EXHIBIT 4.5
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IVANHOE MINES LTD.
EMPLOYEES' AND DIRECTORS' EQUITY INCENTIVE PLAN
PART 1 INTRODUCTION
1.1 PURPOSE
The purpose of the Plan is to secure for the Company and its shareholders the
benefits of incentive inherent in share ownership by the directors and key
employees of the Company and its affiliates who, in the judgment of the Board,
will be largely responsible for its future growth and success. It is generally
recognized that share plans of the nature provided for herein aid in retaining
and encouraging employees and directors of exceptional ability because of the
opportunity offered them to acquire a proprietary interest in the Company.
1.2 DEFINITIONS
(a) "AFFILIATE" has the meaning set forth in Section 1(2) of the ONTARIO
SECURITIES ACT, as amended.
(b) "ASSOCIATE" has the meaning assigned to it in the Ontario Securities
Act, as amended.
(c) "BOARD" means the board of directors of the Company.
(d) "COMPANY" means Ivanhoe Mines Ltd., a company continued under the laws
of the Yukon Territory.
(e) "ELIGIBLE DIRECTORS" means the directors of the Company or any
Affiliate thereof who are, as such, are eligible for participation in
the Plan.
(f) "ELIGIBLE EMPLOYEES" means key employees (including employees who are
officers and directors) of the Company or any Affiliate thereof,
whether or not they have a written employment contract with Company,
determined by the Board as employees eligible for participation in the
Plan. "Eligible Employees" shall include Service Providers eligible for
participation in the Plan as determined by the Board.
(g) "EXCHANGE ACT" means the United States Securities Exchange Act of 1934,
as amended.
(h) "FAIR MARKET VALUE" means, with respect to a Share subject to Option,
the weighted average price of the Shares on The Toronto Stock Exchange
for the five days on which Shares were traded immediately preceding the
date in respect of which Fair Market Value is to be determined or, if
the Shares are not, as at that date listed on The Toronto Stock
Exchange, on such other exchange or exchanges on which the Shares are
listed on that date. If the Shares are not listed and posted for
trading on an exchange on such day, the Fair Market Value shall be such
price per Share as the Board, acting in good faith, may determine.
(i) "FOREIGN PRIVATE ISSUER" has the meaning assigned to it in the rules
promulgated under the Exchange Act.
(j) "INSIDER" has the meaning assigned to it in the Ontario Securities Act,
as amended.
(k) "OPTION" means an option granted under the terms of the Share Option
Plan.
(l) "OPTION PERIOD" means the period during which an Option may be
exercised.
(m) "OPTIONEE" means an Eligible Employee or Eligible Director to whom an
Option has been granted under the terms of the Share Option Plan.
(n) "PARTICIPANT" means, in respect of any Plan, an Eligible Employee or
Eligible Director who participates in such Plan.
(o) "PLAN" means, collectively the Share Option Plan, the Share Bonus Plan
and the Share Purchase Plan and "Plan" means any such plan as the
context requires.
(p) "SERVICE PROVIDER" means any person or company engaged to provide
ongoing management or consulting services for the Company or for any
entity controlled by the Company and eligible for participation in the
Plan as determined by the Board. (Q) "SHARE BONUS PLAN" means the plan
established and operated pursuant to Part 3 and Part 5 hereof.
(r) "SHARE OPTION PLAN" means the plan established and operated pursuant to
Part 2 and Part 5 hereof.
(s) "SHARE PURCHASE PLAN" means the plan established and operated pursuant
to Part 4 and Part 5 hereof.
(t) "SHARES" means the common shares of the Company.
PART 2 SHARE OPTION PLAN
2.1 PARTICIPATION
Options shall be granted only to Eligible Employees and Eligible Directors.
2.2 ADMINISTRATION OF SHARE OPTION PLAN.
(a) The Share Option Plan shall be administered by the Board and
the Board shall determine and designate, from time to time, the individuals to
whom awards shall be made, the amount of the awards and the other terms and
conditions of the awards. In determining the number or value of Options to be
granted, the Board shall consider the Optionee's present and potential
contribution to the success of the Company and the prevailing policies of the
exchanges on which the Company's securities are then listed.
(b) Subject to the provisions of the Share Option Plan, the Board
may, from time to time, adopt and amend rules and regulations relating to
administration of the Share Option Plan, advance the lapse of any vesting or
waiting period, accelerate any exercise date, waive or modify any restriction
applicable to Shares (except those restrictions imposed by law or the rules and
policies of The Toronto Stock Exchange or such other exchange or exchanges on
which the Shares are traded) and make all other determinations, in the judgment
of the Board, necessary or desirable for the administration of the Share Option
Plan. The interpretation and construction of the provisions of the Plan and
related agreements by the Board shall be final
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and conclusive. The Board may correct any defect or supply any omission or
reconcile any inconsistency in the Share Option Plan or in any related agreement
in the manner and to the extent it shall deem expedient to carry the Share
Option Plan into effect, and it shall be the sole and final judge of such
expediency.
2.3 PRICE
The exercise price per Share of any Option shall be not less than one hundred
per cent (100%) of the Fair Market Value on the date of grant.
2.4 GRANT OF OPTIONS
The Board may at any time authorize the granting of Options to such Eligible
Employees and Eligible Directors as it may select for the number of Shares that
it shall designate, subject to the provisions of the Share Option Plan. When the
grant is authorized, the Board shall specify the date of grant.
Each Option granted to an Eligible Employee or to an Eligible Director shall be
evidenced by a stock option agreement with terms and conditions consistent with
the Share Option Plan and as approved by the Board (which terms and conditions
need not be the same in each case and may be changed from time to time, subject
to the approval of any material changes by The Toronto Stock Exchange or such
other exchange or exchanges on which the Shares are then traded).
2.5 TERMS OF OPTIONS
The Option Period shall be ten years from the date such Option is granted or
such lesser duration as the Board may determine at the date of grant, and may
thereafter be reduced with respect to any such Option as provided in Section 2.8
hereof covering termination of employment or death of the Optionee.
Unless otherwise determined from time to time by the Board, Options may be
exercised (in each case to the nearest full Share) during the Option Period as
follows:
(a) at any time during the first year of the Option Period, the
Optionee may purchase up to 33 1/3% of the total number of Shares
reserved for issuance pursuant to his or her Option; and
(b) at any time during each additional year of the Option Period
the Optionee may purchase an additional 33 1/3% of the total number of
Shares reserved for issuance pursuant to his or her Option plus any
Shares not purchased in accordance with the preceding subsection (a)
until, in the third year of the Option Period, 100% of the Option will
be exercisable.
Except as set forth in Section 2.8, no Option may be exercised unless the
Optionee is at the time of such exercise:
(a) in the case of an Eligible Employee, in the employ of the
Company or an Affiliate and shall have been continuously so employed
since the grant of his Option, but absence on leave, having the
approval of the Company or such Affiliate, shall not be considered an
interruption of employment for any purpose of the Share Option Plan; or
(b) in the case of an Eligible Director, a director of the Company
or an Affiliate and shall have been such a director continuously since
the grant of his Option.
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The exercise of any Option will be contingent upon receipt by the
Company of cash payment of the full purchase price of the Shares being
purchased. No Optionee or his legal representatives or legatees will
be, or will be deemed to be, a holder of any Shares subject to an
Option, unless and until certificates for such Shares are issued to him
or them under the terms of the Share Option Plan.
2.6 SHARE APPRECIATION RIGHT
A Participant may, if at any time determined by the Board, have the right (the
"Right"), when entitled to exercise an Option, to terminate such Option in whole
or in part (the "Terminated Option") by notice in writing to the Company and, in
lieu of receiving the Shares (the "Option Shares") to which the Terminated
Option relates, to receive the number of Shares, disregarding fractions, which
is equal to the quotient obtained by:
(a) subtracting the Option exercise price per Share from the Fair
Market Value per Share on the day immediately prior to the exercise of
the Right and multiplying the remainder by the number of Option Shares;
and
(b) dividing the product obtained under ss.(a) by the Fair Market
Value per Share on the day immediately prior to the exercise of the
Right.
If a Right is granted in connection with an Option, it is exercisable only to
the extent and on the same conditions that the related Option is exercisable.
2.7 LAPSED OPTIONS
If Options are surrendered, terminated or expire without being exercised in
whole or in part, new Options may be granted covering the Shares not purchased
under such lapsed Options, subject in the case of the cancellation of an Option
in connection with the grant of a new Option to the same person on different
terms, to the consent of The Toronto Stock Exchange.
2.8 EFFECT OF TERMINATION OF EMPLOYMENT OR DEATH
If an Optionee:
(a) dies while employed by or while a director of the Company or its
Affiliate, any Option held by him at the date of death shall become exercisable
in whole or in part, but only by the person or persons to whom the Optionee's
rights under the Option shall pass by the Optionee's will or applicable laws of
descent and distribution. All such Options shall be exercisable only to the
extent that the Optionee was entitled to exercise the Option at the date of his
death and only for six months after the date of death or prior to the expiration
of the Option Period in respect thereof, whichever is sooner; or
(b) ceases to be employed by or act as a director of the Company or its
Affiliate for cause, no Option held by such Optionee will, unless otherwise
determined by the Board, be exercisable following the date on which such
Optionee ceases to be so employed or ceases to be a director, as the case may
be. If an Optionee ceases to be employed by or act as a director of the Company
or its Affiliate for any reason other than cause then, at the discretion of the
Board, any Option held by such Optionee at the effective date thereof shall
become exercisable in whole or in part for a period of up to six months
thereafter.
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2.9 EFFECT OF TAKEOVER BID
If a bona fide offer (the "Offer") for Shares is made to the Optionee or to
shareholders generally or to a class of shareholders which includes the
Optionee, which Offer, if accepted in whole or in part, would result in the
offeror exercising control over the Company within the meaning of subsection
1(3) of the Ontario Securities Act (as amended from time to time), then the
Company shall, immediately upon receipt of notice of the Offer, notify each
Optionee currently holding an Option of the Offer, with full particulars
thereof, whereupon, notwithstanding Section 2.5 hereof, such Option may be
exercised in whole or in part by the Optionee so as to permit the Optionee to
tender the Shares received upon such exercise (the "Optioned Shares") pursuant
to the Offer.
2.10 EFFECT OF THE AMALGAMATION OR MERGER
If the Company amalgamates or merges with or into another corporation, any
Shares receivable on the exercise of an Option shall be converted into the
securities, property or cash which the Participant would have received upon such
amalgamation or merger if the Participant had exercised his Option immediately
prior to the record date applicable to such amalgamation or merger, and the
option price shall be adjusted appropriately by the Board and such adjustment
shall be binding for all purposes of the Share Option Plan.
2.11 ADJUSTMENT IN SHARES SUBJECT TO THE PLAN
If there is any change in the Shares through the declaration of stock dividends
of Shares or consolidations, subdivisions or reclassification of Shares, or
otherwise, the number of Shares available under the Share Option Plan, the
Shares subject to any Option, and the option price thereof shall be adjusted
appropriately by the Board and such adjustment shall be effective and binding
for all purposes of the Share Option Plan.
2.12 LOANS TO EMPLOYEES
Subject to applicable law, the Board may at any time authorize the Company to
loan money to an Eligible Employee, on such terms and conditions as the Board
may reasonably determine, to assist such Eligible Employee to exercise an Option
held by him or her. Such terms and conditions shall include, in any event,
interest at prevailing market rates, a term not in excess of one year, and
security in favour of the Company represented by that number of Shares issued
pursuant to the exercise of an Option in respect of which such loan was made or
equivalent security which equals the loaned amount divided by the Fair Market
Value of the Shares on the date of exercise of the Option, which security may be
granted on a non-recourse basis.
2.13 TRANSFER OF OPTIONS
Options are non-transferable except by will or by the laws of descent and
distribution.
PART 3 SHARE BONUS PLAN
3.1 PARTICIPANTS
The Board shall have the right, subject to Section 3.2, to issue or reserve for
issuance, for no cash consideration, to any Eligible Employee or any Eligible
Director any number of Shares as a discretionary bonus subject to such provisos
and restrictions as the Board may determine.
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3.2 NUMBER OF SHARES
The aggregate maximum number of shares that may be issued pursuant to Section
3.1 will be limited to 2,000,000 Shares. Shares reserved for issuance and issued
under the Share Bonus Plan shall be subject to the limitations set out in
Section 5.1.
The Board, in its absolute discretion, shall have the right to reallocate any of
the Shares reserved for issuance under the Share Bonus Plan for future issuance
under the Share Option Plan or the Share Purchase Plan and, in the event that
any Shares specifically reserved under the Share Bonus Plan are reallocated to
the Share Option Plan or the Share Purchase Plan, as the case may be, the
aggregate maximum number of Shares reserved under the Share Bonus Plan will be
reduced to that extent. In no event will the number of Shares allocated for
issuance under the Share Bonus Plan exceed 2,000,000 Shares.
3.3 NECESSARY APPROVALS
The obligation of the Company to issue and deliver any Shares pursuant to an
award made under the Share Bonus Plan will be subject to all necessary approvals
of any exchange or securities regulatory authority having jurisdiction over the
Shares.
PART 4 SHARE PURCHASE PLAN
4.1 PARTICIPANTS
Participants in the Share Purchase Plan will be Eligible Employees who have been
continuously employed by the Company or any of its Affiliates on a full-time
basis for at least 12 consecutive months and who have been designated by the
Board as participants in the Share Purchase Plan ("Share Purchase Plan
Participants"). The Board shall have the right, in its absolute discretion, to
waive such 12-month period or to refuse any Eligible Employee or group of
Eligible Employees the right of participation or continued participation in the
Share Purchase Plan.
4.2 ELECTION TO PARTICIPATE IN THE SHARE PURCHASE PLAN AND PARTICIPANT'S
CONTRIBUTION
Any Share Purchase Plan Participant may elect to contribute money (the
"Participant's Contribution") to the Share Purchase Plan in any calendar year if
the Share Purchase Plan Participant delivers to the Company a written direction
in form and substance satisfactory to the Company authorizing the Company to
deduct from the Share Purchase Plan Participant's salary, in equal instalments,
the Participant's Contribution. Such direction will remain effective until
revoked in writing by the Share Purchase Plan Participant or until the Board
terminates or suspends the Share Purchase Plan, whichever is earlier.
The Share Purchase Plan Participant's Contribution shall not exceed 10% of the
Share Purchase Plan Participant's basic annual salary from the Company and its
Affiliates at the time of delivery of the direction, before deductions,
exclusive of any overtime pay, bonuses or allowances of any kind whatsoever (the
"Basic Annual Salary"). In the case of a Share Purchase Plan Participant for
whom the Board has waived the 12-month employment requirement, the Share
Purchase Plan Participant's Contribution shall not exceed 10% of his Basic
Annual Salary from the Company and its Affiliates at the time of delivery of the
direction, prorated over the remainder of the calendar year, before deductions
and exclusive of any overtime pay, bonuses or allowances of any kind whatsoever.
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4.3 COMPANY'S CONTRIBUTION
Immediately prior to the date any Shares are issued to a Share Purchase Plan
Participant in accordance with Section 4.4, the Company will credit the Share
Purchase Plan Participant with, and thereafter hold in trust for the Share
Purchase Plan Participant, an amount (the "Company's Contribution") equal to the
Participant's Contribution then held in trust by the Company.
4.4 ISSUE OF SHARES
On March 31, June 30, September 30 and December 31 in each calendar year the
Company will issue to each Share Purchase Plan Participant fully paid and
non-assessable Shares, disregarding fractions, which is equal to the aggregate
amount of the Participant's Contribution and the Company's Contribution divided
by the Issue Price. For the purposes of this Section 4.4, "Issue Price" means
the weighted average price of the Shares on The Toronto Stock Exchange, or such
exchange or exchanges on which the Shares may be traded at such time for the
90-day period immediately preceding the date of issuance. If the Shares are not
traded on an exchange on the date of issuance, the Issue Price shall be such
price per Share as the Board, acting in good faith, may determine.
The Company shall hold any unused balance of the Participant's Contribution for
a Share Purchase Plan Participant until used in accordance with the Share
Purchase Plan.
4.5 DELIVERY OF SHARES
As soon as reasonably practicable following each issuance of Shares to a Share
Purchase Plan Participant pursuant to Section 4.4, the Company will cause to be
delivered to the Share Purchase Plan Participant a certificate in respect of
such Shares provided that, if required by applicable law or the rules and
policies of The Toronto Stock Exchange or such other exchange or exchanges on
which the Shares are traded, a restrictive legend shall be inscribed on the
certificate, which legend shall state that the Shares shall not be transferable
for such period as may be prescribed by law or by any regulatory authority or
stock exchange on which the Shares are listed.
4.6 EFFECT OF TERMINATION OF EMPLOYMENT OF DEATH
If a Participant ceases to be employed by the Company or any of its Affiliates
for any reason or receives notice from the Company of the termination of his or
her employment, the Share Purchase Plan Participant's participation in the Share
Purchase Plan will be deemed to be terminated and any portion of the
Participant's Contribution then held in trust shall be paid to the Share
Purchase Plan Participant or his estate or successor as the case may be.
4.7 EFFECT OF AMALGAMATION OR MERGER
If the Company amalgamates or merges with or into another corporation, each
Share Purchase Plan Participant to whom Shares are to be issued will receive, on
the date on which any Shares would otherwise have been delivered to the Share
Purchase Plan Participant in accordance with Section 4.5, the securities,
property or cash to which the Share Purchase Plan Participant would have been
entitled on such amalgamation, consolidation or merger had the Shares been
issued immediately prior to the record date of such amalgamation or merger.
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PART 5 GENERAL
5.1 NUMBER OF SHARES
The aggregate number of Shares that may be reserved for issuance under the Plan
shall not exceed 20,000,000 Shares inclusive of those Shares reserved under the
Share Bonus Plan pursuant to Section 3.2. In addition, the aggregate number of
Shares:
(a) that may be reserved for issuance to Insiders under the Plan shall not
exceed 10% of the Company's outstanding issue from time to time;
(b) that may be issued to Insiders under the Plan within any one-year
period shall not exceed 10% of the Company's outstanding issue from time to
time; and
(c) that may be issued to any one Insider and his or her Associates under
the Plan within any one-year period shall not exceed 5% of the Company's
outstanding issue from time to time.
In no event will the number of Shares at any time reserved for issuance to any
Participant exceed 5% of the Company's outstanding issue from time to time.
For the purposes of this Section 5.1, "outstanding issue" means the total number
of Shares, on a non-diluted basis, that are issued and outstanding as of the
date that any Shares are issued or reserved for issuance pursuant to an award
under the Plan to an Insider or such Insider's Associates, excluding any Shares
issued under the Plan during the immediately preceding 12 month period.
5.2 TRANSFERABILITY
Any benefits, rights and options accruing to any Participant in accordance with
the terms and conditions of the Plan shall not be transferable unless
specifically provided herein. During the lifetime of a Participant all benefits,
rights and options may only be exercised by the Participant.
5.3 EMPLOYMENT
Nothing contained in any Plan shall confer upon any Participant any right with
respect to employment or continuance of employment with the Company or any,
Affiliate, or interfere in any way with the right of the Company or any
Affiliate to terminate the Participant's employment at any time. Participation
in any Plan by a Participant is voluntary.
5.4 RECORD KEEPING
The Company shall maintain a register in which shall be recorded:
(a) the name and address of each Participant;
(b) the Plan or Plans in which the Participant participates;
(c) any Participant's Contributions;
(d) the number of unissued Shares reserved for issuance pursuant to an
Option or pursuant to an award made under the Share Bonus Plan in
favour of a Participant; and
(e) such other information as the Board may determine.
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5.5 NECESSARY APPROVALS
The Plan shall be effective only upon formal adoption by the Board following the
approval of the shareholders of the Company in accordance with the rules and
policies of The Toronto Stock Exchange.
The obligation of the Company to sell and deliver Shares in accordance with the
Plan is subject to the approval of any governmental authority having
jurisdiction in respect of the Shares or any exchanges on which the Shares are
then listed which may be required in connection with the authorization, issuance
or sale of such Shares by the Company. If any Shares cannot be issued to any
Participant for any reason including, without limitation, the failure to obtain
such approval, the obligation of the Company to issue such Share shall terminate
and any Participant's Contribution or option price paid to the Company shall be
returned to the Participant.
5.6 INCOME TAXES
As a condition of, and prior to participation in, the Plan, a Participant shall,
at the Company's request, authorize the Company in writing to withhold from any
remuneration or consideration whatsoever payable to such Participant hereunder,
any amounts required by any taxing authority to be withheld for taxes of any
kind as a consequence of such participation in the Plan.
5.7 AMENDMENTS TO PLAN
The Board may amend, modify or terminate the Plan at any time if and when it is
advisable in the absolute discretion of the Board, subject to the approval of
any material changes by The Toronto Stock Exchange or such other exchange or
exchanges on which the Shares are traded. However, any amendment of such Plan
which would:
(a) materially increase the benefits under the Plan;
(b) materially increase the number of Shares which would be issued under
the Plan; or
(c) materially modify the requirements as to eligibility for participation
in the Plan;
shall be effective only upon the approval of the shareholders of the Company
and, if required, the approval of any regulatory body having jurisdiction over
the Shares and any stock exchanges on which the Shares are then listed for
trading. Except as expressly otherwise provided herein, however, no change in an
award already granted under the Plan shall be made without the written consent
of the recipient of such award.
5.8 FOREIGN PRIVATE ISSUER STATUS
If, and for so long as, the Company is not a Foreign Private Issuer or if the
directors and officers of the Company otherwise become subject to Section 16 of
the Exchange Act, then notwithstanding any provision of the Plan to the
contrary:
(a) the Plan shall be administered by a committee consisting of two or more
persons (the "Committee") appointed by the Board, each of whom is a director
qualifying as a "disinterested" person, as such term is defined, from time to
time, in Rule 16b-3 under the Exchange Act;
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(b) the Committee shall determine and designate, from time to time, the
individuals to whom awards shall be made hereunder, the amount of the awards and
the other terms and conditions of such awards;
(c) each member of the Committee shall, upon his appointment or election to
the Committee for the first time, automatically be granted an immediately
exercisable Option to purchase 10,000 Shares at a price per share equal to the
Fair Market Value at the date of grant for an Option Period of ten years but
shall not otherwise be eligible to participate in the Plan;
(d) no Option granted to a director or officer under the Plan may be
exercised during the first six months following the date of grant;
(e) directors and officers of the Company will be required to hold Shares
acquired under the Share Purchase Plan for a period of six months, provided that
no such hold period will be required in respect of any such director or officer
who makes an irrevocable election to waive his right to withdraw from the Share
Purchase Plan or to change his Participant's Contribution at least six months
prior to his acquisition of such Shares;
(f) Subsections 5.8(c), (d) and (e) may only be amended or modified by the
Board or the shareholders of the Company once in any six month period; and
(g) the Board may, subject to Subsection 5.8(f) and Section 5.7, amend or
modify the Plan to the extent that the Board, based upon the advice of legal
counsel, considers necessary or desirable to bring the Plan into compliance with
Rule 16b-3 under the Exchange Act.
5.9 NO REPRESENTATION OR WARRANTY
The Company makes no representation or warranty as to the future market value of
any Shares issued in accordance with the provisions of the Plan.
5.10 COMPLIANCE WITH APPLICABLE LAW, ETC
If any provision of the Plan or any agreement entered into pursuant to the Plan
contravenes any law or any order, policy, by-law or regulation of any regulatory
body or stock exchange having authority over the Company or the Plan then such
provision shall be deemed to be amended to the extent required to bring such
provision into compliance therewith.
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