivered under
the Plan may consist, in whole or in part, of authorized and
unissued shares.

 

(b) Application
of Limitation to Grants of Awards. No Award may be
granted if the number of Shares to be delivered in connection with
such an Award exceeds the number of Shares remaining available for
delivery under the Plan, minus the number of Shares that would be
counted against the limit upon settlement of then outstanding
Awards. The Committee may adopt reasonable counting procedures to
ensure appropriate counting, avoid double counting (as, for
example, in the case of substitute awards) and make adjustments if
the number of Shares actually delivered differs from the number of
Shares previously counted in connection with an Award.

 

(c) Availability
of Shares Not Delivered under Awards and Adjustments to
Limits.

 

(i) If, after the
Effective Date of Restated Plan, (x) Shares subject to any Awards
granted under the Plan are forfeited, expire or otherwise terminate
without issuance of such Shares, or (y) any Award is settled for
cash or otherwise does not result in the issuance of all or a
portion of the Shares subject to such Award, the Shares to which
those Awards were subject shall, to the extent of such forfeiture,
expiration, termination, non-issuance or cash settlement, again be
available for delivery with respect to Awards under the
Plan.

 

(ii) In
the event that, after the Effective Date of Restated Plan, any
Option or other Award granted under this Plan, is exercised through
the tendering of Shares (either actually or by attestation) or by
the withholding of Shares by the Company, or withholding tax
liabilities arising from such Option or other Award are satisfied
by the tendering of Shares (either actually or by attestation) or
by the withholding of Shares by the Company, then only the number
of Shares issued net of the Shares tendered or withheld shall be
counted for purposes of determining the maximum number of
Shares available for grant under the Plan.

 

 

7

 

 

(iii) Substitute
Awards shall not reduce the Shares authorized for delivery under
the Plan or authorized for delivery to a Participant in any period.
Additionally, in the event that an entity acquired by the Company
or any Related Entity or with which the Company or any Related
Entity combines has shares available under a pre-existing plan
approved by its shareholders and not adopted in contemplation of
such acquisition or combination, the shares available for delivery
pursuant to the terms of such pre-existing plan (as adjusted, to
the extent appropriate, using the exchange ratio or other
adjustment or valuation ratio or formula used in such acquisition
or combination to determine the consideration payable to the
holders of common stock of the entities party to such acquisition
or combination) may be used for Awards under the Plan and shall not
reduce the Shares authorized for delivery under the Plan if and to
the extent that the use of such Shares would not require approval
of the Company’s shareholders under the rules of the Listing
Market. Awards using such available shares shall not be made after
the date awards or grants could have been made under the terms of
the pre-existing plan, absent the acquisition or combination, and
shall only be made to individuals who were not Employees or
Directors prior to such acquisition or combination.

 

(iv) Any
Share that again becomes available for delivery pursuant to this
Section 4(c) shall be added back as one (1) Share if such Share was
subject to an Option granted under the Plan and as one and one-half
(1.5) Shares if such Share was subject to an Award other than an
Option granted under the Plan.

 

(v) Notwithstanding
anything in this Section 4(c) to the contrary but subject to
adjustment as provided in Section 9(c) hereof, the maximum
aggregate number of Shares that may be delivered under the Plan as
a result of the exercise of the Incentive Stock Options shall be
1,200,000 Shares. In no event shall any Incentive Stock Options be
granted under the Plan after the tenth anniversary of the date on
which the Board adopts the Plan.

 

(vi) Notwithstanding
anything in this Section 4 to the contrary, but subject to
adjustment as provided in Section 9(c) hereof, in any fiscal year
of the Company during any part of which the Plan is in effect, no
Participant who is a Director but is not also an Employee or
Consultant may be granted any Awards that have a “fair
value” as of the date of grant, as determined in accordance
with FASB ASC Topic 718 (or any other applicable accounting
guidance), that exceeds $250,000 in the aggregate.

 

5. Eligibility;
Per-Participant Limitations. Awards may be
granted under the Plan only to Eligible Persons. Subject to
adjustment as provided in Section 9(c) of this Plan, in any
calendar year during any part of which the Plan is in effect, no
Participant may be granted Options with respect to more than
100,000 Shares.

 

6. Specific
Terms of Awards.

 

(a) General.
Awards may be granted on the terms and conditions set forth in this
Section 6. In addition, the Committee may impose on any Award or
the exercise thereof, at the date of grant or thereafter (subject
to Section 7(e) hereof), such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee
shall determine, including terms requiring forfeiture of Awards in
the event of termination of the Participant’s Continuous
Service and terms permitting a Participant to make elections
relating to his or her Award. Except as otherwise expressly
provided herein, the Committee shall retain full power and
discretion to accelerate, waive or modify, at any time, any term or
condition of an Award that is not mandatory under the Plan. Except
in cases in which the Committee is authorized to require other
forms of consideration under the Plan, or to the extent other forms
of consideration must be paid to satisfy the requirements of
British Columbia law, no consideration other than services may be
required for the grant (as opposed to the exercise) of any
Award.

 

 

8

 

 

(b) Options.
The Committee is authorized to grant Options to any Eligible Person
on the following terms and conditions:

 

(i) Exercise Price.
Other than in connection with Substitute Awards, the exercise price
per Share purchasable under an Option shall be determined by the
Committee, provided that such exercise price shall not be less than
100% of the Fair Market Value of a Share on the date of grant of
the Option. If an Employee owns or is deemed to own (by reason of
the attribution rules applicable under Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of stock
of the Company (or any parent corporation or subsidiary corporation
of the Company, as those terms are defined in Sections 424(e) and
(f) of the Code, respectively) and an Incentive Stock Option is
granted to such Employee, the exercise price of such Incentive
Stock Option (to the extent required by the Code at the time of
grant) shall be no less than 110% of the Fair Market Value of a
Share on the date such Incentive Stock Option is granted. Other
than pursuant to Section 9(c)(i) and (ii) of this Plan, the
Committee shall not be permitted to (A) lower the exercise price
per Share of an Option after it is granted, (B) cancel an Option
when the exercise price per Share exceeds the Fair Market Value of
the underlying Shares in exchange for cash or another Award (other
than in connection with Substitute Awards), (C) cancel an
outstanding Option in exchange for an Option with an exercise price
that is less than the exercise price of the original Options or (D)
take any other action with respect to an Option that may be treated
as a repricing pursuant to the applicable rules of the Listing
Market, without approval of the Company’s
shareholders.

 

(ii) Time
and Method of Exercise. The Committee shall determine the
time or times at which or the circumstances under which an Option
may be exercised in whole or in part (including based on future
service requirements), the method by which notice of exercise is to
be given and the form of exercise notice to be used, the time or
times at which Options shall cease to be or become exercisable
following termination of Continuous Service or upon other
conditions, the methods by which the exercise price may be paid or
deemed to be paid (including in the discretion of the Committee a
cashless exercise procedure), the form of such payment, including,
without limitation, cash, Shares (including without limitation the
withholding of Shares otherwise deliverable pursuant to the Award),
other Awards or awards granted under other plans of the Company or
a Related Entity, or other property, or any rule or regulation
adopted thereunder or any other applicable law), and the methods by
or forms in which Shares will be delivered or deemed to be
delivered to Participants.

 

(iii) Form
of Settlement The Committee may, in its sole discretion,
provide that the Shares to be issued upon exercise of an Option
shall be in the form of Restricted Share or other similar
securities.

 

(iv) Incentive
Stock Options. The terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the
provisions of Section 422 of the Code. Anything in the Plan to the
contrary notwithstanding, no term of the Plan relating to Incentive
Stock Options shall be interpreted, amended or altered, nor shall
any discretion or authority granted under the Plan be exercised, so
as to disqualify either the Plan or any Incentive Stock Option
under Section 422 of the Code, unless the Participant has first
requested, or consents to, the change that will result in such
disqualification. Thus, if and to the extent required to comply
with Section 422 of the Code, Options granted as Incentive Stock
Options shall be subject to the following special terms and
conditions:

 

 

9

 

 

(A) the Option shall
not be exercisable for more than ten years after the date such
Incentive Stock Option is granted; provided, however, that if a
Participant owns or is deemed to own (by reason of the attribution
rules of Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company (or any parent
corporation or subsidiary corporation of the Company, as those
terms are defined in Sections 424(e) and (f) of the Code,
respectively) and the Incentive Stock Option is granted to such
Participant, the term of the Incentive Stock Option shall be (to
the extent required by the Code at the time of the grant) for no
more than five years from the date of grant;

 

(B) the aggregate Fair
Market Value (determined as of the date the Incentive Stock Option
is granted) of the Shares with respect to which Incentive Stock
Options granted under the Plan and all other option plans of the
Company (and any parent corporation or subsidiary corporation of
the Company, as those terms are defined in Sections 424(e) and (f)
of the Code, respectively) that become exercisable for the first
time by the Participant during any calendar year shall not (to the
extent required by the Code at the time of the grant) exceed
$100,000; and

 

(C) if Shares acquired
by exercise of an Incentive Stock Option are disposed of within two
years following the date the Incentive Stock Option is granted or
one year following the transfer of such Shares to the Participant
upon exercise, the Participant shall, promptly following such
disposition, notify the Company in writing of the date and terms of
such disposition and provide such other information regarding the
disposition as the Committee may reasonably require.

 

(c) Restricted
Share Awards. The Committee is
authorized to grant Restricted Share Awards to any Eligible Person
on the following terms and conditions:

 

(i) Grant and
Restrictions. Restricted Share Awards shall be subject to
such restrictions on transferability, risk of forfeiture and other
restrictions, if any, as the Committee may impose, or as otherwise
provided in this Plan during the Restriction Period. The terms of
any Restricted Share Award granted under the Plan shall be set
forth in a written Award Agreement which shall contain provisions
determined by the Committee and not inconsistent with the Plan. The
restrictions may lapse separately or in combination at such times,
under such circumstances (including based on future service
requirements), in such installments or otherwise, as the Committee
may determine at the date of grant or thereafter. Except to the
extent restricted under the terms of the Plan and any Award
Agreement relating to a Restricted Share Award, a Participant
granted Restricted Shares shall have all of the rights of a
shareholder, including the right to vote the Restricted Share and
the right to receive dividends thereon (subject to any mandatory
reinvestment or other requirement imposed by the Committee). During
the period that the Restricted Share Award is subject to a risk of
forfeiture, subject to Section 9(b) below and except as otherwise
provided in the Award Agreement, the Restricted Shares may not be
sold, transferred, pledged, hypothecated, margined or otherwise
encumbered by the Participant or Beneficiary.

 

 

10

 

 

(ii) Forfeiture.
Except as otherwise determined by the Committee, upon termination
of a Participant’s Continuous Service during the applicable
Restriction Period, the Participant’s Restricted Shares that
are at that time subject to a risk of forfeiture that has not
lapsed or otherwise been satisfied shall be forfeited and
reacquired by the Company; provided that the Committee may provide,
by resolution or other action or in any Award Agreement, or may
determine in any individual case, that forfeiture conditions
relating to Restricted Share Awards shall be waived in whole or in
part in the event of terminations resulting from specified causes,
and the Committee may in other cases waive in whole or in part the
forfeiture of Restricted Shares.

 

(iii) Certificates
for Shares. Restricted Shares granted under the Plan may be
evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Shares are registered in the
name of the Participant, the Committee may require that such
certificates bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Shares,
that the Company retain physical possession of the certificates,
and that the Participant deliver a stock power to the Company,
endorsed in blank, relating to the Restricted Shares.

 

(iv) Dividends
and Splits. As a condition to the grant of a Restricted
Share Award, the Committee may require or permit a Participant to
elect that any cash dividends paid on Restricted Shares be
automatically reinvested in additional Restricted Shares or applied
to the purchase of additional Awards under the Plan, or may require
that payment be delayed (with or without interest at such rate, if
any, as the Committee shall determine) and remain subject to
restrictions and a risk of forfeiture to the same extent as the
Restricted Shares with respect to which such cash dividend is
payable, in each case in a manner that does not violate the
requirements of Section 409A of the Code. Unless otherwise
determined by the Committee, Shares distributed in connection with
a share split or share dividend, and other property distributed as
a dividend, shall be subject to restrictions and a risk of
forfeiture to the same extent as the Restricted Shares with respect
to which such Shares or other property have been
distributed.

 

(d) Restricted
Share Unit Award. The Committee is
authorized to grant Restricted Share Unit Awards to any Eligible
Person on the following terms and conditions:

 

(i) Award and
Restrictions. Satisfaction of a Restricted Share Unit Award
shall occur upon expiration of the deferral period specified for
such Restricted Share Unit Award by the Committee (or, if permitted
by the Committee, as elected by the Participant in a manner that
does not violate the requirements of Section 409A of the Code). In
addition, a Restricted Share Unit Award shall be subject to such
restrictions (which may include a risk of forfeiture) as the
Committee may impose, if any, which restrictions may lapse at the
expiration of the deferral period or at earlier specified times
(including based on future service requirements), separately or in
combination, in installments or otherwise, as the Committee may
determine. A Restricted Share Unit Award may be satisfied by
delivery of Shares, cash equal to the Fair Market Value of the
specified number of Shares covered by the Restricted Share Units,
or a combination thereof, as determined by the Committee at the
date of grant or thereafter. Prior to satisfaction of a Restricted
Share Unit Award, a Restricted Share Unit Award carries no voting
or dividend or other rights associated with Share ownership. Prior
to satisfaction of a Restricted Share Unit Award, except as
otherwise provided in an Award Agreement and as permitted under
Section 409A of the Code, a Restricted Share Unit Award may not be
sold, transferred, pledged, hypothecated, margined or otherwise
encumbered by the Participant or any Beneficiary.

 

 

11

 

 

(ii) Forfeiture.
Except as otherwise determined by the Committee, upon termination
of a Participant’s Continuous Service during the applicable
deferral period or portion thereof to which forfeiture conditions
apply (as provided in the Award Agreement evidencing the Restricted
Share Unit Award), the Participant’s Restricted Share Unit
Award that is at that time subject to a risk of forfeiture that has
not lapsed or otherwise been satisfied shall be forfeited; provided
that the Committee may provide, by resolution or other action or in
any Award Agreement, or may determine in any individual case, that
forfeiture conditions relating to a Restricted Share Unit Award
shall be waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee may in other
cases waive in whole or in part the forfeiture of any Restricted
Share Unit Award.

 

7. Certain
Provisions Applicable to Awards.

 

(a) Stand-Alone,
Additional, and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, or in substitution or exchange for,
any other Award or any award granted under another plan of the
Company, any Related Entity, or any business entity to be acquired
by the Company or a Related Entity, or any other right of a
Participant to receive payment from the Company or any Related
Entity. Such additional, and substitute or exchange Awards may be
granted at any time. If an Award is granted in substitution or
exchange for another Award or award, the Committee shall require
the surrender of such other Award or award in consideration for the
grant of the new Award. In addition, Awards may be granted in lieu
of cash compensation, including in lieu of cash amounts payable
under other plans of the Company or any Related Entity, in which
the value of Shares subject to the Award is equivalent in value to
the cash compensation (for example, Restricted Share or Restricted
Share Units), or in which the exercise price, grant price or
purchase price of the Award in the nature of a right that may be
exercised is equal to the Fair Market Value of the underlying
Shares minus the value of the cash compensation surrendered (for
example, Options granted with an exercise price or grant price
“discounted” by the amount of the cash compensation
surrendered), provided that any such determination to grant an
Award in lieu of cash compensation must be made in a manner
intended to be exempt from or comply with Section 409A of the
Code.

 

(b) Term
of Awards. The term of each
Award shall be for such period as may be determined by the
Committee. The term of any Option shall not exceed a period of ten
years (or in the case of an Incentive Stock Option such shorter
term as may be required under Section 422 of the Code); provided,
however, that in the event that on the last day of the term of an
Option, other than an Incentive Stock Option, the exercise of the
Option would violate an applicable federal, state, local, or
foreign law, the Committee may, in its sole and absolute
discretion, extend the term of the Option for a period of no more
than thirty (30) days after the date on which the exercise of the
Option would no longer violate an applicable federal, state, local
and foreign law, provided that such extension of the term of the
Option would not cause the Option to violate the requirements of
Section 409A of the Code.

 

 

12

 

 

(c) Form
and Timing of Payment Under Awards; Deferrals. Subject to the
terms of the Plan and any applicable Award Agreement, payments to
be made by the Company or a Related Entity upon the exercise of an
Option or other Award or settlement of an Award may be made in such
forms as the Committee shall determine, including, without
limitation, cash, Shares, other Awards or other property, and may
be made in a single payment or transfer, in installments, or on a
deferred basis, provided that any determination to pay in
installments or on a deferred basis shall be made by the Committee
at the date of grant. Any installment or deferral provided for in
the preceding sentence shall, however, subject to the terms of the
Plan, be subject to the Company’s compliance with the
provisions of the Sarbanes-Oxley Act of 2002, as amended, the rules
and regulations adopted by the Securities and Exchange Commission
thereunder, all applicable rules of the Listing Market and any
other applicable law, and in a manner intended to be exempt from or
otherwise satisfy the requirements of Section 409A of the Code.
Subject to Section 7(e) of this Plan, the settlement of any Award
may be accelerated, and cash paid in lieu of Shares in connection
with such settlement, in the sole discretion of the Committee or
upon occurrence of one or more specified events (in addition to a
Change in Control). Any such settlement shall be at a value
determined by the Committee in its sole discretion, which, without
limitation, may in the case of an Option be limited to the amount
if any by which the Fair Market Value of a Share on the settlement
date exceeds the exercise price. Installment or deferred payments
may be required by the Committee (subject to Section 7(e) of this
Plan, including the consent provisions thereof in the case of any
deferral of an outstanding Award not provided for in the original
Award Agreement) or permitted at the election of the Participant on
terms and conditions established by the Committee. The acceleration
of the settlement of any Award, and the payment of any Award in
installments or on a deferred basis, all shall be done in a manner
that is intended to be exempt from or otherwise satisfy the
requirements of Section 409A of the Code. The Committee may,
without limitation, make provision for the payment or crediting of
a reasonable interest rate on installment or deferred payments or
the grant or crediting of other amounts in respect of installment
or deferred payments denominated in Shares.

 

(d) Exemptions from Section
16(b) Liability. It is the intent of the Company that the
grant of any Awards to or other transaction by a Participant who is
subject to Section 16 of the Exchange Act shall be exempt from
Section 16 pursuant to an applicable exemption (except for
transactions acknowledged in writing to be non-exempt by such
Participant). Accordingly, if any provision of this Plan or any
Award Agreement does not comply with the requirements of Rule 16b-3
then applicable to any such transaction, such provision shall be
construed or deemed amended to the extent necessary to conform to
the applicable requirements of Rule 16b-3 so that such Participant
shall avoid liability under Section 16(b).

 

(e) Code
Section 409A.

 

(i)           The
Award Agreement for any Award that the Committee reasonably
determines to constitute a “nonqualified deferred
compensation plan” under Section 409A of the Code (a
“Section 409A Plan”), and the provisions of the Section
409A Plan applicable to that Award, shall be construed in a manner
consistent with the applicable requirements of Section 409A of the
Code, and the Committee, in its sole discretion and without the
consent of any Participant, may amend any Award Agreement (and the
provisions of the Plan applicable thereto) if and to the extent
that the Committee determines that such amendment is necessary or
appropriate to comply with the requirements of Section 409A of the
Code.

 

 

13

 

 

(ii)           If
any Award constitutes a Section 409A Plan, then the Award shall be
subject to the following additional requirements, if and to the
extent required to comply with Section 409A of the
Code:

 

(A)           
Payments under the Section 409A Plan may be made only upon (u) the
Participant’s “separation from service”, (v) the
date the Participant becomes “disabled”, (w) the
Participant’s death, (x) a “specified time (or pursuant
to a fixed schedule)” specified in the Award Agreement at the
date of the deferral of such compensation, (y) a “change in
the ownership or effective control of the corporation, or in the
ownership of a substantial portion of the assets” of the
Company, or (z) the occurrence of an “unforeseeble
emergency”;

 

(B)           
The time or schedule for any payment of the deferred compensation
may not be accelerated, except to the extent provided in applicable
Treasury Regulations or other applicable guidance issued by the
Internal Revenue Service;

 

(C)           Any
elections with respect to the deferral of such compensation or the
time and form of distribution of such deferred compensation shall
comply with the requirements of Section 409A(a)(4) of the Code;
and

 

(D)           
In the case of any Participant who is a “specified
employee”, a distribution on account of a “separation
from service” may not be made before the date which is six
months after the date of the Participant’s “separation
from service” (or, if earlier, the date of the
Participant’s death).

 

For
purposes of the foregoing, the terms in quotations shall have the
same meanings as those terms have for purposes of Section 409A of
the Code, and the limitations set forth herein shall be applied in
such manner (and only to the extent) as shall be necessary to
comply with any requirements of Section 409A of the Code that are
applicable to the Award.

 

(iii)           Notwithstanding
the foregoing, or any provision of this Plan or any Award
Agreement, the Company does not make any representation to any
Participant or Beneficiary that any Awards made pursuant to this
Plan are exempt from, or satisfy, the requirements of, Section 409A
of the Code, and the Company shall have no liability or other
obligation to indemnify or hold harmless the Participant or any
Beneficiary for any tax, additional tax, interest or penalties that
the Participant or any Beneficiary may incur in the event that any
provision of this Plan, or any Award Agreement, or any amendment or
modification thereof, or any other action taken with respect
thereto, is deemed to violate any of the requirements of Section
409A of the Code.

 

8. Change
in Control.

 

(a) Effect
of “Change in Control.”

 

  If and
only to the extent provided in any employment or other agreement
between the Participant and the Company or any Related Entity, or
in any Award Agreement, or to the extent otherwise determined by
the Committee in its sole discretion and without any requirement
that each Participant be treated consistently, upon the occurrence
of a “Change in Control,” as defined in Section
8(b):

 

 

14

 

 

(i) Any Option that was
not previously vested and exercisable as of the time of the Change
in Control, shall become immediately vested and exercisable,
subject to applicable restrictions set forth in Section 9(a)
hereof.

 

(ii) Any
restrictions, deferral of settlement, and forfeiture conditions
applicable to a Restricted Share Award, Restricted Share Unit Award
or an Other Share-Based Award subject only to future service
requirements granted under the Plan shall lapse and such Awards
shall be deemed fully vested as of the time of the Change in
Control, except to the extent of any waiver by the Participant and
subject to applicable restrictions set forth in Section 9(a)
hereof.

 

(iii) Notwithstanding
the foregoing or any provision in any Award Agreement to the
contrary, and unless the Committee otherwise determines in a
specific instance, or as is provided in any employment or other
agreement between the Participant and the Company or any Related
Entity, each outstanding Option, Restricted Share Award or
Restricted Share Unit Award shall not be accelerated as described
in Section 8(a)(i), (ii) and (iii), if either (A) the Company is
the surviving entity in the Change in Control and the Option,
Restricted Share Award or Restricted Share Unit Award continues to
be outstanding after the Change in Control on substantially the
same terms and conditions as were applicable immediately prior to
the Change in Control or (B) the successor company or its parent
company assumes or substitutes for the applicable Award, as
determined in accordance with Section 9(c)(ii) hereof.
Notwithstanding the foregoing, if and only to the extent provided
in an Award Agreement and on such terms and conditions as may be
set forth in an Award Agreement, in the event a Participant’s
employment is terminated without Cause by the Company or any
Related Entity or by such successor company or by the Participant
for Good Reason within 24 months following such Change in Control,
each Award held by such Participant at the time of the Change in
Control shall be accelerated as described in Sections 8(a)(i), (ii)
and (iii) above.

 

(b) Definition
of “Change in Control”. Unless otherwise
specified in any employment or other agreement for services between
the Participant and the Company or any Related Entity, or in an
Award Agreement, a “Change in Control” shall mean the
occurrence of any of the following:

 

(i) The acquisition by
any Person of Beneficial Ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of more than fifty
percent (50%) of either (A) the value of then outstanding equity
securities of the Company (the “Outstanding Company
Shares”) or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding
Company Voting Securities”) (the foregoing Beneficial
Ownership hereinafter being referred to as a “Controlling
Interest”); provided, however, that for purposes of this
Section 8(b), the following acquisitions shall not constitute or
result in a Change in Control: (v) any acquisition directly from
the Company; (w) any acquisition by the Company; (x) any
acquisition by any Person that as of the Effective Date owns
Beneficial Ownership of a Controlling Interest; (y) any acquisition
by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Related Entity; or (z) any
acquisition by any entity pursuant to a transaction which complies
with clauses (1), (2) and (3) of subsection (iii) below;
or

 

 

15

 

 

(ii) During
any period of two (2) consecutive years (not including any period
prior to the Effective Date) individuals who constitute the Board
on the Effective Date (the “Incumbent Board”) cease for
any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the Effective Date whose election, or nomination for
election by the Company’s shareholders, was approved by a
vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were
a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or

 

(iii) Consummation
of (A) a reorganization, merger, statutory share exchange or
consolidation or similar transaction involving (x) the Company or
(y) any of its Related Entities, but in the case of this clause
(y) only if equity securities of the Company are issued or
issuable in connection with the transaction (each of the events
referred to in this clause (A) being hereinafter referred to
as a “Business Reorganization”), or (B) a sale or other
disposition of all or substantially all of the assets of the
Company, or the acquisition of assets or equity of another entity
by the Company or any of its Related Entities (each an “Asset
Sale”), in each case, unless, following such Business
Reorganization or Asset Sale, (1) all or substantially all of the
individuals and entities who were the Beneficial Owners,
respectively, of the Outstanding Company Shares and Outstanding
Company Voting Securities immediately prior to such Business
Reorganization or Asset Sale beneficially own, directly or
indirectly, more than fifty percent (50%) of the value of the then
outstanding equity securities and the combined voting power of the
then outstanding voting securities entitled to vote generally in
the election of members of the board of directors (or comparable
governing body of an entity that does not have such a board), as
the case may be, of the entity resulting from such Business
Reorganization or Asset Sale (including, without limitation, an
entity which as a result of such transaction owns the Company or
all or substantially all of the Company’s assets either
directly or through one or more subsidiaries) (the
“Continuing Entity”) in substantially the same
proportions as their ownership, immediately prior to such Business
Reorganization or Asset Sale, of the Outstanding Company Shares and
Outstanding Company Voting Securities, as the case may be
(excluding any outstanding equity or voting securities of the
Continuing Entity that such Beneficial Owners hold immediately
following the consummation of the Business Reorganization or Asset
Sale as a result of their ownership, prior to such consummation, of
equity or voting securities of any company or other entity involved
in or forming part of such Business Reorganization or Asset Sale
other than the Company), (2) no Person (excluding any employee
benefit plan (or related trust) of the Company or any Continuing
Entity or any entity controlled by the Continuing Entity or any
Person that as of the Effective Date owns Beneficial Ownership of a
Controlling Interest) beneficially owns, directly or indirectly,
fifty percent (50%) or more of the value of the then outstanding
equity securities of the Continuing Entity or the combined voting
power of the then outstanding voting securities of the Continuing
Entity except to the extent that such ownership existed prior to
the Business Reorganization or Asset Sale and (3) at least a
majority of the members of the Board of Directors or other
governing body of the Continuing Entity were members of the
Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Reorganization or Asset Sale; or

 

 

16

 

 

(iv) Approval
by the shareholders of the Company of a complete liquidation or
dissolution of the Company.

 

9. General
Provisions.

 

(a) Compliance
With Legal and Other Requirements. The Company may,
to the extent deemed necessary or advisable by the Committee,
postpone the issuance or delivery of Shares or payment of other
benefits under any Award until completion of such registration or
qualification of such Shares or other required action under any
federal or state law, rule or regulation, listing or other required
action with respect to the Listing Market, or compliance with any
other obligation of the Company, as the Committee may consider
appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be
subject to such other conditions as it may consider appropriate in
connection with the issuance or delivery of Shares or payment of
other benefits in compliance with applicable laws, rules, and
regulations, listing requirements, or other
obligations.

 

(b) Limits
on Transferability; Beneficiaries. No Award or other
right or interest granted under the Plan shall be pledged,
hypothecated or otherwise encumbered or subject to any lien,
obligation or liability of such Participant to any party, or
assigned or transferred by such Participant otherwise than by will
or the laws of descent and distribution or to a Beneficiary upon
the death of a Participant, and such Awards or rights that may be
exercisable shall be exercised during the lifetime of the
Participant only by the Participant or his or her guardian or legal
representative, except that Awards and other rights (other than
Incentive Stock Options) may be transferred to one or more
Beneficiaries or other transferees during the lifetime of the
Participant, and may be exercised by such transferees in accordance
with the terms of such Award, but only if and to the extent such
transfers are permitted by the Committee pursuant to the express
terms of an Award Agreement (subject to any terms and conditions
which the Committee may impose thereon), are by gift or pursuant to
a domestic relations order, and are to a “Permitted
Assignee” that is a permissible transferee under the
applicable rules of the Securities and Exchange Commission for
registration of securities on a Form S-8 registration statement.
For this purpose, a Permitted Assignee shall mean (i) the
Participant’s spouse, children or grandchildren (including
any adopted and step children or grandchildren), parents,
grandparents or siblings, (ii) a trust for the benefit of one or
more of the Participant or the persons referred to in clause (i),
(iii) a partnership, limited liability company or corporation in
which the Participant or the persons referred to in clauses (i) and
(ii) are the only partners, members or shareholders, or (iv) a
foundation in which any person or entity designated in clauses (i),
(ii) or (iii) above control the management of assets. A
Beneficiary, transferee, or other person claiming any rights under
the Plan from or through any Participant shall be subject to all
terms and conditions of the Plan and any Award Agreement applicable
to such Participant, except as otherwise determined by the
Committee, and to any additional terms and conditions deemed
necessary or appropriate by the Committee.

 

 

17

 

 

(c) Adjustments.

 

(i) Adjustments to
Awards. In the event that any extraordinary dividend or
other distribution (whether in the form of cash, Shares, or other
property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination,
repurchase, share exchange, liquidation, dissolution or other
similar corporate transaction or event affects the Shares and/or
such other securities of the Company or any other issuer, then the
Committee shall, in such manner as it may deem appropriate and
equitable, substitute, exchange or adjust any or all of
(A) the number and kind of Shares which may be delivered in
connection with Awards granted thereafter, (B) the number and
kind of Shares by which annual per-person Award limitations are
measured under Section 4 hereof, (C) the number and kind of
Shares subject to or deliverable in respect of outstanding Awards,
(D) the exercise price or purchase price relating to any Award
and/or make provision for payment of cash or other property in
respect of any outstanding Award, and (E) any other aspect of any
Award that the Committee determines to be appropriate in order to
prevent the reduction or enlargement of benefits under any
Award.

 

(ii) Adjustments
in Case of Certain Transactions. In the event of any merger,
consolidation or other reorganization in which the Company does not
survive, or in the event of any Change in Control (and subject to
the provisions of Section 8 of this Plan relating to the vesting of
Awards in the event of any Change in Control), any outstanding
Awards may be dealt with in accordance with any of the following
approaches, without the requirement of obtaining any consent or
agreement of a Participant as such, as determined by the agreement
effectuating the transaction or, if and to the extent not so
determined, as determined by the Committee: (A) the continuation of
the outstanding Awards by the Company, if the Company is a
surviving entity, (B) the assumption or substitution for, as those
terms are defined below, the outstanding Awards by the surviving
entity or its parent or subsidiary, (C) full exercisability or
vesting and accelerated expiration of the outstanding Awards, or
(D) settlement of the value of the outstanding Awards in cash or
cash equivalents or other property followed by cancellation of such
Awards (which value, in the case of Options, shall be measured by
the amount, if any, by which the Fair Market Value of a Share
exceeds the exercise or grant price of the Option as of the
effective date of the transaction). For the purposes of this Plan,
an Option, Restricted Share Award, Restricted Share Unit Award, or
Other Share-Based Award shall be considered assumed or substituted
for if following the applicable transaction the Award confers the
right to purchase or receive, for each Share subject to the Option,
Restricted Share Award, Restricted Share Unit Award, or Other
Share-Based Award immediately prior to the applicable transaction,
on substantially the same vesting and other terms and conditions as
were applicable to the Award immediately prior to the applicable
transaction, the consideration (whether stock, cash or other
securities or property) received in the applicable transaction by
holders of Shares for each Share held on the effective date of such
transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such
consideration received in the applicable transaction is not solely
common stock of the successor company or its parent or subsidiary,
the Committee may, with the consent of the successor company or its
parent or subsidiary, provide that the consideration to be received
upon the exercise or vesting of an Option, Restricted Share Award,
Restricted Share Unit Award, or Other Share-Based Award, for each
Share subject thereto, will be solely common stock of the successor
company or its parent or subsidiary substantially equal in fair
market value to the per share consideration received by holders of
Shares in the applicable transaction. The determination of such
substantial equality of value of consideration shall be made by the
Committee in its sole discretion and its determination shall be
conclusive and binding. The Committee shall give written notice of
any proposed transaction referred to in this Section 9(c)(ii) a
reasonable period of time prior to the closing date for such
transaction (which notice may be given either before or after the
approval of such transaction), in order that Participants may have
a reasonable period of time prior to the closing date of such
transaction within which to exercise any Awards that are then
exercisable (including any Awards that may become exercisable upon
the closing date of such transaction). A Participant may condition
his or her exercise of any Awards upon the consummation of the
transaction.

 

 

18

 

 

(iii) Other
Adjustments. The Committee is authorized to make adjustments
in the terms and conditions of, and the criteria included in,
Awards (including Awards subject to satisfaction of performance
goals, or performance goals and conditions relating thereto) in
recognition of unusual or nonrecurring events (including, without
limitation, acquisitions and dispositions of businesses and assets)
affecting the Company, any Related Entity or any business unit, or
the financial statements of the Company or any Related Entity, or
in response to changes in applicable laws, regulations, accounting
principles, tax rates and regulations or business conditions or in
view of the Committee’s assessment of the business strategy
of the Company, any Related Entity or business unit thereof,
performance of comparable organizations, economic and business
conditions, and any other circumstances deemed
relevant.

 

(d) Award
Agreements. Each Award Agreement shall either be (a) in
writing in a form approved by the Committee and executed by the
Company by an officer duly authorized to act on its behalf, or (b)
an electronic notice in a form approved by the Committee and
recorded by the Company (or its designee) in an electronic
recordkeeping system used for the purpose of tracking one or more
types of Awards as the Committee may provide; in each case and if
required by the Committee, the Award Agreement shall be executed or
otherwise electronically accepted by the recipient of the Award in
such form and manner as the Committee may require. The Committee
may authorize any officer of the Company to execute any or all
Award Agreements on behalf of the Company. The Award Agreement
shall set forth the material terms and conditions of the Award as
established by the Committee consistent with the provisions of the
Plan.

 

(e) Taxes.
The Company and any Related Entity are authorized to withhold from
any Award granted, any payment relating to an Award under the Plan,
including from a distribution of Shares, or any payroll or other
payment to a Participant, amounts of withholding and other taxes
due or potentially payable in connection with any transaction
involving an Award, and to take such other action as the Committee
may deem advisable to enable the Company or any Related Entity and
Participants to satisfy obligations for the payment of withholding
taxes and other tax obligations relating to any Award. This
authority shall include authority to withhold or receive Shares or
other property and to make cash payments in respect thereof in
satisfaction of a Participant’s tax obligations, either on a
mandatory or elective basis in the discretion of the Committee. The
amount of withholding tax paid with respect to an Award by the
withholding of Shares otherwise deliverable pursuant to the Award
or by delivering Shares already owned shall not exceed the maximum
statutory withholding required with respect to that Award (or such
other limit as the Committee shall impose, including without
limitation, any limit imposed to avoid or limit any financial
accounting expense relating to the Award).

 

(f) Changes
to the Plan and Awards. The Board may
amend, alter, suspend, discontinue or terminate the Plan, or the
Committee’s authority to grant Awards under the Plan, without
the consent of shareholders or Participants, except that any
amendment or alteration to the Plan shall be subject to the
approval of the Company’s shareholders not later than the
annual meeting next following such Board action if such shareholder
approval is required by any applicable law or regulation
(including, without limitation, Rule 16b-3) or the rules of the
Listing Market, and the Board may otherwise, in its discretion,
determine to submit other such changes to the Plan to shareholders
for approval; provided that, except as otherwise permitted by the
Plan or Award Agreement, without the consent of an affected
Participant, no such Board action may materially and adversely
affect the rights of such Participant under the terms of any
previously granted and outstanding Award. The Committee may waive
any conditions or rights under, or amend, alter, suspend,
discontinue or terminate any Award theretofore granted and any
Award Agreement relating thereto, except as otherwise provided in
the Plan; provided that, except as otherwise permitted by the Plan
or Award Agreement, without the consent of an affected Participant,
no such Committee or the Board action may materially and adversely
affect the rights of such Participant under terms of such Award.
For the avoidance of doubt, and notwithstanding any other terms of
this Plan to the contrary, the terms of the Initial Plan shall
continue to apply to any Awards granted under the Initial Plan
prior to the Effective Date of Restated Plan only if and to the
extent required to comply with this Section 9(f) of the
Plan.

 

 

 

19

 

 

 

(g)           Clawback
of Benefits..           (i)           The
Company may (A) cause the cancellation of any Award, (B) require
reimbursement of any Award by a Participant or Beneficiary, and (C)
effect any other right of recoupment of equity or other
compensation provided under this Plan or otherwise in accordance
with any Company policies that currently exist or that may from
time to time be adopted or modified in the future by the Company
and/or applicable law (each, a “Clawback Policy”). In
addition, a Participant may be required to repay to the Company
certain previously paid compensation, whether provided under this
Plan or an Award Agreement or otherwise, in accordance with any
Clawback Policy. By accepting an Award, a Participant is also
agreeing to be bound by any existing or future Clawback Policy
adopted by the Company, or any amendments that may from time to
time be made to the Clawback Policy in the future by the Company in
its discretion (including without limitation any Clawback Policy
adopted or amended to comply with applicable laws or stock exchange
requirements) and is further agreeing that all of the
Participant’s Award Agreements may be unilaterally amended by
the Company, without the Participant’s consent, to the extent
that the Company in its discretion determines to be necessary or
appropriate to comply with any Clawback Policy.

 

(ii)           If
the Participant, without the consent of the Company, while employed
by or providing services to the Company or any Related Entity or
after termination of such employment or service, violates a
non-competition, non-solicitation or non-disclosure covenant or
agreement or otherwise engages in activity that is in conflict with
or adverse to the interest of the Company or any Related Entity, as
determined by the Committee in its sole discretion, then (i) any
outstanding, vested or unvested, earned or unearned portion of the
Award may, at the Committee’s discretion, be canceled and
(ii) the Committee, in its discretion, may require the Participant
or other person to whom any payment has been made or Shares or
other property have been transferred in connection with the Award
to forfeit and pay over to the Company, on demand, all or any
portion of the gain (whether or not taxable) realized upon the
exercise of any Option and the value realized (whether or not
taxable) on the vesting or payment of any other Award during the
time period specified in the Award Agreement or otherwise specified
by the Committee.

 

(h) Limitation
on Rights Conferred Under Plan. Neither the Plan
nor any action taken hereunder or under any Award shall be
construed as (i) giving any Eligible Person or Participant the
right to continue as an Eligible Person or Participant or in the
employ or service of the Company or a Related Entity;
(ii) interfering in any way with the right of the Company or a
Related Entity to terminate any Eligible Person’s or
Participant’s Continuous Service at any time,
(iii) giving an Eligible Person or Participant any claim to be
granted any Award under the Plan or to be treated uniformly with
other Participants and Employees, or (iv) conferring on a
Participant any of the rights of a shareholder of the Company or
any Related Entity including, without limitation, any right to
receive dividends or distributions, any right to vote or act by
written consent, any right to attend meetings of shareholders or
any right to receive any information concerning the Company’s
or any Related Entity’s business, financial condition,
results of operation or prospects, unless and until such time as
the Participant is duly issued Shares on the books of the Company
or any Related Entity in accordance with the terms of an Award.
None of the Company, its officers or its directors shall have any
fiduciary obligation to the Participant with respect to any Awards
unless and until the Participant is duly issued Shares pursuant to
the Award on the books of the Company in accordance with the terms
of an Award. Neither the Company, nor any Related Entity, nor any
of their respective officers, directors, representatives or agents
is granting any rights under the Plan to the Participant
whatsoever, oral or written, express or implied, other than those
rights expressly set forth in this Plan or the Award
Agreement.

 

 

20

 

 

(i) Unfunded
Status of Awards; Creation of Trusts. The Plan is
intended to constitute an “unfunded” plan for incentive
and deferred compensation. With respect to any payments not yet
made to a Participant or obligation to deliver Shares pursuant to
an Award, nothing contained in the Plan or any Award Agreement
shall give any such Participant any rights that are greater than
those of a general creditor of the Company or Related Entity that
issues the Award; provided that the Committee may authorize the
creation of trusts and deposit therein cash, Shares, other Awards
or other property, or make other arrangements to meet the
obligations of the Company or Related Entity under the Plan. Such
trusts or other arrangements shall be consistent with the
“unfunded” status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant.
The trustee of such trusts may be authorized to dispose of trust
assets and reinvest the proceeds in alternative investments,
subject to such terms and conditions as the Committee may specify
and in accordance with applicable law.

 

(j) Nonexclusivity
of the Plan. Neither the
adoption of the Plan by the Board nor its submission to the
shareholders of the Company for approval shall be construed as
creating any limitations on the power of the Board or a committee
thereof to adopt such other incentive arrangements as it may deem
desirable.

 

(k) Payments
in the Event of Forfeitures; Fractional Shares. Unless otherwise
determined by the Committee, in the event of a forfeiture of an
Award with respect to which a Participant paid cash or other
consideration, the Participant shall be repaid the amount of such
cash or other consideration. No fractional Shares shall be issued
or delivered pursuant to the Plan or any Award. The Committee shall
determine whether cash, other Awards or other property shall be
issued or paid in lieu of such fractional shares or whether such
fractional shares or any rights thereto shall be forfeited or
otherwise eliminated.

 

(l) Governing
Law. Except as
otherwise provided in any Award Agreement, the validity,
construction and effect of the Plan, any rules and regulations
under the Plan, and any Award Agreement shall be determined in
accordance with the laws of British Columbia without giving effect
to principles of conflict of laws, and other applicable
laws.

 

(m) Non-U.S.
Laws. The Committee
shall have the authority to adopt such modifications, procedures,
and subplans as may be necessary or desirable to comply with
provisions of the laws of any countries in which the Company or its
Related Entities may operate to assure the viability of the
benefits from Awards granted to Participants performing services in
such countries and to meet the objectives of the Plan. The
Committee has adopted a Canadian subplan (the “Canadian
Subplan”) that is applicable to a Participant who is a
Canadian Participant as such term is defined in the Canadian
Subplan. The Canadian Subplan is attached hereto as Appendix
A.

 

(n) Plan
Effective Date and Shareholder Approval; Termination of
Plan. The Plan
initially became effective on the Effective Date. The Plan, as
amended and restated herein, shall become effective on the
Effective Date of Restated Plan, subject to subsequent approval,
within 12 months of its adoption by the Board, by shareholders of
the Company eligible to vote in the election of directors, by a
vote sufficient to meet the requirements of Code Section 422, Rule
16b-3 under the Exchange Act (if applicable), applicable
requirements under the rules of any stock exchange or automated
quotation system on which the Shares may be listed or quoted, and
other laws, regulations, and obligations of the Company applicable
to the Plan. Subject to applicable law and the listing
requirements, Awards may be granted subject to shareholder
approval, but may not be exercised or otherwise settled in the
event the shareholder approval is not obtained. The Plan shall
terminate at the earliest of (a) such time as no Shares remain
available for issuance under the Plan, (b) termination of this
Plan by the Board, or (c) the tenth anniversary of the Effective
Date of Restated Plan. Awards outstanding upon expiration of the
Plan shall remain in effect until they have been exercised or
terminated, or have expired.

 

 

 

21

 

 

(o) Construction
and Interpretation. Whenever used
herein, nouns in the singular shall include the plural, and the
masculine pronoun shall include the feminine gender. Headings of
Articles and Sections hereof are inserted for convenience and
reference and constitute no part of the Plan.

 

(p) Severability.
If any provision of the Plan or any Award Agreement shall be
determined to be illegal or unenforceable by any court of law in
any jurisdiction, the remaining provisions hereof and thereof shall
be severable and enforceable in accordance with their terms, and
all provisions shall remain enforceable in any other
jurisdiction.

 

 

 

 

 

22

 

 

APPENDIX A - Canada

TO THE

EDESA BIOTECH, INC.

2019 EQUITY INCENTIVE COMPENSATION PLAN

 

 

1.

SPECIAL
PROVISIONS FOR CANADIAN PARTICIPANTS

 

1.1.

This
Appendix (this “Appendix”) to the Edesa Biotech, Inc.
2019 Equity Incentive Compensation Plan (formerly the Stellar
Biotechnologies, Inc. 2017 Incentive Compensation Plan) (the
“Plan”) was adopted by the Committee pursuant to
Section 9(m) of the Plan. This Appendix shall become effective on
the Effective Date

 

1.2.

The
provisions of this Appendix apply only to a Participant who is a
Canadian Resident Employee or a Canadian Resident Consultant (any
such Participant, a “Canadian
Participant”).

 

1.3.

This
Appendix is to be read as a continuation of the Plan and only
applies with respect to Options and other Awards granted under the
Plan to a Canadian Participant. The purpose of this Appendix is to
establish certain rules and limitations applicable to Options and
other Awards that may be granted or issued under the Plan to a
Canadian Participant from time to time, in compliance with
applicable tax, securities and other applicable laws currently in
force.

 

1.4.

The
Plan and this Appendix are complimentary to each other and shall be
deemed as one. Subject to Section 1.3 of this Appendix, in any case
of contradiction, whether explicit or implied, between any
definitions and/or provisions of this Appendix and the Plan, the
provisions set out in this Appendix shall prevail.

 

1.5.

Section
references in this Appendix shall refer to Sections of the Plan,
unless expressly indicated otherwise.

 

2.

DEFINITIONS

Capitalized terms
not otherwise defined herein shall have the meaning assigned to
them in the Plan. The following additional definitions will apply
to grants made pursuant to this Appendix, provided, however, that
to the extent that such definitions are provided for in the Plan
and this Appendix, the definitions in this Appendix shall apply to
Awards granted to the Canadian Participant:

 

2.1.

“110(1)(d)
Deduction” means the deduction that may be available pursuant
to paragraph 110(1)(d) of the CITA of an amount generally equal to
50% of the employee share option benefit included in the
employee’s income for the year pursuant to Section
7.

 

2.2.

“Canadian
Resident Employee” means an Employee of the Company or any of
its Subsidiaries who is a resident in Canada for purposes of the
CITA and any applicable income tax treaty or
convention.

 

 

A-1

 

 

2.3.

“Canadian
Resident Consultant” means a Consultant of the Company or any
of its Subsidiaries who is a resident in Canada for purposes of the
CITA and any applicable income tax treaty or
convention.

 

2.4.

“Continuous
Service” shall have the meaning assigned to it in the Plan.
For clarity, Continuous Service shall not include any period of pay
in lieu of notice for an Employee or Consultant, whether provided
for under contract, the applicable employment standards
legislation, or the common law.

 

2.5.

“Cause”
shall include the meaning assigned to it in the Plan, and
“cause” as may be defined by applicable law with
respect the termination of the engagement of a Participant by the
Company or a Related Entity as an Employee or a
Consultant.

 

2.6.

“CITA”
means the Income Tax Act (Canada) as it may be amended from time to
time and all regulations, interpretations and administrative
guidance issued thereunder.

 

2.7.

“Consultant”
has the meaning assigned to such term in the Plan; provided that
the Consultant (i) provides the services under a written contract
with the Company or any of its Subsidiaries, and (ii) spends or
will spend a significant amount of time and attention on the
affairs and business of the Company or any of its
Subsidiaries.

 

2.8.

“Consultant
Share Option” means a right of a Canadian Resident Consultant
to purchase Shares under the Plan in accordance with the terms and
conditions set forth in Section 6(b) of the Plan and which is not
intended to comply with Section 7.

 

2.9.

“Employee
Share Option” means a right of a Canadian Resident Employee
to purchase Shares under the Plan in accordance with the terms and
conditions set forth in Section 6(b) of the Plan and which is
intended to comply with Section 7.

 

2.10.

“Fair
Market Value” has the meaning assigned to such term in the
Plan; provided that the Committee shall determine Fair Market Value
for purposes of the CITA.

 

2.11.

“Section
7” means section 7 of the CITA.

 

2.12.

“SDA
Rules” means the rules in the CITA applicable to a right to
receive a deferred amount under a “salary deferral
arrangement” as defined in the CITA.

 

2.13.

“Subsidiary”
has the meaning assigned to such term in the Plan; provided that
the Committee shall determine the meaning of Subsidiary for
purposes of applicable Canadian law.

 

3.

EMPLOYEE
SHARE OPTIONS

 

3.1.

The
Employee Share Options granted under the Plan are intended to
comply with Section 7.

 

 

A-2

 

 

3.2.

No
Employee Share Option shall be granted to any individual otherwise
eligible to participate in the Plan who is not an Employee of the
Company or a Subsidiary on the date of granting of such Option. Any
Employee Share Option granted under the Plan shall contain such
terms and conditions, consistent with the Plan, as the Committee
may determine to be necessary to comply with Section 7 and will
take into consideration the availability of an 110(1)(d)
Deduction.

 

3.3.

No
Employee Share Option shall be granted pursuant to this Appendix
unless the Option Price of such Option is not less than the Fair
Market Value of a Share on the date of granting such Employee Share
Option.

 

3.4.

No
Employee Share Option shall be granted to an individual otherwise
eligible to participate in the Plan unless the individual deals at
arm’s length with the Company and its Subsidiaries for
purposes of the CITA.

 

3.5.

The
right to make a payment of the Option Price of an Employee Share
Option in the form of already owned Shares, under Section 6(b)(ii)
of the Plan, or pursuant to the withholding of shares, under
Section 6(b)(ii) of the Plan, shall not be available to Canadian
Resident Employees. Any other method approved or accepted by the
Committee pursuant to Section 6(b)(ii) of the Plan shall contain
such terms and conditions, consistent with the Plan, as the
Committee may determine to be necessary to comply with Section 7
and will take into consideration the availability of an 110(1)(d)
Deduction.

 

3.6.

No
Employee Share Option may be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated, other than by will or by
the laws of descent and distribution or in accordance with Section
9(b) of the Plan and subject to Applicable Law, including any
applicable securities laws.

 

4.

Consultant
share options

 

4.1.

The
Consultant Share Options granted under the Plan are not intended to
comply with Section 7.

 

4.2.

No
Consultant Share Option shall be granted to any individual
otherwise eligible to participate in the Plan who is not a
Consultant of the Company or a Subsidiary on the date of granting
of such Option.

 

5.

RESTRICTED
SHARES

 

5.1.

No
Restricted Shares shall be granted to a Canadian Participant unless
the Canadian Participant is a Canadian Resident Employee or a
Canadian Resident Consultant.

 

6.

RESTRICTED
SHARE UNITS

 

6.1.

No
Restricted Share Units (the “RSUs”) shall be granted to
a Canadian Participant unless the Canadian Participant is a
Canadian Resident Employee or a Canadian Resident
Consultant.

 

 

A-3

 

 

6.2.

The
RSUs granted under the Plan to a Canadian Resident Employee are
intended to comply with Section 7 to the extent applicable. An
award of RSUs to a Canadian Resident Employee shall only be settled
by delivery of Shares and shall not be settled, in whole or in
part, by cash payment in lieu of delivering Shares unless the Award
contains such necessary terms and conditions such that the Award is
not a “salary deferral arrangement” as defined in the
CITA.

 

6.3.

The
RSUs granted under the Plan to a Canadian Resident Consultant are
not intended to comply with Section 7.

 

7.

OTHER
MATTERS

 

7.1.

It
is the intention of the Company that no Award shall be a
“salary deferral arrangement” as defined in the
CITA.

 

7.2.

Notwithstanding
Section 9(e) of the Plan, the Company and any Related Entity shall
not have the authority to withhold or receive Shares in
satisfaction of a Canadian Participant’s tax
obligations.

 

7.3.

Notwithstanding
Section 7(c) of the Plan, the Company and any Related Entity shall
not be entitled to make payments upon the exercise of an Option or
other Award or settlement of an Award on a deferred
basis.

 

7.4.

In
the event that a Participant becomes a Canadian Participant
subsequent to the grant of an Award under the Plan, then, pursuant
to Section 9(m) of the Plan, such Award shall immediately and
automatically be amended in a manner consistent with this Appendix
unless otherwise determined by the Committee.

 

7.5.

Participation
in the Plan is voluntary and the Committee may require the Canadian
Participant to represent and warrant at the time of issuance or
transfer that his or her participation in the distribution is
voluntary.

 

8.

adjustments

The
Committee shall determine any adjustment pursuant to Section 9(c)
of the Plan after taking into account, among other things, to the
extent applicable: (i) the provisions of the CITA applicable to the
Options, and (ii) the SDA Rules.

 

 

A-4

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