Document:

exh4-1_mgmtagmt.htm

 

 

 

 

 

 

EXHIBIT 4.1

 

MANAGEMENT AGREEMENT BETWEEN TASMAN METALS LTD.

AND SIERRA PERU PTY LTD. DATED OCTOBER 1, 2010

 

 

 

 

  

  

  

 

MANAGEMENT AGREEMENT

 

THIS AGREEMENT made and effective as of the 1st day of October, 2010.

 

BETWEEN:

 

TASMAN METALS LTD., having an office at 1305, 1090 West Georgia Street, Vancouver, BC, V6E 3V7.

 

(the "Corporation")

                               OF THE FIRST PART

 

AND:

 

SIERRA PERU PTY LTD., having an office at 33 Homebush Drive, Junortoun, Victoria, 3551 Australia

 

(the "Contractor")

 

                               OF THE SECOND PART

 

WHEREAS:

 

A.  The Contractor is a private corporation engaged in the provision of geological and executive level management services, primarily through its principals, which includes Mr. Mark Saxon (“Saxon”).

 

B.  The Corporation wishes to retain the Contractor to provide services with respect to the technical, corporate and administrative affairs of the Corporation.

 

C.  The services of the Contractor, as set out in Clause 3 below, are performed outside of Canada.

 

NOW THEREFORE, In consideration of the mutual covenants, premises, agreements and conditions herein contained and other good and valuable consideration (the receipt and authenticity of which is hereby acknowledged by the parties) the Contractor and the Corporation hereby agree as follows:

 

	
1.  

	
DEFINITIONS AND INTERPRETATION

 

For all purposes of this Agreement, except as otherwise expressly provided:

 

	
(a)         

	
"this Agreement" means this contract for technical, corporate and administrative services as from time to time supplemented or amended by one or more agreements entered into pursuant to the applicable provisions hereof;

 

	
(b)         

	
the words "herein" and "hereunder" and other words of similar importance refer to this Agreement as a whole and not to any particular paragraph, sub-paragraph or other subdivision;

 

	
(c)         

	
all references to currency mean lawful currency of Canada;

 

  

  

  

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(d)         

	
the headings are for convenience only and are not intended as a guide to interpretation of this Agreement of any portion hereof;

 

	
(e)         

	
"Business Day" means any day on which the Corporation's bankers located in Vancouver, British Columbia, are open for business during normal banking hours, other than a Saturday or a Sunday; and

 

	
(f)         

	
"Services" means the services described in section 3 of this Agreement.

 

	
2.  

	
ENGAGEMENT AND TERM

 

	
(a)         

	
The Corporation hereby engages the Contractor to provide the Services and the Contractor hereby agrees to provide the Services to the Corporation.

 

	
(b)         

	
The Contractor's engagement will commence on the date of this Agreement and continue until this Agreement is terminated in accordance with the provisions herein.

 

	
(c)         

	
If the Contractor ceases to be an ongoing entity, or Saxon ceases to be a director of the Contractor, then Saxon has the right to form a contract with the Corporation on the same terms, on an individual basis, as contained herewith.

 

	
3.  

	
SCOPE OF SERVICES

 

The Services to be provided by the Contractor shall consist of making available to the Corporation the services of Saxon on a full time basis. The services to be provided to the Corporation, although not limited to, are:

 

	
  

	
(a)

	
act as President & Chief Executive Officer of the Corporation;

 

	
  

	
(c)

	
assist the Corporation on all aspects of its business, including, but not limited to, strategic planning, financing, acquisitions and dispositions and corporate restructuring; and

 

	
  

	
(c)

	
Report to the Corporations’ Board of Directors from time to time.

 

	
4.  

	
COMPENSATION

 

	
(a)         

	
Fee.  During the term of this Agreement, the Contractor will be paid a monthly fee of $13,000 payable monthly as directed by Saxon from time to time and such fee to be reviewed by the Corporation from time to time.

 

	
(b)         

	
Reimbursement of Expenses.  In addition to the foregoing, the Corporation will reimburse the Contractor for all reasonable travel expenses, including car rentals, food and lodging, and sundry expenses and all other out of pocket expenses incurred in connection with the business of the Corporation or any of its subsidiaries within 15 days of presentation of receipts or other evidence satisfactory to the Corporation in respect of such expenses.

 

	
(c)         

	
Stock Options.  The Corporation will grant to Saxon, stock options in an amount and on terms determined by the board of directors of the Corporation from time to time.

 

  

  

  

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5.  

	
CONTRACTOR'S RIGHT TO TERMINATE

 

The Contractor may terminate its obligations under this Agreement at any time upon the occurrence of the following events:

 

	
(a)         

	
at any time upon providing 60 days notice in writing to the Corporation;

 

	
(b)         

	
upon a material breach or default of any term of this Agreement by the Corporation if such material breach or default has not been remedied within 30 days after written notice of the material breach or default has been delivered by the Contractor to the Corporation; or

 

	
(c)         

	
in accordance with subsection 7(b).

 

	
6.  

	
CORPORATION'S RIGHT TO TERMINATE

 

The Corporation may terminate the Contractor's engagement under this Agreement at any time upon the occurrence of any of the following events:

 

	
(a)         

	
the Contractor or any of its directors, officers or employees acting unlawfully, dishonestly, in bad faith or negligently with respect to the business of the Corporation to the extent that it has a material and adverse effect on the Corporation, or acting in any way which would permit the Corporation to terminate the Agreement "for cause" at common law if the Contractor or any of its directors, officers or employees were employees of the Corporation;

 

	
(b)         

	
the conviction of the Contractor or any of its directors, officers or employees of any crime or fraud against the Corporation or its property or any felony offence or crime reasonably likely to bring discredit upon the Contractor or the Corporation;

 

	
(c)         

	
the Contractor or any of its directors, officers or employees filing a voluntary petition in bankruptcy, or being adjudicated bankrupt or insolvent, or filing any petition or answer under any present or future statute or law relating to bankruptcy, insolvency or other relief for debtors;

 

	
(d)         

	
a material breach or default of any term of this Agreement by the Contractor if such material breach or default has not been remedied within 30 days after written notice of the material breach or default has been delivered by the Corporation to the Contractor;

 

	
(e)         

	
Saxon dying or becoming permanently disabled, as determined by a competent physician chosen by the Corporation, or disabled for a period exceeding 360 consecutive days or 360 days calculated on a cumulative basis over any two year period during the term of this Agreement;

 

	
(f)         

	
in accordance with subsection 7(b); or

 

	
(g)         

	
at the discretion of the Corporation without cause.

 

  

  

  

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7.  

	
CHANGE OF CONTROL

 

	
(a)         

	
For the purposes of this Agreement, a "Change of Control" shall be deemed to have occurred when:

 

	
(i)          

	
a majority of the directors elected at any annual or special general meeting of shareholders of the Corporation are not individuals nominated by the Corporation's then incumbent Board;

 

	
(ii)         

	
there is an occurrence of an event, including a take over bid (as defined in the Securities Act (British Columbia)), whereby any person or entity becomes the beneficial owner of shares representing 25% or more of the combined voting power of the voting securities of the Corporation;

 

	
(iii)        

	
there is a merger, amalgamation, reorganization or other corporate transaction of the Corporation with one or more corporations as a result of which, immediately following such merger, amalgamation, reorganization or other corporate transaction the shareholders of the Corporation as a group will hold less than a majority of the outstanding capital stock of the surviving corporation; or

 

	
(iv)         

	
the Corporation sells all or substantially all of its assets.

 

	
(b)         

	
In the event of a Change of Control of the Corporation, the Corporation may terminate the Contractor's obligations under this Agreement within 180 days of the Change of Control upon giving 30 days' notice in writing, and in such event, the Contractor will be entitled to receive the compensation set out in subsection 8(b).

 

	
(c)         

	
In the event of a Change of Control of the Corporation the Contractor may terminate the Contractor’s obligations under this Agreement for “Good Cause” at any time within 12 months after a Change of Control.  A notice of resignation under this section must be in writing, must cite this section and must contain at least one (1) month’s notice and not more than two (2) months’ notice.  In the event of a resignation under this section, on the fifth (5th) business day following the earlier of the last day of the notice period specified in the notice of resignation given under this section and the date the Contractor actually ceases providing services to the Corporation, (the “Date of Resignation”), the Corporation shall pay the compensation set out in subsection 8(c).

 

	
(d)         

	
As used herein voluntary termination by the Contractor of services for “Good Cause” means termination after a Change of Control following the occurrence of one of the following events without the Contractor’s express written consent:

 

	
  

	
(i)

	
the assignment by the Corporation of any duties inconsistent with the Contractor’s or Saxon’s positions, duties, responsibilities and status with the Corporation immediately prior to the Change of Control;

 

	
  

	
(ii)

	
a material reduction in the Contractor’s or Saxon’s responsibilities, titles or offices as in effect immediately prior to the Change of Control, or any removal of Saxon from or any failure to re-elect Saxon to any such positions, except in connection with good and sufficient cause, or as a result of death, disability or retirement;

 

  

  

  

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(iii)

	
a reduction by the Corporation in the Compensation payable to the Contractor as in effect immediately prior to the Change of Control;

 

	
  

	
(iv)

	
a change in the principal executive office of the Corporation to a location more than 50 miles from the location of the principal executive office of the Corporation immediately prior to the Change of Control;

 

	
  

	
(v)

	
the requirement by the Corporation that Saxon be based anywhere other than within a 50-mile radius of his location immediately prior to the Change of Control, except substantially consistent with Saxon’s business travel obligations immediately prior to the Change of Control; or

 

 

	
  

	
(vi)

	
the failure by the Corporation to continue in effect, or a change of Saxon’s participation in benefits under any bonus or incentive compensation or benefit plan, any stock ownership, stock purchase, stock option or other equity incentive plan, any life, health, accident, disability or similar plan providing welfare benefits or any plan or program of fringe benefits in which Saxon is participating immediately prior to a Change of Control (“Existing Plans”), the effect of which would be to materially reduce the total value, in the aggregate, of Saxon’s benefits under all Existing Plans and all amendments thereto and plans substituted therefore, as compared to Saxon’s benefits under Existing Plans as they existed immediately prior to the Change of Control, or the failure by the Corporation to provide Saxon with the number of paid vacation days to which Saxon are entitled in accordance with the Corporation’s general vacation policy in effect immediately prior to the Change of Control.

 

	
8.  

	
PAYMENTS ON TERMINATION

 

	
(a)         

	
In the event of the termination of the Contractor's employment pursuant to subsection 5(a), 6(a), 6(b), 6(c) or 6(d) of this Agreement, the Corporation shall pay to the Contractor within three Business Days of the date of such termination the full amount of compensation accrued pursuant to subsections 4(a) and 4(b) of this Agreement as of the date of termination.

 

	
(b)         

	
In the event of the termination of the Contractor's employment pursuant to subsection 6(g) or 7(b) of this Agreement, the Corporation shall pay to the Contractor within three Business Days of the date of such termination:

 

	
(i)         

	
the full amount of compensation accrued pursuant to subsections 4(a) and 4(b) of this Agreement as of the date of termination; and

 

	
(ii)        

	
two years compensation under subsections 4(a).

 

	
(c)         

	
The Contractor may, by notice to the Corporation, elect to take the severance payments to which he is entitled under subsections 8(a) or 8(b), as the case may be, in a lump sum payment, or in instalments over such period as the Contractor may specify.

 

	
9.  

	
CONFIDENTIALITY

 

The Contractor shall not either during the continuance of its engagement or anytime thereafter divulge, publish or otherwise reveal either directly or indirectly or through any person, firm or corporation the private affairs or secrets of the Corporation, its subsidiaries or affiliates to any person or persons other than the directors of the Corporation and shall not without the written consent of the Corporation either 

 

  

  

  

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during the continuance of its engagement or at any time thereafter, use for its own purpose or any purpose other than those of the Corporation any information it may acquire in relation to the business and affairs of the Corporation except such information which is in the public domain or is required by law to be disclosed.  The Contractor agrees, during the term of its engagement and at all times thereafter to keep confidential all information and material provided to it by the Corporation, excepting only such information as is already known to the public or required by law to be disclosed,  and including any such information and material in relation to any customer, vendor or other party transacting business with the Corporation, and not to release, use or disclose the same, except with the prior written permission of the Corporation.  The within understanding shall survive the termination of this Agreement or of the Contractor's engagement even if occasioned by the Corporation's breach or wrongful termination.  The Contractor will cause all of its directors, officers, employees, advisors and consultants to comply with this section 9.

 

	
10.  

	
SEVERABILITY

 

The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

 

	
11.  

	
ENUREMENT

 

This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.

 

	
12.  

	
NOTICES

 

Unless otherwise specified in this Agreement, any notice or other communication required to be given by any party pursuant to this Agreement must be in writing, given by letter or notice delivered by hand or first-class prepaid post or transmitted by facsimile transmission, and addressed to the recipient and sent to the address and facsimile number of the recipient set out below, marked for the attention of the representative set out below:

 

	 	 (a)	 If to the Contractor:	 Sierra Peru Pty Ltd.
	 	 	 	 33 Homebush Drive, Junortoun, Victory, 3551 Australia
	 	 	 	 Email:  marksaxon70@gmail.com
	 	 	 	 
	 	 (b)	 If to the Corporation:	 Tasman Metals Ltd.
	 	 	 	 1305, 1090 West Georgia Street, Vancouver, BC V6E 3V7
	 	 	 	 Canada
	 	 	 	 Email:  ndemare@chasemtg.com

 

Any notice personally delivered shall be deemed to have been given by the sender and received by the addressee at the time of delivery.  Any notice sent by email shall be deemed to have been given by the sender and received by the addressee on the first business day after it was transmitted.

 

	
13.  

	
GOVERNING LAW

 

The validity, interpretation, construction and performance of the Agreement shall be governed by the laws of the Province of British Columbia and the parties hereby irrevocably atone to the jurisdiction of the courts of British Columbia.

 

  

  

  

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14.  

	
WAIVER

 

No provisions of this Agreement may be modified waived or discharged unless such waiver modification or discharge is agreed to in writing signed by the Contractor and the Corporation.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with any condition or provision of this Agreement to be preformed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or at any prior or subsequent time.

 

	
15.  

	
ENTIRE AGREEMENT

 

No agreements or representations, oral or otherwise, expressed or implied with respect to the subject matter hereof have been made by wither party which are not set forth expressly in the Agreement.

 

	
16.  

	
NO ASSIGNMENT

 

This Agreement may not be assigned by either party hereto without the written consent of the other.

 

	
17.  

	
COUNTERPARTS

 

The Agreement may be executed in one or more counterparts each of which shall be deemed to be an original but all of which together will constitute one and the same Agreement.

 

IN WITNESS WHEREOF the parties have caused this Agreement to be executed and delivered as of the day and year above first set forth.

 

TASMAN METALS LTD.

 

Per:

 

/s/ Nick DeMare                         

Nick DeMare, Director

 

SIERRA PERU PTY LTD.

 

Per:

 

/s/ Mark Saxon                           

Authorized Signatoryexh4-2_stockplan.htm

 

 

 

 

 

EXHIBIT 4.2

 

STOCK OPTION PLAN

 

 

 

 

 

  

  

  

 

TASMAN METALS LTD.

(the “Company”)

 

STOCK OPTION PLAN

 

1.  OBJECTIVES

 

The Plan is intended as an incentive to enable the Company to:

 

	
(a)     

	
attract and retain qualified Directors, Senior Officers, Employees, Management Company Employees and Consultants of the Company and its Affiliates;

 

	
(b)     

	
promote a proprietary interest in the Company and its Affiliates among its Directors, Senior Officers, Employees, Management Company Employees and Consultants; and

 

	
(c)     

	
stimulate the active interest of such persons in the development and financial success of the Company and its Affiliates.

 

2.  DEFINITIONS

 

As used in the Plan, the terms set forth below shall have the following respective meanings:

 

“Affiliate” has the meaning ascribed thereto in the Policies of the TSXV;

 

“Associate” has the meaning ascribed thereto in the Policies of the TSXV;

 

“BCBCA” means the Business Corporations Act (British Columbia);

 

“Board” means the board of directors of the Company;

 

“Committee” means a committee of the Board that the Board may, in accordance with subsection 3.1, designate to administer the Plan;

 

“Company” means Tasman Metals Ltd., a company existing under the BCBCA;

 

“Consultant” means an individual or Consultant Company, other than an Employee, a Senior Officer, a Management Company Employee or a Director of the Company, that:

 

	
(a)     

	
is engaged to provide on an ongoing bona fide basis, consulting, technical, management or other services to the Company or to an Affiliate of the Company, other than services provided in relation to a distribution of securities;

 

	
(b)     

	
provides the services under a written contract between the Company or the Affiliate and the individual or the Consultant Company;

 

	
(c)     

	
in the reasonable opinion of the Company, spends or will spend a significant amount of time and attention on the affairs and business of the Company or an Affiliate of the Company; and

 

  

  

  

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(d)     

	
has a relationship with the Company or an Affiliate of the Company that enables the individual to be knowledgeable about the business and affairs of the Company;

 

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

 

“Discounted Market Price” has the meaning ascribed thereto by the Policies of the TSXV;

 

“Director” means a member of the Board;

 

“Employee” means an individual who:

 

	
(a)     

	
is considered an employee of the Company or its subsidiary under the Income Tax Act (Canada) (i.e. for whom income tax, employment insurance and Canada Pension Plan deductions must be made at source);

 

	
(b)     

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

 

	
(c)     

	
works for the Company or its subsidiary on a continuing and regular basis for a minimum amount of time per week providing services normally provided by an employee and who is subject to the same control and direction by the Company over the details and methods of work as an employee of the Company, but for whom income tax deductions are not made at source;

 

“Insider” has the meaning ascribed thereto by the Policies of the TSXV;

 

“Investor Relations Activities” has the meaning ascribed thereto by the Policies of the TSXV;

 

“Management Company Employee” means an individual employed by a Person providing management services to the Company, which are required for the ongoing successful operation of the business enterprise of the Company, but excluding a Person engaged in Investor Relations Activities;

 

“Option” means an option to purchase Shares granted under or subject to the terms of the Plan;

 

“Option Agreement” means a written agreement or certificate between the Company and an Optionee that evidences the Option and sets forth the terms, conditions and limitations applicable to an Option;

 

“Option Period” means the period for which an Option is granted;

 

“Optionee” means a person to whom an Option has been granted under the terms of the Plan or who holds an Option that is otherwise subject to the terms of the Plan;

 

“Other Share Compensation Arrangement” means, other than the Plan and any Options, any employee stock purchase plan or other compensation or incentive mechanism involving the 

 

  

  

  

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issuance or potential issuance of Shares, including but not limited to a purchase of Shares from treasury which is financially assisted by the Company by way of loan, guarantee or otherwise;

 

“Outstanding Issue” means the number of Shares that are outstanding immediately prior to the Share issuance or Option grant in question;

 

“Person” means a company or individual;

 

“Plan” means this Stock Option Plan of the Company;

 

“Policies of the TSXV” means the policies of the TSXV published by the TSXV in its Corporate Finance Manual, as may be amended from time to time;

 

“Securities Acts” means the Securities Act (British Columbia), R.S.B.C. 1996 c. 418, as amended, and the Securities Act (Alberta) R.S.A. 2000 c. S-4, as amended, from time to time;

 

“Senior Officer” means an officer of the Company within the meaning ascribed thereto in either the Securities Acts or a senior officer of the Company within the meaning ascribed thereto in the BCBCA;

 

“Shares” means common shares without par value in the capital stock of the Company as the same are presently constituted; and

 

“TSXV” means the TSX Venture Exchange or any successor thereto; provided that if the Shares are or become listed on a senior stock exchange, then reference to “TSXV” means a reference to such senior stock exchange.

 

3.  ADMINISTRATION OF THE PLAN

 

	
3.1  

	
The Plan will be administered by the Company’s Secretary or such other officer or employee as may be designated by the Board from time to time.  The Secretary or such other officer or employee will report to the Board or to a Committee of two or more Directors who may be designated from time to time to serve as the Committee for the Plan, all of the sitting members of which shall be current Directors.  Notwithstanding the existence of any such Committee, the Board itself will retain independent and concurrent power to undertake any action hereunder delegated to the Committee, whether with respect to the Plan as a whole or with respect to individual Options granted or to be granted under the Plan.

 

	
3.2  

	
Subject to the limitations of the Plan, the Board shall have full power to grant Options, to determine the terms, limitations, restrictions and conditions respecting such Options and to settle, execute and deliver Option Agreements and bind the Company accordingly, to interpret the Plan and to adopt such rules, regulations and guidelines for carrying out the Plan as it may deem necessary or proper, all of which powers shall be exercised in the best interests of the Company and in keeping with the objectives of the Plan.

 

	
3.3  

	
Notwithstanding any provision of this Plan, the Board may, in its discretion grant Options as it sees fit, or otherwise accelerate the vesting or exercisability of any Option, eliminate or make less restrictive any restrictions contained in an Option, provide for the extension of the Option Period of an outstanding Option, waive any restriction or other provision of the Plan or an Option or otherwise amend or modify an Option in any manner that is either:

 

  

  

  

-4-

 

 

	
(a)     

	
not adverse to the Optionee holding such Option; or

 

	
(b)     

	
consented to by such Optionee;

 

subject to any required approvals of any stock exchange or regulatory body having jurisdiction over the securities of the Company.

 

	
3.4  

	
The Board or Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Option in the manner and to the extent deemed necessary or desirable to carry it into effect.  Any decision of the Board or Committee in the interpretation and administration of the Plan shall lie within its absolute discretion and shall be final, conclusive and binding on all parties concerned.  No member of the Board or Committee shall be liable for anything done or omitted to be done by such member, by any other member of the Board or Committee or by any officer of the Company, in connection with the performance of any duties under the Plan, except those which arise from such member’s own wilful misconduct or as expressly provided by statute.

 

	
3.5  

	
All administrative costs of the Plan shall be paid by the Company.

 

4.  ELIGIBILITY FOR OPTIONS

 

	
4.1  

	
Options may be granted to Directors, Senior Officers, Employees, Management Company Employees and Consultants of the Company and its Affiliates, including an issuer all the voting securities of which are owned by such persons, who are, in the opinion of the Board or Committee, in a position to contribute to the success of the Company or any of its Affiliates or who, by virtue of their service to the Company or any predecessors thereof or to any of its Affiliates, are in the opinion of the Board or Committee, worthy of special recognition.  Except as may be otherwise set out in this Plan, the granting of Options is entirely discretionary.  Nothing in this Plan shall be deemed to give any person any right to participate in this Plan or to be granted an Option and the designation of any Optionee in any year or at any time shall not require the designation of such person to receive an Option in any other year or at any other time.  The Board or Committee shall consider such factors as it deems pertinent in selecting participants and in determining the amounts and terms of their respective Options.

 

	
4.2  

	
If an Optionee who is granted an Option is an Employee, Management Company Employee or Consultant of the Company or any of its Affiliates, the Option Agreement pertaining to such Option shall contain a representation by both the Company and the Optionee that the Optionee is a bona fide Employee, Management Company Employee or Consultant of the Company or its Affiliates.

 

	
4.3  

	
Subject to any applicable regulatory approvals, Options may also be granted under the Plan in exchange for outstanding options granted by the Company or any predecessor Company thereof or any Affiliate thereof, whether such outstanding options were granted under the Plan, under any other stock option plan of the Company or any predecessor Company or any Affiliate thereof, or under any stock option agreement with the Company or any predecessor Company or Affiliate thereof.

 

	
4.4  

	
Subject to any applicable regulatory approvals, Options may also be granted under the Plan in substitution for outstanding options of one or more other companies in connection with a plan of arrangement or exchange, amalgamation, merger, consolidation, acquisition of property or shares, 

 

  

  

  

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or other reorganization between or involving such other companies and the Company or any of its Affiliates.

 

5.  NUMBER OF SHARES RESERVED UNDER THE PLAN

 

	
5.1  

	
The number of Shares that may be reserved for issuance under the Plan, is limited as follows:

 

	
(a)     

	
the maximum aggregate number of Shares reserved for issuance pursuant to the exercise of Options granted under the Plan shall be 10% of  the Outstanding Issue as at the date of a stock option grant, provided that:

 

	
(i)         

	
if any Option subject to the Plan is forfeited, expires, is terminated or is cancelled for any reason whatsoever (other than by reason of exercise), then the maximum number of Shares for which Options may be granted hereunder shall be increased by the number of Shares which were the subject of such forfeited, expired, terminated or cancelled Option; and

 

	
(ii)        

	
such maximum number of Shares shall be appropriately adjusted in the event of any subdivision or consolidation of the Shares;

 

	
(b)     

	
if and for so long as the Shares are listed on the TSXV:

 

	
(i)         

	
the maximum aggregate number of Shares that may be reserved for issuance under Options granted to Insiders pursuant to the Plan may not exceed 10% of the Outstanding Issue at the time of grant, unless the Company has obtained “disinterested shareholder” approval in accordance with the Policies of the TSXV; and

 

	
(ii)        

	
the maximum aggregate number of Options granted to Insiders under the Plan together with any Other Share Compensation Arrangement within a 12 month period may not exceed 10% of the Outstanding Issue at the time of grant, unless the Company has obtained “disinterested shareholder” approval in accordance with the Policies of the TSXV;

 

	
  

	
    (c)

	
if and for so long as the Shares are listed on the TSX Venture Exchange (excluding any senior stock exchange):

 

	
(i)         

	
the maximum aggregate number of Shares that may be reserved for issuance under Options pursuant to the Plan together with any Other Share Compensation Arrangement to any one individual within a 12 month period shall not exceed 5% of the Outstanding Issue at the time of grant (unless the Company has obtained “disinterested shareholder” approval in accordance with the Policies of the TSX Venture Exchange);

 

	
(ii)        

	
the maximum aggregate number of Shares that may be reserved under the Plan or any Other Share Compensation Arrangement for issuance to any one Consultant within a 12 month period shall not exceed 2% of the Outstanding Issue at the time of grant; and

 

	
(iii)       

	
the maximum aggregate number of Shares that may be reserved under the Plan or any Other Share Compensation Arrangement for issuance to persons who are 

 

  

  

  

-6-

 

 

	
       

	
conducting Investor Relations Activities within a 12 month period shall not exceed 2% of the Outstanding Issue at the time of grant;

 

	
(c)     

	
subject to the policies of the TSXV an Option shall vest and may be exercised (in each case to the nearest full Share) during the Option Period in accordance with any vesting schedule as the Board may determine from time to time in its sole discretion.

 

6.  NUMBER OF SHARES PER OPTION

 

	
6.1  

	
The number of Shares under an Option shall be determined by the Board or Committee, in its discretion, at the time such Option is granted, taking into consideration the Optionee’s present and potential contribution to the success of the Company and taking into account all other Options then held by such Optionee, but subject always to the limitations set forth in subsection 5.1.

 

7.  HOLD PERIOD

 

	
7.1  

	
In addition to any resale restrictions under Securities Acts, where the exercise price of the Option is based on the Discounted Market Price, the Option and any Shares issued on the exercise of the Option must be legended with the TSXV hold period commencing on the date the Option was granted as follows:

 

“Without prior written approval of the TSX Venture Exchange and compliance with all applicable securities legislation, the securities represented by this certificate may not be sold, transferred, hypothecated or otherwise traded on or through the facilities of the TSX Venture Exchange or otherwise in Canada or to or for the benefit of a Canadian resident until [four months + 1 day from the date of grant].”

 

8.  PRICE

 

	
8.1  

	
The exercise price per Share under an Option shall be determined by the Board or Committee, in its discretion, at the time such Option is granted, but such price shall not be less than the closing price of the Shares on the TSXV on the trading day immediately preceding the day on which the Option is granted, less any allowable discount (provided that if there are no trades on such day then the last closing price within the preceding ten trading days will be used, and if there are no trades within such ten-day period, then the simple average of the bid and ask prices on the trading day immediately preceding the day of grant will be used) and, in any event, the exercise price per Share will not be less than $0.10, being the minimum exercise price allowable under the Policies of the TSXV.

 

	
8.2  

	
The exercise price at which, and the number of Optioned Shares for which, an outstanding Option may be exercised following a subdivision or consolidation of the Shares shall be subject to adjustment in accordance with section 12.

 

	
8.3  

	
Subject to TSXV approval, the exercise price per Optioned Share under an Option may be reduced at the discretion of the Board or Committee if:

 

	
(a)      

	
prior TSXV approval is obtained and at least six months has elapsed since the later of the date such Option was granted and the date the exercise price for such Option was last amended; and

 

  

  

  

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(b)      

	
disinterested shareholder approval is obtained for any reduction in the exercise price under an Option held by an Insider of the Company;

 

provided that if the exercise price is reduced to the then Discounted Market Price, the TSXV four month hold period will apply from the date of the amendment and further provided that no such conditions will apply in the case of an adjustment made under subsection 5.1(a)(ii).

 

9.  OPTION PERIOD AND EXERCISE OF OPTIONS

 

	
9.1  

	
The Option Period for an Option shall be determined by the Board or Committee at the time the Option is granted and may be up to ten (10) years from the date the Option is granted.  At the time an Option is granted, the Board or Committee may determine that, with respect to that Option, upon the occurrence of one of the events described in subsection 11.1 there shall come into force a time limit for exercise of such Option which is different than the Option Period, and in the event of such a determination, the Option Agreement for such Option shall contain provisions which specify the events and time limits related to that determination.  Subject to the applicable maximum Option Period provided for in this subsection 9.1 and subject to applicable regulatory requirements and approvals, the Board or Committee may extend the Option Period of an outstanding Option beyond its original expiration date, (whether or not such Option is held by an Insider) if the following requirements are satisfied:

 

	
(a)      

	
the term of the Option is not extended so that the effective term of the Option exceeds ten (10) years in total; and

 

	
(b)      

	
if the Optionee is an Insider at the time of the amendment, disinterested shareholder approval is obtained.

 

	
9.2  

	
If and for so long as the Shares are listed on the TSX Venture Exchange (excluding any senior stock exchange), Options issued to Consultants who perform Investor Relations Activities will be subject to a vesting schedule whereby no more than 25% of the options granted may be vested in any three month period.

 

	
9.3  

	
If there is a takeover bid made for all or any of the issued and outstanding Shares, then all outstanding Options, whether fully vested and exercisable or remaining subject to vesting provisions or other limitations on exercise, shall be exercisable in full to enable the Shares subject to such Options to be issued and tendered to such bid.

 

	
9.4  

	
The vested portions of Options will be exercisable, in whole or in part, at any time after vesting.  If an Option is exercised for fewer than all of the Shares for which the Option has then vested, the Option shall remain in force and exercisable for the remaining Shares for which the Option has then vested, according to the terms of such Option.

 

	
9.5  

	
The exercise of any Option will be contingent upon receipt by the Company of cash payment in full for the exercise price of the Shares being purchased by way of certified cheque, wire transfer or bank draft.  Neither an Optionee nor the legal representatives, legatees or distributees of such Optionee will be, or will be deemed to be, a holder of any Shares subject to an Option under the Plan unless and until certificates for such Shares are issuable to the Optionee or such other persons pursuant to the Option or the Plan.

 

  

  

  

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10.  STOCK OPTION AGREEMENT

 

	
10.1  

	
Upon the grant of an Option to an Optionee, the Company and the Optionee shall enter into an Option Agreement setting out the number of Shares subject to the Option, the Option Period and the vesting schedule for the Option, if any, and incorporating the terms and conditions of the Plan and any other requirements of regulatory authorities and stock exchanges having jurisdiction over the securities of the Company, together with such other terms and conditions as the Board or Committee may determine in accordance with the Plan.

 

11.  EFFECT OF TERMINATION OF EMPLOYMENT OR DEATH

 

	
11.1  

	
An outstanding Option shall remain in full force and effect and exercisable according to its terms for the Option Period until the Optionee ceases to be a Director, Employee, Non-Employee Director, Management Company Employee, Senior Officer or Consultant of the Company for any reason, excluding death or termination for cause, after which time the Option will expire within 90 days or, for those Optionees engaged in Investor Relations Activities, the Options will expire within 30 days of the cessation date, unless, the Board or Committee, at its own discretion, agrees to extend the period.

 

	
11.2  

	
In the event that the Optionee, shall cease to be a Director, Senior Officer, Employee, Management Company Employee, or Consultant of the Company for termination for cause, the Option shall terminate and shall cease to be exercisable upon such termination for cause.

 

	
11.3  

	
In the event of the death of an Optionee, an Option which remains exercisable may be exercised in accordance with its terms by the person or persons to whom such Optionee’s rights under the Option shall have passed under the Optionee’s will or pursuant to law, for a period not exceeding the earlier of one year from the Optionee’s death and the original expiry date of such Option.

 

12.  ADJUSTMENT IN SHARES SUBJECT TO THE PLAN

 

	
12.1  

	
Following the date an Option is granted, the exercise price for and the number of Shares which are subject to an Option will be adjusted, with respect to the then unexercised portion thereof, in the events and in accordance with the provisions and rules set out in this section 12, with the intent that the rights of Optionees under their Options are, to the extent possible, preserved and maintained notwithstanding the occurrence of such events.  Any dispute that arises at any time with respect to any adjustment pursuant to such provisions and rules will be conclusively determined by the Board or Committee, and any such determination will be binding on the Company, the Optionee and all other affected parties.

 

	
12.2  

	
If the outstanding Shares are changed into or exchanged for a different number of shares or into or for other securities of the Company or securities of another company or entity, whether through an arrangement, amalgamation, merger, business combination, sale or other similar procedure or otherwise, or a share recapitalization, subdivision or consolidation, then on each exercise of the Option which occurs following such events, for each Optioned Share for which the Option is exercised, the Optionee shall instead receive the number and kind of shares or other securities of the Company or other company into which such Share would have been changed or for which such Share would have been exchanged if it had been outstanding on the date of such event and the exercise price will be similarly adjusted so that the aggregate price to exercise the Option is preserved, and if the Company undertakes an arrangement or is amalgamated, merged or combined with another company, the Board shall make such other provision for the protection of the rights of Optionees as it shall deem advisable.

 

  

  

  

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12.3  

	
If the outstanding Shares are changed into or exchanged for a different number of shares or into or for other securities of the Company or securities of another company or entity, in a manner other than as specified in subsection 12.2, then the Board or Committee, in its sole discretion, may make such adjustment to the securities to be issued pursuant to any exercise of the Option and the exercise price to be paid for each such security following such event as the Board or Committee in its sole and absolute discretion determines to be equitable to give effect to the principle described in subsection 12.1, and such adjustments shall be effective and binding upon the Company and the Optionee and all the other parties for all purposes.

 

	
12.4  

	
No adjustment or substitution provided for in this section 12 shall require the Company to issue a fractional share in respect of any Option.  Fractional shares shall be eliminated.

 

	
12.5  

	
The grant or existence of an Option shall not in any way limit or restrict the right or power of the Company to effect adjustments, reclassifications, reorganizations, arrangements or changes of its capital or business structure, or to amalgamate, merge, consolidate, dissolve or liquidate, or to sell or transfer all or any part of its business or assets.

 

13.  NON-ASSIGNABILITY

 

	
13.1  

	
The Options under the Plan shall not be assignable or otherwise transferable, except as specifically provided in subsection 11.3 in the event of the death of the Optionee.  During the lifetime of the Optionee, all Options may only be exercised by the Optionee.

 

14.  EMPLOYMENT

 

	
14.1  

	
Nothing contained in the Plan shall confer upon any Optionee, or any person employing a Management Company Employee, any right with respect to employment or continuance of employment with, or the provision of services to, the Company or any of its Affiliates, or interfere in any way with the right of the Company or any of its Affiliates to terminate the Optionee’s employment or the services of any such person at any time.  Participation in the Plan by an Optionee is voluntary.

 

15.  REGULATORY ACCEPTANCES

 

	
15.1  

	
The Plan is subject to the acceptance of the Plan for filing by the TSXV, and the Board or Committee is authorized to amend the Plan from time to time in order to comply with any changes required from time to time by such applicable regulatory authorities, whether as conditions to the acceptance for filing of the Plan or otherwise, provided that no such amendment will in any way derogate from the rights held by Optionees holding Options (vested or unvested) at the time thereof without the consent of such Optionees.

 

	
15.2  

	
The obligation of the Company to issue and deliver Shares pursuant to the exercise of any Options granted under the Plan is subject to the acceptance of the Plan for filing by the TSXV.  If any Shares cannot be issued to any Optionee for any reason, including, without limitation, the failure to obtain such acceptance for filing, then the obligation of the Company to issue such Shares shall terminate and any amounts paid to the Company for such Shares shall be returned to the Optionee forthwith without interest or deduction.

 

  

  

  

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16.  SECURITIES REGULATION AND TAX WITHHOLDING

 

	
16.1  

	
Where necessary to enable the Company to use an exemption from requirements to register Shares or file a prospectus or use a registered dealer to distribute Shares under securities laws applicable to the securities of the Company in any jurisdiction, an Optionee, upon the acquisition of any Shares on the exercise of Options and as a condition to such exercise, shall provide to the Board or Committee such evidence as the Board or Committee requires to demonstrate that the Optionee or recipient will acquire such Shares with investment intent (i.e. for investment purposes) and not with a view to their distribution, including an undertaking to that effect in a form acceptable to the Board or Committee.  The Board or Committee may cause a legend or legends to be placed upon any certificates for the Shares to make appropriate reference to applicable resale restrictions, and the Optionee or recipient shall be bound by such restrictions.  The Board or Committee also may take such other action or require such other action or agreement by such Optionee or proposed recipient as may from time to time be necessary to comply with applicable securities laws.  This provision shall in no way obligate the Company to undertake the registration or qualification of any Options or the Shares under any securities laws applicable to the securities of the Company.

 

	
16.2  

	
For all purposes of the Plan, the Company may take all such measures as it deems appropriate or necessary to comply with applicable laws, including income tax laws and securities laws and regulations, as well as the rules of regulatory authorities having jurisdiction over the Company or in respect of the securities of the Company.  Without limitation to the foregoing, the Company may withhold and remit to tax authorities such sums which might otherwise be due or accruing due by the Company to an Optionee, if such withholding and remittance are required under applicable income tax laws in connection with the grant or exercise of the Optionee’s Options.

 

	
16.3  

	
The Company may withhold from any amount payable to a participant (a “Participant”), either under the Plan or otherwise, such amount as may be necessary to enable the Company to comply with the applicable requirements of any federal, provincial, state or local law, or any administrative policy of any applicable tax authority, relating to the withholding of tax or any other required deductions with respect to awards hereunder (“Withholding Obligations”). The Company shall also have the right in its discretion to satisfy any liability for any Withholding Obligations by selling, or causing a broker to sell, on behalf of any Participant such number of Shares issued to the Participant pursuant to an exercise of Options hereunder as is sufficient to fund the Withholding Obligations (after deducting commissions payable to the broker), or retaining any amount payable which would otherwise be delivered, provided or paid to the Participant hereunder. The Company may require a Participant, as a condition to the exercise of an Option to make such arrangements as the Company may require so that the Company can satisfy applicable Withholding Obligations, including, without limitation, requiring the Participant to (i) remit the amount of any such Withholding Obligations to the Company in advance; (ii) reimburse the Company for any such Withholding Obligations; or (iii) cause a broker who sells shares acquired by the Participant under the Plan on behalf of the Participant to withhold from the proceeds realized from such sale the amount required to satisfy any such Withholding Obligations and to remit such amount directly to the Company.

 

	
16.4  

	
Any Shares of a Participant that are sold by the Company, or by a broker engaged by the Company (the “Broker”), to fund Withholding Obligations will be sold as soon as practicable in transactions effected on the exchange on which the common shares of the Company are then listed for trading. In effecting the sale of any such Shares, the Company or the Broker will exercise its sole judgment as to the timing and manner of sale and will not be obligated to seek or obtain a minimum price. Neither the Company nor the Broker will be liable for any loss arising 

 

  

  

  

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out of any sale of such Shares including any loss relating to the manner or timing of such sales, the prices at which the Shares are sold or otherwise. In addition, neither the Company nor the Broker will be liable for any loss arising from a delay in transferring any Shares to a Participant. The sale price of Shares sold on behalf of Participants will fluctuate with the market price of the Company’s shares and no assurance can be given that any particular price will be received upon any such sale.

 

	
16.5  

	
Issuance, transfer or delivery of certificates for Shares acquired pursuant to the Plan may be delayed, at the discretion of the Board or Committee, until it is satisfied that the requirements of applicable laws and regulations, and applicable rules of regulatory authorities, have been met.

 

17.  AMENDMENT AND TERMINATION OF PLAN

 

	
17.1  

	
The Board reserves the right to amend or terminate the Plan at any time if and when it is deemed advisable in the absolute discretion of the Board; provided, however, that no such amendment or termination shall adversely affect any outstanding Options granted under the Plan without the consent of the Optionee.  Any amendment to the Plan shall also be subject to acceptance of such amendment or amended Plan for filing by the TSXV and, where required by the TSXV, the approval of the shareholders of the Company.

 

18.  NO REPRESENTATION OR WARRANTY

 

	
18.1  

	
The Company makes no representation or warranty as to the future market value of any Shares.

 

19.  GENERAL PROVISIONS

 

	
19.1  

	
Nothing contained in the Plan shall prevent the Company or any of its Affiliates from adopting or continuing in effect other compensation arrangements (subject to shareholder approval if such approval is required by TSXV) and such arrangements may be either generally applicable or applicable only in specific cases.

 

	
19.2  

	
The validity, construction and effect of the Plan, the grant of Options, the issue of Shares, any rules and regulations relating to the Plan any Option Agreement, and all determinations made and actions taken pursuant to the Plan, shall be governed by and determined in accordance with the laws of the Province of British Columbia.

 

	
19.3  

	
If any provision of the Plan or any Option Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to any person or Option, or would disqualify the Plan or any Option under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Option, such provision shall be stricken as to such jurisdiction, person, or Option and the remainder of the Plan and any such Option Agreement shall remain in full force and effect.

 

	
19.4  

	
Neither the Plan nor any Option shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any of its Affiliates and an Optionee or any other person.

 

  

  

  

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19.5  

	
Headings are given to the sections of the Plan solely as a convenience to facilitate reference.  Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

 

20.  TERM OF THE PLAN

 

	
20.1  

	
The Plan shall be effective as of March 14, 2013, and is subject to approval by the shareholders of the Company on a yearly basis at the Company’s meetings of shareholders and acceptance for filing by the TSXV pursuant to section 15.

 

	
20.2  

	
The Plan shall be effective until the Plan is terminated by the Board pursuant to section 17, and no Option shall be granted under the Plan after that date.  Unless otherwise expressly provided in the Plan or in an applicable Option Agreement, the Option Period for any Option granted hereunder will, and any authority of the Board to amend, alter, adjust, suspend, discontinue or terminate any such Option or to waive any conditions or rights under any such Option shall, continue after termination of the Plan notwithstanding such termination.

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