Filed by Automated Filing Services Inc. (604) 609-0244 - Lexington Energy Services Inc. - Exhibit 10.1







	Exhibit 10.1
	 
	Lexington Energy Services Inc. 
	 
	2007
      NON-QUALIFIED STOCK OPTION PLAN 


SECTION 1 
INTRODUCTION

1.1      Establishment.
Lexington Energy Services Inc. (the “Company”), a Nevada corporation,
hereby establishes the Lexington Energy Services Inc. 2007 Non-qualified Stock
Option Plan (the “Plan”) for employees, consultants, directors, and other
persons associated with the Company and any of the Company’s subsidiaries, whom
the Board wishes to incite Lexington Energy Services Inc., together with its
affiliated corporations, as defined in Section 2.1 hereafter, are referred to as
the “Company”, except where the context otherwise requires.

1.2      Purposes. The purposes
of this Plan are to (i) attract and retain the best available personnel for
positions of responsibility within the Company (ii) provide incentives to
employees, officers, and management of the Company, (iii) provide Directors,
Consultants and Advisors of the Company with an opportunity to acquire a
proprietary interest in the Company to encourage their continued provision of
services to the Company, and to provide such persons with incentives and rewards
for superior performance more directly linked to the profitability of the
Company's business and increases in shareholder value, and (iv) generally to
promote the success of the Company's business and the interests of the Company
and all of its stockholders, through the grant of options to purchase shares of
the Company's Common Stock. 

          Incentive
benefits granted hereunder may be non-qualified stock options. The type of
options granted shall be determined by the board or the Compensation Committee
and reflected in the terms of written agreements.

SECTION 2 
DEFINITIONS

2.1      Definitions.
The following terms will have the meanings set forth below:

“Affiliated Corporation” means any corporation or other
entity (including, but not limited to, a partnership) that is affiliated with
the Company through stock ownership or otherwise, and includes subsidiaries of
the Company.

“Board” means the Board of Directors of the Company.

“Code” means the Internal Revenue Code of the USA or the
Income Tax Act of Canada, as it may be amended form time to time, and as
appropriate to the context and as applies to the Eligible Participant.

“Effective Date” means the effective date of the Plan,
which will be upon approval of the shareholders of the Company.

“Eligible Participants” means any employees (including,
without limitation, all officers), directors, consultants and any other persons
whom the Board wishes to incite to contribute to the fortunes of the Company and
permitted by law or policy to receive options.

“Fair Value” means the value of a Share of Stock as
determined by the Stock Option Committee acting in good faith and in its sole
discretion in accordance with this Agreement. Notwithstanding the above, if the
Stock is actively traded in an established stock or quotation market, “Fair
Value” 




2

will mean the officially quoted closing price of the Stock on
such exchange (a “National Exchange”) on a particular date selected by the Stock
Option Committee in establishing the purchase price of Shares of the Option.

“Stock Option Committee” means the Compensation
Committee of the Company, unless the Board strikes a separate committee, and in
the absence of an empowered committee shall mean the Board.

“Non-Statutory Option” means an Option granted under
this Plan in accordance with the requirements of the Code, as amended from time
to time.

“Option” means a right to purchase Stock of the Company
granted under this Plan at a stated price for a specified period of time.

“Option Price” means the price at which shares of Stock
subject to an Option may be purchased, determined in accordance with this
Agreement and as established by the Stock Option Committee and contracted by the
Option contract.

“Option Holder” means an Eligible Participant designated
by the Stock Option Committee from time to time during the term of the Plan to
receive one or more Options under the Plan.

“Plan Limit” shall have the meaning set forth in section
4.1. “Share” or “Shares” means a share or shares of Stock.
“Stock” means the common stock of the Company.

2.2      Gender and
Number. Except where otherwise indicated by the context, the masculine
gender also will include the feminine gender, and the definition of any term
herein in the singular also will include the plural.

SECTION 3 
PLAN ADMINISTRATION

3.1      Stock
Option Committee. The Stock Option Committee will administer the Plan. In
accordance with the provisions of the Plan, the Stock Option Committee will, in
accordance with policies ordered by the Board but in the absence of board
direction in its sole discretion, select the Eligible Participants to whom
Options will be granted, the form of each Option, the amount of each Option, and
any other terms and conditions of each Option as the Stock Option Committee may
deem necessary and consistent with the terms of the Plan. The Stock Option
Committee will determine the form or forms of the agreements with Option
Holders. The agreements will evidence the particular provisions, terms,
conditions, rights and duties of the Company and the Option Holders with respect
to Options granted pursuant to the Plan, which provisions need not be identical
except as may be provided herein. The Stock Option Committee may from time to
time adopt such rules and regulations for carrying out the purposes of the Plan
as it may deem proper and in the best interests of the Company. The Stock Option
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any agreement entered into hereunder in the
manner and to the extent it may deem expedient and it will be the sole and final
judge of such expediency. No member of the Stock Option Committee will be liable
for any action or determination made in good faith, and all members of the
Committee will, in addition to their rights as directors, be fully protected by
the Company with respect to any such action, determination or interpretation.
The determinations, interpretations and other actions of the Stock Option
Committee pursuant to the provisions of the Plan will be binding and conclusive
for all purposes and on all persons.




3

SECTION 4
STOCK SUBJECT TO THE PLAN AND EXCEPTIONS

4.1      Plan limit.
A maximum of 2,000,000 Shares (“Plan Limit”) are authorized for
issuance under the Plan in accordance with the provisions of the Plan. Shares
that are issued upon the exercise of Options will be deducted from the Plan
Limit and such Plan Limit shall not be increased without approval of the board
or, if shareholders of the Company have so required, without approval of the
shareholders of the Company. While any Options are outstanding, the Company will
retain as authorized and unissued Stock at least the number of Shares from time
to time required under the provisions of the Plan or otherwise assure itself of
its ability to perform its obligations hereunder.

4.2      Unused and
Forfeited Stock. Any Shares that are subject to an Option under this Plan
that are not used because the terms and conditions of the Option are not met or
any Shares that are used for full or partial payment of the purchase price of
Shares with respect to which an Option is exercised or any Shares retained by
the Company for any purpose of this Plan automatically will be returned to the
Plan Limit and become available for again for use under the Plan.

4.3      Adjustments for
Stock Split, Stock Dividend, Etc. If the Company at any time increases or
decreases the number of its outstanding Shares of Stock, or changes in any way
the rights and privileges of such Shares by means of the Payment of a Stock
dividend or any other distribution upon such Shares payable in Stock, or through
a stock split, subdivision, consolidation, combination, reclassification or
recapitalization involving the Stock, then, in relation to the Stock that is
affected by the above events, the provisions of this Section 4.3 will apply. In
such event, the numbers, rights and privileges of the following will be
increased, decreased or changed in like manner as if such shares had been issued
and outstanding, fully paid and non-assessable at the time of such event:

(i)      adjustment to the Shares of
Stock as to which Options may be granted under the Plan; and 

(ii)      adjustment to the exercise
price of each outstanding Option granted hereunder.

4.4      General
Adjustment Rules. If any adjustment or substitution provided for in this
Section 4 will result in the creation of a fractional Share under any Option,
the number of Shares subject to the Option will be rounded to the next higher
Share.

4.5      Determination by
Stock Option Committee, Etc. Adjustments under this Section 4 will be made
by the Stock Option Committee, whose determinations with regard thereto will be
final and binding upon all parties.

4.6      Options
Exceptional to Plan. With the concurrence of the board, the Stock Option
Committee may grant Options outside the Plan or within the Plan but in excess of
the Plan Limit, such that the available Plan Limit is not diminished, for
exceptional circumstances or to acquire or retain personnel or achieve important
goals or strategic targets considered important to the Company but which cannot
reasonably be fit into the Plan Limit or the Plan due to insufficiency of
available Plan Options, legal impediments whereby the recipient cannot or is
best not included in the Plan, or other purposes or reasons considered
appropriate to the board.




4

SECTION 5 
REORGANIZATION OR LIQUIDATION

5.1      Reorganization
and Options. In the event that the Company is merged or consolidated with
another corporation (other than a merger or consolidation in which the Company
is the continuing corporation and that does not result in any reclassification
or change of outstanding Shares), or if all or substantially all of the assets
or control of the outstanding voting stock of the Company is acquired by any
other corporation, business entity or person (other than by a sale or conveyance
in which the Company continues as a holding company of an entity or entities
that conduct the business of businesses formerly conducted by the Company), or
in case of a reorganization (other than a reorganization under the United States
Bankruptcy Code) or liquidation of the Company, the Stock Option Committee will
have the power and discretion to prescribe the terms and conditions for the
exercise or modification of any outstanding Options granted hereunder. By way of
illustration, and not by way of limitation, the Stock Option Committee may
provide for the complete or partial acceleration of the dates of exercise of the
Options, or may provide that such Options will be exchanged or converted into
options to acquire securities of the surviving or acquiring cooperation, or may
provide for a payment or distribution in respect of outstanding Options (or the
portion thereof that currently is exercisable) in cancellation thereof. The
Stock Option Committee may provide that Options must be exercised in connection
with the closing of such transaction and that if not so exercised such Options
will expire. Any such determinations by the Stock Option Committee may be made
generally with respect to all Option Holders, or may be made on a case-by-case
base with respect to particular Option Holders. The provisions of this Section 5
will not apply to any transaction undertaken for the purpose of reincorporating
the Company under the laws of another jurisdiction, if such transaction does not
materially affect the beneficial ownership of the Company’s capital stock. Any
determination by the Stock Option Committee hereunder shall not amend the terms
of any Option without the consent of the Option Holder unless, in the opinion of
the Committee acting reasonably, such amendment is necessary to permit the
alterations to the Company to be effected and such is in the interest of
shareholders generally.

SECTION 6 
STOCK OPTIONS

6.1      Grant of
Options. An Eligible Participant may be granted one or more Options.
Options granted under the Plan will be Non-Statutory Options.

6.2      Option
Agreements. Each Option granted under the Plan will be evidenced by a
written stock option agreement that will be entered into by the Company and the
Eligible Participant to whom the Option is granted (the “Option Holder”), and
will be deemed to contain the following terms and conditions, unless other terms
and conditions inconsistent therewith have been entered into the Option
agreement. In the event of inconsistency between the provisions of the Plan and
any Option agreement entered into, the provisions of the Option agreement will
be considered to have been determined to be exceptional from the below and such
Option Agreement shall govern where not inconsistent with law. However, the
provisions of the Plan will govern where the agreement omits to provide for a
matter governed by the Plan and the agreement will not be incomplete nor
unenforceable if it fails to provide for a matter provided by the terms of this
Plan as such shall be incorporated by reference:

(a) Number of Shares. Each Stock option agreement will
state that it covers a specified number of Shares, as determined by the Stock
Option Committee and the agreement. If the agreement fails to state the number
then it shall be the number set forth in the minutes of the Stock Option
Committee.

(b) Price. The price at which each Share covered by an
Option may be purchased will be determined by the Stock Option Committee and set
forth in the Stock Option agreement. Where 




5

the price shall be omitted the price shall be the Fair Market
Value of the Stock on the date set forth at the beginning of the Option
agreement.

(c) Vesting Period. Each Stock Option will state the
time and the amount of the Shares of the Option which vest, and are exercisable
thereafter, at specified times during the Option Period. Unless otherwise
provided in the Option agreement, Options will vest and be exercisable for types
of Option Holders as follows:

(i)      Directors and senior
officers to Vice-President - 50% of the amount of the Shares under Option
upon granting and 50% twelve months thereafter;

(ii)      Employees Generally
- 10% at the end of the later of any probation period pursuant to which the
Employee is continued or three months from the date of engagement and 5% at the
end of each calendar month thereafter; and

(iii)     
Other Option Holders - 10% at the end of the first 30 days of engagement,
20% upon completion of 50% of the term, where a particular term, or upon 50% of
project completion, where project contract specific, and the remainder upon, and
for a period of 30 days thereafter, the Company certifying substantial
satisfaction, acting reasonably, with contract and/or project completion.

(d) Duration of Options. Each Stock option agreement
will state the period of time within which the Option may be exercised by the
Option Holder (the “Option Period”). The Option Period shall expire not more
than five years from the date an Option is granted. Unless otherwise stated,
director and senior officer Options shall be the lesser of five years or the
term of their office plus 90 days, Employee Options the lesser of five years or
the term of their employment plus 30 days, and other Option Holders the lesser
of five years or the term of the engagement agreement plus 30 days.

(e) Termination of Employment, Death, Disability Etc.
Except as otherwise determined by the Stock Option Committee, each Stock Option
agreement will provide as follows with respect to the exercise of the Option
upon termination of the employment or the death of the Option Holder:

(i)      Termination.
If the Option Holder’s employment or office with the Company is terminated
within the Option Period for cause, as determined by the Company in its sole
discretion, or if the Option Holder resigns without appropriate or agreed notice
and agreed termination terms, the Option will be void for all purposes
immediately upon notice of termination or resignation, as the case may be,
unless otherwise agreed solely at the discretion of the Company. Unless
specified in an engagement agreement, “cause” means a material violation, as
determined by the Company, of the Company’s established policies and procedures
and the terms of engagement and a failure to rectify within 15 days of notice.
If the Option Holder is terminated for another reason, not provided for below or
in the engagement agreement or the Option agreement, then the Option shall be
exercisable, as to the vested portion only on the date of termination, for a
period of 30 days after termination, except as otherwise permitted by the sole
discretion of the Stock Option Committee but not to exceed the Option Period.
The effect of this Section will be limited to determining the consequences of a
termination and nothing in this Section will restrict or otherwise interfere
with the Company’s discretion with respect to the termination of any
Employee.

(ii)      Death or
Disability. If the Option Holder’s employment with the Company is
terminated within the Option Period because of the Option Holder’s death or
disability the Option will remain exercisable, to the extent that it was vested
and exercisable on the date of the Option Holder’s death or disability, for a
period of six months after such date; provided, however, that in no event may
the Option be exercised after the expiration of the Option Period.




6

(iii)      Non-Employees
or non-Office Holders. For all purposes under this Section, an Eligible
Participant who is not an Employee or office holder of the Company will be
considered to have a termination at the conclusion of the relevant contract or
upon notice by the Company of termination for default or breach of agreement. If
the contract is terminated for breach or default then the Option shall terminate
immediately. Otherwise the Option shall terminate in accordance with its terms
or section 6.2(d) above.

(f) Transferability of Option. Each stock option
agreement will provide that the Option and exercise rights granted therein are
not transferable or subject to assignment or lien for security purposes by the
Option Holder except to the Option Holder’s legal representative, his estate, a
family corporation or personal holding corporation, a bona fide lender or in
such other circumstance as the Stock Option Committee may approve in its sole
discretion, which may be exercised contrary without reason. Each assignment of
an interest in an Option must be approved before such will be enforceable.

(g) Exercise, Payments, Etc. Unless otherwise provided
by the Stock Option agreement the method for exercising the Option granted will
be by delivery to the office of the Company of written notice specifying the
particular Option (or portion thereof) that is being exercised and the number of
Shares with respect to which such Option is exercised, together with payment of
the Option Price. The exercise of the Option will be deemed effective upon
actual receipt of such notice and payment to the Company of the Option Price in
a form satisfactory to the Company, acting reasonably. The purchase of such
Stock will take place at the principal offices of the Company upon delivery of
such notice. A properly executed certificate or certificates representing the
Stock will be issued by the Company and delivered to the Option Holder with
reasonable dispatch. Unless restricted by the Option agreement, the exercise
price shall be paid by any of the following methods or any combination of the
following methods:

(i)      in
cash;

(ii)      by cashier’s check,
certified cheque, or other acceptable banker’s note payable to the order of the
Company;

(iii)      by
delivery to the Company of a properly executed notice of exercise together with
irrevocable instructions (referred to in the industry as ‘delivery against
payment’) to a broker to deliver to the Company promptly the amount of the
proceeds of the sale of all or a portion of the Stock or of a loan from the
broker to the Option Holder necessary to pay the exercise price; or

(iv)      such other method as the
Option Holder and the Stock Option Committee may determine as adequate including
delivery of acceptable securities (including securities of the Company), set-off
for wages or invoices due, property, or other adequate value.

In the discretion of the Stock Option Committee, the Company
may grant a loan or guarantee a third-party loan obtained by an Option Holder to
pay part or all of the Option Price of the Shares provided that such loan or the
Company’s guaranty is secured by the Shares.

(h) Date of Grant. An Option will be considered as
having been granted on the date specified in the grant resolution of the Stock
Option Committee.

6.3      Stockholder
Privileges. Prior to the exercise of the Option and the transfer of Shares
to the Option Holder, an Option Holder will have no rights as a stockholder with
respect to any Shares subject to any Option granted to such person under this
Plan and, until the Option Holder becomes the holder of the record of such
Stock, no adjustments, other than those described in Section 4, will be made for
dividends or other distributions or other rights to which there is a record date
preceding the date such Option Holder becomes the holder of record of such
Stock.




7

SECTION 7
RIGHTS OF EMPLOYEES AND OPTION HOLDERS

7.1      Employment.
Nothing contained in the Plan or in any Option will confer upon any
Eligible Participant any right with respect to the continuation of employment by
the Company, or interfere in any way with the right of the Company, subject to
the terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of such
Eligible Participant form the rate in existence at the time of the grant of an
Option.

SECTION 8 
GENERAL RESTRICTIONS

8.1      Investment
representations. The Company may require any person to whom an Option is
granted, as a condition of exercising such Option or receiving Stock under the
Option, to give written assurances, in substance and form satisfactory to the
Company and its counsel, to the effect that such person is acquiring the Stock
subject to the Option for his own account for investment and not with any
present intention of selling and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and applicable state
and provincial securities laws. Legends evidencing such restrictions may be
placed on the certificates evidencing the Stock.

8.2      Compliance
with Securities Laws. Each Option will be subject to the requirement that
if at any time counsel to the Company determines that the listing, registration
or qualification of the Shares subject to such Option upon any securities
exchange or under any state, provincial or federal law, or the consent or
approval of any governmental or regulatory body, is necessary as a condition of,
or in connection with, the issuance or purchase of Shares thereunder, such
Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval will have been effected or
obtained on conditions acceptable to the Stock Option Committee. Nothing herein
will be deemed to require the Company to apply for or to obtain such listing,
registration or qualification. However, where available to the circumstances of
an Option Holder the Company will include the Option with any other filings that
the Company elects, at its sole discretion, to file under S-8 or any other
filings with the SEC but the Company shall not be obliged to make an individual
filing for a particular Option, unless such shall have been required pursuant to
the specific Option agreement.

SECTION 9
OTHER EMPLOYEE BENEFITS

9.1      Benefits
and Taxes. The amount of any compensation deemed to be received by an
Option Holder as a result of the exercise of an Option will not constitute
“earnings” with respect to which any other employee benefits of such Option
Holder are determined, including, without limitation, benefits under any
pension, profit sharing, life insurance or salary continuation plan. Any taxable
consequences of any Option are entirely the responsibility of the Option Holder
and no contribution shall be required of the Company and, further, if the
Company should suffer liability for unpaid taxes of an Option Holder then the
full amount of such shall be a debt of the Option Holder to the Company payable
immediately and for which the Company may seek judgment and, before judgment or
process, may set-off against any amounts due to the Option Holder or may
recover, again before judgment or process, by exercise of any Options of the
Option Holder on the Option Holder’s behalf, at the discretion of the Stock
Option Committee. 




8

SECTION 10
PLAN AMENDMENT, MODIFICATION AND TERMINATION

10.1      Amendment.
The Board may at any time terminate and, from time to time, may amend or
modify the Plan provided, however, that no amendment or modification may become
effective without approval of the amendment or modification by the stockholders
where stockholder approval is required to enable the Plan to satisfy any
applicable statutory requirements, or if the Company, on the advice of counsel,
determines that stockholder approval otherwise is necessary or desirable.

          No
amendment, modification or termination of the Plan will in any manner adversely
affect any Options theretofore granted under the Plan, without the consent of
the Option Holders holding such Options.

SECTION 11 
WITHHOLDING

11.1      Withholding
Requirement. The Company’s obligations to deliver Shares upon the exercise
of an Option will be subject to the Option Holder’s satisfaction of all
applicable federal, state and local income and other tax withholding
requirements and applicable securities requirements.

11.2      Withholding
With Stock. At the time an Option is granted the Stock Option Committee, in
its sole discretion, may permit the Option Holder to pay all such amounts of tax
withholding, or any part thereof, that is due upon exercise of the Option by
such adjustments as the Stock Option Committee determines, including adjustment
to a net exercise price or adjustment to the Option Price.

SECTION 12 
BROKERAGE ARRANGEMENTS

12.1      Brokerage.
The Stock Option Committee, in its discretion, may enter into arrangements
with one or more banks, brokers or other financial institutions to facilitate
the disposition of shares acquired upon exercise of Stock Options, including,
without limitation, arrangements for the simultaneous exercise of Stock Options
and sale of the Shares acquired upon such exercise.

SECTION 13 
NONEXCLUSIVITY OF THE PLAN

13.1      Other Plans.
The adoption of this Plan by the Board will not be construed as creating
any limitations on the power or authority of the Board to adopt such other or
additional incentive or other compensation arrangements of whatever nature as
the Board may deem necessary or desirable or preclude or limit the continuation
of any other plan, practice or arrangement for the payment of compensation or
fringe benefits to employees generally, or to any class or group of employees,
or any other persons that the Company or any Affiliated Corporation now has
lawfully put into effect, including, without limitation, any retirement,
pension, savings and stock purchase plan, insurance, death and disability
benefits and executive short-term incentive plans.




9

SECTION 14 
REQUIREMENTS OF LAW

14.1      Requirements of
Law. The insurance of Stock and the payment of cash pursuant to the Plan
will be subject to all applicable laws, rules and regulations.

14.2      Governing
Law. The Plan and all agreements hereunder will be construed in accordance
with and governed by the laws of the State of Delaware.

SECTION 15 
DURATION OF THE PLAN

15.1      Termination.
The Plan will terminate at such time as may be determined by the Board, and no
Option will be granted after such termination. If not sooner terminated under
the preceding sentence, the Plan will fully cease and expire on the earlier of
one year from the date that the Plan Limit has been exhausted and all Options
exercised or expired or January 30, 2011. Options outstanding at the time of the
Plan termination may continue to be exercised in accordance with their
terms.