EXHIBIT 4.1
NORTHERN ETHANOL, INC.
2006 STOCK PLAN
1. Purpose of the Plan. The purposes of this Stock Plan are to attract and
retain the best available individuals for positions of substantial
responsibility, to provide additional incentive to such individuals, and to
promote the success of the Company's business by aligning the financial
interests of Directors, Employees and Consultants providing personal services to
the Company or to any Parent or Subsidiary of the Company with long-term
shareholder value.
Awards granted hereunder may be Incentive Stock Options, Nonqualified Stock
Options, Stock Awards, or SARs, at the discretion of the Board and as reflected
in the terms of the Award Agreement.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Award" shall mean any award or benefits granted under the Plan,
including Options, Stock Awards, and SARs.
(b) "Award Agreement" shall mean a written or electronic agreement between
the Company and the Awardee setting forth the terms of the Award.
(c) "Awardee" shall mean the holder of an outstanding Award.
(d) "Board" shall mean (i) the Board of Directors of the Company or (ii)
both the Board and the Committee, if a Committee has been appointed in
accordance with Section 4(a) of the Plan.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Committee" shall mean the Compensation Committee appointed by the
Board of Directors in accordance with Section 4(a) of the Plan, if one
is appointed; provided, however, if the Board of Directors appoints
more than one Committee pursuant to Section 4(a), then "Committee"
shall refer to the appropriate Committee, as indicated by the context
of the reference.
(g) "Common Shares" shall mean the common shares of Northern Ethanol, Inc.
(h) "Company" shall mean Northern Ethanol, Inc., a Nevada corporation and
any successor thereto.
(j) "Consultant" shall mean any person, except an Employee, engaged by the
Company or any Parent or Subsidiary of the Company, to render personal
services to such entity, including as an advisor.
(k) "Continuous Status as a Participant" shall mean (1) for Employees, the
absence of any interruption or termination of service as an Employee,
and (2) for Consultants, the absence of any interruption, expiration,
or termination of such person's consulting or advisory relationship
with the Company or the occurrence of any termination event as set
forth in such person's Award Agreement. Continuous Status as a
Participant shall not be considered interrupted (i) for an Employee in
the case of sick leave, maternity leave, infant care leave, medical
emergency leave, military leave, or any other leave of absence for
which Continuous Status is not considered interrupted in accordance
with the Company's policies on such matters, and (ii) for a
Consultant, in the case of any temporary interruption in such person's
availability to provide services to the Company which has been
authorized in writing by the President of the Company prior to its
commencement.
(l) "Conversion Options" shall mean the Options described in Section 6(c)
of the Plan.
(m) "Director" means a member of the Board of Directors of the Company or
any Subsidiary thereof.
(n) "Employee" shall mean any person, including an officer, who is a
common law employee of, receives remuneration for personal services
to, is reflected on the official human resources database as an
employee of, and is on the payroll of the Company or any Parent or
Subsidiary of the Company. A person is on the payroll if he or she is
paid from the payroll department of the Company, or any Parent or
Subsidiary of the Company. Persons providing services to the Company,
or to any Parent or Subsidiary of the Company, pursuant to an
agreement with a staff leasing organization, temporary workers engaged
through or employed by temporary or leasing agencies, and workers who
hold themselves out to the Company, Parent, or Subsidiary to which
they are providing services as being independent contractors, or as
being employed by or engaged through another company while providing
the services are not Employees for purposes of this Plan, whether or
not such persons are, or may be reclassified by the courts, the
Internal Revenue Service, the U. S. Department of Labor, or other
person or entity as, common law employees of the Company, Parent, or
Subsidiary, either solely or jointly with another person or entity.
(o) "Effective Date" shall mean April 4, 2006.
(p) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(q) "FLSA" shall mean the Fair Labor Standards Act.
(r) "Incentive Stock Option" shall mean any Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the
Code.
(s) "Maximum Annual Participant Award" shall have the meaning set forth in
Section 5(b).
(t) "Nonqualified Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option.
(u) "Option" shall mean a stock option granted pursuant to Section 6 of
the Plan.
(v) "Parent" shall mean a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(w) "Participant" shall mean a Director, Employee or Consultant.
(x) "Plan" shall mean this 2006 Stock Plan, including any amendments
thereto.
(y) "Share" shall mean one Common Share, as adjusted in accordance with
Section 14 of the Plan.
(z) "SAR" shall mean a stock appreciation right awarded pursuant to
Section 8 of the Plan.
(aa) "Stock Award" shall mean a grant of Shares or of a right to receive
Shares or their cash equivalent (or both) pursuant to Section 7 of the
Plan.
(bb) "Subsidiary" shall mean (i) in the case of an Incentive Stock Option a
"subsidiary corporation," whether now or hereafter existing, as
defined in Section 424(f) of the Code, and (ii) in the case of a
Nonqualified Stock Option, a Stock Award or an SAR, in addition to a
subsidiary corporation as defined in (i), a limited liability company,
partnership or other entity in which the Company controls 50 percent
or more of the voting power or equity interests.
3. Shares Subject to the Plan. Subject to the provisions of Sections 14 and 16
of the Plan, the maximum aggregate number of Shares (increased, proportionately,
in the event of any stock split, stock dividend or similar event with respect to
the Shares) which may be awarded and delivered under the Plan shall not exceed
8,000,000 Shares (unadjusted
for any stock split or stock dividend with respect to the Shares). The Shares
may be authorized, but unissued, or reacquired Common Shares.
Subject to the provisions of the following sentence, if an Award should
expire or become unexercisable for any reason without having been exercised in
full, the undelivered Shares which were subject thereto shall, unless the Plan
shall have been terminated, become available for future Awards under the Plan.
Notwithstanding anything to the contrary contained herein, any Awards of Options
that are transferred to a third party pursuant to a program under which the
holder of certain Options may transfer such Options to such third party in
exchange for cash or other consideration, shall be removed from the Plan and the
Shares subject to such Awards shall not be available for regrant under the Plan
regardless of whether the transferred Options are exercised or expire without
exercise.
4. Administration of the Plan.
(a) Procedure. The Plan shall be administered by the Board of Directors of
the Company.
(i) The Board of Directors may appoint one or more Committees each
consisting of not less than two members of the Board of Directors
to administer the Plan on behalf of the Board of Directors,
subject to such terms and conditions as the Board of Directors
may prescribe. Once appointed, such Committees shall continue to
serve until otherwise directed by the Board of Directors.
(ii) From time to time the Board of Directors may increase the size of
the Committee(s) and appoint additional members thereof, remove
members (with or without cause) and appoint new members in
substitution therefor, or fill vacancies however caused.
(b) Powers of the Board. Subject to the provisions of the Plan, the Board
shall have the authority, in its discretion: (i) to grant Incentive
Stock Options, Nonqualified Stock Options, Stock Awards, and SARs;
(ii) to determine, in accordance with Section 11(b) of the Plan, the
fair market value of the Shares; (iii) to determine, in accordance
with Section 11(a) of the Plan, the exercise price per share of Awards
to be granted; (iv) to determine the Participants to whom, and the
time or times at which, Awards shall be granted and the number of
Shares to be represented by each Award; (v) to interpret the Plan;
(vi) to prescribe, amend, and rescind rules and regulations relating
to the Plan; including the form of Award Agreement, and manner of
acceptance of an Award, (vii) to determine the terms and provisions of
each Award to be granted (which need not be identical) and, with the
consent of the Awardee, modify or amend each Award; (viii) to
authorize conversion or substitution under the Plan of any or all
Conversion Options; (ix) to accelerate or defer (with the consent of
the Awardee) the exercise date of any Option; (x) to authorize any
person to execute on behalf of the
Company any instrument required to effectuate the grant of an Award
previously granted by the Board; and (xi) to make all other
determinations deemed necessary or advisable for the administration of
the Plan.
The Board may, but need not, determine that an Award shall vest
or be granted subject to the satisfaction of one or more performance
goals. Performance goals for awards will be determined by the
Compensation Committee of the Board and will be designed to support
the business strategy, and align executives' interests with customer
and shareholder interests. For awards that are intended to qualify as
performance-based compensation under Section 162(m), performance goals
will be based on one or more of the following business criteria: sales
or licensing volume, revenues, customer satisfaction, expenses,
organizational health/productivity, earnings (which includes similar
measurements such as net profits, operating profits and net income,
and which may be calculated before or after taxes, interest,
depreciation, amortization or taxes), margins, cash flow, shareholder
return, return on equity, return on assets or return on investments,
working capital, product shipments or releases, brand or product
recognition or acceptance and/or stock price. These criteria may be
measured: individually, alternatively or in any combination; with
respect to the Company, a subsidiary, division, business unit, product
line, product or any combination of the foregoing; on an absolute
basis, or relative to a target, to a designated comparison group, to
results in other periods or to other external measures; and including
or excluding items that could affect the measurement, such as
extraordinary or unusual and nonrecurring gains or losses, litigation
or claim judgments or settlements, material changes in tax laws,
acquisitions or divestitures, the cumulative effect of accounting
changes, asset write-downs, restructuring charges, or the results of
discontinued operations.
(c) Effect of Board's Decision. All decisions, determinations, and
interpretations of the Board shall be final and binding on all
Participants and Awardees.
5. Eligibility.
(a) Awards may be granted to Participants and to persons to whom offers of
employment as an Employee have been extended; provided that Incentive
Stock Options may only be granted to Employees.
(b) The maximum number of Shares with respect to which an Award or Awards
may be granted to any Participant in any one taxable year of the
Company (the "Maximum Annual Participant Award") shall not exceed
500,000 Common Shares for Options or SARs, or 500,000 shares for Stock
Awards (increased, in both cases proportionately, in the event of any
stock split, stock dividend or similar event with respect to the
Shares). If an Option is in tandem with an SAR, such that the exercise
of the Option or SAR with respect to a Share cancels the tandem SAR or
Option right, respectively, with respect to each Share,
the tandem Option and SAR rights with respect to each Share shall be
counted as covering but one Share for purposes of the Maximum Annual
Participant Award.
6. Options.
(a) Each Option shall be designated in the written or electronic option
agreement as either an Incentive Stock Option or a Nonqualified Stock
Option. However, notwithstanding such designations, to the extent that
the aggregate fair market value of the Shares with respect to which
Options designated as Incentive Stock Options are exercisable for the
first time by any Employee during any calendar year (under all plans
of the Company) exceeds $100,000, such Options shall be treated as
Nonqualified Stock Options.
(b) For purposes of Section 6(a), Options shall be taken into account in
the order in which they were granted, and the fair market value of the
Shares shall be determined as of the time the Option with respect to
such Shares is granted.
(c) Options converted or substituted under the Plan for any or all
outstanding stock options and stock appreciation rights held by
directors, employees, consultants, advisors or other option holders
granted by entities subsequently acquired by the Company or a
subsidiary or affiliate of the Company ("Conversion Options") shall be
effective as of the close of the respective mergers and acquisitions
of such entities by the Company. The Conversion Options may be
Incentive Stock Options or Nonqualified Stock Options, as determined
by the Committee; provided, however, that stock appreciation rights in
the acquired entity shall only be converted to or substituted with
Nonqualified Stock Options. The Conversion Options shall be options to
purchase the number of Common Shares determined by multiplying the
number of shares of the acquired entity's common stock underlying each
such stock option or stock appreciation right immediately prior to the
closing of such merger or acquisition by the number specified in the
applicable merger or acquisition agreement for conversion of each
share of such entity's common stock to a Common Share (the "Merger
Ratio"). Such Conversion Options shall be exercisable at an exercise
price per Common Share (increased to the nearest whole cent) equal to
the exercise price per share of the acquired entity's common stock
under each such stock option or stock appreciation right immediately
prior to closing divided by the Merger Ratio. No fractional Common
Shares will be issued upon exercise of Conversion Options. In lieu of
such issuance, the Common Shares issued pursuant to each such exercise
shall be rounded to the closest whole Share. All other terms and
conditions applicable to such stock options and stock appreciation
rights prior to closing of the acquisition, including vesting, shall
remain unchanged under the Conversion Options.
7. Stock Awards.
(a) Stock Awards may be granted either alone, in addition to, or in tandem
with other Awards granted under the Plan. After the Committee
determines that it will offer a Stock Award, it will advise the
Awardee in writing or electronically, by means of an Award Agreement,
of the terms, conditions and restrictions, including vesting, if any,
related to the offer, including the number of Shares that the Awardee
shall be entitled to receive or purchase, the price to be paid, if
any, and, if applicable, the time within which the Awardee must accept
the offer. The offer shall be accepted by execution of an Award
Agreement in the manner determined by the Committee.
(b) Unless the Committee determines otherwise, the Award Agreement shall
provide for the forfeiture of the non-vested Common Shares underlying
such Stock Award upon the Awardee ceasing to be a Participant. To the
extent that the Awardee purchased the Shares granted under such Stock
Award and any such Shares remain non-vested at the time the Awardee
ceases to be a Participant, the cessation of Participant status shall
cause an immediate sale of such non-vested Shares to the Company at
the original price per Common Share paid by the Awardee.
8. SARs.
(a) The Committee shall have the full power and authority, exercisable in
its sole discretion, to grant SARs to selected Awardees. The Committee
is authorized to grant both tandem stock appreciation rights ("Tandem
SARs") and stand-alone stock appreciation rights ("Stand-Alone SARs")
as described below.
(b) Tandem SARs.
(i) Awardees may be granted a Tandem SAR, exercisable upon such terms
and conditions as the Committee shall establish, to elect between
the exercise of the underlying Section 6 Option for Common Shares
or the surrender of the Option in exchange for a distribution
from the Company in an amount equal to the excess of (A) the fair
market value (on the Option surrender date) of the number of
Shares in which the Awardee is at the time vested under the
surrendered Option (or surrendered portion thereof) over (B) the
aggregate exercise price payable for such vested Shares.
(ii) No such Option surrender shall be effective unless it is approved
by the Committee, either at the time of the actual Option
surrender or at any earlier time. If the surrender is so
approved, then the distributions to which the Awardee shall
become entitled under this Section 8(b) may be made in Common
Shares valued at fair market value on the Option surrender date,
in cash, or partly in Shares and partly in cash, as the Committee
shall deem appropriate.
(iii) If the surrender of an Option is not approved by the Committee,
then the Awardee shall retain whatever rights he or she had under
the surrendered Option (or surrendered portion thereof) on the
Option surrender date and may exercise such rights at any time
prior to the later of (A) five (5) business days after the
receipt of the rejection notice or (B) the last day on which the
Option is otherwise exercisable in accordance with the terms of
the instrument evidencing such Option, but in no event may such
rights be exercised more than ten (10) years after the date of
the Option grant.
(c) Stand-Alone SARs.
(i) An Awardee may be granted a Stand-Alone SAR not tied to any
underlying Option under Section 6 of the Plan. The Stand-Alone
SAR shall cover a specified number of Common Shares and shall be
exercisable upon such terms and conditions as the Committee shall
establish. Upon exercise of the Stand-Alone SAR, the holder shall
be entitled to receive a distribution from the Company in an
amount equal to the excess of (A) the aggregate fair market value
(on the exercise date) of the Common Shares underlying the
exercised right over (B) the aggregate base price in effect for
those Shares.
(ii) The number of Common Shares underlying each Stand-Alone SAR and
the base price in effect for those Shares shall be determined by
the Committee at the time the Stand-Alone SAR is granted. In no
event, however, may the base price per Share be less than the
fair market value per underlying Common Share on the grant date.
(iii) The distribution with respect to an exercised Stand-Alone SAR
may be made in Common Shares valued at fair market value on the
exercise date, in cash, or partly in Shares and partly in cash,
as the Committee shall deem appropriate.
(d) The Common Shares underlying any SARs exercised under this Section 8
shall not be available for subsequent issuance under the Plan.
9. Term of Plan. The Plan shall become effective as of the Effective Date. It
shall continue in effect until terminated under Section 17 of the Plan.
10. Term of Award; Limitations on Vesting and Repricing.
(a) The term of each Award shall be no more than ten (10) years from the
date of grant. However, in the case of an Incentive Stock Option
granted to a Participant who, at the time the Option is granted, owns
Shares representing more than ten percent (10%) of the voting power of
all classes of shares of the
Company or any Parent or Subsidiary, the term of the Option shall be
no more than five (5) years from the date of grant.
(b) Except as may be provided in the Award Agreement, each award shall
vest over a period of not less than three (3) years from the date of
grant, provided that Conversion Options and awards that are granted or
vest based on performance goals shall not count toward the limit of
this Section 10(b).
(c) No Award may be repriced, replaced, regranted through cancellation, or
modified without approval of the shareholders of the Company (except
in connection with an adjustment pursuant to Section 14) if the effect
would be to reduce the exercise price for the Shares underlying such
Award.
11. Exercise Price and Consideration.
(a) The per Share exercise price under each Award shall be such price as
is determined by the Board, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant of such
Incentive Stock Option, owns shares representing more than
ten percent (10%) of the voting power of all classes of
shares of the Company or any Parent or Subsidiary, the per
Share exercise price shall be no less than 110% of the fair
market value per Share on the date of grant.
(B) granted to any other Employee, the per Share exercise price
shall be no less than 100% of the fair market value per
Share on the date of grant.
(ii) Except for Conversion Options under Section 6(c), the per Share
exercise price under a Nonqualified Stock Option or SAR shall be
no less than seventy-five percent (75%) of the fair market value
per Share on the date of grant. Notwithstanding the foregoing (or
any other provision of the Plan), Options and SARs that are
granted to Employees who are non-exempt for purposes of the FLSA,
shall satisfy the requirements for exclusion from regular rate of
pay for purposes of the FLSA and shall have an exercise price
that is at least eighty-five percent (85%) of the fair market
value of the underlying Shares at the time of grant; furthermore,
such Options or SARs shall not be exercisable within the six (6)
month period immediately following the date of grant, except, if
so provided in the Award Agreement, in the event of the Awardee's
death, disability, or retirement, upon a change in corporate
control of the Company, or under such other circumstances as are
permitted under the FLSA or rules and regulations thereunder.
(iii) The maximum aggregate number of Shares underlying all
Nonqualified Stock Options and SARs with a per Share exercise
price of less than fair market value on any grant date that may
be granted under this Plan is 500,000 Shares (increased,
proportionately, in the event of any stock split, stock dividend
or similar event with respect to the Shares); provided that
Conversion Options shall not count against the limit of this
Section 11(a)(iii).
(b) The fair market value per Share shall be the closing price per share
of the Common Share on the Over the Counter Bulletin Board (the
"OTCBB") on the date of grant. If the Shares cease to be listed on
OTCBB, the Board shall designate an alternative method of determining
the fair market value of the Shares. Notwithstanding the foregoing,
the Board may determine that an alternative price may be fair market
value if it is determined that the price on the OTCBB is not fair
market value due to limited trading volume or other factors.
(c) The consideration to be paid for the Shares to be issued upon exercise
of an Award, including the method of payment, shall be determined by
the Board at the time of grant and may consist of cash and/or check.
Payment may also be made by delivering a properly executed exercise
notice together with irrevocable instructions to a broker to promptly
deliver to the Company the amount of sale proceeds necessary to pay
the exercise price. If the Awardee is an officer of the Company within
the meaning of Section 16 of the Exchange Act, the officer may, in
addition, be allowed to pay all or part of the purchase price with
Shares which, as of the exercise date, the officer has owned for six
(6) months or more.
(d) Prior to issuance of the Shares upon exercise of an Award, the Awardee
shall pay any federal, state, and local income and employment tax
withholding obligations applicable to such Award. If an Awardee is an
officer of the Company within the meaning of Section 16 of the
Exchange Act, he may elect to pay such withholding tax obligations by
having the Company withhold Shares having a value equal to the amount
required to be withheld, and any Award under the Plan may permit or
require that such withholding tax obligations be paid by having the
Company withhold Shares having a value equal to the amount required to
be withheld. The value of the Shares to be withheld shall equal the
fair market value of the Shares on the day the Award is exercised. The
right of an officer to dispose of Shares to the Company in
satisfaction of withholding tax obligations shall be deemed to be
approved as part of the initial grant of an Award, unless thereafter
rescinded, and shall otherwise be made in compliance with Rule 16b-3
and other applicable regulations, and any Award under the Plan may
permit or require that such withholding tax obligations be paid by
having the Company withhold Shares having a value equal to the amount
required to be withheld.
12. Exercise of Award.
(a) Procedure for Exercise; Rights as a Shareholder. Any Award granted
hereunder shall be exercisable at such times and under such conditions
as determined by the Board at the time of grant, and as shall be
permissible under the terms of the Plan.
An Award may not be exercised for a fraction of a Share.
An Award shall be deemed to be exercised when written or
electronic notice of such exercise has been given to the Company in
accordance with the terms of the Award by the person entitled to
exercise the Award and full payment for the Shares with respect to
which the Award is exercised has been received by the Company. Full
payment may, as authorized by the Board, consist of any consideration
and method of payment allowable under Section 11(c) of the Plan. Until
the issuance (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company) of
the share certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a shareholder shall exist
with respect to the Shares subject to the Award, notwithstanding the
exercise of the Award. The Company shall issue (or cause to be issued)
such share certificate promptly upon exercise of the Award. In the
event that the exercise of an Award is treated in part as the exercise
of an Incentive Stock Option and in part as the exercise of a
Nonqualified Stock Option pursuant to Section 6(a), the Company shall
issue a share certificate evidencing the Shares treated as acquired
upon the exercise of an Incentive Stock Option and a separate share
certificate evidencing the Shares treated as acquired upon the
exercise of a Nonqualified Stock Option, and shall identify each such
certificate accordingly in its share transfer records. No adjustment
will be made for a dividend or other right for which the record date
is prior to the date the share certificate is issued, except as
provided in Section 14 of the Plan.
Exercise of an Award in any manner and delivery of the Shares
subject to such Award shall result in a decrease in the number of
Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Award, by the number of Shares as to which
the Award is exercised.
(b) Termination of Status as a Participant. In the event of termination of
an Awardee's Continuous Status as a Participant, such Awardee may
exercise his or her rights under any outstanding Awards to the extent
exercisable on the date of termination (but in no event later than the
date of expiration of the term of such Award as set forth in the Award
Agreement). To the extent that the Awardee was not entitled to
exercise his or her rights under such Awards at the date of such
termination, or does not exercise such rights within the time
specified in the individual Award Agreements, the Awards shall
terminate.
(c) Disability of Awardee. Notwithstanding the provisions of Section 12(b)
above, in the event of termination of an Awardee's Continuous Status
as a Participant as a result of total and permanent disability (i.e.,
the inability to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a
continuous period of twelve (12) months), the Awardee will vest in the
Award, but only to the extent of the vesting that would have occurred
had the Awardee remained in Continuous Status as a Participant for a
period of twelve (12) months after the date on which the Participant
ceased performing services as a result of the total and permanent
disability. An Option or SAR that is vested pursuant to this Section
12(c) must be exercised within eighteen (18) months (or such shorter
time as is specified in the grant) from the date on which the
Participant ceased performing services as a result of the total and
permanent disability (but in no event later than the date of
expiration of the term of such Option or SAR as set forth in the Award
Agreement). To the extent that the Awardee was not entitled to
exercise such Option or SAR within the time specified herein, the
Award shall terminate.
(d) Death of Awardee. Notwithstanding the provisions of Section 12(b)
above, in the event of the death of an Awardee:
(i) who is at the time of death a Participant, the Award will vest,
but only to the extent of the vesting that would have occurred
had the Awardee continued living and remained in Continuous
Status as a Participant twelve (12) months following the date of
death, by the Awardee's estate or by a person who acquired the
right to exercise the Award by bequest or inheritance, or
(ii) whose Option or SAR has not yet expired but whose Continuous
Status as a Participant terminated prior to the date of death,
the Option or SAR may be exercised, at any time within twelve
(12) months following the date of death, by the Awardee's estate
or by a person who acquired the right to exercise the Option or
SAR by bequest or inheritance, but only to the extent of the
right to exercise that had vested at the date of termination.
(e) Notwithstanding subsections (b), (c), and (d) of this Section 12, the
Board shall have the authority to extend the expiration date of any
outstanding Option in circumstances in which it deems such action to
be appropriate (provided that no such extension shall extend the term
of an Award beyond the date on which the Award would have expired if
no termination of the Employee's Continuous Status as a Participant
had occurred).
13. Non-Transferability of Awards. An Award may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Awardee, only by the Awardee; provided that the Board may permit further
transferability, on a general or specific basis, and may impose conditions and
limitations on any permitted transferability.
14. Adjustments to Shares Subject to the Plan.
Award, the Maximum Annual Employee Award and the number of Shares which
have been authorized for issuance under the Plan but as to which no Awards have
yet been granted or which have been returned to the Plan upon cancellation or
expiration of an Award, as well as the price per Share covered by each such
outstanding Award, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination, or reclassification of the Shares, or
any other increase or decrease in the number of issued Shares effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding, and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of any class, or securities convertible into shares of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of Shares subject to an Award.
In the event of the proposed dissolution or liquidation of the Company, the
Award will terminate immediately prior to the consummation of such proposed
action, unless otherwise provided by the Board. The Board may, in the exercise
of its sole discretion in such instances, declare that any Award shall terminate
as of a date fixed by the Board and give each Awardee the right to exercise an
Award as to all or any part of the Shares subject to an Award, including Shares
as to which the Award would not otherwise be exercisable. In the event of a
proposed sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, each Award shall be
assumed or an equivalent award shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation, unless such
successor corporation does not agree to assume the Award or to substitute an
equivalent award, in which case the Board shall, in lieu of such assumption or
substitution, provide for the Awardee to have the right to exercise the Award as
to all of the Shares subject to Awards, including Shares as to which the Award
would not otherwise be exercisable. If the Board makes an Award fully
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Board shall notify the Awardee that the Award shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Award will terminate upon the expiration of such period.
15. Time of Granting Awards. The date of grant of an Award shall, for all
purposes, be the date on which the Company completes the corporate action
relating to the grant of such Award and all conditions to the grant have been
satisfied, provided that conditions to the grant, exercise or vesting of an
Award shall not defer the date of grant. Notice of a grant shall be given to
each Participant to whom an Award is so granted within a reasonable time after
the determination has been made.
16. Substitutions and Assumptions. The Board shall have the right to substitute
or assume Awards in connection with mergers, reorganizations, separations, or
other transactions to which Section 424(a) of the Code applies, provided such
substitutions and
assumptions are permitted by Section 424 of the Code and the regulations
promulgated thereunder. The number of Shares reserved pursuant to Section 3 may
be increased by the corresponding number of Awards assumed and, in the case of a
substitution, by the net increase in the number of Shares subject to Awards
before and after the substitution.
17. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may amend or terminate the Plan
from time to time in such respects as the Board may deem advisable
(including, but not limited to amendments which the Board deems
appropriate to enhance the Company's ability to claim deductions
related to stock option exercises); provided that any increase in the
number of Shares subject to the Plan, other than in connection with an
adjustment under Section 14 of the Plan, and any amendment described
in Section 10(b) of the Plan, shall require approval of or
ratification by the shareholders of the Company.
(b) Participants in Foreign Countries. The Board shall have the authority
to adopt such modifications, procedures, and subplans as may be
necessary or desirable to comply with provisions of the laws of
foreign countries in which the Company or its Subsidiaries may operate
to assure the viability of the benefits from Awards granted to
Participants performing services in such countries and to meet the
objectives of the Plan.
(c) Effect of Amendment or Termination. Any such amendment or termination
of the Plan shall not affect Awards already granted and such Awards
shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the
Awardee and the Board, which agreement must be in writing and signed
by the Awardee and the Company.
18. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to
the exercise of an Award unless the exercise of such Award and the issuance and
delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
19. Reservation of Shares. The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
20. No Employment/Service Rights. Nothing in the Plan shall confer upon any
Participant the right to an Award or to continue in service as an Employee or
Consultant for any period of specific duration, or interfere with or otherwise
restrict in any way the rights of the Company (or any Parent or Subsidiary
employing or retaining such person), or of any Participant or Awardee, which
rights are hereby expressly reserved by each, to terminate such person's
services at any time for any reason, with or without cause.
NORTHERN ETHANOL, INC.
193 King Street, Suite 300
Toronto, Ontario M5A 1J5
, 200
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(insert name, address of
- ------------------------------------
grantee of option)
- ------------------------------------
- ------------------------------------
- ------------------------------------
Dear :
----------------------
The Board of Directors of Northern Ethanol, Inc. (the "Corporation") is pleased
to award you an Option pursuant to the provisions of the 2006 Stock Plan (the
"Plan") to purchase shares of the Common Stock of the Corporation ("Common
Shares"). This letter will describe the Option granted to you. Attached to this
letter is a copy of the Plan. The terms of the Plan also set forth provisions
governing the Option granted to you. Therefore, in addition to reading this
letter, you should also read the Plan. Your signature on this letter is an
acknowledgement to us that you have read and understand the Plan and that you
agree to abide by its terms. All terms not defined in this letter shall have the
same meaning as in the Plan.
1. Type of Option. You are granted a [Incentive Stock Option ("ISO")]
[Non-Qualified Stock Option ("NSO")] [Stock Award] [Stock Appreciation Right
("SAR")].
2. Rights and Privileges. Subject to the conditions hereinafter set forth,
we grant you the right to purchase ( ) Common Shares of the Corporation at an
exercise price of One Dollar (US$1.00) per share, which Option to purchase shall
be issued pursuant to the Plan.
3. Time of Exercise. The Option may be exercised at any time and from time
to time beginning when the right to purchase the Common Shares accrues and
ending when terminated as provided in Section 5 of this letter.
4. Method of Exercise. The Option shall be exercised by written notice to
the Chief Executive Officer of the Corporation at the Corporation's principal
place of business. The notice shall set forth the number of Common Shares to be
acquired and shall contain a check payable to the Corporation in full payment
for the Common Shares or, if you are an
officer of the Corporation within the meaning of Section 16 of the Securities
Exchange Act of 1934, that number of already owned Common Shares equal in value
to the total Exercise Price of the Option. We shall make a delivery of the
shares of Common Shares subject to the conditions of the Plan.
5. Termination of Option. To the extent not exercised, the Option shall
terminate upon the first to occur of the following dates:
(a) ___________________, being five (5) years from the date pursuant
to the provisions of Section 7 of this letter; or
(b) Upon a determination of termination of your "Continuous Status as
a Participant," as defined Section 2(k) of the Plan
6. Binding Effect. The rights and obligations described in this letter
shall inure to the benefit of and be binding upon both of us and our respective
heirs, personal representatives, successors and assigns.
7. Date of Grant. The Option shall be treated as having been granted to you
on the date of this letter, even though you may sign it at a later date.
Yours truly,
NORTHERN ETHANOL, INC.
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Gord Laschinger, Chief Executive Officer
AGREED TO AND ACCEPTED:
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