Document:

fdef14c0208ex4_duska.htm

    
       

      2004
EQUITY INCENTIVE PLAN 

       

      OF

       

      DUSKA
THERAPEUTICS, INC. 

       

       

       

      1.          PURPOSES OF THE PLAN

       

      The purposes of the 2004
Equity Incentive Plan (“Plan”) of DUSKA THERAPEUTICS, INC., a Nevada corporation
(the “Company”), are to: 

       

      1.1  Encourage
selected employees, directors, consultants and advisers to improve operations
and increase the profitability of the Company; 

       

      1.2  Encourage
selected employees, directors, consultants and advisers to accept or continue
employment or association with the Company or its Affiliates; and 

       

      1.3  Increase the
interest of selected employees, directors, consultants and advisers in the
Company’s welfare through participation in the growth in value of the common
stock of the Company, par value $.001 per share (the “Common Stock”).

       

      2.            
TYPES OF AWARDS; ELIGIBLE PERSONS

       

      2.1  The
Administrator (as defined below) may, from time to time, take the following
action, separately or in combination, under the Plan: (i) grant “incentive stock
options” (“ISOs”) intended to satisfy the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder (the
“Code”); (ii) grant “non-qualified options” (“NQOs,” and together with ISOs,
“Options”); (iii) grant or sell Common Stock subject to restrictions
(“restricted stock”) and (iv) grant stock appreciation rights (in general, the
right to receive the excess of the fair market value of Common Stock on the
exercise date over its fair market value on the grant date (“SARs”)), either in
tandem with Options or as separate and independent grants. Any such awards may
be made to employees, including employees who are officers or directors, and to
individuals described in Section 1 of this Plan who the Administrator believes
have made or will make a contribution to the Company or any Affiliate (as
defined below); provided, however, that only a person who is an employee of the
Company or any Affiliate at the date of the grant of an Option is eligible to
receive ISOs under the plan. The term “Affiliate” as used in this Plan means a
parent or subsidiary corporation as defined in the applicable provisions
(currently Sections 424(e) and (f), respectively) of the Code. The term
“employee” includes an officer or director who is an employee of the Company.
The term “consultant” includes persons employed by, or otherwise affiliated
with, a consultant. The term “adviser” includes persons employed by, or
otherwise affiliated with, an adviser. 

       

      2.2  Except as
otherwise expressly set forth in this Plan, no right or benefit under this Plan
shall be subject in any manner to anticipation, alienation, hypothecation, or
charge, and any such attempted action shall be void. No right or benefit under
this Plan shall in any manner be  liable
for or subject to debts, contracts, liabilities, or torts of any option holder
or any other person except as otherwise may be expressly required by applicable
law. 

       

      3.         STOCK SUBJECT TO THIS PLAN; MAXIMUM NUMBER OF
GRANTS

       

      Subject to the provisions
of Sections 6.1.1 and 8.2 of this Plan, the total number of shares of Common
Stock which may be offered, or issued as restricted stock or on the exercise of
Options or SARs under the Plan shall not exceed six million five hundred
thousand (6,500,000) shares of Common Stock. The shares subject to an Option or
SAR granted under the Plan which expire, terminate or are cancelled unexercised
shall become available again for grants under this Plan. If shares of restricted
stock awarded under the Plan are forfeited to the Company or repurchased by the
Company, the number of shares forfeited or repurchased shall again be available
under the Plan. Where the exercise price of an Option is paid by means of the
optionee’s surrender of previously owned shares of Common Stock or the Company’s
withholding of shares otherwise issuable upon exercise of the Option as may be
permitted herein, only the net number of shares issued and which remain
outstanding in connection with such exercise shall be deemed “issued” and no
longer available for issuance under this Plan. 

       

       

       

      
        
           

        

        
           

          
            
 

        

        
           

        

      

       

       

       

      4.
            ADMINISTRATION

       

      4.1  This Plan shall
be administered by the Board of Directors of the Company (the “Board”) or by a
committee (the “Committee”) to which administration of this Plan, or of part of
this Plan, is delegated by the Board (in either case, the “Administrator”). The
Board shall appoint and remove members of the Committee in its discretion in
accordance with applicable laws. At the Board’s discretion, the Committee may be
comprised solely of “non-employee directors” within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or
“outside directors” within the meaning of Section 162(m) of the Code. The
Administrator may delegate non-discretionary administrative duties to such
employees of the Company as the Administrator deems proper and the Board, in its
absolute discretion, may at any time and from time to time exercise any and all
rights and duties of the Administrator under this Plan. 

       

      4.2  Subject to the
other provisions of this Plan, the Administrator shall have the authority, in
its discretion: (i) to grant Options and SARs and grant or sell restricted
stock; (ii) to determine the fair market value of the Common Stock subject to
Options or other awards; (iii) to determine the exercise price of Options
granted, the economic terms of SARs granted, or the offering price of restricted
stock; (iv) to determine the persons to whom, and the time or times at which,
Options or SARs shall be granted or restricted stock granted or sold, and the
number of shares subject to each Option or SAR or the number of shares of
restricted stock granted or sold; (v) to construe and interpret the terms and
provisions of this Plan, of any applicable agreement and all Options and SARs
granted under this Plan, and of any restricted stock award under this Plan; (vi)
to prescribe, amend, and rescind rules and regulations relating to this Plan;
(vii) to determine the terms and provisions of each Option and SAR granted and
award of restricted stock (which need not be identical), including but not
limited to, the time or times at which Options and SARs shall be exercisable or
the time at which the restrictions on restricted stock shall lapse; (viii) with
the consent of the grantee, to rescind any award or exercise of an Option or SAR
and to modify or amend the terms of any Option, SAR or restricted stock; (ix) to
reduce the exercise price of any Option, the base value from which appreciation
is to be determined with respect to an SAR or the purchase price of restricted
stock; (x) to accelerate or defer (with the consent of the grantee) the exercise
date of any Option or SAR or the date on which the restrictions on restricted
stock lapse; (xi) to issue shares of restricted stock to an optionee in
connection with the accelerated exercise of an Option by such optionee; (xii) to
authorize any person to execute on behalf of the Company any instrument
evidencing the grant of an Option. SAR or award of restricted stock; (xiii) to
determine the duration and purposes of leaves of absence which may be granted to
participants without constituting a termination of their employment for the
purposes of the Plan; and (xiv) to make all other determinations deemed
necessary or advisable for the administration of this Plan, any applicable
agreement, Option, SAR or award of restricted stock. 

       

      4.3  All questions of
interpretation, implementation, and application of this Plan or any agreement or
Option, SAR or award of restricted stock shall be determined by the
Administrator, which determination shall be final and binding on all persons.

       

      5.            
GRANTING OF OPTIONS AND SARS;
AGREEMENTS

       

      5.1  No Options or
SARs shall be granted under this Plan after ten (10) years from the date of
adoption of this Plan by the Board. 

       

      5.2  Each Option and
SAR shall be evidenced by a written agreement, in form satisfactory to the
Administrator, executed by the Company and the person to whom such grant is
made. In the event of a conflict between the terms or conditions of an agreement
and the terms and conditions of this Plan, the terms and conditions of this Plan
shall govern. 

       

      5.3  Each agreement
shall specify whether the Option it evidences is an NQO or an ISO, provided,
however, all Options granted under this Plan to non-employee directors,
consultants and advisers of the Company are intended to be NQOs.

       

       

       

       

       

      
        
           

        

        
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      5.4  Subject to
Section 6.3.3 with respect to ISOs, the Administrator may approve the grant of
Options or SARs under this Plan to persons who are expected to become employees,
directors, consultants or advisers of the Company, but are not employees,
directors, consultants or advisers at the date of approval. 

       

      6.
            TERMS AND CONDITIONS OF OPTIONS AND
SARS

       

      Each Option and SAR
granted under this Plan shall be subject to the terms and conditions set forth
in Section 6.1. NQOs and SARs shall also be subject to the terms and conditions
set forth in Section 6.2, but not those set forth in Section 6.3. ISOs shall
also be subject to the terms and conditions set forth in Section 6.3, but not
those set forth in Section 6.2. SARs shall be subject to the terms and
conditions of Section 6.4. 

       

      6.1  Terms and
Conditions to Which All Options and SARs Are Subject. All Options and SARs
granted under this Plan shall be subject to the following terms and conditions:

       

      6.1.1  Changes in
Capital Structure. Subject to Section 6.1.2, if the stock of the Company is
changed by reason of a stock split, reverse stock split, stock dividend,
recapitalization, combination or reclassification, or if the Company effects a
spin-off of the Company’s subsidiary, appropriate adjustments shall be made by
the Administrator, in its sole discretion, in (a) the number and class of shares
of stock subject to this Plan and each Option and SAR outstanding under this
Plan, and (b) the exercise price of each outstanding Option; provided, that the
Company shall not be required to issue fractional shares as a result of any such
adjustments. Any adjustment, however, in an outstanding Option shall be made
without change in the total price applicable to the unexercised portion of the
Option but with a corresponding adjustment in the price for each share covered
by the unexercised portion of the Option. Adjustments under this Section 6.1.1
shall be made by the Administrator, whose determination as to the nature of the
adjustments that shall be made, and the extent thereof, shall be final, binding,
and conclusive. If an adjustment under this Section 6.1.1 would result in a
fractional share interest under an option or any installment, the
Administrator’s decision as to inclusion or exclusion of that fractional share
interest shall be final, but no fractional shares of stock shall be issued under
the Plan on account of any such adjustment. 

       

      6.1.2  Corporate
Transactions. Except as otherwise provided in the applicable agreement, in the
event of a Corporate Transaction (as defined below), the Administrator shall
notify each holder of an Option or SAR at least thirty (30) days prior thereto
or as soon as may be practicable. To the extent not then exercised all Options
and SARs shall terminate immediately prior to the consummation of such Corporate
Transaction unless the Administrator determines otherwise in its sole
discretion; provided. however, that the Administrator, in its sole discretion,
may (i) permit exercise of any Options or SARs prior to their termination, even
if such Options or SARs would not otherwise have been exercisable, and/or (ii)
provide that all or certain of the outstanding Options and SARs shall be assumed
or an equivalent Option or SAR substituted by an applicable successor
corporation or entity or any Affiliate of the successor corporation or entity. A
“Corporate Transaction” means (i) a liquidation or dissolution of the Company;
(ii) a merger or consolidation of the Company with or into another corporation
or entity (other than a merger with a wholly-owned subsidiary); (iii) a sale of
all or substantially all of the assets of the Company; or (iv) a purchase or
other acquisition of more than 50% of the outstanding stock of the Company by
one person or by more than one person acting in concert. 

       

      6.1.3  Time of
Option or SAR Exercise. Subject to Section 5 and Section 6.3.4, an Option or SAR
granted under the Plan shall be exercisable (a) immediately as of the effective
date of the of the applicable agreement or (b) in accordance with a schedule or
performance criteria as may be set by the Administrator and specified in the
applicable agreement. However, in no case may an Option or SAR be exercisable
until a written agreement in form and substance satisfactory to the Company is
executed by the Company and the grantee. 

       

      6.1.4  Grant Date.
The date of grant of an Option or SAR under the Plan shall be the effective date
of the applicable agreement. 

       

       

       

       

       

      
        
           

        

        
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      6.1.5  Non-Transferability of Rights. Except with the express written
approval of the Administrator, which approval the Administrator is authorized to
give only with respect to NQOs and SARs, no Option or SAR granted under this
Plan shall be assignable or otherwise transferable by the grantee except by will
or by the laws of descent and distribution. During the life of the grantee, an
Option or SAR shall be exercisable only by the grantee. 

       

      6.1.6  Payment.
Except as provided below, payment in full, in cash, shall be made for all stock
purchased at the time written notice of exercise of an Option is given to the
Company and the proceeds of any payment shall be considered general funds of the
Company. The Administrator, in the exercise of its absolute discretion after
considering any tax, accounting and financial consequences, may authorize any
one or more of the following additional methods of payment: 

       

      (a)  Subject to the
Sarbanes-Oxley Act of 2002, acceptance of the optionee’s full recourse
promissory note for all or part of the Option price, payable on such terms and
bearing such interest rate as determined by the Administrator (but in no event
less than the minimum interest rate specified under the Code at which no
additional interest or original issue discount would be imputed), which
promissory note may be either secured or unsecured in such manner as the
Administrator shall approve (including, without limitation, by a security
interest in the shares of the Company); 

       

      (b)  Subject to the
discretion of the Administrator and the terms of the stock option agreement
granting the Option, delivery by the optionee of shares of Common Stock already
owned by the optionee for all or part of the Option price, provided the fair
market value (determined as set forth in Section 6.1.9) of such shares of Common
Stock is equal on the date of exercise to the Option price, or such portion
thereof as the optionee is authorized to pay by delivery of such stock;

       

      (c)  Subject to the
discretion of the Administrator, through the surrender of shares of Common Stock
then issuable upon exercise of the Option, provided the fair market value
(determined as set forth in Section 6.1.9) of such shares of Common Stock is
equal on the date of exercise to the Option price, or such portion thereof as
the optionee is authorized to pay by surrender of such stock; and 

       

      (d)  By means of
so-called cashless exercises as permitted under applicable rules and regulations
of the Securities and Exchange Commission and the Federal Reserve Board.

       

      6.1.7  Withholding
and Employment Taxes. At the time of exercise and as a condition thereto, or at
such other time as the amount of such obligation becomes determinable, the
grantee of an Option or SAR shall remit to the Company in cash all applicable
federal and state withholding and employment taxes. Such obligation to remit may
be satisfied, if authorized by the Administrator in its sole discretion, after
considering any tax, accounting and financial consequences, by the holder’s (i)
delivery of a promissory note in the required amount on such terms as the
Administrator deems appropriate, (ii) tendering to the Company previously owned
shares of Common Stock or other securities of the Company with a fair market
value equal to the required amount, or (iii) agreeing to have shares of Common
Stock (with a fair market value equal to the required amount), which are
acquired upon exercise of the Option or SAR, withheld by the Company.

       

      6.1.8  Other
Provisions. Each Option and SAR granted under this Plan may contain such other
terms, provisions, and conditions not inconsistent with this Plan as may be
determined by the Administrator, and each ISO granted under this Plan shall
include such provisions and conditions as are necessary to qualify the Option as
an “incentive stock option” within the meaning of Section 422 of the Code.

       

      6.1.9  Determination of Value. For purposes of this Plan, the fair market
value of Common Stock or other securities of the Company shall be determined as
follows: 

       

      (a)  If the stock of
the Company is listed on a securities exchange or is regularly quoted by a
recognized securities dealer, and selling prices are reported, its fair market
value shall be the closing price of such stock on the date the value is to be
determined, but if selling prices are not reported, its fair market value shall
be the mean between the high bid and low asked prices for such stock on the date
the value is to be determined (or if there are no quoted prices for the date of
grant, then for the last preceding business day on which there were quoted
prices). 

       

       

       

       

       

      
        
           

        

        
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      (b)  In the absence
of an established market for the stock, the fair market value thereof shall be
determined in good faith by the Administrator, with reference to the Company’s
net worth, prospective earning power, dividend-paying capacity, and other
relevant factors, including the goodwill of the Company, the economic outlook in
the Company’s industry, the Company’s position in the industry, the Company’s
management, and the values of stock of other corporations in the same or a
similar line of business. 

       

      6.1.10  Option and
SAR Term. No Option or SAR shall be exercisable more than 10 years after the
date of grant, or such lesser period of time as is set forth in the applicable
agreement (the end of the maximum exercise period stated in the agreement is
referred to in this Plan as the “Expiration Date”). 

       

      6.2  Terms and
Conditions to Which Only NQOs Are Subject. Options granted under this Plan which
are designated as NQOs shall be subject to the following terms and conditions:

       

      6.2.1  Exercise
Price. The exercise price of an NQO shall be the amount determined by the
Administrator as specified in the option agreement. 

       

      6.2.2  Termination
of Employment. Except as otherwise provided in the applicable agreement, if for
any reason a grantee ceases to be employed by the Company or any of its
Affiliates, Options that are NQOs and SARs held at the date of termination (to
the extent then exercisable) may be exercised in whole or in part at any time
within ninety (90) days of the date of such termination (but in no event after
the Expiration Date). For purposes of this Section 6.2.2, “employment” includes
service as a director, consultant or adviser. For purposes of this Section
6.2.2, a grantee’s employment shall not be deemed to terminate by reason of the
grantee’s transfer from the Company to an Affiliate, or vice versa, or sick
leave, military leave or other leave of absence approved by the Administrator,
if the period of any such leave does not exceed ninety (90) days or, if longer,
if the grantee’s right to reemployment by the Company or any Affiliate is
guaranteed either contractually or by statute. 

       

      6.3  Terms and
Conditions to Which Only ISOs Are Subject. Options granted under this Plan which
are designated as ISOs shall be subject to the following terms and conditions:

       

      6.3.1  Exercise
Price. The exercise price of an ISO shall not be less than the fair market value
(determined in accordance with Section 6.1.9) of the stock covered by the Option
at the time the Option is granted. The exercise price of an ISO granted to any
person who owns, directly or by attribution under the Code (currently Section
424(d)), stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of any Affiliate (a “Ten
Percent Stockholder”) shall in no event be less than one hundred ten percent
(110%) of the fair market value (determined in accordance with Section 6.1.9) of
the stock covered by the Option at the time the Option is granted.

       

      6.3.2  Disqualifying Dispositions. If stock acquired by exercise of an
ISO granted pursuant to this Plan is disposed of in a “disqualifying
disposition” within the meaning of Section 422 of the Code (a disposition within
two (2) years from the date of grant of the Option or within one year after the
issuance of such stock on exercise of the Option), the holder of the stock
immediately before the disposition shall promptly notify the Company in writing
of the date and terms of the disposition and shall provide such other
information regarding the Option as the Company may reasonably require.

       

      6.3.3  Grant Date.
If an ISO is granted in anticipation of employment as provided in Section 5.4,
the Option shall be deemed granted, without further approval, on the date the
grantee assumes the employment relationship forming the basis for such grant,
and, in addition, satisfies all requirements of this Plan for Options granted on
that date. 

       

       

       

       

       

      
        
           

        

        
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      6.3.4  Term.
Notwithstanding Section 6.1.10, no ISO granted to any Ten Percent Stockholder
shall be exercisable more than five (5) years after the date of grant.

       

      6.3.5  Termination
of Employment. Except as otherwise provided in the stock option agreement, if
for any reason an optionee ceases to be employed by the Company or any of its
Affiliates, Options that are ISOs held at the date of termination (to the extent
then exercisable) may be exercised in whole or in part at any time within ninety
(90) days of the date of such termination (but in no event after the Expiration
Date). For purposes of this Section 6.3.5, an optionee’s employment shall not be
deemed to terminate by reason of the optionee’s transfer from the Company to an
Affiliate, or vice versa, or sick leave, military leave or other leave of
absence approved by the Administrator, if the period of any such leave does not
exceed ninety (90) days or, if longer, if the optionee’s right to reemployment
by the Company or any Affiliate is guaranteed either contractually or by
statute. 

       

      6.4  Terms and
Conditions Applicable Solely to SARs. In addition to the other terms and
conditions applicable to SARs in this Section 6, the holder shall be entitled to
receive on exercise of an SAR only Common Stock at a fair market value equal to
the benefit to be received by the exercise. At the request of the holder, and
with the approval of the Administrator (which approval may be granted or
withheld in the sole and absolute discretion of the Administrator), the benefit
may be payable in cash or partly in Common Stock and partly in cash.

       

      7.
            MANNER OF EXERCISE

       

      7.1  An optionee
wishing to exercise an Option or SAR shall give written notice to the Company at
its principal executive office, to the attention of the officer of the Company
designated by the Administrator, accompanied by payment of the exercise price
and/or withholding taxes as provided in Sections 6.1.6 and 6.1.7. The date the
Company receives written notice of an exercise hereunder accompanied by the
applicable payment will be considered as the date such Option or SAR was
exercised. 

       

      7.2  Promptly after
receipt of written notice of exercise and the applicable payments called for by
Section 7.1, the Company shall, without stock issue or transfer taxes to the
holder or other person entitled to exercise the Option or SAR, deliver to the
holder or such other person a certificate or certificates for the requisite
number of shares of Common Stock. A holder or permitted transferee of an Option
or SAR shall not have any privileges as a stockholder with respect to any shares
of Common Stock to be issued until the date of issuance (as evidenced by the
appropriate entry on the books of the Company or a duly authorized transfer
agent) of such shares. 

       

      8.
            RESTRICTED STOCK

       

      8.1  Grant or
Sale of Restricted Stock. 

       

      8.1.1  No awards of
restricted stock shall be granted under this Plan after ten (10) years from the
date of adoption of this Plan by the Board. 

       

      8.1.2  The
Administrator may issue shares under the Plan as a grant or for such
consideration (including services, and, subject to the Sarbanes-Oxley Act of
2002, promissory notes) as determined by the Administrator. Shares issued under
the Plan shall be subject to the terms, conditions and restrictions determined
by the Administrator. The restrictions may include restrictions concerning
transferability, repurchase by the Company and forfeiture of the shares issued,
together with such other restrictions as may be determined by the Administrator.
If shares are subject to forfeiture or repurchase by the Company, all dividends
or other distributions paid by the Company with respect to the shares may be
retained by the Company until the shares are no longer subject to forfeiture or
repurchase, at which time all accumulated amounts shall be paid to the
recipient. All Common Stock issued pursuant to this Section 8 shall be subject
to a purchase or grant agreement, which shall be executed by the Company and the
prospective recipient of the shares prior to the delivery of certificates
representing such shares to the recipient. 

       

       

       

       

       

      
        
           

        

        
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      The purchase or grant
agreement may contain any terms, conditions, restrictions, representations and
warranties required by the Administrator. The certificates representing the
shares shall bear any legends required by the Administrator. The Administrator
may require any purchaser of restricted stock to pay to the Company in cash upon
demand amounts necessary to satisfy any applicable federal, state or local tax
withholding requirements. If the purchaser fails to pay the amount demanded, the
Administrator may withhold that amount from other amounts payable by the Company
to the purchaser, including salary, subject to applicable law. With the consent
of the Administrator in its sole discretion, a purchaser may deliver Common
Stock to the Company to satisfy this withholding obligation. Upon the issuance
of restricted stock, the number of shares reserved for issuance under the Plan
shall be reduced by the number of shares issued. 

       

      8.2  Changes in
Capital Structure. In the event of a change in the Company’s capital structure,
as described in Section 6.1.1, appropriate adjustments shall be made by the
Administrator, in its sole discretion, in the number and class of restricted
stock subject to this Plan and the restricted stock outstanding under this Plan;
provided, however, that the Company shall not be required to issue fractional
shares as a result of any such adjustments. 

       

      8.3  Corporate
Transactions. In the event of a Corporate Transaction, as defined in Section
6.1.2 hereof, to the extent not previously forfeited, all restricted stock shall
be forfeited immediately prior to the consummation of such Corporate Transaction
unless the Administrator determines otherwise in its sole discretion; provided,
however, that the Administrator, in its sole discretion, may remove any
restrictions as to any restricted stock. The Administrator may, in its sole
discretion, provide that all outstanding restricted stock participate in the
Corporate Transaction with an equivalent stock substituted by an applicable
successor corporation subject to the restriction. 

       

      9.
            EMPLOYMENT OR CONSULTING
RELATIONSHIP

       

      Nothing in this Plan or
any Option granted hereunder shall interfere with or limit in any way the right
of the Company or of any of its Affiliates to terminate the employment,
consulting or advising of any optionee or restricted stock holder at any time,
nor confer upon any optionee or restricted stock holder any right to continue in
the employ of, or consult or advise with, the Company or any of its Affiliates.

       

      10.         
CONDITIONS UPON ISSUANCE OF
SHARES

       

      10.1  Securities
Act. Shares of Common Stock shall not be issued pursuant to the exercise of an
Option or the receipt of restricted stock unless the exercise of such Option or
such receipt of restricted stock and the issuance and delivery of such shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended (the “Securities
Act”). 

       

      10.2  Non-Compete
Agreement. As a further condition to the receipt of Common Stock pursuant to the
exercise of an Option or the receipt of restricted stock, the optionee or
recipient of restricted stock may be required not to render services for any
organization, or engage directly or indirectly in any business, competitive with
the Company at any time during which (i) an Option is outstanding to such
Optionee and for six (6) months after any exercise of an Option or the receipt
of Common Stock pursuant to the exercise of an Option and (ii) restricted stock
is owned by such recipient and for six (6) months after the restrictions on such
restricted stock lapse. Failure to comply with this condition shall cause such
Option and the exercise or issuance of shares thereunder and/or the award of
restricted stock to be rescinded and the benefit of such exercise, issuance or
award to be repaid to the Company. 

       

      11.         
NON-EXCLUSIVITY OF THIS
PLAN

       

      The adoption of this Plan
shall not be construed as creating any limitations on the power of the Company
to adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options other than under this Plan.

       

       

       

       

       

       

       

      
        
           

        

        
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      12.       
MARKET STAND-OFF

       

      Each optionee, holder of
an SAR or recipient of restricted stock, if so requested by the Company or any
representative of the underwriters in connection with any registration of the
offering of any securities of the Company under the Securities Act, shall not
sell or otherwise transfer any shares of Common Stock acquired upon exercise of
Options, SARs or receipt of restricted stock during the 180-day period following
the effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that such restriction shall apply only to a
registration statement of the Company which includes securities to be sold on
behalf of the Company to the public in an underwritten public offering under the
Securities Act and the restriction period shall not exceed 90 days after the
registration statement becomes effective. 

       

      13.
       AMENDMENTS TO PLAN

       

      The Board may at any time
amend, alter, suspend or discontinue this Plan. Without the consent of an
optionee, holder of an SAR or holder of restricted stock, no amendment,
alteration, suspension or discontinuance may adversely affect such person’s
outstanding Option(s), SAR(s) or the terms applicable to restricted stock except
to conform this Plan and ISOs granted under this Plan to the requirements of
federal or other tax laws relating to incentive stock options. No amendment,
alteration, suspension or discontinuance shall require stockholder approval
unless (a) stockholder approval is required to preserve incentive stock option
treatment for federal income tax purposes or (b) the Board otherwise concludes
that stockholder approval is advisable. 

       

      14.          EFFECTIVE DATE OF PLAN;
TERMINATION

       

      This Plan shall become
effective upon adoption by the Board; provided,
however, that no Option or SAR shall be exercisable unless and until written
consent of the stockholders of the Company, or approval of stockholders of the
Company voting at a validly called stockholders’ meeting, is obtained within
twelve (12) months after adoption by the Board. If any Options or SARs are so
granted and stockholder approval shall not have been obtained within twelve (12)
months of the date of adoption of this Plan by the Board, such Options and SARs
shall terminate retroactively as of the date they were granted. Awards may be
made under this Plan and exercise of Options and SARs shall occur only after
there has been compliance with all applicable federal and state securities laws.
This Plan (but not Options and SARs previously granted under this Plan) shall
terminate within ten (10) years from the date of its adoption by the Board.
Termination shall not affect any outstanding Options or SARs or the terms
applicable to previously awarded restricted stock.

       

       

      8f20fr12gex4i_nearctic.htm

    
      Exhibit
3

      Audit
Committee Charter

      

      NEARCTIC
NICKEL MINES INC.

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

       

 

    AUDIT
COMMITTEE CHARTER

    

    1.0           PURPOSE

    

    1.1           
The Audit Committee (the “Committee”) is established by the Board of Directors
(the “Board”) of Nearctic Nickel Mines Inc. (the “Company”) for the purpose of
overseeing the accounting and financial reporting processes of the Company and
audits of the financial statements of the Company.

    

    The
Committee is responsible for assisting the Board’s oversight of:

    

    1.1.1 the independent auditor’s
qualifications and independence;

    

    1.1.2 the performance of the Company’s
independent auditors;

    

    1.1.3 the quality and integrity of the
Company’s financial statements and related disclosure;

    

    1.1.4 oversight of the Company’s
internal and disclosure controls and reporting; and

    

    1.1.5 the Company’s compliance with
legal and regulatory requirements.

    

    2.0           COMPOSITION

    

    2.1           Members

    

    2.1.1           The
Committee shall consist of as many members as the Board shall determine, but
inany event not fewer than three members.

    

    2.1.2           The
Board shall appoint members of the Committee annually.

    

    2.2           Qualifications

    

    
      	
               
      

            	
              2.2.1

            	
              Each
      member of the Committee shall be an “unrelated” director within the
      meaning of the applicable Toronto Stock Exchange (“TSX”) and Ontario
      Securities Commissions (“OSC”)
guidelines.

            

    

    

    
      	
               
      

            	
              2.2.2

            	
              Each
      member of the Committee shall be financially literate, meaning each
      member, at the time of their appointment, must be able to read and
      understand financial statements that present a breadth and level of
      complexity of accounting issues that are generally comparable to the
      breadth and complexity of the Company that can reasonably be expected to
      be raised by the Company’s financial
statements.

            

    

     

    2.3           
Service
on Multiple Committees

    It is
recommended that Committee members not simultaneously serve on the committees of
more than three other public companies. If a Committee member serves on more
than two other committees, the Committee (or Board) must determine whether
membership on multiple committees impairs the ability of the member to serve on
the Committee.

    

    2.4           
Chair

    The Chair
of the Committee shall be appointed by the Committee.

    

    2.5           Removal
and Replacement

    The
members of the Committee may be removed or replaced, and any vacancies on the
Committee shall be filled, by the Board. Membership on the Committee shall
automatically end at such time as the Board determines that a member ceases to
be an unrelated director.

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

     

    
 

    

    3.0           
OPERATIONS

    

    3.1           
Meetings

    The Chair
of the Committee, in consultation with the Committee members, shall determine
the schedule and frequency of the Committee meetings, provided that the
Committee shall meet at least four times per year.

    

    3.2           Executive
Sessions

    The
Committee shall meet separately with Management, the Corporate Treasurer and the
independent auditor in periodic executive sessions. The Committee shall also
meet separately with the independent auditor at every meeting of the Committee
at which the independent auditor is present.

    

    3.3           
Agenda

    The Chair
of the Committee, with the assistance of the Corporate Treasurer, shall develop
and set the Committee’s agenda, in consultation with other members of the
Committee, the Board and Management. The agenda and information concerning the
business to be conducted at each Committee meeting shall be, to the extent
practical, communicated to the members of the Committee sufficiently in advance
of each meeting to permit meaningful review.

    

    3.4           Report
to Board

    The
Committee shall report regularly to the entire Board and shall submit to the
Board the minutes of its meetings.

    

    3.5           
Self-Evaluation

    The
Committee shall conduct an annual performance self-evaluation and shall report
to the entire Board the results of the self-evaluation.

    

    3.6           Assessment
of Charter

    The
Committee shall review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board for approval.

    

    4.0           COMMITTEE
AUTHORITY AND RESPONSIBILITIES

    

    4.1           
Independent Auditor’s Qualifications and Independence

    

    4.1.1           The
Committee shall be directly responsible for the appointment (subject to
shareholder approval),
retention or replacement of the independent auditor.

    

    
      	
               
      

            	
              4.1.2

            	
              The
      Committee shall be directly responsible for the compensation and oversight
      of the work of the independent auditor, (including resolution of
      disagreements between Management and the auditor regarding financial
      reporting), employed by the Company to audit its financial
      statements.

            

    

    

    4.1.3           
The independent auditor shall report directly to the Committee.

    

    4.1.4           The
Committee shall review and evaluate the experience, qualifications, performance
and independence
of the independent auditor.

    

    4.1.5           The
Committee shall have the sole authority to pre-approve:

     

    
      
        	
                 
      

              	
                (a)

              	
                all
      auditing services, including all audit engagement fees and terms;
      and

              	
                 

              

      

       

    

    
      	
               
      

            	
              (b)

            	
              all
      non-audit services, including certain tax services to be performed by the
      Company’s
      independent auditor.

            	
               

            

    

    

    
      	
               
      

            	
              4.1.6

            	
              The
      Committee shall review with the lead audit partner whether any of the
      audit partners receive any discretionary compensation from the audit firm
      with respect to non-audit services performed by the independent
      auditor.

            

    

    

    
      	
               
      

            	
              4.1.7

            	
              The
      Committee shall obtain and review with the lead audit partner and a more
      senior representative of the independent auditor, annually or more
      frequently as the Committee considers appropriate, a report by the
      independent auditor describing:

            

    

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
 

    
      

      
        	
                 
      

              	
                (a)

              	
                the
      independent auditor’s internal quality-control
  procedures;

              

      

       

    

    
      	
               
      

            	
               (b)

            	
              any
      material issues raised by the most recent internal quality-control review,
      or peer review, of the independent auditor, or by any inquiry, review or
      investigation by governmental, regulatory or professional authorities,
      within the preceding five years, respecting one or more independent audits
      carried out by the independent auditor, and any steps taken to deal with
      these issues; and

            

    

    

    
      	
               
      

            	
              (c)

            	
              all
      relationships between the independent auditor and the Company in order to
      assess the independent auditor’s
independence.

            

    

     

    
      
        	
                 
      

              	
                4.1.8

              	
                
                  The
      Committee shall ensure a five-year rotation period and a five-year
      “time-out” periodof the lead audit partner having primary responsibility
      for the audit and the audit partner responsible for reviewing the audit as
      required by law and a seven-year mandatory rotation period with a two year
      “time-out” period for certain other audit partners depending on the
      partner’s involvement in the audit. In addition, the Committee shall
      consider whether, in order to assure continuing auditor independence, it
      is appropriate to adopt a policy of rotating the independent auditing firm
      on a regular basis.

                

              

      

       

    

    
      
        
          	
                   
      

                	
                  4.1.9

                	
                  
                    
                      The
      Committee shall recommend to the Board policies for the Company’s hiring
      of partners, employees or former partners and employees of the current and
      formerindependent auditor who participated in any capacity in the audit of
      the Company.

                    

                  

                

        

         

      

      
        
          
            
              	
                       
      

                    	
                      4.1.10

                    	
                      
                        
                          
                            The
      Committee shall pre-approve the hiring of any partner, employee or former
      partner and employee of the independent auditor who was a member of the
      Company’s audit team during the preceding two fiscal years. In addition,
      the Committee shall pre-approve the hiring of any partner, employee or
      former partner or employee of the independent auditor within the preceding
      two fiscal years for senior positions within the Company, regardless of
      whether that person was a member of the Company’s audit
      team.

                          

                        

                      

                    

            

             

          

        

      

    

    4.2           Performance
of the Audit Functions and Independent Auditors

    

    
      	
               
      

            	
              4.2.1

            	
              The
      Committee shall discuss with Management and advise on the appointment,
      replacement, reassignment or dismissal of any senior internal auditor, if
      applicable.

            

    

    

    
      	
               
      

            	
              4.2.2

            	
              The
      Committee shall meet with Management and the independent auditor prior to
      the audit to discuss the scope, planning and staffing of the proposed
      audit for the current year.

            

    

    

    
      	
               
      

            	
              4.2.3

            	
              The
      Committee shall review and discuss with Management and the independent
      auditor, any internal audit department responsibilities, plans, results,
      budget and staffing, if applicable.

            

    

    

    

    
      	
               
      

            	
              4.2.4

            	
              The
      Committee shall review and discuss with Management the Company’s major
      financial risk exposures and the steps Management has taken to monitor and
      control such exposures, including the Company’s policies with respect to
      risk assessment and risk
Management.

            

    

    

    
      	
               
      

            	
              4.2.5

            	
              The
      Committee shall review with Management, any internal auditor and the
      independent auditor and conduct an annual assessment and a quarterly
      evaluation of the Company’s disclosure controls and procedures and the
      Company’s internal controls over financial reporting and determine if
      there are any significant deficiencies or weaknesses in the Company’s
      control procedures. The Committee shall review with Management the
      Company’s anti-fraud control
procedures.

            

    

    

    
      	
               
      

            	
              4.2.6

            	
              The
      Company shall provide for appropriate funding, as determined by the
      Committee, for payment of compensation to the independent auditor for the
      purpose of rendering or issuing an audit report and to any advisors
      employed by the Committee.

            

    

    

    

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    

    4.3           
Financial Statements and Related Disclosure

    

    
      	
               
      

            	
              4.3.1

            	
              The
      Committee shall review and discuss with Management and the independent
      auditor the Company’s annual audited financial statements, including the
      Management’s discussion and analysis before the filing of such
      statements.

            

    

    

    
      	
               
      

            	
              4.3.2

            	
              The
      Committee shall review and discuss with Management and the independent
      auditor the Company’s quarterly financial statements, including the
      interim Management’s discussion and analysis, and the results of the
      independent auditor’s review of the quarterly financial statements, before
      the filing of such statements.

            

    

    

    
      	
               
      

            	
              4.3.3

            	
              The
      Committee shall discuss the independent auditor Management’s competency in
      preparing the financial statements.

            

    

    

    
      	
               
      

            	
              4.3.4

            	
              The
      Committee shall review and discuss quarterly and annual reports from the
      independent auditor on:

            

    

     

    
      
        	
                 
      

              	
                (a)

              	
                
                  all
      critical accounting policies and practices to be used by the Company
      in preparing its financial
  statements;

                

              

      

       

    

    
      	
               
      

            	
              (b)

            	
              all
      material alternative treatments of financial information within GAAP that
      have been discussed with Management, ramifications of the use of these
      alternative disclosures and treatments, and the treatment preferred by the
      independent auditor; and

            

    

    

    
      	
               
      

            	
              (c)

            	
              other
      material communications between the independent auditor and Management,
      such as any Management letter or schedule of unadjusted
      differences.

            

    

    

    
      	
               
      

            	
              4.3.5

            	
              The
      Committee shall review and discuss with Management earnings (and/or other
      financial) press releases with particular attention to the use of “pro
      forma” or “adjusted” non-GAAP information, before they are
      issued.

            

    

    

    
      	
               
      

            	
              4.3.6

            	
              The
      Committee shall review and discuss generally with Management the nature of
      the financial information and earnings guidance provided to analysts and
      rating agencies.

            

    

    

    
      	
               
      

            	
              4.3.7

            	
              The
      Committee shall review with Management, any internal auditor and the
      independent auditor disclosures made to the Committee by the Company’s CEO
      and CFO during their certification process for the quarterly and annual
      financial filings about the quality, adequacy and effectiveness of the
      Company’s internal controls over financial reporting and any significant
      deficiencies in the design or operation of internal controls over
      financial reporting or material weakness therein and any fraud involving
      Management or other employees who have a significant role in the Company’s
      internal controls over financial
reporting.

            

    

    

    
      	
               
      

            	
              4.3.8

            	
              The
      Committee shall review and discuss with Management and the independent
      auditor the effect of regulatory and accounting initiatives as well as
      off-balance sheet structures on the Company’s financial
      statements.

            

    

     

    
      
        	
                 
      

              	
                4.3.9

              	
                
                  The
      Committee shall discuss with Management and the independent auditor any
      audit problems or difficulties and Management’s
      response.

                

              

      

       

    

    
      
        
          	
                   
      

                	
                  4.3.10

                	
                  
                    
                      The
      Committee shall review and discuss with Management and the independent
      auditor the effectiveness of the Company’s disclosure controls and
      procedures.

                    

                  

                

        

         

      

    

    
      
        
          
            	
                     
      

                  	
                    4.3.11

                  	
                    
                      
                        
                          The
      Committee shall discuss with Management and the independent auditor
      financial reporting issues and judgments made in connection with the
      preparation of the Company’s financial statements, including any
      significant changes in the Company’s selection or application of
      accounting principles, any major issues as to the adequacy of the
      Company’s internal controls over financial reporting and any special steps
      adopted in light of material control
      deficiencies.

                        

                      

                    

                  

          

           

           

        

      

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
       

      
        
          
            
              	
                       
      

                    	
                      4.3.12

                    	
                      
                        
                          
                            
                              The
      Committee shall review with Management, and any outside professionals as
      the Committee considers appropriate, important trends and developments in
      financial reporting practices and requirements and their effect on the
      Company’s financial
  statements.

                            

                          

                        

                      

                    

            

             

            
              
                
                  
                    	
                             
      

                          	
                            4.3.13

                          	
                            
                              
                                
                                  
                                    
                                      The
      Committee shall review with Management any related party transactions and
      ensure such related party transactions are appropriately
      disclosed.

                                    

                                  

                                

                              

                            

                          

                  

                   

                

              

            

          

        

      

    

    4.4           Compliance
with Legal and Regulatory Requirements

    

    
      	
               
      

            	
              4.4.1

            	
              The
      Committee shall discuss with Management and the independent auditor any
      correspondence with regulators or governmental agencies and any published
      reports which raise material issues regarding the
  Company.

            

    

     

    
      
        	
                 
      

              	
                4.4.2

              	
                
                  The
      Committee shall establish procedures
for

                

              

      

       

      
        
          	
                   
      

                	 	
                  (a)

                	
                  
                    the
      receipt, retention and treatment of complaints received by the Company
      regarding accounting, internal accounting controls, auditing matters or
      potentialviolations of law;
and

                  

                

        

         

      

    

    
      	
               
      

            	 	
              (b)

            	
              the
      confidential, anonymous submission by employees of the Company of concerns
      regarding questionable accounting or auditing matters or potential
      violations of law.

            

    

    

    5.0
GENERAL

    

    
      	
              5.1

            	
              The
      foregoing list of duties is not exhaustive, and the Committee may, in
      addition, perform such other functions as may be necessary or appropriate
      for the performance of its oversight
function.

            

    

    

    
      	
              5.2

            	
              The
      Committee has the power to delegate its authority and duties to a
      subcommittee or individual members of the Committee, as it deems
      appropriate, provided that the subcommittee is composed entirely of
      unrelated directors.

            

    

    

    
      	
              5.3

            	
              In
      discharging its oversight role, the Committee shall have full access to
      all Company books, records, facilities and
  personnel.

            

    

    

    
      	
              5.4

            	
              The
      Committee may retain, and determine the fees of, independent counsel and
      other advisors, in its sole
discretion.

            

    

    

     

    5

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