Passport Potash Inc.: Exhibit 4.1 - Filed by newsfilecorp.com





PASSPORT POTASH INC. 
(the “Company”) 

 

SHARE OPTION PLAN 

 

Dated for Reference August 25, 2011 

 

ARTICLE 1 
PURPOSE AND INTERPRETATION 

Purpose 

1.1                    The
purpose of this Plan is to advance the interests of the Company by encouraging
equity participation in the Company through the acquisition of Common Shares of
the Company. It is the intention of the Company that this Plan will at all times
be in compliance with TSX Venture Policies (or, if applicable, NEX Policies) and
any inconsistencies between this Plan and TSX Venture Policies (or, if
applicable, NEX Policies) will be resolved in favour of the latter. 

Definitions 

1.2                    In
this Plan 

(a)        Affiliate
means a company that is a parent or subsidiary of the Company, or that is
controlled by the same entity as the Company; 

(b)        Associate has
the meaning set out in the Securities Act; 

(c)        Black-out
Period means an interval of time during which the Company has determined
that one or more Participants may not trade any securities of the Company
because they may be in possession of undisclosed material information pertaining
to the Company, or when in anticipation of the release of quarterly or annual
financials, to avoid potential conflicts associated with a company’s
insider-trading policy or applicable securities legislation, (which, for greater
certainty, does not include the period during which a cease trade order is in
effect to which the Company or in respect of an Insider, that Insider, is
subject); 

(d)        Board means
the board of directors of the Company or any committee thereof duly empowered or
authorized to grant Options under this Plan; 

(e)        Change of
Control includes situations where after giving effect to the contemplated
transaction and as a result of such transaction:




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(i)        any one Person holds
a sufficient number of voting shares of the Company or resulting company to
affect materially the control of the Company or resulting company, or, 

(ii)       any combination of
Persons, acting in concert by virtue of an agreement, arrangement, commitment or
understanding, holds in total a sufficient number of voting shares of the
Company or its successor to affect materially the control of the Company or its
successor,

where such Person or combination of
Persons did not previously hold a sufficient number of voting shares to
materially affect control of the Company or its successor and, in the absence of
evidence to the contrary, any Person or combination of Persons acting in concert
by virtue of an agreement, arrangement, commitment or understanding, holding
more than 20% of the voting shares of the Company or resulting company is deemed
to materially affect control of the Company or resulting company; 

(f)        Common Shares
means the common shares without par value in the capital of the Company
providing such class is listed on the TSX Venture (or, NEX, as the case may be);


(g)        Company means
the company named at the top hereof and includes, unless the context otherwise
requires, all of its Affiliates and successors according to law; 

(h)        Consultant
means an individual or Consultant Company, other than an Employee, Officer or
Director that:

(i)        provides on an
ongoing bona fide basis, consulting, technical, managerial or like services to
the Company or 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 an 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 business and affairs 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 or Consultant Company to be knowledgeable about the business and
affairs of the Company; 

(i)        Consultant
Company means for an individual consultant, a company or partnership of
which the individual is an employee, shareholder or partner; 

(j)        Directors
means the directors of the Company as may be elected from time to time; 

(k)        Discounted
Market Price has the meaning assigned by Policy 1.1 of the TSX Venture
Policies; 




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(l)        Disinterested
Shareholder Approval means approval by a majority of the votes cast by all
the Company’s shareholders at a duly constituted shareholders’ meeting,
excluding votes attached to Common Shares beneficially owned by Insiders who are
Service Providers or their Associates; 

(m)        Distribution
has the meaning assigned by the Securities Act, and generally refers to a
distribution of securities by the Company from treasury; 

(n)        Effective
Date for an Option means the date of grant thereof by the Board; 

(o)        Employee
means:

(i)        an individual who is
considered an employee under the Income Tax Act Canada (i.e. for whom
income tax, employment insurance and CPP deductions must be made at source);


(ii)       an individual who works
full-time for the Company or a subsidiary thereof providing services normally
provided by an employee and who is subject to the same control and direction by
the Company over the details and methods of work as an employee of the Company,
but for whom income tax deductions are not made at source; or 

(iii)      an individual who works
for the Company or its subsidiary 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
over the details and methods of work as an employee of the Company, but for whom
income tax deductions need not be made at source; 

(p)        Exchange Hold
Period has the meaning assigned by Policy 1.1 of the TSX Venture
Policies;

(q)        Exercise
Price means the amount payable per Common Share on the exercise of an
Option, as determined in accordance with the terms hereof;

(r)        Expiry Date
means the day on which an Option lapses as specified in the Option
Commitment therefor or in accordance with the terms of this Plan; 

(s)        Insider means
an insider as defined in the TSX Venture Policies or as defined in securities
legislation applicable to the Company; 

(t)        Investor
Relations Activities has the meaning assigned by Policy 1.1 of the TSX
Venture Policies; 

(u)        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 enterprise of the Company, but excluding a Person
engaged in Investor Relations Activities; 




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(v)        Market Price
has the meaning assigned by Policy 1.1 of the TSX Venture Policies; 

(w)        NEX means a
separate board of the TSX Venture for companies previously listed on the TSX
Venture or the Toronto Stock Exchange which have failed to maintain compliance
with the ongoing financial listing standards of those markets; 

(x)        NEX Issuer
means a company listed on NEX; 

(y)        NEX Policies
means the rules and policies of NEX as amended from time to time; 

(z)        Officer means
a Board appointed officer of the Company; 

(aa)      Option means the
right to purchase Common Shares granted hereunder to a Service Provider; 

(bb)     
Option Commitment means the notice of grant of an Option delivered by the
Company hereunder to a Service Provider and substantially in the form of
Schedule A attached hereto; 

(cc)     
Optioned Shares means Common Shares that may be issued in the future to a
Service Provider upon the exercise of an Option; 

(dd)     
Optionee means the recipient of an Option hereunder; 

(ee)    
 Outstanding Shares means at the relevant time, the number of issued
and outstanding Common Shares of the Company from time to time; 

(ff)     
Participant means a Service Provider that becomes an Optionee; 

(gg)     
Person includes a company, any unincorporated entity, or an individual;


(hh)     
Plan means this share option plan, the terms of which are set out herein
or as may be amended; 

(ii)       Plan Shares means
the total number of Common Shares which may be reserved for issuance as Optioned
Shares under the Plan as provided in §2.2; 

(jj)       Regulatory Approval
means the approval of the TSX Venture and any other securities regulatory
authority that has lawful jurisdiction over the Plan and any Options issued
hereunder; 

(kk)     
Securities Act means the Securities Act, R.S.B.C. 1996, c. 418, or any
successor legislation; 

(ll)       Service Provider
means a Person who is a bona fide Director, Officer, Employee, Management
Company Employee, Consultant or Company Consultant, and also includes a company,
100% of the share capital of which is beneficially owned by one or more Service
Providers; 




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(mm)     
Share Compensation Arrangement means any Option under this Plan but also
includes any other stock option, stock option plan, employee stock purchase plan
or any other compensation or incentive mechanism involving the issuance or
potential issuance of Common Shares to a Service Provider; 

(nn)     
Shareholder Approval means approval by a majority of the votes cast by
eligible shareholders of the Company at a duly constituted shareholders’
meeting; 

(oo)     
Take Over Bid means a take over bid as defined in Multilateral Instrument
62-104 (Take-over Bids and Issuer Bids) or the analogous provisions of
securities legislation applicable to the Company; 

(pp)    
 TSX Venture means the TSX Venture Exchange and any successor
thereto; and 

(qq)     
TSX Venture Policies means the rules and policies of the TSX Venture as
amended from time to time. 

Other Words and Phrases 

1.3                   
Words and phrases used in this Plan but which are not defined in the Plan, but
are defined in the TSX Venture Policies (and, if applicable, the NEX Policies),
will have the meaning assigned to them in the TSX Venture Policies (and, if
applicable, NEX Policies). 

Gender 

1.4                    Words
importing the masculine gender include the feminine or neuter, words in the
singular include the plural, words importing a corporate entity include
individuals, and vice versa. 

ARTICLE 2 
SHARE OPTION PLAN 

Establishment of Share Option Plan 

2.1                    The
Plan is hereby established to recognize contributions made by Service Providers
and to create an incentive for their continuing assistance to the Company and
its Affiliates.

Maximum Plan Shares 

2.2                   
The maximum aggregate number of Plan Shares that may be reserved for issuance
under the Plan at any point in time is 10% of the Outstanding Shares at the time
Plan Shares are reserved for issuance as a result of the grant of an Option,
less any Common Shares reserved for issuance under share options granted under
Share Compensation Arrangements other than this Plan, unless this Plan is
amended pursuant to the requirements of the TSX Venture Policies (and, if
applicable, NEX Policies). 




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Eligibility 

2.3                   
Options to purchase Common Shares may be granted hereunder to Service Providers
of the Company, or its affiliates, from time to time by the Board. Service
Providers that are not individuals will be required to undertake in writing not
to effect or permit any transfer of ownership or option of any of its
securities, or to issue more of its securities (so as to indirectly transfer the
benefits of an Option), as long as such Option remains outstanding, unless the
written permission of the TSX Venture and the Company is obtained. 

Options Granted Under the Plan 

2.4                   
All Options granted under the Plan will be evidenced by an Option Commitment in
the form attached as Schedule A, showing the number of Optioned Shares, the term
of the Option, a reference to vesting terms, if any, and the Exercise Price.


2.5                   
Subject to specific variations approved by the Board, all terms and conditions
set out herein will be deemed to be incorporated into and form part of an Option
Commitment made hereunder. 

Limitations on Issue 

2.6                    Subject
to §2.10, the following restrictions on issuances of Options are applicable
under the Plan: 

(a)        no Service Provider
can be granted an Option if that Option would result in the total number of
Options, together with all other Share Compensation Arrangements granted to such
Service Provider in the previous 12 months, exceeding 5% of the Outstanding
Shares, unless the Company has obtained Disinterested Shareholder Approval to do
so; 

(b)        the aggregate number
of Options granted to all Service Providers conducting Investor Relations
Activities in any 12-month period cannot exceed 2% of the Outstanding Shares,
calculated at the time of grant, without the prior consent of the TSX Venture
(or NEX, as the case may be); and 

(c)        the aggregate number
of Options granted to any one Consultant in any 12 month period cannot exceed 2%
of the Outstanding Shares, calculated at the time of grant, without the prior
consent of the TSX Venture. 

Options Not Exercised 

2.7                    In
the event an Option granted under the Plan expires unexercised or is terminated
by reason of dismissal of the Optionee for cause or is otherwise lawfully
cancelled prior to exercise of the Option, the Optioned Shares that were
issuable thereunder will be returned to the Plan and will be eligible for
re-issuance. 




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Powers of the Board 

2.8                  
 The Board will be responsible for the general administration of the Plan
and the proper execution of its provisions, the interpretation of the Plan and
the determination of all questions arising hereunder. Without limiting the
generality of the foregoing, the Board has the power to 

	 	(a) 	
      allot Common Shares for issuance in connection with the
      exercise of Options;

	 	 	 
	 	(b) 	
      grant Options hereunder;



(c)        subject to any
necessary Regulatory Approval, amend, suspend, terminate or discontinue the
Plan, or revoke or alter any action taken in connection therewith, except that
no general amendment or suspension of the Plan will, without the prior written
consent of all Optionees, alter or impair any Option previously granted under
the Plan unless the alteration or impairment occurred as a result of a change in
the TSX Venture Policies or the Company’s tier classification thereunder; and


(d)        delegate all or such
portion of its powers hereunder as it may determine to one or more committees of
the Board, either indefinitely or for such period of time as it may specify, and
thereafter each such committee may exercise the powers and discharge the duties
of the Board in respect of the Plan so delegated to the same extent as the Board
is hereby authorized so to do. 

Amendment of the Plan by the Board of Directors 

2.9                    Subject
to the requirements of the TSX Venture Policies and the prior receipt of any
necessary Regulatory Approval, the Board may in its absolute discretion, amend
or modify the Plan or any Option granted as follows: 

(a)        it may make
amendments which are of a typographical, grammatical or clerical nature only;


(b)        it may change the
vesting provisions of an Option granted hereunder, subject to prior written
approval of the TSX Venture, if applicable; 

(c)        it may change the
termination provision of an Option granted hereunder which does not entail an
extension beyond the original Expiry Date of such Option; 

(d)        it may make
amendments necessary as a result in changes in securities laws applicable to the
Company; 

(e)        if the Company
becomes listed or quoted on a stock exchange or stock market senior to the TSX
Venture, it may make such amendments as may be required by the policies of such
senior stock exchange or stock market; and 

(f)        it may make such
amendments as reduce, and do not increase, the benefits of this Plan to Service
Providers. 




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Amendments Requiring Disinterested Shareholder Approval


2.10                  The
Company will be required to obtain Disinterested Shareholder Approval prior to
any of the following actions becoming effective: 

(a)        the Plan, together
with all of the Company’s other previous Share Compensation Arrangements, could
result at any time in: 

(i)        the aggregate number
of Common Shares reserved for issuance under Options granted to Insiders
exceeding 10% of the Outstanding Shares in the event that this Plan is amended
to reserve for issuance more than 10% of the Outstanding Shares;

(ii)       the number of Optioned
Shares issued to Insiders within a one-year period exceeding 10% of the
Outstanding Shares in the event that this Plan is amended to reserve for
issuance more than 10% of the Outstanding Shares; or,

(iii)    
 the issuance to any one Optionee, within a 12-month period, of a number of
Common Shares exceeding 5% of the Outstanding Shares; or 

(b)        any reduction in the
Exercise Price of an Option previously granted to an Insider. 

Options Granted Under the Company’s Previous Share Option
Plans 

2.11                  Any
option granted pursuant to a stock option plan previously adopted by the Board
which is outstanding at the time this Plan comes into effect shall be deemed to
have been issued under this Plan and shall, as of the date this Plan comes into
effect, be governed by the terms and conditions hereof. 

ARTICLE 3 
TERMS AND CONDITIONS OF OPTIONS 

Exercise Price 

3.1                    The
Exercise Price of an Option will be set by the Board at the time such Option is
allocated under the Plan, and cannot be less than the Discounted Market Price.


Term of Option 

3.2                    An
Option can be exercisable for a maximum of 10 years from the Effective Date.


Option Amendment 

3.3                   
Subject to §2.10(b), the Exercise Price of an Option may be amended only if at
least six (6) months have elapsed since the later of the date of commencement of
the term of the Option, the date the Common Shares commenced trading on the TSX
Venture, or the date of the last amendment of the Exercise Price. 




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3.4                    An
Option must be outstanding for at least one year before the Company may extend
its term, subject to the limits contained in §3.2. 

3.5                    Any
proposed amendment to the terms of an Option must be approved by the TSX Venture
prior to the exercise of such Option. 

Vesting of Options 

3.6                   
Subject to §3.7, vesting of Options shall be at the discretion of the Board and,
with respect to any particular Options granted under the Plan, in the absence of
a vesting schedule being specified at the time of grant, all such Options shall
vest immediately. Where applicable, vesting of Options will generally be subject
to: 

(a)        the Service Provider
remaining employed by or continuing to provide services to the Company or any of
its Affiliates as well as, at the discretion of the Board, achieving certain
milestones which may be defined by the Board from time to time or receiving a
satisfactory performance review by the Company or any of its Affiliates during
the vesting period; or 

(b)        the Service Provider
remaining as a Director of the Company or any of its Affiliates during the
vesting period. 

Vesting of Options Granted to Consultants Conducting
Investor Relations Activities 

3.7                   
Notwithstanding §3.6, Options granted to Consultants conducting Investor
Relations Activities will vest: 

(a)        over a period of not
less than 12 months as to 25% on the date that is three months from the date of
grant, and a further 25% on each successive date that is three months from the
date of the previous vesting; or 

(b)        such longer vesting
period as the Board may determine. 

Effect of Take Over Bid 

3.8                    If
a Take Over Bid is made to the shareholders generally then the Company shall
immediately upon receipt of notice of the Take Over Bid, notify each Optionee
currently holding an Option of the Take Over Bid, with full particulars thereof
whereupon such Option may, notwithstanding §3.6 and §3.7 or any vesting
requirements set out in the Option Commitment, be immediately exercised in whole
or in part by the Optionee, subject to approval of the TSX Venture (or the NEX,
as the case may be) for vesting requirements imposed by the TSX Venture
Policies. 

Extension of Options Expiring During Blackout Period


3.9                    Should
the Expiry Date for an Option fall within a Blackout Period, or within nine (9)
Business Days following the expiration of a Blackout Period, such Expiry Date
shall, subject to approval of the TSX Venture (or the NEX, as the case may be),
be automatically extended without any further act or formality to that day which
is the tenth (10th) Business Day after the end of the Blackout Period, such tenth Business Day to be
considered the Expiry Date for such Option for all purposes under the Plan.
Notwithstanding §2.8, the tenth Business Day period referred to in this §3.9 may
not be extended by the Board. 




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Optionee Ceasing to be Director, Employee or Service
Provider 

3.10                  Options
may be exercised after the Service Provider has left his/her employ/office or
has been advised by the Company that his/her services are no longer required or
his/her service contract has expired, until the term applicable to such Options
expires, except as follows: 

(a)        in the case of the
death of an Optionee, any vested Option held by him at the date of death will
become exercisable by the Optionee’s lawful personal representatives, heirs or
executors until the earlier of one year after the date of death of such Optionee
and the date of expiration of the term otherwise applicable to such Option; 

(b)        an Option granted to
any Service Provider will expire 90 days (or such other time, not to exceed one
year, as shall be determined by the Board as at the date of grant or agreed to
by the Board and the Optionee at any time prior to expiry of the Option) after
the date the Optionee ceases to be employed by or provide services to the
Company, and only to the extent that such Option was vested at the date the
Optionee ceased to be so employed by or to provide services to the Company; and


(c)        in the case of an
Optionee being dismissed from employment or service for cause, such Optionee’s
Options, whether or not vested at the date of dismissal will immediately
terminate without right to exercise same. 

Non Assignable 

3.11                  Subject
to §3.10, all Options will be exercisable only by the Optionee to whom they are
granted and will not be assignable or transferable. 

Adjustment of the Number of Optioned Shares 

3.12                  The
number of Common Shares subject to an Option will be subject to adjustment in
the events and in the manner following: 

(a)        in the event of a
subdivision of Common Shares as constituted on the date hereof, at any time
while an Option is in effect, into a greater number of Common Shares, the
Company will thereafter deliver at the time of purchase of Optioned Shares
hereunder, in addition to the number of Optioned Shares in respect of which the
right to purchase is then being exercised, such additional number of Common
Shares as result from the subdivision without an Optionee making any additional
payment or giving any other consideration therefor; 

(b)        in the event of a
consolidation of the Common Shares as constituted on the date hereof, at any
time while an Option is in effect, into a lesser number of Common Shares, the
Company will thereafter deliver and an Optionee will accept, at the time of
purchase of Optioned Shares hereunder, in lieu of the number of Optioned Shares
in respect of which the right to purchase is then being
exercised, the lesser number of Common Shares as result from the consolidation;




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(c)        in the event of any
change of the Common Shares as constituted on the date hereof, at any time while
an Option is in effect, the Company will thereafter deliver at the time of
purchase of Optioned Shares hereunder the number of shares of the appropriate
class resulting from the said change as an Optionee would have been entitled to
receive in respect of the number of Common Shares so purchased had the right to
purchase been exercised before such change; 

(d)        in the event of a
capital reorganization, reclassification or change of outstanding equity shares
(other than a change in the par value thereof) of the Company, a consolidation,
merger or amalgamation of the Company with or into any other company or a sale
of the property of the Company as or substantially as an entirety at any time
while an Option is in effect, an Optionee will thereafter have the right to
purchase and receive, in lieu of the Optioned Shares immediately theretofore
purchasable and receivable upon the exercise of the Option, the kind and amount
of shares and other securities and property receivable upon such capital
reorganization, reclassification, change, consolidation, merger, amalgamation or
sale which the holder of a number of Common Shares equal to the number of
Optioned Shares immediately theretofore purchasable and receivable upon the
exercise of the Option would have received as a result thereof. The subdivision
or consolidation of Common Shares at any time outstanding (whether with or
without par value) will not be deemed to be a capital reorganization or a
reclassification of the capital of the Company for the purposes of this §3.12;


(e)        an adjustment will
take effect at the time of the event giving rise to the adjustment, and the
adjustments provided for in this section are cumulative; 

(f)        the Company will not
be required to issue fractional shares in satisfaction of its obligations
hereunder. Any fractional interest in a Common Share that would, except for the
provisions of this §3.12, be deliverable upon the exercise of an Option will be
cancelled and not be deliverable by the Company; and 

(g)        if any questions
arise at any time with respect to the Exercise Price or number of Optioned
Shares deliverable upon exercise of an Option in any of the events set out in
this §3.12, such questions will be conclusively determined by the Company’s
auditors, or, if they decline to so act, any other firm of Chartered
Accountants, in Vancouver, British Columbia (or in the city of the Company’s
principal executive office) that the Company may designate and who will be
granted access to all appropriate records and such determination will be binding
upon the Company and all Optionees. 

ARTICLE 4 
COMMITMENT AND EXERCISE PROCEDURES


Option Commitment 

4.1                    Upon
grant of an Option hereunder, an authorized officer of the Company will deliver
to the Optionee an Option Commitment detailing the terms of such Options and
upon such delivery the Optionee will be subject to the Plan and have
the right to purchase the Optioned Shares at the Exercise Price set out therein
subject to the terms and conditions hereof, including any additional
requirements contemplated with respect to the payment of required withholding
taxes on behalf of Optionees. 




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Manner of Exercise 

4.2                    An
Optionee who wishes to exercise his Option may do so by delivering 

(a)        a written notice to
the Company specifying the number of Optioned Shares being acquired pursuant to
the Option; and 

(b)        a certified cheque,
wire transfer or bank draft payable to the Company for the aggregate Exercise
Price for the Optioned Shares being acquired, plus any required withholding tax
amount subject to §4.3. 

Tax Withholding and Procedures 

4.3                    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 Optionee
who wishes to exercise an Option must, in addition to following the procedures
set out in§4.2 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; 

and must in all other respects follow any related procedures
and conditions imposed by the Company. 

Delivery of Optioned Shares and Hold Periods 

4.4                   
As soon as practicable after receipt of the notice of exercise described in §4.2
and payment in full for the Optioned Shares being acquired, the Company will
direct its transfer agent to issue to the Optionee the appropriate number of
Optioned Shares. If the Exercise Price is set below the then current market
price of the Common Shares on the TSX Venture at the time of grant, the
certificate representing the Optioned Shares or written notice in the case of
uncertificated shares will include a legend stipulating that the Optioned Shares
issued are subject to a four-month Exchange Hold Period commencing the date of
the Option Commitment. 




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ARTICLE 5 
GENERAL 

Employment and Services 

5.1                   
Nothing contained in the Plan will confer upon or imply in favour of any
Optionee any right with respect to office, employment or provision of services
with the Company, or interfere in any way with the right of the Company to
lawfully terminate the Optionee’s office, employment or service at any time
pursuant to the arrangements pertaining to same. Participation in the Plan by an
Optionee is voluntary. 

No Representation or Warranty 

5.2                    The
Company makes no representation or warranty as to the future market value of
Common Shares issued in accordance with the provisions of the Plan or to the
effect of the Income Tax Act (Canada) or any other taxing statute
governing the Options or the Common Shares issuable thereunder or the tax
consequences to a Service Provider. Compliance with applicable securities laws
as to the disclosure and resale obligations of each Participant is the
responsibility of each Participant and not the Company. 

Interpretation 

5.3                    The
Plan will be governed and construed in accordance with the laws of the Province
of British Columbia. 

Continuation of Plan 

5.4                    The
Plan will become effective from and after August 25, 2011, and will remain
effective provided that the Plan, or any amended version thereof receives
Shareholder Approval at each annual general meeting of the holders of Common
Shares of the Company subsequent to August 25, 2011.

Amendment of the Plan 

5.5                   
The Board reserves the right, in its absolute discretion, to at any time amend,
modify or terminate the Plan with respect to all Common Shares in respect of
Options which have not yet been granted hereunder. Any amendment to any
provision of the Plan will be subject to any necessary Regulatory Approvals
unless the effect of such amendment is intended to reduce (but not to increase)
the benefits of this Plan to Service Providers. 




SCHEDULE A 

SHARE OPTION PLAN 

OPTION COMMITMENT 

Notice is hereby given that, effective this ________day of
________________, __________ (the “Effective Date”) PASSPORT POTASH INC.
(the “Company”) has granted to ___________________________________________ (the
“Optionee”), an Option to acquire ______________ Common Shares (“Optioned
Shares”) up to 5:00 p.m. Vancouver Time on the __________ day of
____________________, __________ (the “Expiry Date”) at an Exercise Price of
Cdn$____________ per share. 

Optioned Shares are to vest immediately. 

OR 

Optioned Shares will vest [INSERT VESTING SCHEDULE AND TERMS]


The Option shall expire days after the Optionee ceases to be
employed by or provide services to the Company. 

The grant of the Option evidenced hereby is made subject to the
terms and conditions of the Plan, which are hereby incorporated herein and form
part hereof. 

To exercise your Option, deliver a written notice specifying
the number of Optioned Shares you wish to acquire, together with a certified
cheque, wire transfer or bank draft payable to the Company for the aggregate
Exercise Price. A certificate or written notice in the case of uncertificated
shares for the Optioned Shares so acquired will be issued by the transfer agent
as soon as practicable thereafter and may bear a minimum four month
non-transferability legend from the date of this Option Commitment, the text of
which is as follows. [Note: A Company may grant stock options without a hold
period, provided the exercise price of the options is set at or above the market
price of the Company’s shares. If a four month hold period is applicable, the
following legend must be placed on the certificate or the written notice in the
case of uncertificated shares.] 


  
    "WITHOUT PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE
      AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES
      REPRESENTED BY THIS CERTIFICATE MAY 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
      12:00 A.M. (MIDNIGHT) ON [insert date 4 months from the date of grant]”.
    

  



The Company and the Optionee represent that the Optionee under
the terms and conditions of the Plan is a bona fide Service Provider (as defined
in the Plan), entitled to receive Options under TSX Venture Policies. 




- 2 - 

The Optionee also acknowledges and consents to the collection
and use of Personal Information (as defined in the Policies of the TSX Venture
Exchange) by both the Company and the TSX Venture (or the NEX, as the case may
be) as more particularly set out in the Acknowledgement - Personal Information
in use by the TSX Venture (or the NEX, as the case may be) on the date of this
Option Commitment. 

PASSPORT POTASH INC. 

	 	 
	Authorized Signatory 	 
	 	 
	 	 
	[insert name of optionee] 	 
	 	 
	 	 
	Signature of Optionee