Exhibit 3.1

 

1284670 B.C. LTD.

 

STOCK OPTION PLAN

 

DATED FOR REFERENCE JANUARY 21, 2022

 

Approved by the board of directors effective on January 21, 2022

 

 

 

 

TABLE OF CONTENTS

 

    Page
     
Section 1 DEFINITIONS AND INTERPRETATION 1
     
1.1 Definitions 1
1.2 Choice of Law 7
1.3 Headings 7
     
Section 2 GRANT OF OPTIONS 7
     
2.1 Grant of Options 7
2.2 Record of Option Grants 7
2.3 Effect of Plan 8
2.4 Hold Period 8
     
Section 3 PURPOSE AND PARTICIPATION  8
     
3.1 Purpose of Plan  8
3.2 Participation in Plan  8
3.3 Limits on Option Grants  8
3.4 Limits on Option Grants for Investor Relations Activities  9
3.5 Notification of Grant  9
3.6 Copy of Plan  9
3.7 Limitation on Service  9
3.8 No Obligation to Exercise  10
3.9 Agreement  10
3.10 Notice  10
3.11 Representation  10
     
Section 4 NUMBER OF SHARES UNDER PLAN  10
     
4.1 Committee to Approve Issuance of Shares  10
4.2 Number of Shares  10
4.3 Fractional Shares  11
     
Section 5 TERMS AND CONDITIONS OF OPTIONS  11
     
5.1 Exercise Period of Option  11
5.2 Number of Shares Under Option  11
5.3 Exercise Price of Option  11
5.4 Termination of Option 12
5.5 Vesting of Option and Acceleration 13
5.6 Additional Terms 13
     
Section 6 TRANSFERABILITY OF OPTIONS 14
     
6.1 Non-transferable 14
6.2 Death of Option Holder 14
6.3 Disability of Option Holder 14
6.4 Disability and Death of Option Holder 14
6.5 Vesting 14
6.6 Deemed Non-Interruption of Engagement 14

 

 
ii

 

Section 7 EXERCISE OF OPTION  15
     
7.1 Exercise of Option 15
7.2 Black Out Period 15
7.3 Issue of Share Certificates 15
7.4 No Rights as Shareholder 15
7.5 Tax Withholding and Procedures 16
     
Section 8 ADMINISTRATION 16
     
8.1 Board or Committee 16
8.2 Powers of Committee 16
8.3 Administration by Committee 17
8.4 Interpretation 17
     
Section 9 APPROVALS AND AMENDMENT 17
     
9.1 Shareholder Approval of Plan 17
9.2 Amendment of Option or Plan 18
     
Section 10 CONDITIONS PRECEDENT TO ISSUANCE OF OPTIONS AND SHARES 18
     
10.1 Compliance with Laws 18
10.2 Regulatory Approvals 18
10.3 Inability to Obtain Regulatory Approvals 18
     
Section 11 ADJUSTMENTS AND TERMINATION 19
     
11.1 Termination of Plan 19
11.2 No Grant During Suspension of Plan 19
11.3 Alteration in Capital Structure 19
11.4 Triggering Events 20
11.5 Notice of Termination by Triggering Event 20
11.6 Determinations to be Made By Committee 20

 

 
 

 

STOCK OPTION PLAN

 

Section 1

DEFINITIONS AND INTERPRETATION

 

1.1Definitions

 

As used herein, unless there is something in the subject matter or context inconsistent therewith, the following terms shall have the meanings set forth below:

 

(a)“Administrator” means such Executive or Employee of the Company as may be designated as Administrator by the Committee from time to time, or, if no such person is appointed, the Committee itself.

 

(b)“Associate” means, where used to indicate a relationship with any person:

 

(i)any relative, including the spouse of that person or a relative of that person’s spouse, where the relative has the same home as the person;

 

(ii)any partner, other than a limited partner, of that person;

 

(iii)any trust or estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar capacity; and

 

(iv)any corporation of which such person beneficially owns or controls, directly or indirectly, voting securities carrying more than 10% of the voting rights attached to all outstanding voting securities of the corporation.

 

(c)“Black-Out” means a restriction imposed by the Company on all or any of its directors, officers, Employees, Insiders or persons in a special relationship whereby they are to refrain from trading in the Company’s securities until the restriction has been lifted by the Company.

 

(d)“Board” means the board of directors of the Company.

 

(e)“Change of Control” means an occurrence when either:

 

(i)a Person, other than the current “control person” of the Company (as that term is defined in the Securities Act), becomes a “control person” of the Company; or

 

(ii)a majority of the directors elected at any annual or extraordinary general meeting of shareholders of the Company are not individuals nominated by the Company’s then-incumbent Board.

 

 
- 2 -

 

(f)“Committee” means a committee of the Board to which the responsibility of approving the grant of Options has been delegated, or if no such committee is appointed, the Board itself.

 

(g)“Company” means 1284670 B.C. Ltd.;

 

(h)“Consultant” means an individual who:

 

(i)is engaged to provide, on an ongoing bona fide basis, consulting, technical, management or other services to the Company or any Subsidiary other than services provided in relation to a “distribution” (as that term is described in the Securities Act);

 

(ii)provides the services under a written contract between the Company or any Subsidiary and the individual or a Consultant Entity (as defined in clause (h)(v) below);

 

(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 any Subsidiary; and

 

(iv)has a relationship with the Company or any Subsidiary that enables the individual to be knowledgeable about the business and affairs of the Company or is otherwise permitted by applicable Regulatory Rules to be granted Options as a Consultant or as an equivalent thereof,

 

and includes:

 

(i)a corporation of which the individual is an Employee or shareholder or a partnership of which the individual is an Employee or partner (a “Consultant Entity”); or

 

(ii)an RRSP or RRIF established by or for the individual under which he or she is the beneficiary.

 

(i)“CSE” means the Canadian Securities Exchange.

 

(j)“Disability” means a medically determinable physical or mental impairment expected to result in death or to last for a continuous period of not less than 12 months, and which causes an individual to be unable to engage in any substantial gainful activity, or any other condition of impairment which cannot be accommodated under applicable human rights laws without imposing undue hardship on the Company or any Subsidiary employing or engaging the Person, that the Committee, acting reasonably, determines constitutes a disability.

 

 
- 3 -

 

(k)“Employee” means:

 

(i)an individual who works full-time or part-time for the Company or any Subsidiary and such other individual as may, from time to time, be permitted by applicable Regulatory Rules to be granted Options as an Employee or as an equivalent thereto; or

 

(ii)an individual who works for the Company or any Subsidiary either full-time or on a continuing and regular basis for a minimum amount of time per week providing services normally provided by an Employee and who is subject to the same control and direction by the Company or any Subsidiary over the details and methods of work as an Employee of the Company or any Subsidiary, but for whom income tax deductions are not made at source,

 

and includes:

 

(i)a corporation wholly-owned by such individual; and

 

(ii)any RRSP or RRIF established by or for such individual under which he or she is the beneficiary.

 

(l)“Exchange” means the stock exchange upon which the Company’s shares principally trade.

 

(m)“Executive” means an individual who is a director or officer of the Company or a Subsidiary, and includes:

 

(i)a corporation wholly-owned by such individual; and

 

(ii)any RRSP or RRIF established by or for such individual under which he or she is the beneficiary.

 

(n)“Exercise Notice” means the written notice of the exercise of an Option, in the form set out as Schedule B hereto, or by written notice in the case of uncertificated Shares, duly executed by the Option Holder.

 

(o)“Exercise Period” means the period during which a particular Option may be exercised and is the period from and including the Grant Date through to and including the Expiry Time on the Expiry Date provided, however, that the Option has Vested pursuant to the terms and conditions of this Plan and any additional terms and conditions imposed by the Committee, and that no Option can be exercised unless and until all necessary Regulatory Approvals have been obtained.

 

(p)“Exercise Price” means the price at which an Option is exercisable as determined in accordance with section 5.3.

 

(q)“Expiry Date” means the date the Option expires as set out in the Option Certificate or as otherwise determined in accordance with sections 5.4, 6.2, 6.3, 6.4 or 11.4.

 

 
- 4 -

 

(r)“Expiry Time” means the time the Option expires on the Expiry Date, which is 4:00 p.m. local time in Vancouver, British Columbia on the Expiry Date.

 

(s)“Grant Date” means the date on which the Committee grants a particular Option, which is the date the Option comes into effect provided however that no Option can be exercised unless and until all necessary Regulatory Approvals have been obtained.

 

(t)“Insider” means an insider as that term is defined in the Securities Act.

 

(u)“Investor Relations Activities” means any activities, by or on behalf of the Company or shareholder of the Company, that promote or reasonably could be expected to promote the purchase or sale of securities of the Company, but does not include:

 

(i)the dissemination of information provided, or records prepared, in the ordinary course of business of the Company

 

(A)to promote the sale of products or services of the Company, or

(B)to raise public awareness of the Company,

 

that cannot reasonably be considered to promote the purchase or sale of securities of the Company;

 

(ii)activities or communications necessary to comply with the requirements of:

 

(A)applicable securities laws;

(B)Exchange requirements or the by-laws, rules or other regulatory instruments of any other self-regulatory body or exchange having jurisdiction over the Company;

 

(iii)communications by a publisher of, or writer for, a newspaper, magazine or business or financial publication, that is of general and regular paid circulation, distributed only to subscribers to it for value or to purchasers of it, if:

 

(A)the communication is only through the newspaper, magazine or publication, and

(B)the publisher or writer receives no commission or other consideration other than for acting in the capacity of publisher or writer; or

 

(iv)activities or communications that may be otherwise specified by the Exchange.

 

(v)“Market Value” means the market value of the Shares as determined in accordance with section 5.3.

 

 
- 5 -

 

(w)“NI 45-106” means National Instrument 45-106—Prospectus Exemptions.

 

(x)“Option” means an incentive share purchase option granted pursuant to this Plan entitling the Option Holder to purchase Shares of the Company.

 

(y)“Option Certificate” means the certificate, in substantially the form set out as Schedule A hereto, evidencing the Option.

 

(z)“Option Holder” means a Person who holds an unexercised and unexpired Option or, where applicable, the Personal Representative of such person.

 

(aa)“Outstanding Issue” means the number of Shares that are outstanding (on a non-diluted basis) immediately prior to the Share issuance or grant of Option in question.

 

(bb)“Person” means an individual, natural person, corporation, government or political subdivision or agency of a government, and where two or more persons act as a partnership, limited partnership, syndicate or other group for the purpose of acquiring, holding or disposing of securities of an issuer, such partnership, limited partnership, syndicate or group shall be deemed to be a Person.

 

(cc)“Personal Representative” means:

 

(i)in the case of a deceased Option Holder, the executor or administrator of the deceased duly appointed by a court or public authority having jurisdiction to do so; and

 

(ii)in the case of an Option Holder who for any reason is unable to manage his or her affairs, the person entitled by law to act on behalf of such Option Holder.

 

(dd)“Plan” means this stock option plan as from time to time amended.

 

(ee)“Regulatory Approvals” means any necessary approvals of the Regulatory Authorities as may be required from time to time for the implementation, operation or amendment of this Plan or for the Options granted from time to time hereunder.

 

(ff)“Regulatory Authorities” means all organized trading facilities on which the Shares are listed, and all securities commissions or similar securities regulatory bodies having jurisdiction over the Company, this Plan or the Options granted from time to time hereunder.

 

(gg)“Regulatory Rules” means all corporate and securities laws, regulations, rules, policies, notices, instruments and other orders of any kind whatsoever which may, from time to time, apply to the implementation, operation or amendment of this Plan or the Options granted from time to time hereunder including, without limitation, those of the applicable Regulatory Authorities.

 

 
- 6 -

 

(hh)“Related Entity” means a Person that is controlled by the Company. For the purposes of this Plan, a Person (first person) is considered to control another Person (second person) if the first Person, directly or indirectly, has the power to direct the management and policies of the second person by virtue of

 

(i)ownership of or direction over voting securities in the second Person,

 

(ii)a written agreement or indenture,

 

(iii)being the general partner or controlling the general partner of the second Person, or

 

(iv)being a trustee of the second Person.

 

(ii)“Related Person” means:

 

(i)a Related Entity of the Company;

 

(ii)a partner, director or officer of the Company or Related Entity;

 

(iii)a promoter of or Person who performs Investor Relations Activities for the Company or Related Entity; and

 

(iv)any Person that beneficially owns, either directly or indirectly, or exercises voting control or direction over at least 10% of the total voting rights attached to all voting securities of the Company or Related Entity.

 

(jj)“Securities Act” means the Securities Act (British Columbia), RSBC 1996, c.418 as from time to time amended.

 

(kk)“Share” or “Shares” means, as the case may be, one or more common shares without par value in the capital stock of the Company.

 

(ll)“Subsidiary” means a wholly-owned or controlled subsidiary corporation of the Company.

 

(mm)“Triggering Event” means:

 

(i)the proposed dissolution, liquidation or wind-up of the Company;

 

(ii)a proposed merger, amalgamation, arrangement or reorganization of the Company with one or more corporations as a result of which, immediately following such event, the shareholders of the Company as a group, as they were immediately prior to such event, are expected to hold less than a majority of the outstanding capital stock of the surviving corporation;

 

(iii)the proposed acquisition of all or substantially all of the issued and outstanding shares of the Company by one or more Persons;

 

 
- 7 -

 

(iv)a proposed Change of Control of the Company;

 

(v)the proposed sale or other disposition of all or substantially all of the assets of the Company; or

 

(vi)a proposed material alteration of the capital structure of the Company which, in the opinion of the Committee, is of such a nature that it is not practical or feasible to make adjustments to this Plan or to the Options granted hereunder to permit the Plan and Options granted hereunder to stay in effect.

 

(nn)“Vest”, “Vesting” or “Vested” means that a portion of the Option granted to the Option Holder which is available to be exercised by the Option Holder at any time and from time to time.

 

1.2Choice of Law

 

The Plan is established under, and the provisions of the Plan shall be subject to and interpreted and construed solely in accordance with, the laws of the Province of British Columbia and the laws of Canada applicable therein without giving effect to the conflicts of laws principles thereof and without reference to the laws of any other jurisdiction. The Company and each Option Holder hereby attorn to the jurisdiction of the Courts of British Columbia.

 

1.3Headings

 

The headings used herein are for convenience only and are not to affect the interpretation of the Plan.

 

Section 2
GRANT OF OPTIONS

 

2.1Grant of Options

 

The Committee shall, from time to time in its sole discretion, grant Options to such Persons and on such terms and conditions as are permitted under this Plan.

 

2.2Record of Option Grants

 

The Committee shall be responsible to maintain a record of all Options granted under this Plan and such record shall contain, in respect of each Option:

 

(a)the name and address of the Option Holder;

 

(b)the category (Executive, Employee or Consultant) under which the Option was granted to him, her or it;

 

(c)the Grant Date and Expiry Date of the Option;

 

(d)the number of Shares which may be acquired on the exercise of the Option and the Exercise Price of the Option;

 

(e)the Vesting and other additional terms, if any, attached to the Option; and

 

(f)the particulars of each and every time the Option is exercised.

 

 
- 8 -

 

2.3Effect of Plan

 

All Options granted pursuant to the Plan shall be subject to the terms and conditions of the Plan notwithstanding the fact that the Option Certificates issued in respect thereof do not expressly contain such terms and conditions but instead incorporate them by reference to the Plan. The Option Certificates will be issued for convenience only and in the case of a dispute with regard to any matter in respect thereof, the provisions of the Plan and the records of the Company shall prevail over the terms and conditions in the Option Certificate, save and except as noted below. Each Option will also be subject to, in addition to the provisions of the Plan, the terms and conditions contained in the schedules, if any, attached to the Option Certificate for such Option. Should the terms and conditions contained in such schedules be inconsistent with the provisions of the Plan, such terms and conditions will supersede the provisions of the Plan.

 

2.4Hold Period

 

Pursuant to the policies of the Exchange, where a hold period is applicable, the Option Certificate will include a legend stipulating that the Option is and the Shares upon the exercise of the Option are subject to a four-month hold period commencing on the date of distribution of the Option.

 

Section 3

PURPOSE AND PARTICIPATION

 

3.1Purpose of Plan

 

The purpose of the Plan is to provide the Company with a share-related mechanism to attract, retain and motivate qualified Executives, Employees and Consultants to contribute toward the long term goals of the Company, and to encourage such individuals to acquire Shares of the Company as long term investments.

 

3.2Participation in Plan

 

The Committee shall, from time to time and in its sole discretion, determine those Executives, Employees and Consultants to whom Options are to be granted.

 

3.3Limits on Option Grants

 

The Company shall only grant Options under this Plan in accordance with section 10 hereof and, for greater certainty, may not grant any Options under this Plan unless an exemption under NI 45-106 is available. For so long as the Company is not a reporting issuer or is otherwise a reporting issuer but listed on the CSE, Section 2.24 of NI 45-106 shall not apply to the Plan and all Options granted thereunder to any Employees or Consultants who are engaged in Investor Relations Activities for the Company, any associated Consultant, any executive officer of the Company, any director of the Company or any permitted assign of those Persons if, after the grant:

 

(a)the number of securities, calculated on a fully diluted basis, reserved for issuance under options granted to

 

(i)Related Persons, exceeds 10% of the outstanding securities of the Company, or

 

(ii)a Related Person, exceeds 5% of the outstanding securities of the Company, or

 

 
- 9 -

 

(b)the number of securities, calculated on a fully diluted basis, issued within 12 months to

 

(i)Related Persons, exceeds 10% of the outstanding securities of the Company, or

 

(ii)a Related Person and the associates of the Related Person, exceeds 5% of the outstanding securities of the Company;

 

unless the Company obtains security holder approval in accordance with the Regulatory Rules, including the requirements under NI 45-106.

 

3.4Limits on Option Grants for Investor Relations Activities

 

The maximum number of Options which may be granted within an 12 month period to Employees or Consultants engaged in Investor Relations Activities must not exceed 1% of the Outstanding Issue.

 

3.5Notification of Grant

 

Following the granting of an Option, the Administrator shall, within a reasonable period of time, notify the Option Holder in writing of the grant and shall enclose with such notice the Option Certificate representing the Option so granted. In no case will the Company be required to deliver an Option Certificate to an Option Holder until such time as the Company has obtained all necessary Regulatory Approvals for the grant of the Option.

 

3.6Copy of Plan

 

Each Option Holder, concurrently with the notice of the grant of the Option, shall be provided with a copy of the Plan. A copy of any amendment to the Plan shall be promptly provided by the Administrator to each Option Holder.

 

3.7Limitation on Service

 

The Plan does not give any Option Holder that is an Executive the right to serve or continue to serve as an Executive of the Company or any Subsidiary, nor does it give any Option Holder that is an Employee or Consultant the right to be or to continue to be employed or engaged by the Company or any Subsidiary.

 

 
- 10 -

 

3.8No Obligation to Exercise

 

Option Holders shall be under no obligation to exercise Options.

 

3.9Agreement

 

The Company and every Option Holder granted an Option hereunder shall be bound by and subject to the terms and conditions of this Plan. By accepting an Option granted hereunder, the Option Holder has expressly agreed with the Company to be bound by the terms and conditions of this Plan. In the event that the Option Holder receives his, her or its Options pursuant to an oral or written agreement with the Company or a Subsidiary, whether such agreement is an employment agreement, consulting agreement or any other kind of agreement of any kind whatsoever, the Option Holder acknowledges that in the event of any inconsistency between the terms relating to the grant of such Options in that agreement and the terms attaching to the Options as provided for in this Plan, the terms provided for in this Plan shall prevail and the other agreement shall be deemed to have been amended accordingly.

 

3.10Notice

 

Any notice, delivery or other correspondence of any kind whatsoever to be provided by the Company to an Option Holder will be deemed to have been provided if provided to the last home address, fax number or email address of the Option Holder in the records of the Company and the Company shall be under no obligation to confirm receipt or delivery.

 

3.11Representation

 

As a condition precedent to the issuance of an Option, the Company must be able to represent to the Exchange as of the Grant Date that the Option Holder is a bona fide Executive, Employee or Consultant of the Company or any Subsidiary.

 

Section 4

NUMBER OF SHARES UNDER PLAN

 

4.1Committee to Approve Issuance of Shares

 

The Committee shall approve by resolution the issuance of all Shares to be issued to Option Holders upon the exercise of Options, such authorization to be deemed effective as of the Grant Date of such Options regardless of when it is actually done. The Committee shall be entitled to approve the issuance of Shares in advance of the Grant Date, retroactively after the Grant Date, or by a general approval of this Plan.

 

4.2Number of Shares

 

Subject to adjustment as provided for herein, the number of Shares which will be available for purchase pursuant to Options granted pursuant to this Plan, plus any other outstanding incentive stock options of the Company granted pursuant to a previous stock option plan or agreement, will not exceed 10% of the Outstanding Issue. If any Option expires or otherwise terminates for any reason without having been exercised in full, the number of Shares in respect of such expired or terminated Option shall again be available for the purposes of granting Options pursuant to this Plan.

 

 
- 11 -

 

4.3Fractional Shares

 

No fractional shares shall be issued upon the exercise of any Option and, if as a result of any adjustment, an Option Holder would become entitled to a fractional share, such Option Holder shall have the right to purchase only the next lowest whole number of Shares and no payment or other adjustment will be made for the fractional interest.

 

Section 5

TERMS AND CONDITIONS OF OPTIONS

 

5.1Exercise Period of Option

 

Subject to sections 5.4, 6.2, 6.3, 6.4 and 11.4, the Grant Date and the Expiry Date of an Option shall be the dates fixed by the Committee at the time the Option is granted and shall be set out in the Option Certificate issued in respect of such Option.

 

5.2Number of Shares Under Option

 

The number of Shares which may be purchased pursuant to an Option shall be determined by the Committee and shall be set out in the Option Certificate issued in respect of the Option.

 

5.3Exercise Price of Option

 

The Exercise Price at which an Option Holder may purchase a Share upon the exercise of an Option shall be determined by the Committee and shall be set out in the Option Certificate issued in respect of the Option. Notwithstanding the foregoing, the Exercise Price shall not be less than the Market Value of the Shares as of the Grant Date. The Market Value of the Shares for a particular Grant Date shall be determined as follows:

 

(a)if the Company’s Shares are listed on the CSE, and the Committee determines the CSE to be the Company’s primary Exchange, Market Value will be the greater of the closing trading price of the Shares on (i) the trading day prior to the Grant Date and (ii) the Grant Date;
   
(b)subject to subparagraph (a) above, for each organized trading facility on which the Shares are listed, Market Value will be the closing trading price of the Shares on the day immediately preceding the Grant Date, and may be less than this price if it is within the discounts permitted by the applicable Regulatory Authorities;
   
(c)if the Company’s Shares are listed on more than one organized trading facility, the Market Value shall be the Market Value as determined in accordance with subparagraphs (a) or (b) above for the primary organized trading facility on which the Shares are listed, as determined by the Committee, subject to any adjustments as may be required to secure all necessary Regulatory Approvals;

 

 
- 12 -

 

(d)subject to subparagraph (a), if the Company’s Shares are listed on one or more organized trading facilities but have not traded during the ten trading days immediately preceding the Grant Date, then the Market Value will be, subject to any adjustments as may be required to secure all necessary Regulatory Approvals, such value as is determined by the Committee; and
   
(e)if the Company’s Shares are not listed on any organized trading facility, then the Market Value will be, subject to any adjustments as may be required to secure all necessary Regulatory Approvals, such value as is determined by the Committee to be the fair value of the Shares, taking into consideration all factors that the Committee deems appropriate, including, without limitation, recent sale and offer prices of the Shares in private transactions negotiated at arms’ length. Notwithstanding anything else contained herein, in no case will the Market Value be less than the minimum prescribed by each of the organized trading facilities that would apply to the Company on the Grant Date in question.

 

5.4Termination of Option

 

Subject to such other terms or conditions that may be attached to Options granted hereunder, an Option Holder may exercise an Option in whole or in part at any time and from time to time during the Exercise Period. Any Option or part thereof not exercised within the Exercise Period shall terminate and become null, void and of no effect as of the Expiry Time on the Expiry Date. The Expiry Date of an Option shall be the earlier of the date so fixed by the Committee at the time the Option is granted as set out in the Option Certificate and the date established, if applicable, in paragraphs (a) or (b) below or sections 6.2, 6.3, 6.4 or 11.4 of this Plan:

 

(a)Ceasing to Hold Office - In the event that the Option Holder holds his or her Option as an Executive and such Option Holder ceases to hold such position other than by reason of death or Disability, the Expiry Date of the Option shall be, unless otherwise determined by the Committee and expressly provided for in the Option Certificate, the 30th day following the date the Option Holder ceases to hold such position unless the Option Holder ceases to hold such position as a result of:

 

(i)ceasing to meet the qualifications set forth in the corporate legislation applicable to the Company;
   
(ii)a special resolution having been passed by the shareholders of the Company removing the Option Holder as a director of the Company or any Subsidiary; or
   
(iii)an order made by any Regulatory Authority having jurisdiction to so order,

 

in which case the Expiry Date shall be the date the Option Holder ceases to hold such position; OR

 

 
- 13 -

 

(b)Ceasing to be Employed or Engaged - In the event that the Option Holder holds his or her Option as an Employee or Consultant and such Option Holder ceases to hold such position other than by reason of death or Disability, the Expiry Date of the Option shall be, unless otherwise determined by the Committee and expressly provided for in the Option Certificate, the 30th day following the date the Option Holder ceases to hold such position, unless the Option Holder ceases to hold such position as a result of:

 

(i)termination for cause;
   
(ii)resigning his or her position; or
   
(iii)an order made by any Regulatory Authority having jurisdiction to so order,

 

in which case the Expiry Date shall be the date the Option Holder ceases to hold such position.

 

In the event that the Option Holder ceases to hold the position of Executive, Employee or Consultant for which the Option was originally granted, but comes to hold a different position as an Executive, Employee or Consultant prior to the expiry of the Option, the Committee may, in its sole discretion, choose to permit the Option to stay in place for that Option Holder with such Option then to be treated as being held by that Option Holder in his or her new position and such will not be considered to be an amendment to the Option in question requiring the consent of the Option Holder under section 9.2 of this Plan. Notwithstanding anything else contained herein, in no case will an Option be exercisable later than the Expiry Date of the Option.

 

5.5Vesting of Option and Acceleration

 

The Vesting schedule for an Option, if any, shall be determined by the Committee and shall be set out in the Option Certificate issued in respect of the Option. The Committee may elect, at any time, to accelerate the Vesting schedule of one or more Options including, without limitation, on a Triggering Event, and such acceleration will not be considered an amendment to the Option in question requiring the consent of the Option Holder under section 9.2 of this Plan.

 

5.6Additional Terms

 

Subject to all applicable Regulatory Rules and all necessary Regulatory Approvals, the Committee may attach additional terms and conditions to the grant of a particular Option, such terms and conditions to be set out in a schedule attached to the Option Certificate. The Option Certificates will be issued for convenience only, and in the case of a dispute with regard to any matter in respect thereof, the provisions of this Plan and the records of the Company shall prevail over the terms and conditions in the Option Certificate, save and except as noted below. Each Option will also be subject to, in addition to the provisions of the Plan, the terms and conditions contained in the schedules, if any, attached to the Option Certificate for such Option. Should the terms and conditions contained in such schedules be inconsistent with the provisions of the Plan, such terms and conditions will supersede the provisions of the Plan.

 

 
- 14 -

 

Section 6

TRANSFERABILITY OF OPTIONS

 

6.1Non-transferable

 

Except as provided otherwise in this section 6, Options are non-assignable and non-transferable.

 

6.2Death of Option Holder

 

In the event of the Option Holder’s death, any Options held by such Option Holder shall pass to the Personal Representative of the Option Holder and shall be exercisable by the Personal Representative on or before the date which is the earlier of one year following the date of death and the applicable Expiry Date.

 

6.3Disability of Option Holder

 

If the employment or engagement of an Option Holder as an Employee or Consultant or the position of an Option Holder as a director or officer of the Company or a Subsidiary is terminated by the Company by reason of such Option Holder’s Disability, any Options held by such Option Holder shall be exercisable by such Option Holder or by the Personal Representative on or before the date which is the earlier of one year following the termination of employment, engagement or appointment as a director or officer and the applicable Expiry Date.

 

6.4Disability and Death of Option Holder

 

If an Option Holder has ceased to be employed, engaged or appointed as a director or officer of the Company or a Subsidiary by reason of such Option Holder’s Disability and such Option Holder dies within one year after the termination of such engagement, any Options held by such Option Holder that could have been exercised immediately prior to his or her death shall pass to the Personal Representative of such Option Holder and shall be exercisable by the Personal Representative on or before the date which is the earlier of one year following the death of such Option Holder and the applicable Expiry Date.

 

6.5Vesting

 

Unless the Committee determines otherwise, Options held by or exercisable by a Personal Representative shall, during the period prior to their termination, continue to Vest in accordance with any Vesting schedule to which such Options are subject.

 

6.6Deemed Non-Interruption of Engagement

 

Employment or engagement by the Company shall be deemed to continue intact during any military or sick leave or other bona fide leave of absence if the period of such leave does not exceed 90 days or, if longer, for so long as the Option Holder’s right to re-employment or re-engagement by the Company is guaranteed either by statute or by contract. If the period of such leave exceeds 90 days and the Option Holder’s re-employment or re-engagement is not so guaranteed, then his or her employment or engagement shall be deemed to have terminated on the ninety-first day of such leave.

 

 
- 15 -

 

Section 7

EXERCISE OF OPTION

 

7.1Exercise of Option

 

An Option may be exercised only by the Option Holder or the Personal Representative of any Option Holder. An Option Holder or the Personal Representative of any Option Holder may exercise an Option in whole or in part at any time and from time to time during the Exercise Period up to the Expiry Time on the Expiry Date by delivering to the Administrator the required Exercise Notice, or by written notice in the case of uncertificated Shares, the applicable Option Certificate and a certified cheque or bank draft or wire transfer payable to the Company or its legal counsel in an amount equal to the aggregate Exercise Price of the Shares then being purchased pursuant to the exercise of the Option. Notwithstanding anything else contained herein, Options may not be exercised during a Black-Out unless the Committee determines otherwise.

 

7.2Black Out Period

 

If an Option expires, terminates or is cancelled (other than an expiry, termination or cancellation pursuant to section 5.4(a) or section 5.4(b) above) within or immediately after a Black-Out, the Holder may elect for the term of such Option to be extended to the date which is ten (10) business days after the last day of the Black-Out; provided, that, the expiration date as extended by this section 7.2 will not in any event be beyond the later of: (i) December 31 of the calendar year in which the Option was otherwise due to expire; and (ii) the 15th day of the third month following the month in which the Option was otherwise due to expire.

 

7.3Issue of Share Certificates

 

As soon as reasonably practicable following the receipt of the notice of exercise as described in section 7.1 and payment in full for the Optioned Shares being acquired, the Administrator will direct its transfer agent to issue to the Option Holder the appropriate number of Shares in either certificate form or at the election of the Option Holder, on an uncertificated basis pursuant to the instructions given by the Option Holder to the Administrator. If the number of Shares so purchased is less than the number of Shares subject to the Option Certificate surrendered, the Administrator shall also provide a new Option Certificate for the balance of Shares available under the Option to the Option Holder concurrent with delivery of the Shares.

 

7.4No Rights as Shareholder

 

Until the date of the issuance of the certificate for the Shares purchased pursuant to the exercise of an Option, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to such Shares, notwithstanding the exercise of the Option, unless the Committee determines otherwise. In the event of any dispute over the date of the issuance of the Shares, the decision of the Committee shall be final, conclusive and binding.

 

 
- 16 -

 

7.5Tax Withholding and Procedures

 

Notwithstanding anything else contained in this Plan, the Company may, from time to time, implement such procedures and conditions as it determines appropriate with respect to the withholding and remittance of taxes imposed under applicable law, or the funding of related amounts for which liability may arise under such applicable law. Without limiting the generality of the foregoing, an Option Holder who wishes to exercise an Option must, in addition to following the procedures set out in section 7.1 and elsewhere in this Plan, and as a condition of exercise:

 

(a)deliver a certified cheque, wire transfer or bank draft payable to the Company for the amount determined by the Company to be the appropriate amount on account of such taxes or related amounts; or
   
(b)otherwise ensure, in a manner acceptable to the Company (if at all) in its sole and unfettered discretion, that the amount will be securely funded;
   
(c)and must in all other respects follow any related procedures and conditions imposed by the Company.

 

Section 8

ADMINISTRATION

 

8.1Board or Committee

 

The Plan shall be administered by the Administrator with oversight by the Committee.

 

8.2Powers of Committee

 

The Committee shall have the authority to do the following:

 

(a)oversee the administration of the Plan in accordance with its terms;
   
(b)appoint or replace the Administrator from time to time;
   
(c)determine all questions arising in connection with the administration, interpretation and application of the Plan, including all questions relating to the Market Value;
   
(d)correct any defect, supply any information or reconcile any inconsistency in the Plan in such manner and to such extent as shall be deemed necessary or advisable to carry out the purposes of the Plan;
   
(e)prescribe, amend, and rescind rules and regulations relating to the administration of the Plan;
   
(f)determine the duration and purposes of leaves of absence from employment or engagement by the Company which may be granted to Option Holders without constituting a termination of employment or engagement for purposes of the Plan;
   
(g)do the following with respect to the granting of Options:

 

(i)determine the Executives, Employees or Consultants to whom Options shall be granted, based on the eligibility criteria set out in this Plan;

 

 
- 17 -

 

(ii)determine the terms of the Option to be granted to an Option Holder including, without limitation, the Grant Date, Expiry Date, Exercise Price and Vesting schedule (which need not be identical with the terms of any other Option);
   
(iii)subject to any necessary Regulatory Approvals and section 9.2, amend the terms of any Options;
   
(iv)determine when Options shall be granted; and
   
(v)determine the number of Shares subject to each Option;

 

(h)accelerate the Vesting schedule of any Option previously granted; and
   
(i)make all other determinations necessary or advisable, in its sole discretion, for the administration of the Plan.

 

8.3Administration by Committee

 

All determinations made by the Committee in good faith shall be final, conclusive and binding upon all persons. The Committee shall have all powers necessary or appropriate to accomplish its duties under this Plan.

 

8.4Interpretation

 

The interpretation by the Committee of any of the provisions of the Plan and any determination by it pursuant thereto shall be final, conclusive and binding and shall not be subject to dispute by any Option Holder. No member of the Committee or any person acting pursuant to authority delegated by it hereunder shall be personally liable for any action or determination in connection with the Plan made or taken in good faith and each member of the Committee and each such person shall be entitled to indemnification with respect to any such action or determination in the manner provided for by the Company.

 

Section 9

APPROVALS AND AMENDMENT

 

9.1Shareholder Approval of Plan

 

If required by a Regulatory Authority or by the Committee, this Plan may be made subject to the approval of the shareholders of the Company as prescribed by the Regulatory Authority. If shareholder approval is required, any Options granted under this Plan prior to such time will not be exercisable or binding on the Company unless and until such shareholder approval is obtained.

 

 
- 18 -

 

9.2Amendment of Option or Plan

 

Subject to any required Regulatory Approvals, the Committee may from time to time amend any existing Option or the Plan or the terms and conditions of any Option thereafter to be granted provided that where such amendment relates to an existing Option and it would:

 

(a)materially decrease the rights or benefits accruing to an Option Holder; or
   
(b)materially increase the obligations of an Option Holder; then, unless otherwise excepted out by a provision of this Plan, the Committee must also obtain the written consent of the Option Holder in question to such amendment. If at the time the Exercise Price of an Option is reduced the Option Holder is an Insider of the Company, the Insider must not exercise the Option at the reduced Exercise Price until the reduction in Exercise Price has been approved by the disinterested shareholders of the Company, if required by the Exchange.

 

Section 10
CONDITIONS PRECEDENT TO ISSUANCE OF OPTIONS AND SHARES

 

10.1Compliance with Laws

 

An Option shall not be granted or exercised, and Shares shall not be issued pursuant to the exercise of any Option, unless the grant and exercise of such Option and the issuance and delivery of such Shares comply with all applicable Regulatory Rules, and such Options and Shares will be subject to all applicable trading restrictions in effect pursuant to such Regulatory Rules and the Company shall be entitled to legend the Option Certificates and the certificates for the Shares or the written notice in the case of uncertificated Shares representing such Shares accordingly.

 

10.2Regulatory Approvals

 

In administering this Plan, the Committee will seek any Regulatory Approvals which may be required. The Committee will not permit any Options to be granted without first obtaining the necessary Regulatory Approvals unless such Options are granted conditional upon such Regulatory Approvals being obtained. The Committee will make all filings required with the Regulatory Authorities in respect of the Plan and each grant of Options hereunder. No Option granted will be exercisable or binding on the Company unless and until all necessary Regulatory Approvals have been obtained. The Committee shall be entitled to amend this Plan and the Options granted hereunder in order to secure any necessary Regulatory Approvals and such amendments will not require the consent of the Option Holders under section 9.2 of this Plan.

 

10.3Inability to Obtain Regulatory Approvals

 

The Company’s inability to obtain Regulatory Approval from any applicable Regulatory Authority, which Regulatory Approval is deemed by the Committee to be necessary to complete the grant of Options hereunder, the exercise of those Options or the lawful issuance and sale of any Shares pursuant to such Options, shall relieve the Company of any liability with respect to the failure to complete such transaction.

 

 
- 19 -

 

Section 11

ADJUSTMENTS AND TERMINATION

 

11.1Termination of Plan

 

Subject to any necessary Regulatory Approvals, the Committee may terminate or suspend the Plan. Unless earlier terminated as provided in this section 11, the Plan shall terminate on, and no more Options shall be granted under the Plan after, the tenth anniversary of the date of the Exchange’s acceptance of the Plan.

 

11.2No Grant During Suspension of Plan

 

No Option may be granted during any suspension, or after termination, of the Plan. Suspension or termination of the Plan shall not, without the consent of the Option Holder, alter or impair any rights or obligations under any Option previously granted.

 

11.3Alteration in Capital Structure

 

If there is a material alteration in the capital structure of the Company and the Shares are consolidated, subdivided, converted, exchanged, reclassified or in any way substituted for, the Committee shall make such adjustments to this Plan and to the Options then outstanding under this Plan as the Committee determines to be appropriate and equitable under the circumstances, so that the proportionate interest of each Option Holder shall, to the extent practicable, be maintained as before the occurrence of such event. Such adjustments may include, without limitation:

 

(a)a change in the number or kind of shares of the Company covered by such Options; and
   
(b)a change in the Exercise Price payable per Share provided, however, that the aggregate Exercise Price applicable to the unexercised portion of existing Options shall not be altered, it being intended that any adjustments made with respect to such Options shall apply only to the Exercise Price per Share and the number of Shares subject thereto.

 

For purposes of this section 11.3, and without limitation, neither:

 

(c)the issuance of additional securities of the Company in exchange for adequate consideration (including services); nor
   
(d)the conversion of outstanding securities of the Company into Shares shall be deemed to be material alterations of the capital structure of the Company. Any adjustment made to any Options pursuant to this section 11.3 shall not be considered an amendment requiring the Option Holder’s consent for the purposes of section 9.2 of this Plan.

 

 
- 20 -

 

11.4Triggering Events

 

Subject to the Company complying with section 11.5 and any necessary Regulatory Approvals and notwithstanding any other provisions of this Plan or any Option Certificate, the Committee may, without the consent of the Option Holder or Holders in question:

 

(a)cause all or a portion of any of the Options granted under the Plan to terminate upon the occurrence of a Triggering Event; or
   
(b)cause all or a portion of any of the Options granted under the Plan to be exchanged for incentive stock options of another corporation upon the occurrence of a Triggering Event in such ratio and at such Exercise Price as the Committee deems appropriate, acting reasonably.

 

Such termination or exchange shall not be considered an amendment requiring the Option Holder’s consent for the purpose of section 9.2 of the Plan.

 

11.5Notice of Termination by Triggering Event

 

In the event that the Committee wishes to cause all or a portion of any of the Options granted under this Plan to terminate on the occurrence of a Triggering Event, it must give written notice to the Option Holders in question not less than 10 days prior to the consummation of a Triggering Event so as to permit the Option Holder the opportunity to exercise the Vested portion of the Options prior to such termination. Upon the giving of such notice and subject to any necessary Regulatory Approvals, all Options or portions thereof granted under the Plan which the Company proposes to terminate shall become immediately exercisable notwithstanding any contingent Vesting provision to which such Options may have otherwise been subject. Furthermore, if any of the Options granted under this Plan are cancelled prior to their Expiry Date, the Company shall not grant new Options to the same Persons or Entities until thirty (30) days have lapsed from the date of cancellation.

 

11.6Determinations to be Made By Committee

 

Adjustments and determinations under this section 11 shall be made by the Committee, whose decisions as to what adjustments or determination shall be made, and the extent thereof, shall be final, binding, and conclusive.

 

 

 

 

SCHEDULE A

 

[Include legends prescribed by Regulatory Authorities, if required.]

 

1284670 B.C. LTD.

 

STOCK OPTION PLAN - OPTION CERTIFICATE

 

This Option Certificate is issued pursuant to the provisions of the Stock Option Plan (the “Plan”) of 1284670 B.C. Ltd.(the “Company”) and evidences that ● [Name of Option Holder] is the holder (the “Option Holder”) of an option (the “Option”) to purchase up to ● common shares (the “Shares”) in the capital stock of the Company at a purchase price of Cdn.$ ● per Share (the “Exercise Price”). This Option may be exercised at any time and from time to time from and including the following Grant Date through to and including up to 4:00 p.m. local time in Vancouver, British Columbia (the “Expiry Time”) on the following Expiry Date:

 

(a)the Grant Date of this Option is ●; and
   
(b)subject to sections 5.4, 6.2, 6.3, 6.4 and 11.4of the Plan, the Expiry Date of this Option is ●, 20●.

 

To exercise this Option, the Option Holder must deliver to the Administrator of the Plan, prior to the Expiry Time on the Expiry Date, an Exercise Notice, in the form provided in the Plan, or written notice in the case of uncertificated Shares, which is incorporated by reference herein, together with the original of this Option Certificate and a certified cheque or bank draft payable to the Company or its legal counsel in an amount equal to the aggregate of the Exercise Price of the Shares in respect of which this Option is being exercised.

 

This Option Certificate and the Option evidenced hereby is not assignable, transferable or negotiable and is subject to the detailed terms and conditions contained in the Plan. This Option Certificate is issued for convenience only and in the case of any dispute with regard to any matter in respect hereof, the provisions of the Plan and the records of the Company shall prevail. This Option is also subject to the terms and conditions contained in the schedules, if any, attached hereto.

 

[Include legends on the certificate or the written notice in the case of uncertificated shares prescribed by Regulatory Authorities, if required.]

 

 
- A2-

 

If the Option Holder is a resident or citizen of the United States of America at the time of the exercise of the Option, the certificate(s) representing the Shares will be endorsed with the following or a similar legend:

 

“The securities represented hereby have not been registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or the securities laws of any state of the United States. The holder hereof, by purchasing such securities, agrees for the benefit of the Company that such securities may be offered, sold or otherwise transferred only (a) to the Company; (b) outside the United States in accordance with Rule 904 of Regulation S under the U.S. Securities Act; (c) in accordance with the exemption from registration under the U.S. Securities Act provided by Rule 144 thereunder, if available, and in compliance with any applicable state securities laws; or (d) in a transaction that does not require registration under the U.S. Securities Act and any applicable state securities laws, and, in the case of paragraph (c) or (d), the seller furnishes to the Company an opinion of counsel of recognized standing in form and substance satisfactory to the Company to such effect.

 

The presence of this legend may impair the ability of the holder hereof to effect “good delivery” of the securities represented hereby on a Canadian stock exchange.”

 

1284670 B.C. LTD.

by its authorized signatory:

 

 

 

The Option Holder acknowledges receipt of a copy of the Plan and represents to the Company that the Option Holder is familiar with the terms and conditions of the Plan, and hereby accepts this Option subject to all of the terms and conditions of the Plan. The Option Holder agrees to execute, deliver, file and otherwise assist the Company in filing any report, undertaking or document with respect to the awarding of the Option and exercise of the Option, as may be required by the Regulatory Authorities. The Option Holder further acknowledges that if the Plan has not been approved by the shareholders of the Company on the Grant Date, this Option is not exercisable until such approval has been obtained.

 

Signature of Option Holder:

 

 
Signature   Date signed:
     
   
Print Name    
     
   
Address    
     
   

 

 

 

 

OPTION CERTIFICATE – SCHEDULE

 

[Complete the following additional terms and any other special terms, if applicable, or remove the inapplicable terms or this schedule entirely.]

 

The additional terms and conditions attached to the Option represented by this Option Certificate are as follows:

 

1.The Options will not be exercisable unless and until they have vested and then only to the extent that they have vested. The Options will vest in accordance with the following:

 

(a)● Shares (●%) will vest and be exercisable on or after the Grant Date;
(b)● additional Shares (●%) will vest and be exercisable on or after ● [date];
(c)● additional Shares (●%) will vest and be exercisable on or after ● [date];
(d)● additional Shares (●%) will vest and be exercisable on or after ● [date];

 

2.Upon the Option Holder ceasing to hold a position with the Company, other than as a result of the events set out in paragraphs 5.4(a) or 5.4(b) of the Plan, the Expiry Date of the Option shall be ● [Insert date desired that is longer or shorter than the standard 30 days as set out in the Plan] following the date the Option Holder ceases to hold such position.

 

 

 

 

SCHEDULE B

 

1284670 B.C. LTD.

 

STOCK OPTION PLAN

 

NOTICE OF EXERCISE OF OPTION

 

TO: The Administrator, Stock Option Plan

●

● [ Address]

 

(or such other address as the Company may advise)

 

The undersigned hereby irrevocably gives notice, pursuant to the Stock Option Plan (the “Plan”) of 1284670 B.C. Ltd.(the “Company”), of the exercise of the Option to acquire and hereby subscribes for (cross out inapplicable item):

 

(a)all of the Shares; or
(b)of the Shares;

 

which are the subject of the Option Certificate attached hereto (attach your original Option Certificate). The undersigned tenders herewith a certified cheque or bank draft (circle one) payable to the Company or to ● in an amount equal to the aggregate Exercise Price of the aforesaid Shares and directs the Company to issue a certificate OR a written notice in the case of uncertificated Shares evidencing said Shares in the name of the undersigned to be issued to the undersigned [in the case of issuance of a share certificate, at the following address (provide full complete address)]:

 

   
   
   

 

The undersigned acknowledges the Option is not validly exercised unless this Notice is completed in strict compliance with this form and delivered to the required address with the required payment prior to 4:00 p.m. local time in Vancouver, BC on the Expiry Date of the Option.

 

DATED the day ____of ___________, 20___.

 

 
  Signature of Option Holder