Document:

Naturally Advanced Technologies Inc.: Exhibit 4.1 - Filed by newsfilecorp.com

	 
	2011 FIXED SHARE OPTION
      PLAN 

For:

NATURALLY ADVANCED TECHNOLOGIES INC.

 

 

Naturally Advanced Technologies Inc.
Suite 402
- 1008 Homer Street, Vancouver, British Columbia, Canada, V6B 2X1

__________

NATURALLY ADVANCED TECHNOLOGIES INC.

(the “Company”)

2011 FIXED SHARE OPTION PLAN

Dated for reference effective on September 15, 2011

ARTICLE 1
PURPOSE AND INTERPRETATION

Purpose and Entire Plan

1.1          
The purpose of this Plan is to advance the interests of the Company by
encouraging equity participation in the Company through the acquisition of
Common Shares of the Company. It is the intention of the Company that this Plan
will at all times be in compliance with the TSX Venture Policies (or, if
applicable, the NEX Policies) and any inconsistencies between this Plan and the
TSX Venture Policies) (or, if applicable, the NEX Policies) will be resolved in
favour of the latter.

1.2          
This Plan supersedes and replaces each of the Company’s previously ratified
stock option plans and including, without limitation, the Company’s most recent
and existing “2010 Fixed Share Option Plan”, dated as ratified by the
Board of the Company on September 22, 2010, except that any “Options”
theretofore granted by the Company under its 2010 Fixed Share Option Plan are
necessarily brought forward by the Company under this Plan without restriction
by the terms and conditions of this Plan going forward.

Definitions

1.3          
In this Plan:

	 	(a) 	
      “Affiliate” means a company that is a parent or
      subsidiary of the Company, or that is controlled by the same entity as the
      Company;

	 	 	 
	 	(b) 	
      “Associate” has the meaning set out in the
      Securities Act;

	 	 	 
	 	(c) 	
      “Black-out Period” means an interval of time
      during which the Company has determined that one or more Participants may
      not trade any securities of the Company because they may be in possession
      of undisclosed material information pertaining to the Company, or when in
      anticipation of the release of quarterly or annual financials, to avoid
      potential conflicts associated with a company’s insider-trading policy or
      applicable securities legislation, (which, for greater certainty, does not
      include the period during which a cease trade order is in effect to which
      the Company or in respect of an Insider, that Insider, is
  subject);

	 	 	 
	 	(d) 	
      “Board” means the board of directors of the
      Company or any committee thereof duly empowered or authorized to grant
      Options under this Plan;

	 	 	 
	 	(e) 	
      “Change of Control” includes situations where
      after giving effect to the contemplated transaction and as a result of
      such transaction:

- 4 -

	 	(i) 	
      any one Person holds a sufficient number of voting shares
      of the Company or resulting company to affect materially the control of
      the Company or resulting company, or,

	 	 	 
	 	(ii) 	
      any combination of Persons, acting in concert by virtue
      of an agreement, arrangement, commitment or understanding, holds in total
      a sufficient number of voting shares of the Company or its successor to
      affect materially the control of the Company or its
  successor,

	 		
      where such Person or combination of Persons did not
      previously hold a sufficient number of voting shares to affect materially
      control of the Company or its successor. In the absence of evidence to the
      contrary, any Person or combination of Persons acting in concert by virtue
      of an agreement, arrangement, commitment or understanding, holding more
      than 20% of the voting shares of the Company or resulting company is
      deemed to materially affect control of the Company or resulting
      company;

	 	 	 	 
	 	(f) 	
      “Common Shares” means common shares without par
      value in the capital of the Company providing such class is listed on the
      TSX Venture (or the NEX, as the case may be);

	 	 	 	 
	 	(g) 	
      “Company” means the company named at the top
      hereof and includes, unless the context otherwise requires, all of its
      Affiliates and successors according to law;

	 	 	 	 
	 	(h) 	
      “Consultant” means an individual or Consultant
      Company, other than an Employee, or a Director of the Company
  that:

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

	 	 	 	 
	 		(ii) 	
      provides the services under a written contract between
      the Company or an Affiliate and the individual or the Consultant
      Company;

	 	 	 	 
	 		(iii) 	
      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

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

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

	 	 	 	 
	 	(j) 	
      “Directors” means the directors of the Company as
      may be elected from time to time;

	 	 	 	 
	 	(k) 	
      “Discounted Market Price” has the meaning assigned
      by Policy 1.1 of the TSX Venture Policies;

	 	 	 	 
	 	(l) 	
      “Disinterested Shareholder Approval” means
      approval by a majority of the votes cast by all the Company’s shareholders
      at a duly constituted shareholders’ meeting, excluding votes attached to Common Shares
      beneficially owned by Insiders who are Service Providers or their
  Associates;

- 5 -

	 	(m) 	
      “Distribution” has the meaning assigned by the
      Securities Act, and generally refers to a distribution of securities by
      the Company from treasury;

	 	 	 	 
	 	(n) 	
      “Effective Date” for an Option means the date of
      grant thereof by the Board;

	 	 	 	 
	 	(o) 	
      “Employee” means:

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

	 	 	 	 
	 		(ii) 	
      an individual who works full-time for the Company or a
      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

	 	 	 	 
	 		(iii) 	
      an individual who 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
      need not be made at source;

	 	 	 	 
	 	(p) 	
      “Exercise Price” means the amount payable per
      Common Share on the exercise of an Option, as determined in accordance
      with the terms hereof;

	 	 	 	 
	 	(q) 	
      “Expiry Date” means the day on which an Option
      lapses as specified in the Option Commitment therefore or in accordance
      with the terms of this Plan;

	 	 	 	 
	 	(r) 	
      “Insider” means an insider as defined in the TSX
      Venture Policies or as defined in securities legislation applicable to the
      Company;

	 	 	 	 
	 	(s) 	
      “Investor Relations Activities” has the meaning
      assigned by Policy 1.1 of the TSX Venture Policies;

	 	 	 	 
	 	(t) 	
      “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;

	 	 	 	 
	 	(u) 	
      “NEX” means a separate board of the TSX Venture
      for companies previously listed on the TSX Venture or the Toronto Stock
      Exchange which have failed to maintain compliance with the ongoing
      financial listing standards of those markets;

	 	 	 	 
	 	(v) 	
      “NEX Issuer” means a company listed on the
    NEX;

	 	 	 	 
	 	(w) 	
      “NEX Policies” means the rules and policies of the
      NEX as amended from time to time;

- 6 -

	 	(x) 	
      “Officer” means a Board appointed officer of the
      Company;

	 	 	 
	 	(y) 	
      “Option” means the right to purchase Common Shares
      granted hereunder to a Service Provider;

	 	 	 
	 	(z) 	
      “Option Commitment” means the notice of grant of
      an Option delivered by the Company hereunder to a Service Provider and
      substantially in the form of Schedule A attached hereto;

	 	 	 
	 	(aa) 	
      “Optioned Shares” means Common Shares that may be
      issued in the future to a Service Provider upon the exercise of an
      Option;

	 	 	 
	 	(bb) 	
      “Optionee” means the recipient of an Option
      hereunder;

	 	 	 
	 	(cc) 	
      “Outstanding Shares” means at the relevant time,
      the number of issued and outstanding Common Shares of the Company from
      time to time;

	 	 	 
	 	(dd) 	
      “Participant” means a Service Provider that
      becomes an Optionee;

	 	 	 
	 	(ee) 	
      “Person includes a company, any unincorporated
      entity, or an individual;

	 	 	 
	 	(ff) 	
      “Plan” means this “2010 Fixed Share Option Plan”,
      the terms of which are set out herein or as may be amended;

	 	 	 
	 	(gg) 	
      “Plan Shares” means the total number of Common
      Shares which may be reserved for issuance as Optioned Shares under the
      Plan as provided in §2.2;

	 	 	 
	 	(hh) 	
      “Regulatory Approval” means the approval of the
      TSX Venture and any other securities regulatory authority that has lawful
      jurisdiction over the Plan and any Options issued hereunder;

	 	 	 
	 	(ii) 	
      “Securities Act” means the Securities Act,
      R.S.B.C. 1996, c. 418, or any successor legislation;

	 	 	 
	 	(jj) 	
      “Service Provider” means a Person who is a bona
      fide Director, Officer, Employee, Management Company Employee, Consultant
      or Company Consultant, and also includes a company, 100% of the share
      capital of which is beneficially owned by one or more Service
      Providers;

	 	 	 
	 	(kk) 	
      “Share Compensation Arrangement” means any Option
      under this Plan but also includes any other stock option, stock option
      plan, employee stock purchase plan or any other compensation or incentive
      mechanism involving the issuance or potential issuance of Common Shares to
      a Service Provider;

	 	 	 
	 	(ll) 	
      “Shareholder Approval” means approval by a
      majority of the votes cast by eligible shareholders of the Company at a
      duly constituted shareholders’ meeting;

	 	 	 
	 	(mm) 	
      “Take Over Bid” means a take over bid as defined
      in subsection 92(1) of the Securities Act or the analogous provisions of
      securities legislation applicable to the Company;

	 	 	 
	 	(kk) 	
      “Termination Date” has the meaning ascribed
      thereto in §3.10;

- 7 -

	 	(nn) 	
      “TSX Venture” means the TSX Venture Exchange and
      any successor thereto; and

	 	 	 
	 	(oo) 	
      “TSX Venture Policies” means the rules and
      policies of the TSX Venture as amended from time to
time.

Other Words and Phrases

1.4          
Words and phrases used in this Plan but which are not defined in the Plan, but
are defined in the TSX Venture Policies (and, if applicable, the NEX Policies),
will have the meaning assigned to them in the TSX Venture Policies (and, if
applicable, the NEX Policies).

Gender

1.5          
Words importing the masculine gender include the feminine or neuter, words in
the singular include the plural, words importing a corporate entity include
individuals, and vice versa.

ARTICLE 2
 SHARE OPTION PLAN

Establishment of the Share Option Plan

2.1          
The Plan is hereby established to recognize contributions made by Service
Providers and to create an incentive for their continuing assistance to the
Company and its Affiliates. 

Maximum Plan Shares

2.2          
The maximum aggregate number of Plan Shares that may be reserved for issuance
under the Plan at any point in time is 8,224,240 Shares (which represents
20% of the Company’s issued and outstanding Common Shares on the effective date
of this Plan), less any Common Shares reserved for issuance under share options
granted under Share Compensation Arrangements other than this Plan, unless this
Plan is amended pursuant to the requirements of the TSX Venture Policies and, if
applicable, the NEX Policies.

Eligibility

2.3          
Options to purchase Common Shares may be granted hereunder to Service Providers
from time to time by the Board. Service Providers that are not individuals will
be required to undertake in writing not to effect or permit any transfer of
ownership or option of any of its securities, or to issue more of its securities
(so as to indirectly transfer the benefits of an Option), as long as such Option
remains outstanding, unless the written permission of the TSX Venture and the
Company is obtained.

Options Granted Under the Plan

2.4          
All Options granted under the Plan will be evidenced by an Option Commitment in
the form attached as Schedule A, showing the number of Optioned Shares, the term
of the Option, a reference to vesting terms, if any, and the Exercise Price.

- 8 -

2.5          
Subject to specific variations approved by the Board, all terms and conditions
set out herein will be deemed to be incorporated into and form part of an Option
Commitment made hereunder.

Limitations on Issue

2.6          
Subject to §2.10, the following restrictions on issuances of Options are
applicable under the Plan:

	 	(a) 	
      no Service Provider can be granted an Option if that
      Option would result in the total number of Options, together with all
      other Share Compensation Arrangements granted to such Service Provider in
      the previous 12 months, exceeding 5% of the Outstanding Shares unless the
      Company has obtained Disinterested Shareholder Approval to do
so;

	 	 	 
	 	(b) 	
      the aggregate number of Options granted to Service
      Providers conducting Investor Relations Activities in any 12-month period
      cannot exceed 2% of the Outstanding Shares, calculated at the time of
      grant; and

	 	 	 
	 	(c) 	
      the aggregate number of Options granted to any one
      Consultant in any 12-month period cannot exceed 2% of the Outstanding
      Shares, calculated at the time of grant.

Options Not Exercised

2.7          
In the event an Option granted under the Plan expires unexercised or is
terminated by reason of dismissal of the Optionee for cause or is otherwise
lawfully cancelled prior to exercise of the Option, the Optioned Shares that
were issuable thereunder will be returned to the Plan and will be eligible for
re-issuance.

Powers of the Board

2.8          
The Board will be responsible for the general administration of the Plan and the
proper execution of its provisions, the interpretation of the Plan and the
determination of all questions arising hereunder. Without limiting the
generality of the foregoing, the Board has the power to

	 	(a) 	
      allot Common Shares for issuance in connection with the
      exercise of Options;

	 	 	 
	 	(b) 	
      grant Options hereunder;

	 	 	 
	 	(c) 	
      subject to any necessary Regulatory Approval, amend,
      suspend, terminate or discontinue the Plan, or revoke or alter any action
      taken in connection therewith, except that no general amendment or
      suspension of the Plan will, without the prior written consent of all
      Optionees, alter or impair any Option previously granted under the Plan
      unless the alteration or impairment occurred as a result of a change in
      the TSX Venture Policies or the Company’s tier classification thereunder;
      and

	 	 	 
	 	(d) 	
      delegate all or such portion of its powers hereunder as
      it may determine to one or more committees of the Board, either
      indefinitely or for such period of time as it may specify, and thereafter
      each such committee may exercise the powers and discharge the duties of
      the Board in respect of the Plan so delegated to the same extent as the
      Board is hereby authorized so to do.

- 9 -

Amendment of the Plan by the Board of
Directors

2.9          
Subject to the requirements of the TSX Venture Policies and the prior receipt of
any necessary Regulatory Approval, the Board may in its absolute discretion,
amend or modify the Plan or any Option granted as follows:

	 	(a) 	
      it may make amendments which are of a typographical,
      grammatical or clerical nature only;

	 	 	 
	 	(b) 	
      it may change the vesting provisions of an Option granted
      hereunder;

	 	 	 
	 	(c) 	
      it may change the termination provision of an Option
      granted hereunder which does not entail an extension beyond the original
      Expiry Date of such Option;

	 	 	 
	 	(d) 	
      it may make amendments necessary as a result in changes
      in securities laws applicable to the Company;

	 	 	 
	 	(e) 	
      if the Company becomes listed or quoted on a stock
      exchange or stock market senior to the TSX Venture, it may make such
      amendments as may be required by the policies of such senior stock
      exchange or stock market; and

	 	 	 
	 	(f) 	
      amend this Plan (except for previously granted and
      outstanding Options) to reduce the benefits that may be granted to Service
      Providers (before a particular Option is granted) subject to the other
      terms hereof.

Terms or Amendments Requiring Disinterested Shareholder
Approval

2.10          
The Company shall obtain Disinterested Shareholder Approval prior to any of the
following actions becoming effective:

	 	(a) 	
      the Plan, together with all of the Company’s other Share
      Compensation Arrangements, could result at any time in:

	 	 	 	 
	 		(i) 	
      the aggregate number of Common Shares reserved for
      issuance under Options granted to Insiders exceeding 10% of the
      Outstanding Shares (in the event that this Plan is amended to reserve for
      issuance more than 10% of the Outstanding Shares);

	 	 	 	 
	 		(ii) 	
      the number of Optioned Shares issued to Insiders within a
      one-year period exceeding 10% of the Outstanding Shares (in the event that
      this Plan is amended to reserve for issuance more than 10% of the
      Outstanding Shares); or,

	 	 	 	 
	 		(iii) 	
      the issuance to any one Optionee, within a 12-month
      period, of a number of Common Shares exceeding 5% of Outstanding Shares;
      or

	 	 	 	 
	 	(b) 	
      any reduction in the Exercise Price of an Option
      previously granted to an Insider.

Options Granted Under the Company’s Previous Share Option
Plans

2.11          
Any option granted pursuant to a stock option plan previously adopted by the
Board which is outstanding at the time this Plan comes into effect shall be
deemed to have been issued under this Plan and shall, as of the date this Plan
comes into effect, be governed by the terms hereof.

- 10 -

ARTICLE 3

TERMS AND CONDITIONS OF OPTIONS

Exercise Price

3.1          
  The Exercise Price of an Option will be set by the Board on the Effective Date
  of the Option and cannot be less than the Discounted Market Price.

Term of Option

3.2          
An Option can be exercisable for a maximum of 10 years from the Effective
Date.

Option Amendment

3.3          
Subject to §2.10(b), the Exercise Price of an Option may be amended only if at
least six (6) months have elapsed since the later of the Effective Date, the
date the Common Shares commenced trading on the TSX Venture, and the date of the
last amendment of the Exercise Price.

3.4          
An Option must be outstanding for at least one year before the Company may
extend its term, subject to the limits contained in §3.2.

3.5          
Any proposed amendment to the terms of an Option must be approved by the TSX
Venture prior to the exercise of such Option.

Vesting of Options

3.6          
Subject to §3.7, vesting of Options shall be in accordance with Schedule B
attached hereto or otherwise, at the discretion of the Board, and will generally
be subject to:

	 	(a) 	
      the Service Provider remaining employed by or continuing
      to provide services to the Company or any of its Affiliates as well as, at
      the discretion of the Board, achieving certain milestones which may be
      defined by the Board from time to time or receiving a satisfactory
      performance review by the Company or any of its Affiliates during the
      vesting period; or

	 	 	 
	 	(b) 	
      the Service Provider remaining as a Director of the
      Company or any of its Affiliates during the vesting
  period.

Vesting of Options Granted to Consultants Conducting
Investor Relations Activities

3.7          
Notwithstanding §3.6, Options granted to Consultants conducting Investor
Relations Activities will vest:

	 	(a) 	
      over a period of not less than 12 months as to 25% on the
      date that is three months from the date of grant, and a further 25% on
      each successive date that is three months from the date of the previous
      vesting; or

	 	 	 
	 	(b) 	
      such longer vesting period as the Board may
    determine.

Effect of Take Over Bid

3.8          
If a Take Over Bid is made to the shareholders, all options issued to directors,
officers, employees and consultants that are not yet fully vested will
immediately become fully vested, unless such options are subject to vesting restrictions
in accordance with TSX Venture policies.

- 11 -

3.9          
If a Take Over Bid is made to the shareholders generally then the Company shall,
immediately upon receipt of notice of the Take Over Bid, notify each Optionee
currently holding an Option of the Take Over Bid, with full particulars thereof
whereupon such Option may, subject to receipt of Regulatory Approval and
notwithstanding §3.6, §3.7 and §3.7 be immediately exercised in whole or in part
by the Optionee.

Extension of Options Expiring During Blackout
Period

3.10          
Should the Expiry Date for an Option fall within a Blackout Period, or within
nine (9) Business Days following the expiration of a Blackout Period, such
Expiry Date shall be automatically extended without any further act or formality
to that day which is the tenth (10th) Business Day after the end of
the Blackout Period, such tenth Business Day to be considered the Expiry Date
for such Option for all purposes under the Plan. Notwithstanding §2.8, the tenth
Business Day period referred to in this §3.10 may not be extended by the
Board.

Optionee Ceasing to be Director, Employee or Service
Provider

3.11          
No Option may be exercised after the earlier of the date the Service Provider
has left his employ/office and the date that the Service Provider has been
advised by the Company that his services are no longer required or his service
contract has expired (the “Termination Date”), except as follows:

	 	(a) 	
      in the case of the death of an Optionee, any vested
      Option held by him at the date of death will become exercisable by the
      Optionee’s lawful personal representatives, heirs or executors until the
      earlier of one year after the date of death of such Optionee and the date
      of expiration of the term otherwise applicable to such Option;

	 	 	 
	 	(b) 	
      Options granted to a Service Provider conducting Investor
      Relations Activities will expire 90 days after the Termination Date, but
      only to the extent that such Option has vested as at the Termination
      Date;

	 	 	 
	 	(c) 	
      any Option granted to an Optionee other than one
      conducting Investor Relations Activities will expire one year after the
      Termination Date, but only to the extent that such Option has vested as at
      the Termination Date; and

	 	 	 
	 	(d) 	
      in the case of an Optionee being dismissed from
      employment or service for cause, such Optionee’s Options, whether or not
      vested at the date of dismissal will immediately terminate without right
      to exercise same.

Non Assignable

3.12          
Subject to §3.11, all Options will be exercisable only by the Optionee to whom
they are granted and will not be assignable or transferable.

- 12 -

Adjustment of the Number of Optioned Shares

3.13          
  The number of Common Shares subject to an Option will be subject to adjustment
  in the events and in the manner following

	 	(a) 	
      in the event of a subdivision of Common Shares as
      constituted on the date hereof, at any time while an Option is in effect,
      into a greater number of Common Shares, the Company will thereafter
      deliver at the time of purchase of Optioned Shares hereunder, in addition
      to the number of Optioned Shares in respect of which the right to purchase
      is then being exercised, such additional number of Common Shares as result
      from the subdivision without an Optionee making any additional payment or
      giving any other consideration therefore;

	 	 	 
	 	(b) 	
      in the event of a consolidation of the Common Shares as
      constituted on the date hereof, at any time while an Option is in effect,
      into a lesser number of Common Shares, the Company will thereafter deliver
      and an Optionee will accept, at the time of purchase of Optioned Shares
      hereunder, in lieu of the number of Optioned Shares in respect of which
      the right to purchase is then being exercised, the lesser number of Common
      Shares as result from the consolidation;

	 	 	 
	 	(c) 	
      in the event of any change of the Common Shares as
      constituted on the date hereof, at any time while an Option is in effect,
      the Company will thereafter deliver at the time of purchase of Optioned
      Shares hereunder the number of shares of the appropriate class resulting
      from the said change as an Optionee would have been entitled to receive in
      respect of the number of Common Shares so purchased had the right to
      purchase been exercised before such change;

	 	 	 
	 	(d) 	
      in the event of a capital reorganization,
      reclassification or change of outstanding equity shares (other than a
      change in the par value thereof) of the Company, a consolidation, merger
      or amalgamation of the Company with or into any other company or a sale of
      the property of the Company as or substantially as an entirety at any time
      while an Option is in effect, an Optionee will thereafter have the right
      to purchase and receive, in lieu of the Optioned Shares immediately
      theretofore purchasable and receivable upon the exercise of the Option,
      the kind and amount of shares and other securities and property receivable
      upon such capital reorganization, reclassification, change, consolidation,
      merger, amalgamation or sale which the holder of a number of Common Shares
      equal to the number of Optioned Shares immediately theretofore purchasable
      and receivable upon the exercise of the Option would have received as a
      result thereof. The subdivision or consolidation of Common Shares at any
      time outstanding (whether with or without par value) will not be deemed to
      be a capital reorganization or a reclassification of the capital of the
      Company for the purposes of this §3.13;

	 	 	 
	 	(e) 	
      an adjustment will take effect at the time of the event
      giving rise to the adjustment, and the adjustments provided for in this
      section are cumulative;

	 	 	 
	 	(f) 	
      the Company will not be required to issue fractional
      shares in satisfaction of its obligations hereunder. Any fractional
      interest in a Common Share that would, except for the provisions of this
      §3.13, be deliverable upon the exercise of an Option will be cancelled and
      not be deliverable by the Company; and

	 	 	 
	 	(g) 	
      if any questions arise at any time with respect to the
      Exercise Price or number of Optioned Shares deliverable upon exercise of
      an Option in any of the events set out in this §3.13, such questions will
      be conclusively determined by the Company’s auditors, or, if they decline
      to so act, any other firm of Chartered Accountants, in Vancouver, British
      Columbia (or in the city of the Company’s principal executive office) that
      the Company may designate and who will be granted access to all appropriate
records. Such determination will be binding upon the Company and all
Optionees.

- 13 -

ARTICLE 4
COMMITMENT AND EXERCISE PROCEDURES

Option Commitment

4.1          
Upon grant of an Option hereunder, an authorized officer of the Company will
deliver to the Optionee an Option Commitment detailing the terms of such Options
and upon such delivery the Optionee will be subject to the Plan and have the
right to purchase the Optioned Shares at the Exercise Price set out therein
subject to the terms and conditions hereof.

Manner of Exercise

4.2          
An Optionee who wishes to exercise his Option may do so by delivering

	 	(a) 	
      a written notice to the Company specifying the number of
      Optioned Shares being acquired pursuant to the Option; and

	 	 	 
	 	(b) 	
      a certified cheque, wire transfer or bank draft payable
      to the Company for the aggregate Exercise Price by the Optioned Shares
      being acquired.

Tax Withholding and Procedures

4.3          
Notwithstanding anything else contained in this Plan, the Company may, from time
to time, implement such procedures and conditions as it determines appropriate
with respect to the withholding and remittance of taxes imposed under applicable
law, or the funding of related amounts for which liability may arise under such
applicable law. Without limiting the generality of the foregoing, an Optionee
who wishes to exercise an Option must, in addition to following the procedures
set out elsewhere in this Plan, and as a condition of exercise:

(a)     
deliver a certified cheque, wire transfer or bank draft payable to the Company
for the amount determined by the Company to be the appropriate amount on account
of such taxes or related amounts; or

(b)     
otherwise ensure, in a manner acceptable to the Company (if at all) in its sole
and unfettered discretion, that the amount will be securely funded;

and must in all other respects follow any related procedures
and conditions imposed by the Company.

Delivery of Certificate and Hold Periods

4.4          
As soon as practicable after receipt of the notice of exercise described in §4.2
and payment in full for the Optioned Shares being acquired, the Company will
direct its transfer agent to issue a certificate to the Optionee for the
appropriate number of Optioned Shares. Such certificate issued will bear a
legend stipulating any resale restrictions required under applicable securities
laws. Further, if the Exercise Price is set below than the then current market
price of the Common Shares on the TSX Venture, the certificate will also bear a
legend stipulating that the Optioned Shares are subject to a four-month TSX Venture
hold period commencing the date of the grant of the Option.

- 14 -

ARTICLE 5
 GENERAL

Employment and Services

5.1          
Nothing contained in the Plan will confer upon or imply in favour of any
Optionee any right with respect to office, employment or provision of services
with the Company, or interfere in any way with the right of the Company to
lawfully terminate the Optionee’s office, employment or service at any time
pursuant to the arrangements pertaining to same. Participation in the Plan by an
Optionee is voluntary.

No Representation or Warranty

5.2          
The Company makes no representation or warranty as to the future market value of
Common Shares issued in accordance with the provisions of the Plan or to the
effect of the Income Tax Act (Canada) or any other taxing statute
governing the Options or the Common Shares issuable thereunder or the tax
consequences to a Service Provider. Compliance with applicable securities laws
as to the disclosure and resale obligations of each Participant is the
responsibility of each Participant and not the Company.

Interpretation

5.3          
The Plan will be governed and construed in accordance with the laws of the
Province of British Columbia.

Effective Date of Plan

5.4          
The Plan will become effective from and after September 15, 2011. 

__________

Schedule A 

SHARE OPTION PLAN

 OPTION COMMITMENT

     Notice is hereby given that,
effective this ________ day of ________________ , ________ (the “Effective
Date”), NATURALLY ADVANCED TECHNOLOGIES INC. (the “Company”) has
granted to ___________________________________________ (the “Optionee”)
an Option to acquire  ______________ Common Shares (collectively, the
“Optioned Shares”) up to 5:00 p.m. Vancouver Time on the ________ day of
________________ , ________ (the “Expiry Date”) at an Exercise Price of
US$ ________ (CDN$ ____________ ) per Optioned Share.

     At the date of grant of the
Option the Company is classified as [a Tier ____ Issuer under TSX Venture
Policies] [an NEX Issuer].

     Optioned Shares will vest and may
be exercised as follows: 

{COMPLETE ONE}

			In accordance with the vesting provisions set
      out in Schedule B of the Plan; 
	 	 	 
	 	 	           
                         
                         
                     or 
	 	 	 
	 	 	As follows: [INSERT VESTING SCHEDULE ]
  

     The grant of the Option evidenced
hereby is made subject to the terms and conditions of the Plan, which are hereby
incorporated herein and forms part hereof.

     To exercise your Option, deliver
a written notice specifying the number of Optioned Shares you wish to acquire,
together with a certified cheque, wire transfer or bank draft payable to the
Company for the aggregate Exercise Price. A certificate for the Optioned Shares
so acquired will be issued by the transfer agent as soon as practicable
thereafter and will bear a minimum four month non-transferability legend from
the date of this Option Commitment, the text of which is as follows. [The
Company may grant stock options without a hold period, provided the exercise
price of the options is set at or above the market price of the Company’s shares
rather than below.].

	
      “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 12:00 A.M. (MIDNIGHT) ON [insert date 4 months
      from the date of grant].”. 

     The Company and the Optionee
represent that the Optionee under the terms and conditions of the Plan is a bona
fide Service Provider (as defined in the Plan), entitled to receive Options
under TSX Venture Policies.

- 2 -

     The Optionee also acknowledges
and consents to the collection and use of Personal Information (as defined in
the Policies of the TSX Venture Exchange) by both the Company and the TSX
Venture (or the NEX, as the case may be) as more particularly set out in the
Acknowledgement – Personal Information in use by the TSX Venture (or the NEX, as
the case may be) on the date of this Share Option Plan.

NATURALLY ADVANCED TECHNOLOGIES INC.

	 	 
	Authorized Signatory 	 
	 	 
	 	 
	 	 
	(SIGNATURE OF OPTIONEE) 	 

__________

Schedule B 

SHARE OPTION PLAN 

VESTING SCHEDULE

1.          
Options granted pursuant to the Plan to Directors, Officers and all Employees
and Consultants employed or retained by the Company will vest as follows:

	 	(a) 	
      1/12 of the total number of Options granted will vest one
      month after the date of grant;

	 	 	 
	 	(b) 	
      a further 1/12 of the total number of Options granted
      will vest in equal monthly proportions over a period of 11 months
      thereafter.

2.          
Options granted to Consultants retained by the Company pursuant to a short term
contract or for a specific project with a finite term, will be subject to such
vesting provisions determined by the Board of Directors of the Company at the
time the Option Commitment is made, subject to Regulatory Approval.

3.          
Options granted to Service Providers involved in Investor Relations Activities
shall vest in accordance with §3.7 of the Plan and any policies of the TSX
Venture Exchange.

__________ex10_1.htm

Exhibit 10.1

FIRST AMENDMENT

Reference is made to that certain Credit Agreement, dated as of September 30, 2010 (as amended and modified from time to time, the "Credit Agreement"), by and among Vectren Capital Corp., an Indiana corporation (the "Borrower"), the Guarantor, the Lenders and Wells Fargo Bank, National Association, as administrative agent (the "Administrative Agent").  Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Credit Agreement.

The parties hereto agree that a mutual error was made in drafting Section 7.13(i) of the Credit Agreement and that Section 7.13(i) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

(i)           in addition to Liens covered by (a)-(h) above, Liens securing Indebtedness not exceeding 15% of the Guarantor's Consolidated Net Worth in the aggregate outstanding at any time.

This First Amendment is a Loan Document.  All references in the Credit Agreement and the other Loan Documents to the Credit Agreement shall be deemed to refer to the Credit Agreement as amended hereby.  Except as modified hereby, all of the terms and provisions of the Credit Agreement and the other Loan Documents shall remain in full force and effect.

This First Amendment may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.  Delivery of an executed counterpart by telecopy or other secure electronic format (.pdf) shall be as effective as an original.  This First Amendment shall be governed by the laws of the State of Illinois and shall become effective upon the Administrative Agent's receipt of counterparts hereof duly executed by the Required Lenders and each of the Loan Parties.

[SIGNATURE PAGES FOLLOW]

The parties hereto have caused this First Amendment to be executed as of November 2, 2010.

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent

By           /s/ Allison Newman                                                                

Name:           Allison Newman

Title:           Director

LENDERS:                                           WELLS FARGO BANK, NATIONAL ASSOCIATION,

as a Lender, Swing Line Lender and an L/C Issuer

By:           /s/ Allison Newman                                                      

Name:           Allison Newman

Title:           Director

BANK OF AMERICA, N.A.,

as a Lender and an L/C Issuer

By:           /s/ Carlos Morales                                                      

Name:           Carlos Morales

Title:           Vice President

JPMORGAN CHASE BANK, N.A.,

as a Lender and an L/C Issuer

By:           /s/ Helen D. Davis                                                      

Name:           Helen D. Davis

Title:           Authorized Officer

UNION BANK, N.A.,

as a Lender and an L/C Issuer

By:           /s/ Susan K. Johnson                                                                

Name:           Susan K. Johnson

Title:           Vice President

FIFTH THIRD BANK,

as a Lender

By:           /s/ Jennifer Raibley                                                      

Name:           Jennifer Raibley

Title:           Vice President

U.S. BANK NATIONAL ASSOCIATION,

as a Lender

By:           /s/ Shawn O’Hara                                                      

Name:           Shawn O’Hara

Title:           Managing Director

PNC BANK, NATIONAL ASSOCIATION,

as a Lender

By:           /s/ Chris Johnson                                                      

Name:           Chris Johnson

Title:           Assistant Vice President

REGIONS BANK,

as a Lender

By:           /s/ Eric Harvey                                                      

Name:           Eric Harvey

Title:           Vice President

OLD NATIONAL BANK,

as a Lender

By:           /s/ Wade Jenkins                                           

Name:           Wade Jenkins

Title:           Vice President

INTEGRA BANK N.A.,

as a Lender

By:           /s/ Chris E. Rutledge                                                      

Name:           Chris E. Rutledge

Title:           SVP

	
BORROWER:

	
VECTREN CAPITAL CORP.,

	
  

	
as Borrower

By           /s/ Robert L. Goocher                                                                

Name:           Robert L. Goocher

Title:           Vice President, Treasurer and Asst. Secretary

GUARANTOR:                                                      VECTREN CORPORATION

By           /s/ Robert L. Goocher                                                                

Name:           Robert L. Goocher

Title:           Treasurer and Vice President of InvestorRelations

 

 

INDS01 SWT 1320091v1

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