Exhibit
10.1


 





 


FORM
OF


INCENTIVE
STOCK OPTION AGREEMENT


 


THIS
AGREEMENT made as of the INSERT DATE


 


BETWEEN:


 


WESTERN
MAGNESIUM CORPORATION, a company duly incorporated pursuant to the laws of Delaware with offices at Suite 900 – 580 Hornby
Street, Vancouver, BC V6C 3B6


 


(hereinafter
referred to as the “Company”)


 


OF
THE FIRST PART


 


AND:


INSERT
NAME AND ADDRESS


 


(hereinafter
referred to as the “Optionee”)


 


OF
THE SECOND PART


 


WHEREAS
the Optionee is a Director, Officer, Employee or Qualified Consultant of the Company and in that capacity devotes time and effort
in the affairs of the Company;


 


NOW
THEREFORE IN CONSIDERATION of the mutual covenants and agreements hereinafter contained, the parties hereto covenant and agree each
with the other as follows:


 


		1.	The
                                            Company hereby grants to the Optionee upon the terms and conditions hereinafter contained,
                                            the sole and exclusive right and option to purchase INSERT NUMBER shares of the capital
                                            of the Company at a price of $[__] per share (the “Option”), such Option
                                            to be exercisable at any time within [INSERT # OF YEARS] of the date of this Agreement,
                                            subject always to the provisions of earlier termination of the Option as set forth in paragraph
                                            3 hereof.



 


		2.	Subject
                                            to the discretion of the Board to apply vesting to the grant of any Option, the Options granted
                                            to an Optionee under this Plan will fully vest on the date of grant of such Options



 


		(a)	In
                                            accordance with the policies of the Exchange, and subject to their approval to the contrary,
                                            Options granted to Consultants performing Investor Relations Activities must vest (and not
                                            otherwise be exercisable) in stages over a minimum of 12 months with no more than 1⁄4
                                            of the Options vesting in any 3 month period 25% of the initial aggregate number of common
                                            shares that may be purchased under the Option may vest on allocation;



 


Suite
900 – 580 Hornby Street | Vancouver, BC | V6C 3B6 Phone: (604) 423-2709|


www.westmagcorp.com





 



    	 



    	2 | P a g e



    




 





		3.	Pursuant
                                            to the terms of the Company’s Stock Option Plan, the options being granted shall terminate
                                            upon the following circumstances:



 


		(a)	Expiry
                                            on Termination or Cessation: If an Optionee ceases to be a Director, Officer, Employee
                                            or Consultant for any reason other than death, then despite any other provision contained
                                            in this Plan, such Optionee’s Option will terminate within a reasonable period to be
                                            determined by the Administrator (the “Exercise Period”) commencing on the effective
                                            date the Optionee ceases to be employed by or provide services to the Company (but only to
                                            the extent that such Option has vested on or before the date the Optionee ceased to be so
                                            employed or provide services to the Company) as provided for in the written option agreement
                                            between the Company and the Optionee, and all rights to purchase Shares under such Option
                                            will expire as of the last day of such Exercise Period, provided however that the maximum
                                            Exercise Period shall be six (6) months, unless the Optionee has entered into a valid employment
                                            or consulting agreement that provides for a longer Exercise Period, but in no case shall
                                            the Exercise Period be greater than one (1) year unless prior Exchange approval has been
                                            given.



 


		(b)	Death
                                            of an Optionee: If an Optionee dies prior to the expiry of his Option, his heirs, administrators
                                            or legal representatives may, by the earlier of:



 


		(a)	one
                                            year from the date of the Optionee’s death (or such lesser period as may be specified
                                            by the Board at the time of granting the Option); and



 


		(b)	the
                                            expiry date of the Option;



 


exercise
any portion of such Option.


 


		(c)	Leave
                                            of Absence: Employment will be deemed to continue intact during any sick leave or other
                                            bona fide leave of absence if the period of such leave does not exceed 90 days or, if longer,
                                            for so long as the Optionee’s right to reemployment is guaranteed either by statute
                                            or by contract. If the period of such leave exceeds 90 days and the Optionee’s reemployment
                                            is not so guaranteed, then his employment will be deemed to have terminated on the ninety-first
                                            day of such leave.



 


		4.	Assignment:
                                            No Option granted under this Plan is transferable or assignable otherwise than by will
                                            or pursuant to the laws of succession except that, if permitted by the rules and policies
                                            of the Exchange, an Optionee will have the right to assign any Option granted to him under
                                            this Plan to a trust or similar legal entity established by such Optionee.



 


		5.	Notice:
                                            An Option must be exercised only in accordance with the terms and conditions of the written
                                            option agreement under which it is granted and will be exercisable only by notice in writing
                                            to the Company at its principal place of business.



 


		6.	Payment:
                                            Subject to any vesting requirements described in each individual Option agreement, Options
                                            may be exercised in whole or in part at any time prior to their lapse or termination. Shares
                                            purchased by an Optionee on exercise on an Option must be paid for in full at the time of
                                            purchase (i.e. concurrently with the giving of the requisite notice) by either cash or certified
                                            cheque in favour of the Company.



 


		7.	Hold
                                            Period: In addition to any resale restrictions under the Securities Act or other applicable
                                            legislation, all Options granted under this Plan where the exercise price is based on the
                                            Discounted Market Price and all Shares issued on the exercise of such Options (before the
                                            expiry of the hold period) will be subject to a four-month Exchange hold period from the
                                            date the Options are granted, and the Option agreements and the certificates representing
                                            such Shares will bear the following legend:



 




    	 



    	3 | P a g e



    

 


“Without
prior written approval of the 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 the date that is four months and one day from issuance.”


 


The
four-month Exchange hold period may also apply in certain circumstances where the Options are granted at greater than the Discounted
Market Price and such Options will be subject to a four-month Exchange hold period from the date the Options are granted, and the Option
agreements and the certificates representing such Shares will bear the same legend as set out above.


 


The
Optionee acknowledges that the Company is a “domestic issuer” under the 1933 Act and Regulations, and the shares issued upon
the exercise of the Option are “Restricted Shares” under the 1933 Act and may not be traded under the 1933 Act and the securities
laws of all applicable States unless they are registered under the US Securities Laws or an exemption from such registration requirement
is available, and the placement of a legend on all Securities will be substantially in the following terms:


 


“THE
SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY
PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY (A) TO THE COMPANY; (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT; (C)
IN ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 OF THE U.S. SECURITIES ACT, IF AVAILABLE, AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS; OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE
STATE SECURITIES LAWS, AND, IN THE CASE OF PARAGRAPH (C) OR (D), THE SELLER FURNISHES TO THE COMPANY AN OPINION OF COUNSEL OF RECOGNIZED
STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE GOOD DELIVERY
IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”


 


“THE
SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT,
OR THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR ON BEHALF OF A U.S. PERSON UNLESS
THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION
FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. THE TERMS “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANINGS
GIVEN THEM UNDER REGULATION S PROMULGATED PURSUANT TO THE U.S. SECURITIES ACT.”


 


The
hold period of the TSX Venture Exchange is superceded by the hold period governed by the US Securities Act.


 


		8.	Individuals:
                                            Options may be granted only to an individual or to a company that is wholly-owned by an individual
                                            who is eligible for an Option grant. Only individuals who are Directors, Officers, Consultants
                                            or Employees may be granted Options. If the Optionee is a company, it must agree not to effect
                                            or permit any transfer of ownership or option of shares of the Company nor to issue further
                                            shares of any class in the company to any other individual or entity as long as the incentive
                                            Option remains outstanding, except with the written consent of the Exchange.



 


		9.	Time
                                            shall be of the essence of this Agreement.



 









    	 



    	4 | P a g e



    

 








		10.	The
                                            Company hereby confirms that as of the date of this Agreement the Optionee is a Director,
                                            Officer, Employee or Qualified Consultant of the Company as that term is defined in the TSX
                                            Venture Exchange policies.



 


		7.	This
                                            Agreement is governed by the Company’s Stock Option Plan, which is subject to the acceptance
                                            of the TSX Venture Exchange.



 


		8.	The
                                            Optionee acknowledges and confirms that any shares issued upon the exercise of the Option
                                            shall be subject to a four month hold period commencing from the date of granting of the
                                            Option, as required by the policies of the TSX Venture Exchange, and the share certificates
                                            will be legended accordingly.



 


		9.	The
                                            Optionee hereby acknowledges and consents to:



 


		(a)	the
                                            disclosure to the Exchange and all other regulatory authorities of all personal information
                                            of the undersigned obtained by the Issuer; and



 


		(b)	the
                                            collection, use and disclosure of such personal information by the Exchange and all other
                                            regulatory authorities in accordance with their requirements, including the provision to
                                            third party service providers, from time to time.



 


		10.	If
                                            at any time during the continued existence of the Option there shall be any alteration in
                                            the capital stock of the Company, other than an increase in the authorized or issued capital,
                                            then the within Option shall attach to an appropriate number of the shares or securities
                                            of the Company which shall have been created by any such alteration, and the price payable
                                            on the exercise of the Option shall be adjusted proportionately to the change in the shares
                                            resulting from such capital alteration.



 


		11.	If
                                            the Optionee is an insider of the Company, then disinterested Shareholder approval and acceptance
                                            by the TSX Venture Exchange must be obtained in respect of any proposed reduction in the
                                            exercise price of the Option.



 


		12.	Wherever
                                            in this Agreement the singular or masculine is used the same shall be construed as meaning
                                            the plural or the feminine or the body corporate where the context so requires, and vice
                                            versa.



 


		13.	This
                                            Agreement shall enure to the benefit of the Optionee and shall to the extent hereinbefore
                                            provided, enure to the benefit of his/her heirs, executors and administrators.



 


		14.	This
                                            Agreement may be signed by the Directors of the Company and by the Optionee in as many counterparts
                                            as may be necessary, each of which so signed shall be deemed to be an original and such counterparts
                                            together shall constitute one and the same instrument, and notwithstanding the date of execution
                                            shall be deemed to bear the date as set forth above.



 


The
remainder of this page is intentionally left blank.


 




    	 



    	5 | P a g e



    

 


IN
WITNESS WHEREOF the parties hereto have caused these presents to be executed as and from the day and year first above written.


 


THE
CORPORATE SEAL of WESTERN MAGNESIUM CORPORATION was hereunto affixed in the presence of:


 


	 	 	)	 
	Authorized
    Signatory	 	)	 
	 	 	)	 
	 	 	)	 
	Authorized
    Signatory	 	)	 


 


	SIGNED,
                                            SEALED and DELIVERED by the said

     

    [__]
    in the presence of:

     

     

    


 





    




Witness
Name

     

     

    


 








Witness
Address

 

     

    


 



 

    




Occupation
	)

    )

    )

    )

    






    )

    )

    )

    )

    )

    )

    )

    )

    )

    )
	 

                            

                            

                            

                            

                           


 





                          [__]

                          Authorized
                          Signatory