U.S. COBALT INC.
STOCK OPTION PLAN
Dated April 2, 2003
TABLE OF CONTENTS
STOCK OPTION PLAN
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions
As used herein, unless anything in the subject matter or context is inconsistent therewith, the following terms shall have the meanings set forth below:
| (a) | “Administrator” means, initially, the secretary
of the Corporation and thereafter shall mean such director or other senior
officer or employee of the Corporation as may be designated as Administrator
by the Board from time to time; |
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| (b) | “affiliate” has the meaning ascribed thereto
in the Securities Act (British Columbia); |
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| (c) | “associate” has the meaning ascribed thereto
in the Securities Act (British Columbia); |
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| (d) | “Award Date” means the date on which the
Board grants and announces a particular Option; |
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| (e) | “Board” means the board of directors of
the Corporation; |
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| (f) | “Consultant” means an individual, other than an Employee or a Director of the Corporation, that: | |
| (i) | is engaged to provide on a bona fide basis
consulting, technical, management or other services to the Corporation
or to an affiliate of the Corporation, other than services provided in
relation to a distribution and, in the case of senior-listed issuers only,
includes an Investor Consultant; |
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| (ii) | provides the services under a written contract between
the Corporation or the affiliate and the individual or a Consultant Company
or Consultant Partnership of the individual; and |
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| (iii) | in the reasonable opinion of the Corporation, spends
or will spend a significant amount of time and attention on the affairs
and business of the Corporation or an affiliate of the Corporation; |
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| (g) | “Consultant Company” means, for an individual
consultant, a company which the individual consultant is an employee or
shareholder; |
|
| (h) | “Consultant Partnership” means, for an individual consultant, a partnership of which the individual consultant is an employee or partner; |
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| (i) | “Corporation” means U.S. Cobalt Inc.; | |
| (j) | “Director” means any individual holding
the office of director or officer of the Corporation or an affiliate of
the Corporation; |
|
| (k) | “Employee” means an individual regularly
employed on a full-time or part-time basis by the Corporation or an affiliate
of the Corporation or an individual who, on a regular basis and for a
minimum amount of time per week, performs services for the Corporation
or an affiliate of the Corporation normally provided by an employee other
than a Director, and for the purpose of the Plan includes a Management
Company Employee; |
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| (l) | “Exchange” means the TSX Venture Exchange
or, if the Shares are no longer listed for trading on the TSX Venture
Exchange, such other exchange or quotation system on which the Shares
are listed or quoted for trading; |
|
| (m) | “Exercise Notice” means the notice respecting
the exercise of an Option in the form set out as Schedule “B”
hereto, duly executed by the Option Holder; |
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| (n) | “Exercise Period” means the period during
which a particular Option may be exercised and is the period from and
including the Award Date through to and including the Expiry Date, subject
to the provisions of the Plan relating to vesting of Options; |
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| (o) | “Exercise Price” means the price at which
an Option may be exercised as determined in accordance with paragraph
3.5; |
|
| (p) | “Expiry Date” means the date determined
in accordance with paragraph 3.3 and after which a particular Option cannot
be exercised; |
|
| (q) | “insider” has meaning ascribed thereto
in the Securities Act (British Columbia); |
|
| (r) | “Investor Consultant” means, a Consultant
that is a registrant or provides to the Corporation or an affiliate of
the Corporation services provided by a registrant or services that include
investor relations activities; |
|
| (s) | “Management Company Employee” means an
individual employed by a person providing management services to the Corporation,
which are required for the ongoing successful operation of the business
enterprise of the Corporation, but excluding a person involved in investor
relations activities; |
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| (t) | “Option” means an option to acquire Shares,
awarded to a Director, Employee or Consultant pursuant to the Plan; |
|
| (u) | “Option Certificate” means the certificate,
substantially in the form set out as Schedule “A” hereto, evidencing
an Option; |
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| (v) | “Option Holder” means a Director, Employee
or Consultant, or a former Director, Employee or Consultant, who holds
an unexercised and unexpired Option or, where applicable, the Personal
Representative of such person; |
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| (w) | “Plan” means this U.S. Cobalt Inc. stock option plan; |
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| (x) | “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 |
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| (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; and |
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| (y) | “Share” or “Shares” means, as
the case may be, one or more common shares without par value in the capital
of the Corporation. |
1.2 Choice of Law
The Plan is established under and the provisions of the Plan shall be interpreted and construed in accordance with the laws of the Province of British Columbia.
1.3 Headings
The headings used herein are for convenience only and are not to affect the interpretation of the Plan.
ARTICLE 2
PURPOSE AND PARTICIPATION
2.1 Purpose
The purpose of the Plan is to provide the Corporation with a share-related mechanism to attract, retain and motivate qualified Directors, Employees and Consultants, to reward such of those Directors, Employees and Consultants as may be awarded Options under the Plan by the Board from time to time for their contributions toward the long term goals of the Corporation and to enable and encourage such Directors, Employees and Consultants to acquire Shares as long term investments.
2.2 Participation
The Board shall, from time to time, in its sole discretion determine those Directors, Employees and Consultants, if any, to whom Options are to be awarded. If the Board elects to award an Option to a Director, the Board shall, in its sole discretion but subject to paragraph 3.2, determine the number of Shares to be acquired on the exercise of such Option. If the Board elects to award an Option to
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an Employee or Consultant, the number of Shares to be acquired on the exercise of such Option shall be determined by the Board in its sole discretion, and in so doing the Board may take into account the following criteria:
| (a) | the remuneration paid to the Employee or Consultant
as at the Award Date in relation to the total remuneration payable by
the Corporation to all of its Employees and Consultants as at the Award
Date; |
|
| (b) | the length of time that the Employee or Consultant
has been employed or engaged by the Corporation; and |
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| (c) | the quality of work performed by the Employee or
Consultant. |
2.3 Notification of Award
Following the approval by the Board of the awarding of an Option, the Administrator shall notify the Option Holder in writing of the award and shall enclose with such notice the Option Certificate representing the Option so awarded.
2.4 Copy of Plan
Each Option Holder, concurrently with the notice of the award 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.
2.5 Limitation
The Plan does not give any Option Holder that is a Director the right to serve or continue to serve as a Director of the Corporation 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 Corporation.
ARTICLE 3
TERMS AND CONDITIONS OF OPTIONS
3.1 Board to Allot Shares
The Shares to be issued to Option Holders upon the exercise of Options shall be allotted and authorized for issuance by the Board prior to the exercise thereof.
3.2 Number of Shares
The maximum number of Shares issuable under the Plan, together with the number of Shares issuable under outstanding options granted otherwise than under the Plan, shall not exceed 2,200,000 Shares of the Corporation. Additionally, the Corporation shall not grant Options:
| (a) | to any one person in any 12 month period which could, when exercised, result in the issuance of Shares exceeding five percent (5%) of the issued and outstanding Shares of the Corporation; or |
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| (b) | to all Consultants or to all persons employed by
the Corporation who perform investor relations activities which could,
when exercised, result in the issuance of Shares exceeding two percent
(2%) of the issued and outstanding Shares of the Corporation. |
If any Option expires or otherwise terminates for any reason without having been exercised in full, the number of Shares in respect of which Option expired or terminated shall again be available for the purposes of the Plan.
3.3 Term of Option
Subject to paragraph 3.4, the Expiry Date of an Option shall be the date so fixed by the Board at the time the particular Option is awarded, provided that such date shall not be later than:
| (a) | for so long as the Corporation is classified as a
Tier 2 issuer or equivalent designation of the Exchange, the fifth anniversary
of the later of the date the Shares are listed on the Exchange and the
Award Date of the Option; or |
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| (b) | if the classification of the Corporation on the
Exchange is upgraded from that of a Tier 2 issuer, or the Shares are no
longer listed on the Exchange, the tenth anniversary of the Award Date
of the Option. |
3.4 Termination of Option
An Option Holder may, subject to any vesting provisions applicable to Options hereunder, exercise an Option in whole or in part at any time or from time to time during the Exercise Period provided that, with respect to the exercise of part of an Option, the Board may at any time and from time to time fix a minimum or maximum number of Shares in respect of which an Option Holder may exercise part of any Option held by such Option Holder. Any Option or part thereof not exercised within the Exercise Period shall terminate and become null, void and of no effect as of 5:00 p.m. local time in Vancouver, British Columbia, on the Expiry Date. The Expiry Date of an Option shall be the earlier of the date so fixed by the Board at the time the Option is awarded and the date established, if applicable, in sub-paragraphs (a) to (c) below:
| (a) | Death In the event that the Option Holder should die while he or she is still a Director (if he or she holds his or her Option as Director) or Employee or Consultant (if he or she holds his or her Option as Employee or Consultant), the Expiry Date shall be six (6) months from the date of death of the Option Holder; or |
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| (b) | Ceasing to Hold Office In the event that the Option Holder holds his or her Option as Director of the Corporation and such Option Holder ceases to be a Director of the Corporation other than by reason of death, the Expiry Date of the Option shall be the 90th day following the date the Option Holder ceases to be a Director of the Corporation unless the Option Holder ceases to be a Director of the Corporation but continues to |
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be engaged by the Corporation as an Employee, in
which case the Expiry Date shall remain unchanged, or unless the Option
Holder ceases to be a Director of the Corporation as a result of: |
| (i) | ceasing to meet the qualifications set forth in the
Company Act (British Columbia); or |
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| (ii) | a resolution having been passed by the members of
the Corporation pursuant to the Company Act (British Columbia);
or |
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| (iii) | by order of the British Columbia Registrar of Companies,
British Columbia Securities Commission, the Exchange or any other regulatory
body having jurisdiction to so order, in which case the Expiry Date shall
be the date the Option Holder ceases to be a Director of the Corporation.
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| (c) | Ceasing to be Employed or a Consultant In the event that the Option Holder holds his or her Option as an Employee or Consultant of the Corporation and such Option Holder ceases to be an Employee or Consultant of the Corporation other than by reason of death, the Expiry Date of the Option shall be the 90th day following the date the Option Holder ceases to be an Employee or Consultant of the Corporation unless the Option Holder ceases to be an Employee or Consultant of the Corporation as a result of: |
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| (i) | termination for cause or, in the case of a Consultant,
breach of contract; or |
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| (ii) | by order of the British Columbia Registrar of Companies,
British Columbia Securities Commission, the Exchange or any other regulatory
body having jurisdiction to so order, |
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| in which case the Expiry Date shall be the date the Option Holder ceases to be an Employee or Consultant of the Corporation. | ||
Notwithstanding the foregoing, the Expiry Date for
Options granted to any Option Holder engaged in investor relations activities
shall be the 30th day following the date that the Option Holder ceases
to be employed in such capacity. |
3.5 Exercise Price
The Exercise Price shall be that price per share, as determined by the Board in its sole discretion and announced as of the Award Date, at which an Option Holder may purchase a Share upon the exercise of an Option, and shall not be less than the closing price of the Corporation’s Shares traded through the facilities of the Exchange (or, if the Shares are no longer listed for trading on the Exchange, then such other exchange or quotation system on which the Shares are listed or quoted for trading) on the day preceding the Award Date, less any discount permitted by the Exchange, or such other price as may be required by the Exchange.
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3.6 Assignment of Options
Options may not be assigned or transferred, provided however that the Personal Representative of an Option Holder may, to the extent permitted by paragraph 4.1, exercise the Option within the Exercise Period.
3.7 Adjustments
If prior to the complete exercise of any Option the Shares are consolidated, subdivided, converted, exchanged or reclassified or in any way substituted for (collectively the “Event”), an Option, to the extent that it has not been exercised, shall be adjusted by the Board in accordance with such Event in the manner the Board deems appropriate. No fractional Shares shall be issued upon the exercise of any Option and accordingly, if as a result of the Event, 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 with respect to the fractional interest so disregarded. Additionally, no lots of Shares in an amount less than 500 Shares shall be issued upon the exercise of the Option unless such amount of Shares represents the balance left to be exercised under the Option.
3.8 Vesting
All Options granted pursuant to the Plan will be subject to such vesting requirements as may be prescribed by the Exchange, if applicable, or as may be imposed by the Board. At any time the Corporation is classified as a Tier 2 company or equivalent designation on the Exchange, all Options granted pursuant to the Plan must contain conditions relating to the vesting of the right to exercise an Option granted to any Option Holder, which will provide that the right to purchase Shares under the Option may not be exercised any earlier than the following times (although the Board may impose longer vesting periods):
| Number of Shares | Date After Which the Shares may be
Purchased |
| One Quarter | Award Date |
| One Quarter | Six Months Following Award Date |
| One Quarter | One Year Following Award Date |
| One Quarter | Eighteen Months Following Award Date |
| The Option Certificate representing any such Option will disclose any vesting conditions. | |
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ARTICLE 4
EXERCISE OF OPTION
4.1 Exercise 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 or from time to time during the Exercise Period up to 5:00 p.m. local time in Vancouver, British Columbia on the Expiry Date by delivering to the Administrator an Exercise Notice, the applicable Option Certificate and a certified cheque or bank draft payable to the Corporation in an amount equal to the aggregate Exercise Price of the Shares to be purchased pursuant to the exercise of the Option.
4.2 Issue of Share Certificates
As soon as practicable following the receipt of the Exercise Notice, the Administrator shall cause to be delivered to the Option Holder a certificate for the Shares purchased pursuant to the exercise of the Option. If the number of Shares purchased is less than the number of Shares subject to the Option Certificate surrendered, the Administrator shall forward a new Option Certificate to the Option Holder concurrently with delivery of the aforesaid share certificate for the balance of Shares available under the Option.
4.3 Condition of Issue
The issue of Shares by the Corporation pursuant to the exercise of an Option is subject to this Plan and compliance with the laws, rules and regulations of all regulatory bodies applicable to the issuance and distribution of such Shares and to the listing requirements of any stock exchange or exchanges on which the Shares may be listed. The Option Holder agrees to comply with all such laws, rules and regulations and agrees to furnish to the Corporation any information, report and/or undertakings required to comply with and to fully co-operate with the Corporation in complying with such laws, rules and regulations.
ARTICLE 5
ADMINISTRATION
5.1 Administration
The Plan shall be administered by the Administrator on the instructions of the Board. The Board may make, amend and repeal at any time and from time to time such regulations not inconsistent with the Plan as it may deem necessary or advisable for the proper administration and operation of the Plan and such regulations shall form part of the Plan. The Board may delegate to the Administrator or any Director, officer or employee of the Corporation such administrative duties and powers as it may see fit.
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5.2 Interpretation
The interpretation by the Board of any of the provisions of the Plan and any determination by it pursuant thereto shall be final and conclusive and shall not be subject to any dispute by any Option Holder. No member of the Board or any person acting pursuant to authority delegated by it hereunder shall be liable for any action or determination in connection with the Plan made or taken in good faith and each member of the Board and each such person shall be entitled to indemnification with respect to any such action or determination in the manner provided for by the Corporation.
ARTICLE 6
AMENDMENT AND TERMINATION
6.1 Prospective Amendment
Subject to applicable regulatory and, if required by any relevant law, rule or regulation applicable to the Plan, to shareholder approval, the Board may from time to time amend the Plan and the terms and conditions of any Option thereafter to be granted and, without limiting the generality of the foregoing, may make such amendment for the purpose of meeting any changes in any relevant law, rule or regulation applicable to the Plan, any Option or the Shares or for any other purpose which may be permitted by all relevant laws, rules and regulations provided always that any such amendment shall not alter the terms or conditions of any Option or impair any right of any Option Holder pursuant to any Option awarded prior to such amendment. Notwithstanding the foregoing, the Board may, subject to section 3.8 hereof, amend the terms upon which each Option shall become vested with respect to Shares without further approval of the Exchange, other regulatory bodies having authority over the Company or the Plan or the shareholders.
6.2 Retrospective Amendment
Subject to applicable regulatory and, if required by any relevant law, rule or regulation applicable to the Plan, to shareholder approval, the Board may from time to time retrospectively amend the Plan and, with the consent of the affected Option Holders, retrospectively amend the terms and conditions of any Options which have been previously granted. For greater certainty, the policies of the Exchange currently require that disinterested shareholder approval be obtained for any reduction in the Exercise Price of any Option held by an insider of the Corporation.
6.3 Termination
The Board may terminate the Plan at any time provided that such termination shall not alter the terms or conditions of any Option or impair any right of any Option Holder pursuant to any Option awarded prior to the date of such termination. Notwithstanding the termination of the Plan, the Corporation, Options awarded under the Plan, Option Holders and Shares issuable under Options awarded under the Plan shall continue to be governed by the provisions of the Plan.
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6.4 Agreement
The Corporation and every person to whom an Option is awarded hereunder shall be bound by and subject to the terms and conditions of the Plan.
ARTICLE 7
APPROVALS REQUIRED FOR PLAN
7.1 Approvals Required for Plan
Prior to its implementation by the Corporation, the Plan is subject to approval by the Exchange.
7.2 Substantive Amendments to Plan
Any substantive amendments to the Plan shall be subject to the Corporation first obtaining the approvals of:
| (a) | the shareholders or disinterested shareholders,
as the case may be, of the Corporation at general meeting where required
by the rules and policies of any stock exchange on which the Shares may
be listed for trading; and |
|
| (b) | any stock exchange on which the Shares may be listed
for trading. |
SCHEDULE “A”
U.S. COBALT INC.
STOCK OPTION PLAN OPTION CERTIFICATE
This Certificate is issued pursuant to the provisions of U.S. Cobalt Inc. (the “Corporation”) Stock Option Plan (the “Plan”) and evidences that ____________ (the “Holder”) is the holder of an option (the “Option”) to purchase up to ______________ common shares (the “Shares”) in the capital stock of the Corporation at a purchase price of $ ______________ per Share. Subject to the provisions of the Plan:
| (a) | the Award Date of this Option is _______________________; and | |
| (b) | the Expiry Date of this Option is ________________________. |
The right to purchase Shares under the Option will vest in the Holder in increments over the term of the Option as follows:
| Date | Cumulative Number of Shares which may be Purchased |
This Option may be exercised in accordance with its terms at any time and from time to time from and including the Award Date through to and including up to 5:00 local time in Vancouver, British Columbia on the Expiry Date, by delivery to the Administrator of the Plan an Exercise Notice, in the form provided in the Plan, together with this Certificate and a certified cheque or bank draft payable to “U.S. Cobalt Inc.” in an amount equal to the aggregate of the Exercise Price of the Shares in respect of which the Option is being exercised.
This 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 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 Corporation shall prevail.
The foregoing Option has been awarded this ______________ day of ___________________.
Without prior written consent of the TSX Venture Exchange and compliance with all applicable securities legislation, the securities represented by this certificate and the shares issuable upon the exercise thereof my not be sold, transferred, hypothecated or otherwise traded on or through the facilities of the TSX Venture Exchange or otherwise in Canada or to or for the benefit of a Canadian resident until _____________________ .
U.S. COBALT INC. Per: ____________________________ |
SCHEDULE “B”
EXERCISE NOTICE
| TO: | The Administrator, Stock Option Plan U.S. Cobalt Inc. • [ADDRESS] |
1. Exercise of Option
The undersigned hereby irrevocably gives notice, pursuant to the U.S. Cobalt Inc. (the “Corporation”) Stock Option Plan (the “Plan”), 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. |
Calculation of total Exercise Price:
| (a) | number of Shares to be acquired on exercise: | shares | |||
| (b) | times the Exercise Price per Share: | $ | |||
| Total Exercise Price, as enclosed herewith: | $ |
The undersigned tenders herewith a cheque or bank draft (circle one) in the amount of $___________ , payable to “U.S. Cobalt Inc.” in an amount equal to the total Exercise Price of the Shares, as calculated above, and directs the Corporation to issue the share certificate evidencing the Shares in the name of the undersigned to be mailed to the undersigned at the following address:
DATED the _____________ day of __________________.
| __________________________________________ | __________________________________________ |
| Witness | Signature of Option Holder |
| __________________________________________ | __________________________________________ |
| Name of Witness (Print) | Name of Option Holder (Print) |