(Sample Agreement)
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT made effective ________, 2000
BETWEEN:
XXXXXXX.XXX INC., a body corporate,
duly incorporated under the laws of the Province
of British Columbia and having its office located at
Suite 505 - 1155 Xxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, X0X 0X0
(hereinafter called the "Company")
OF THE FIRST PART
AND: (name of optionee)
(hereinafter called the "Optionee")
OF THE SECOND PART
WHEREAS:
A. The Optionee is devoting considerable time and effort to the
affairs of the Company; and
B. The Company is desirous of granting a Stock Option to the
Optionee in order to provide an incentive for his/her to
contribute to the advancement of the Company;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of
the premises, the mutual covenants and agreements herein
contained, the parties hereto agree as follows:
1. The Company hereby gives and grants to the Optionee, upon
the terms and conditions hereinafter contained, the sole and
exclusive right and option to purchase ____fully paid and non-
assessable shares of the capital stock of the Company at a price
of $____per share, such option to be exercised in whole or in
part at any time up to ________ years from the date of this
Agreement.
2. The Option granted pursuant to this Agreement is subject to
the prior approval of:
a. the Canadian Venture Exchange (the "Exchange"), and
b. the shareholders of the Company (the "Shareholders") if the
Optionee is an insider of the Company (as defined in the
Securities Act, S.B.C. 1985,c.83, as amended)("Insider"),and any
amendments to this Agreement are subject to the prior approval of
c. the Exchange, and
d. the Shareholders if the option as constituted and granted
hereunder was approved by the Shareholders or the Optionee is an
Insider at the time of the amendment. Accordingly, the option
granted pursuant to this Agreement and any amendments hereto may
not be exercised prior to the required approvals having been
obtained.
3. The Optionee represents that he/she is an employee or
director of the Company or its subsidiary and the Optionee agrees
that in the event the Optionee ceases to act in his capacity as
an employee with the Company or its wholly-owned subsidiary, all
the rights granted to him hereunder as to any of the shares
optioned to him under this Agreement which have not theretofore
been purchased, shall thereupon cease, terminate, and be of no
further force and effect.
a for the purposes of this agreement employees include
persons who the Company considers to be employees, and certain
persons who, although in form are independent contractors, in
substance are employees:
i Deductions at Source - A person will be deemed to
be an employee if the person's employer is making
deductions at source (income tax, UIC and CPP).
ii Full time Dependent Contractor - Dependent
contractors generally do not have deductions at
source. However, clearly, in certain
circumstances, the relationship of a dependent
contractor to the person contracting the services
in one of employment. The criteria which is used
by courts to determine whether the nature of the
relationship is in substance an employer\employee
relationship is the "control test": does the
person contracting the contractor exercise control
and have the right over direction over the
contractor and his\her work (e.g. does the
employer not only have right to direct what is
done but how it is done). To be considered a full
time dependent contractor, the contractor must
meet the "control test" and work full time for the
person contracting the services (35 - 40 hours per
week).
iii Part Time Dependent Contractor - Certain part time
dependent contractors will be considered employees
based on the "control test" set out above but only if
the dependent contractor is obligated by the person
contracting the services to work a set number of hours
per week. This number should be disclosed.
4. In the event of the death of the Optionee during the term of
this option, his personal representative shall be entitled to
purchase all or any part of the optioned shares to which the
Optionee would have been entitled pursuant to the provisions of
this Agreement, for a period not exceeding one (1) year following
the date of the death of the Optionee.
5. The option hereunder granted shall be non-transferable and
non-assignable and subject to section 4 hereof, shall be
exercisable only by the Optionee by giving notice in writing
addressed to the Company at its registered office, which notice
shall specify therein the number of optioned shares in respect of
which the option is being exercised and shall include payment
therewith, by cash or certified cheque, of the full amount of the
purchase price for the number of shares purchased. Upon such
exercise of the option, the Company shall forthwith cause the
Registrar and Transfer Agent of the Company to deliver to the
Optionee, or his agent a Certificate or Certificates in the name
of the Optionee, representing in the aggregate such number of
optioned shares as the Optionee purchases.
6. Nothing herein contained shall obligate the Optionee to
purchase or pay for any optioned shares except those optioned
shares in respect of which the Optionee shall have exercised his
option to purchase in the manner hereinbefore provided.
7. In the event the issued and outstanding shares of the
Company are changed by a stock dividend, subdivision,
consolidation, reduction in capital or otherwise recapitalized or
reclassified (whether in connection with a merger or otherwise
but not in connection with any issuance of additional shares for
consideration) this option shall be adjusted (written notice of
which adjustment shall be delivered to the Optionee or as the
case may require, his personal representative at such last known
address as may appear on the records of the Company) as follows:
a. the number and class of shares subject hereto shall then be
such as to permit the Optionee upon the exercise hereof to
acquire the same equity in the Company as he would have acquired
if immediately prior to such capital transaction he had been the
holder of that number of shares then under option but not
theretofore purchased and issued hereunder; and
b. the purchase price of each shall then be increased or
decreased proportionately as the case may require in order that
the purchase price for the equity in the Company actually
purchased shall be the equivalent of the purchase price for such
equity immediately prior to such capital transaction.
8. If the Company shall be dissolved or amalgamated with
another company into a new company or merged with another company
so that such other company is the surviving corporation, this
option shall terminate; PROVIDED HOWEVER that the Optionee shall
have the right between the time of the last required official
action of shareholders and/or directors meetings and the final
step consummating such dissolution, merger or amalgamation to
exercise this option in whole or in part.
9. The Company agrees to furnish the Optionee with not less
than thirty (30) days written
notice delivered to such last known
address of the Optionee or his personal representative as may
appear on the records of the Company, of the events contemplated
in the last preceding section and of any other contemplated
distribution, rights offering or similar benefit conferred upon
the holders of shares of the Company in order for the Optionee or
his personal representative to determine whether or not to
exercise this option in whole or in part.
10. This Agreement shall enure to the benefit of the Optionee
and his heirs, executors and administrators and wherever
reference is made to the Optionee, the same shall be construed to
mean his personal legal representative, wherever the context so
requires.
11. The term of this option shall expire on_________, in the
event the Optionee has not provided the Company with notice of
intention to exercise the option.
12. Wherever the singular or masculine are used throughout this
Agreement, the same shall be construed as being the plural or
feminine or neuter where the context so requires.
13. Time shall be of the essence of this Agreement.
14. This option may be terminated by the Company by notice in
writing to the Optionee on the occurrence of either of the
following events:
a. if the Optionee engages in any act which constitutes a
breach of any Securities Act having jurisdiction over the Company
or any regulation or written policy statement imposed thereunder;
or
b. if the Optionee engages in act which constitutes a breach of
any rule, by-law or written policy of any stock exchange having
jurisdiction over the Company.
15. Termination under section 14 shall be effective at the time
of delivery of a notice of termination to the Optionee at the
address for the Optionee first set out above.
16. Any notice required to be given under this Agreement shall
be deemed to be well and sufficiently given if delivered,
telegraphed or mailed by registered mail to the party to receive
such notice at the address of such party first set out above.
Any notice given as aforesaid shall be deemed to have been given
if delivered when delivered, if telegraphed, on the second
business day after the date of telegraphing, or if mailed, on the
second business day after the date of mailing. Either party may
from time to time by notice in writing change its address for the
purposes of this section.
17. This option supersedes and takes the place of any prior
stock options between the parties, which options are hereby
cancelled and of no force and effect.
18. For the purposes of Section 55(2)(9) of the Securities Act,
S.B.C. 1985, c.83, as amended, the Company hereby declares that
the Optionee is under no requirement to exercise the option
herein granted, in whole or in part, in expectation or as a
condition of the Optionee acting or
continuing to act as a
Director or Employee of the Company or its subsidiary as the case
may require.
IN WITNESS WHEREOF, the parties hereto have hereunto affixed
their respective hands and seals or corporate seals, as the case
may be, both as of the day and year first above written.
THE CORPORATE SEAL of )
XXXXXXX.XXX INC. was hereunto )
affixed in the presence of: )
) c/s
)
_________________________________)
)
)
_________________________________)
SIGNED, SEALED, and DELIVERED )
by _________in the presence of: )
)
)
_________________________________) __________________
Witness ) (Name of Optionee)
)
_________________________________)
Address )
