Exhibit 10.7
APOLLO GOLD CORPORATION
PLAN OF ARRANGEMENT ▇▇▇▇▇ OPTION INCENTIVE PLAN
WHEREAS pursuant to an arrangement agreement (the "ARRANGEMENT
AGREEMENT") made as of the 25th day of June, 2002 (the "EFFECTIVE DATE") between
International Pursuit Corporation ("PURSUIT") and Nevoro Gold Corporation
("NEVORO"), Pursuit and Nevoro agreed to amalgamate and merge the operations of
Pursuit and Nevoro to form Apollo Gold Corporation (the "COMPANY"), on and
subject to the terms the conditions contained in the Arrangement Agreement and
the plan of arrangement (the "PLAN OF ARRANGEMENT") attached thereto;
AND WHEREAS pursuant to the terms of the Plan of Arrangement, the
Company was authorized , on the Effective Date, as soon as reasonable
practicable after the completion of the steps necessary to effect the
Arrangement, to establish an incentive stock option plan and to grant to the key
employees, officers and directors of the Company (as determined by the board of
directors of the Company) options (the "ARRANGEMENT OPTIONS") to acquire an
aggregate of 2,780,412 Common Shares of the Company at an exercise price of
US$0.80 per share, vesting as to an aggregate of 695,103 Common Shares every six
months for a period of 24 months following the Effective Date;
AND WHEREAS pursuant to a letter (the "TSX APPROVAL LETTER") dated
July 31, 2002, the Toronto Stock Exchange ("TSX") gave its final approval to the
creation and granting of the Arrangement Options;
AND WHEREAS the Company wishes to create this incentive stock option
plan for the purposes of granting the Arrangement Options to senior officers,
directors and key employees of the Company and its subsidiaries and affiliates,
as well as any other person or company engaged to provide ongoing management or
consulting services to the Company or to its subsidiaries and affiliates
(collectively, the "SERVICE PROVIDERS"), as follows (which plan is hereafter
referred to as the "PLAN"):
1. DEFINITIONS
As used herein, the following terms shall have the following meanings:
(a) "AFFILIATE" shall have the meaning ascribed to that term in the
Securities Act (Ontario);
(b) "ASSOCIATE" shall have the meaning ascribed to that term in the
Securities Act (Ontario);
(c) "COMMON SHARES" means the common shares in the capital of the Company
as such shares are subdivided, consolidated, reclassified or changed
from time to time;
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(d) "EFFECTIVE DATE" means June 25, 2002;
(e) "INSIDER" means:
(i) an insider as defined in the Securities Act (Ontario) other than
the a person who falls within that definition solely by virtue of
being a director or senior officer of a subsidiary of the
Company; and
(ii) an associate of any person who is an insider by virtue of (i);
(f) "OUTSTANDING ISSUE" means the number of Common Shares that are
outstanding on a non-diluted basis;
(g) "RESERVED FOR ISSUANCE" means shares which may be issued in the future
upon the exercise of Arrangement Options which have been granted;
(h) "SHARE COMPENSATION ARRANGEMENTS" means a stock option, stock option
plan, employee stock purchase plan or any other compensation or
incentive mechanism involving the issuance or potential issuance of
shares to one or more Service Providers including a share purchase
from treasury which is financially assisted by the Company by way of a
loan, guarantee or otherwise; and
(i) "SUBSIDIARY" shall have the meaning ascribed to that term in the
Securities Act (Ontario").
2. PURPOSE OF THE PLAN
The purpose of the Plan is to develop the interest of certain key
Service Providers in the growth and development of the Company by providing them
with the opportunity, through the granting of Arrangement Options, to acquire an
increased proprietary interest in the Company.
3. IMPLEMENTATION
The Plan will be implemented in accordance with the terms hereof and
will be structured to comply with the rules of the TSX, as amended from time to
time (the "TSX RULES").
4. ADMINISTRATION
The Plan will be administered by the board of directors of the Company
(the "BOARD") or, in the Board's discretion, by a committee (the "COMMITTEE")
appointed by the Board and consisting of not less than three members of the
Board. Subject to the provisions of the Plan, the Board or the Committee is
authorized, in its sole discretion, to make such determinations under and such
interpretations of and take such steps and actions in connection with the proper
administration of the Plan and such rules and regulations concerning the
granting of the Arrangement Options pursuant to the Plan as it may deem
necessary or advisable. No member of the Board or of the Committee will be
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liable for any action or determination taken or made in good faith with respect
to the Plan or any Arrangement Options granted under it. Any determination
approved by a majority of the Board or of the Committee will be deemed to be a
determination of that matter by the Board or the Committee, as the case may be.
Members of the Board or the Committee may be granted Arrangement Options under
the Plan.
5. NUMBER OF SHARES DEDICATED TO THE PLAN
The Company shall reserve, set aside and make available to the Board
or Committee for the granting of Arrangement Options to eligible grantees up to
an aggregate of 2,780,412 Common Shares, subject to adjustment from time to time
provided that such adjustment receives the necessary approvals in accordance
with the TSX Rules. All Arrangement Options granted under the Plan will conform
to all applicable provisions prescribed by the Plan and to such specific terms
and conditions as may be determined by the Board or the Committee at the time of
making each grant, provided that such terms and conditions are not inconsistent
with the provisions hereof. Common Shares reserved for issuance for which an
Arrangement Option is granted under the Plan but not exercised prior to the
termination of such Arrangement Option, whether through surrender, termination,
lapse or otherwise, shall be available for Arrangement Options thereafter
granted by the Board or the Committee under the Plan. All Common Shares issued
pursuant to the exercise of the Arrangement Options granted under the Plan shall
be issued as fully-paid and non-assessable shares.
6. ELIGIBILITY
The persons who will be eligible to be granted Arrangement Options
pursuant to the Plan ("PARTICIPANTS") will be such Service Providers as the
Board or the Committee shall determine. In determining Arrangement Options to be
granted to Participants under the Plan, the Board or Committee will give due
consideration to the value of each such Service Provider's past, present and
potential contribution to the Company's success or to the success of any
affiliate or subsidiary of the Company.
7. GRANTING OF ARRANGEMENT OPTIONS
(a) Subject to the provisions herein set forth and after review of
recommendations from management for the granting of the Arrangement
Options, the Board or Committee shall, in its sole discretion, select
those Participants to whom such Arrangement Options under the Plan
shall be granted (an "OPTIONEE"), fix the number of Common Shares to
be granted to each and the terms and conditions, within the limits
prescribed in paragraph 8, attaching to each Arrangement Option.
(b) Subject to the provisions contained herein, the following additional
provisions shall be applicable to the Arrangement Options granted
under the Plan:
(i) a majority of the Common Shares reserved for issuance under the
Plan will or may be issuable to Insiders of the Company; and
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(ii) the number of Common Shares Reserved for Issuance pursuant to the
Plan, together with all of the Company's other previously
established or proposed Share Compensation Arrangements, could
result, at any time in the number of Common Shares Reserved for
Issuance under the Plan exceeding 10% of the Outstanding Issue.
8. TERMS AND CONDITIONS OF THE ARRANGEMENT OPTIONS
The terms and conditions of each Arrangement Option granted under the
Plan shall be set forth in an Option Agreement between the Company and Optionee.
Such Option Agreement shall include the following terms and conditions:
(a) NUMBER OF COMMON SHARES - The Board or the Committee shall, in its
sole discretion, but subject to the TSX Rules, fix the aggregate
number of Common Shares which are the subject of the Arrangement
Option.
(b) ARRANGEMENT OPTION PRICE - Pursuant to the TSX Approval letter, the
Board or the Committee shall fix the Arrangement Option price per
Common Share at U.S.$0.80 per share.
(c) PAYMENT - The full purchase price for the Common Shares purchased
under the Arrangement Option shall be paid for in cash upon the
exercise thereof. An Optionee who is not already a shareholder shall
have none of the rights of a shareholder of the Company until Common
Shares issuable pursuant to this Arrangement Option are issued to him.
(d) TERM OF ARRANGEMENT OPTION - The Board or the Committee shall fix the
term of the Arrangement Option at five years from the date the
Effective Date, subject to subparagraphs (e), (f) and (g) of this
paragraph 8.
(e) DEATH OF OPTIONEE - In the event of the death of the Optionee while in
the employment of the Company or an affiliate of the Company prior to
the end of the term of the Arrangement Option, the Optionee's legal
representative may:
(i) exercise the Arrangement Option to the extent that the Optionee
was entitled to do so at the date of his death at any time up to
and including, but not after, a date one year following the date
of death of the Optionee, or prior to the close of business on
the day of the expiry of the term of the Arrangement Option,
whichever is earlier; and
(ii) with the prior written consent of the Board or the Committee,
exercise the Arrangement Option to purchase all or any of the
optioned shares as the Board or the Committee may designate but
not exceeding the number of optioned shares that the Optionee
would have been entitled to otherwise had he survived. The
Arrangement Option may be exercised at any time up to and
including, but not after, the date one year following the death
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of the Optionee or prior to the closing of business on the day of
the expiry of the term of the Arrangement Option, whichever is
earlier.
(f) RESIGNATION OR DISCHARGE FOR CAUSE OF OPTIONEE - In the event of the
resignation of the Optionee as an employee of the Company or an
affiliate of the Company, or the discharge for "cause" of the Optionee
as an employee of the Company or a subsidiary or affiliate of the
Company during the duration of the Arrangement Option, the Arrangement
Option shall in all respects cease and terminate. For the purposes of
the Plan, the determination by the Company that the Optionee was
discharged for "cause" shall be binding on the Optionee.
(g) OTHER TERMINATION OF OPTIONEE - In the event of the termination of
employment of the Optionee with the Company or a subsidiary or
affiliate of the Company, other than as referred to in paragraphs (e)
and (f) above, the Optionee may:
(i) exercise the Arrangement Option to the extent that he was
entitled to do so at the time of such termination of employment,
at any time up to and including, but not after, the effective
date of such termination of employment or prior to the close of
business on the day of the expiry of the term of the Arrangement
Option, whichever is earlier; and
(ii) with the prior written consent of the Board or the Committee,
which consent may be withheld in the Company's sole discretion,
exercise the Arrangement Option to purchase all or any of the
optioned shares as the Board or the Committee may designate but
not exceeding the number of optioned shares that he would have
been entitled to otherwise had his employment with the Company or
a subsidiary or affiliate of the Company been maintained for the
term of the Arrangement Option. The Arrangement Option may be
exercised at any time up to and including, but not after, a date
three (3) months following the date of the said termination of
employment, or prior to the close of business on the expiry of
the term of the Arrangement Option, whichever is earlier.
(h) NON-TRANSFERABILITY OF ARRANGEMENT OPTION - The Arrangement Options
granted under the Plan may not be assigned, encumbered or otherwise
disposed of by the Optionee, provided that nothing herein shall
operate to restrict the transfer of any Common Shares issued pursuant
to the exercise of a particular Arrangement Option granted under the
Plan.
(i) EXERCISE OF ARRANGEMENT OPTION - Subject to the provisions of the
Plan, an Arrangement Option granted under the Plan shall be exercised
from time to time by the Optionee, or in the event of death, by his
legal representatives, by giving notice in writing addressed to the
Company at its registered office, to the attention of the Secretary of
the Company, specifying the number of optioned shares in respect of
which such notice is being given, together with payment by cash or
certified cheque in full of the purchase price for the shares being
purchased.
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9. ADJUSTMENTS IN EVENT OF CHANGE IN STRUCTURE OF CAPITAL
Appropriate adjustments in the number of Common Shares optioned and in
the option price per Common Share, relating to Arrangement Options granted or to
be granted, shall be made by the Board or the Committee, in its sole discretion,
to give effect to adjustments in the number of Common Shares of the Company
resulting, subsequent to the approval of the Plan by the shareholders of the
Company from any subdivisions, consolidations or reclassification of the Common
Shares of the Company, or other relevant changes in the capital structure of the
Company, or the payment of stock dividends other than in the ordinary course of
business by the Company.
10. AMENDMENT OR DISCONTINUANCE OF PLAN
The Board may amend the Plan at any time subject to prior approval of
the TSX and compliance with the applicable TSX Rules.
11. MISCELLANEOUS
(a) NO RIGHTS AS A SHAREHOLDER
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Nothing contained in the Plan nor in any Arrangement Option granted
hereunder shall be deemed to give any Optionee any interest or title in or to
any Common Shares of the Company or any rights as a shareholder of the Company
or any other legal or equitable right against the Company whatsoever other than
as set forth in the Plan and pursuant to the exercise of any Arrangement Option.
(b) EMPLOYMENT
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Nothing contained in the 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 thereof to terminate such employment at any time. Participation in the
Plan by a Participant is voluntary.
(c) RECORD KEEPING
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The Company shall maintain a register in which shall be recorded:
(i) the name and address of each Participant; and
(ii) the number of Arrangement Options granted to a Participant and
the number of Arrangement Options outstanding.
(d) ADMINISTRATION OF THE PLAN
--------------------------
The Board or the Committee is authorized to interpret the Plan from
time to time and to adopt, amend and rescind rules and regulations for carrying
out such Plan provided, however, that no amendment shall be made to the Plan
without the prior approval of the TSX. The interpretation and construction of
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any provision of the Plan by the Board or the Committee shall be final and
conclusive. Administration of the Plan shall be the responsibility of the
appropriate officers of the Company and all costs in respect thereof shall be
paid by the Company.
(e) INCOME TAXES
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As a condition of and prior to participation in the Plan a Participant
shall authorize the Company in written form to withhold from any remuneration
otherwise payable to such Participant any amounts required by any taxing
authority to be withheld for taxes of any kind as a consequence of such
participation in the Plan.
(f) NO REPRESENTATION OR WARRANTY
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The Company makes no representation or warranty as to the future
market value of any Common Shares issued in accordance with the provisions of
the Plan.
(g) INTERPRETATION
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The Plan will be governed by and construed in accordance with the laws
of the Province of Ontario.
(h) COMPLIANCE WITH APPLICABLE LAW, ETC.
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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.
