EXHIBIT 4.2
Without prior approval of
the TSX Venture Exchange (the “Exchange”) and compliance with all applicable
securities legislation, the securities represented by this agreement and any
securities issued upon exercise thereof may not be sold, transferred, hypothecated or
otherwise traded on or through the facilities of the Exchange or otherwise in Canada or
to or for the benefit of a Canadian resident until December 24, 2004.
KODIAK OIL & GAS
CORP.
This Option Agreement is entered into
between Kodiak Oil & Gas Corp. (the “Company”) and the Optionee named below
pursuant to the Incentive Share Option Plan of the Company adopted on June 18, 2004
(the “Plan”), a copy of which is attached hereto. The Optionee and the Company
confirm that on August 23, 2004 (the “Grant Date”),
«Optionee» (the “Optionee”) was granted the option (the
“Option”) to purchase 250,500 Common Shares of the Company (the
“Option Shares”) for the price (the “Option Price”) of $1.00
per Option Share. The Options will terminate on August 23, 2009 (the “Expiry
Date”).
| 1. |
|
The
granting of the Options is subject to the terms and conditions set out in
the Plan. |
| 2. |
|
The
Options will vest as to 83,500 options on each of first, second and third
anniversary dates of the Grant Date. For greater certainty, once Options
have become vested, they continue to be exercisable until termination at
the Expiry Date or in accordance with the early termination provisions in
the Plan |
| 3. |
|
Upon
each exercise of an Option, the Optionee shall, if so requested by the
Company, represent and agree in writing that: |
| |
(a) |
|
the
Optionee is or was a director, officer, employee or Consultant of the
Company or a director, officer, employee or Consultant of any subsidiary
or associate and has not been induced to purchase the Option Shares by
expectation of employment or continued employment; |
| |
(b) |
|
the
Optionee (or such other person who may exercise the Option pursuant to the
Plan) is purchasing the Option Shares as a principal for the Optionee’s
own account (or if such Optionee is deceased, for the account of the
estate of such deceased Optionee) for investment purposes, and not with a
view to the distribution or resale thereof to the public; |
| |
(c) |
|
the
Optionee (or such other person who may exercise the Option pursuant to the
Plan) will, prior to and upon any sale or disposition of any of the Option
Shares, comply with all applicable securities laws and any other federal,
provincial or state laws or regulations to the extent that such laws or
regulations are applicable to the sale or disposition; and |
| |
(d) |
|
the
Optionee (or such other person who may exercise the Option pursuant to the
Plan) will not offer, sell or deliver any of the Option Shares, directly
or indirectly, in the United States or to any citizen or resident of, or
any corporation, partnership |
– 2 –
| |
or
other entity created or organized in or under the laws of, the United States, or any
estate or trust the income of which is subject to United States federal income taxation
regardless of its source, except in compliance with United States federal and state
securities laws. The Optionee acknowledges that the Company has the right to place any
restriction or legend on any securities issued pursuant to this agreement or its Plan
including, but in no way limited to placing a legend to the effect that the securities
have not been registered under the Securities Act (1933) of the United States and may not
be offered or sold in the United States unless registration or an exemption from
registration is available. |
| 4. |
|
If
the Optionee is an employee, Consultant or Management Company Employee (as
such terms are defined in the Plan), the Company, by signing this Option
Agreement, hereby represents that the Optionee is a bona fide employee,
Consultant or Management Company Employee of the Company or its
subsidiaries. |
| 5. |
|
By
signing this Option Agreement, the Optionee acknowledges that the Optionee
has read and understands the Plan and agrees to the terms and conditions
of the Plan and this Option Agreement. |
IN WITNESS WHEREOF, the parties
hereto have executed this Option Agreement as of the __ day of March, 2005.
____________________________
<<Optionee>> |
KODIAK OIL & GAS CORP.
Per: _____________________________
President
|
KODIAK OIL & GAS
CORP.
INCENTIVE SHARE OPTION
PLAN
(Ratified by
Shareholders June 18, 2004)
KODIAK OIL & GAS
CORP.
INCENTIVE SHARE OPTION
PLAN
For the purposes of this Plan, the
following terms shall have the following meanings:
| |
(a) |
|
“Affiliate” means
a company that is one of the following: |
| |
|
(i) |
|
a
Subsidiary of the Company; |
| |
|
(ii) |
|
a
company to whom the Company is a subsidiary; or |
| |
|
(iii) |
|
a
company that is controlled by the same person as the Company; |
| |
(b) |
|
“Associate” has
the meaning ascribed to that term under Section 1(1) of the Securities Act
(British Columbia); |
| |
(c) |
|
“Board” means
the Board of Directors of the Company; |
| |
(d) |
|
“Common
Shares” means the Common Shares without par value of the Company as
currently constituted; |
| |
(e) |
|
“Company” means
Kodiak Oil & Gas Corp.; |
| |
(f) |
|
“Consultant” means,
in relation to an Company, an individual or Consultant company, other than
an Employee or a Director of the Company, that: |
| |
|
(i) |
|
is
engaged to provide on an ongoing bona fide basis, consulting, technical,
management or other services to the Company or to an Affiliate of the
Company, other than services provided in relation to a Distribution; |
| |
|
(ii) |
|
provides
the services under a written contract between the Company or the Affiliate
and the individual or the Consultant Company; |
| |
|
(iii) |
|
in
the reasonable opinion of the Company, spends or will spend a significant
amount of time and attention on the affairs and business of the Company or
an Affiliate of the Company; and |
| |
|
(iv) |
|
has
a relationship with the Company or an Affiliate of the Company that enables
the individual to be knowledgeable about the business and affairs of the
Company. |
| |
(g) |
|
“Consultant
Company” means for an individual consultant, a company or partnership
of which the individual is an employee, shareholder or partner. |
– 5 –
| |
(h) |
|
“Directors” means
directors, senior officers and Management Company Employees of the
Company, or directors, senior officers and Management Company Employees of
the Company’s subsidiaries to whom stock options can be granted in
reliance on a Prospectus exemption under applicable Securities Laws. |
| |
(i) |
|
“Discounted
Market Price” means the Market Price less a discount which shall not
exceed the amount set forth below, subject to a minimum price of $0.10; |
| Closing Price |
Discount |
|
|
| Up to $0.50 |
|
25 |
% |
| $0.51 to $2.00 | |
20 |
% |
| Above $2.00 | |
15 |
% |
| |
(j) |
|
“Disinterested
Shareholder Approval” means a majority of the votes cast at a meeting
of shareholders other than votes attaching to securities beneficially
owned by: |
| |
|
(i) |
|
Insiders
to whom shares may be issued pursuant to the Plan; and |
| |
|
(ii) |
|
any
Associate of persons referred to in (i); |
| |
Non-voting
and subordinate voting shares are to be given full voting rights in these circumstances. |
| |
(k) |
|
“Eligible
Person” means, subject to all applicable laws, any director, officer,
employee, Consultant, Consultant Company or Management Company Employee of
the Company or any of its Subsidiary companies; |
| |
(l) |
|
“Fair
Market Value” means, with respect to a Common Share subject to
Option, the 10-day average of the closing prices of the Company’s
Common Shares on the TSX Venture Exchange or, if the Common Shares are not
listed on such exchange, on such other exchange or exchanges on which the
Common Shares are listed on a specific day. If no Common Shares have been
traded on such day, the Fair Market Value shall be established on the same
basis on the last previous day for which a trade was reported by such
exchange. If the Common Shares are not listed for trading on such
exchange, on such day, the Fair Market Value shall be such price per
Common Share as the Board, acting in good faith, may determine. |
| |
|
(i) |
|
an
insider as defined under Section 1(1) of the Securities Act (British
Columbia), other than a person who falls within that definition solely by
virtue of being a director or senior officer of a Subsidiary of the
Company, and |
– 6 –
| |
|
(ii) |
|
an
Associate as defined under Section 1(1) of the Securities Act (British
Columbia) of any person who is an insider by virtue of (i) above; |
| |
(n) |
|
“Management
Company Employee” means an individual employed by a person providing
management services to the Company which are required for the ongoing
successful operation of the business of the Company, but excluding a
person engaged in investor relations activities; |
| |
(o) |
|
“Market
Price” means the last daily closing price of the Company’s
listed Common Shares before the date of grant of an Option; |
| |
(p) |
|
“Option” means
an option to purchase Common Shares granted to an Eligible Person pursuant
to the terms of the Plan; |
| |
(q) |
|
“Outstanding
Issue” is determined on the basis of the number of Common Shares that
are outstanding immediately prior to the share issuance or grant of the
option in question, excluding Common Shares issued pursuant to Share
Compensation Arrangements over the preceding one-year period; |
| |
(r) |
|
“Participant” means
Eligible Persons to whom Options have been granted; |
| |
(s) |
|
“Plan” means
this Incentive Share Option Plan of the Company; |
| |
(t) |
|
“Share
Compensation Arrangement” means any stock option, share option plan,
employee share purchase plan or any other compensation or incentive
mechanism involving the issuance or potential issuance of Common Shares,
including a share purchase from treasury which is financially assisted by
the Company by way of a loan, guarantee or otherwise; |
| |
(u) |
|
“Subsidiary” has
the meaning ascribed to that term under Section 1(1) of the
Securities Act (British Columbia); and |
| |
(v) |
|
“Termination
Date” means the date on which a Participant ceases to be an Eligible
Person. |
Words importing the singular number
only shall include the plural and vice versa and words importing the masculine shall
include the feminine.
This Plan and all matters to which
reference is made herein shall be governed by and interpreted in accordance with the laws
of the Province of British Columbia and the laws of Canada applicable therein.
The purpose of the Plan is to advance
the interests of the Company by (i) providing Eligible Persons with additional
incentive to develop and promote the growth and success of the Company,
(ii) encouraging stock ownership by such Eligible Persons, (iii) increasing the
proprietary interest of Eligible Persons in the success of the Company,
(iv) encouraging the Eligible Person to remain with the Company or its Subsidiaries
or any Associate, and
– 7 –
(v) attracting and retaining persons
of outstanding competence whose
efforts will dictate, to a large extent, the future growth and success of the Company.
| |
(a) |
|
This
Plan shall be administered by the Board or a committee of the Board duly
appointed for this purpose by the Board and consisting of not less than
three directors. If a committee is appointed for this purpose, all
references to the Board will be deemed to be references to the Committee. |
| |
(b) |
|
Subject
to the limitations of the Plan, the Board shall have the authority: |
| |
|
(i) |
|
to
grant Options to purchase Common Shares to Eligible Persons, |
| |
|
(ii) |
|
to
determine the terms, limitations, restrictions and conditions respecting such
grants, including, the number of Common Shares for which any Option may be
granted to an Eligible Person and the exercise price at which Common
Shares may be purchased under any Option to be granted to an Eligible
Person, |
| |
|
(iii) |
|
to
interpret the Plan and to adopt, amend and rescind such administrative
guidelines and other rules and regulations relating to the Plan as it
shall from time to time deem advisable, and |
| |
|
(iv) |
|
to
make all other determinations and to take all other actions in connection
with the implementation and administration of the Plan including, without
limitation, for the purpose of ensuring compliance with section 1.7
hereof, as it may deem necessary or advisable. The Board’s
guidelines, rules, regulations, interpretations and determinations shall
be conclusive and binding upon the Company and all other persons. |
| |
(a) |
|
Options
may be granted on authorized but unissued common shares of the Company not
exceeding 10% of the total number of issued and outstanding common shares of
the Company from time to time on a non-diluted basis. |
| |
(b) |
|
Subject
only to paragraph 1.4(d) and paragraph 1.5(iv) below, the maximum number
of Common Shares which may be reserved for issuance under Options in any
12 month period to any one individual under the Plan shall be 5% of the
Common Shares outstanding at the time of the grant (on a non-diluted
basis) less the aggregate number of Common Shares reserved for issuance to
such person under any other option to purchase Common Shares from treasury
granted as a compensation or incentive mechanism. |
| |
(c) |
|
Subject
only to paragraph 1.4(d) and paragraph 1.5(iv) below, the maximum number
of Common Shares which may be reserved for issuance under Options in any
12 month period to any one Consultant under the Plan shall be 2% of the |
– 8 –
| |
Common
Shares outstanding at the time of the grant (on a non-diluted basis) less the aggregate
number of Common Shares reserved for issuance to such person under any other option to
purchase Common Shares from treasury granted as a compensation or incentive mechanism.
|
| |
(d) |
|
As
long as the Company’s Common Shares are listed on the TSX Venture
Exchange, the maximum number of Common Shares which may be reserved for
issuance under Options in any 12 month period to a director who is
employed in an investor relations capacity or to an employee who is
employed in an investor relations capacity at any time under the Plan
shall be 2% of the Common Shares outstanding at the time of the grant (on
a non-diluted basis) less the aggregate number of Common Shares reserved
for issuance to all persons engaged in investor relations activities under
any other option to purchase Common Shares from treasury granted as a
compensation or incentive mechanism. |
| |
(e) |
|
Any
Common Shares subject to an Option which for any reason is cancelled or
terminated without having been exercised, shall again be available for
grant under the Plan. No fractional shares shall be issued. Please refer
to section 1.9(d) for the manner in which a fractional share value
shall be treated. |
| |
(f) |
|
If
there is a change in the outstanding Common Shares by reason of any stock
dividend or any recapitalization, amalgamation, subdivision,
consolidation, combination or exchange of shares, or other corporate
change, the Board shall make, subject to the prior approval of the
relevant stock exchanges, appropriate substitution or adjustment in |
| |
|
(i) |
|
the
number or kind of shares or other securities reserved for issuance pursuant to
the Plan, and |
| |
|
(ii) |
|
the
number and kind of shares subject to unexercised Options theretofore granted
and in the option price of such shares; |
provided however, that no
substitution or adjustment shall obligate the Company to issue or sell fractional shares.
If the Company is reorganized, amalgamated with another corporation or consolidated, the
Board shall make such provisions for the protection of the rights of Participants as the
Board in its discretion deems appropriate.
| 1.5 |
|
Limits
with respect to Insiders |
Subject only to obtaining approval of
the TSX Venture Exchange (and any other exchange upon which the common shares of the
Company may be posted and listed for trading) and Disinterested Shareholder Approval for
the grant of any Options under the circumstances described in section 1.5 of the Plan, the
Company may cause:
| |
|
(i) |
|
the
number of Common Shares reserved for issuance pursuant to Options granted to
Insiders to exceed 10% of the Outstanding Issue; |
| |
|
(ii) |
|
the
issuance to Insiders, within a one-year period, of Common Shares to |
– 9 –
| |
exceed
10% of the Outstanding Issue; |
| |
|
(iii) |
|
at
such time as the Company’s common shares are listed on Tier 1 of the TSX
Venture Exchange, the issuance to any one Insider, within a one year
period of a number of shares exceeding 5% of the Outstanding Issue; or |
| |
|
(iv) |
|
a
reduction in the exercise price of Options previously granted to Insiders. |
Any entitlement granted prior to the
Participant becoming an Insider of the Company shall be excluded in determining the number
of Common Shares issuable to Insiders.
| 1.6 |
|
Amendment
and Termination |
| |
(a) |
|
The
Board may amend, suspend or terminate the Plan or any portion thereof at any
time in accordance with applicable legislation, and subject to any
required regulatory approval. No such amendment, suspension or termination
shall alter or impair any Options or any rights pursuant thereto granted
previously to any Participant without the consent of such Participant. If
the Plan is terminated, the provisions of the Plan and any administrative
guidelines, and other rules and regulations adopted by the Board and in
force at the time of the Plan shall continue in effect during such time as
an Option or any rights pursuant thereto remain outstanding. |
| |
(b) |
|
With
the consent of the affected Participants, the Board may amend or modify any
outstanding Option in any manner to the extent that the Board would have
had the authority to initially grant such award as so modified or amended,
including without limitation, to change the date or dates as of which an
Option becomes exercisable, subject to the prior approval of the relevant
stock exchanges. |
| 1.7 |
|
Compliance
with Legislation |
The Plan, the grant and exercise of
Options hereunder and the Company’s obligation to sell and deliver Common Shares upon
exercise of Options shall be subject to all applicable federal, provincial and foreign
laws, rules and regulations, the rules and regulations of any stock exchange on which the
Common Shares are listed for trading and to such approvals by any regulatory or
governmental agency as may, in the opinion of counsel to the Company, be required. The
Company shall not be obliged by any provision of the Plan or the grant of any Option
hereunder to issue or sell Common Shares in violation of such laws, rules and regulations
or any condition of such approvals. No Option shall be granted and no Common Shares issued
or sold hereunder where such grant, issue or sale would require registration of the Plan
or of Common Shares under the securities laws of any foreign jurisdiction and any
purported grant of any Option or issue or sale of Common Shares hereunder in violation of
this provision shall be void. In addition, the Company shall have no obligation to issue
any Common Shares pursuant to the Plan unless such Common Shares shall have been duly
listed, upon official notice of issuance, with all stock exchanges on which the Common
Shares are listed for trading. Common Shares issued and sold to Participants pursuant to
the exercise of Options may be subject to limitations on sale or resale under applicable
securities laws. In addition to resale restrictions under applicable securities laws, and
as long as the Company’s Common Shares are listed on the
– 10 –
TSX Venture Exchange, all Options and
Common Shares issued on the exercise of Options must be legended with a four month hold
period from the date of grant. If Options are granted to any resident or citizen of the
United States, the Board and the Company will use their best efforts to ensure that all
matters pertaining to such Options shall be made in compliance with applicable United
States securities laws.
The Plan shall be effective upon the
approval of the Plan by:
| |
(a) |
|
the
TSX Venture Exchange and any other exchange upon which the Common Shares of
the Company may be posted and listed for trading; and |
| |
(b) |
|
the
shareholders of the Company, given by the affirmative vote of a majority of
the votes attached to the Common Shares of the Company entitled to vote
and represented and voted at an annual or special meeting of the holders
of such Common Shares. |
| |
(a) |
|
Nothing
contained herein shall prevent the Board from adopting other or additional
compensation arrangements, subject to any required regulatory approval. |
| |
(b) |
|
Nothing
contained in the Plan nor in any Option granted thereunder shall be deemed
to give any Participant any interest or title in or to any Common Shares
of the Company or any rights as a shareholder of the Company or any other
legal or equitable right against the Company whatsoever other than as set
forth in the Plan and pursuant to the exercise of any Option. |
| |
(c) |
|
The
Plan does not give any Participant or any employee of the Company or any of
its Associated or Subsidiary companies the right or obligation to or to
continue to serve as a director, officer or employee, as the case may be,
of the Company or any of its Associated or Subsidiary companies. The
awarding of Options to any Eligible Person is a matter to be determined
solely in the discretion of the Board. The Plan shall not in any way
▇▇▇▇▇▇, limit, obligate, restrict or constrain the Board with regard to
the allotment or issue of any Common Shares or any other securities in the
capital of the Company or any of its subsidiaries other than as
specifically provided for in the Plan. |
| |
(d) |
|
No
fractional Common Shares shall be issued upon the exercise of Options granted
under the Plan and, accordingly, if a Participant would become entitled to
a fractional Common Share upon the exercise of an Option, such Participant
shall only have the right to purchase the next lowest whole number of
Common Shares and no payment or other adjustment will be made with respect
to the fractional interest so disregarded. |
– 11 –
Subject to the provisions of the
Plan, the Board shall have the authority to determine the limitations, restrictions and
conditions, if any, in addition to those set forth in section 2.3 hereof, applicable
to the exercise of an Option, including, without limitation, the nature and duration of
the restrictions, if any, to be imposed upon the sale or other disposition of Common
Shares acquired upon exercise of the Option, and the nature of the events, if any, and the
duration of the period in which any Participant’s rights in respect of Common Shares
acquired upon exercise of an Option may be forfeited. An Eligible Person may receive
Options on more than one occasion under the Plan and may receive separate Options on any
one occasion.
The Board shall establish the Option
price at the time each Option is granted, which shall, as long as the Company’s
Common Shares are listed on the TSX Venture Exchange, be not less than the Discounted
Market Price. At such time as the Company’s Common Shares are listed on the TSX
Exchange, the Option price shall be not less than the Fair Market Value.
The Option price shall be subject to
adjustment in accordance with the provisions of section 1.4(f) hereof.
| |
(a) |
|
Options
granted must expire not later than: |
| |
|
(i) |
|
as
long as the Company’s Common Shares are listed on Tier 2 of the TSX
Venture Exchange, a maximum of 5 years from the date of grant; or |
| |
|
(ii) |
|
at
such time as the Company’s Common Shares are listed on Tier 1 of the TSX
Venture Exchange or on the TSX Exchange, a maximum of 10 years from the
date of grant. |
| |
(b) |
|
Options
will vest at the discretion of the Board at the time of each grant. |
| |
(c) |
|
Options
shall not be assignable or transferable by the Participant otherwise than
by will or the laws of descent and distribution, and shall be exercisable
during the lifetime of a Participant only by the Participant and after
death only by the Participant’s legal representative. |
| |
(d) |
|
Subject
to section 2.3(a) and except as otherwise determined by the Board: |
| |
|
(i) |
|
if
a Participant ceases to be an Eligible Person which, for the purposes of this
subsection does not include persons engaged in investor relations
activities, for any reason whatsoever other than death, each Option held
by the Participant will cease to be exercisable no more than 90 days after
the Termination Date. Options granted to Participants engaged in investor
relations activities must expire within 30 days after the Participant
ceases to be employed to provide investor relations activities. If any
portion of an |
– 12 –
| |
Option
is not vested by the Termination Date, that portion of the Option may not under any
circumstances be exercised by the Participant. Without limitation, and for greater
certainty only, this provision will apply regardless of whether the Participant was
dismissed with or without cause and regardless of whether the Participant received
compensation in respect of dismissal or is entitled to a period of notice of termination
which would otherwise have permitted a greater portion of the Option to vest with the
Participant; |
| |
|
(ii) |
|
if
a Participant dies, the legal representative of the Participant may exercise
the Participant’s Options within one year after the date of the
Participant’s death, but only to the extent the Options were by their
terms exercisable on the date of death; |
| |
|
(iii) |
|
the
retirement of any Participant who is a director of the Company or any
Subsidiaries or Associate companies at any annual general meeting of the
Company or such Subsidiaries as required by the constating documents of
the Company or Subsidiaries, as the case may be, shall not result in the
termination of the Option granted to such Participant provided that such
Participant is re-elected at such annual general meeting as a director of
the Company or such Subsidiary, as the case may be; |
| |
|
(iv) |
|
the
change in the duties or position of a Participant or the transfer of such
Participant from a position with the Company to a position with an
Subsidiary, or vice-versa, shall not trigger the termination of such
Participant’s Option provided such Participant remains a director,
officer, employee or Consultant of the Company or Subsidiary. |
| |
(e) |
|
Each
Option shall be confirmed by an Option agreement executed on behalf of the
Company by any one director of the Board and by the Participant and each
Option agreement shall incorporate such terms and conditions as the Board
in its discretion deems consistent with the terms of the Plan. |
| |
(f) |
|
The
exercise price of each Common Share purchased under an Option shall be paid
in full in cash or by bank draft or certified cheque at the time of such
exercise, in lawful money of Canada, and upon receipt of payment in full,
but subject to the terms of the Plan, the number of Common Shares in
respect of which the Option is exercised shall be duly issued as fully
paid and non-assessable. |
| |
(g) |
|
Subject
to the terms and conditions of this Plan, an Option may be exercised by
written notice signed by the Participant and dated the date of exercise,
and not post-dated, stating that the Participant elects to exercise his
rights to purchase Common Shares under such Option and the number of
Common Shares in respect of which such Option is being exercised,
accompanied by full payment for the Common Shares being purchased under
such Option delivered to the Company at its principal office at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ (or such other |
– 13 –
| |
address
of the principal office of the Company at the time of exercise) addressed to the
attention of the President of the Company. Delivery of any notice of exercise accompanied
by the payment may be made by personal delivery, by courier service or by agent. |
| |
(h) |
|
Upon
exercise of an Option, a certificate or certificates evidencing the Common
Shares in respect of which the Option is exercised shall forthwith be
delivered to the Optionee. |
| |
(i) |
|
Notwithstanding
the time or times specifically provided herein or in an Option agreement
for the exercise of an Option, the Participant may elect to purchase all
or any of the Common Shares remaining subject to such Option at any time if
a “take-over bid” or an “issuer bid” occurs (within
the meaning of any securities laws or other Federal, Provincial or State
laws or regulations). |
| 2.4 |
|
Share
Appreciation Right |
At such time as the Company’s
Common Shares are listed on Tier 1 of the TSX Venture Exchange or the TSX Exchange, a
Participant may, if determined by the Board, have the right (the “Right”), when
entitled to exercise an Option, to terminate such Option in whole or in part by notice in
writing to the Company and, in lieu of receiving Common Shares pursuant to the exercise of
the Option, shall receive instead and at no cost to the Participant that number of Common
Shares, disregarding fractions, which, when multiplied by the Fair Market Value on the day
immediately prior to the date of the exercise of the Right, have a total value equal to
the product of the number of Common Shares subject to the Option times the difference
between the Fair Market Value on the day immediately prior to the exercise of the Right
and the Option exercise price. No such share appreciation rights will exist, however,
until the Board formally approves the activation of this Right.
| 2.5 |
|
Representation
by Optionees |
Each Option agreement shall provide
that upon each exercise of an Option, the Participant (including for the purposes of this
section 2.5 each other person who, pursuant to subsection 2.3(d) hereof, may
purchase Common Shares under an Option granted to an Eligible Person) shall, if so
requested by the Company, represent and agree in writing that:
| |
(a) |
|
the
person is, or the Participant was, a director, officer, employee or
Consultant of the Company or a director, officer, employee or Consultant
of any Subsidiary or Associate and has not been induced to purchase the
Common Shares by expectation of employment or continued employment; |
| |
(b) |
|
the
person is purchasing the Common Shares pursuant to the exercise of such
Option as principal for the Participant’s own account (or if such
Participant is deceased, for the account of the estate of such deceased
Participant) for investment purposes, and not with a view to the
distribution or resale thereof to the public; |
| |
(c) |
|
the
person will, prior to and upon any sale or disposition of any of the Common |
– 14 –
| |
Shares
purchased pursuant to the exercise of such Option, comply with all applicable securities
laws and any other federal, provincial or state laws or regulations to the extent that
such laws or regulations are applicable to such sale or disposition; and |
| |
(d) |
|
such
Participant (or such other person) will not offer, sell or deliver any of
the Common Shares purchased pursuant to the exercise of such Option,
directly or indirectly, in the United States or to any citizen or resident
of, or any corporation, partnership or other entity created or organized
in or under the laws of, the United States, or any estate or trust the
income of which is subject to United States federal income taxation
regardless of its source, except in compliance with United States federal
and state securities laws. The Participant acknowledges that the Company
has the right to place any restriction or legend on any securities issued
pursuant to this agreement or its Plan including, but in no way limited to
placing a legend to the effect that the securities have not been
registered under the Securities Act (1933) of the United States and may
not be offered or sold in the United States unless registration or an
exemption from registration is available. |
The Company may employ other
procedures and require further documentation from a Participant to ensure compliance with
all applicable laws.
The issue and sale of Common Shares
pursuant to any Option granted under the Plan is specially conditioned on such issue and
sale being made in compliance with applicable securities laws, and the Company shall have
no obligation to issue or sell any Common Shares pursuant to the exercise of any Option
unless the Board determines in its sole discretion that such issue and sale will be made
in compliance with applicable securities laws. The Company will be entitled to take such
action as its deems necessary to restrict the transferability in the United States of any
Common Shares acquired on exercise of any Option.
| 2.6 |
|
Representation
by the Company |
Each Option agreement related to
stock option grants to an employee, Consultant or Management Company Employee shall
include a representation by the Company that the Participant is a bona fide employee,
Consultant or Management Company Employee of the Company or its Subsidiaries.
| 2.7 |
|
Notice
to Commissions and Exchanges |
The Company will give notice to all
applicable securities commissions and other regulatory bodies in Canada and the United
States and all applicable stock exchanges and other trading facilities upon which the
Common Shares are listed or traded, as may be required, of its adoption of this Plan and
of its entering into Option agreements with Eligible Persons and the terms and conditions
for the purchase of Common Shares under such Option agreements, and will use all
reasonable efforts to obtain any requisite approvals as may be required from such bodies,
exchanges and trading facilities.