Document:

cougf20f2010731ex10-5.htm

Exhibit 10.5

 

	

	
COUGAR OIL AND GAS CANADA INC.

Suite 1120, 833 – 4 Avenue S.W.

Calgary, Alberta T2P 3T5

Phone: +1 403-262-8044

Fax:           +1 403-513-2670

info@cougarenergyinc.com

www.cougarenergyinc.com

 

Cougar Energy Inc.

and

Cougar Oil and Gas Canada Inc.

Code of Business Conduct

January 2010

	
1.

	
Introduction

This Code of Business Conduct and Ethics (the “Code”) is a statement of Cougar Oil and Gas Canada Inc. (“Cougar Oil and Gas Canada Inc.” or “Company”) expectations in various areas of legal and ethical concern, and applies to every director, officer, consultant and employee (collectively referred to as “personnel”) of Cougar Oil and Gas Canada Inc. The Code recognizes that Cougar Oil and Gas Canada Inc.’s reputation is dependent upon the integrity and sense of responsibility of its directors, officers and personnel. It is imperative that a high standard of ethical, moral, professional and legal conduct be evidenced in all business practices. This Code should serve as a reference for all directors, officers and personnel in fulfilling their responsibility to conduct business in a legal and ethical manner. Any waiver of any provision of this Code on behalf of an executive officer or director may only be approved by the Board of Directors or a committee designated by the Board of Directors and must be immediately disclosed to the shareholders.

 

In addition to the Code, Cougar Oil and Gas Canada Inc. has adopted numerous policies addressing specific elements of our business. When appropriate, those separate policies will be referred to in the Code and are incorporated herein by reference. Copies of those policies may accompany the Code. In the event that there is a conflict between the Code and a specific policy, the terms of the specific policy shall prevail. Cougar Oil and Gas Canada Inc. reserves the right to amend, supplement or rescind the Code or any policy or any portion at any time and to adopt different policies and procedures.

 

It should be noted that while compliance with applicable federal, state and provincial and local law is the foundation of the Code, Cougar Oil and Gas Canada Inc. expects its directors, officers and personnel to avoid unethical business dealings, whether actual or perceived, even in situations where no law may be violated. In fact, in many instances, the standards set forth in the Code and policies often exceed legal requirements.

Unless stated otherwise, this Code applies to all directors, officers, consultants and employees of the Company and its subsidiaries, regardless of the individual’s position. The Code and policies are not all-inclusive and nothing can replace good judgment on the part of the individual. Finally, the Code and any associated policies are not and should not be interpreted as a contract for employment.

  

  

  

	

	
COUGAR OIL AND GAS CANADA INC.

Suite 1120, 833 – 4 Avenue S.W.

Calgary, Alberta T2P 3T5

Phone: +1 403-262-8044

Fax:           +1 403-513-2670

info@cougarenergyinc.com

www.cougarenergyinc.com

 

	
2.

	
Compliance with Laws, Rules and Regulations

Cougar Oil and Gas Canada Inc. directors, officers and personnel are expected to obey all federal, provincial, state and local laws. All Company business should be conducted in full compliance with applicable law. Personnel are expected to understand and comply with all laws affecting their work. If there are questions about the law or its application in a particular situation, Company management should be consulted.

	
3.

	
Drug and Alcohol Policy

Personnel are prohibited from performing Company tasks while under the influence of any drugs, alcohol or other substances that might have an effect upon an individual’s ability to perform such tasks. Personnel are also prohibited from possessing such substances on Company premises or property.

	
4.

	
Environment, Health and Safety

One of Cougar Oil and Gas Canada Inc.’s core values is its commitment to the safety and health of its personnel and associates, and the protection of the environment. All personnel are responsible for complying with the Company’s policies and procedures on Environment, Health and Safety.

For the safety of all directors, officers, personnel and visitors, the Company prohibits the possession by anyone of such items as firearms, guns, weapons of any kind, explosives or ammunition while on Company premises. In addition, the Company does not condone any acts or threats of violence by anyone against personnel, customers or visitors on Company premises at any time or while engaged in business with or on behalf of Company, on or off Company premises.

	
5.

	
Anti-Harassment Statement

It is illegal under provincial, state and federal law for any personnel, male or female, to sexually harass other personnel. The Company strictly prohibits sexual harassment in the workplace. Additionally, harassment based on other protected characteristics such as race, national origin, religion, disability or age, is illegal, is not permitted by the Company, and will not be tolerated.

In addition, the Company believes diversity, the collective mixture of similarities and differences, is a valued asset. The Company has created an atmosphere that allows each individual to contribute, achieve his or her professional goals and interact in a workplace accepting of such diverse attributes as, not only race and gender, but also age, sexual orientation, religion, level of education, physical ability, military status, years of service and social or cultural representation.

	
6.

	
Insider Trading

The Company has separate policies pertaining to trading in Company securities (see “Disclosure and Insider Trading Policy”). Personnel are prohibited from buying or selling, either directly or indirectly, Company securities based on insider information or from transmitting such information to others in violation of applicable federal and/or provincial or state securities laws. In addition, members of the Company’s Board of Directors and certain executive officers have additional responsibilities and restrictions concerning transactions involving Cougar Oil and Gas Canada Inc. securities.

  

  

  

	

	
COUGAR OIL AND GAS CANADA INC.

Suite 1120, 833 – 4 Avenue S.W.

Calgary, Alberta T2P 3T5

Phone: +1 403-262-8044

Fax:           +1 403-513-2670

info@cougarenergyinc.com

www.cougarenergyinc.com

 

Insider information includes, but is not limited to, information about matters such as significant contracts, claims, liabilities, major litigation, potential sales, mergers or acquisitions, confidential oil and gas and mineral plans, activities, earnings, forecasts or budgets. This information is to remain strictly confidential until such time as it has been released to the public by the Company. Questions regarding use of or qualification as insider information should be directed to the Chief Executive Officer or Chief Financial Officer.

	
7.

	
Accounting and Disclosure Practices

It is Cougar Oil and Gas Canada Inc.’s policy to keep books, records and accounts that completely and fairly reflect the Company’s financial condition. Cougar Oil and Gas Canada Inc. shall, at all times, comply with applicable accounting principles, laws, rules and regulations.

Employees who have responsibilities in the areas of finance, accounting and auditing matters are responsible for understanding and complying with all applicable laws, rules, regulations, ethical standards and internal procedures.

Full and complete disclosure of important information about the Company is of paramount importance to Cougar Oil and Gas Canada Inc. The proper accounting and reporting of this information, both financial and non-financial, is a process involving numerous individuals and departments to ensure that truthful, accurate and reliable information is disclosed to the public. Cougar Oil and Gas Canada Inc. has established Disclosure Policies and Procedures to ensure the timely collection and evaluation of information potentially subject to disclosure requirements of securities and exchange commissions in Canada and the United States. Filings with such commissions will be accurate and timely. The accounting and disclosure process is designed to record, process and report in a timely manner all material information as required by applicable laws, rules and regulations, and is overseen by the Company’s Disclosure Coordinator, the Chief Financial Officer. Personnel with comments or questions regarding information that may require consideration under corporate disclosure policies and procedures should present the information to the Chief Financial Officer. All directors, officers and personnel are expected to carefully consider and respond in a timely manner to any inquiries from the Company related to public disclosures.

	
8.

	
Foreign Corrupt Practices Act

In the United States, the Company is subject to compliance with the Foreign Corrupt Practices Act of 1977 (“FCPA”). The FCPA makes it a criminal offense to bribe or offer to bribe a foreign governmental or political official to obtain or retain business. Payments to foreign officials for routine governmental actions may be made where permitted under the law. The FCPA also requires that all publicly held companies maintain and keep records and accounts that fairly and accurately present their activities and transactions. It is Company policy to abide by the FCPA in all respects. Additionally, no secret or unrecorded fund of corporate assets will be established or maintained, and no false entries will be made on Company books or records.

  

  

  

	

	
COUGAR OIL AND GAS CANADA INC.

Suite 1120, 833 – 4 Avenue S.W.

Calgary, Alberta T2P 3T5

Phone: +1 403-262-8044

Fax:           +1 403-513-2670

info@cougarenergyinc.com

www.cougarenergyinc.com

 

	
9.

	
Anti-trust Laws

United States antitrust laws are designed to promote competition and to preserve the free enterprise system. Antitrust laws prohibit, among other things, price fixing, creation of a monopoly, boycotts, tying arrangements, exclusive dealing and refusals to deal. It is Cougar Oil and Gas Canada Inc.’s intent to conduct its business in accordance with all applicable antitrust laws. All directors, officers and personnel are expected to comply with antitrust laws and not participate in any activity that could be construed to be a violation of antitrust laws. Violations of antitrust laws can result in civil and criminal penalties against the Company and its employees. Questions should be directed to the President.

	
10.

	
Confidential Information

As a director, officer or personnel of Cougar Oil and Gas Canada Inc., you may have access to material non-public information concerning Cougar Oil and Gas Canada Inc. and its subsidiaries, its personnel and third party business relationships. This information must not be communicated to any person, including other personnel, unless that person has a need to know that information for a legitimate business purpose.

Information that is considered confidential and therefore the property of Cougar Oil and Gas Canada Inc. shall include, but is not limited to, such items as information regarding business activities and financial performance, technical data and other proprietary information, any documents, files, maps, reports, manuals, computer programs and electronic mail. These items must not be released or removed from Company property without proper approval. Additionally, in the event of termination for any reason, the terminated individual may be required to immediately deliver all copies of the above described information to Cougar Oil and Gas Canada Inc.

 

 

Personnel with access to compensation and confidential benefit information must not disclose this information to those without a need to know, including other Cougar Oil and Gas Canada Inc. employees. Additionally, personnel are strictly prohibited from gaining access to Company information that they do not need to know or do not have legitimate access to for performance of their particular job. Personnel will be asked to sign a Confidentiality Agreement.

	
11.

	
Conflicts of Interest

The Company strives to maintain the highest degree of integrity in the conduct of its business. In order to comply with this objective, when dealing with third parties on behalf of the Company, it is imperative that officers and personnel act and think on behalf of the Company only and maintain judgment independent of personal interest. As an officer or personnel representing the Company, you may find yourself in a situation in which your personal interest and that of Cougar Oil and Gas Canada Inc. are inconsistent. Such a situation, whether actual or apparent, is commonly referred to as a conflict of interest.

  

  

  

	

	
COUGAR OIL AND GAS CANADA INC.

Suite 1120, 833 – 4 Avenue S.W.

Calgary, Alberta T2P 3T5

Phone: +1 403-262-8044

Fax:           +1 403-513-2670

info@cougarenergyinc.com

www.cougarenergyinc.com

 

It is Cougar Oil and Gas Canada Inc.’s policy that no officer or personnel shall hold a position of substantial interest in an entity that conflicts with or appears to conflict with, the proper performance of Company duties or responsibilities or might affect independence of judgment in transactions between Cougar Oil and Gas Canada Inc. and the entity. Likewise, officers and personnel shall not hold a position in any company that is deemed to be competitive with Cougar Oil and Gas Canada Inc.  Officers and personnel are required to disclose any substantial interest or position (i.e. director, officer, employee or consultant) that they, or someone they are closely associated with, have in any entity that has business relations or dealings with Cougar Oil and Gas Canada Inc.

 

If an officer or personnel, at any time, is considering assuming a position of substantial interest or an outside relationship which involves, or could be perceived to involve, a conflict of interest, or is in doubt as to the application of this policy, the individual must promptly notify an officer of the Company who will determine in consultation with the Company’s Corporate Counsel, whether the action being considered would or could constitute a conflict of interest.

Additional conflict of interest issues are:

11.1   Gifts and Entertainment

The business relationships Cougar Oil and Gas Canada Inc. has with its contractors, suppliers, vendors and service providers are of utmost significance. It is Cougar Oil and Gas Canada Inc.’s policy to achieve the highest standards of integrity in all those relationships and to ensure that third parties with whom Cougar Oil and Gas Canada Inc. associates exhibit the same degree of commitment to that standard. In support of that policy, it is vital that Cougar Oil and Gas Canada Inc. and its officers and personnel maintain relationships that are unencumbered by events or activities that maybe construed as improper incentive.

 

Officers and personnel must avoid the direct or indirect receipt of solicitation of payments, gifts, entertainment or other favors from individuals or firms that exceed what is generally considered common courtesy usually associated with ethical business practices. Receipt of such a gift might be regarded as placing the employee under some obligation, or perceived obligation, to a third party dealing or desiring to deal with Cougar Oil and Gas Canada Inc.

 

Excessive gifts and entertainment at the expense of Cougar Oil and Gas Canada Inc. must not be provided to others. Entertainment expense should be kept to a minimum and should only be incurred if there is a clear business reason for the expenditure.

The following criteria may be used when determining reasonableness of a gift or entertainment:

° Gifts of cash or cash equivalent are strictly prohibited.

° Unsolicited gifts of nominal value may be accepted.

° Is the gift consistent with accepted business practice?

° Would disclosure embarrass you or the Company?

° Is it ethically acceptable?

  

  

  

	

	
COUGAR OIL AND GAS CANADA INC.

Suite 1120, 833 – 4 Avenue S.W.

Calgary, Alberta T2P 3T5

Phone: +1 403-262-8044

Fax:           +1 403-513-2670

info@cougarenergyinc.com

www.cougarenergyinc.com

 

Gifts and entertainment provided to government employees within Canada and the United States are prohibited under any circumstance.

In certain situations, there may be a legitimate business purpose associated with accepting a nominal gift or entertainment that would otherwise be contrary to the Code. Guidelines on nominal gifts will be defined periodically by management. Officers and personnel should assess the circumstances prior to accepting gifts or entertainment to ensure that they satisfy all requirements under the Code. In the event of any questions or uncertainty, the individual should contact the Company’s Chief Executive Officer and/or Chief Financial Officer.

11.2 Outside Activities

Directors, officers and personnel should not participate in business or personal activities that conflict with Company duties or interests. Cougar Oil and Gas Canada Inc. employees are encouraged to work with civic, social, corporate, industry and charitable organizations as long as participation does not present a potential conflict of interest.

11.3 Outside Investments

Directors, officers and personnel may not take advantage of personal investment opportunities that are afforded to them by virtue of their position with the Company. In addition, directors, officers and personnel should not make an investment in a company that they know is a candidate for acquisition by Cougar Oil and Gas Canada Inc.

11.4 Use of Company Assets

Company facilities, equipment, materials, supplies and other assets are intended for use on Company matters. Use of Company information or assets for personal gain or in a manner contrary to Company interests, whether or not the Company suffers any direct loss, is considered a conflict of interest.

12.   Fair Dealing

All directors, officers and personnel shall deal honestly and ethically with customers, contractors, competitors, personnel and others while engaged in business on behalf of the Company. Directors, officers and personnel shall not take unfair advantage of anyone through manipulation, concealment, abuse of privileged or confidential information, misrepresentation of material facts or any other unfair dealing practice.

13.   Political Contributions and Activities

No contributions will be made by the Company to political parties, candidates, committees, elected officials or candidates for office in any federal, provincial, state, local or foreign election, except where permitted by applicable law and approved by the Chief Executive Officer.

Employees are encouraged to participate actively in the political process on their own initiative and at their own expense.

  

  

  

	

	
COUGAR OIL AND GAS CANADA INC.

Suite 1120, 833 – 4 Avenue S.W.

Calgary, Alberta T2P 3T5

Phone: +1 403-262-8044

Fax:           +1 403-513-2670

info@cougarenergyinc.com

www.cougarenergyinc.com

 

	
14.

	
Reporting of Business Expenses

Cougar Oil and Gas Canada Inc. will reimburse its personnel for reasonable and necessary expenses actually incurred in the conduct of Company business as provided in Company policies. All expense reports should be submitted promptly and accurately. Managers are responsible for the careful review of all expense reports submitted for their approval. Abuse of expense account usage will not be tolerated.

	
15.

	
Protect Company Assets

All personnel are expected to protect Cougar Oil and Gas Canada Inc. assets against theft, loss or misuse. Company assets include, but are not limited to, cash, land, buildings, equipment, inventory, vehicles and appliances (i.e. telephones, computers, copiers, facsimile machines, etc.). Additionally, it includes such intangible items as business plans, inventions (which shall be considered Company property), potential prospects and Company records. Cougar Oil and Gas Canada Inc. is required by law to retain certain types of records, usually for a specific period of time, and personnel is required to assist Cougar Oil and Gas Canada Inc. in fulfilling these records retention requirements, as well as assisting in the maintenance of accurate records. Also, personnel should recognize that many materials are copyrighted. As such, prior to using Company assets to copy or download copyrighted materials, personnel are required to obtain the publisher’s permission. Personnel are responsible for familiarizing themselves with the Company’s authority limitations and policies on the execution of contracts and should limit their actions to those within the specific authority granted to them by the Company.

	
16.

	
Use of Information Systems

Personnel will have access to the Company’s information systems including, but not limited to, computer, network and Internet equipment, systems, software and data, telephones, voice mail and facsimile machines. Employees should use the information systems primarily for communication of Company business information. The information systems are the property of the Company, including all messages and data transmitted and stored and, as such, personnel should have no expectation of privacy. The provisions of the Code and the policies, including confidentiality, are equally applicable to the use of these systems. Employees should not transmit e-mail, except in the normal course of business, which contains information that has not been made public or information relating to potential liability. Additionally, employees should recognize that e-mail and other files, including personal data and correspondence, are considered Company-owned business records and subject to disclosure in a court of law.

  

  

  

	

	
COUGAR OIL AND GAS CANADA INC.

Suite 1120, 833 – 4 Avenue S.W.

Calgary, Alberta T2P 3T5

Phone: +1 403-262-8044

Fax:           +1 403-513-2670

info@cougarenergyinc.com

www.cougarenergyinc.com

 

	
17.

	
Code of Conduct Violations

Violations of the Code are serious offenses that may result in disciplinary action, up to and including termination. In addition, violations of the law may result in fines, penalties or other legal remedies, including imprisonment.

The Company expects all employees to not only abide by, but to help enforce the Code and related policies. Although not required to conduct its own investigation, any employee that is aware of a potential or perceived violation of the Code or a specific policy has an obligation to report that fact to Company management or as otherwise required in the Code or policies. There will be no reprisals for the good faith reporting of a perceived violation. Reports of a violation will be investigated promptly and the matter will be treated, to the extent possible, as confidential.

 

	
18.

	
Company Assistance

To remove any doubts or suspicions regarding potential conflicts or violations of this Code, personnel should freely consult with their managers. To report suspected violations of the standards set forth in this Code or the related policies, or to seek guidance regarding these standards, you should contact the one of the Company’s officers.cougf20f2010731ex10-6.htm

Exhibit 10.6

 

Cougar Oil and Gas Canada, Inc.

STOCK OPTION PLAN

	
1.0

	
GENERAL PROVISIONS

	
1.1.

	
Purpose

The purpose of the Stock Option Plan (the “Plan”) of Cougar Oil and Gas Inc. (herein called the “Corporation”) is to advance the interests of the Corporation by:

	
1.1.1.

	
providing Eligible Persons with additional incentive;

 

	
1.1.2.

	
encouraging stock ownership by such Eligible Persons;

 

	
1.1.3.

	
increasing their proprietary interest in the success of the Corporation;

 

	
1.1.4.

	
encouraging them to remain with the Corporation or its Subsidiaries; and

 

	
1.1.5.

	
attracting new employees, officers and directors.

 

Options issued under this Plan will not be Incentive Stock Options under Internal Revenue Code Section 422.

	
1.2.

	
Administration

The Plan shall be administered by the board of directors of the Corporation (the “Board”).  Subject to the limitations of the Plan, the Board shall have the authority to:

	
1.2.1.

	
grant options (“Options”) to acquire shares of common stock of the Corporation (the “Common Shares”) to Eligible Persons;

 

	
1.2.2.

	
determine the terms, limitations, restrictions and conditions upon such grants;

 

	
1.2.3.

	
interpret the Plan and to adopt, amend and rescind such administrative guidelines and other rules and regulations relating to the Plan as it shall from time to time deem advisable; and

 

	
1.2.4.

	
make all other determinations and to take all other actions in connection with the implementation and administration of the Plan as it may deem necessary or advisable. The Board’s guidelines, rules, regulations, interpretations and determinations shall be conclusive and binding upon the Corporation and all other persons.

 

No Option shall be granted under the Plan unless recommended and approved by the Board.

 

  

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1.3.

	
Interpretation

For the purposes of the Plan, the following terms shall have the following meanings:

	
1.3.1.

	
“Code” means the United States Internal Revenue Code of 1986, as amended;

 

	
1.3.2.

	
“Eligible Person” means a director, senior officer or employee of, or a consultant or any other person providing services to, the Corporation or of any Subsidiary pursuant to a written contract;

 

	
1.3.3.

	
“Exchange” means any stock exchange or exchanges on which the common shares of the Corporation are then listed and any other regulatory body having jurisdiction hereinafter;

 

	
1.3.4.

	
“Exercise Price” has the meaning ascribed thereto in Section 2.3;

 

	
1.3.5.

	
“Fair Market Value” means, subject to applicable Exchange requirements, the greater of the ten day weighted average calculation up to and including the last closing price for Common Shares on the OTC Bulletin Board or the relevant Exchange or if the Common Shares are not listed or admitted to trading on any exchange, as determined by any other appropriate method selected by the Board.

 

	
1.3.6.

	
“Insider” if used in relation to the Corporation, means:

 

	  	
1.3.6.1.

	
A director, executive or senior officer of the Corporation,

 

	  	
1.3.6.2.

	
A director, executive or senior officer of a company that is an Insider or subsidiary of the Corporation,

 

	  	
1.3.6.3.

	
A person that beneficially owns or controls, directly or indirectly, voting shares carrying more than 10% of the voting rights attached to all outstanding voting shares of the Corporation, or

 

	  	
1.3.6.4.

	
The Corporation itself if it holds any of its own securities.

 

	
1.3.7.

	
“Participant” means an Eligible Person to whom Options have been granted;

 

	
1.3.8.

	
“Subsidiary” means any company that is a subsidiary of the Corporation as defined in Section 424(f) of the Code;

 

	
1.3.9.

	
“Underlying Share” means a Common Share issuable upon the exercise of an Option; and

 

  

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1.3.10.

	
“Year” with respect to any Option granted under the Plan means the period of 12 months commencing on the date of the granting of such Option or on any anniversary thereof.

Words importing the singular number only shall include the plural and vice versa and words importing the masculine shall include the feminine.

	
1.4.

	
Laws

The Plan and all matters to which reference is made herein shall be governed by and interpreted in accordance with the laws of the Province of Alberta.

	
1.5.

	
Shares Reserved

All shares of the Corporation issued under the Plan shall be Common Shares in the capital stock of the Corporation.  Options may be granted in respect of authorized and unissued Common Shares.

 

The maximum number of Common Shares which may be reserved for issuance under the Plan shall be 10% of the issued and outstanding stock, which number is subject to adjustment in accordance with the provisions of the Plan.

 

The number of Underlying Shares subject to an option granted to any one Participant shall be determined by the Board, but no one Participant shall be granted an option which exceeds the maximum number permitted by the relevant Exchange.

The aggregate number of Common Shares with respect to which Options may be granted to any one person (together with their associates) under this Plan, together with all other incentive plans of the Corporation in any one year:

 

	  	
a)

	
shall not exceed 2% of the total number of Common Shares outstanding; and

 

	  	
b)

	
for investor relations employees or consultants, in aggregate with all other persons employed to provide investor relations activities, shall not exceed 2% of the total number of common shares outstanding.

 

Any Common Shares subject to an Option that for any reason expires without having been exercised shall again be available for grants under the Plan.  No fractional shares shall be issued, and the Board may determine the manner in which fractional share value shall be treated.

  

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1.6.

	
Adjustments

In the event of any change in the outstanding Common Shares by reason of any stock dividend or split, recapitalization, merger, arrangement, consolidation, combination or exchange of shares, or other corporate change, or in the event of any issue of rights pursuant to a shareholder rights plan or other similar plan, the Board shall make, subject to the prior approval of any relevant stock exchange, appropriate substitution or adjustment in:

	  	
a)

	
the number or kind of shares or other securities reserved for issuance pursuant to the Plan; and

 

	  	
b)

	
the number and kind of shares subject to unexercised Options theretofore granted and in the Exercise Price of such Options; provided, however, that no substitution or adjustment shall obligate the Corporation to issue or sell fractional shares.

 

In the event of the reorganization of the Corporation or the amalgamation, merger or consolidation of the Corporation with another corporation, or the payment of a special or extraordinary dividend, the Board may make such provision for the protection of the rights of Participants as the Board in its sole discretion deems appropriate.

	
1.7.

	
Non-Exclusivity

Nothing contained herein shall prevent the Corporation from adopting other or additional compensation arrangements, subject to any required approval.

	
1.8.

	
Amendment and Termination

The Board may at any time prior to expiry amend, suspend or terminate the Plan or any portion thereof.  No such amendments, suspension or termination shall alter or impair any Options or any rights pursuant thereto granted previously to any Participant without the consent of such Participant.  Any reduction in the exercise price of Options held by Insiders at the time of the proposed amendment requires disinterested shareholder approval.  In the event of termination of the Plan, the provisions of the Plan and any administrative guidelines, and other rules and regulations adopted by the Board and in force at the time of the Plan termination shall continue in effect during such time as an Option or any rights pursuant thereto remain outstanding.

	
1.9.

	
Compliance with Legislation

The Board may postpone the exercise of any Option or the issue of any Underlying Shares pursuant to the Plan for such time as the Board in its discretion may deem necessary in order to permit the Corporation to effect or maintain registration of the Plan or the Common Shares issuable pursuant thereto under the securities laws of any applicable jurisdiction, or to determine that such shares and the Plan are exempt from such registration.  The Corporation shall not be obligated by any provision of the Plan or grant thereunder to sell or issue Common Shares in violation of the law of any government or exchange having jurisdiction therein.  In addition, the Corporation shall have no obligation to issue any Common Shares pursuant to the Plan unless such Common Shares shall have been duly listed, upon official notice of issuance, with a stock exchange on which such Common Shares are listed for trading.

  

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1.10.

	
Transferability

 

All benefits, rights and options accruing to any Participant in accordance with the terms and conditions of the Plan shall not be transferable or assignable unless specifically provided herein or to the extent, if any, permitted by the relevant Exchange.  During the lifetime of a Participant any benefits, rights and options may only be exercised by the Participant.

 

Subject to compliance with applicable requirements of the relevant Exchange, Participants may elect to hold options granted to them in an incorporated entity wholly owned by them and such entity shall be bound by the Plan in the same manner as if the options were held by the Participant.

	
1.11.

	
Acceleration of Exercisability of Options upon Occurrence of Certain Events

 

In connection with any merger, arrangement or consolidation which results in the holders of the outstanding voting securities of the Corporation (determined immediately prior to such merger or consolidation) owning, directly or indirectly, less than a majority of the outstanding voting securities of the surviving corporation (determined immediately following such merger or consolidation), or any sale or transfer by the Corporation of all or substantially all its assets or any tender offer or exchange offer for or the acquisition, directly or indirectly, by any person or group of all or a majority of the then outstanding voting securities of the Corporation, each Option granted under the Plan to each director and officer of the Corporation; or at the discretion of the Board, any other Eligible Person, shall become exercisable in full or part, notwithstanding any other provision of the Plan or of any outstanding Options granted thereunder, on and after:

	  	
a)

	
the fifteenth day prior to the effective date of such merger, arrangement, consolidation, sale, transfer or acquisition or

 

	  	
b)

	
the date of commencement of such tender offer or exchange offer, as the case may be.

	
1.12.

	
Stock Exchange Rules

 

All options granted pursuant to this Plan shall be subject to rules and policies of the Exchange.

  

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2.0

	
OPTIONS

	
2.1.

	
Grants

 

Subject to the provisions of the Plan, the Board shall have the authority to determine the limitations, restrictions and conditions, if any, in addition to those set forth in Section 3 hereof, applicable to the exercise of an Option, including, without limitation, the nature and duration of the restrictions, if any, to be imposed upon the sale or other disposition of the Underlying Shares, and the nature of the events, if any, and the duration of the period in which any Participant’s rights in respect of the Underlying Shares may be forfeited.  An Eligible Person may receive Options on more than one occasion under the Plan and may receive separate Options on any one occasion.  At the date of grant of any option hereunder, the Eligible Person must be a bona fide director, officer, employee, consultant (or other person providing services) of the Corporation or its Subsidiaries.

	
2.2.

	
Rights of Optionee

 

No person entitled to exercise any option granted under the Plan shall have any of the rights or privileges of a shareholder of the Corporation in respect of any Underlying Shares until certificates representing such Underlying Shares shall have been issued and delivered.

	
2.3.

	
Exercise Price

 

The exercise price of the Underlying Shares (the “Exercise Price”) subject to each option shall be determined by the Board, subject to applicable Exchange approval, at the time any option is granted.  In no event shall such exercise price be lower than the Fair Market Value.

 

Once the exercise price has been determined by the Board, accepted by the Exchange and the option has been granted, the exercise price of an option may be reduced upon receipt of Board approval, provided that in the case of options held by insiders of the Corporation (as defined in the policies of the Exchange), the exercise price of an option may be reduced only if disinterested shareholder approval is obtained.

 

The Exercise Price shall be subject to adjustment in accordance with the provisions of Section 1.6 hereof.

  

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3.0

	
EXERCISE OF OPTIONS

	
3.1

	
Exercise

 

The following shall apply to the exercise of all options:

	  	
a)

	
Options shall not be exercisable later than 5 years after the date of grant.  In no circumstances shall the duration of an Option exceed the maximum term permitted by the Exchange.

 

	  	
b)

	
The Board may determine when any Option shall become exercisable and may determine that the Option can be exercisable in installments.  Options granted to consultants performing investor relations activities will contain vesting provisions such that vesting occurs over at least 12 months with no more than 3/4 of the options vesting in any 3 month period.

Except as otherwise determined by the Board:

	  	
a)

	
If a Participant ceases to be an Eligible Person as a result of termination for cause (as such term is defined at common law), no Option held by such Participant may be exercised following the date on which such Participant ceased to be an Eligible Person;

 

	  	
b)

	
If a Participant ceases to be an Eligible Person for any reason other than termination for cause or death, any vested Option held by such Participant may continue be exercised by the Participant to and until the earlier of the applicable expiration of the option period in respect of such Option and 90 days after the date on which such Participant ceases to be an Eligible Person.  In the case of a Participant engaged in investor relations activities, 90 shall be changed to 30 days.

 

	  	
c)

	
In the event of death, the heirs, administrators or legal representatives of a Participant may exercise the Participant’s Options within twelve months after the date of the Participant’s death to the extent such Options were by their terms exercisable prior to his death or within the period of twelve months following his death; but for greater certainty no Option shall be exercisable after its stated termination date. In the event that the heirs, administrators or legal representatives of a Participant who has died exercises the Participant’s Option in accordance with the terms of the Plan, the Corporation shall have no obligation to issue the Common Shares until evidence satisfactory to the Corporation has been provided by such heirs, administrators or legal representatives that such heirs, administrators or legal representatives are entitled to acquire the Common Shares under the Plan.

 

  

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Except as provided in paragraph (C) above, or as otherwise provided in the applicable Option Agreement, during the lifetime of a Participant, Options held by such Participant shall be exercisable only by him and no Option shall be transferable other than by will or the laws of descent and distribution.

 

Each Option shall be confirmed by an agreement executed by the Corporation and by the Participant.  In the case of employees or consultants of the Corporation or Subsidiary, the option agreements to which they are party must contain a representation of the Corporation that such employee or consultant, as the case may be, is a bona fide employee or consultant of the Corporation or its Subsidiaries.

 

If, as and when any Common Shares have been duly issued upon the exercise of an Option and in accordance with the terms of such Option and the Plan, such Underlying Shares shall be conclusively deemed allotted as fully paid and non-assessable shares of the Corporation.

 

Subject to any vesting restrictions imposed by the Board, options may be exercised in whole or in part at any time and from time to time during the option period.  Options may not be exercised for fewer than 1,000 Common Shares at any one time, unless the Participant holds Options for less than 1,000 Underlying Shares.

	
3.2

	
Notice of Exercise

 

The exercise of any option will be contingent upon receipt by the Corporation at its head office of a written notice of exercise, specifying the number of Underlying Shares with respect to which the option is being exercised, accompanied by cash payment, certified cheque or bank draft for the full purchase price of such Underlying Shares with respect to which the option is exercised.  No Participant or his legal representatives, legatees or distributees will be, or will be deemed to be, a holder of any common shares of the Corporation unless and until the certificates for Underlying Shares issuable pursuant to options under the Plan are issued to him or them under the terms of the Plan.

	
3.3

	
Proceeds from Sale of Shares

 

The proceeds from the sale of Shares issued upon the exercise of options shall be added to the general funds of the Corporation and shall thereafter be used from time to time for such corporate purposes as the Board may determine.

  

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4.0

	
APPROVAL

	
4.1.

	
Necessary Approvals

 

The ability of a Participant to exercise options and the obligation of the Corporation to issue and deliver Underlying Shares in accordance with the Plan is subject to any approvals which may be required from shareholders of the Corporation and any regulatory authority or stock exchange having jurisdiction over the securities of the Corporation.  If any Underlying Shares cannot be issued to any Participant for whatever reason, the obligation of the Corporation to issue such Underlying Shares shall terminate and any option exercise price paid to the Corporation will be returned to the Participant.

	
5.0

	
MISCELLANEOUS

	
5.1.

	
Withholding

 

It shall be a condition to the obligation of the Corporation to issue Common Shares upon exercise of an Option that the Participant (or any beneficiary, transferee or person entitled to act under paragraph 3.1(E) hereof) pay to the Corporation, upon its demand, such amount as may be requested by the Corporation for the purpose of satisfying any liability to withhold federal, state or local income or other taxes. If the amount requested is not paid, the Corporation may refuse to issue such Common Shares.

	
5.2.

	
Issuance of Certificates; Legends

 

Common Shares duly acquired under the terms of an Option shall be registered in the name of the Participant and a share certificate representing the number of such Common Shares shall be issued in the name of the Participant, his or her legal representatives or as he, she or they may direct.  The Corporation may endorse such legend or legends upon the certificates for Common Shares issued upon the exercise of an Option granted hereunder and may issue such “stop transfer” instructions to its transfer agent in respect of such shares as, in its absolute discretion, it determines to be necessary or appropriate.

	
5.3.

	
Correction of Defects, Omissions and Inconsistencies

 

The Board may correct any defect, supply any omission, or reconcile any inconsistency in this Plan in the manner and to the extent it shall deem desirable to carry this Plan into effect, subject to applicable regulatory approval if any.

	
5.4.

	
Other Actions

 

Nothing contained in this Plan shall be construed to limit the authority of the Corporation to exercise its corporate rights and powers, including but not by way of limitation, the right of the Corporation to grant Options for proper corporate purposes other than under the Plan with respect to any other person, firm, corporation or association.

 

 

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