Stock Option Plan of Genoil Inc.



 





Exhibit 4.1




Stock Option Plan of Genoil Inc., as amended October 25, 2001 and January 13,
2003




 









 







GENOIL INC.




STOCK OPTION PLAN




as amended October 25, 2001

and January 13, 2003




ARTICLE I

PURPOSE OF PLAN



1.1 The purpose of the Plan is to attract, retain and motivate persons as
directors, officers, key employees and consultants of the Corporation and its
Subsidiaries and to advance the interests of the Corporation by providing such
persons with the opportunity, through share options, to acquire an increased
proprietary interest in the Corporation.




ARTICLE II

DEFINED TERMS




     Where used herein, the following terms shall have the following meanings,
respectively:


2.1 “Board” means the board of directors of the Corporation or, if established
and duly authorized to act, the Executive Committee or another Committee
appointed for such purpose by the board of directors of the Corporation;



2.2 “Business Day” means any day, other than a Saturday or a Sunday, on which
the Exchange is open for trading;



2.3 “Consultant” means an individual (including an individual whose services
are contracted through a personal holding corporation) with whom the
Corporation or any Subsidiary has a contract for substantial services;



2.4 “Corporation” means GENOIL INC. and includes any successor corporation
thereto;



2.5 “Eligible Person” means any director, officer, employee (part-time or
full-time) or Consultant of the Corporation or any Subsidiary;



2.6 “Exchange” means The Toronto Stock Exchange and, where the context permits,
any other exchange on which the Shares are or may be listed from time;



2.7 “Insider” means:





	 	(a)	 	an Insider as defined under Section 1(1) of the Securities
Act (Ontario), other than a person who falls within that definition
solely by virtue of being a director or senior officer of a
Subsidiary; and



 









 





	 	(b)	 	an associate as defined under Section 1(1) of the Securities
Act (Ontario) of any person who is an insider by virtue of (i)
above;



2.8 “Market Price” at any date in respect of the Shares shall be the greatest
closing price of such Shares on any Exchange on the last Business Day preceding
the date on which the Option is approved by the Board (or, if such Shares are
not then listed and posted for trading on the Exchange, on such stock exchange
in Canada on which the Shares are listed and posted for trading as may be
selected for such purpose by the Board). In the event that such Shares did not
trade on such Business Day, the Market Price shall be the average of the bid
and ask prices in respect of such Shares at the close of trading on such date.
In the event that such Shares are not listed and posted for trading on any
stock exchange, the Market Price shall be the fair market value of such Shares
as determined by the Board in its sole discretion;



2.9 “Option” means an option to purchase Shares granted under the Plan;



2.10 “Option Price” means the price per Share at which Shares may be purchased
under the Option, as the same may be adjusted from time to time in accordance
with Article 8;



2.11 “Optionee” means an Eligible Person to whom an Option has been granted;



2.12 “Outstanding Issue” means the number of Shares outstanding on a
non-diluted basis, determined on the basis of the number of shares that are
outstanding immediately prior to the share issuance under Article 5 herein,
excluding shares issued pursuant to share compensation arrangements over the
preceding one-year period;



2.13 “Person” means an individual, a corporation, a partnership, an
unincorporated association or organization, a trust, a government or department
or agency thereof and the heirs, executors, administrators or other legal
representatives of an individual and an associate or affiliate of any thereof
as such terms are defined in the Business Corporations Act (Alberta);



2.14 “Plan” means the GENOIL INC. Share Option Plan, as the same may be amended
or varied from time to time;



2.15 “Share Compensation Arrangement” means any stock option, stock option
plan, employee stock purchase plan or any other compensation or incentive
mechanism involving the issuance or potential issuance of Shares, including a
share purchase from treasury which is financially assisted by the Corporation
by way of a loan, guarantee or otherwise;



2.16 “Shares” means the common shares of the Corporation or, in the event of an
adjustment contemplated by Article 8, such other shares or securities to which
an Optionee may be entitled upon the exercise of an Option as a result of such
adjustment; and



2.17 “Subsidiary” means any corporation which is a subsidiary as such term is
defined in section 4 of the Business Corporations Act (Alberta) (as such
provision is from time to time amended, varied or re-enacted) of the
Corporation.




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ARTICLE III

ADMINISTRATION OF THE PLAN



3.1 The Plan shall be administered in accordance with the rules and policies of
the Exchange in respect of employee stock option plans by the Board. The Board
shall receive recommendations of management and shall determine and designate
from time to time those directors, officers, employees and Consultants of the
Corporation or its Subsidiaries to whom an Option should be granted and the
number of Shares, which will be optioned from time to time to any individual
and the terms and conditions of the grant.



3.2 The Board shall have the power, where consistent with the general purpose
and intent of the Plan and subject to the specific provisions of the Plan:





	 	(a)	 	to establish policies and to adopt, prescribe, amend or vary
rules and regulations for carrying out the purposes, provisions and
administration of the Plan and make all other determinations
necessary or advisable for its administration;





	 	(b)	 	to interpret and construe the Plan and to determine all
questions arising out of the Plan and any Option granted pursuant to
the Plan and any such interpretation, construction or determination
made by the Board shall be final, binding and conclusive for all
purposes;





	 	(c)	 	to determine which Eligible Persons are granted Options and
to grant Options;





	 	(d)	 	to determine the number of Shares covered by each Option;





	 	(e)	 	to determine the Option Price;





	 	(f)	 	to determine the time or times when Options will be granted
and exercisable;





	 	(g)	 	to determine if the Shares which are subject to an Option
will be subject to any restrictions upon the exercise of such
Option; and





	 	(h)	 	to prescribe the form of the instruments relating to the
grant, exercise and other terms of Options which initially shall be
substantially in the form annexed hereto as Schedule “A”.




ARTICLE IV

SHARES SUBJECT TO THE PLAN



4.1 Options may be granted in respect of authorized and unissued Shares
provided that, subject to increase by the Board, the receipt of the approval of
the Exchange and the approval of shareholders of the Corporation, the maximum
aggregate number of Shares reserved by the Corporation for issuance and which
may be purchased upon the exercise of all Options shall equal 19,000,000 Shares
in respect of which Options are not exercised shall be available for subsequent
Options under the Plan. No fractional Shares may be purchased or issued under
the Plan.




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ARTICLE V

ELIGIBILITY; GRANT; TERMS OF OPTIONS



5.1 Options may be granted to Eligible Persons.



5.2 Options may be granted by the Corporation pursuant to the recommendations
of the Board from time to time provided and to the extent that such decisions
are approved by the Board.



5.3 Subject to the provisions of this Plan, the number of Shares subject to
each Option, the Option Price, the expiration date of each Option, the extent
to which each Option is exercisable from time to time during the term of the
Option and other terms and conditions relating to each such Option shall be
determined by the Board. At no time shall the period during which an Option
shall be exercisable exceed 10 years.



5.4 In the event that no specific determination is made by the Board with
respect to the following matter, the period during which an Option shall,
subject to any other specific provisions of the Plan, be exercisable shall be
five years from the date the Option is granted to the Optionee.



5.5 The Option Price of Shares which are the subject of any Option shall in no
circumstances be lower than the Market Price of the Shares at the date of the
grant of the Option.



5.6 The maximum number of Shares which may be reserved for issuance to any one
Optionee under this Plan or under any other Share Compensation Arrangement
shall not exceed 5% of the Outstanding Issue.



5.7 The maximum number of Shares which may be reserved for issuance to Insiders
under the Plan or under any other Share Compensation Arrangement shall be 10%
of the Outstanding Issue.



5.8 The maximum number of Shares which may be issued to any one Insider and
such Insider’s associates under the Plan and any other Share Compensation
Arrangement in any 12 month period shall be 5% of the Outstanding Issue. The
maximum number of Shares which may be issued to any Insiders under the Plan and
any other Share Compensation Arrangement in any 12 month period shall be 10% of
the Outstanding Issue.



5.9 Any entitlement to acquire Shares granted pursuant to the Plan or any other
Share Compensation Arrangement prior to the Optionee becoming an Insider shall
be excluded for the purposes of the limits set out in 5.7 and 5.8 above.



5.10 An Option is personal to the Optionee and is non-assignable.




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ARTICLE VI

EXERCISE OF OPTIONS



6.1 Subject to the provisions of the Plan, an Option may be exercised from time
to time by delivery to the Corporation at its registered office of a written
notice of exercise addressed to the
Secretary of the Corporation specifying the number of Shares with respect to
which the Option is being exercised and accompanied by payment in full of the
Option Price of the Shares to be purchased. Certificates for such Shares shall
be issued and delivered to the Optionee within a reasonable period of time
following the receipt of such notice and payment.



6.2 Notwithstanding any of the provisions contained in the Plan or in any
Option, the Corporation’s obligation to issue Shares to an Optionee pursuant to
the exercise of an Option shall be subject to:





	 	(a)	 	completion of such registration or other qualification of
such Shares or obtaining approval of such governmental or regulatory
authority as counsel to the Corporation shall reasonably determine
to be necessary or advisable in connection with the authorization,
issuance or sale thereof;





	 	(b)	 	the listing of such Shares on the Exchange, if applicable;
and





	 	(c)	 	the receipt from the Optionee of such representations,
agreements and undertakings, including as to future dealings in such
Shares, as the Corporation or its counsel reasonably determines to
be necessary or advisable in order to safeguard against the
violation of the securities laws of any jurisdiction.




     In this connection the Corporation shall, to the extent necessary, take
all reasonable steps to obtain such approvals, registrations and qualifications
as may be necessary for the issuance of such Shares in compliance with
applicable securities laws and for the listing of such Shares on the Exchange.



ARTICLE VII

TERMINATION OF EMPLOYMENT; DEATH



7.1 Subject to Section 7.2 and any express resolution passed by the Board with
respect to an Option, an Option, and all rights to purchase pursuant thereto,
shall expire and terminate immediately upon the Optionee ceasing to be a
director, officer or a part-time or full-time employee of the Corporation or of
any Subsidiary. The entitlement of a Consultant to Options including the
termination thereof shall be in accordance with the terms of the consulting
agreement entered into between the Corporation or the Subsidiary and the
Consultant but will not exceed 90 days after termination of the contract.



7.2 If, before the expiry of an Option in accordance with the terms thereof,
the employment of the Optionee with the Corporation or with any Subsidiary
shall terminate, in either case by reason of the death of the Optionee, such
Option may, subject to the terms thereof and any other terms of the Plan, be
exercised by the legal representative(s) of the estate of the Optionee at any
time during the first six months following the death of the Optionee (but prior
to the expiry of the


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Option in accordance with the terms thereof) but only to
the extent that the Optionee was entitled to exercise such Option at the date
of the termination of his employment.



7.3 Options shall not be affected by any change of employment of the Optionee
or by the Optionee ceasing to be a director where the Optionee continues to be
employed by the Corporation or continues to be a director or officer of, the
Corporation or any Subsidiary.




ARTICLE VIII

CHANGE IN CONTROL AND CERTAIN ADJUSTMENTS



8.1 Notwithstanding any other provision of this Plan in the event that the
Corporation receives an offer (the “Offer”) for:





	 	(a)	 	the acquisition by any Person of Shares or rights or options
to acquire Shares of the Corporation or securities which are
convertible into Shares of the Corporation or any combination
thereof such that after the completion of such acquisition such
Person would be entitled to exercise 30% or more of the votes
entitled to be cast at a meeting of the shareholders; or





	 	(b)	 	the sale by the Corporation of all or substantially all of
the property or assets of the Corporation;



then notwithstanding that at the effective time of the Offer the Optionee may
not be entitled to all the Shares granted by the Option, the Optionee shall be
entitled to exercise the Options to the full amount of the Shares remaining at
that time from the date of the Offer to the date of the close of any such
transaction. If such transaction is not completed within 90 days of the date of
the Offer and the Optionee has not so exercised that portion of the Option
relating to Shares to which the Optionee would not otherwise be entitled, this
provision shall cease to apply to the Offer.



8.2 Appropriate adjustments with respect to Options granted or to be granted,
in the number of Shares optioned and in the Option Price, shall be made by the
Board to give effect to adjustments in the number of Shares of the Corporation
resulting from subdivisions, consolidations or reclassifications of the Shares
of the Corporation, the payment of stock dividends or cash dividends by the
Corporation (other than dividends in the ordinary course), the distribution of
securities, property or assets by way of dividend or otherwise (other than
dividends in the ordinary course), or other relevant changes in the capital
stock of the Corporation or the amalgamation or merger of the Corporation with
or into any other entity, subsequent to the approval of the Plan by the Board.
The appropriate adjustment in any particular circumstance shall be conclusively
determined by the Board in its sole discretion, subject to approval by the
Shareholders of the Corporation and to acceptance by the Exchange respectively,
if applicable.




ARTICLE IX

AMENDMENT OR DISCONTINUANCE OF PLAN



9.1 The Board may amend or discontinue the Plan at any time upon receipt of
requisite regulatory approval including without limitation, the approval of the
Exchange, provided,


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however, that no such amendment may, without the consent of
the shareholders, increase the maximum number of Shares that may be optioned
under the Plan, change the manner of determining the minimum Option Price,
reduce the Option Price for Options granted to Insiders or, without the consent
of the Optionee, alter or impair any of the terms of any Option previously
granted to an Optionee under the Plan. Any amendments to the terms of an Option
shall also require regulatory approval, including without limitation, the
approval of the Exchange.




ARTICLE X

MISCELLANEOUS PROVISIONS



10.1 The holder of an Option shall not have any rights as a shareholder of the
Corporation with respect to any of the Shares covered by such Option until such
holder shall have exercised such Option in accordance with the terms of the
Plan (including tendering payment in full of the Option Price of the Shares in
respect of which the Option is being exercised) and the issuance of Shares by
the Corporation.



10.2 Nothing in the Plan or any Option shall confer upon an Optionee any right
to continue in the employ of the Corporation or any Subsidiary or affect in any
way the right of the Corporation or any Subsidiary to terminate his employment
at any time; nor shall anything in the Plan or any Option be deemed or
construed to constitute an agreement, or an expression of intent, on the part
of the Corporation or any Subsidiary to extend the employment of any Optionee
beyond the time which he would normally be retired pursuant to the provisions
of any present or future retirement plan of the Corporation or any Subsidiary
or any present or future retirement plan of the Corporation or any Subsidiary,
or beyond the time at which he would otherwise be retired pursuant to the
provisions of any contract of employment with the Corporation or any
Subsidiary.



10.3 To the extent required by law or regulatory policy or necessary to allow
Shares issued on exercise of an Option to be free of resale restrictions, the
Corporation shall report the grant, exercise or termination of the Option to
the Exchange and the appropriate securities regulatory authorities.




ARTICLE XI

SHAREHOLDER AND REGULATORY APPROVAL



11.1 The Plan shall be subject to the approval of the shareholders of the
Corporation to be given by a resolution passed at a meeting of the shareholders
of the Corporation in accordance with the Business Corporations Act (Alberta),
and to acceptance by the Exchange. Any Options granted prior to such approval
and acceptances shall be conditional upon such approval and acceptance being
given and no such Options may be exercised unless such approval and acceptance
is given.




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SCHEDULE “A” TO SHARE OPTION PLAN




CERTIFICATE OF GENOIL INC.




     GENOIL INC. (the “Corporation”), for good and valuable consideration,
hereby grants to the Optionee set forth below an Option to purchase common
shares of the Corporation. The Option shall be subject to the terms and
conditions set forth in the GENOIL INC. Share Option Plan, as the same may be
amended or replaced from time to time (the “Plan”), and in addition shall be
subject to the terms set forth below:



	 	 	 
	Optionee:
	 	 
	Position
with the Corporation 

	:	 
	Number of Shares

	:	 
	Option Price

	:	 
	Expiry Date of Option

	:	 
	Rights of Exercise

	:	 







     On the close of business on the Expiry Date, the Options granted will
expire and terminate and be of no further force and effect whatsoever as to the
Shares for which the Option hereby granted has not been exercised.



     Where used herein all defined terms shall have the respective meanings
attributed thereto in the Plan. As provided for under the Plan, the Option
provided for herein is not assignable to any other person. If you require a
copy of the Plan, please contact the Secretary of the Corporation and she will
provide a copy to you.



     DATED this 13th day of January, 2003.