Filed by Bowne Pure Compliance



 




Exhibit 4.2




CANWEST PETROLEUM CORPORATION

2006 STOCK OPTION PLAN

(as amended through September 12, 2006)




A. 1. Purposes of and Benefits Under the Plan. This 2006 Stock Option Plan (the
“Plan”) is intended to encourage stock ownership by employees, consultants, officers and directors
of CanWest Petroleum Corporation and its controlled, affiliated and subsidiary entities
(collectively, the “Corporation”), so that they may acquire or increase their proprietary interest
in the Corporation, and is intended to facilitate the Corporation’s efforts to: (i) induce
qualified persons to become employees, officers and directors (whether or not they are employees)
and consultants to the Corporation; (ii) compensate employees, officers, directors and consultants
for services to the Corporation; and (iii) encourage such persons to remain in the employ of or
associated with the Corporation and to put forth maximum efforts for the success of the
Corporation. It is further intended that options granted by the Committee pursuant to Section 6 of
this Plan shall constitute “incentive stock options” (“Incentive Stock Options”) within the meaning
of Section 422 of the Internal Revenue Code, and the regulations issued thereunder, and options
granted by the Committee pursuant to Section 7 of this Plan shall constitute “non-qualified stock
options” (“Non-qualified Stock Options”). “Options” means options granted pursuant to the
provisions of this Plan, whether Incentive Stock Options or Non-qualified Stock Options.



2. Definitions. As used in this Plan, the following words and phrases shall have the
meanings indicated:




(a) “Board” shall mean the Board of Directors of the Corporation.




(b) “Bonus” means any Common Stock bonus issued pursuant to the provisions of this Plan.



(c) “Committee” shall mean any Committee appointed by the Board to administer this Plan, if
one has been appointed. If no Committee has been appointed, the term “Committee” shall mean the
Board.




(d) “Common Stock” shall mean the Corporation’s $.001 par value common stock.



(e) “Disability” shall mean a Recipient’s inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment that can be expected
to result in death or that has lasted or can be expected to last for a continuous period of not
less than 12 months. If the Recipient has a disability insurance policy, the term “Disability”
shall be as defined therein.



 


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(f) “Fair Market Value” per share as of a particular date shall mean the last sale price of
the Corporation’s Common Stock as reported on a national securities exchange or by NASDAQ, or if
the quotation for the last sale reported is not available for the Corporation’s Common Stock, the
average of the closing bid and asked prices of the Corporation’s Common
Stock as so reported or, if such quotations are unavailable, the value determined by the
Committee in accordance with its discretion in making a bona fide, good faith determination of fair
market value. Fair Market Value shall be determined without regard to any restriction other than a
restriction which, by its terms, never will lapse. In the case of Options and Bonuses granted at a
time when the Corporation does not have a registration statement in effect relating to the shares
issuable hereunder, the value at which the Bonus shares are issued may be determined by the
Committee at a reasonable discount from Fair Market Value to reflect the restricted nature of the
shares to be issued and the inability of the Recipient to sell those shares promptly.




(g) “Recipient” means any person granted an Option or awarded a Bonus hereunder.



(h) “Internal Revenue Code” shall mean the United States Internal Revenue Code of 1986, as
amended from time to time (codified as Title 26 of the United States Code) and any successor
legislation.




3. Administration.



(a) The Plan shall be administered by the Committee. The Committee shall have the authority
in its discretion, subject to and not inconsistent with the express provisions of the Plan, to
administer the Plan and to exercise all the powers and authorities either specifically conferred
under the Plan or necessary or advisable in the administration of the Plan, including the
authority: to grant Options and Bonuses; to determine the vesting schedule and other restrictions,
if any, relating to Options and Bonuses; to determine the purchase price of the shares of Common
Stock covered by each Option (the “Option Price”); to determine the persons to whom, and the time
or times at which, Options and Bonuses shall be granted; to determine the number of shares to be
covered by each Option or Bonus; to determine Fair Market Value per share; to interpret the Plan;
to prescribe, amend and rescind rules and regulations relating to the Plan; to determine the terms
and provisions of the Option agreements (which need not be identical) entered into in connection
with Options granted under the Plan; and to make all other determinations deemed necessary or
advisable for the administration of the Plan. The Committee may delegate to one or more of its
members or to one or more agents such administrative duties as it may deem advisable, and the
Committee or any person to whom it has delegated duties as aforesaid may employ one or more persons
to render advice with respect to any responsibility the Committee or such person may have under the
Plan.



(b) Options and Bonuses granted under the Plan shall be evidenced by duly adopted resolutions
of the Committee included in the minutes of the meeting at which they are adopted or in a unanimous
written consent.



(c) The Committee shall endeavor to administer the Plan and grant Options and Bonuses
hereunder in a manner that is compatible with the obligations of persons subject to Section 16 of
the U.S. Securities Exchange Act of 1934 (the “1934 Act”), although compliance with Section 16 is
the obligation of the Recipient, not the Corporation. Neither the Committee, the Board nor the
Corporation can assume any legal responsibility for a Recipient’s compliance with his obligations
under Section 16 of the 1934 Act.


 


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(d) No member of the Committee or the Board shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Option or Bonus granted hereunder.




4. Eligibility.



(a) Subject to certain limitations hereinafter set forth, Options and Bonuses may be granted
to employees (including officers) and consultants to and directors (whether or not they are
employees) of the Corporation or its present or future divisions, affiliates and subsidiaries. In
determining the persons to whom Options or Bonuses shall be granted and the number of shares to be
covered by each Option or Bonus, the Committee shall take into account the duties of the respective
persons, their present and potential contributions to the success of the Corporation, and such
other factors as the Committee shall deem relevant to accomplish the purposes of the Plan.



(b) A Recipient shall be eligible to receive more than one grant of an Option or Bonus during
the term of the Plan, on the terms and subject to the restrictions herein set forth.




5. Stock Reserved.



(a) The stock subject to Options or Bonuses hereunder shall be shares of Common Stock. Such
shares, in whole or in part, may be authorized but unissued shares or shares that shall have been
or that may be reacquired by the Corporation. The aggregate number of shares of Common Stock as to
which Options and Bonuses may be granted from time to time under the Plan shall not exceed the
lower of (i) 30,000,000 shares or (ii) 15% of the total shares outstanding, subject to adjustment
as provided in Section 8(i) hereof.



(b) If any Option outstanding under the Plan for any reason expires or is terminated without
having been exercised in full, or if any Bonus granted is forfeited because of vesting or other
restrictions imposed at the time of grant, the shares of Common Stock allocable to the unexercised
portion of such Option or the forfeited portion of the Bonus shall become available for subsequent
grants of Options and Bonuses under the Plan.




6. Incentive Stock Options.



(a) Options granted pursuant to this Section 6 are intended to constitute Incentive Stock
Options and shall be subject to the following special terms and conditions, in addition to the
general terms and conditions specified in Section 8 hereof. Only employees of the Corporation
shall be entitled to receive Incentive Stock Options.



(b) The aggregate Fair Market Value (determined as of the date the Incentive Stock Option is
granted) of the shares of Common Stock with respect to which Incentive Stock Options granted under
this and any other plan of the Corporation or any parent or subsidiary of the Corporation are
exercisable for the first time by a Recipient during any calendar year may not exceed the amount
set forth in Section 422(d) of the Internal Revenue Code.


 


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(c) Incentive Stock Options granted under this Plan are intended to satisfy all requirements
for incentive stock options under Section 422 of the Internal Revenue Code and the Treasury
Regulations promulgated thereunder and, notwithstanding any other provision of this Plan, the Plan
and all Incentive Stock Options granted under it shall be so construed, and all contrary provisions
shall be so limited in scope and effect and, to the extent they cannot be so limited, they shall be
void.



7. Non-qualified Stock Options. Options granted pursuant to this Section 7 are
intended to constitute Non-qualified Stock Options and shall be subject only to the general terms
and conditions specified in Section 8 hereof.



8. Terms and Conditions of Options. Each Option granted pursuant to the
Plan shall be evidenced by a written Option agreement between the Corporation and the Recipient,
which agreement shall be substantially in the form of Exhibit A hereto as modified from
time to time by the Committee in its discretion, and which shall comply with and be subject to the
following terms and conditions:



(a) Number of Shares. Each Option agreement shall state the number of shares of
Common Stock covered by the Option.



(b) Type of Option. Each Option Agreement shall specifically identify the portion, if
any, of the Option which constitutes an Incentive Stock Option and the portion, if any, which
constitutes a Non-qualified Stock Option.



(c) Option Price. Subject to adjustment as provided in Section 8 (i) hereof, each
Option agreement shall state the Option Price, which shall be determined by the Committee subject
only to the following restrictions:



(1) Each Option Agreement shall state the Option Price, which (except as otherwise set forth
in paragraphs 8(c)(2) and (3) hereof) shall not be less than 100% of the Fair Market Value per
share on the date of grant of the Option.



(2) Any Incentive Stock Option granted under the Plan to a person owning more than ten percent
of the total combined voting power of the Common Stock shall be at a price of no less than 110% of
the Fair Market Value per share on the date of grant of the Incentive Stock Option.



(3) Any Non-qualified Stock Option granted under the Plan shall be at a price determined and
specified by the Board, which price may be an amount less than the Fair Market Value per share on
the date of grant of the Non-qualified Stock Option.



(4) The date on which the Committee adopts a resolution expressly granting an Option shall be
considered the day on which such option is granted, unless a future date is specified in the
resolution.


 


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(d) Term of Option. Each Option agreement shall state the period during and times at
which the Option shall be exercisable, in accordance with the following limitations:



(1) The date on which the Committee adopts a resolution expressly granting an Option shall be
considered the day on which such Option is granted, unless a future date is specified in the
resolution, although any such grant shall not be effective until the Recipient has executed an
Option agreement with respect to such Option.



(2) The exercise period of any Option shall not exceed ten years from the date of grant of the
Option.



(3) Incentive Stock Options granted to a person owning more than ten percent of the total
combined voting power of the Common Stock of the Corporation shall be for no more than five years.



(4) The Committee shall have the authority to accelerate or extend the exercisability of any
outstanding Option at such time and under such circumstances as it, in its sole discretion, deems
appropriate. In any event, no exercise period may be so extended to increase the term of the
Option beyond ten years from the date of the grant.



(5) The exercise period shall be subject to earlier termination as provided in Sections 8(f)
and 8(g) hereof, and, furthermore, shall be terminated upon surrender of the Option by the holder
thereof if such surrender has been authorized in advance by the Committee.



(6) Subject to the rules and regulations of any exchange with which the shares of the
Corporation are listed for trading, notwithstanding any other provisions of this Plan, if any
Options may not be exercised due to any Black-Out Period (as defined below) at any time within the
three business day period prior to the normal expiry date of such Options (the “Restricted
Options”), the expiry date of such Restricted Options shall be extended for a period of 10 business
days following the end of the Black-Out Period (or such longer period as permitted by the exchange
and approved by the Board of Directors). “Black-Out Period” means the period of time when,
pursuant to any policies of the Corporation, any securities of the Corporation may not be traded by
certain persons as designated by the Corporation, including any holder of an Option.




(e) Method of Exercise and Medium and Time of Payment.



(1) An Option may be exercised as to any or all whole shares of Common Stock as to which it
then is exercisable, provided, however, that no Option may be exercised as to less than 100 shares
(or such number of shares as to which the Option is then exercisable if such number of shares is
less than 100).



 


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(2) Each exercise of an Option granted hereunder, whether in whole or in part, shall be
effected by written notice to the Secretary of the Corporation designating the number of shares as
to which the Option is being exercised, and shall be accompanied by
payment in full of the Option Price for the number of shares so designated, together with any
written statements required by, or deemed by the Corporation’s counsel to be advisable pursuant to,
any applicable securities laws.



(3) The Option Price shall be paid in cash, or in shares of Common Stock having a Fair Market
Value equal to such Option Price, or in property or in a combination of cash, shares and property
and, subject to approval of the Committee, may be effected in whole or in part with funds received
from the Corporation at the time of exercise as a compensatory cash payment.



(4) The Committee shall have the sole and absolute discretion to determine whether or not
property other than cash or Common Stock may be used to purchase the shares of Common Stock
hereunder and, if so, to determine the value of the property received.



(5) The Recipient shall make provision for the withholding of taxes as required by Section 10
hereof.




(f) Termination.



(1) Unless otherwise provided in the Option Agreement by and between the Corporation and the
Recipient, if the Recipient ceases to be an employee, officer, director or consultant of the
Corporation (other than by reason of death, Disability or retirement), all Options theretofore
granted to such Recipient but not theretofore exercised shall terminate three months following the
date the Recipient ceased to be an employee, officer, director or consultant of the Corporation,
and shall terminate upon the date of termination of employment or other relationship if discharged
for cause.



(2) Nothing in the Plan or in any Option or Bonus granted hereunder shall confer upon an
individual any right to continue in the employ of or other relationship with the Corporation or
interfere in any way with the right of the Corporation to terminate such employment or other
relationship between the individual and the Corporation.



(g) Death, Disability or Retirement of Recipient. Unless otherwise provided in the
Option Agreement by and between the Corporation and the Recipient, if a Recipient shall die while
an employee, officer, director or consultant of the Corporation, or within ninety days after the
termination of such Recipient as an employee, officer, director or consultant, other than
termination for cause, or if the Recipient’s relationship with the Corporation shall terminate by
reason of Disability or retirement, all Options theretofore granted to such Recipient (whether or
not otherwise exercisable) unless earlier terminated in accordance with their terms, may be
exercised by the Recipient or by the Recipient’s estate or by a person who acquired the right to
exercise such Options by bequest or inheritance or otherwise by reason of the death or Disability
of the Recipient, at any time within one year after the date of death, Disability or retirement of
the Recipient; provided, however, that in the case of Incentive Stock Options such one-year period
shall be limited to three months in the case of retirement.


 


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(h) Transferability Restriction.



(1) Options granted under the Plan shall not be transferable other than by will or by the laws
of descent and distribution or pursuant to a qualified domestic relations order as defined by the
Internal Revenue Code or Title I of the Employee Retirement Income Security Act of 1974, or the
rules thereunder. Options may be exercised during the lifetime of the Recipient only by the
Recipient and thereafter only by his legal representative.



(2) Any attempted sale, pledge, assignment, hypothecation or other transfer of an Option
contrary to the provisions hereof and/or the levy of any execution, attachment or similar process
upon an Option, shall be null and void and without force or effect and shall result in a
termination of the Option.



(3) (A) As a condition to the transfer of any shares of Common Stock issued upon exercise of
an Option granted under this Plan, the Corporation may require an opinion of counsel, satisfactory
to the Corporation, to the effect that such transfer will not be in violation of the U.S.
Securities Act of 1933, as amended (the “1933 Act”) or any other applicable securities laws or that
such transfer has been registered under federal and all applicable state securities laws. (B)
Further, the Corporation shall be authorized to refrain from delivering or transferring shares of
Common Stock issued under this Plan until the Committee determines that such delivery or transfer
will not violate applicable securities laws and the Recipient has tendered to the Corporation any
federal, state or local tax owed by the Recipient as a result of exercising the Option or disposing
of any Common Stock when the Corporation has a legal liability to satisfy such tax. (C) The
Corporation shall not be liable for damages due to delay in the delivery or issuance of any stock
certificate for any reason whatsoever, including, but not limited to, a delay caused by listing
requirements of any securities exchange or any registration requirements under the 1933 Act, the
1934 Act, or under any other state, federal or provincial law, rule or regulation. (D) The
Corporation is under no obligation to take any action or incur any expense in order to register or
qualify the delivery or transfer of shares of Common Stock under applicable securities laws or to
perfect any exemption from such registration or qualification. (E) Furthermore, the Corporation
will not be liable to any Recipient for failure to deliver or transfer shares of Common Stock if
such failure is based upon the provisions of this paragraph.




(i) Effect of Certain Changes.



(1) If there is any change in the number of shares of outstanding Common Stock through the
declaration of stock dividends, or through a recapitalization resulting in stock splits or
combinations or exchanges of such shares, the number of shares of Common Stock available for
Options and the number of such shares covered by outstanding Options, and the exercise price per
share of the outstanding Options, shall be proportionately adjusted by the Committee to reflect any
increase or decrease in the number of issued shares of Common Stock; provided, however, that any
fractional shares resulting from such adjustment shall be eliminated.



 


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(2) In the event of the proposed dissolution or liquidation of the Corporation, or any
corporate separation or division, including, but not limited to, split-up, split-off or spin-off, or a merger or consolidation of the Corporation with another corporation, the
Committee may provide that the holder of each Option then exercisable shall have the right to
exercise such Option (at its then current Option Price) solely for the kind and amount of shares of
stock and other securities, property, cash or any combination thereof receivable upon such
dissolution, liquidation, corporate separation or division, or merger or consolidation by a holder
of the number of shares of Common Stock for which such Option might have been exercised immediately
prior to such dissolution, liquidation, corporate separation or division, or merger or
consolidation; or, in the alternative the Committee may provide that each Option granted under the
Plan shall terminate as of a date fixed by the Committee; provided, however, that not less than 30
days’ written notice of the date so fixed shall be given to each Recipient, who shall have the
right, during the period of 30 days preceding such termination, to exercise the Option as to all or
any part of the shares of Common Stock covered thereby, including shares as to which such Option
would not otherwise be exercisable.



(3) Paragraph 2 of this Section 8 (i) shall not apply to a merger or consolidation in which
the Corporation is the surviving corporation and shares of Common Stock are not converted into or
exchanged for stock, securities of any other corporation, cash or any other thing of value.
Notwithstanding the preceding sentence, in case of any consolidation or merger of another
corporation into the Corporation in which the Corporation is the surviving corporation and in which
there is a reclassification or change (including a change to the right to receive cash or other
property) of the shares of Common Stock (excluding a change in par value, or from no par value to
par value, or any change as a result of a subdivision or combination, but including any change in
such shares into two or more classes or series of shares), the Committee may provide that the
holder of each Option then exercisable shall have the right to exercise such Option solely for the
kind and amount of shares of stock and other securities (including those of any new direct or
indirect parent of the Corporation), property, cash or any combination thereof receivable upon such
reclassification, change, consolidation or merger by the holder of the number of shares of Common
Stock for which such Option might have been exercised.



(4) In the event of a change in the Common Stock of the Corporation as presently constituted
into the same number of shares with a different par value, the shares resulting from any such
change shall be deemed to be the Common Stock of the Corporation within the meaning of the Plan.



(5) To the extent that the foregoing adjustments relate to stock or securities of the
Corporation, such adjustments shall be made by the Committee, whose determination in that respect
shall be final, binding and conclusive, provided that each Incentive Stock Option granted pursuant
to this Plan shall not be adjusted in a manner that causes such option to fail to continue to
qualify as an Incentive Stock Option within the meaning of Section 422 of the Internal Revenue
Code.



 


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(6) Except as expressly provided in this Section 8(i), the Recipient shall have no rights by
reason of any subdivision or consolidation of shares of stock of any class, or the payment of any
stock dividend or any other increase or decrease in the number of shares of stock of any class, or
by reason of any dissolution, liquidation, merger, or consolidation or spin-off of assets or stock
of another corporation; and any issue by the Corporation of shares of stock
of any class, or securities convertible into shares of stock of any class, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number or price of shares of
Common Stock subject to an Option. The grant of an Option pursuant to the Plan shall not affect in
any way the right or power of the Corporation to make adjustments, reclassifications,
reorganizations or changes of its capital or business structures, or to merge or consolidate, or to
dissolve, liquidate, or sell or transfer all or any part of its business or assets.




(j) No Rights as Shareholder — Non-Distributive Intent.



(1) Neither a Recipient of an Option nor such Recipient’s legal representative, heir, legatee
or distributee, shall be deemed to be the holder of, or to have any rights of a holder with respect
to, any shares subject to such Option until after the Option is exercised and the shares are
issued.



(2) No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for which the record date is prior
to the date such stock certificate is issued, except as provided in Section 8(i) hereof.



(3) Upon exercise of an Option at a time when there is no registration statement in effect
under the 1933 Act relating to the shares issuable upon exercise, shares may be issued to the
Recipient only if the Recipient represents and warrants in writing to the Corporation that the
shares purchased are being acquired for investment and not with a view to the distribution thereof
and provides the Corporation with sufficient information to establish an exemption from the
registration requirements of the 1933 Act. A form of subscription agreement containing
representations and warranties deemed sufficient as of the date of adoption of this Plan is
attached hereto as Exhibit B.



(4) No shares shall be issued upon the exercise of an Option unless and until there shall have
been compliance with any then applicable requirements of the U.S. Securities and Exchange
Commission or any other regulatory agencies having jurisdiction over the Corporation.



(k) Other Provisions. Option Agreements authorized under the Plan may contain such
other provisions, including, without limitation, (i) the imposition of restrictions upon the
exercise, and (ii) in the case of an Incentive Stock Option, the inclusion of any condition not
inconsistent with such Option qualifying as an Incentive Stock Option, as the Committee shall deem
advisable.



9. Grant of Stock Bonuses. In addition to, or in lieu of, the grant of an Option, the
Committee may grant Bonuses.



 


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(a) At the time of grant of a Bonus, the Committee may impose a vesting period of up to ten
years, and such other restrictions which it deems appropriate. Unless otherwise directed by the
Committee at the time of grant of a Bonus, the Recipient shall be
considered a shareholder of the Corporation as to the Bonus shares which have vested in the
grantee at any time regardless of any forfeiture provisions which have not yet arisen.



(b) The grant of a Bonus and the issuance and delivery of shares of Common Stock pursuant
thereto shall be subject to approval by the Corporation’s counsel of all legal matters in
connection therewith, including compliance with the requirements of the 1933 Act, the 1934 Act,
other applicable securities laws, rules and regulations, and the requirements of any stock
exchanges upon which the Common Stock then may be listed. Any certificates prepared to evidence
Common Stock issued pursuant to a Bonus grant shall bear legends as the Corporation’s counsel may
seem necessary or advisable. Included among the foregoing requirements, but without limitation,
any Recipient of a Bonus at a time when a registration statement relating thereto is not effective
under the 1933 Act shall execute a Subscription Agreement substantially in the form of Exhibit
B.



10. Agreement by Recipient Regarding Withholding Taxes. Each Recipient agrees that
the Corporation, to the extent permitted or required by law, shall deduct a sufficient number of
shares due to the Recipient upon exercise of the Option or the grant of a Bonus to allow the
Corporation to pay federal, provincial, state and local taxes of any kind required by law to be
withheld upon the exercise of such Option or payment of such Bonus from any payment of any kind
otherwise due to the Recipient. The Corporation shall not be obligated to advise any Recipient of
the existence of any tax or the amount which the Corporation will be so required to withhold.



11. Term of Plan. Options and Bonuses may be granted under this Plan from time to
time within a period of ten years from the date the Plan is adopted by the Board.




12. Amendment and Termination of the Plan.



(a) (1) Subject to the policies, rules and regulations of any lawful authority having
jurisdiction (including any exchange with which the shares of the Corporation are listed for
trading), the Board of Directors may at any time, without further action by the shareholders,
terminate the Plan (or any one or more provision of the Plan) or amend the Plan or any Option
granted hereunder in such respects as it may consider advisable and, without limiting the
generality of the foregoing, it may do so to ensure: (A) that Options granted hereunder will comply
with any provisions respecting stock options in the income tax and other laws in force in any
country or jurisdiction of which any Option holders may from time to time be a resident or citizen;
(B) alter the terms and conditions of vesting applicable to any Options; (C) extend the term of
Options held by a person other than a person who, at the time of the extension, is an insider of
the Corporation, provided that the term does not extend beyond ten years form the date of grant
(subject to the “Blackout” extension provisions of the Plan); (D) accelerate the expiry date in
respect of Options; (E) determine the adjustment provisions pursuant to Section (i) hereof; (F)
amend the definitions contained within the Plan; (G) amend or modify the mechanics of exercise, and
consideration payable in connection with the exercise, of the Options; or
(H) amendments of a “housekeeping” nature.


 


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(2) provided, however, that any amendment that would: (A) materially increase the number of
securities issuable under the Plan to persons who are subject to Section 16(a) of the 1934 Act; or
(B) grant eligibility to a class of persons who are subject to Section 16(a) of the 1934 Act and
are not included within the terms of the Plan prior to the amendment; or (C) materially increase
the benefits accruing to persons who are subject to Section 16(a) of the 1934 Act under the Plan;
or (D) require shareholder approval under applicable state law, the rules and regulations of any
national securities exchange on which the Corporation’s securities then may be listed, the Internal
Revenue Code or any other applicable law, shall be subject to the approval of the shareholders of
the Corporation as provided in Section 13 hereof.



(3) provided further that any such increase or modification that may result from adjustments
authorized by Section 8(i) hereof or which are required for compliance with the 1934 Act, the
Internal Revenue Code, the Employee Retirement Income Security Act of 1974, their rules or other
laws or judicial order, shall not require such approval of the shareholders.



(b) Except as provided in Section 8 hereof, no suspension, termination, modification or
amendment of the Plan may adversely affect any Option previously granted, unless the written
consent of the Recipient is obtained.



13. Approval of Shareholders. The Plan shall take effect upon its adoption by the
Board but shall be subject to approval at a duly called and held meeting of stockholders in
conformance with the vote required by the Corporation’s governing documents, resolution of the
Board, any other applicable law and the rules and regulations thereunder, or the rules and
regulations of any national securities exchange upon which the Corporation’s Common Stock is listed
and traded, each to the extent applicable.



14. Termination of Right of Action. Every right of action arising out of or
in connection with the Plan by or on behalf of the Corporation or any of its subsidiaries, or by
any shareholder of the Corporation or any of its subsidiaries against any past, present or future
member of the Board, or against any employee, or by an employee (past, present or future) against
the Corporation or any of its subsidiaries, will, irrespective of the place where an action may be
brought and irrespective of the place of residence of any such shareholder, director or employee,
cease and be barred by the expiration of three years from the date of the act or omission in
respect of which such right of action is alleged to have risen.



15. Tax Litigation. The Corporation shall have the right, but not the obligation, to
contest, at its expense, any tax ruling or decision, administrative or judicial, on any issue which
is related to the Plan and which the Board believes to be important to holders of Options issued
under the Plan and to conduct any such contest or any litigation arising therefrom to a final
decision.


 


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16. Adoption.



(a) This Plan was approved by resolution of the Board of Directors of the Corporation on
January 3, 2006, and amended on August 16, 2006 and on September 12, 2006.



(b) If this Plan is not approved by the shareholders of the Corporation within 12 months of
the date the Plan was approved by the Board as required by Section 422(b)(1) of the Internal
Revenue Code, this Plan and any Options granted hereunder to Recipients shall be and remain
effective, but the reference to Incentive Stock Options herein shall be deleted and all Options
granted hereunder shall be Non-qualified Stock Options pursuant to Section 7 hereof.



[End of Plan]



 


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Exhibit A




FORM OF STOCK OPTION AGREEMENT




STOCK OPTION AGREEMENT made as of this
 _____ 
day of
 _____ 
,
 _____ 
, by and between CanWest
Petroleum Corporation, a Colorado corporation (the “Corporation”), and
 _____ 


 _____ 
(the “Recipient”).



In accordance with the Corporation’s 2006 Stock Option Plan (the “Plan”), the provisions of
which are incorporated herein by reference, the Corporation desires, in connection with the
services of the Recipient, to provide the Recipient with an opportunity to acquire shares of the
Corporation’s $.001 par value common stock (“Common Stock”) on favorable terms and thereby increase
the Recipient’s proprietary interest in the Corporation and incentive to put forth maximum efforts
for the success of the business of the Corporation. Capitalized terms used but not defined herein
are used as defined in the Plan.



NOW, THEREFORE, in consideration of the premises and mutual covenants herein set forth and
other good and valuable consideration, the Corporation and the Recipient agree as follows:



1. Confirmation of Grant of Option. Pursuant to a determination of the Committee or,
in the absence of a Committee, by the Board of Directors of the Corporation made on
 _____ 
,

 _____ 
(the “Date of Grant”), the Corporation, subject to the terms of the Plan and of this
Agreement, confirms that the Recipient has been irrevocably granted on the Date of Grant, as a
matter of separate inducement and agreement, and in addition to and not in lieu of salary or other
compensation for services, a Stock Option (the “Option”) exercisable to purchase an aggregate of

 _____ 
shares of Common Stock on the terms and conditions herein set forth, subject to adjustment
as provided in Paragraph 8 hereof.



2. Option Price. The Option Price of shares of Common Stock covered by the Option
will be $  per share (the “Option Price”) subject to adjustment as provided in Paragraph 8
hereof.



3. Vesting and Exercise of Option. (a) Except as otherwise provided herein or in
Section 8 of the Plan, the Option [shall vest and become exercisable as follows: (insert vesting
schedule), provided, however, that no option shall vest or become exercisable unless the Recipient
is an employee of the Corporation on such vesting date/or may be exercised in whole or in part at
any time during the term of the Option.] (b) The Option may not be exercised at any one time as
to fewer than 100 shares (or such number of shares as to which the Option is then exercisable if
such number of shares is less than 100). (c) The Option may be exercised by written notice to the
Secretary of the Corporation accompanied by payment in full of the Option Price as provided in
Section 8 of the Plan.


 


 









 





4. Term of Option. The term of the Option will be through
 _____ 
,
 _____ 
, subject
to earlier termination or cancellation as provided in this Agreement. The holder of the Option
will not have any rights to dividends or any other rights of a shareholder with respect to any
shares of Common Stock subject to the Option until such shares shall have been issued (as evidenced
by the appropriate transfer agent of the Corporation) upon purchase of such shares through exercise
of the Option.



5. Transferability Restriction. The Option may not be assigned, transferred or
otherwise disposed of, or pledged or hypothecated in any way (whether by operation of law or
otherwise) except in strict compliance with Section 8 of the Plan. Any assignment, transfer,
pledge, hypothecation or other disposition of the Option or any attempt to make any levy of
execution, attachment or other process will cause the Option to terminate immediately upon the
happening of any such event; provided, however, that any such termination of the Option under the
provisions of this Paragraph 5 will not prejudice any rights or remedies which the Corporation may
have under this Agreement or otherwise.



6. Exercise Upon Termination. The Recipient’s rights to exercise this Option upon
termination of employment or cessation of service as an officer, director or consultant shall be as
set forth in Section 8(f) of the Plan.



7. Death, Disability or Retirement of Recipient. The exercisability of this Option
upon the death, Disability or retirement of the Recipient shall be as set forth in Section 8(g) of
the Plan.



8. Adjustments. The Option shall be subject to adjustment upon the occurrence of
certain events as set forth in Section 8(i) of the Plan.



9. No Registration Obligation. The Recipient understands that the Option is not
registered under the 1933 Act and, unless by separate written agreement, the Corporation has no
obligation to so register the Option or any of the shares of Common Stock subject to and issuable
upon the exercise of the Option, although it may from time to time register under the 1933 Act the
shares issuable upon exercise of Options granted pursuant to the Plan. The Recipient represents
that the Option is being acquired for the Recipient’s own account and that unless registered by the
Corporation, the shares of Common Stock issued on exercise of the Option will be acquired by the
Recipient for investment. The Recipient understands that the Option is, and the underlying
securities may be, issued to the Recipient in reliance upon exemptions from the 1933 Act, and
acknowledges and agrees that all certificates for the shares issued upon exercise of the Option may
bear the following legend unless such shares are registered under the 1933 Act prior to their
issuance:



The shares represented by this Certificate have not been registered
under the Securities Act of 1933 (the “1933 Act”), and are
“restricted securities” as that term is defined in Rule 144 under
the 1933 Act. The shares may not be offered for sale, sold or
otherwise transferred except pursuant to an effective registration
statement under the 1933 Act or pursuant to an exemption from
registration under the 1933 Act, the availability of which is to be
established to the satisfaction of the Company.


 


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The Recipient further understands and agrees that the Option may be exercised only if at the
time of such exercise the underlying shares are registered and/or the Recipient and the Corporation
are able to establish the existence of an exemption from registration under the 1933 Act and
applicable state or other laws.



10. Notices. Each notice relating to this Agreement will be in writing and delivered
in person or by certified mail to the proper address. Notices to the Corporation shall be
addressed to the Corporation, attention: Karim Hirji, Chief Financial Officer, at such address as
may constitute the Corporation’s principal place of business at the time, with a copy to: Theresa
M. Mehringer, Esq., Burns, Figa & Will, P.C., 6400 S. Fiddlers Green Circle, Suite 1000, Greenwood
Village, Colorado 80111. Notices to the Recipient or other person or persons then entitled to
exercise the Option shall be addressed to the Recipient or such other person or persons at the
Recipient’s address below specified. Anyone to whom a notice may be given under this Agreement may
designate a new address by notice to that effect given pursuant to this Paragraph 10.



11. Approval of Counsel. The exercise of the Option and the issuance and delivery of
shares of Common Stock pursuant thereto shall be subject to approval by the Corporation’s counsel
of all legal matters in connection therewith, including compliance with the requirements of the
1933 Act, the Securities Exchange Act of 1934, as amended, applicable state and other securities
laws, the rules and regulations thereunder, and the requirements of any national securities
exchange(s) upon which the Common Stock then may be listed.



12. Benefits of Agreement. This Agreement will inure to the benefit of and be binding
upon each successor and assignee of the Corporation. All obligations imposed upon the Recipient
and all rights granted to the Corporation under this Agreement will be binding upon the Recipient’s
heirs, legal representatives and successors.



13. Effect of Governmental and Other Regulations. The exercise of the Option and the
Corporation’s obligation to sell and deliver shares upon the exercise of the Option are subject to
all applicable federal and state laws, rules and regulations, and to such approvals by any
regulatory or governmental agency which may, in the opinion of counsel for the Corporation, be
required.



14. Plan Governs. In the event that any provision in this Agreement conflicts with a
provision in the Plan, the provision of the Plan shall govern.


 


3









 





Executed in the name and on behalf of the Corporation by one of its duly authorized officers
and by the Recipient all as of the date first above written.



	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	CANWEST PETROLEUM CORPORATION
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Date

	 	 	 	 	,	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	Christopher H. Hopkins, Chief Executive Officer






The undersigned Recipient has read and understands the terms of this Option Agreement and the
attached Plan and hereby agrees to comply therewith.



	 	 	 	 	 	 	 	 	 	 	 	 	 
	Date

	 	 	 	 	,	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Signature of Recipient
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Tax ID Number:	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Address:	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 







 


4









 







Exhibit B




SUBSCRIPTION AGREEMENT




THE SECURITIES BEING ACQUIRED BY THE UNDERSIGNED HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933 OR ANY OTHER LAWS AND ARE OFFERED UNDER EXEMPTIONS FROM THE REGISTRATION PROVISIONS OF
SUCH LAWS. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT
IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER CONTAINED IN THIS STOCK SUBSCRIPTION AGREEMENT AND
APPLICABLE SECURITIES LAWS.



This Subscription Agreement is entered for the purpose of the undersigned acquiring

 _____ 
shares of the $.001 par value common stock (the “Securities”) of CanWest Petroleum
Corporation, a Colorado corporation (the “Corporation”) from the Corporation as a Bonus or pursuant
to exercise of an Option granted pursuant to the Corporation’s 2006 Stock Option Plan (the
“Plan”). All capitalized terms not otherwise defined herein shall be as defined in the Plan.



It is understood that no grant of any Bonus or exercise of any Option at a time when no
registration statement relating thereto is effective under the U.S. Securities Act of 1933, as
amended (the “1933 Act”) can be completed until the undersigned executes this Subscription
Agreement and delivers it to the Corporation, and that such grant or exercise is effective only in
accordance with the terms of the Plan and this Subscription Agreement.



In connection with the undersigned’s acquisition of the Securities, the undersigned represents
and warrants to the Corporation as follows:



1. The undersigned has been provided with, and has reviewed the Plan, and such other
information as the undersigned may have requested of the Corporation regarding its business,
operations, management, and financial condition (all of which is referred to herein as the
“Available Information”).



2. The Corporation has given the undersigned the opportunity to ask questions of and to
receive answers from persons acting on the Corporation’s behalf concerning the terms and conditions
of this transaction and the opportunity to obtain any additional information regarding the
Corporation, its business and financial condition or to verify the accuracy of the Available
Information which the Corporation possesses or can acquire without unreasonable effort or expense.



3. The Securities are being acquired by the undersigned for the undersigned’s own account and
not on behalf of any other person or entity.


 


 









 





4. The undersigned understands that the Securities being acquired hereby have not been
registered under the 1933 Act or any state or foreign securities laws, and are, and unless
registered will continue to be, restricted securities within the meaning of Rule 144 of the General
Rules and Regulations under the 1933 Act and other statutes, and the undersigned consents to the
placement of appropriate restrictive legends on any certificates evidencing the Securities and any
certificates issued in replacement or exchange therefor and acknowledges that the Corporation will
cause its stock transfer records to note such restrictions.



5. By the undersigned’s execution below, it is acknowledged and understood that the
Corporation is relying upon the accuracy and completeness hereof in complying with certain
obligations under applicable securities laws.



6. This Agreement binds and inures to the benefit of the representatives, successors and
permitted assigns of the respective parties hereto.



7. The undersigned acknowledges that the grant of any Bonus or Option and the issuance and
delivery of shares of Common Stock pursuant thereto shall be subject to prior approval by the
Corporation’s counsel of all legal matters in connection therewith, including compliance with the
requirements of the 1933 Act and other applicable securities laws, the rules and regulations
thereunder, and the requirements of any national securities exchange(s) upon which the Common Stock
then may be listed.



8. The undersigned acknowledges and agrees that the Corporation has withheld
 _____ 

shares for the payment of taxes as a result of the grant of the Bonus or the exercise of an Option.



9. The Plan is incorporated herein by reference. In the event that any provision in this
Agreement conflicts with any provision in the Plan, the provisions of the Plan shall govern.




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	,	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Signature of Recipient
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Tax ID Number:	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Address:	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 







 


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