As filed with the Securities and Exchange Commission on November
14, 2018
Registration No. __________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________________
SPHERE 3D CORP.
(Exact Name of Registrant as Specified in Its Charter)
___________________
|
Ontario, Canada
|
98-1220792
|
|
(State or Other Jurisdiction of
|
(I.R.S. Employer
|
|
Incorporation or Organization)
|
Identification No.)
|
895 Don Mills Road,
Bldg. 2, Suite 900
Toronto, Ontario M3C
1W3
(Address, Including Zip Code, of Principal Executive
Offices)
___________________
Sphere 3D Corp. 2015 Performance Incentive
Plan
(Full Title of the Plan)
___________________
Eric L. Kelly
Chief Executive
Officer
4542 Ruffner Street, Suite 250
San Diego,
California 92111
(858) 571-5555
(Name, Address
and Telephone Number, Including Area Code, of Agent for Service)
COPY TO:
Warren T. Lazarow, Esq.
Paul Sieben, Esq.
O’Melveny & Myers LLP
2765 Sand Hill Road
Menlo Park, California 94025
(650) 473-2600
___________________
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company or an emerging growth company. See the definitions of “large
accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer [ ]
|
Accelerated
filer [
]
|
|
|
|
|
Non-accelerated filer [ ]
|
Smaller reporting company [X]
|
|
(Do not
check if a smaller reporting company)
|
|
|
|
Emerging growth company [X]
|
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to
Section 7(a)(2)(B) of the Securities Act. [ ]
|
CALCULATION OF REGISTRATION FEE
|
|
|
|
Proposed
|
Proposed
|
|
|
|
|
Maximum
|
Maximum
|
|
|
Title of
|
Amount
|
Offering
|
Aggregate
|
Amount Of
|
|
Securities
|
To Be
|
Price
|
Offering
|
Registration
|
|
To
Be Registered
|
Registered
|
Per
Share
|
Price
|
Fee
|
|
|
|
|
|
|
|
Common Shares, no par value
per share, issuable pursuant to awards granted under the Sphere 3D Corp.
2015 Performance Incentive Plan
|
382,500
(1)
shares
|
$1.74
(2)
|
$665,550
(2)
|
$80.66
|
|
|
|
|
|
|
|
(1)
|
This Registration Statement covers, in addition to the
number of common shares, no par value per share (the “Common Shares”) of
Sphere 3D Corp., a corporation incorporated under the laws of the Province
of Ontario (the “Company” or the “Registrant”), stated above, options and
other rights to purchase or acquire Common Shares covered by this
Registration Statement and, pursuant to Rule 416 under the Securities Act
of 1933, as amended (the “Securities Act”), an additional indeterminate
number of shares, options and rights that may be offered or issued
pursuant to the Sphere 3D Corp. 2015 Performance Incentive Plan (the
“Plan”) as a result of one or more adjustments under the Plan to prevent
dilution resulting from one or more stock splits, stock dividends or
similar transactions.
|
|
|
|
|
(2)
|
Estimated solely for the purpose of calculating the
registration fee in accordance with Rule 457(h) and 457(c) under the
Securities Act, based upon the average of the high and low prices of the
Common Shares on November 13, 2018 (which is within five business days
prior to the date of this filing), as quoted on the Nasdaq Global Select
Market.
|
|
The Exhibit Index for this Registration Statement is at
page 7.
|
EXPLANATORY NOTE
This Registration Statement is filed by the Company to
register additional securities issuable pursuant to the Plan and consists of
only those items required by General Instruction E to Form S-8. The number of
shares registered hereby has been adjusted to reflect the Company’s
one-for-eight reverse stock split effective November 5, 2018.
__________________________
PART I
INFORMATION REQUIRED IN THE
SECTION 10(a) PROSPECTUS
The document(s) containing the information specified in Part I of
Form S-8 will be sent or given to participants as specified by Securities Act
Rule 428(b)(1).
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
Item
3.
Incorporation of Certain Documents by Reference
The following documents of the Company filed with
the Securities and Exchange Commission (the “Commission”) are incorporated
herein by reference:
|
|
(a)
|
The Company’s Registration Statements on Form S-8, filed
with the Commission on June 25, 2015 (Commission File No. 333-205236),
November 15, 2016 (Commission File No. 333-214605), February 24, 2017
(Commission File No. 333-216209), August 24, 2017 (Commission File No.
333-220152), January 29, 2018 (Commission File No. 222771);
|
|
|
|
|
|
|
(b)
|
The Company’s Annual Report on Form 10-K for its fiscal
year ended December 31, 2017, filed with the Commission on March 21, 2018
(Commission File No. 001-36532);
|
|
|
|
|
|
|
(c)
|
The Company’s Quarterly Reports on Form 10-Q for its
fiscal quarters ended March 31, 2018, June 30, 2018 and September 30,
2018, filed with the Commission on May 10, 2018, August 14, 2018 and
November 7, 2018, respectively (each, Commission File No.
001-36532);
|
|
|
|
|
|
|
(d)
|
The Company’s Current Reports on Form 8-K, filed with the
Commission on February 21, 2018, March 19, 2018, April 2, 2018, April 17,
2018, May 10, 2018 (with respect to Item 8.01 only), May 31, 2018, June 4,
2018, June 6, 2018 (as amended by Form 8-K/A, filed with the Commission on
June 7, 2018), June 19, 2018, July 3, 2018, July 19, 2018, July 25, 2018,
August 13, 2018, August 16, 2018, August 21, 2018, October 2, 2018,
November 2, 2018, November 5, 2018 and November 14, 2018 (each, Commission File No.
001-36532); and
|
|
|
|
|
|
|
(e)
|
The description of the Company’s common shares contained
in its Registration Statement on Form 8-A (File No. 001-36532) filed with
the Commission on July 7, 2014 pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and any other
amendment or report filed for the purpose of updating such
description.
|
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which deregisters
all securities then remaining unsold, shall be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof from the date
of filing of such documents; provided, however, that documents or information
deemed to have been furnished and not filed in accordance with Commission rules
shall not be deemed incorporated by reference into this Registration Statement.
Any statement contained herein or in a document, all or a portion of which is
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or amended, to constitute a part of this
Registration Statement.
Item
5.
Interests
of Named Experts and Counsel
Not
applicable.
Item
6.
Indemnification
of Directors and Officers
Under
the Business Corporations Act (Ontario), the Company may indemnify a director or
officer, a former director or officer or another individual who acts or acted at
the Company’s request as a director or officer, or an individual acting in a
similar capacity, of another entity, against all costs, charges and expenses,
including an amount paid to settle an action or satisfy a judgment, reasonably
incurred by the individual in respect of any civil, criminal, administrative,
investigative or other proceeding in which the individual is involved because of
that association with the Company or another entity on condition that (i) the
individual acted honestly and in good faith with a view to the Company’s best
interests or, as the case may be, to the best interests of the other entity for
which the individual acted as a director or officer or in a similar capacity at
the Company’s request, and (ii) in the case of a criminal or administrative
action or proceeding that is enforced by a monetary penalty, the individual also
had reasonable grounds for believing that his or her conduct was lawful.
Further, the Company may, with court approval, indemnify an individual described
above in respect of an action by or on the Company’s behalf or other entity to
obtain a judgment in its favor, to which the individual is made a party because
of the individual’s association with the Company or another entity, against all
costs, charges and expenses reasonably incurred by the individual in connection
with such action if the individual fulfills condition (i) above. An individual
as described above is entitled as a matter of right to indemnification from the
Company in respect of all costs, charges and expenses reasonably incurred by
such individual in connection with the defense of any civil, criminal,
administrative, investigative or other proceedings to which such individual is
subject if he or she was not judged by a court or other competent authority to
have committed any fault or omitted to do anything that he or she ought to have
done, and has fulfilled conditions (i) and (ii) above.
In
accordance with the Business Corporations Act (Ontario), the Company has agreed
to indemnify each of the Company’s directors and officers against all costs,
charges and expenses, including an amount paid to settle an action or satisfy a
judgment, reasonably incurred by such individual in respect of any civil,
criminal, administrative action or proceeding in which such individual is
involved by reason of his or her association with the Company or another entity
if such individual acted honestly and in good faith with a view to the best
interests of the Company or such other entity, and such individual had
reasonable grounds for believing that his or her conduct was lawful.
The
Company maintains a policy of directors’ and officers’ liability insurance,
which insures directors and officers for losses as a result of claims against
the Company’s directors and officers in their capacity as directors and officers
and also reimburses the Company for payments made pursuant to the indemnity
provisions under the Company’s bylaws and the Business Corporations Act
(Ontario).
Item
8.
Exhibits
See
the attached Exhibit Index at page 7, which is incorporated herein by
reference.
SIGNATURES
Pursuant
to the requirements of the Securities Act, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing
on Form S-8 and has duly caused this Form S-8 Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of San Jose, State of California, on November
14, 2018.
SPHERE 3D CORP.
|
|
By:
|
/s/ Eric Kelly
|
|
|
|
Eric Kelly
|
|
|
|
Chief Executive Officer
|
4
POWER OF ATTORNEY
Each
person whose signature appears below constitutes and appoints Eric Kelly and
Peter Tassiopoulos, or either one or both of them, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place, and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments, exhibits thereto and other documents in connection therewith) to
this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that each of
said attorneys-in-fact and agents, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act, this Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated.
|
Signature
|
Title
|
Date
|
|
|
|
|
|
|
|
|
|
/s/
Eric Kelly
|
Chairman of the Board and Chief Executive
Officer
|
November 14, 2018
|
|
Eric Kelly
|
(Principal Executive
Officer)
|
|
|
|
|
|
|
|
|
|
|
/s/ Kurt Kalbfleisch
|
Chief Financial Officer
|
November 14, 2018
|
|
Kurt Kalbfleisch
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
|
|
|
/s/
Cheemin Bo-Linn
|
Director
|
November 14, 2018
|
|
Cheemin Bo-Linn
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Vivekanand Mahadevan
|
Director
|
November 14, 2018
|
|
Vivekanand Mahadevan
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Duncan McEwan
|
Director
|
November 14, 2018
|
|
Duncan McEwan
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Peter Tassiopoulos
|
Director
|
November 14, 2018
|
|
Peter Tassiopoulos
|
|
|
5
SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES
Pursuant
to the requirements of the Securities Act, the undersigned, the duly authorized
representative in the United States of the Registrant, has signed this
registration statement in the City of San Jose, State of California on
November
14, 2018.
AUTHORIZED U.S. REPRESENTATIVE
|
|
By:
|
/s/
Eric Kelly
|
|
|
|
Eric Kelly
|
|
|
|
Chairman of the Board and Chief Executive
|
|
|
|
Officer
|
6
EXHIBIT INDEX
7
EXHIBIT 4
SPHERE 3D CORP.
2015 PERFORMANCE INCENTIVE PLAN
As amended on September 12, 2018 and approved by Shareholders
on October 31, 2018
and
As adjusted to reflect the 1:8 share consolidation effective
November 5, 2018
|
1.
|
PURPOSE OF PLAN
|
|
|
|
|
|
The purpose of this Sphere 3D Corp. 2015 Performance
Incentive Plan (this “
Plan
”) of Sphere 3D Corp., a corporation
incorporated under the laws of the Province of Ontario (the
“
Corporation
”), is to promote the success of the Corporation and to
increase shareholder value by providing an additional means through the
grant of awards to attract, motivate, retain and reward selected employees
and other eligible persons.
|
|
|
|
|
2.
|
ELIGIBILITY
|
|
|
|
|
|
The Administrator (as such term is defined in Section
3.1) may grant awards under this Plan only to those persons that the
Administrator determines to be Eligible Persons. An “
Eligible
Person
” is any person who is either: (a) an officer (whether or not a
director) or employee of the Corporation or one of its Subsidiaries; (b) a
director of the Corporation or one of its Subsidiaries; or (c) an
individual consultant or advisor who renders or has rendered bona fide
services (other than services in connection with the offering or sale of
securities of the Corporation or one of its Subsidiaries in a
capital-raising transaction or as a market maker or promoter of securities
of the Corporation or one of its Subsidiaries) to the Corporation or one
of its Subsidiaries and who is selected to participate in this Plan by the
Administrator; provided, however, that a person who is otherwise an
Eligible Person under clause (c) above may participate in this Plan only
if such participation would not adversely affect either the Corporation’s
eligibility to use Form S-8 to register under the Securities Act of 1933,
as amended (the “
Securities Act
”), the offering and sale of shares
issuable under this Plan by the Corporation, the Corporation’s ability to
rely on all necessary prospectus and other exemptions under Canadian
securities legislation in a manner satisfactory to the Corporation, in its
sole discretion, or the Corporation’s compliance with any other applicable
laws. An Eligible Person who has been granted an award (a “participant”)
may, if otherwise eligible, be granted additional awards if the
Administrator shall so determine. As used herein, subject to any
applicable laws that may require a different interpretation,
“
Subsidiary
” means any corporation or other entity a majority of
whose outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Corporation; and “
Board
” means the
Board of Directors of the Corporation.
|
|
|
|
|
3.
|
PLAN ADMINISTRATION
|
|
|
3.1
|
The Administrator
. This Plan shall be
administered by and all awards under this Plan shall be authorized by the
Administrator. The “
Administrator
” means the Board or one or more
committees appointed by the Board or another committee (within its
delegated authority and in the manner and on the terms authorized by the
Board) to administer all or certain aspects of this Plan. Any such
committee shall be comprised solely of one or more directors or such
number of directors as may be required under applicable law. A committee
may delegate some or all of its authority to another committee so
constituted, to the extent permitted by applicable laws. The Board or a
committee comprised solely of directors may also delegate, to the extent
permitted by applicable law, to one or more officers of the Corporation,
its powers under this Plan (a) to designate the officers and employees of
the Corporation and its Subsidiaries who will
receive grants of awards under this Plan, and (b) to determine
the number of shares subject to, and the other terms and conditions of,
such awards. The Board may delegate different levels of authority to
different committees with administrative and grant authority under this
Plan. Unless otherwise provided in the Bylaws of the Corporation or the
applicable charter of any Administrator: (a) a majority of the members of
the acting Administrator shall constitute a quorum, and (b) the vote of a
majority of the members present assuming the presence of a quorum or the
unanimous written consent of the members of the Administrator shall
constitute action by the acting Administrator.
|
|
|
|
With respect to awards
intended to satisfy the requirements for performance-based compensation
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
“
Code
”), this Plan shall be administered by a committee consisting
solely of two or more outside directors (as this requirement is applied
under Section 162(m) of the Code); provided, however, that the failure to
satisfy such requirement shall not affect the validity of the action of
any committee otherwise duly authorized and acting in the matter. Award
grants, and transactions in or involving awards, intended to be exempt
under Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the “
Exchange Act
”), must be duly and timely authorized by the
Board or a committee consisting solely of two or more non-employee
directors (as this requirement is applied under Rule 16b-3 promulgated
under the Exchange Act). To the extent required by any applicable listing
agency, this Plan shall be administered by a committee composed entirely
of independent directors (within the meaning of the applicable listing
agency).
|
|
|
|
|
|
|
3.2
|
Powers of the Administrator
. Subject to the
express provisions of this Plan and applicable laws, the Administrator is
authorized and empowered to do all things necessary or desirable in
connection with the authorization of awards and the administration of this
Plan (in the case of a committee or delegation to one or more officers,
within the authority delegated to that committee or person(s) and in the
manner and on the terms authorized by the Board), including, without
limitation, the authority to:
|
|
|
(a)
|
determine eligibility and, from among those persons
determined to be eligible, the particular Eligible Persons who will
receive an award under this Plan;
|
|
|
|
|
|
|
(b)
|
grant awards to Eligible Persons, determine the price at
which securities will be offered or awarded and the number of securities
to be offered or awarded to any of such persons, determine the other
specific terms and conditions of such awards consistent with the express
limits of this Plan, establish the installments (if any) in which such
awards shall become exercisable or shall vest (which may include, without
limitation, performance and/or time-based schedules), or determine that no
delayed exercisability or vesting is required, establish any applicable
performance targets, determine the extent (if any) to which any applicable
exercise and vesting requirements have been satisfied, and establish the
events of termination or reversion of such awards;
|
|
|
|
|
|
|
(c)
|
approve the forms of award agreements (which need not be
identical either as to type of award or among participants);
|
|
|
|
|
|
|
(d)
|
construe and interpret this Plan and any agreements
defining the rights and obligations of the Corporation, its Subsidiaries,
and participants under this Plan, make any and all determinations
necessary under this Plan and any such agreements, further define
the terms used in this Plan, and prescribe, amend and rescind
rules and regulations relating to the administration of this Plan or the
awards granted under this Plan;
|
|
|
(e)
|
cancel, modify, or waive the Corporation’s rights with
respect to, or modify, discontinue, suspend, or terminate any or all
outstanding awards, subject to any required consent under Section
8.6.5;
|
|
|
|
|
|
|
(f)
|
accelerate or extend the vesting or exercisability or
extend the term of any or all such outstanding awards (in the case of
options or stock appreciation rights, within the maximum ten-year term of
such awards) in such circumstances as the Administrator may deem
appropriate (including, without limitation, in connection with a
termination of employment or services or other events of a personal
nature) subject to any required consent under Section 8.6.5;
|
|
|
|
|
|
|
(g)
|
adjust the number of Common Shares subject to any award,
adjust the price of any or all outstanding awards or otherwise change
previously imposed terms and conditions, in such circumstances as the
Administrator may deem appropriate, in each case subject to Sections 4 and
8.6 (and subject to the no repricing provision below);
|
|
|
|
|
|
|
(h)
|
determine the date of grant of an award, which may be a
designated date after but not before the date of the Administrator’s
action (unless otherwise designated by the Administrator, the date of
grant of an award shall be the date upon which the Administrator took the
action granting an award);
|
|
|
|
|
|
|
(i)
|
determine whether, and the extent to which, adjustments
are required pursuant to Section 7 hereof and authorize the termination,
conversion, substitution or succession of awards upon the occurrence of an
event of the type described in Section 7;
|
|
|
|
|
|
|
(j)
|
acquire or settle (subject to Sections 7 and 8.6) rights
under awards in cash, stock of equivalent value, or other consideration
(subject to the no repricing provision below); and
|
|
|
|
|
|
|
(k)
|
determine the fair market value of the Common Shares or
awards under this Plan from time to time and/or the manner in which such
value will be determined.
|
|
|
|
Notwithstanding the foregoing and except for an
adjustment pursuant to Section 7.1 or a repricing approved by
shareholders, in no case may the Administrator (1) amend an outstanding
stock option or SAR to reduce the exercise price or base price of the
award, (2) cancel, exchange, or surrender an outstanding stock option or
SAR in exchange for cash or other awards for the purpose of repricing the
award, or (3) cancel, exchange, or surrender an outstanding stock option
or SAR in exchange for an option or SAR with an exercise or base price
that is less than the exercise or base price of the original
award.
|
|
|
|
|
|
|
3.3
|
Binding Determinations
. Any determination
or other action taken by, or inaction of, the Corporation, any Subsidiary,
or the Administrator relating or pursuant to this Plan (or any award made
under this Plan) and within its authority hereunder or under applicable
law shall be within the absolute discretion of that entity or body and
shall be conclusive and binding upon all persons. Neither the Board nor
any Board committee, nor any member thereof or person acting at the
direction thereof, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with this
Plan (or any award made under this Plan), and all such persons shall be
entitled to indemnification and reimbursement by the Corporation in
respect of any claim, loss, damage or expense (including, without
limitation, attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by
law and/or under any directors and officers liability insurance coverage
that may be in effect from time to time.
|
|
|
3.4
|
Reliance on Experts
. In making any
determination or in taking or not taking any action under this Plan, the
Administrator may obtain and may rely upon the advice of experts,
including employees and professional advisors to the Corporation. To the
fullest extent permitted by law, no director, officer or agent of the
Corporation or any of its Subsidiaries shall be liable for any such action
or determination taken or made or omitted in good faith.
|
|
|
|
|
|
|
3.5
|
Delegation
. The Administrator may delegate
ministerial, non-discretionary functions to individuals who are officers
or employees of the Corporation or any of its Subsidiaries or to third
parties.
|
|
4.
|
COMMON SHARES SUBJECT TO THE PLAN; SHARE
LIMITS
|
|
|
4.1
|
Shares Available
. Subject to the provisions
of Section 7.1, the shares that may be delivered under this Plan shall be
the Corporation’s authorized but unissued Common Shares. For purposes of
this Plan, “
Common Shares
” shall mean the common shares of the
Corporation and such other securities or property as may become the
subject of awards under this Plan, or may become subject to such awards,
pursuant to an adjustment made under Section 7.1.
|
|
|
|
|
|
|
4.2
|
Share Limits
. The maximum number of Common
Shares that may be delivered pursuant to awards granted to Eligible
Persons under this Plan (the “
Share Limit
”) is equal to the sum of
the following:
|
|
|
(1)
|
640,843 Common Shares, plus
|
|
|
|
|
|
|
(2)
|
the number of any Common Shares subject to stock options
granted under the Corporation’s Second Amended and Restated Stock Option
Plan (the “
Prior Plan
”) and outstanding on June 18, 2015 which
expire, or for any reason are cancelled or terminated, after that date
without being exercised.
|
The following limits also apply with
respect to awards granted under this Plan:
|
|
(a)
|
The maximum number of Common Shares that may be delivered
pursuant to options qualified as incentive stock options granted under
this Plan is 38,966 shares.
|
|
|
|
|
|
|
(b)
|
The maximum number of Common Shares subject to those
options and stock appreciation rights that are granted during any fiscal
year of the Corporation to any individual under this Plan is 37,500
shares.
|
|
|
|
|
|
|
(c)
|
Additional limits with respect to Performance-Based
Awards are set forth in Section 5.2.3.
|
Each of the foregoing numerical limits
is subject to adjustment as contemplated by Section 4.3, Section 7.1, and
Section 8.10.
|
|
4.3
|
Awards Settled in Cash, Reissue of Awards and
Shares
. Except as provided in the next sentence, shares that are
subject to or underlie awards granted under this Plan which expire or for
any reason are cancelled or terminated, are forfeited, fail to vest, or
for any other reason are not paid or delivered under this Plan shall again
be available for subsequent awards under this Plan. Shares that are
exchanged by a participant or withheld by the Corporation as full or
partial payment in connection with any award granted under this Plan, as
well as any shares exchanged by a participant or withheld by the
Corporation or one of its Subsidiaries to satisfy the tax withholding
obligations related to any award granted under this Plan, shall be
available for subsequent awards under this Plan. To the extent that an
award granted under this Plan is settled in cash or a form other than
Common Shares, the shares that would have been delivered had there been no
such cash or other settlement shall not be counted against the shares
available for issuance under this Plan. In the event that Common Shares
are delivered in respect of a dividend equivalent right granted under this
Plan, the number of shares actually delivered with respect to the award
shall be counted against the share limits of this Plan. To the extent that
Common Shares are delivered pursuant to the exercise of a stock
appreciation right or stock option granted under this Plan, the number of
shares actually delivered with respect to the award shall be counted
against the share limits of this Plan. Refer to Section 8.10 for
application of the foregoing share limits with respect to assumed awards.
The foregoing adjustments to the share limits of this Plan are subject to
any applicable limitations under Section 162(m) of the Code with respect
to awards intended as performance- based compensation
thereunder.
|
|
|
|
|
|
|
4.4
|
Reservation of Shares; No Fractional Shares;
Minimum Issue
. The Corporation shall at all times reserve a number
of Common Shares sufficient to cover the Corporation’s obligations and
contingent obligations to deliver shares with respect to awards then
outstanding under this Plan (exclusive of any dividend equivalent
obligations to the extent the Corporation has the right to settle such
rights in cash). No fractional shares shall be delivered under this Plan.
The Administrator may pay cash in lieu of any fractional shares in
settlements of awards under this Plan. The Administrator may from time to
time impose a limit (of not greater than 100 shares) on the minimum number
of shares that may be purchased or exercised as to awards granted under
this Plan unless (as to any particular award) the total number purchased
or exercised is the total number at the time available for purchase or
exercise under the award.
|
|
|
5.1
|
Type and Form of Awards
. The Administrator
shall determine the type or types of award(s) to be made to each selected
Eligible Person. Awards may be granted singly, in combination or in
tandem. Awards also may be made in combination or in tandem with, in
replacement of, as alternatives to, or as the payment form for grants or
rights under any other employee or compensation plan of the Corporation or
one of its Subsidiaries. The types of awards that may be granted under
this Plan are (subject, in each case, to the no repricing provisions of
Section 3.2):
5.1.1 Stock Options
. A
stock option is the grant of a right to purchase a specified number of
Common Shares during a specified period as determined by the
Administrator. An option may be intended as an incentive stock option
within the meaning of Section 422 of the Code (an “
ISO
”) or a
nonqualified stock option (an option not intended to be an ISO). The award
agreement for an option will indicate if the option is intended as an ISO;
otherwise it will be deemed to be a nonqualified stock option. The maximum
term of each option (ISO or nonqualified) shall be ten (10) years. The per
share exercise price for each option shall be not less than 100% of the
fair market value of a Common Share on the date of grant of the option.
When an option is exercised, the exercise price for the shares to
be purchased shall be paid in full in cash or such other method permitted by the
Administrator consistent with Section 5.5.
|
5.1.2
Additional Rules Applicable to ISOs
. To the extent that the aggregate
fair market value (determined at the time of grant of the applicable option) of
stock with respect to which ISOs first become exercisable by a participant in
any calendar year exceeds $100,000, taking into account both Common Shares
subject to ISOs under this Plan and stock subject to ISOs under all other plans
of the Corporation or one of its Subsidiaries (or any parent or predecessor
corporation to the extent required by and within the meaning of Section 422 of
the Code and the regulations promulgated thereunder), such options shall be
treated as nonqualified stock options. In reducing the number of options treated
as ISOs to meet the $100,000 limit, the most recently granted options shall be
reduced first. To the extent a reduction of simultaneously granted options is
necessary to meet the $100,000 limit, the Administrator may, in the manner and
to the extent permitted by law, designate which Common Shares are to be treated
as shares acquired pursuant to the exercise of an ISO. ISOs may only be granted
to employees of the Corporation or one of its subsidiaries (for this purpose,
the term “subsidiary” is used as defined in Section 424(f) of the Code, which
generally requires an unbroken chain of ownership of at least 50% of the total
combined voting power of all classes of stock of each subsidiary in the chain
beginning with the Corporation and ending with the subsidiary in question).
There shall be imposed in any award agreement relating to ISOs such other terms
and conditions as from time to time are required in order that the option be an
“incentive stock option” as that term is defined in Section 422 of the Code. No
ISO may be granted to any person who, at the time the option is granted, owns
(or is deemed to own under Section 424(d) of the Code) shares of outstanding
Common Shares possessing more than 10% of the total combined voting power of all
classes of stock of the Corporation, unless the exercise price of such option is
at least 110% of the fair market value of the stock subject to the option and
such option by its terms is not exercisable after the expiration of five years
from the date such option is granted.
5.1.3 Stock
Appreciation Rights
. A stock appreciation right or “
SAR
” is a
right to receive a payment, in cash and/or Common Shares, equal to the excess of
the fair market value of a specified number of Common Shares on the date the SAR
is exercised over the “
base price
” of the award, which base price shall
be set forth in the applicable award agreement and shall be not less than 100%
of the fair market value of a Common Share on the date of grant of the SAR. The
maximum term of a SAR shall be ten (10) years.
5.1.4 Other
Awards; Dividend Equivalent Rights
. The other types of awards that may
be granted under this Plan include: (a) stock bonuses, restricted stock,
performance stock, stock units, phantom stock or similar rights to purchase or
acquire shares, whether at a fixed or variable price (or no price) or fixed or
variable ratio related to the Common Shares, and any of which may (but need not)
be fully vested at grant or vest upon the passage of time, the occurrence of one
or more events, the satisfaction of performance criteria or other conditions, or
any combination thereof; (b) any similar securities with a value derived from
the value of or related to the Common Shares and/or returns thereon; or (c) cash
awards. Dividend equivalent rights may be granted as a separate award or in
connection with another award under this Plan; provided, however, that dividend
equivalent rights may not be granted in connection with a stock option or SAR
granted under this Plan. In addition, any dividends and/or dividend equivalents
as to the unvested portion of a restricted stock award that is subject to
performance-based vesting requirements or the unvested portion of a stock unit
award that is subject to performance-based vesting requirements will be subject to termination and forfeiture to the same extent
as the corresponding portion of the award to which they relate.
|
|
5.2
|
Section 162(m) Performance-Based Awards
.
Without limiting the generality of the foregoing, any of the types of
awards listed in Section 5.1.4 above may be, and options and SARs granted
to officers and employees (“
Qualifying Options
” and “
Qualifying
SARS
,” respectively) typically will be, granted as awards intended to
satisfy the requirements for “performance-based compensation” within the
meaning of Section 162(m) of the Code (“
Performance-Based
Awards
”
). The grant, vesting, exercisability or payment of
Performance-Based Awards may depend (or, in the case of Qualifying Options
or Qualifying SARs, may also depend) on the degree of achievement of one
or more performance goals relative to a pre-established targeted level or
levels using one or more of the Business Criteria set forth below (on an
absolute or relative (including, without limitation, relative to the
performance of other companies or upon comparisons of any of the
indicators of performance relative to other companies) basis) for the
Corporation on a consolidated basis or for one or more of the
Corporation’s subsidiaries, segments, divisions or business units, or any
combination of the foregoing. Any Qualifying Option or Qualifying SAR
shall be subject only to the requirements of Section 5.2.1 and 5.2.3 in
order for such award to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code. Any other
Performance-Based Award shall be subject to all of the following
provisions of this Section 5.2.
|
|
|
|
|
|
|
|
5.2.1
Class;
Administrator
.
The eligible class of persons for
Performance-Based Awards under
|
|
|
|
|
|
|
|
this Section 5.2 shall be officers and employees of the
Corporation or one of its Subsidiaries. The Administrator approving
Performance-Based Awards or making any certification required pursuant to
Section 5.2.4 must be constituted as provided in Section 3.1 for awards
that are intended as performance-based compensation under Section 162(m)
of the Code.
|
|
|
|
|
|
|
|
5.2.2
Performance
Goals
.
The specific performance goals for Performance-Based
Awards (other than Qualifying Options and Qualifying SARs) shall be, on an
absolute or relative basis, established based on one or more of the
following business criteria (“
Business Criteria
”) as selected by
the Administrator in its sole discretion: earnings per share, cash flow
(which means cash and cash equivalents derived from either net cash flow
from operations or net cash flow from operations, financing and investing
activities), stock price, total shareholder return, gross revenue, revenue
growth, operating income (before or after taxes), net earnings (before or
after interest, taxes, depreciation and/or amortization), return on equity
or on assets or on net investment, cost containment or reduction, or any
combination thereof. These terms are used as applied under generally
accepted accounting principles or in the financial reporting of the
Corporation or of its Subsidiaries. To qualify awards as performance-based
under Section 162(m), the applicable Business Criterion (or Business
Criteria, as the case may be) and specific performance goal or goals
(“targets”) must be established and approved by the Administrator during
the first 90 days of the performance period (and, in the case of
performance periods of less than one year, in no event after 25% or more
of the performance period has elapsed) and while performance relating to
such target(s) remains substantially uncertain within the meaning of
Section 162(m) of the Code. The terms of the Performance-Based Awards may
specify the manner, if any, in which performance targets shall be adjusted
to mitigate the unbudgeted impact of material, unusual or nonrecurring
gains and losses, accounting changes or other items specified by the
Administrator at the time of establishing the targets. The applicable
performance measurement period may not be less than three months nor more
than 10 years.
|
5.2.3 Form of
Payment; Maximum Performance-Based Award
.
Grants or awards under
this Section 5.2 may be paid in cash or Common Shares or any combination
thereof. Grants of Qualifying Options and Qualifying SARs to any one participant
in any one calendar year shall be subject to the limit set forth in Section
4.2(b) . The maximum number of Common Shares which may be subject to
Performance-Based Awards (including Performance-Based Awards payable in Common
Shares and Performance-Based Awards payable in cash where the amount of cash
payable upon or following vesting of the award is determined with reference to
the fair market value of a Common Share at such time) that are granted to any
one participant in any one fiscal year of the Corporation shall not exceed
37,500
shares (counting such shares on a one-for-one basis for this
purpose), either individually or in the aggregate, subject to adjustment as
provided in Section 7.1; provided that this limit shall not apply to Qualifying
Options and Qualifying SARs (which are covered by the limit of Section 4.2(b)) .
The aggregate amount of compensation to be paid to any one participant in
respect of all Performance-Based Awards payable only in cash (excluding cash
awards covered by the preceding sentence where the cash payment is determined
with reference to the fair market value of a Common Share upon or following the
vesting of the award) and granted to that participant in any one fiscal year of
the Corporation shall not exceed $5,000,000. Awards that are cancelled during
the year shall be counted against these limits to the extent required by Section
162(m) of the Code.
5.2.4 Certification
of Payment
.
Before any Performance-Based Award under this Section
5.2 (other than Qualifying Options and Qualifying SARs) is paid and to the
extent required to qualify the award as performance-based compensation within
the meaning of Section 162(m) of the Code, the Administrator must certify in
writing that the performance target(s) and any other material terms of the
Performance-Based Award were in fact timely satisfied.
5.2.5 Reservation of
Discretion
.
Subject to Section 3 hereof and applicable laws, the
Administrator will have the discretion to determine the restrictions or other
limitations of the individual awards granted under this Section 5.2 including
the authority to reduce awards, payouts or vesting or to pay no awards, in its
sole discretion, if the Administrator preserves such authority at the time of
grant by language to this effect in its authorizing resolutions or
otherwise.
5.2.6 Expiration of
Grant Authority
.
As required pursuant to Section 162(m) of the
Code and the regulations promulgated thereunder, the Administrator’s authority
to grant new awards that are intended to qualify as performance-based
compensation within the meaning of Section 162(m) of the Code (other than
Qualifying Options and Qualifying SARs) shall terminate upon the first meeting
of the Corporation’s shareholders that occurs in the fifth year following the
year in which the Corporation’s shareholders first approve this Plan, subject to
any subsequent extension that may be approved by shareholders.
|
|
5.3
|
Award Agreements
. Each award shall be
evidenced by either (1) a written award agreement in a form approved by
the Administrator and executed by the Corporation by an officer duly
authorized to act on its behalf, or (2) an electronic notice of award
grant in a form approved by the Administrator and recorded by the
Corporation (or its designee) in an electronic recordkeeping system used
for the purpose of tracking award grants under this Plan generally (in
each case, an “award agreement”), as the Administrator may provide and, in
each case and if required by the Administrator, executed or otherwise
electronically accepted by the recipient of the award in such form and
manner as the Administrator may require. The Administrator may authorize
any officer of the Corporation (other than the particular award recipient)
to execute any or all award agreements on behalf of the Corporation. The
award agreement shall set forth the material terms and conditions of the
award as established by the Administrator consistent with the express
limitations of this Plan.
|
|
|
|
|
|
|
5.4
|
Deferrals and Settlements
. Payment of
awards may be in the form of cash, Common Shares, other awards or
combinations thereof as the Administrator shall determine, and with such
restrictions as it may impose. The Administrator may also require or
permit participants to elect to defer the issuance of shares or the
settlement of awards in cash under such rules and procedures as it may
establish under this Plan. The Administrator may also provide that
deferred settlements include the payment or crediting of interest or other
earnings on the deferral amounts, or the payment or crediting of dividend
equivalents where the deferred amounts are denominated in
shares.
|
|
|
|
|
|
|
5.5
|
Consideration for Common Shares or Awards
.
The purchase price for any award granted under this Plan or the Common
Shares to be delivered pursuant to an award, as applicable, may be paid by
means of any lawful consideration as determined by the Administrator,
including, without limitation, one or a combination of the following
methods:
|
|
|
•
|
services rendered by the recipient of such award;
|
|
|
|
|
|
|
•
|
cash, check payable to the order of the Corporation, or
electronic funds transfer;
|
|
|
|
|
|
|
•
|
notice and third party payment in such manner as may be
authorized by the Administrator;
|
|
|
|
|
|
|
•
|
the delivery of previously owned Common Shares;
|
|
|
|
|
|
|
•
|
by a reduction in the number of shares otherwise
deliverable pursuant to the award; or
|
|
|
|
|
|
|
•
|
subject to such procedures as the Administrator may
adopt, pursuant to a “cashless exercise” with a third party who provides
financing for the purposes of (or who otherwise facilitates) the purchase
or exercise of awards.
|
In no event shall any shares
newly-issued by the Corporation be issued for less than the minimum lawful
consideration for such shares or for consideration other than consideration
permitted by applicable law. Common Shares used to satisfy the exercise price of
an option shall be valued at their fair market value on the date of exercise.
The Corporation will not be obligated to deliver any shares unless and until it
receives full payment of the exercise or purchase price therefor and any related
withholding obligations under Section 8.5 and any other conditions to exercise
or purchase have been satisfied. Unless otherwise expressly provided in the
applicable award agreement, the Administrator may at any time eliminate or limit
a participant’s ability to pay the purchase or exercise price of any award or
shares by any method other than cash payment to the Corporation. Common Shares
delivered pursuant to Awards granted under this Plan, when the applicable
consideration therefor shall have been received by the Corporation, shall be
duly issued as fully paid and non-assessable.
|
|
5.6
|
Definition of Fair Market Value
. For
purposes of this Plan, “fair market value” shall mean, unless otherwise
determined or provided by the Administrator in the circumstances, the
closing price (in regular trading) for a Common Share on the NASDAQ Stock
Market (the “
Market
”) for the date in question or, if no sales of
Common Shares were reported on the Market on that date, the closing price
(in regular trading) for a Common Share on the Market for the next
preceding day on which sales of Common Shares were reported on the Market.
The Administrator may, however, provide with respect to one or more awards
that the fair market value shall equal the closing price (in regular
trading) for a Common Share on the Market on the last trading day
preceding the date in question or the average of the high and low trading
prices of a Common Share on the Market for the date in question or the
most recent trading day. If the Common Shares are no longer listed or are
no longer actively traded on the Market as of the applicable date, the
fair market value of the Common Shares shall be the value as reasonably
determined by the Administrator for purposes of the award in the
circumstances. The Administrator also may adopt a different methodology
for determining fair market value with respect to one or more awards if a
different methodology is necessary or advisable to secure any intended
favorable tax, legal or other treatment for the particular award(s) (for
example, and without limitation, the Administrator may provide that fair
market value for purposes of one or more awards will be based on an
average of closing prices (or the average of high and low daily trading
prices) for a specified period preceding the relevant date).
|
|
|
|
|
|
|
5.7
|
Transfer Restrictions
.
|
|
|
|
|
|
|
|
5.7.1
Limitations on
Exercise and Transfer
. Unless otherwise expressly provided in (or
pursuant to) this Section 5.7 or required by applicable law: (a) all
awards are non-transferable and shall not be subject in any manner to
sale, transfer, anticipation, alienation, assignment, pledge, encumbrance
or charge; (b) awards shall be exercised only by the participant; and (c)
amounts payable or shares issuable pursuant to any award shall be
delivered only to (or for the account of) the participant.
|
|
|
|
|
|
|
|
5.7.2
Exceptions
.
The Administrator may permit awards to be exercised by and paid to, or
otherwise transferred to, other persons or entities pursuant to such
conditions and procedures, including limitations on subsequent transfers,
as the Administrator may, in its sole discretion, establish in writing.
Any permitted transfer shall be subject to compliance with applicable
federal, provincial and state securities laws and shall not be for value
(other than nominal consideration, settlement of marital property rights,
or for interests in an entity in which more than 50% of the voting
interests are held by the Eligible Person or by the Eligible Person’s
family members).
|
|
|
|
|
|
|
|
5.7.3
Further Exceptions
to Limits on Transfer
. The exercise and transfer restrictions in
Section 5.7.1 shall not apply to:
|
|
|
(a)
|
transfers to the Corporation (for example, in connection
with the expiration or termination of the award),
|
|
|
|
|
|
|
(b)
|
the designation of a beneficiary to receive benefits in
the event of the participant’s death or, if the participant has died,
transfers to or exercise by the participant’s beneficiary, or, in the
absence of a validly designated beneficiary or if such designation cannot
be validly made, transfers by will or the laws of descent and
distribution,
|
|
|
|
|
|
|
(c)
|
subject to any applicable limitations on ISOs, transfers
to a family member (or former family member) pursuant to a domestic
relations order if approved or ratified by the
Administrator,
|
|
|
(d)
|
if the participant has suffered a disability, permitted
transfers or exercises on behalf of the participant by his or her legal
representative, or
|
|
|
|
|
|
|
(e)
|
the authorization by the Administrator of “cashless
exercise” procedures with third parties who provide financing for the
purpose of (or who otherwise facilitate) the exercise of awards consistent
with applicable laws and the express authorization of the
Administrator.
|
|
|
5.8
|
International Awards
. One or more awards
may be granted to Eligible Persons who provide services to the Corporation
or one of its Subsidiaries outside of the United States. Any awards
granted to such persons may be granted pursuant to the terms and
conditions of any applicable sub-plans, if any, appended to this Plan and
approved by the Administrator. The awards so granted need not comply with
other specific terms of this Plan, provided that shareholder approval of
any deviation from the specific terms of this Plan is not required by
applicable law or any applicable listing
agency.
|
|
6.
|
EFFECT OF TERMINATION OF EMPLOYMENT OR SERVICE ON
AWARDS
|
|
|
6.1
|
General
. The Administrator shall establish
the effect of a termination of employment or service on the rights and
benefits under each award under this Plan and in so doing may make
distinctions based upon, inter alia, the cause of termination and type of
award. If the participant is not an employee of the Corporation or one of
its Subsidiaries and provides other services to the Corporation or one of
its Subsidiaries, the Administrator shall be the sole judge for purposes
of this Plan (unless a contract or the award otherwise provides) of
whether the participant continues to render services to the Corporation or
one of its Subsidiaries and the date, if any, upon which such services
shall be deemed to have terminated.
|
|
|
|
|
|
|
6.2
|
Events Not Deemed Terminations of Service
.
Unless the express policy of the Corporation or one of its Subsidiaries,
or the Administrator, otherwise provides, or except as otherwise required
by applicable law, the employment relationship shall not be considered
terminated in the case of (a) sick leave, (b) military leave, or (c) any
other leave of absence authorized by the Corporation or one of its
Subsidiaries, or the Administrator; provided that, unless reemployment
upon the expiration of such leave is guaranteed by contract or law or the
Administrator otherwise provides, such leave is for a period of not more
than three months. In the case of any employee of the Corporation or one
of its Subsidiaries on an approved leave of absence, continued vesting of
the award while on leave from the employ of the Corporation or one of its
Subsidiaries may be suspended until the employee returns to service,
unless the Administrator otherwise provides or applicable law otherwise
requires. In no event shall an award be exercised after the expiration of
the term set forth in the applicable award agreement.
|
|
|
|
|
|
|
6.3
|
Effect of Change of Subsidiary Status
. For
purposes of this Plan and any award, if an entity ceases to be a
Subsidiary of the Corporation a termination of employment or service shall
be deemed to have occurred with respect to each Eligible Person in respect
of such Subsidiary who does not continue as an Eligible Person in respect
of the Corporation or another Subsidiary that continues as such after
giving effect to the transaction or other event giving rise to the change
in status unless the Subsidiary that is sold, spun-off or otherwise
divested (or its successor or a direct or indirect parent of such
Subsidiary or successor) assumes the Eligible Person’s award(s) in
connection with such transaction.
|
|
7.
|
ADJUSTMENTS; ACCELERATION
|
|
|
|
|
|
|
7.1
|
Adjustments
. Subject to Section 7.2, upon
(or, as may be necessary to effect the adjustment, immediately prior to):
any reclassification, recapitalization, stock split (including a stock
split in the form of a stock dividend) or reverse stock split; any merger,
amalgamation, combination, consolidation, conversion or other
reorganization; any spin-off, split-up, or similar extraordinary dividend
distribution in respect of the Common Shares; or any exchange of Common
Shares or other securities of the Corporation, or any similar, unusual or
extraordinary corporate transaction in respect of the Common Shares; then
the Administrator shall equitably and proportionately adjust (1) the
number and type of Common Shares (or other securities) that thereafter may
be made the subject of awards (including the specific share limits,
maximums and numbers of shares set forth elsewhere in this Plan), (2) the
number, amount and type of Common Shares (or other securities or property)
subject to any outstanding awards, (3) the grant, purchase, or exercise
price (which term includes the base price of any SAR or similar right) of
any outstanding awards, and/or (4) the securities, cash or other property
deliverable upon exercise or payment of any outstanding awards, in each
case to the extent necessary to preserve (but not increase) the level of
incentives intended by this Plan and the then-outstanding
awards.
|
|
|
|
|
|
|
|
Unless otherwise expressly provided in the applicable
award agreement, upon (or, as may be necessary to effect the adjustment,
immediately prior to) any event or transaction described in the preceding
paragraph or a sale of all or substantially all of the business or assets
of the Corporation as an entirety, the Administrator shall equitably and
proportionately adjust the performance standards applicable to any
then-outstanding performance-based awards to the extent necessary to
preserve (but not increase) the level of incentives intended by this Plan
and the then-outstanding performance-based awards.
|
|
|
|
|
|
|
|
It is intended that, if possible, any adjustments
contemplated by the preceding two paragraphs be made in a manner that
satisfies applicable Canadian and U.S. legal, tax (including, without
limitation and as applicable in the circumstances, Section 424 of the
Code, Section 409A of the Code and Section 162(m) of the Code) and
accounting (so as to not trigger any charge to earnings with respect to
such adjustment) requirements.
|
|
|
|
|
|
|
|
Without limiting the generality of Section 3.3, any good
faith determination by the Administrator as to whether an adjustment is
required in the circumstances pursuant to this Section 7.1, and the extent
and nature of any such adjustment, shall be conclusive and binding on all
persons.
|
|
|
|
|
|
|
7.2
|
Corporate Transactions - Assumption and Termination
of Awards
. Upon the occurrence of any of the following: any
recapitalization, merger, amalgamation, combination, consolidation,
conversion or other reorganization in connection with which the
Corporation does not survive (or does not survive as a public company in
respect of its Common Shares); any exchange of Common Shares or other
securities of the Corporation in connection with which the Corporation
does not survive (or does not survive as a public company in respect of
its Common Shares); a sale of all or substantially all the business, stock
or assets of the Corporation in connection with which the Corporation does
not survive (or does not survive as a public company in respect of its
Common Shares); a dissolution of the Corporation; or any other event in
which the Corporation does not survive (or does not survive as a public
company in respect of its Common Shares); then the Administrator may make
provision for a cash payment in settlement of, or for the termination,
assumption, substitution or exchange of any or all outstanding share-based
awards or the cash, securities or property deliverable to the holder of
any or all outstanding share-based awards,
based upon, to the extent relevant under the circumstances, the
distribution or consideration payable to holders of the Common Shares upon
or in respect of such event. Upon the occurrence of any event described in
the preceding sentence, then, unless the Administrator has made a
provision for the substitution, assumption, exchange or other continuation
or settlement of the award or the award would otherwise continue in
accordance with its terms in the circumstances: (1) unless otherwise
provided in the applicable award agreement, each then-outstanding option
and SAR shall become fully vested, all shares of restricted stock then
outstanding shall fully vest free of restrictions, and each other award
granted under this Plan that is then outstanding shall become payable to
the holder of such award; and (2) each award shall terminate upon the
related event; provided that the holder of an option or SAR shall be given
reasonable advance notice of the impending termination and a reasonable
opportunity to exercise his or her outstanding vested options and SARs
(after giving effect to any accelerated vesting required in the
circumstances) in accordance with their terms before the termination of
such awards (except that in no case shall more than ten days’ notice of
the impending termination be required and any acceleration of vesting and
any exercise of any portion of an award that is so accelerated may be made
contingent upon the actual occurrence of the event).
|
|
|
|
Without limiting the preceding paragraph, in connection
with any event referred to in the preceding paragraph or any change in
control event defined in any applicable award agreement, the Administrator
may, in its discretion, provide for the accelerated vesting of any award
or awards as and to the extent determined by the Administrator in the
circumstances.
|
|
|
|
|
|
|
|
The Administrator may adopt such valuation methodologies
for outstanding awards as it deems reasonable in the event of a cash or
property settlement and, in the case of options, SARs or similar rights,
but without limitation on other methodologies, may base such settlement
solely upon the excess if any of the per share amount payable upon or in
respect of such event over the exercise or base price of the
award.
|
|
|
|
|
|
|
|
In any of the events referred to in this Section 7.2, the
Administrator may take such action contemplated by this Section 7.2 prior
to such event (as opposed to on the occurrence of such event) to the
extent that the Administrator deems the action necessary to permit the
participant to realize the benefits intended to be conveyed with respect
to the underlying shares. Without limiting the generality of the
foregoing, the Administrator may deem an acceleration and/or termination
to occur immediately prior to the applicable event and, in such
circumstances, will reinstate the original terms of the award if an event
giving rise to an acceleration and/or termination does not
occur.
|
|
|
|
|
|
|
|
Without limiting the generality of Section 3.3, any good
faith determination by the Administrator pursuant to its authority under
this Section 7.2 shall be conclusive and binding on all persons.
|
|
|
|
|
|
|
7.3
|
Other Acceleration Rules
. The Administrator
may override the provisions of Section 7.2 by express provision in the
award agreement and may accord any Eligible Person a right to refuse any
acceleration, whether pursuant to the award agreement or otherwise, in
such circumstances as the Administrator may approve. The portion of any
ISO accelerated in connection with an event referred to in Section 7.2 (or
such other circumstances as may trigger accelerated vesting of the award)
shall remain exercisable as an ISO only to the extent the applicable
$100,000 limitation on ISOs is not exceeded. To the extent exceeded, the
accelerated portion of the option shall be exercisable as a nonqualified
stock option under the Code.
|
|
|
8.1
|
Compliance with Laws
. This Plan, the
granting and vesting of awards under this Plan, the offer, issuance and
delivery of Common Shares, and/or the payment of money under this Plan or
under awards are subject to compliance with all applicable federal,
provincial, state, local and foreign laws, rules and regulations
(including but not limited to provincial, state and federal securities law
and federal margin requirements) and to such approvals by any listing,
regulatory or governmental authority as may, in the opinion of counsel for
the Corporation, be necessary or advisable in connection therewith. The
person acquiring any securities under this Plan will, if requested by the
Corporation or one of its Subsidiaries, provide such assurances and
representations to the Corporation or one of its Subsidiaries as the
Administrator may deem necessary or desirable to assure compliance with
all applicable legal and accounting requirements.
|
|
|
|
|
|
|
8.2
|
No Rights to Award
. No person shall have
any claim or rights to be granted an award (or additional awards, as the
case may be) under this Plan, subject to any express contractual rights
(set forth in a document other than this Plan) to the contrary.
|
|
|
|
|
|
|
8.3
|
No Employment/Service Contract
. Nothing
contained in this Plan (or in any other documents under this Plan or in
any award) shall confer upon any Eligible Person or other participant any
right to continue in the employ or other service of the Corporation or one
of its Subsidiaries, constitute any contract or agreement of employment or
other service or affect an employee’s status as an employee at will, nor
shall interfere in any way with the right of the Corporation or one of its
Subsidiaries to change a person’s compensation or other benefits, or to
terminate his or her employment or other service, with or without cause.
Nothing in this Section 8.3, however, is intended to adversely affect any
express independent right of such person under a separate employment or
service contract other than an award agreement.
|
|
|
|
|
|
|
8.4
|
Plan Not Funded
. Awards payable under this
Plan shall be payable in shares or from the general assets of the
Corporation, and no special or separate reserve, fund or deposit shall be
made to assure payment of such awards. No participant, beneficiary or
other person shall have any right, title or interest in any fund or in any
specific asset (including Common Shares, except as expressly otherwise
provided) of the Corporation or one of its Subsidiaries by reason of any
award hereunder. Neither the provisions of this Plan (or of any related
documents), nor the creation or adoption of this Plan, nor any action
taken pursuant to the provisions of this Plan shall create, or be
construed to create, a trust of any kind or a fiduciary relationship
between the Corporation or one of its Subsidiaries and any participant,
beneficiary or other person. To the extent that a participant, beneficiary
or other person acquires a right to receive payment pursuant to any award
hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Corporation.
|
|
|
|
|
|
|
8.5
|
Tax Withholding
. Upon any exercise,
vesting, or payment of any award, or upon the disposition of Common Shares
acquired pursuant to the exercise of an ISO prior to satisfaction of the
holding period requirements of Section 422 of the Code, or upon any other
tax withholding event with respect to any award, arrangements satisfactory
to the Corporation shall be made to provide for any taxes the Corporation
or any of its Subsidiaries may be required to withhold with respect to
such award event or payment. Such arrangements may include (but are not
limited to) any one of (or a combination of) the
following:
|
|
|
(a)
|
The Corporation or one of its Subsidiaries shall have the
right to require the participant (or the participant’s personal
representative or beneficiary, as the case may be) to pay
or provide for payment of at least the minimum amount of any
taxes which the Corporation or one of its Subsidiaries may be required to
withhold with respect to such award event or payment.
|
|
|
(b)
|
The Corporation or one of its Subsidiaries shall have the
right to deduct from any amount otherwise payable in cash (whether related
to the award or otherwise) to the participant (or the participant’s
personal representative or beneficiary, as the case may be) the minimum
amount of any taxes which the Corporation or one of its Subsidiaries may
be required to withhold with respect to such award event or
payment.
|
|
|
|
|
|
|
(c)
|
In any case where a tax is required to be withheld in
connection with the delivery of Common Shares under this Plan, the
Administrator may in its sole discretion (subject to Section 8.1) require
or grant (either at the time of the award or thereafter) to the
participant the right to elect, pursuant to such rules and subject to such
conditions as the Administrator may establish, that the Corporation reduce
the number of shares to be delivered by (or otherwise reacquire) the
appropriate number of shares, valued in a consistent manner at their fair
market value or at the sales price in accordance with authorized
procedures for cashless exercises, necessary to satisfy the minimum
applicable withholding obligation on exercise, vesting or payment. In no
event shall the shares withheld exceed the minimum whole number of shares
required for tax withholding under applicable
law.
|
|
|
8.6
|
Effective Date, Termination and Suspension,
Amendments
.
|
|
|
|
|
|
|
|
8.6.1
Effective
Date
. This Plan is effective as of May 15, 2015, the date of its
approval by the Board (the “
Effective Date
”). This Plan shall be
submitted for and subject to shareholder approval no later than twelve
months after the Effective Date. Unless earlier terminated by the Board,
this Plan shall terminate at the close of business on the day before the
tenth anniversary of the Effective Date. After the termination of this
Plan either upon such stated expiration date or its earlier termination by
the Board, no additional awards may be granted under this Plan, but
previously granted awards (and the authority of the Administrator with
respect thereto, including the authority to amend such awards) shall
remain outstanding in accordance with their applicable terms and
conditions and the terms and conditions of this Plan.
|
|
|
|
|
|
|
|
8.6.2
Board
Authorization
. The Board may, at any time, terminate or, from time
to time, amend, modify or suspend this Plan, in whole or in part. No
awards may be granted during any period that the Board suspends this
Plan.
|
|
|
|
|
|
|
|
8.6.3
Shareholder
Approval
. To the extent then required by applicable law or any
applicable listing agency or required under Sections 162, 422 or 424 of
the Code to preserve the intended tax consequences of this Plan, or deemed
necessary or advisable by the Board, any amendment to this Plan shall be
subject to shareholder approval.
|
|
|
|
|
|
|
|
8.6.4
Amendments to
Awards
. Without limiting any other express authority of the
Administrator under (but subject to) the express limits of this Plan, the
Administrator by agreement or resolution may waive conditions of or
limitations on awards to participants that the Administrator in the prior
exercise of its discretion has imposed, without the consent of a
participant, and (subject to the requirements of Sections 3.2 and 8.6.5)
may make other changes to the terms and conditions of awards. Any
amendment or other action that would constitute a repricing of an award is
subject to the limitations set forth in Section
3.2.
|
|
|
|
8.6.5
Limitations on
Amendments to Plan and Awards
. No amendment, suspension or
termination of this Plan or amendment of any outstanding award agreement
shall, without written consent of the participant, affect in any manner
materially adverse to the participant any rights or benefits of the
participant or obligations of the Corporation under any award granted
under this Plan prior to the effective date of such change. Changes,
settlements and other actions contemplated by Section 7 shall not be
deemed to constitute changes or amendments for purposes of this Section
8.6.
|
|
|
|
|
|
|
8.7
|
Privileges of Stock Ownership
. Except as
otherwise expressly authorized by the Administrator, a participant shall
not be entitled to any privilege of stock ownership as to any Common
Shares not actually delivered to and held of record by the participant.
Except as expressly required by Section 7.1 or otherwise expressly
provided by the Administrator, no adjustment will be made for dividends or
other rights as a shareholder for which a record date is prior to such
date of delivery.
|
|
|
|
|
|
|
8.8
|
Governing Law; Construction;
Severability
.
|
|
|
|
|
|
|
|
8.8.1
Choice of
Law
. This Plan, the awards, all documents evidencing awards and
all other related documents shall be governed by, and construed in
accordance with the laws of the state of California and the federal laws
of the United States of America applicable thereto without recourse to
their conflict of laws rules.
|
|
|
|
|
|
|
|
8.8.2
Severability
. If a court of competent jurisdiction holds any
provision invalid and unenforceable, the remaining provisions of this Plan
shall continue in effect.
|
|
|
|
|
|
|
|
8.8.3
Plan
Construction
.
|
|
|
(a)
|
Rule 16b-3
. It is the intent of the Corporation
that the awards and transactions permitted by awards be interpreted in a
manner that, in the case of participants who are or may be subject to
Section 16 of the Exchange Act, qualify, to the maximum extent compatible
with the express terms of the award, for exemption from matching liability
under Rule 16b-3 promulgated under the Exchange Act. Notwithstanding the
foregoing, the Corporation shall have no liability to any participant for
Section 16 consequences of awards or events under awards if an award or
event does not so qualify.
|
|
|
|
|
|
|
(b)
|
Section 162(m)
. Awards under Section 5.1.4 to
persons described in Section 5.2 that are either granted or become vested,
exercisable or payable based on attainment of one or more performance
goals related to the Business Criteria, as well as Qualifying Options and
Qualifying SARs granted to persons described in Section 5.2, that are
approved by a committee composed solely of two or more outside directors
(as this requirement is applied under Section 162(m) of the Code) shall be
deemed to be intended as performance-based compensation within the meaning
of Section 162(m) of the Code unless such committee provides otherwise at
the time of grant of the award. It is the further intent of the
Corporation that (to the extent the Corporation or one of its Subsidiaries
or awards under this Plan may be or become subject to limitations on
deductibility under Section 162(m) of the Code) any such awards and any
other Performance- Based Awards under Section 5.2 that are granted to or
held by a person subject to Section 162(m) will qualify as
performance-based compensation or otherwise be exempt from deductibility
limitations under Section 162(m).
|
|
|
8.9
|
Captions
. Captions and headings are given
to the sections and subsections of this Plan solely as a convenience to
facilitate reference. Such headings shall not be deemed in any way
material or relevant to the construction or interpretation of this Plan or
any provision thereof.
|
|
|
8.10
|
Stock-Based Awards in Substitution for Stock
Options or Awards Granted by Other Corporation
. Awards may be
granted to Eligible Persons in substitution for or in connection with an
assumption of employee stock options, SARs, restricted stock or other
stock-based awards granted by other entities to persons who are or who
will become Eligible Persons in respect of the Corporation or one of its
Subsidiaries, in connection with a distribution, merger or other
reorganization by or with the granting entity or an affiliated entity, or
the acquisition by the Corporation or one of its Subsidiaries, directly or
indirectly, of all or a substantial part of the stock or assets of the
employing entity. The awards so granted need not comply with other
specific terms of this Plan, provided the awards reflect only adjustments
giving effect to the assumption or substitution consistent with the
conversion applicable to the Common Shares in the transaction and any
change in the issuer of the security. Any shares that are delivered and
any awards that are granted by, or become obligations of, the Corporation,
as a result of the assumption by the Corporation of, or in substitution
for, outstanding awards previously granted by an acquired Corporation (or
previously granted by a predecessor employer (or direct or indirect parent
thereof) in the case of persons that become employed by the Corporation or
one of its Subsidiaries in connection with a business or asset acquisition
or similar transaction) shall not be counted against the Share Limit or
other limits on the number of shares available for issuance under this
Plan.
|
|
|
|
|
|
|
8.11
|
Non-Exclusivity of Plan
. Nothing in this
Plan shall limit or be deemed to limit the authority of the Board or the
Administrator to grant awards or authorize any other compensation, with or
without reference to the Common Shares, under any other plan or authority.
|
|
|
|
|
|
|
8.12
|
No Corporate Action Restriction
. The
existence of this Plan, the award agreements and the awards granted
hereunder shall not limit, affect or restrict in any way the right or
power of the Corporation or any Subsidiary (or any of their respective
shareholders, boards of directors or committees thereof, as the case may
be) to make or authorize: (a) any adjustment, recapitalization,
reorganization or other change in the capital structure or business of the
Corporation or any Subsidiary, (b) any merger, amalgamation, consolidation
or change in the ownership of the Corporation or any Subsidiary, (c) any
issue of bonds, debentures, capital, preferred or prior preference stock
ahead of or affecting the capital stock (or the rights thereof) of the
Corporation or any Subsidiary, (d) any dissolution or liquidation of the
Corporation or any Subsidiary, (e) any sale or transfer of all or any part
of the assets or business of the Corporation or any Subsidiary, or (f) any
other corporate act or proceeding by the Corporation or any Subsidiary. No
participant, beneficiary or any other person shall have any claim under
any award or award agreement against any member of the Board or the
Administrator, or the Corporation or any employees, officers or agents of
the Corporation or any Subsidiary, as a result of any such action.
|
|
|
|
|
|
|
8.13
|
Other Company Benefit and Compensation
Programs
. Payments and other benefits received by a participant
under an award made pursuant to this Plan shall not be deemed a part of a
participant’s compensation for purposes of the determination of benefits
under any other employee welfare or benefit plans or arrangements, if any,
provided by the Corporation or any Subsidiary, except where the
Administrator expressly otherwise provides or authorizes in writing.
Awards under this Plan may be made in addition to, in combination with, as
alternatives to or in payment of grants, awards or commitments under any
other plans or arrangements of the Corporation or its Subsidiaries.
|
|
|
8.14
|
Clawback Policy
. The awards granted under
this Plan are subject to the terms of the Corporation’s recoupment,
clawback or similar policy as it may be in effect from time to time, as
well as any similar provisions of applicable law, any of which could in
certain circumstances require repayment or forfeiture of awards or any
Common Shares or other cash or property received with respect to the
awards (including any value received from a disposition of the shares
acquired upon payment of the awards).
|
SPHERE 3D CORP.
2015 PERFORMANCE INCENTIVE PLAN
Canadian Residents Addendum
Section 1
Application
This
addendum applies to a Participant who is a resident of Canada under the Income
Tax Act (Canada) or an applicable tax treaty to which Canada is a party
(hereinafter referred to as a “
Canadian Participant
”).
Section 2
Stock Options
Stock
Options granted to Canadian Participants shall not be settled in cash unless at
the request of the Canadian Participant, which request the Corporation may in
its sole and entire discretion grant or deny. Stock Options granted to Canadian
Participants shall not be settled with Shares other than Shares issued from
treasury.
Section 3
Restricted
Stock and Incentive Stock Options
Restricted
Stock, Incentive Stock Options and awards that are subject to forfeiture (other
than restricted stock units and stock options that are subject to vesting
requirements) shall not be granted to Canadian Participants.
Section 4
Stock
Appreciation Rights
Stock
Appreciation Rights granted to Canadian Participants shall be exercised and
settled immediately upon vesting.
Section 5
Restricted
Stock Units
Restricted Stock Units, stock bonuses, stock
units, phantom stock and similar rights or awards granted to Canadian
Participants shall vest and be payable no later than December 31 of the third
year following the year in which the award was granted.
Section 6
Tendering of
Shares
The
tendering of shares by a Canadian Participant to satisfy the Canadian
Participant’s federal, provincial or other taxes as required by law to be
withheld with respect to such awards, or to satisfy the exercise price of an
award, shall not be available to Canadian Participants.
Section 7
Designation
of beneficiary
A
designation of beneficiary shall not be available to a Canadian Participant who
is a resident in the Province of Quebec. Upon the death of a Canadian
Participant who was a resident in the Province of Quebec immediately before the
Canadian Participant’s death, any and all distribution of shares and/or cash
payable pursuant to the terms of the Plan and any exercise of an award shall
solely be made by or to the administrator, executor or liquidator of the
Canadian Participant’s estate. A designation of Beneficiary by a Canadian
Participant, residing in a Province other than the Province of Quebec or in a
territory in Canada, pursuant to the Plan shall be subject to the requirements
of the province or territory of domicile of such Canadian Participant.
Section 8
Miscellaneous
The
following shall be inserted in any award to be completed by a Canadian
Participant who is a resident in the Province of Quebec: “The parties hereto
have agreed that this Subscription Agreement and the Plan be drafted in English.
Les parties aux présentes ont convenu que le présent document et les règles du
régime soient rédigés en anglais.”
EXHIBIT 5
Stikeman Elliott LLP
Barristers & Solicitors
1155 René Lévesque Blvd. West, 40th Floor,
Montréal, Quebec, Canada H3B 3V2
Tel: (514) 397-3000 Fax: (514) 397-3222
www.stikeman.com
November 14, 2018
Sphere 3D Corp.
895 Don Mills Road
Bldg. 2, Suite 900
Toronto, ON M3C 1W3
Canada
Re:
Registration of 382,500 common shares of Sphere 3D Corp.
Dear Sirs/Mesdames:
We
have acted as Canadian special counsel to Sphere 3D Corp., a corporation
incorporated under the
Business Corporations Act
(Ontario) (the
"
Company
"), in connection with the registration under the United States
Securities Act of 1933, as amended (the "
Act
"), pursuant to a
Registration Statement on Form S-8 (the "
Registration Statement
"), filed
on or about the date hereof with the United States Securities and Exchange
Commission, of 382,500 common shares of the Company (the "
Shares
") to be
issued pursuant to awards granted under the Company's 2015 Performance Incentive
Plan (the "
Plan
").
For
the purposes of this opinion, we have examined and relied upon copies of the
Plan. We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of and relied upon the following documents
(collectively, the "
Corporate Documents
"):
|
|
(a)
|
the certificate and articles of amendment of the
Company;
|
|
|
|
|
|
|
(a)
|
the by-laws of the Company;
|
|
|
|
|
|
|
(b)
|
certain resolutions of the Company's directors and
shareholders; and
|
|
|
|
|
|
|
(c)
|
a certificate of an officer of the Company (the
"
Officer's Certificate
").
|
We
also have reviewed such other documents, and have considered such questions of
law, as we have deemed relevant and necessary as a basis for the opinion
expressed herein. We have relied upon the Corporate Documents without
independent investigation of the matters provided for therein for the purpose of
providing our opinion expressed herein.
In
examining all documents and in providing our opinion expressed herein we have
assumed that:
|
|
(a)
|
all individuals had the requisite legal
capacity;
|
|
|
|
|
|
|
(b)
|
all signatures are genuine;
|
|
|
(c)
|
all documents submitted to us as originals are complete
and authentic and all photostatic, certified, telecopied, notarial or
other copies conform to the originals;
|
|
|
|
|
|
|
(d)
|
all facts set forth in the official public records,
certificates and documents supplied by public officials or otherwise
conveyed to us by public officials are complete, true and
accurate;
|
|
|
|
|
|
|
(e)
|
all facts set forth in the certificates supplied by the
respective officers and directors, as applicable, of the Company
including, without limitation, the Officer's Certificate, are complete,
true and accurate.
|
Our
opinion is expressed only with respect to the laws of the Province of Ontario
(the "
Jurisdiction
") and the laws of Canada applicable therein. Any
reference to the laws of the Jurisdiction includes the laws of Canada that apply
in the Jurisdiction.
Our
opinion is expressed with respect to the laws of the Jurisdiction in effect on
the date of this opinion. We have no responsibility or obligation to: (i) update
this opinion, (ii) take into account or inform the addressee or any other person
of any changes in law, facts or other developments subsequent to this date that
do or may affect the opinion we express, or (iii) advise the addressee or any
other person of any other change in any matter addressed in this opinion, nor do
we have any responsibility or obligation to consider the applicability or
correctness of this opinion to any person other than the addressee.
Where
our opinion refers to any of the Shares as being issued as being "fully-paid and
non-assessable", such opinion assumes that all required consideration (in
whatever form) has been paid or provided and no opinion is expressed as to the
adequacy of any such consideration paid or provided.
Based
and relying upon the foregoing, we are of the opinion that the Shares have been
validly authorized and reserved for issuance pursuant to the Plan and will, when
issued in accordance with such authorization and the terms of the Plan, be
validly issued as fully paid and non-assessable.
This
opinion has been prepared for your use in connection with the Registration
Statement and is expressed as of the date hereof. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company, the
Registration Statement or the Shares.
We hereby consent to the filing of this opinion as
an exhibit to the Registration Statement. In giving this consent, we do not
admit that we are within the category of persons whose consent is required under
the Act or the rules and regulations promulgated thereunder. This opinion may
not be quoted from or referred to in any documents other than the Registration
Statement as provided for herein without our prior written consent.
|
|
Yours truly,
|
|
|
|
|
|
/s/ Stikeman Elliott LLP
|