1
EXHIBIT 10(a)
ALASKA APOLLO RESOURCES INC.
1997 STOCK OPTION PLAN
1. DEFINITIONS. As used herein, the following terms shall have
the meanings indicated below:
(a) "Committee" shall mean a Committee of two or more
directors who shall be appointed by and serve at the pleasure of the Board of
Directors. If the Company's securities are registered pursuant to Section 12 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), then, to
the extent necessary for compliance with Rule 16b-3, or any successor provision,
each of the members of the Committee shall be a "Non-Employee Director." For
purposes of this Paragraph l(a), "Non-Employee Director" shall have the same
meaning as set forth in Rule 16b-3, or any successor provision, as then in
effect, of the General Rules and Regulations under the Exchange Act.
(b) The "Code" is the Internal Revenue Code of 1986, as
amended from time to time.
(c) The "Company" shall mean Alaska Apollo Resources Inc., a
Province of British Columbia corporation.
(d) "Fair Market Value" as of any day shall mean (i) if such
stock is reported by the Nasdaq National Market or Nasdaq SmallCap Market or is
listed upon an established stock exchange or exchanges, the reported closing
price of such stock by the Nasdaq National Market or Nasdaq SmallCap Market or
on such stock exchange or exchanges on such date or, if no sale of such stock
shall have occurred on such date, on the next preceding day on which there was a
sale of stock; (ii) if such stock is not so reported by the Nasdaq National
Market or Nasdaq SmallCap Market or listed upon an established stock exchange,
the average of the closing "bid" and "asked" prices quoted by the National
Quotation Bureau, Inc. (or any comparable reporting service) on such date or, if
there are no quoted "bid" and "asked" prices on such date, on the next preceding
date for which there are such quotes; or (iii) if such stock is not publicly
traded as of such date, the per share value as determined by the Board of
Directors, or the Committee, in its sole discretion by applying principles of
valuation with respect to the Company's Common Stock in accordance with Code
Section 422.
(e) "Non-Employee Director" shall mean members of the Board of
Directors who at the relevant time are "outside directors" within the meaning of
Code Section 162(m).
(f) "Option Stock" shall mean Common Stock of the Company
(subject to adjustments as described in Paragraph 12) reserved for options
pursuant to this Plan.
(g) The "Optionee" means an employee of the Company or any
Subsidiary to whom an incentive stock option has been granted pursuant to
Paragraph 9.
(h) The "Plan" means the Alaska Apollo Resources Inc. 1997
Stock Option Plan, as amended hereafter from time to time, including the form of
Option Agreements as they may be modified by the Board of Directors from time to
time.
(i) "Related Corporation" means a Parent Corporation or a
Subsidiary Corporation each as defined in Code Section 424.
2. PURPOSE. The purpose of this Plan is to promote the success of the
Company and its subsidiaries by facilitating the retention of competent
personnel and by furnishing incentives to officers, directors, employees,
consultants, and advisors upon whose efforts the success of the Company and its
subsidiaries will depend to a large degree.
1
2
It is the intention of the Company to carry out this Plan through the
granting of stock options which will qualify as "incentive stock options" under
the provisions of Code Section 422 or any successor provision, pursuant to
Paragraph 9 of this Plan. Adoption of this Plan shall be and is expressly
subject to the condition of approval by the shareholders of the Company within
12 months before or after the adoption of this Plan by the Board of Directors.
Any incentive stock options granted after adoption of this Plan by the Board of
Directors shall be treated as nonqualified stock options if shareholder approval
is not obtain within such 12-month period.
3. EFFECTIVE DATE OF PLAN. This Plan shall be effective as of the date
of adoption by the Board of Directors, subject to approval by the shareholders
of the Company as required in Paragraph 2 hereof.
4. ADMINISTRATION. This Plan shall be administered by a Committee which
may be appointed by the Board of Directors from time to time (collectively
referred to as the "Administrator"). The Administrator shall have all of the
powers vested in it under the provisions of this Plan, including but not limited
to exclusive authority (where applicable and within the limitations described in
this Plan) to determine, in its sole discretion, whether an incentive stock
option shall be granted, the individuals to whom, and the time or times at
which, options shall be granted, the number of shares subject to each option and
the option price and terms and conditions of each option. The Administrator
shall have full power and authority to administer and interpret this Plan, to
make and amend rules, regulations and guidelines for administering this Plan, to
prescribe the form and conditions of the respective stock option agreements
(which may vary from Optionee to Optionee) evidencing each option and to make
all other determinations necessary or advisable for the administration of this
Plan. The Administrator's interpretation of this Plan, and all actions taken,
and determinations made by the Administrator pursuant to the power vested in it
hereunder, shall be conclusive and binding on all parties concerned.
No member of the Committee shall be liable for any action taken or
determination made in good faith in connection with the administration of this
Plan. Upon the appointment of a Committee by the Board of Directors as provided
hereunder, any action of the Committee with respect to the administration of
this Plan shall be taken pursuant to a majority vote of the Committee members or
pursuant to the written resolution of all Committee members.
5. PARTICIPANTS. The Administrator shall, from time to time, at its
discretion and without approval of the shareholders, designate those employees
of the Company or any subsidiary to whom incentive stock options shall be
granted pursuant to Paragraph 9 of this Plan. The Administrator may grant
additional incentive stock options under this Plan to some or all participants
then holding options or may grant options solely or partially to new
participants. In designating participants, the Administrator shall also
determine the number of shares to be optioned to each such participant. The
Administrator may from time to time designate individuals as being ineligible to
participate in this Plan.
6. STOCK. The Stock to be optioned under this Plan shall consist of
authorized but unissued shares of Option Stock. Three million Shares of Option
Stock shall be reserved and available for options under this Plan; provided,
however, that the total number of shares of Option Stock reserved for options
under this Plan shall be subject to adjustment as provided in Paragraph 11 of
this Plan. In the event that any outstanding option under this Plan for any
reason expires or is terminated prior to the exercise thereof, the shares of
Option Stock allocable to the unexercised portion of such option shall continue
to be reserved for options under this Plan and may be optioned hereunder.
7. DURATION OF PLAN. Incentive stock options may be granted pursuant to
this Plan from time to time during a period of 10 years from the effective date
as defined in Paragraph 3. Any incentive stock option granted during such
ten-year period shall remain in full force and effect until the expiration of
the option as specified in the written stock option agreement and shall remain
subject to the terms and conditions of this Plan.
8. PAYMENT. Optionees may pay for shares upon exercise of options
granted pursuant to this Plan with cash, personal check, certified check, Common
Stock of the Company valued at such Stock's then Fair Market Value, or such
other form of payment as may be authorized by the Administrator. The
Administrator may, in its sole discretion, limit the forms of payment available
to the Optionee and may exercise such discretion any time prior to the
termination of the option granted to the Optionee or upon any exercise of the
option by the Optionee.
2
3
With respect to payment in the form of Common Stock of the Company, the
Administrator may require advance approval or adopt such rules as it deems
necessary to assure compliance with Rule 16b-3, or any successor provision, as
then in effect, of the General Rules and Regulations under the Exchange Act, if
applicable.
9. TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS. Each incentive
stock option granted pursuant to this Paragraph 9 shall be evidenced by a
written stock option agreement (the "Option Agreement"). The Option Agreement
shall be in such form as may be approved from time to time by the Administrator
and may vary from Optionee to Optionee; provided, however, that each Optionee
and each Option Agreement shall comply with and be subject to the following
terms and conditions:
(a) NUMBER OF SHARES AND OPTION PRICE. The Option Agreement
shall state the total number of shares covered by the incentive stock option. To
the extent required to qualify the Option as an incentive stock option under
Code Section 422, or any successor provision, the option price per share shall
not be less than 100 percent of the Fair Market Value of the Common Stock per
share on the date the Administrator grants the option; provided, however, that
if an Optionee owns stock possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company or of its Parent or any
Subsidiary, the option price per share of an incentive stock option granted to
such Optionee shall not be less than 110 percent of the Fair Market Value of the
Common Stock per share on the date of the grant of the option. The Administrator
shall have full authority and discretion in establishing the option price and
shall be fully protected in so doing.
(b) TERM AND EXERCISABILITY OF INCENTIVE STOCK OPTION. The
term during which any incentive stock option granted under this Plan may be
exercised shall be established in each case by the Administrator. To the extent
required to qualify the Option as an incentive stock option under Code Section
422, or any successor provision, in no event shall any incentive stock option be
exercisable during a term of more than 10 years after the date on which it is
granted; provided, however, that if an Optionee owns stock possessing more than
10 percent of the total combined voting power of all classes of stock of the
Company or of its parent or any Subsidiary, the incentive stock option granted
to such Optionee shall be exercisable during a term of not more than five years
after the date on which it is granted.
The Option Agreement shall state when the incentive stock option
becomes exercisable and shall also state the maximum term during which the
option may be exercised. In the event an incentive stock option is exercisable
immediately, the manner of exercise of the option in the event it is not
exercised in full immediately shall be specified in the Option Agreement. The
Administrator may accelerate the exercisability of any incentive stock option
granted hereunder which is not immediately exercisable as of the date of grant.
(c) MAXIMUM SIZE OF INCENTIVE STOCK OPTION AS SUCH. To the
extent that the aggregate Fair Market Value of Common Stock for which an
Incentive Stock Option becomes exercisable by the Optionee for the first time in
any calendar year exceeds $100,000, the portion of such incentive stock option
which exceeds such $100,000 limitation shall be treated as a Non-Statutory Stock
Option and not an incentive stock option under Code Section 422. For purposes of
this Paragraph 9, all incentive stock options granted to an Optionee by the
Company, as well as any options that may have been granted to the Optionee under
any other stock incentive plans of the Company or any Related Corporation which
are intended to comply with the provisions Code Section 422 shall be considered
in the order in which they were granted, and the Fair Market Value as of the
time they were granted.
(d) OTHER PROVISIONS. The Option Agreement authorized under
this Paragraph 9 shall contain such other provisions as the Administrator shall
deem advisable. Any such Option Agreement shall contain such limitations and
restrictions upon the exercise of the option as shall be necessary to ensure
that such option will be considered an "incentive stock option" as defined in
Code Section 422 or to conform to any change therein.
10. TRANSFER OF OPTION. No incentive stock option shall be
transferable, in whole or in part, by the Optionee other than by will or by the
laws of descent and distribution and, during the Optionee's lifetime, the option
may be exercised only by the Optionee. If the Optionee shall attempt any
transfer of any incentive stock option granted under this Plan during the
Optionee's lifetime, such transfer shall be void and the incentive stock option,
to the extent not fully exercised, shall terminate.
3
4
11. ANTI-DILUTION ADJUSTMENTS. A pro rata adjustment for an increase or
decrease in the number of shares of Common Stock of the Company subject to this
Plan or that may be awarded to any individual in any year shall be made to give
effect to any consolidation of shares, the equivalent value in stock of cash
dividends, stock dividends, stock splits, stock combinations, recapitalization
and other similar changes in the capital structure of the Company. Pro rata
adjustments shall be made in the number, kind and price of shares of Common
Stock of the Company covered by any outstanding Option hereunder to give effect
to any consolidation of shares, stock dividends, stock splits, stock
combinations, recapitalization and similar changes in the capital structure in
the Company, or a merger or dissolution or reorganization of the Company, after
the date the Option is granted so that the Optionee is treated in a manner
equivalent to that of holders of the underlying Common Stock.
12. CHANGE IN CORPORATE CONTROL. Upon a change in Corporate Control,
each outstanding Incentive Stock Option shall immediately become fully
exercisable, and a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the shares covered by all
outstanding Incentive Stock Options, whether to be issued by the Company or by
any successor corporation, shall be effective at all times during which the
Incentive Stock Options may be exercised and, to facilitate resale of the
shares, during the twelve months after the last exercise of the Options.
"Change in Corporate Control" means (a) the time of approval of the
Company of (i) any consolidation or merger of the Company in which the Company
is not the continuing or surviving corporation or pursuant to which shares of
Common Stock would be converted into cash, securities or other property, other
than a merger in which the holders of Common Stock immediately prior to the
merger will have the same proportionate ownership of Common Stock of the
surviving corporation immediately after the merger, (ii) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company, or
(iii) adoption of any plan or proposal for the liquidation or dissolution of
the Company; or (b) the date on which any "person" (as defined in Section 13(d)
of the Exchange Act), other than the Company or a subsidiary or employee
benefit plan or trust maintained by the Company or any of its subsidiaries,
shall become (together with its "affiliates" and "associates," as defined in
Rule 12b-2 under the Exchange Act) the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of more than 25 percent
of the Common Stock outstanding at the time, without the prior approval of the
Board of Directors of the Company.
The Administrator may restrict the rights of or the applicability of
this Paragraph 12 to the extent necessary to comply with Section 16(b) of the
Exchange Act, the Code or any other applicable law or regulation. The grant of
an option pursuant to this Plan shall not limit in any way the right or power of
the Company to make adjustments, reclassification, reorganizations or changes of
its capital or business structure or to merge, exchange or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its business or assets.
13. SECURITIES LAW COMPLIANCE. No shares of Common Stock shall be
issued pursuant to this Plan unless and until there has been compliance, in the
opinion of Company's counsel, with all applicable legal requirements, including
without limitation, those relating to securities laws and stock exchange listing
requirements. As a condition to the issuance of Option Stock to Optionee, the
Administrator may require Optionee to (a) represent that the shares of Option
Stock are being acquired for investment and not resale and to make such other
representations as the Administrator shall deem necessary or appropriate to
qualify the issuance of the shares as exempt from the Securities Act of 1933 and
any other applicable securities laws, and (b) represent that Optionee shall not
dispose of the shares of Option Stock in violation of the Securities Act or any
other applicable securities laws.
In the event of a transaction (as defined in Paragraph 12 of this Plan)
which is treated as a "pooling of interests" under generally accepted accounting
principles, Optionee will comply with Rule 145 of the Securities Act and any
other restrictions imposed under other applicable legal or accounting principles
if Optionee is an "affiliate" (as defined in such applicable legal and
accounting principles) at the time of the transaction, and Optionee will execute
any documents necessary to ensure compliance with such rules.
The Company reserves the right to place a legend on any stock
certificate issued upon exercise of an option granted pursuant to this Plan to
assure compliance with this Paragraph 13.
4
5
14. RIGHTS AS A SHAREHOLDER. An Optionee (or the Optionee's successor
or successors) shall have no rights as a shareholder with respect to any shares
covered by an option until the date of the issuance of a stock certificate
evidencing such shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property), distributions or
other rights for which the record date is prior to the date such stock
certificate is actually issued (except as otherwise provided in Paragraph 12 of
this Plan).
15. AMENDMENT OF THIS PLAN. The Board of Directors may from time to
time, insofar as permitted by law, suspend or discontinue this Plan or revise or
amend it in any respect; provided, however, that no such revision or amendment,
except as is authorized in Paragraph 12, shall impair the terms and conditions
of any option which is outstanding on the date of such revision or amendment to
the material detriment of the Optionee without the consent of the Optionee.
Notwithstanding the foregoing, no such revision or amendment shall (a)
materially increase the number of shares subject to this Plan except as provided
in Paragraph 12 hereof, (b) change the designation of the class of employees
eligible to receive options, (c) decrease the price at which options may be
granted, or (d) materially increase the benefits accruing to Optionees under
this Plan without the approval of the shareholders of the Company if such
approval is required for compliance with the requirements of any applicable law
or regulation. Furthermore, this Plan may not, without the approval of the
shareholders, be amended in any manner that will cause Incentive Stock Options
to fail to meet the requirements of Code Section 422.
16. NO OBLIGATION TO EXERCISE OPTION. The granting of an option shall
impose no obligation upon the Optionee to exercise such option. Further, the
granting of an option hereunder shall not impose upon the Company or any
Subsidiary any obligation to retain the Optionee in its employ for any period.
17. REGISTRATION RIGHTS. The Optionee shall have the registration
rights set forth in Exhibit A.
5
6
EXHIBIT A TO THE
ALASKA APOLLO RESOURCES INC.
1997 STOCK OPTION PLAN
REGISTRATION RIGHTS
DEMAND REGISTRATION RIGHTS
--------------------------
(a) At any time, commencing one (1) year after the effective date of
the Plan, the Optionee or any other holders of options (collectively, "Option
Holders") granted under the Plan shall have the right, on one occasion, by
written notice to the Company, to have the Company prepare and file with the
Securities and Exchange Commission (the "Commission"), a registration statement
on Form S-8 or similar form, including a reoffer prospectus which is prepared in
accordance with the requirements of Part I of the Form S-8, and such other
documents, as may be necessary in the opinion of both counsel for the Company
and counsel for the Option Holders, in order to comply with the provisions of
the Securities Act of 1933 (the "Act" ), so as to permit a public offering and
sale of all of the options and securities underlying such options issued or to
be issued under the Plan by the holders thereof, subject to whatever
restrictions on the exercise of the options or the sale of the options as are
set forth in the Plan. The demand registration rights granted hereby shall
expire after all of the options and/or securities underlying the options have
been sold or have expired, but in no event later than ten (10) years after the
effective date of the Plan.
COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION
-----------------------------------------------------
(b) In connection with any registration under paragraph(a) above, the
Company covenants and agrees as follows:
(1) The Company shall use its best efforts to file a
registration statement within sixty (60) days of receipt of any demand therefor,
or in the event the Company does not qualify for the use of Form S-8 or similar
form, as soon as practicable after the Company becomes qualified to use such
form, and to have any registration statement declared effective at the earliest
possible time and, to the extent applicable, shall furnish each Option Holder
desiring to sell securities registered thereby such number of prospectuses as
shall reasonably be requested.
(2) The Company shall pay all costs, fees and expenses in
connection with the registration statement filed pursuant to paragraph(a) above.
(3) The Company will take all necessary action which may be
required in qualifying or registering the securities included in the
registration statement for offer and sale under the securities or blue sky laws
of such states as reasonably are requested by the Option Holder(s), provided
that the Company shall not be obligated to execute or file any general consent
to service of process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
(4) Nothing contained in this Agreement shall be construed as
requiring the Option Holder(s) to exercise their options prior to the initial
filing of any registration statement or the effectiveness thereof, other than as
may be required by the terms of the Plan.
(5) The Company shall not permit the inclusion of any
securities other than the options and the securities underlying the options to
be included in any registration statement filed pursuant to paragraph(a) hereof.
6