Exhibit 10.2

 

 

 

 

NOVAGOLD RESOURCES INC.

 

 

 

 

 

 

 

 

 

 

 

2009 PERFORMANCE SHARE UNIT PLAN

 

 

 

 

Effective May 26, 2009, as amended May 29, 2012, as further amended on June 5,
2014, as further amended on January 25, 2017, as further amended on January 23,
2019.

 

 

 

 

 

 

 

 

NOVAGOLD RESOURCES INC.

2009 PERFORMANCE SHARE UNIT PLAN

 

 

 

1.PURPOSE

 

1.1This Plan has been established by the Corporation to assist the Corporation
in the recruitment and retention of highly qualified employees and consultants
by providing a means to reward superior performance, to motivate Participants
under the Plan to achieve important corporate and personal objectives and,
through the issuance of Shares in the Corporation to Participants under the
Plan, to better align the interests of Participants with the long-term interests
of Shareholders.

 

2.PLAN DEFINITIONS AND INTERPRETATIONS

 

In this Plan, the following terms have the following meanings:

 

(a)“Account” means the bookkeeping account established and maintained by the
Corporation for each Participant in which the number of Share Units of the
Participant are recorded;

 

(b)“Applicable Law” means any applicable provision of law, domestic or foreign,
including, without limitation, applicable securities legislation, together with
all regulations, rules, policy statements, rulings, notices, orders or other
instruments promulgated thereunder and Stock Exchange Rules;

 

(c)“Beneficiary” means any person designated by the Participant as his or her
beneficiary under the Plan in accordance with Section 13.1 or, failing any such
effective designation, the Participant’s estate;

 

(d)“Board” means the Board of Directors of the Corporation;

 

(e)“Cause” has the meaning ascribed to the phrase “cause” or “just cause for
termination” under the laws of British Columbia;

 

(f)“Change of Control” means:

 

(i)the acquisition whether directly or indirectly, by a person or company, or
any persons or companies acting jointly or in concert (as determined in
accordance with the Securities Act (British Columbia) and the rules and
regulations thereunder) of voting securities of the Corporation which, together
with any other voting securities of the Corporation held by such person or
company or persons or companies, constitute, in the aggregate, more than 50% of
all outstanding voting securities of the Corporation;

 

(ii)an amalgamation, arrangement or other form of business combination of the
Corporation with another company which results in the holders of voting
securities of that other company holding, in the aggregate, 50% or more of all
outstanding voting securities of the Corporation (including a merged or
successor company) resulting from the business combination; or

 

(iii)the sale, lease or exchange of all or substantially all of the property of
the Corporation to another person, other than a subsidiary of the Corporation or
other than in the ordinary course of business of the Corporation;

 

(g)“Committee” means the Compensation Committee of the Board or any other
committee or person designated by the Board to administer the Plan;

 

 

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(h)“Corporation” means NovaGold Resources Inc. and its respective successors and
assigns, and any reference in the Plan to action by the Corporation means action
by or under the authority of the Board or any person or committee that has been
designated for the purpose by the Board including, without limitation, the
Committee;

 

(i)“Designated Subsidiary” means an entity (including, for greater certainty, a
partnership) which is controlled by the Corporation and which has been
designated by the Corporation for purposes of the Plan from time to time, and
for the purposes of this definition, a person (first person) is considered to
control another person (second person) if the first person, directly or
indirectly, has the power to direct the management and policies of the second
person by virtue of:

 

(i)ownership of or direction over voting securities in the second person,

 

(ii)a written agreement or indenture,

 

(iii)being the general partner or controlling the general partner of the second
person, or

 

(iv)being a trustee of the second person;

 

(j)“Director” means a director of the Corporation;

 

(k)“Eligible Consultant” means an individual, other than an Employee that (i) is
engaged to provide on a bona fide basis consulting, technical, management or
other services to the Corporation or any Designated Subsidiary under a written
contract between the Corporation or the Designated Subsidiary and the individual
or a company of which the individual consultant is an employee (other than
services related to a distribution or services that directly or indirectly
promote or maintain a market for the Corporation’s securities) and (ii) in the
reasonable opinion of the Corporation, spends or will spend a significant amount
of time and attention on the affairs and business of the Corporation or a
Designated Subsidiary;

 

(l)“Employee” means an employee of the Corporation or any of its Designated
Subsidiaries or any combination or partnership of such corporations;

 

(m)“Employer” means the Corporation, the Designated Subsidiary or the
combination or partnership of such corporations that employs the Participant or
that employed the Participant immediately prior to the Participant’s Termination
Date;

 

(n)“Expiry Date” means, with respect to Share Units granted to a Participant,
the date determined by the Corporation for such purpose for such grant, which
date shall be no later than the date which is two years after the Participant’s
Termination Date and shall, in all cases, be in compliance with the requirements
pertaining to the exception to the application of the salary deferral
arrangement rules of Section 248(1)(k) of the Income Tax Act (Canada), as such
section may be amended or re-enacted from time to time;

 

(o)“Fiscal Year” means a fiscal year of the Corporation;

 

(p)“Good Reason” means the occurrence of any one or more of the following
without a Participant’s written consent:

 

(i)a material change in the Participant’s position or duties, responsibilities,
title or office in effect immediately prior to a Change of Control, which
includes any removal of the Participant from or any failure to re-elect or
re-appoint the Participant to any such position or office;

 

(ii)a reduction in the Participant’s overall annual compensation for services
provided to the Corporation in the cumulative amount of 5% or more within a 12
month period;

 

(iii)any change to the terms or conditions of the employment of the Participant
that would constitute “constructive dismissal” as that term is defined at common
law which the Company fails to remedy within thirty (30) days of receiving
written notice from the Participant of any such change; or

 

 

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(iv)the Corporation relocating the Participant to any place other than the
location at which the Participant reported for work on a regular basis
immediately prior to a Change of Control or a place within 25 miles of that
location;

 

(q)“Grant Agreement” means an agreement between the Corporation and a
Participant under which Share Units are granted, together with such amendments,
deletions or changes thereto as are permitted under the Plan;

 

(r)“Grant Date” of a Share Unit means the date a Share Unit is granted to a
Participant under the Plan;

 

(s)“Insider” has the meaning provided for purposes of the TSX relating to
Security Based Compensation Arrangements;

 

(t)“Joint Actor” means a person acting “jointly or in concert with” another
person within the meaning of Section 96 of the Securities Act (British Columbia)
or as such section may be amended or re-enacted from time to time;

 

(u)“Market Value” with respect to a Share as at any date means the arithmetic
average of the closing price of the Shares traded on the TSX for the five (5)
trading days on which a board lot was traded immediately preceding such date
(or, if the Shares are not then listed and posted for trading on the TSX, on
such stock exchange on which the Shares are then listed and posted for trading
as may be selected for such purpose by the Corporation). In the event that the
Shares are not listed and posted for trading on any stock exchange, the Market
Value shall be the Market Value of the Shares as determined by the Board in its
discretion, acting reasonably and in good faith;

 

(v)“Participant” means a bona fide full-time or part-time Employee or an
Eligible Consultant who, in any such case, has been designated by the
Corporation for participation in the Plan;

 

(w)“Payout Date” means a date selected by the Corporation, in accordance with
and as contemplated by Section 3.2 and Section 6.1;

 

(x)“Performance Goal” means one or more of the following performance goals,
either individually, alternatively or in any combination, applied on a
corporate, subsidiary, division, business unit or line of business basis:

 

Financial Performance Goals:

 

•economic value added (EVA);

•sales or revenue;

•costs or expenses;

•performance relative to budget;

•net profit after tax;

•gross profit;

•income (including without limitation operating income, pre-tax income and
income attributable to the Company);

•cash flow (including without limitation free cash flow and cash flow from
operating, investing or financing activities or any combination thereof);

•earnings (including without limitation earnings before or after taxes, earnings
before interest and taxes (EBIT), earnings before interest, taxes, depreciation
and amortization (EBITDA) and earnings (whether before or after taxes), EBIT or
EBITDA as a percentage of net sales;

•net working capital;

•margins (including one or more of gross, operating and net income margin);

 

 

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Shareholder Performance Goals:

 

•earnings per share (EPS) (basic or diluted);

•earnings per share from continuing operations;

•returns (including one or more of return on actual or pro forma assets, net
assets, equity, investment, revenue, sales, capital and net capital employed,
total shareholder return (TSR) and total business return (TBR));

•ratios (including one or more of price to earnings, debt to assets, debt to net
assets and ratios regarding liquidity, solvency, fiscal capacity, productivity
or risk);

•stock price;

•value creation;

•market capitalization;

 

Corporate Performance Goals:

 

•safety performance;

•environmental performance;

•development and implementation of exploration programs;

•advancement of governmental permitting and approval processes;

•development and implementation of corporate social responsibility/sustainable
development initiatives;

•engagement with key stakeholders;

•evaluation of corporate development opportunities;

•corporate compliance and reporting;

•implementation or completion of key corporate initiatives or projects;

•strategic plan development and implementation;

•workforce satisfaction;

•employee retention;

•productivity metrics;

•career development;

 

Each such Performance Goal may be based (i) solely by reference to absolute
results of individual performance or organizational performance at various
levels (e.g., the Company’s performance or the performance of a subsidiary,
division, business segment or business unit of the Company) or (ii) upon
organizational performance relative to the comparable performance of other
companies selected by the Committee. To the extent consistent with Section
162(m), the Committee may, when it establishes performance criteria, also
provide for the exclusion of charges related to an event or occurrence which the
Committee determines should appropriately be excluded, including (X) asset-write
downs, litigation or claim judgments or settlements, reorganizations, the impact
of acquisitions and divestitures, restructurings, discontinued operations,
extraordinary items, and other unusual or non-recurring charges, (Y) foreign
exchange gains and losses or an event either not directly related to the
operations of the Company or not within the reasonable control of the Company’s
management, or (Z) the cumulative effects of tax or accounting changes in
accordance with U.S. generally accepted accounting principles (or other
accounting principles which may then be in effect). To the extent that Section
162(m) of the Code or applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
disclosing to Shareholders and obtaining Shareholder approval of such changes
and without thereby exposing the Company to potentially adverse tax or other
legal consequences, the Committee shall have the sole discretion to make such
changes without obtaining Shareholder approval;

 

(y)“Plan” means this 2009 Performance Share Unit Plan;

 

(z)“Reorganization” means any (i) capital reorganization, (ii) merger, (iii)
amalgamation, or (iv) arrangement or other scheme of reorganization;

 

 

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(aa)“Section 162(m)” means Section 162(m) of the U.S. Internal Revenue Code of
1986, as amended, and the Treasury Regulations promulgated thereunder as in
effect from time to time;

 

(bb)“Section 409A” means Section 409A of the U.S. Internal Revenue Code of 1986,
as amended, and the Treasury Regulations promulgated thereunder as in effect
from time to time;

 

(cc)“Security Based Compensation Arrangement” has the meaning defined in the
provisions of the TSX Company Manual relating to security based compensation
arrangements;

 

(dd)“Shareholders” means the holders of Shares;

 

(ee)“Shares” mean Common Shares of the Corporation and includes any securities
of the Corporation into which such Common Shares may be converted, reclassified,
redesignated, subdivided, consolidated, exchanged or otherwise changed, pursuant
to a Reorganization or otherwise;

 

(ff)“Share Unit” means a unit credited by means of an entry on the books of the
Corporation to a Participant pursuant to the Plan, representing the right to
receive, subject to and in accordance with the Plan, for each Vested Share Unit
one Share, at the time, in the manner, and subject to the terms, set forth in
the Plan and the applicable Grant Agreement;

 

(gg)“Stock Exchange Rules” means the applicable rules of any stock exchange upon
which Shares are listed;

 

(hh)“Termination Date” means the date on which a Participant ceases, for any
reason including resignation, termination, death or disability, to be an active
Employee or an Eligible Consultant, as the case may be, and, in the case of a
Participant who is an Employee, where the employment is terminated by the
Employer, whether wrongful or for cause or otherwise, such date shall be the
date notice of termination is provided and, in the case of a Participant who is
an Eligible Consultant, the date the written contract between the Eligible
Consultant and the Corporation or any Designated Subsidiary is terminated or
expires and the Eligible Consultant no longer provides services thereunder;

 

(ii)“TSX” means the Toronto Stock Exchange; and

 

(jj)“Vested Share Units” shall mean Shares in respect of which all vesting terms
and conditions set forth in the Plan and the applicable Grant Agreement have
been either satisfied or waived in accordance with the Plan.

 

2.2In this Plan, unless the context requires otherwise, words importing the
singular number may be construed to extend to and include the plural number, and
words importing the plural number may be construed to extend to and include the
singular number.

 

3.GRANT OF SHARE UNITS AND TERMS

 

3.1The Corporation may grant Share Units to such Participant or Participants in
such number and at such times as the Corporation may, in its sole discretion,
determine, as a bonus or similar payment in respect of services rendered by the
Participant for a Fiscal Year or otherwise as compensation, including as an
incentive for future performance by the Participant.

 

3.2In granting any Share Units pursuant to Section 3.1, the Corporation shall
designate:

 

(a)the number of Share Units which are being granted to the Participant;

 

(b)any time or performance based or other conditions as to vesting of the Share
Units to become Vested Share Units; and

 

 

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(c)the Payout Date, which shall in no event be later than the Expiry Date and,
unless otherwise determined on the Grant Date, shall be the third anniversary of
the Grant Date; and

 

(d)the Expiry Date;

 

which shall be set out in the Grant Agreement.

 

3.3Subject to the terms of the Plan, the Corporation may determine any other
terms or conditions with respect to the vesting of Share Units granted pursuant
to Section 3.1, in whole or in part, to become Vested Share Units or the
provision of Shares under the Plan, including without limitation, provisions
which make the vesting of Share Units conditional upon (i) the achievement of
corporate or personal objectives, including the attainment of milestones
relating to financial, operational, strategic or other objectives of the
Corporation, (ii) the market price of Shares from time to time and/or the return
to Shareholders, and/or (iii) any other performance criteria relating to the
Participant, the Corporation, a subsidiary, or business unit. Any such
conditions shall be set out in the Grant Agreement.

 

The conditions may relate to all or any portion of the Share Units in a grant
and may be graduated such that different percentages of the Share Units in a
grant will become Vested Share Units depending on the extent of satisfaction of
one or more such conditions. The Corporation may, in its discretion and having
regard to the best interests of the Corporation, subsequent to the Grant Date of
a Share Unit, waive any such terms or conditions or determine that they have
been satisfied.

 

3.4

Share Units that are intended to be “qualified performance-based compensation”
within the meaning of Section 162(m) shall be conditioned solely on the
achievement of one or more objective Performance Goals established within the
time prescribed by Section 162(m), and shall otherwise comply with the
requirements of Section 162(m), as described below:

 

(a)for each Share Unit, a committee consisting of two or more “outside
directors” as defined under Section 162(m) (the “Committee”) shall, not later
than 90 days after the beginning of each performance period, (i) designate all
Participants for such performance period and (ii) establish the objective
performance factors for each Participant for that performance period on the
basis of one or more of the Performance Goals, the outcome of which is
substantially uncertain at the time the Committee actually establishes the
Performance Goal. The Committee shall have sole discretion to determine the
applicable performance period, provided that in the case of a performance period
less than 12 months, in no event shall a performance goal be considered to be
pre-established if it is established after 25 percent of the performance period
(as scheduled in good faith at the time the Performance Goal is established) has
elapsed. To the extent required under Section 162(m), the terms of the objective
performance factors must preclude discretion to increase an amount paid in
connection with an Award, but may permit discretion to reduce such amount; and

 

(b)following the close of each performance period and prior to payment of any
amount to a Participant with respect to a Share Unit, the Committee shall
certify in writing as to the attainment of all factors (including the
performance factors for a Participant) upon which any payments to a Participant
for that performance period are to be based.

 

No Share Units that are intended to be “qualified performance-based
compensation” shall be granted under the Plan after the first stockholder
meeting to occur in the fifth year following the year in which Shareholders
approved the Performance Goals unless and until the Performance Goals or the
Plan is re-approved by the Shareholders.

 

4.

GRANT AGREEMENT

 

4.1

Each grant of a Share Unit will be set forth in a Grant Agreement containing
terms and conditions required under the Plan and such other terms and conditions
not inconsistent herewith as the Corporation may, in its sole discretion, deem
appropriate.

 

 

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5.

SHARE UNIT GRANTS AND ACCOUNTS

 

5.1

An Account shall be maintained by the Corporation for each Participant. On the
Grant Date, the Account will be credited with the Share Units granted to a
Participant on that date.

 

6.

PAYOUTS

 

6.1

On each Payout Date and subject to Section 6.5, the Participant shall be
entitled to receive, and the Corporation shall issue or provide, Shares equal in
number to the Vested Share Units in the Participant’s Account to which the
Payout Date relates.

 

6.2

The number of Shares to be issued or provided shall be equal to the whole number
of Vested Share Units. Where the number of Share Units would result in the issue
of a fractional Share Unit in the form of a fractional Share, the number of
Share Units to be issued in the form of Shares shall be rounded down to the next
whole number of Share Units. No fractional Shares shall be issued and such
fractional Share entitlement shall be satisfied by a cash payment to the
Participant in an amount equal to such fractional Share entitlement multiplied
by the Market Value on the Payout Date.

 

6.3

Shares issued by the Corporation from treasury under this Plan shall be
considered fully paid in consideration of past service that is no less in value
than the fair equivalent of the money the Corporation would have received if the
Shares had been issued for money.

 

6.4

Subject to and in accordance with any Applicable Law, the Corporation may, but
is not obligated to, acquire issued and outstanding Shares in the market for the
purposes of providing Shares to Participants under the Plan. The Shares acquired
for this purpose shall not be included for the purpose of determining the
maximum number of Shares to be issued under the Plan in accordance with Section
10.1.

 

6.5

If so determined by the Corporation, in lieu of the issue or provision of
Shares, the Corporation may satisfy the issuance or provision of Shares under
the Plan, in whole or in part, by the payment of a cash amount to a Participant
on the Payout Date. The amount of such payment shall be equal to the number of
Shares in respect of which the Corporation makes such a determination,
multiplied by the Market Value on the Payout Date, subject to any applicable
withholding tax. An entitlement so paid in cash shall not be included for the
purpose of determining the maximum number of Shares to be issued under the Plan
in accordance with Section 10.1.

 

7.

TERMINATION OF EMPLOYMENT AND FORFEITURES

 

7.1

Unless otherwise determined by the Corporation pursuant to Section 7.2 and
subject to Section 7.3, on a Participant’s Termination Date, any Share Units in
a Participant’s Account which are not Vested Share Units shall terminate and be
forfeited.

 

7.2

Notwithstanding Section 7.1, where a Participant ceases to be an Employee as a
result of the termination of his or her employment without cause, then in
respect of each grant of Share Units made to such Participant, at the
Corporation’s discretion, all or a portion of such Participant’s Share Units may
be permitted to continue to vest, in accordance with their terms, during any
statutory or common law severance period or any period of reasonable notice
required by law or as otherwise may be determined by the Corporation in its sole
discretion.

 

7.3

Subject to Section 15 hereof, notwithstanding the conditions as to vesting of
Share Units contained in any individual Grant Agreement, if at any time within
12 months from the date of a Change of Control: (i) a Participant’s relationship
with the Corporation is terminated by the Corporation other than for Cause or
(ii) a Participant resigns for Good Reason, all outstanding Share Units held by
such Participant shall become Vested Share Units and the Payout Date in
connection with such Participant’s Vested Share Units shall be accelerated to
the date of such Participant’s termination or resignation for Good Reason and
the Corporation shall issue Shares to such Participants with respect to such
Vested Share Units in accordance with Sections 6 and 8; provided that in the
event that any Share Units are subject to performance-based vesting conditions,
then the vesting of such Share Units shall accelerate only to the extent that
such performance-based vesting conditions have been satisfied and further
provided that if a performance-based vesting condition is, in the Board’s
discretion, capable of being partially performed, then vesting shall be
accelerated on a pro rata basis to reflect the degree to which the vesting
condition has been satisfied, as determined by the Board.

 

 

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7.4

In the event a Participant’s Termination Date is prior to the Payout Date with
respect to any Vested Share Units in such Participant’s Account, the Payout Date
with respect to such Vested Share Units shall, notwithstanding any provision in
the Grant Agreement, be accelerated to the Participant’s Termination Date and
the Corporation shall, as soon as practicable following such Termination Date,
issue or provide Shares or make payment to such Participant with respect to such
Vested Share Units in accordance with Section 6.

 

8.

FORFEITED UNITS

 

8.1

Notwithstanding any other provision of the Plan or a Grant Agreement, Share
Units granted hereunder shall terminate on, if not redeemed or previously
terminated and forfeited in accordance with the Plan, and be of no further force
and effect after, the Expiry Date.

 

9

ALTERATION OF NUMBER OF SHARES SUBJECT TO THE PLAN

 

9.1

In the event that the Shares shall be subdivided or consolidated into a
different number of Shares or a distribution shall be declared upon the Shares
payable in Shares, the number of Share Units then recorded in the Participant’s
Account shall be adjusted by replacing such number by a number equal to the
number of Shares which would be held by the Participant immediately after the
distribution, subdivision or consolidation, should the Participant have held a
number of Shares equal to the number of Share Units recorded in the
Participant’s Account on the record date fixed for such distribution,
subdivision or consolidation.

 

9.2

In the event there shall be any change, other than as specified in Section 9.1,
in the number or kind of outstanding Shares or of any shares or other securities
into which such Shares shall have been changed or for which they shall have been
exchanged, pursuant to a Reorganization or otherwise, then there shall be
substituted for each Share referred to in the Plan or for each share into which
such Share shall have been so changed or exchanged, the kind of securities into
which each outstanding Share shall be so changed or exchanged and an equitable
adjustment shall be made, if required, in the number of Share Units then
recorded in the Participant’s Account, such adjustment, if any, to be reasonably
determined by the Committee and to be effective and binding for all purposes.

 

9.3

With respect to grants made prior to January 23, 2019 and subject to Section 15
hereof, notwithstanding the conditions as to vesting of Share Units contained in
any individual Grant Agreement, all outstanding Share Units shall become Vested
Share Units on any Change of Control and the Payout Date in connection with such
Vested Share Units shall, notwithstanding any provisions in the Grant Agreement,
be accelerated to the date of such Change of Control and the Corporation shall,
as soon as practicable following such Change of Control, issue or provide Shares
or make payments to such Participants with respect to such Vested Share Units in
accordance with Section 6. For greater certainty, this Section 9.3 shall not
apply to grants made on or after January 23, 2019.

 

9.4

In the case of any such substitution, change or adjustment as provided for in
this Section 9, the variation shall generally require that the aggregate Market
Value of the Share Units then recorded in the Participant’s Account prior to
such substitution, change or adjustment will be proportionately and
appropriately varied so that it be equal to such aggregate Market Value after
the variation.

 

10.

RESTRICTIONS ON ISSUANCE

 

10.1

Share Units may be granted by the Corporation in accordance with this Plan
provided the aggregate number of Share Units outstanding pursuant to the Plan
from time to time shall not exceed 3% of the number of issued and outstanding
Shares from time to time.

 

10.2

The maximum number of Shares issuable to Insiders pursuant to the Plan, together
with any Shares issuable pursuant to any other Security Based Compensation
Arrangement, at any time, shall not exceed 10% of the total number of
outstanding Shares. The maximum number of Shares issued to Insiders pursuant to
the Plan, together with any Shares issued pursuant to any other Security Based
Compensation Arrangement, within any one year period, shall not exceed 10% of
the total number of outstanding Shares. No one person may be granted any Share
Units (whether ultimately settled for Shares or cash) for more than 9,500,000
Shares (subject to adjustment as provided for in Part 9), in the aggregate in
any calendar year.

 

 

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11.

AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN

 

11.1

The Corporation may, without notice, at any time and from time to time, and
without shareholder approval, amend the Plan or any provisions thereof in such
manner as the Corporation, in its sole discretion, determines appropriate:

 

(a)

for the purposes of making formal minor or technical modifications to any of the
provisions of the Plan,

 

(b)

to correct any ambiguity, defective provision, error or omission in the
provisions of the Plan,

 

(c)

to change the vesting provisions of Share Units to reflect revised performance
metrics or to accelerate vesting in the event that performance criteria is
achieved earlier than expected;

 

(d)

to change the termination provisions of Share Units or the Plan which does not
entail an extension beyond the original Expiry Date of the Share Units; or

 

(e)

the amendments contemplated by Section 15.1(f);

 

provided, however, that:

 

(f)

no such amendment of the Plan may be made without the consent of each affected
Participant in the Plan if such amendment would adversely affect the rights of
such affected Participant(s) under the Plan; and

 

(g)

shareholder approval shall be obtained in accordance with the requirements of
the TSX for any amendment that results in:

 

 

    (i) an increase in the maximum number of Shares issuable pursuant to the
Plan (other than pursuant to Section 9);

 

    (ii) an extension of the Expiry Date for Share Units granted under the Plan;

 

    (iii) other types of compensation through Share issuance;

 

    (iv) an expansion of the rights of a Participant to assign Share Units other
than as set forth in Section 14.2; or

 

    (v) the addition of additional categories of participants (other than as
contemplated by Section 9);

 

    (vi) changes in eligible participants that may permit the introduction or
reintroduction of non-employee directors on a discretionary basis; or

 

    (vii) any amendments to this Section 11.1 that will increase the
Corporation’s ability to amend the Plan without shareholder approval.

 

11.2

If the Corporation terminates the Plan, Share Units previously credited shall,
at the discretion of the Corporation, either (a) be settled immediately in
accordance with the terms of the Plan in effect at such time, or (b) remain
outstanding and in effect and settled in due course in accordance with the
applicable terms and conditions, in either case without shareholder approval.

 

 

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12.

ADMINISTRATION

 

12.1

Unless otherwise determined by the Board, the Plan shall be administered by the
Committee subject to Applicable Laws. The Committee shall have full and complete
authority to interpret the Plan, to prescribe such rules and regulations and to
make such other determinations as it deems necessary or desirable for the
administration of the Plan. All actions taken and decisions made by the
Committee shall be final, conclusive and binding on all parties concerned,
including, but not limited to, the Participants and their beneficiaries and
legal representatives, each Designated Subsidiary and the Corporation. All
expenses of administration of the Plan shall be borne by the Corporation.

 

12.2

The Corporation shall keep or cause to be kept such records and accounts as may
be necessary or appropriate in connection with the administration of the Plan
and the discharge of its duties. At such times as the Corporation shall
determine, the Corporation shall furnish the Participant with a statement
setting forth the details of his or her Share Units including the Grant Date and
the Vested Share Units and unvested Share Units held by each Participant. Such
statement shall be deemed to have been accepted by the Participant as correct
unless written notice to the contrary is given to the Corporation within 30 days
after such statement is given to the Participant.

 

12.3

The Corporation may, at its discretion, appoint one or more persons or companies
to provide services in connection with the Plan including without limitation,
administrative and record-keeping services.

 

13.

BENEFICIARIES AND CLAIMS FOR BENEFITS

 

13.1

Subject to the requirements of Applicable Law, a Participant may designate in
writing a Beneficiary to receive any benefits that are payable under the Plan
upon the death of such Participant. The Participant may, subject to Applicable
Law, change such designation from time to time. Such designation or change shall
be in such form and executed and filed in such manner as the Corporation may
from time to time determine.

 

14.

GENERAL

 

14.1

The transfer of an employee from the Corporation to a Designated Subsidiary,
from a Designated Subsidiary to the Corporation or from a Designated Subsidiary
to another Designated Subsidiary, shall not be considered a termination of
employment for the purposes of the Plan, nor shall it be considered a
termination of employment if a Participant is placed on such other leave of
absence which is considered by the Corporation as continuing intact the
employment relationship.

 

14.2

The Plan shall enure to the benefit of and be binding upon the Corporation, its
successors and assigns. The interest of any Participant under the Plan or in any
Share Unit shall not be transferable or assignable other than by operation of
law, except, if and on such terms as the Corporation may permit, to a spouse or
minor children or grandchildren or a personal holding company or family trust
controlled by a Participant, the shareholders or beneficiaries of which, as the
case may be, are any combination of the Participant, the Participant’s spouse,
the Participant’s minor children or the Participant’s minor grandchildren, and
after his or her lifetime shall enure to the benefit of and be binding upon the
Participant’s Beneficiary.

 

14.3

The Corporation’s grant of any Share Units or issuance of any Shares hereunder
is subject to compliance with Applicable Law applicable thereto. As a condition
of participating in the Plan, each Participant agrees to comply with all
Applicable Law and agrees to furnish to the Corporation all information and
undertakings as may be required to permit compliance with Applicable Law.

 

14.4

The Corporation or a Designated Subsidiary may withhold from any amount payable
to a Participant, either under this Plan, or otherwise, such amount as may be
necessary so as to ensure that the Corporation or the Designated Subsidiary will
be able to comply with the applicable provisions of any federal, provincial,
state or local law relating to the withholding of tax or other required
deductions, including on the amount, if any, includable in the income of a
Participant. The Corporation shall also have the right in its discretion to
satisfy any such withholding tax liability by retaining, acquiring or selling on
behalf of a Participant any Shares which would otherwise be issued or provided
to a Participant hereunder.

 

 

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14.5

A Participant shall not have the right or be entitled to exercise any voting
rights, receive any distribution or have or be entitled to any other rights as a
Shareholder in respect of any Share Units.

 

14.6

Neither designation of an employee as a Participant nor the grant of any Share
Units to any Participant entitles any Participant to the grant, or any
additional grant, as the case may be, of any Share Units under the Plan. Neither
the Plan nor any action taken thereunder shall interfere with the right of an
Employer of a Participant to terminate a Participant’s employment at any time.
Neither any period of notice, if any, nor any payment in lieu thereof, upon
termination of employment, wrongful or otherwise, shall be considered as
extending the period of employment for the purposes of the Plan.

 

14.7

Participation in the Plan shall be entirely voluntary and any decision not to
participate shall not affect any employee’s employment with the Corporation or a
Designated Subsidiary.

 

14.8

The Plan shall be an unfunded obligation of the Corporation. Neither the
establishment of the Plan nor the grant of any Share Units or the setting aside
of assets by the Corporation (if, in its sole discretion, it chooses to do so)
shall be deemed to create a trust. The right of the Participant or Beneficiary
to receive payment pursuant to the Plan shall be no greater than the right of
other unsecured creditors of the Corporation.

 

14.9

This Plan is established under the laws of the Province of British Columbia and
the rights of all parties and the construction of each and every provision of
the Plan and any Share Units granted hereunder shall be construed according to
the laws of the Province of British Columbia.

 

15.

SECTION 409A

 

15.1

It is intended that the provisions of this Plan comply with Section 409A, and
all provisions of this Plan shall be construed and interpreted in a manner
consistent with the requirements for avoiding taxes or penalties under Section
409A. Notwithstanding anything in the Plan to the contrary, the Corporation may
provide in the applicable Grant Agreement with respect to Share Units granted to
Participants whose benefits under the Plan are or may become subject to Section
409A, such terms and conditions as may be required for compliance with Section
409A. In addition, the following will apply to the extent that a Participant’s
Share Units are subject to Section 409A.

 

(a)Except as permitted under Section 409A, any Share Units, or payment with
respect to Share Units, may not be reduced by, or offset against, any amount
owing by the Participant to the Corporation or any Designated Subsidiary.

 

(b)If a Participant otherwise would become entitled to receive payment in
respect of any Share Units as a result of his or her ceasing to be an Employee
or Eligible Consultant upon a Termination Date, any payment made on account of
such person ceasing to be an Employee or Eligible Consultant shall be made at
that time only if the Participant has experienced a “separation from service”
(within the meaning of Section 409A).

 

(c)If a Participant is a “specified employee” (within the meaning of Section
409A) at the time he or she otherwise would be entitled to payment as a result
of his or her separation from service, any payment that otherwise would be
payable during the six-month period following such separation from service will
be delayed and shall be paid on the first day of the seventh month following the
date of such separation from service or, if earlier, the Participant’s date of
death.

 

(d)A Participant’s status as a specified employee shall be determined by the
Corporation as required by Section 409A on a basis consistent with the
regulations under Section 409A and such basis for determination will be
consistently applied to all plans, programs, contracts, agreements, etc.
maintained by the Corporation that are subject to Section 409A.

 

 

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(e)Each Participant, any beneficiary or the Participant’s estate, as the case
may be, is solely responsible and liable for the satisfaction of all taxes and
penalties that may be imposed on or for the account of such Participant in
connection with this Plan (including any taxes and penalties under Section
409A), and neither the Corporation nor any Designated Subsidiary or affiliate
shall have any obligation to indemnify or otherwise hold such Participant or
beneficiary or the Participant’s estate harmless from any or all of such taxes
or penalties.

 

(f)If and to the extent that Share Units would otherwise become payable upon a
Change of Control as defined in the Plan, such payment will occur at that time
only if such change of control also constitutes a “change in ownership”, a
“change in effective control” or a “change in the ownership of a substantial
portion of the assets of the Corporation” as defined under Section 409A and
applicable regulations (a “409A Change in Control”). If a Change of Control as
defined in the Plan is not also a 409A Change in Control, unless otherwise
permitted under Section 409A the time for the payment of Share Units will not be
accelerated and will be payable pursuant to the terms of the Plan and applicable
Grant Agreement as if such Change of Control had not occurred.

 

(g)In the event that the Committee determines that any amounts payable under the
Plan will be taxable to a Participant under Section 409A prior to payment to
such Participant of such amount, the Corporation may (i) adopt such amendments
to the Plan and Share Units and appropriate policies and procedures, including
amendments and policies with retroactive effect, that the Committee determines
necessary or appropriate to preserve the intended tax treatment of the benefits
provided by the Plan and Grant Agreement and/or (ii) take such other actions as
the Corporation determines necessary or appropriate to avoid or limit the
imposition of an additional tax under Section 409A.

 

EFFECTIVE DATE: May 26, 2009, as amended MAY 29, 2012, as further amended June
5, 2014, as further amended on January 25, 2017, as further amended on January
23, 2019.