1.
Purpose
.
The
Purpose of the POWER OIL & GAS INC. 2007 Stock Option Plan
(“ Plan
”) is to provide to key employees, officers, directors,
consultants and agents of Power Oil & Gas Inc. (the
“ Corporation
”), or any of its subsidiaries, added incentive for high
levels of performance and to reward unusual efforts which
increase the earnings and long-term growth of the
Corporation. It is intended to accomplish the
foregoing by providing for the grant of Stock Options to
qualified eligible individuals. Except where the
context otherwise requires, the term “Corporation”
shall include Power Oil & Gas Inc., a Canadian
corporation, and all present and future subsidiaries of the
Corporation.
2.
Certain
Definitions .
As
used in this Plan, the following words and phrases shall have
the respective meanings set forth below, unless the context
clearly indicates a contrary meaning.
(a) “
Board of
Directors” or “ Board
” shall mean the Board of Directors of the
Corporation.
(b)
“
Cause”
shall mean any one or more of the following:
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(i)
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a
material breach of any term of employment, consultation or
engagement with the Corporation by the Optionee.
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(ii)
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the
continuing, repeated willful failure or refusal by the Optionee to
substantially perform his responsibilities on behalf of the
Corporation.
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(iii)
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an
act or omission of the Optionee that is materially adverse to the
business, goodwill or reputation of the Corporation.
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(iv)
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an
act of dishonesty.
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(v) the
commission of a felony.
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(vi)
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the
breach of a fiduciary duty or fraud.
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(vii)
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an
act of moral turpitude.
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(viii)
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a
determination by a physician licensed in the jurisdiction where the
Optionee is employed that the Optionee is a chronic alcoholic or a
narcotics addict (as such term is defined under the applicable law
of such jurisdiction), or
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(ix)
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any
“cause” for termination or discharge as may be
otherwise defined in any employment, consultation or engagement
agreement between the Optionee and the Corporation.
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The
determination of the Option Committee with respect to whether
a termination for Cause has occurred shall be submitted to the
Board of Directors, whose decision shall be final and
conclusive.
(c) “
Change of
Control” shall mean (i) an acquisition of any
voting securities of the Corporation (the “ Voting
Securities” ) by any “Person” (as the
term person is used for purposes of Section 13(d) or 14(d) of
the Exchange Act), immediately after which such Person has
“Beneficial Ownership” (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of forty percent
(40%) or more of the then outstanding shares or the combined
voting power of the Corporation’s then outstanding
Voting Securities; (ii) the individuals who, as of the
Effective Date are members of the Board (the “
Incumbent
Board” ), cease for any reason to constitute at
least two-thirds of the members of the Board; provided, however
, that if the election, or nomination of the members of the
Corporation’s common stockholders, of any new director
was approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Plan, be
considered as a member of the Incumbent Board; (iii) the
consummation of a merger, consolidation or reorganization with
or into the Corporation or in which securities of the
Corporation are issued unless such merger, consolidation or
reorganization is a “Non-Control Transaction”;
(iv) a complete liquidation or dissolution of the Corporation;
or (v) the sale or other disposition of all or substantially
all of the assets of the Corporation to any Person (other than
a transfer to a Subsidiary or the distribution to the
Corporation’s stockholders of the stock of a Subsidiary
or any other assets).
Notwithstanding
the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (the “ Subject
Person” ) acquired Beneficial Ownership of more
than the permitted amount of the then outstanding Shares or
Voting Securities as a result of the acquisition of Shares or
Voting Securities by the Corporation which, by reducing the
number of Shares or Voting Securities then outstanding,
increases the proportional number of shares Beneficially Owned
by the Subject Persons, provided that if a Change in Control
would occur (but for the operation of this sentence) as a
result of the acquisition of Shares or Voting Securities by
the Corporation, and after such share acquisition by the
Corporation, the Subject Person becomes the Beneficial Owner
of any additional Shares or Voting Securities which increases
the percentage of the then outstanding Shares or Voting
Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
(d) “
Disability”
shall mean the inability to engage in any substantial gainful
activity by reason of any medically determined 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 not less than twelve (12) months as determined by
the Option Committee in their sole discretion.
(e) “
Effective
Date” shall mean the date on which the Plan is
approved by a majority of the outstanding shares of capital
stock of the Corporation entitled to vote
thereon.
(f) “
Exchange
Act” shall mean the Securities and Exchange Act
of 1934, as amended.
(g) “
Fair
Market Value per Share” shall mean as of any date
the fair market value of each of the Shares on such date (the
“applicable date”) as determined by the Option
Committee in good faith. The Option Committee is
authorized to make its determination as to the fair market
value on the following basis: (i) if the Shares are not traded
on a securities exchange and are not quoted on the National
Association of Securities Dealers, Inc.’s Automated
Quotation System (“NASDAQ”), but are quoted on the
Over The Counter Electronic Bulletin Board operated by NASDAQ,
“Fair Market Value per Share” shall be the mean
between the average daily bid and average daily asked prices
of the Shares on the applicable date, as published on such
bulletin board; (ii) if the Shares are not traded on a
securities exchange and are quoted on NASDAQ, “Fair
Market Value per Share” shall be the closing transaction
price of the Shares on the applicable date, as reported on
NASDAQ; (iii) if the Shares are traded on a securities
exchange, “Fair Market Value per Share” shall be
the daily closing price of the Shares, on such securities
exchange as of the applicable date; or (iv) if the Shares are
traded other than as described in (i), (ii) or (iii) above, or
if the Shares are not publicly traded, “Fair Market
Value per Share” shall be the value determined by the
Option Committee in good faith based upon the fair market
value as determined by completely independent and well
qualified experts. In the case of Shares described
in (i), (ii) or (iii) above, if no prices are reported for the
Shares on the applicable date, the “Fair Market Value
per Share” shall be the price reported for such Shares
on the next preceding date on which there were reported
prices.
(h)
“
Granting
Date” shall mean the date on which the grant of an
Option is made effective by the Option Committee.
(i) “
Non-Control
Transaction” shall mean a merger, consolidation
or reorganization with or into the Corporation or in which
securities of the Corporation are issued where:
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(a)
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the
stockholders of the Corporation, immediately before such merger,
consolidation or reorganization, own directly or indirectly
immediately following such merger, consolidation or reorganization,
at least fifty percent (50%) of the combined voting power of the
outstanding voting securities of the corporation resulting from
such merger or consolidation or reorganization (the “
Surviving
Corporation ”) in substantially the same proportion as
their ownership of the Voting Securities immediately before such
merger, consolidation or reorganization,
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(b)
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the
individuals who were members of the Incumbent Board immediately
prior to the execution of the agreement providing for such merger,
consolidation or reorganization constitute at least two-thirds of
the members of the board of directors of the Surviving Corporation,
or a corporation beneficially directly or indirectly owning a
majority of the Voting Securities of the Surviving Corporation,
and
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(c)
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no
Person other than (1) the Corporation, (2) any Subsidiary, (3) any
employee benefit plan (or any trust forming a part thereof) that,
immediately prior to such merger, consolidation or reorganization,
was maintained by the Corporation or any Subsidiary, or (4) any
Person who, immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of thirty percent (30%) or
more of the then outstanding Voting Securities or Shares, has
Beneficial Ownership of thirty percent (30%) or more of the
combined voting power of the Surviving Corporation’s then
outstanding voting securities or its common stock.
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(j) “
Option”
shall man any option to purchase Shares of the Corporation
granted under the Plan.
(k) “
Option
Agreement” shall mean the document setting forth
the terms and conditions of each Option.
(l) “
Option
Committee” shall mean the Committee selected and
designated by the Board of Directors to administer the Plan,
consisting of not less than one member of the Board of
Directors.
(m) “
Optionee”
shall mean the holder of an Option.
(n) “
Retirement”
shall have the meaning ascribed by the Option
Committee.
(o) “
Securities
Act” shall mean the Securities Act of 1933, as
amended.
(p) “
Shares
” shall mean the shares of common stock, no par value
per share, of the Corporation.
(q) “
Subsidiary”
shall mean any corporation (other than Power Oil & Gas
Inc.) in an unbroken chain of corporations beginning with
Power Oil & Gas Inc., if each of the corporations other
than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such
chain.
(r)
“
Ten
Percent Shareholder” shall mean an individual who, at
the time an Option is granted, owns stock possessing more than 10%
of the total combined voting power of all classes of stock of the
Corporation or its parent, if any.
3.
Stock
Options .
(a)
In
General . Awards under the Plan shall be
granted in the form of Common Stock Options.
(b)
Limitation on
Number of Shares . The aggregate number of
Shares which may be issued and purchased under the Plan shall
not exceed 5,000,000 Shares, subject to any Share adjustments
pursuant to Section 9. Shares may be either
authorized and unissued Shares or issued Shares reacquired by
the Corporation. The total number of Shares subject
to Options authorized under the Plan shall be subject to
increase or decrease, as necessary, in order to give effect to
the adjustment provisions of Section 9 hereof and to give
effect to any amendment adopted as provided in Section 14
hereof. Notwithstanding the above limitation, any
Shares subject to an Option which terminates, is cancelled or
expires for any reason without being exercised in full, may
again be subject to an Option under the Plan, unless the Plan
shall have been terminated. At the discretion of
the Option Committee, existing Options may be cancelled and
new options granted at a lower price in the event of a decline
in the market value of the Shares. If Shares issued upon
exercise of an Option under the Plan are tendered to the
Corporation in partial or full payment of the exercise price
of an Option granted under the Plan, such tendered Shares
shall not be available for subsequent Option grants under the
Plan.
4.
Eligibility
.
(a)
In
General . Officers, Directors, employees,
consultants, and agents of the Corporation (whether or not
employees of the Corporation) shall be eligible to receive
grants of Stock Options. Within the foregoing
limits, the Option Committee, in its sole and absolute
discretion, shall, from time to time, determine (i) the
individuals or the class of individuals to whom Options may be
granted hereunder, (ii) the number of Shares to be covered by
each of the Options granted hereunder, (iii) the purchase
price of the Shares and the method of payment for such Shares,
(iv) the terms and provisions of the respective Option
Agreement and (v) the times at which such Options shall be
granted. The Option Committee shall take into
account such factors as it shall deem relevant in connection
with accomplishing the purpose of the Plan as set forth in
Section 1 hereof. All such determinations and
designations of individuals eligible to receive Options under
the Plan shall be made in the absolute discretion of the
Option Committee and shall not require the approval of the
stockholders, except as expressly set forth
herein.
(b)
Additional
Options . An individual who has been granted
an Option may be granted additional Options if the Option
Committee shall so determine. In addition, new
Options may be granted in substitution for Options previously
granted under this Plan or another plan of the Corporation or
under the plan of another corporation assumed by the
Corporation.
(c)
Option
Agreement . Each Option granted pursuant to
the Plan shall be evidenced by a written Option Agreement
entered into between the Corporation and the Optionee which
shall contain such terms and provisions, including, but not
limited to, the period of exercise, whether in installments or
otherwise, the exercise price and such other terms and
conditions as the Option Committee shall, in its sole
discretion, determine to be appropriate and within the
contemplation of the Plan. The terms and conditions
of such written Option Agreement need not be the same for all
Options granted under the Plan.
5.
Administration
of Plan .
(a)
Option
Committee . This Plan shall be administered
by the Option Committee, subject to the approval and
ratification by the Board of Directors. Any action
of the Option Committee with respect to administration of the
Plan shall be taken pursuant to (i
