BENZ ENERGY LTD.
STOCK OPTION PLAN
JANUARY 14, 1998
ARTICLE ONE (1)
DEFINITIONS AND INTERPRETATION
Section 1.1 DEFINITIONS: For purposes of the Plan, unless such word or
term is otherwise defined herein or the context in which such word or term is
used herein otherwise requires, the following words and terms with the
initial letter or letters thereof capitalized shall have the following
meanings:
(a) "1993 Act" means the Securities Act of 1993 of the United States,
as amended;
(b) "Committee" means the Directors or, if the Directors so determine
in accordance with section 2.3 of the Plan, the committee of the
Directors authorized to administer the Plan;
(c) "Common Shares" means the common shares of the Corporation, as
adjusted in accordance with the provisions of Article Six of the
Plan;
(d) "Corporation" means Benz Energy Ltd., a corporation continued
pursuant to the provisions of the BUSINESS CORPORATIONS ACT (Yukon);
(e) "Directors" means the directors of the Corporation from time to
time;
(f) "Eligible Directors" means the Directors or the Directors of any
subsidiary of the Corporation from time to time who, by the nature
of their positions are, in the opinion of the Committee, in a
position to contribute to the success of the Corporation;
(g) "Eligible Employees" means employees, including officers, whether
Directors or not, and including both full-time and part-time
employees, of the Corporation or any subsidiary of the Corporation
who, by the nature of their positions or jobs are, in the opinion
of the Committee, in a position to contribute to the success of the
Corporation;
(h) "Employment Contract" means any contract between the Corporation or
any subsidiary of the Corporation and any Eligible Employee or
Other Participant relating to, or entered into in connection with,
the employment of the Eligible Employee or the engagement of the
Other Participant;
(i) "Option" means an option to purchase Common Shares granted pursuant
to, or governed by, the Plan;
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(j) "Optionee" means a Participant to whom an Option has been granted
pursuant to the Plan;
(k) "Option Period" means the period of time during which the
particular Option may be exercised;
(l) "Other Participants" means any person or corporation engaged to
provide ongoing management or consulting services for the
Corporation or for any entity controlled by the Corporation other
than an Eligible Director or an Eligible Employee;
(m) "Participant" means each Eligible Director, Eligible Employee and
Other Participant;
(n) "Plan" means this stock option plan;
(o) "Share Compensation Arrangement" means any stock options, stock
option plan, employee stock purchase plan or any other compensation
or incentive mechanism involving the issuance or potential issuance
of Common Shares, including a share purchase from treasury which is
financially assisted by the Corporation by way of a loan, guarantee
or otherwise; and
(p) "Insider" means
(i) an insider of the Corporation, other than a person who is
an insider of the Corporation solely by virtue of being a
director or senior officer of a subsidiary of the
Corporation; and
(ii) an associate of any person who is an insider of the
Corporation within the meaning of paragraph (i) of this
definition.
Section 1.2 SECURITIES DEFINITIONS: In the Plan, the terms "associate",
"subsidiary" and "insider" shall have the meanings given to such terms in the
SECURITIES ACT (Ontario).
Section 1.3 HEADINGS: The headings of all articles, sections, and
paragraphs in the Plan are inserted for convenience of reference only and
shall not affect the construction or interpretation of the Plan.
Section 1.4 CONTEXT, CONSTRUCTION: Whenever the singular or masculine are
used in the Plan, the same shall be construed as being the plural or feminine
or neuter or vice versa where the context so requires.
Section 1.5 REFERENCES TO THE PLAN: The words "herein", "hereby",
"hereunder", "hereof" and similar expressions mean or refer to the Plan as a
whole and not to any particular article, section, paragraph or other part
hereof.
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Section 1.6 CANADIAN FUNDS: Unless otherwise specifically provided, all
references to dollar amounts in the Plan are references to lawful money of
Canada.
ARTICLE TWO (2)
PURPOSE AND ADMINISTRATION OF THE PLAN
Section 2.1 PURPOSE OF THE PLAN: The Plan provides for the grant of
Options to Participants for the purpose of advancing the interests of the
Corporation through the motivation, attraction and retention of key employees
and directors of the Corporation and subsidiaries of the Corporation and to
secure for the Corporation and the shareholders of the Corporation the
benefits inherent in the ownership of Common Shares by key employees and
directors of the Corporation and subsidiaries of the Corporation, it being
generally recognized that stock option plans aid in attracting, retaining and
encouraging employees and directors due to the opportunity offered to them to
acquire a proprietary interest in the Corporation.
Section 2.2 ADMINISTRATION OF THE PLAN: The Plan shall be administered by
the Committee and the Committee shall have full authority to administer the
Plan including the authority to interpret and construe any provision of the
Plan and to adopt, amend and rescind such rules and regulations for
administering the Plan as the Committee may deem necessary in order to comply
with the requirements of the Plan. All actions taken and all interpretations
and determinations made by the Committee in good faith shall be final and
conclusive and shall be binding on the Participants and the Corporation. No
member of the Committee shall be personally liable for any action taken or
determination or interpretation made in good faith in connection with the
Plan and all members of the Committee shall, in addition to their rights as
Directors, be fully protected, indemnified and held harmless by the
Corporation with respect to any such action taken or determination or
interpretation made. The appropriate officers of the Corporation are hereby
authorized and empowered to do all things and execute and deliver all
instruments, undertakings and applications and writings as they, in their
absolute discretion, consider necessary for the implementation of the Plan
and of the rules and regulations established for administering the Plan. All
costs incurred in connection with the Plan shall be for the account of the
Corporation.
Section 2.3 DELEGATION TO COMMITTEE: All of the powers exercisable
hereunder by the Directors may, to the extent permitted by applicable law and
as determined by resolution of the Directors, be exercised by a committee of
the Directors comprised of not less than three Directors.
Section 2.4 RECORD KEEPING: The Corporation shall maintain a register in
which shall be recorded:
(a) the name and address of each Optionee;
(b) the number of Common Shares subject to Options granted to each
Optionee; and
(c) the aggregate number of Common Shares subject to Options.
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Section 2.5 PREVIOUSLY GRANTED OPTIONS: The options to purchase an
aggregate of 2,967,464 Common Shares granted by the Corporation to
Participants before January 14, 1998 shall continue to be exercisable, and
upon the Plan becoming effective, shall be governed by and be subject to the
Plan and shall be deemed to be Options granted under the Plan. The
Corporation may, after adoption of the Plan by the Corporation's Board of
Directors, grant Options under the Plan, but no Common Shares may be issued
pursuant to such Options until the Plan is effective. To the extent that the
terms and conditions of any of the aforesaid options are inconsistent with
the terms and conditions of the Plan, the terms and conditions of the Plan
shall govern.
ARTICLE THREE (3)
ELIGIBILITY AND PARTICIPATION
IN THE PLAN AND GRANT OF OPTIONS
Section 3.1 ELIGIBILITY: Options shall only be granted to Participants.
Section 3.2 DETERMINATION OF OPTION RECIPIENTS: The Committee shall from
time to time determine the Participants to whom Options shall be granted to
each Participant and the other terms of each Option granted to each
participant, all such determinations to be made in accordance with the terms
and conditions of the Plan, and the Committee may take into consideration the
present and potential contributions of and the services rendered by the
particular Participant to the success of the Corporation and any other
factors which the Committee deems appropriate and relevant. Each Option
granted to a Participant shall be evidenced by a stock option agreement
containing terms and conditions consistent with the provisions of the Plan,
which terms and conditions need not be the same in each case. No Participant
who is a Director shall vote on any motion considered by the Directors
granting any Option to such Director.
ARTICLE FOUR (4)
NUMBER OF COMMON SHARES SUBJECT TO THE
PLAN, EXERCISE PRICE AND TERM OF OPTIONS
Section 4.1 NUMBER OF SHARES: The maximum aggregate number of Common Shares
which may be made subject to Options shall be 3,020,998 Common Shares and in no
event shall the aggregate number of Common Shares reserved for issue pursuant
to the provisions of the Plan exceed 3,020,998 Common Shares, subject in each
case to adjustment in accordance with Article Six of the Plan. In addition,
the maximum aggregate number of Common Shares which, together with Common
Shares subject to a Share Compensation Arrangement with such Participant or
Participants, as the case may be, may be:
(a) reserved for issue pursuant to Options granted to Participants
who are Insiders shall not exceed 10% of the number of Common
Shares then outstanding;
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(b) issued pursuant to Share Compensation Agreements granted to
Participants who are Insiders within a one-year period shall not
exceed 10% of the number of Common Shares then outstanding;
(c) issued pursuant to Share Compensation Agreements granted to any
one Participant who is an Insider and the associates of such
Participant within a one-year period shall not exceed 5% of the
number of Common Shares then outstanding; and
(d) reserved for issue pursuant to Options granted to any one
Participant shall not exceed 5% of the number of Common Shares
then outstanding.
For purposes of this section 4.1, the number of Common Shares then
outstanding means the number of Common Shares outstanding on a non-diluted
basis immediately prior to the proposed grant of the applicable Option,
excluding Common Shares issued pursuant to Share Compensation Arrangements
over the preceding one-year period. If Options are surrendered, terminate or
expire in accordance with the terms of the Plan without being exercised in
whole or in part, the Common Shares which were the subject of such Options
and which were not purchased may again be made subject to an Option.
Section 4.2 EXERCISE PRICE: The price per share at which any Common Share
which is the subject of an Option may be purchased shall be determined by the
Directors at the time the Option is granted, provided that such price shall
be not less than the closing price of the Common Shares on The Toronto Stock
Exchange or if the Common Shares are not then listed on The Toronto Stock
Exchange, on such other exchange or market as the Common Shares are then
listed, on the last trading day immediately preceding the date of grant of
such Option.
Section 4.3 TERMS OF OPTIONS: The Option Period for each Option shall be
such period of time as shall be determined by the Committee, subject to any
Employment Contract, provided that no Option Period shall exceed 10 years.
The Committee may determine the number or percentage of Common Shares which
may be purchased by an Optionee during any particular time period within the
Option Period.
ARTICLE FIVE (5)
EXERCISE OF OPTION, EFFECT OF
DEATH AND TERMINATION OF EMPLOYMENT
AND WITHHOLDING TAXES
Section 5.1 EXERCISE OF OPTION:
(a) EXERCISE: Subject to any restriction on the number or
percentage of Common Shares which may be purchased by the
Optionee during any particular time period within the Option
Period determined by the Committee, an Option may be exercised
by the Optionee in whole at any time, or in part from time to
time, during the Option Period, provided however that, except as
otherwise specifically provided in section 5.2
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or section 5.3 hereof or in any Employment Contract, no Option
may be exercised unless the Optionee at the time of exercise
thereof is:
(i) in the case of an Eligible Employee, in the employment of
the Corporation or a subsidiary of the Corporation and
has been continuously so employed since the date of grant
of such Option, provided however, that a leave of absence
with the approval of the Corporation or such subsidiary
of the Corporation shall not be considered an
interruption of employment for purposes of the Plan;
(ii) in the case of an Eligible Director who is not also an
Eligible Employee, a director of the Corporation or a
subsidiary of the Corporation and has been such a
director continuously since the date of grant of such
Option; and
(iii) in the case of an Other Participant, engaged in providing
ongoing management or consulting services for the
Corporation or an entity controlled by the Corporation
and has been so engaged since the date of grant of such
Option.
(b) PAYMENT OF EXERCISE PRICE: The exercise of any Option shall be
contingent upon receipt by the Corporation of payment of the
aggregate purchase price for the Common Shares in respect of
which the Option has been exercised. No Optionee or legal
representative, legalee or distributee of any Optionee will be,
or will be deemed to be, a holder of any Common Shares with
respect to which such Optionee was granted an Option, unless and
until certificates for such Common Shares are issued to such
Optionee, or them, under the terms of the Plan. Subject to
section 9.4 hereof, upon an Optionee exercising an Option and
paying the Corporation the aggregate purchase price for the
Common Shares in respect of which the Option has been exercised,
the Corporation shall as soon as practicable issue and deliver a
certificate representing the Common Shares so purchased.
Section 5.2 EFFECT OF DEATH: If a Participant shall die while an Optionee,
any Option held by such Optionee at the date of death shall be exercisable in
whole or in part only by the person or persons to whom the rights of the
Optionee under the Option shall pass by the will of the Optionee or the laws
of descent and distribution for a period of one year after the date of death
of the Optionee or prior to the expiration of the Option Period in respect of
the Option, whichever is sooner, and then only to the extent that such
Optionee was entitled to exercise the Option at the date of death of such
Optionee, subject to the provisions of any Employment Contract.
Section 5.3 EFFECT OF TERMINATION OF EMPLOYMENT: If an Optionee shall cease
to be a Participant for cause, no Option held by such Optionee shall be
exercisable following the date on which such Optionee ceases to be a
Participant. If an Optionee ceases to be Participant for any reason other
than for cause or by virtue of death, any Option held by such Optionee at
such time shall remain exercisable in full at any time, and in part from time
to time, for a period of 30 days after the date on which the Optionee ceases
to be a Participant or prior to the expiration of the Option Period in
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respect of the Option, whichever is sooner, and then only to the extent that
such Optionee was entitled to exercise the Option at such time, subject to
the provisions of any Employment Contract.
Section 5.4 WITHHOLDING TAXES: The Corporation or any subsidiary of the
Corporation may take such steps as are considered necessary or appropriate
for the withholding of any taxes which the Corporation or any subsidiary of
the Corporation is required by any law or regulation of any governmental
authority whatsoever to withhold in connection with any Option including,
without limiting the generality of the foregoing, the withholding of all or
any portion of any payment or the withholding of the issue of Common Shares
to be issued upon the exercise of any Option until such time as the Optionee
has paid the Corporation or any subsidiary of the Corporation for any amount
which the Corporation or subsidiary of the Corporation is required to
withhold with respect to such taxes.
ARTICLE SIX (6)
CAPITAL CHANGES
Section 6.1 CAPITAL CHANGES: In the event there is any change in the Common
Shares, whether by reason of a stock dividend, consolidation, subdivision,
reclassification or otherwise, an appropriate adjustment shall be made by the
Directors in:
(a) the number of Common Shares available under the Plan;
(b) the number of Common Shares subject to the Options; and
(c) the exercise price of the Common Shares subject to Options.
If the foregoing adjustment shall result in a fractional Common Share, the
fraction shall be disregarded. All such adjustments shall be conclusive,
final and binding for all purposes of the Plan.
Section 6.2 AMALGAMATION, CONSOLIDATION OR MERGER: If the Corporation
amalgamates with, consolidates with or merges with or into, or participates
in a statutory arrangement with, another corporation, any Common Shares
receivable on the exercise of an Option shall be converted into the
securities, property or cash which the Optionee would have received upon such
amalgamation, consolidation, merger or arrangement had the Option been
exercised to such event becoming effective.
ARTICLE SEVEN (7)
EFFECTIVE TIME OF PLAN, AMENDMENT
OF PLAN AND TERMINATION OF PLAN
Section 7.1 EFFECTIVE TIME OF PLAN: The Plan shall become effective upon the
approval of the Plan by:
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(a) The Toronto Stock Exchange and any other exchange upon which the
Common Shares of the Corporation may be listed and posted for
trading; and
(b) the shareholders of the Corporation, given by the affirmative vote
of a majority of the votes attached to the Common Shares of the
Corporation entitled to vote and represented and voted at an annual
or special meeting of the holders of the such Common Shares held,
among other things, to consider and approve the Plan.
Section 7.2 AMENDMENT OF PLAN: The Directors may from time to time in the
absolute discretion of the Directors amend, modify and change the provisions
of the Plan, provided that any amendment, modification or change of the
provisions of the Plan which would:
(a) materially increase the benefits under the Plan;
(b) increase the number of Common Shares, other than by virtue of
Article Six of the Plan, which may be issued pursuant to the
exercise of Options granted pursuant to the Plan; or
(c) materially modify the requirements as to eligibility for
participation in the Plan;
shall only be effective upon such amendment, modification or change being
approved by the shareholders of the Corporation in a manner similar to the
approval contemplated by section 7.1 of the Plan. Any amendment, modification
or change of any provision of the Plan shall be subject to approval, if
required, by any regulatory body having jurisdiction.
Section 7.3 TERMINATION OF THE PLAN: The Plan may be terminated at any time
by the Directors. Notwithstanding the termination of the Plan, any Option
outstanding under the Plan at the time of termination shall remain in effect
until such Option has been exercised, has expired, has been surrendered to
the Corporation or has been terminated.
ARTICLE EIGHT (8)
U.S. MATTERS
Section 8.1 ADDITIONAL RESTRICTIONS ON TRANSFER: By accepting Options
and/or Common Shares under the Plan, an Optionee will be deemed to represent,
warrant and agree as follows:
(a) SECURITIES ACT OF 1933: The Optionee understands that the Common
Shares have not been registered under the 1933 Act, and that such
shares are not freely tradeable and must be held indefinitely unless
such shares are either registered under the 1933 Act
or
an exemption from such registration is available. The Optionee
understands that the Corporation is under no obligation to register
the Common Shares under applicable securities laws.
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(b) OTHER APPLICABLE LAWS: The Optionee further understands that
transfer of the Common Shares requires full compliance with the
provisions of all applicable laws.
(c) INVESTMENT INTENT: Unless a registration statement is in effect
with respect to the sale of Common Shares obtained through exercise
of Options granted hereunder: (i) Upon exercise of any Option, the
Optionee will purchase the Common Shares for his or her own account
and not with a view to distribution within the meaning of the
1933 Act, other than as may be effected in compliance with the
1933 Act and the rules and regulations promulgated thereunder;
(ii) no one else will have any beneficial interest in the Common
Shares; and (iii) he or she has no present intention of disposing of
the Common Shares at any particular time.
Section 8.2 COMPLIANCE WITH LAW: Notwithstanding any other provision of the
Plan, Options may be granted pursuant to the Plan, and Common shares may be
issued pursuant to the exercise thereof by an Optionee, only after there has
been compliance with all applicable federal and state securities laws, and
all of the same will be subject to this overriding condition. The Corporation
will not be required to register or qualify Common Shares with the United
States Securities and Exchange Commission or any State agency, except that
the Corporation will register with, or as required by local law, file for and
secure an exemption from such registration requirements from, the applicable
securities administrator and other officials of each jurisdiction in which a
Participant would be granted an Option hereunder prior to such grant.
Section 8.3 EXERCISE OF OPTIONS: In addition to any other requirements set
out in the Plan or a stock option agreement, the following conditions will
apply to the exercise of Options under the Plan:
(a) MECHANICS: Upon exercise of an Option, an Optionee provides
(i) full payment of the exercise price thereof and the amount of
withholding taxes pursuant to subsection 8.3(b) below; and
(ii) assurances satisfactory to the Corporation that the Common
Shares to be purchased upon such exercise are being purchased for
investment and not with a view to resale in connection with any
distribution of such shares in violation of the 1933 Act; provided,
however, that in the event the Common Shares called for under the
Option are registered under the 1933 Act, or in the event resale of
such Common Shares without such registration would otherwise be
permissible, this second condition will be inoperative if, in the
opinion of counsel for the Corporation, such condition is not
required under the 1933 Act, or any other applicable law,
regulation or rule of any governmental agency.
(b) WITHHOLDING TAXES: As a condition to the issuance of the Common
Shares upon full or partial exercise of an Option granted under the
Plan, the Optionee will pay to the Corporation in cash, or by way of
certified cheque, bank draft or money order the amount of the
Corporation's tax withholding liability required in connection with
such exercise. For purposes of this subsection 8.3(b), "tax
withholding liability" means all federal and state income taxes,
social security tax, and any other taxes applicable to the
compensation income arising from the transaction required by
applicable law to be withheld by the Corporation.
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ARTICLE NINE (9)
MISCELLANEOUS PROVISIONS
Section 9.1 NON-ASSIGNABLE: No rights under the Plan an no Option awarded
pursuant to the provisions of the Plan are assignable or transferable by any
Participant other than pursuant to a will or by the laws of descent and
distribution.
Section 9.2 RIGHTS AS A SHAREHOLDER: No Optionee shall have any rights as a
shareholder of the Corporation with respect to any Common Shares which are
the subject of an Opinion. No Optionee shall be entitled to receive, and no
adjustment shall be made for, any dividends, distributions or other rights
declared for shareholders of the Corporation for which the record date is
prior to the date of exercise of any Option.
Section 9.3 NO CONTRACT OF EMPLOYMENT: Nothing contained in the Plan shall
confer or be deemed to confer upon any Participant the right to continue in
the employment of the Corporation or any subsidiary of the Corporation nor
interfere or be deemed to interfere in any way with any right of the
Corporation or any subsidiary of the Corporation to discharge any Participant
at any time for any reason whatsoever, with or without cause.
Section 9.4 NECESSARY APPROVALS: The obligation of the Corporation to grant
any Option pursuant to the Plan and to issue, sell and deliver any Common
Shares on the exercise of an Option is subject to the approval of any
governmental authority or regulatory body required in connection with the
grant of such Option or the issue, sale and delivery of such Common Shares by
the Corporation. In the event that any Common Shares cannot be issued to any
Optionee pursuant to the exercise of an Option as a result of the failure to
obtain any required regulatory approvals, then the obligation of the
Corporation to issue such Common Shares shall terminate and any money paid to
the Corporation in connection with the exercise of such Option shall be
returned to the Optionee without interest or deduction.
Section 9.5 NO REPRESENTATION OR WARRANTY: The Corporation makes no
representation or warranty as to the value of any Option granted pursuant to
the Plan or as to the future value of any Common Shares issued pursuant to
the Exercise of any Option.
Section 9.6 COMPLIANCE WITH APPLICABLE LAW: If any provision of the Plan
or any Option contravenes any law or any order, policy, by-law or regulation
of any regulatory body having jurisdiction, then such provision shall be
deemed to be amended to the extent necessary to bring such provision into
compliance therewith.
Section 9.7 APPLICABLE LAW: The Plan and all of the rights and obligations
arising herefrom shall be interpreted and applied in accordance with the laws
of the Province of British Columbia.
Approved and adopted by the directors of the Corporation on the
14th day of January, 1998.
Approved by the shareholders of the Corporation on the day
of , 1998.