SXC HEALTH SOLUTIONS
CORP.
SXC Health
Solutions Corp., a corporation existing under the laws of the Yukon
Territory of Canada (the “Company”), hereby establishes
and adopts the following Long-Term Incentive Plan (the
“Plan”).
1.1.
Purpose . The purpose of the Plan is to assist the Company
and its Affiliates in attracting and retaining selected individuals
to serve as directors, employees and/or consultants of the Company
who are expected to contribute to the Company’s success and
to achieve long-term objectives which will inure to the benefit of
all shareholders of the Company through the additional incentives
inherent in the Awards hereunder. The Plan is designed to provide
the board of directors of the Company with sufficient
flexibility to address current and
future long-term incentive equity-based alternatives for
the Company which includes Options or Restricted Stock Units.
The specific terms of any Awards, including such items as
vesting periods and treatment of the Award upon a change
of control or termination of employment, will be set
forth in the applicable Award Agreement.
2.1.
“ Affiliate ” shall mean (i) any person or
entity that directly, or through one or more intermediaries,
controls, or is controlled by, or is under common control with, the
Company (including any Subsidiary) or (ii) any entity in which
the Company has a significant equity interest, as determined by the
Committee.
2.2.
“ Applicable Period ” shall mean, with respect
to any Performance Period, a period commencing on or before the
first day of the Performance Period and ending not later than the
earlier of (a) 90 days after the commencement of the
Performance Period and (b) the date on which twenty-five
percent (25%) of the Performance Period has been completed. Any
action required to be taken within an Applicable Period may be
taken at a later date if permissible under Section 162(m) of
the Code or regulations promulgated thereunder, as they may be
amended from time to time.
2.3.
“ Award ” shall mean any Option, Stock
Appreciation Right, Restricted Stock Award, Restricted Stock Unit
Award, Performance Award, Dividend Equivalent, Other Stock-Based
Award or any other right, interest or option relating to Shares or
other property (including cash) granted pursuant to the provisions
of the Plan.
2.4.
“ Award Agreement ” shall mean any written
agreement, contract or other instrument or document evidencing any
Award granted by the Committee hereunder.
2.5.
“ Board ” shall mean the board of directors of
the Company.
2.6.
“ Code ” shall mean the Internal Revenue Code of
1986, as amended from time to time, and any successor thereto. All
citations to Sections of the Code are to such Sections as they may
from time to time be amended or renumbered.
2.7.
“ Committee ” shall mean the Compensation
Committee of the Board or such other committee appointed by the
Board to administer the Plan, consisting of no fewer than two
Directors, each of whom is (i) a “Non-Employee
Director” within the meaning of Rule 16b-3 (or any
successor rule) of the Exchange Act, (ii) an “outside
director” within the meaning of Section 162(m)(4)(C)(i)
of the Code, and (iii) an “independent director”
for purpose of the rules and regulations of The Nasdaq Stock Market
(“Nasdaq”).
2.8.
“ Covered Employee ” shall mean a “covered
employee” within the meaning of Section 162(m)(3) of the
Code.
2.9.
“ Director ” shall mean a non-employee member of
the Board.
2.10.
“ Dividend Equivalents ” shall have the meaning
set forth in Section 12.7.
2.11.
“ Employee ” shall mean any employee (including
an officer) of the Company or any Affiliate. Solely for purposes of
the Plan, an Employee shall also mean any other natural person,
including a consultant, who provides services to the Company or any
Affiliate, so long as such person (i) renders bona fide
services that are not in connection with the offer and sale of the
Company’s securities in a capital-raising transaction or
distribution; (ii) does not directly or indirectly promote or
maintain a market for the Company’s securities;
(iii) provides services pursuant to a written contract; and
(iv) spends or will spend a significant amount of time and
attention to the business and affairs of the Company or any
Affiliate.
2.12.
“ Exchange Act ” shall mean the Securities
Exchange Act of 1934, as amended, and any successor thereto. All
citations to Sections of the Exchange Act are to such Sections as
they may from time to time be amended or renumbered.
2.13.
“ Fair Market Value ” shall mean, with respect
to any property other than Shares, the market value of such
property determined by such methods or procedures as shall be
established from time to time by the Committee. The Fair Market
Value of Shares as of any date shall be: (i) the per Share
closing price of the Shares as reported on Nasdaq on that date (or
if there was no reported closing price on such date, on the last
preceding date on which the closing price was reported);
(ii) if the Company is not then listed on Nasdaq, the per
Share closing price of the Shares as reported on the TSX on that
date (or if there was no reported closing price on such date, on
the last preceding date on which the closing price was reported);
or (iii) if the Company is not then listed on Nasdaq or the
TSX, the Fair Market Value of Shares shall be determined by the
Committee in its sole discretion in accordance with
Section 409A of the Code.
2.14.
“ Family Entity ” shall mean a trust in which
one or more Family Members have more than fifty percent of the
beneficial interest, a foundation in which the Participant and/or
one or more Family Members control the management of assets and any
other entity in which the Participant and/or one or more Family
Members own more than fifty percent of the voting
interests.
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2.15.
“ Family Member ” shall mean the
Participant’s spouse, parent, child, stepchild, grandchild,
sibling, mother or father-in-law, son or daughter-in-law,
stepparent, grandparent, former spouse, niece, nephew or brother or
sister-in-law, including adoptive relationships, or any person
sharing the Participant’s household (other than a tenant or
employee).
2.16.
“ Freestanding Stock Appreciation Right ” shall
have the meaning set forth in Section 6.1(a).
2.17.
“ Insider ” shall have the meaning set forth in
the TSX Company Manual.
2.18.
“ Limitations ” shall have the meaning set forth
in Section 10.4.
2.19.
“ Option ” shall mean any right granted to a
Participant under the Plan allowing such Participant to purchase
Shares at such price or prices and during such period or periods as
the Committee shall determine.
2.20.
“ Other Stock - Based Award ” shall have
the meaning set forth in Section 8.1.
2.21.
“ Participant ” shall mean an Employee or
Director to whom the Committee has granted an Award under the
Plan.
2.22.
“ Payee ” shall have the meaning set forth in
Section 13.1.
2.23.
“ Performance Award ” shall mean any Award of
Performance Shares or Performance Units granted pursuant to
Section 9.
2.24.
“ Performance Period ” shall mean that period
established by the Committee at the time any Performance Award is
granted or at any time thereafter during which any performance
goals specified by the Committee with respect to such Award are to
be measured.
2.25.
“ Performance Share ” shall mean any grant
pursuant to Section 9 of a unit valued by reference to a
designated number of Shares, which value may be paid to the
Participant by delivery of such property as the Committee shall
determine, including cash, Shares, other property, or any
combination thereof, upon achievement of such performance goals
during the Performance Period as the Committee shall establish at
the time of such grant or thereafter, but not later than the time
permitted by Section 162(m) of the Code in the case of a Covered
Employee, unless the Committee determines not to comply with
Section 162(m) of the Code with respect to such Performance
Share.
2.26.
“ Performance Unit ” shall mean any grant
pursuant to Section 9 of a unit valued by reference to a
designated amount of property (including cash) other than Shares,
which value may be paid to the Participant by delivery of such
property as the Committee shall determine, including cash, Shares,
other property, or any combination thereof, upon achievement of
such performance goals during the Performance Period as the
Committee shall establish at the time of such grant or thereafter,
but not later than the time permitted by Section 162(m) of the Code
in the case of a Covered Employee, unless the Committee determines
not to comply with Section 162(m) of the Code with respect to such
Performance Unit.
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2.27.
“ Permitted Assignee ” shall have the meaning
set forth in Section 12.5.
2.28.
“ Prior Plan ” shall mean the SXC Health
Solutions Corp. Amended and Restated Stock Option Plan.
2.29.
“ Restricted Stock ” shall mean any Share issued
with the restriction that the holder may not sell, transfer, pledge
or assign such Share and with such 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.
2.30.
“ Restricted Stock Unit ” means an Award that is
valued by reference to a Share, which value may be paid to the
Participant by delivery of such property as the Committee shall
determine, including without limitation, cash or Shares, or any
combination thereof, and that has such restrictions as the
Committee, in its sole discretion, may impose, including without
limitation, any restriction on the right to retain such Awards, to
sell, transfer, pledge or assign such Awards, and/or to receive any
cash Dividend Equivalents with respect to such Awards, which
restrictions may lapse separately or in combination at such time or
times, in installments or otherwise, as the Committee may deem
appropriate,
2.31.
“ Restriction Period ” shall have the meaning
set forth in Section 7.1.
2.32.
“ Restricted Stock Award ” shall have the
meaning set forth in Section 7.1.
2.33.
“ Restricted Stock Unit Award ” shall have the
meaning set forth in Section 7.1.
2.34.
“ Share ” shall mean a share of common stock of
the Company, no par value per share.
2.35.
“ Stock Appreciation Right ” shall mean the
right granted to a Participant pursuant to
Section 6.
2.36.
“ Subsidiary ” shall mean any corporation (other
than the Company) in an unbroken chain of corporations beginning
with the Company if, at the time of the granting of the Award, each
of the corporations other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other
corporations in the chain.
2.37.
“ Substitute Awards ” shall mean 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 acquired by
the Company or any Subsidiary or with which the Company or any
Subsidiary combines.
2.38.
“ Tandem Stock Appreciation Right ” shall have
the meaning set forth in Section 6.1(b).
2.39.
“TSX” means the Toronto Stock
Exchange.
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3. SHARES
SUBJECT TO THE PLAN
3.1.
Number of Shares . (a) Subject to adjustment as
provided in this Section 3.1 and in Section 12.4, a total
of 1,070,000 Shares shall be authorized for issuance pursuant to
Awards granted under the Plan. Upon approval of this Plan by the
stockholders of the Company, no further grants may be made under
the Prior Plan, but Shares authorized for issuance pursuant to
awards granted under the Prior Plan that have not been used for
awards granted under the Prior Plan may be issued pursuant to
Awards granted under this Plan in addition to the number of Shares
specified immediately above. Any Shares that are subject to Awards
of Options or Stock Appreciation Rights 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
or Stock Appreciation Rights shall be counted against this limit as
one-and-seventy-nine one-hundredths (1.79) Shares for every one
(1) Share granted.
(b) If any Shares
subject to an Award or to an award under the Prior Plan are
forfeited, expire or otherwise terminate without issuance of such
Shares, or any Award or award under the Prior Plan 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 shall, to
the extent of such forfeiture, expiration, termination, cash
settlement or non-issuance, again be available for Awards under the
Plan, as provided in Section 3.1(c) below.
(c) Any Shares
that again become available for grant pursuant to this
Section 3 shall be added back as one (1) Share if such
Shares were subject to Options or Stock Appreciation Rights granted
under the Plan or options or stock appreciation rights granted
under the Prior Plan, and as one-and-seventy-nine one-hundredths
(1.79) Shares if such Shares were subject to Awards other than
Options or Stock Appreciation Rights granted under the
Plan.
3.2.
Character of Shares . Any Shares issued hereunder may
consist, in whole or in part, of authorized and unissued shares,
treasury shares or shares purchased in the open market or
otherwise.
4.
ELIGIBILITY AND ADMINISTRATION
4.1.
Eligibility . Any Employee or Director shall be eligible to
be selected as a Participant.
4.2.
Administration . (a) The Plan shall be administered by
the Committee. The Directors may remove from, add members to, or
fill vacancies on, the Committee. A majority of the Committee shall
constitute a quorum. The acts of the Committee shall be either
(i) acts of a majority of the members of the Committee present
at any meeting at which a quorum is present or (ii) acts
approved in writing by all of the members of the Committee without
a meeting.
(b) The Committee
shall have full power and authority, subject to the provisions of
the Plan and subject to such orders or resolutions not inconsistent
with the provisions of the Plan as may from time to time be adopted
by the Board, to: (i) select the Employees and Directors to
whom Awards may from time to time be granted hereunder;
(ii) determine the type or types of Awards, not inconsistent
with the provisions of the
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Plan, to be
granted to each Participant hereunder; (iii) determine the
number of Shares to be covered by each Award granted hereunder;
(iv) determine the terms and conditions, not inconsistent with
the provisions of the Plan, of any Award granted hereunder;
(v) determine whether, to what extent and under what
circumstances Awards may be settled in cash, Shares or other
property, subject to Section 8.1; (vi) determine whether,
to what extent, and under what circumstances cash, Shares, other
property and other amounts payable with respect to an Award made
under the Plan shall be deferred in accordance with
Section 409A of the Code either automatically or at the
election of the Participant; (vii) determine whether, to what
extent and under what circumstances any Award shall be cancelled or
suspended; (viii) interpret and administer the Plan and any
instrument or agreement entered into under or in connection with
the Plan, including any Award Agreement; (ix) correct any
defect, supply any omission or reconcile any inconsistency in the
Plan or any Award in the manner and to the extent that the
Committee shall deem desirable to carry it into effect;
(x) establish such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration
of the Plan; (xi) determine whether any Award will have
Dividend Equivalents; and (xii) make any other determination
and take any other action that the Committee deems necessary or
desirable for administration of the Plan.
(c) Decisions of
the Committee shall be final, conclusive and binding on all persons
or entities, including the Company, any Participant, any
shareholder and any Employee or any Affiliate. No member of the
Committee, and no entity, committee, member of the Board or officer
to whom the Committee delegates any of its power and authority
hereunder, shall be liable for any act, omission, interpretation,
construction or determination made in connection with this Plan in
good faith, and the members of the Committee and such entities,
committees, members of the Board or officers shall be entitled to
indemnification and reimbursement by the Company in respect of any
claim, loss, damage or expense (including attorneys’ fees)
arising therefrom to the full extent permitted by law.
(d) The Committee
may delegate to a committee of one or more directors of the Company
or, to the extent permitted by law, to one or more officers or a
committee of officers the right to grant Awards to Employees who
are not Directors or officers (as defined in Rule 16a-1(f) under
the Exchange Act) of the Company and to cancel or suspend Awards to
Employees who are not Directors or officers (as defined in
Rule 16a-1(f) under the Exchange Act) of the Company;
provided , however , that to the extent the Committee
intends that an Award granted to any person who is a “covered
employee” within the meaning of Section 162(m) of the
Code or who, in the Committee’s judgment, is likely to be a
covered employee at any time during the applicable Performance
Period or during any period in which a Performance Award may be
paid following a Performance Period be exempt from Section 162(m)
of the Code, only the Committee shall be permitted to
(a) designate such person to participate in the Plan for such
Performance Period, (b) establish performance goals and
Performance Awards for such person, and (c) certify the
achievement of such performance goals.
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5.1.
Grant of Options . Options may be granted hereunder to
Participants either alone or in addition to other Awards granted
under the Plan. Any Option shall be subject to the terms and
conditions of this Section 5 and to such additional terms and
conditions, not inconsistent with the provisions of the Plan, as
the Committee shall deem desirable.
5.2.
Award Agreements . All Options granted pursuant to this
Section 5 shall be evidenced by a written Award Agreement in
such form and containing such terms and conditions as the Committee
shall determine which are not inconsistent with the provisions of
the Plan. Granting of an Option pursuant to the Plan shall impose
no obligation on the recipient to exercise such Option. Any
individual who is granted an Option pursuant to this Section 5
may hold more than one Option granted pursuant to the Plan at the
same time.
5.3.
Option Price . The option price per Share purchasable under
any Option granted pursuant to this Section 5 shall not be
less than 100% of the Fair Market Value of such Share on the date
of grant of such Option. Other than pursuant to Section 12.4,
the Committee shall not be permitted to take any action with
respect to an Option that may be treated as a repricing under the
rules and regulations of Nasdaq or the TSX, without shareholder
approval.
5.4.
Option Period . The term of each Option shall be fixed by
the Committee in its sole discretion; provided that no Option shall
be exercisable after the expiration of seven years from the date
the Option is granted.
5.5.
Exercise of Options . Vested Options granted under the Plan
shall be exercised by the Participant or by a Permitted Assignee
thereof (or by the Participant’s executors, administrators,
guardian or legal representative, as may be provided in an Award
Agreement) as to all or part of the Shares covered thereby, by the
giving of written, telephonic, or electronic notice of exercise to
the Company or its designated agent pursuant to rules and
procedures established by the Committee for this purpose,
specifying the number of Shares to be purchased, accompanied by
payment of the full purchase price for the Shares being purchased.
Unless otherwise provided in an Award Agreement, full payment of
such purchase price shall be made at the time of exercise and shall
be made (a) in cash or cash equivalents (including certified
check or bank check or wire transfer of immediately available
funds), (b) by tendering previously acquired Shares (either
actually or by attestation, valued at their then Fair Market
Value), (c) with the consent of the Committee, by withholding
Shares otherwise issuable in connection with the exercise of the
Option, (d) as provided by the Committee, cashless exercises
as permitted under the Federal Reserve Board’s
Regulation T, subject to applicable securities law
restrictions, or (e) any combination of any of the foregoing.
The notice of exercise, accompanied by such payment, shall be
delivered to the Company at its principal business office or such
other office as the Committee may from time to time direct, and
shall be in such form, containing such further provisions
consistent with the provisions of the Plan, as the Committee may
from time to time prescribe. In no event may any Option granted
hereunder be exercised for a fraction of a Share.
5.6.
Form of Settlement . In its sole discretion, the Committee
may provide, at the time of grant, that the Shares to be issued
upon an Option’s exercise shall be in the form of Restricted
Stock or other similar securities, or may reserve the right so to
provide after the time of grant.
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6. STOCK
APPRECIATION RIGHTS
6.1.
Grant and Exercise . The Committee may provide Stock
Appreciation Rights alone or in tandem with other Awards (including
Options), in each case upon such terms and conditions, not
inconsistent with the Plan, as the Committee may establish. The
provisions of Stock Appreciation Rights need not be the same with
respect to each recipient.
(a) Stock
Appreciation Rights granted without regard to any Option or other
Award (a “Freestanding Stock Appreciation Right”) shall
generally have the same terms and conditions as Options, including
(i) an exercise price not less than Fair Market Value on the
date of grant (except in the case of Substitute Awards or in
connection with an adjustment provided in Section 12.4) and
(ii) a term not greater than seven years. Upon the exercise of
a Freestanding Stock Appreciation Right, the holder shall have the
right to receive the excess of (i) the Fair Market Value of
one Share on the date of exercise or such other amount as the
Committee shall so determine at any time during a specified period
before the date of exercise over (ii) the exercise price of
the right on the date of grant.
(b) Stock
Appreciation Rights may be granted in conjunction with all or part
of any Option granted under the Plan (a “Tandem Stock
Appreciation Right”). Any
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