Ann: Appendix 3Y - Cook, page-52

Glen,

I have a slightly different take on that.

Yes, it is very likely a non-recourse loan, but it is tied to all the shares issued to him under the ESP program: some of which are in-the-money and some (like this one) are out-of-the-money. If those were the only shares he had, then yes, its the only shares at risk.

You should note, no one inside the company can compel the director of any company to exercise option to purchase shares - especially when it is out-of-the money. These programs are an incentive offered to directors, and the majority of the time, when the director exercises his option to buy shares in the company, it is usually deep-in-the money.

The person who chose to exercise his option (this time) to buy shares in CVN, that was offered to him @ 69 cents, was Adrian. And when he did that, he put himself in the same position as any shareholder who purchased on-market at 69 cents - ie. there is an obligation to pay.

So regardless of whether its a recourse or non-recourse loan, there is an obligation to pay back. Adrian on this occasion, put at risk his other ESP shares that are in-the-money.

I could see he (ncnda) did not understand what a loan agreement was - whether recourse or non-recourse. So I tried to be diplomatic about it, by referring him back to the company he works for. But he interpreted that as something I did not know about, and started name calling.

And even if he failed to understand what a loan was, the quote from Thomson that "Adrian couldn't sell his shares until he had paid out the loan" should have alerted him to the fact that there is an obligation to pay - it wasn't something you could renege on because there was no money exchanged.