CANWEST PETROLEUM CORPORATION
2006 STOCK OPTION PLAN
A. 1.
Purposes of and Benefits Under the Plan. This 2006 Stock Option
Plan
(the "Plan") is intended to encourage stock ownership by employees,
consultants,
officers and directors
of CanWest Petroleum
Corporation
and its controlled,
affiliated and subsidiary entities (collectively, the "Corporation"), so that
they may acquire or increase their proprietary interest in the
Corporation, and
is intended to facilitate the Corporation's efforts to: (i) induce
qualified
persons to become
employees, officers
and directors
(whether or not they
are
employees) and
consultants
to the Corporation; (ii) compensate employees,
officers, directors
and consultants for services to the Corporation; and (iii)
encourage such
persons to remain in the employ of or associated with the
Corporation and to put forth maximum efforts for the success of the
Corporation.
It is further intended that options granted by the Committee
pursuant to Section
6 of this Plan shall
constitute "incentive
stock options"
("Incentive
Stock
Options") within the
meaning of Section 422 of the Internal Revenue Code, and
the regulations issued thereunder, and options granted by the
Committee pursuant
to Section
7 of this Plan shall constitute "non-qualified stock options"
("Non-qualified Stock Options"). "Options" means options granted
pursuant to the
provisions of this Plan, whether Incentive Stock Options or
Non-qualified
Stock
Options.
2.
Definitions.
As used in this Plan,
the following words and phrases
shall have the meanings indicated:
(a) "Board" shall mean the Board of Directors of the
Corporation.
(b) "Bonus"
means any Common
Stock bonus
issued pursuant to the
provisions of this Plan.
(c) "Committee" shall
mean any Committee
appointed by the Board to
administer this
Plan, if one has been appointed. If no Committee has been
appointed, the term "Committee" shall mean the Board.
(d) "Common
Stock" shall mean the Corporation's $.001 par value
common stock.
(e) "Disability" shall mean a Recipient's inability to engage in
any
substantial gainful activity by reason of any medically
determinable physical or
mental impairment that
can be expected to result in death or that has lasted or
can be expected to last for a continuous period of not less than 12 months.
If
the Recipient has a disability insurance policy, the term
"Disability" shall be
as defined therein.
(f) "Fair Market Value" per share as of a particular date shall
mean
the last sale price of the Corporation's Common Stock as reported on a
national
securities exchange or by NASDAQ, or if the quotation for the last
sale reported
is not available for the Corporation's Common Stock, the average of the
closing
bid and asked prices
of the Corporation's
Common Stock as so reported or, if
such quotations
are unavailable, the value determined by the Committee in
accordance with its discretion in making a bona fide, good faith determination
of fair market value.
Fair Market Value shall be determined without regard to
any restriction other than a restriction which, by its terms, never will
lapse.
In the case of Options and Bonuses granted at a time when the
Corporation
does
not have a
registration statement
in effect relating to the shares
issuable
hereunder, the value
at which the Bonus shares are issued may be determined by
the Committee
at a reasonable
discount from Fair Market Value to reflect
the
restricted nature of
the shares to be issued and the inability of the Recipient
to sell those shares promptly.
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<PAGE>
(g) "Recipient"
means any person granted an Option or awarded a
Bonus hereunder.
(h) "Internal Revenue
Code" shall mean the
United States
Internal
Revenue Code of 1986, as amended from time to time (codified as Title 26 of the
United States Code) and any successor legislation.
3.
Administration.
(a) The Plan shall be administered by the Committee. The Committee
shall have the authority in its discretion, subject to and not
inconsistent with
the express provisions
of the Plan, to administer the Plan and to exercise all
the powers and
authorities
either specifically conferred under the Plan or
necessary or
advisable in the administration of the Plan, including the
authority: to grant
Options and Bonuses;
to determine the vesting schedule and
other restrictions,
if any, relating to
Options and Bonuses;
to determine the
purchase price of the shares of Common Stock covered by each Option
(the "Option
Price"); to
determine the persons to whom, and the time or times at
which,
Options and Bonuses
shall be granted; to
determine the number
of shares to be
covered by each Option or Bonus; to determine Fair Market Value per share;
to
interpret the Plan;
to prescribe, amend and rescind rules and regulations
relating to the Plan;
to determine the terms and provisions of the Option
agreements (which need not be identical) entered into in connection
with Options
granted under the Plan; and to make all other determinations deemed
necessary or
advisable for the
administration of the Plan. The Committee may delegate to one
or more of its members or to one or more agents such administrative
duties as it
may deem advisable,
and the Committee or any person to whom it
has delegated
duties as aforesaid may employ one or more persons to render advice
with respect
to any responsibility the Committee or such person may have under
the Plan.
(b) Options and Bonuses granted under the Plan shall be evidenced
by
duly adopted resolutions of the Committee included in the minutes
of the meeting
at which they are adopted or in a unanimous written consent.
(c) The Committee
shall endeavor to
administer the Plan
and grant
Options and
Bonuses hereunder in a manner that is compatible with the
obligations of persons subject to Section 16 of the U.S. Securities
Exchange Act
of 1934 (the "1934 Act"), although compliance with Section
16 is the obligation
of the Recipient, not the Corporation. Neither the Committee, the Board
nor the
Corporation can assume
any legal
responsibility for a
Recipient's
compliance
with his obligations under Section 16 of the 1934 Act.
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<PAGE>
(d) No
member of the Committee or the Board shall be liable for any
action
taken or determination made in good faith with respect to the Plan
or any Option
or Bonus granted hereunder.
4.
Eligibility.
(a) Subject to certain
limitations
hereinafter set forth,
Options
and Bonuses may be granted to employees (including officers) and
consultants to
and directors
(whether or not they
are employees) of the
Corporation
or its
present or future
divisions, affiliates
and subsidiaries.
In determining the
persons to whom Options or Bonuses shall be granted and the number of
shares to
be covered by each Option or Bonus, the Committee shall take into account the
duties of the respective persons, their present and potential
contributions to
the success of the
Corporation, and such
other factors as the Committee shall
deem relevant to accomplish the purposes of the Plan.
(b) A Recipient shall
be eligible to receive more than one grant of
an Option or Bonus during the term of the Plan, on the terms and subject to
the
restrictions herein set forth.
5. Stock
Reserved.
(a) The stock subject
to Options
or Bonuses hereunder shall be
shares of Common Stock. Such shares, in whole or in part,
may be authorized but
unissued shares or
shares that shall have been or that may be reacquired by the
Corporation. The
aggregate number of shares of Common Stock as to which Options
and Bonuses
may be granted from time to time under the Plan
shall not exceed
2,500,000, subject to adjustment as provided in Section 8(i)
hereof.
(b) If any Option
outstanding under the Plan for any reason expires
or is terminated
without having been exercised in full, or if any Bonus granted
is forfeited
because of vesting or
other restrictions
imposed at the time
of
grant, the shares of
Common Stock allocable to the unexercised portion of such
Option or the
forfeited portion of the Bonus shall become available for
subsequent grants of Options and Bonuses under the Plan.
6.
Incentive Stock Options.
(a) Options
granted pursuant to this Section 6 are intended to
constitute Incentive Stock Options and shall be subject to the
following special
terms and conditions,
in addition to the general terms and conditions specified
in Section 8 hereof.
Only employees
of the Corporation shall be entitled to
receive Incentive Stock Options.
(b) The aggregate Fair
Market Value
(determined as of the date the
Incentive Stock Option is granted) of the shares of Common Stock
with respect to
which Incentive
Stock Options granted under this and any other plan of the
Corporation or any parent or subsidiary of the Corporation are exercisable for
the first time by a Recipient during any calendar year may not
exceed the amount
set forth in Section 422(d) of the Internal Revenue Code.
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<PAGE>
(c) Incentive Stock
Options granted under this Plan are intended to
satisfy all
requirements for
incentive stock
options under Section 422 of the
Internal Revenue Code and the Treasury Regulations promulgated thereunder and,
notwithstanding any
other provision of
this Plan, the Plan
and all Incentive
Stock Options
granted under it shall be so construed, and all contrary
provisions shall be so
limited in scope and effect and, to the extent they
cannot be so limited, they shall be void.
7.
Non-qualified Stock Options. Options granted pursuant to this
Section 7
are intended to constitute Non-qualified Stock Options and shall be
subject only
to the general terms and conditions specified in Section 8
hereof.
8. Terms
and Conditions of Options. Each Option granted pursuant to the
Plan shall be evidenced by a written Option agreement between the Corporation
and the Recipient, which agreement shall be substantially in the
form of Exhibit
A hereto as modified from time to time by the Committee in its
discretion,
and
which shall comply with and be subject to the following terms and
conditions:
(a) Number of Shares.
Each Option agreement
shall state the number
of shares of Common Stock covered by the Option.
(b) Type of Option. Each Option Agreement shall specifically
identify the portion, if any, of the Option which constitutes an
Incentive Stock
Option and the portion, if any, which constitutes a Non-qualified
Stock Option.
(c) Option Price. Subject to adjustment as provided in Section 8
(i)
hereof, each
Option agreement shall state the Option
Price, which shall be
determined by the Committee subject only to the following
restrictions:
(1) Each Option Agreement shall state the Option Price,
which
(except as otherwise set forth in paragraphs 8(c)(2) and (3) hereof) shall
not
be less than 100% of the Fair Market Value per share on the date of
grant of the
Option.
(2) Any Incentive
Stock Option
granted under the Plan to a
person owning more
than ten percent of the total combined voting power of the
Common Stock shall be
at a price of no less than 110% of the Fair Market Value
per share on the date of grant of the Incentive Stock Option.
(3) Any Non-qualified
Stock Option granted under the Plan
shall be at a price determined and specified by the Board, which
price may be an
amount less
than the Fair
Market Value per share on the date of
grant of the
Non-qualified Stock Option.
(4) The date on
which the Committee adopts a resolution
expressly granting an Option shall be considered the day on which
such option is
granted, unless a future date is specified in the resolution.
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<PAGE>
(d) Term of Option.
Each Option
agreement shall state the period
during and times at which the Option shall be exercisable, in accordance with
the following limitations:
(1) The date on
which the Committee adopts a resolution
expressly granting an Option shall be considered the day on which
such Option is
granted, unless a future date is specified in the resolution,
although any such
grant shall
not be effective until the Recipient has executed an Option
agreement with respect to such Option.
(2) The exercise
period of any
Option shall not exceed ten
years from the date of grant of the Option.
(3) Incentive Stock
Options granted to a person owning
more
than ten percent of the total combined voting power of the Common Stock
of the
Corporation shall be for no more than five years.
(4) The Committee
shall have the
authority to
accelerate or
extend the
exercisability of any outstanding Option at such time and under
such
circumstances as it, in its sole discretion, deems appropriate. In
any event, no
exercise period may be so extended to increase the term of the
Option beyond ten
years from the date of the grant.
(5) The exercise period shall be subject to earlier
termination as
provided in Sections
8(f) and 8(g) hereof,
and, furthermore,
shall be terminated
upon surrender of the
Option by the holder thereof if such
surrender has been authorized in advance by the Committee.
(e) Method of Exercise and Medium and Time of Payment.
(1) An Option may be
exercised as to any or
all whole shares
of Common Stock as to which it then is exercisable, provided, however, that no
Option may be
exercised as to less than 100 shares (or such number of shares
as
to which the Option is then exercisable if such number of shares is less than
100).
(2) Each exercise of an Option granted hereunder, whether in
whole or in part,
shall be effected by written notice to the Secretary of the
Corporation
designating the
number of shares as to
which the Option is
being
exercised, and shall
be accompanied by
payment in full of the Option Price for
the number
of shares so designated, together with any written statements
required by, or deemed by the Corporation's counsel to be advisable
pursuant to,
any applicable securities laws.
(3) The Option Price
shall be paid in cash,
or in shares of
Common Stock
having a Fair
Market Value equal to such Option Price, or in
property or in a
combination
of cash, shares and property and, subject to
approval of the
Committee,
may be effected in whole or in part with funds
received from the
Corporation at the
time of exercise as a
compensatory cash
payment.
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<PAGE>
(4) The Committee shall have the sole and absolute discretion
to determine whether or not property other than cash or Common
Stock may be used
to purchase the shares of Common Stock hereunder and, if so, to determine
the
value of the property received.
(5) The Recipient
shall make provision for the withholding of
taxes as required by Section 10 hereof.
(f) Termination.
(1) Unless otherwise
provided in the Option
Agreement by and
between the
Corporation and the
Recipient,
if the Recipient
ceases to be an
employee, officer,
director or
consultant of the
Corporation
(other than by
reason of death,
Disability or retirement), all Options theretofore granted
to
such Recipient
but not theretofore exercised shall terminate three months
following the date the Recipient ceased to be an employee,
officer, director
or
consultant of the Corporation, and shall terminate upon the date
of termination
of employment or other relationship if discharged for cause.
(2) Nothing
in the Plan or in any
Option or Bonus granted
hereunder shall confer upon an individual any right to continue in
the employ of
or other relationship
with the Corporation or interfere in any way with the
right of the
Corporation to
terminate such
employment or other
relationship
between the individual and the Corporation.
(g) Death, Disability
or Retirement of Recipient. Unless otherwise
provided in the
Option Agreement by and between the Corporation and the
Recipient, if a
Recipient shall die
while an employee,
officer, director or
consultant of the
Corporation, or within
ninety days after the
termination of
such Recipient
as an employee,
officer, director or consultant, other than
termination for cause, or if the Recipient's relationship with the Corporation
shall terminate by reason of Disability or retirement, all Options theretofore
granted to such Recipient (whether or not otherwise exercisable) unless earlier
terminated in accordance with their terms, may be exercised by the Recipient
or
by the Recipient's estate or by a person who acquired the right to
exercise such
Options by
bequest or inheritance or otherwise by reason of the death or
Disability of the
Recipient,
at any time
within one year after the date of
death, Disability or retirement of the Recipient; provided,
however, that in the
case of Incentive
Stock Options such one-year period shall be limited to
three
months in the case of retirement.
(h) Transferability Restriction.
(1) Options granted
under the Plan shall not be transferable
other than by will or by the laws of descent and distribution or pursuant to a
qualified domestic
relations order as
defined by the Internal Revenue Code or
Title I of the Employee Retirement Income Security Act of 1974, or the rules
thereunder. Options
may be exercised
during the lifetime of the Recipient only
by the Recipient and thereafter only by his legal
representative.
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<PAGE>
(2) Any attempted sale, pledge, assignment, hypothecation or
other transfer of an Option contrary to the provisions hereof
and/or the levy of
any execution,
attachment or similar process upon an Option, shall be null and
void and without
force or effect
and shall result in a termination of the
Option.
(3) (A) As a condition to the transfer of any shares of Common
Stock issued upon exercise of an Option granted under this Plan,
the Corporation
may require an opinion
of counsel,
satisfactory
to the Corporation, to the
effect that such transfer will not be in violation of the U.S.
Securities Act of
1933, as amended (the
"1933 Act") or any other applicable securities laws or
that such transfer has been registered under federal and all applicable
state
securities laws. (B)
Further, the
Corporation
shall be authorized to
refrain
from delivering or
transferring
shares of Common Stock
issued under this Plan
until the Committee
determines that such
delivery or transfer will not violate
applicable securities laws and the Recipient has tendered to the
Corporation any
federal, state or
local tax owed by the Recipient as a result of exercising the
Option or disposing of any Common Stock when the Corporation has a legal
liability to
satisfy such tax. (C) The Corporation shall not be liable for
damages due to delay in the delivery or issuance of any stock
certificate
for
any reason whatsoever,
including, but not limited to, a delay caused by listing
requirements of any securities exchange or any registration
requirements under
the 1933 Act, the 1934 Act, or under any other state, federal
or
