Exhibit 10(hh)

Adopted February 22, 2016

2016 Short-Term Incentive Plan

Effective January 1, 2016

Potash Corporation of Saskatchewan Inc.

 

Signature  

/s/ Keith G. Martell

Name   Keith G. Martell Title   Chair, Human Resources and Compensation
Committee Date   February 22, 2016

 

Signature  

/s/ Lee Knafelc

Name   Lee Knafelc Title   Senior Vice President, Human Resources and
Administration Date   February 22, 2016

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Contents

 

Section 1—Establishment of the Plan

     5   

1.01

  Purpose      5   

1.02

  Effective Date      5   

Section 2—Definitions

     5   

2.01

  Accrued Incentive Awards      5   

2.02

  Adjusted EBITDA      5   

2.03

  Adjusted EBITDA Ratio      5   

2.04

  Award Payment      6   

2.05

  Board      6   

2.06

  CEO      6   

2.07

  Committee      6   

2.08

  Corporation      6   

2.09

  Depreciation and Amortization      6   

2.10

  EBITDA Award Multiplier      6   

2.11

  EBITDA Award Percentage      6   

2.12

  Eligible Employee      7   

2.13

  Entitled Employee      7   

2.14

  Environmental Incidents      7   

2.15

  Finance Costs      7   

2.16

  Hourly Employee      7   

2.17

  Income Taxes      8   

2.18

  Individual Award Multiplier      8   

2.19

  Lost Time Injury Rate      8   

2.20

  Non-recurring/Unusual Items Included in Operating Income      8   

2.21

  Operations Award Multiplier      8   

2.22

  PCS Inc.      8   

2.23

  Permit Excursion      8   

 

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2.24

  Plan      8   

2.25

  Provincial Reportable Spill      9   

2.26

  Recordable Injury Rate      9   

2.27

  Reportable Quantity Release      9   

2.28

  Retirement      9   

2.29

  Salary      9   

2.30

  SH&E Award Multiplier      10   

2.31

  Target EBITDA      10   

2.32

  Target Percentage      10   

2.33

  Unrealized Gains/Losses on Derivative Instruments Included in Operating Income
     10   

2.34

  Year      10   

Section 3—Participation

     10   

3.01

  Participation Requirements      10   

Section 4—Award Payments

     10   

4.01

  Eligibility      10   

4.02

  Calculation of EBITDA Award Payment      11   

4.03

  Entitled Operations Employees      11   

4.04

  Entitled Corporate Office Employees and Entitled Corporate Executives      12
  

4.05

  Limitation of Award Payments and General Discretion      12   

4.06

  Timing of Award Payments      13   

4.07

  Recoupment Policy      13   

Section 5—Administration of the Plan

     13   

5.01

  Administration      13   

Section 6—Transfer of Employment

     14   

6.01

  Transfer of Employment      14   

Section 7—General Provisions

     14   

7.01

  Assignment or Alienation      14   

7.02

  Amendment or Termination      14   

 

3

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7.03

  Effect of Amendment or Termination      14   

7.04

  No Enlargement of Contractual Rights      14   

7.05

  Interpretation      15   

7.06

  Withholding of Taxes      15   

7.07

  Binding on Successors      15   

7.08

  Currency      15   

Section 8—Change in Control

     15   

8.01

  Definition of Change in Control      15   

8.02

  Prior Year CIC STIP Award Payment      15   

8.03

  CIC STIP Award Payment      15   

Appendix “A”—STIP Award Percentage

     17   

 

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Section 1—Establishment of the Plan

1.01  Purpose

This 2016 Short-Term Incentive Plan is established for the purpose of rewarding
eligible employees on an annual basis for their efforts and contributions in the
attainment of certain performance measures that contribute materially to the
success of the business interests of Potash Corporation of Saskatchewan Inc.

1.02  Effective Date

Subject to Section 7.02 (Amendment or Termination), this Plan shall be effective
on and after January 1, 2016.

Section 2—Definitions

The following terms, when capitalized, shall be defined as follows:

2.01  Accrued Incentive Awards

“Accrued Incentive Awards” means the amounts accrued during the Year that
represent expected payments under this Plan and other group incentive plans as
appropriate.

2.02  Adjusted EBITDA

“Adjusted EBITDA” means the amount derived from the following formula:

 

  (a) Net Income before Finance Costs, Income Taxes, and Depreciation and
Amortization, plus/minus

 

  (b) Non-recurring/Unusual Items Included in Operating Income, plus/minus

 

  (c) Change in Unrealized Gains/Losses on Derivative Instruments Included in
Operating Income, plus

 

  (d) Accrued Incentive Awards.

2.03  Adjusted EBITDA Ratio

“Adjusted EBITDA Ratio” means the amount derived from the following formula:

 

  (a) Adjusted EBITDA

DIVIDED BY

 

  (b) Target EBITDA

and used to calculate an Entitled Employee’s EBITDA Award Percentage for a given
Year pursuant to Section 4.02. Notwithstanding the foregoing, if the amount
derived from the formula above is less than 50%, then the Adjusted EBITDA Ratio
shall be deemed to be 0%, and if the amount derived from the formula above is
greater than 150%, then the Adjusted EBITDA Ratio shall be deemed to be 150%.

 

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2.04  Award Payment

“Award Payment” means a cash payment to an Entitled Employee calculated pursuant
to Section 4 (Award Payments).

 

  (a) “EBITDA Award Payment” is the payment calculated based upon the Adjusted
EBITDA Ratio, a measure of Adjusted EBITDA relative to Target EBITDA.

 

  (b) “Individual Award Payment” is the payment calculated based on individual
job performance in accordance with Section 4.03(c) or Section 4.04(c), as
applicable.

 

  (c) “Operations Award Payment” is the payment calculated based upon operations
performance factors as established in accordance with Section 4.03(b) for the
benefit of Entitled Operations Employees.

 

  (d) “SH&E Award Payment” is the payment calculated based upon safety, health
and environmental performance factors as established in accordance with
Section 4.04(b) for the benefit of Entitled Corporate Office Employees and
Entitled Corporate Executives.

2.05  Board

“Board” means the Board of Directors of PCS Inc.

2.06  CEO

“CEO” means the Chief Executive Officer of PCS Inc.

2.07  Committee

“Committee” means the Human Resources and Compensation Committee of the Board.

2.08  Corporation

“Corporation” means PCS Inc. and its direct and indirect subsidiaries.

2.09  Depreciation and Amortization

“Depreciation and Amortization” means the depreciation and amortization expense
for a given Year, as set out in the audited consolidated financial statements of
PCS Inc. for that Year.

2.10  EBITDA Award Multiplier

“EBITDA Award Multiplier” means, with respect to an Entitled Employee, the
percentage set forth in the “EBITDA Award Multiplier” column on Appendix “A”
with respect to such Entitled Employee’s Tier.

2.11  EBITDA Award Percentage

“EBITDA Award Percentage” means the percentage of an Entitled Employee’s Salary
derived from the formula set forth in Section 4.02.

 

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2.12  Eligible Employee

“Eligible Employee” means an employee, including an Hourly Employee, who has
satisfied the eligibility requirements set out in Section 4.01 (Eligibility).

2.13  Entitled Employee

“Entitled Employee” means an Eligible Employee who is recommended by the CEO and
approved by the Committee to participate in this Plan.

 

  (a) Entitled Corporate Executive

“Entitled Corporate Executive” means an Entitled Employee who would otherwise be
an Entitled Corporate Office Employee, but for the fact that he or she has been
designated by the Committee as an Entitled Corporate Executive.

 

  (b) Entitled Corporate Office Employee

“Entitled Corporate Office Employee” means an Entitled Employee who is attached
to one of the corporate facilities of PCS Inc. or its direct or indirect
subsidiaries at either Saskatoon or Northbrook, but in each case other than an
Entitled Corporate Executive.

 

  (c) Entitled Operations Employee

“Entitled Operations Employee” means an Entitled Employee who is attached to one
of the operating facilities of PCS Inc. or its direct or indirect subsidiaries.

2.14  Environmental Incidents

“Environmental Incidents” means, for a given Year, the number derived from the
following formula:

 

  (a) the number of Reportable Quantity Releases during such Year, plus

 

  (b) the number of Permit Excursions during such Year, plus

 

  (c) the number of Provincial Reportable Spills during such Year.

2.15  Finance Costs

“Finance Costs” means the finance cost expense or income recognized for a given
Year as set out in the audited consolidated financial statements of PCS Inc. for
that Year.

2.16  Hourly Employee

“Hourly Employee” means an employee employed at either a Canadian or U.S.
operation who is paid on an hourly wage rate basis, including both employees who
are and who are not covered by a collective bargaining agreement.

 

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2.17  Income Taxes

“Income Taxes” means the income tax expense accrued for a given Year, as set out
in the audited consolidated financial statements of PCS Inc. for that Year.

2.18  Individual Award Multiplier

“Individual Award Multiplier” means, with respect to an Entitled Employee, the
percentage set forth in the “Individual Award Multiplier” column on Appendix “A”
with respect to such Entitled Employee’s Tier.

2.19  Lost Time Injury Rate

“Lost Time Injury Rate” means, for a given Year, the amount derived from the
following formula:

 

  (a) the total number of lost-time injuries for all employees, contractors and
others on site during such Year, multiplied by 200,000

DIVIDED BY

 

  (b) the actual number of hours worked by employees, contractors and others on
site during such Year.

2.20  Non-recurring/Unusual Items Included in Operating Income

“Non-recurring/Unusual Items Included in Operating Income” means items that are
considered non-routine, unique, and not expected to be repeated in a normal
course of the Corporation’s operating cycle, and which are recognized in
Operating Income for a given Year as set out in the audited consolidated
financial statements of PCS Inc. for that Year. Such items may result in a
measurable charge or increase to income and may or may not be triggered by a
management decision.

2.21  Operations Award Multiplier

“Operations Award Multiplier” means, with respect to an Entitled Operations
Employee, the percentage set forth in the “Operations Award Multiplier” column
on Appendix “A” with respect to such Entitled Operations Employee’s Tier.

2.22  PCS Inc.

“PCS Inc.” means Potash Corporation of Saskatchewan Inc.

2.23  Permit Excursion

“Permit Excursion” means an exceedance of a federal, state, provincial or local
permit condition or regulatory limit.

2.24  Plan

“Plan” means this 2016 Short-Term Incentive Plan, as amended from time to time.

 

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2.25  Provincial Reportable Spill

“Provincial Reportable Spill” means an unconfined spill or release into the
environment.

2.26  Recordable Injury Rate

“Recordable Injury Rate” means, for a given Year, the amount derived from the
following formula:

 

  (a) the total number of recordable injuries for employees, contractors and
others on site during such Year, multiplied by 200,000

DIVIDED BY

 

  (b) the actual number of hours worked by employees, contractors and others on
site during such Year.

2.27  Reportable Quantity Release

“Reportable Quantity Release” means a release the quantity of which equals or
exceeds the United States Environmental Protection Agency’s notification level
and is reportable to the United States Coast Guard National Response Center.

2.28  Retirement

“Retirement” (or similar terms) means, with respect to an Entitled Employee who
is subject to United States income tax, such Entitled Employee’s separation from
service after attaining age 55 and completing 5 years of service. Retirement
with respect to any Entitled Employee who is not subject to United States income
tax means retirement as determined in accordance with the qualified retirement
plan of the Corporation in which the Entitled Employee is eligible to
participate.

2.29  Salary

“Salary” means:

 

  (a) For Entitled Employees who are exempt from the overtime requirements of
U.S. wage and hour legislation, other than Canadian Hourly Employees, the actual
base salary earned during a given Year.

 

  (b) For Entitled Employees who are Canadian Hourly Employees, the actual total
base pay for the given Year, excluding, but not limited to, overtime, bonuses,
shift differentials and premiums.

 

  (c) For Entitled Employees who are U.S. employees and who are non-exempt from
the overtime requirements of U.S. wage and hour legislation, total earned
income, including overtime and shift differentials, for the given Year.

 

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2.30  SH&E Award Multiplier

“SH&E Award Multiplier” means, with respect to an Entitled Corporate Office
Employee or Entitled Corporate Executive, the percentage set forth in the “SH&E
Award Multiplier” column on Appendix “A” with respect to such Entitled
Employee’s Tier.

2.31  Target EBITDA

“Target EBITDA” means the Adjusted EBITDA projected in the annual budget
approved by the Board and used in the formula set forth in Section  4.02 to
calculate an Entitled Employee’s EBITDA Award Percentage for a given Year.

2.32  Target Percentage

“Target Percentage” means the percentage assigned to the Tier Level for Entitled
Employees within that Tier, as shown in the table contained in Appendix “A”. The
Target Percentage applicable to an Entitled Employee shall be recommended by the
CEO and approved by the Committee.

2.33  Unrealized Gains/Losses on Derivative Instruments Included in Operating
Income

“Unrealized Gains/Losses on Derivative Instruments Included in Operating Income”
means the mark to market adjustments on the company’s derivative instrument
assets and liabilities, including but not limited to, natural gas non-hedging
and foreign exchange non-hedging, that are required to be recognized under
accounting standards for reporting purposes, and which are recognized in
operating income for a given Year as set out in the audited consolidated
financial statements of PCS Inc. for that Year.

2.34  Year

“Year” means the fiscal year of PCS Inc.

Section 3—Participation

3.01  Participation Requirements

Participation in the Plan is limited to Eligible Employees.

Section 4—Award Payments

4.01  Eligibility

A permanent employee of the Corporation who:

 

  (a) is employed for at least one month during a Year, and, except in the case
of a termination of employment due to Retirement or death or as otherwise
provided herein, who is in the employ of the Corporation at the end of a Year,
and

 

  (b) is not a participant in another annual cash bonus plan sponsored by the
Corporation for the same period during the Year as covered by this Plan

shall become an Eligible Employee.

 

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4.02  Calculation of EBITDA Award Payment

Subject to Section 4.05 (Limitation of Award Payments and General Discretion),
for purposes of Section 4.03 or 4.04, as applicable, the portion of an Entitled
Employee’s Award Payment calculated pursuant to this Section 4.02 (the EBITDA
Award Payment) shall be equal to the Entitled Employee’s EBITDA Award Percentage
multiplied by his or her Salary.

 

  (a) The EBITDA Award Percentage (which, for the avoidance of doubt, shall be
no greater than 200% of the applicable Target Percentage) is calculated as
follows:

If the Adjusted EBITDA Ratio equals or exceeds 50% and does not exceed 100%, the
calculation is:

Target Percentage multiplied by Adjusted EBITDA Ratio = EBITDA Award Percentage

If the Adjusted EBITDA Ratio exceeds 100% and does not exceed 150%, the
calculation is:

(Two times Target Percentage multiplied by Adjusted EBITDA Ratio) minus Target
Percentage = EBITDA Award Percentage

 

  (b) No EBITDA Award Percentage is calculated for an Adjusted EBITDA Ratio of
less than 50% and for Award Percentage calculations, Adjusted EBITDA Ratio is
limited to 150%.

4.03  Entitled Operations Employees

Subject to Section 4.05 (Limitation of Award Payments and General Discretion),
an Entitled Operations Employee shall be entitled to an Award Payment equal to
the sum of paragraphs (a), (b), and, for certain Entitled Operations Employees
who are in Tier 6 through 11 (as described in Appendix “A”), (c) below:

 

  (a) The EBITDA Award Payment, multiplied by the applicable EBITDA Award
Multiplier;

 

  (b) the Operations Award Payment, which is the Target Percentage of the Salary
of the Entitled Operations Employee, adjusted (in no event to be greater than
200% of the Target Percentage) by applying a formula to be developed from time
to time by the CEO in consultation with the Senior Vice President, Human
Resources & Administration and the appropriate subsidiary President which
formula shall reasonably reflect the actual results of the operating facility to
which the employee is attached (potentially including Recordable Injury Rate,
Lost-Time Injury Rate and Environmental Incidents) compared to the approved
target for that operating facility, subject to achieving a threshold of at least
25% of the operating facility’s targets, multiplied by the applicable Operations
Award Multiplier; and

 

  (c) the Individual Award Payment, which is, for an Entitled Operations
Employee who is in Tier 6 through 11, the Target Percentage of the Salary of the
Entitled Operations Employee, adjusted (in no event to be greater than 200% of
the Target Percentage) based upon the Entitled Operations Employee’s job
performance, as determined by his or her supervisor, and approved in accordance
with the provisions of this Plan, multiplied by the applicable Individual Award
Multiplier.

 

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  (d) No portion of the Award Payment for an Entitled Operations Employee who is
not in Tier 6 through 11 will be based on individual job performance.

4.04  Entitled Corporate Office Employees and Entitled Corporate Executives

Subject to Section 4.05 (Limitation of Award Payments and General Discretion),
an Entitled Corporate Office Employee or an Entitled Corporate Executive shall
be entitled to an Award Payment equal to the sum of paragraphs (a), (b) and
(c) below:

 

  (a) The EBITDA Award Payment, multiplied by the applicable EBITDA Award
Multiplier;

 

  (b) the SH&E Award Payment, which is the Target Percentage of the Salary of
the Entitled Employee, adjusted (in no event to be greater than 200% of the
Target Percentage) by applying a formula to be developed from time to time by
the CEO in consultation with the Senior Vice President, Human Resources &
Administration which formula shall reasonably reflect the Corporation’s safety,
health and environmental results (potentially including Recordable Injury Rate,
Lost-Time Injury Rate and Environmental Incidents) compared to the approved
target, subject to achieving a threshold of less than 110% of the applicable
target, multiplied by the applicable SH&E Award Multiplier; and

 

  (c) the Individual Award Payment, which is the Target Percentage of the Salary
of the Entitled Corporate Office Employee or Entitled Corporate Executive,
adjusted (in no event to be greater than 200% of the Target Percentage) based
upon the Entitled Employee’s job performance, as determined by his or her
supervisor, and approved in accordance with the provisions of this Plan,
multiplied by the applicable Individual Award Multiplier.

4.05  Limitation of Award Payments and General Discretion

 

  (a) Subject to Section 4.01, in the event that, for a given Year, the Entitled
Employee (i) is employed by the Corporation for less than the full Year, (ii) is
employed on a part-time basis for any portion of the Year, (iii) terminates
employment with the Corporation prior to the end of the Year due to Retirement
or death, (iv) is promoted or demoted from one Group or Tier to another Group or
Tier set forth in Appendix “A,” or (v) experiences a change in Salary during the
Year, the Award Payment (and the constituent elements of such Award Payment) for
such Entitled Employee will be adjusted to account for such employment change by
applying appropriate pro-ration and/or weighting, as applicable. Further,
notwithstanding Section 4.01 to the contrary, an employee who for part of the
Year was an active employee but for part of the Year was on long-term disability
or an approved or unpaid leave of absence, may be considered an Entitled
Employee and eligible for a pro-rata share of the Award Payment based upon the
fraction of the Year the employee was considered an active employee and subject,
if applicable, to potential additional adjustments as described in the prior
sentence; provided, however, that in situations where the fractional portion of
the Year worked is less than one-twelfth, the employee will not be considered an
Entitled Employee unless the CEO recommends and the Committee approves the
exception.

 

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  (b) The Award Payment for any Entitled Employee may exceed or be below the
amount calculated in accordance with this Section 4 (as adjusted pursuant to
Section 4.05(a), if applicable) based on individual performance, the
shareholders’ experience, significant safety, health and environmental events or
other factors. Award Payments falling outside the established range shall be
reviewed and approved by the Board and the Committee for the CEO and the CEO and
the Committee for direct reports to the CEO. For all others, approval of the CEO
is required.

 

  (c) Notwithstanding the Groups and Tiers established in Appendix “A”, the
Committee may on the recommendation of the CEO, designate an Eligible Employee
for inclusion in one of such Groups or Tiers when, but for such designation, the
Eligible Employee would not otherwise be included in such Group or Tier.

4.06  Timing of Award Payments

The Committee shall, on the recommendation of the CEO and within 30 days of the
end of a Year, approve the Adjusted EBITDA calculation and the amount of Award
Payments for each Entitled Employee who is a direct report to the CEO for any
given Year. The CEO’s Award Payment will be approved by the Board. Following
approval of the Adjusted EBITDA calculation, final calculations for the
remaining Entitled Employees will be prepared. The Award Payments shall be paid
to Entitled Employees within 30 days of the Committee’s approval of the Adjusted
EBITDA calculation and no later than 2 1⁄2 months after the end of the Year.

4.07  Recoupment Policy

Notwithstanding any other provision under this Section, Entitled Employees shall
be subject to the terms and conditions of the Corporation’s Policy on Recoupment
of Unearned Compensation (as previously adopted and, from time to time, amended
by the Board), a copy of which shall be distributed to each such Entitled
Employee. In addition, notwithstanding anything in this Plan to the contrary,
any award under the Plan may also provide for the cancellation or forfeiture of
the award or the forfeiture and repayment to the Corporation of any gain related
to the award, or other provisions intended to have a similar effect, upon such
terms and conditions as may be required by the Committee or under Section 10D of
the Securities Exchange Act of 1934, as amended, and any applicable rules or
regulations promulgated by the Securities and Exchange Commission or any
national securities exchange or national securities association on which the
Corporation’s common shares may be traded.

Section 5—Administration of the Plan

5.01  Administration

The Committee shall conclusively interpret the provisions of this Plan and
decide all questions of fact arising in the application of the Plan.
Determinations and interpretations in individual cases may be made by the CEO
with due regard to consistency with any prior action by the Committee and such
determination shall be binding and conclusive upon the individual employees
concerned and persons claiming under them. The Committee shall be advised of any
such determination or interpretation made by the CEO. To the extent applicable,
the Plan shall be administered with respect to Entitled Employees subject to
U.S. law so as to avoid penalties pursuant to Section 409A of the Internal
Revenue Code.

 

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Section 6—Transfer of Employment

6.01  Transfer of Employment

If an Entitled Employee’s employment is transferred during a Year to a different
location, within the Corporation the Senior Vice President, Human Resources &
Administration and the CEO shall determine whether the Entitled Employee’s Award
Payment is calculated in accordance with Section 4.03 (Entitled Operations
Employees), Section 4.04 (Entitled Corporate Office Employees and Entitled
Corporate Executives), or a combination of those sections.

Section 7—General Provisions

7.01  Assignment or Alienation

Except as required by applicable laws, the right of an Entitled Employee to
receive an Award Payment under this Plan shall not be:

 

  (a) given as security;

 

  (b) subject to transfer, anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation; or

 

  (c) subject to execution, attachment, levy or similar process or assignment by
operation of law,

and any attempt to effect any such action shall be null and void and of no
effect.

7.02  Amendment or Termination

Subject to Section 7.03 (Effect of Amendment or Termination), this Plan may be
amended in whole or in part from time to time or terminated by the Corporation.
Any amendment or termination shall be binding on the Corporation, Entitled
Employees, Eligible Employees and their respective beneficiaries.

7.03  Effect of Amendment or Termination

Notwithstanding Section 7.02 (Amendment or Termination), no amendment or
termination of any provision of this Plan shall directly or indirectly deprive
any Entitled Employee or beneficiary of all or any portion of an Award Payment
earned with respect to any Year ending prior to the date of the amendment or
termination.

7.04  No Enlargement of Contractual Rights

This Plan shall not give any Entitled Employee or Eligible Employee the right to
be retained in the service of the Corporation nor shall it interfere with the
right of the Corporation to terminate the employment of the Entitled Employee or
Eligible Employee. Participation in this Plan shall not give any Entitled
Employee or Eligible Employee any right or claim to any benefit, except to the
extent provided in this Plan.

 

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7.05  Interpretation

This Plan shall be interpreted pursuant to the laws of the Province of
Saskatchewan. Section headings are for convenience only and shall not be
considered provisions of the Plan. Words in the singular shall include the
plural, and vice versa, unless qualified by the context.

7.06  Withholding of Taxes

The Corporation shall withhold all applicable taxes from any amounts paid
pursuant to this Plan.

7.07  Binding on Successors

This Plan shall be binding on any successor or successors of PCS Inc. whether by
merger, consolidation or otherwise.

7.08  Currency

The benefits payable pursuant to this Plan shall be paid in the same currency as
the Entitled Employee receives his or her Salary.

Section 8—Change in Control

8.01  Definition of Change in Control

For purposes of the Plan, the term “Change in Control” shall have the same
meaning as the term “change in control” in the Corporation’s 2016 Long-Term
Incentive Plan, as amended.

8.02  Prior Year CIC STIP Award Payment

 

  (a) Notwithstanding anything in the Plan to the contrary, upon the occurrence
of a Change in Control, an Entitled Employee with respect to the Year
immediately prior to the Year in which the Change in Control occurs (the “Prior
Year”) shall be entitled to receive for the Prior Year the Entitled Employee’s
Award Payment for the Prior Year; provided that an Award Payment for the Prior
Year was not previously paid to the Entitled Employee prior to the effective
date of the Change in Control; and provided further that Section 4.05(a) of the
Plan shall continue to apply with respect to the Prior Year (the “Prior Year
STIP Award Payment”).

 

  (b) Any Prior Year STIP Award Payment shall be paid within 30 calendar days
following the effective date of the Change in Control; provided, however, that
any Prior Year STIP Award Payment shall be paid no later than 2  1⁄2 months
after the end of the Prior Year.

8.03   CIC STIP Award Payment

 

  (a)

Notwithstanding anything in the Plan to the contrary, upon the occurrence of a
Change in Control, an Entitled Employee (without regard to the requirement set
forth in Section 4.01(a) of the Plan that the employee be employed at the end of
the Year) shall be entitled to receive for the Year that includes the effective
date of the Change in Control the Entitled Employee’s Award Payment for such
Year, pro-rated for the portion of such Year that elapsed prior to the Change in
Control (determined by dividing (i) the number of calendar days that elapsed
during such Year from the commencement of such Year through

 

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  the effective date of the Change in Control by (ii) the number of calendar
days in such Year); provided that Section 4.05(a) of the Plan shall continue to
apply with respect to the period prior to the Change in Control during such Year
(the “CIC STIP Award Payment”).

 

  (b) For purposes of calculating an Entitled Employee’s CIC STIP Award Payment
(and the Adjusted EBITDA), the Adjusted EBITDA for a given Year shall be deemed
to be equal to the greater of (i) the Target EBITDA with respect to such Year,
or (ii) the actual Adjusted EBITDA during the portion of such Year that elapsed
through the end of the month in which the Change in Control occurs.

 

  (c) For purposes of calculating an Entitled Operations Employee’s CIC STIP
Award Payment, the operating facility results for purposes of Section 4.03(b) of
the Plan for a given Year shall be deemed to be equal to the greater of (i) the
approved target of the operating facility with respect to such Year, or (ii) the
actual results of the operating facility during the portion of such Year that
elapsed through the end of the month in which the Change in Control occurs.

 

  (d) For purposes of calculating an Entitled Corporate Office Employee’s or an
Entitled Corporate Executive’s CIC STIP Award Payment, the safety, health and
environmental results for purposes of Section 4.04(b) of the Plan for a given
Year shall be deemed to be equal to the greater of (i) the approved target with
respect to such Year, or (ii) the actual safety, health and environmental
results during the portion of such Year that elapsed through the end of the
month in which the Change in Control occurs.

 

  (e) For purposes of calculating an Entitled Employee’s CIC STIP Award Payment,
the individual job performance results for purposes of Sections 4.03(c) and
4.04(c) of the Plan for a given Year shall be deemed to be equal to the greater
of (i) the approved target with respect to such Year, or (ii) the actual
individual job performance results during the portion of such Year that elapsed
through the end of the month in which the Change in Control occurs.

 

  (f) Notwithstanding Section 4.05(b) of the Plan, the CIC STIP Award Payment
may not be below the amount calculated in accordance with Sections 4.01 through
4.04 of the Plan (and this Section 8.03), nor shall any approval be required for
purposes of Section 4.05(b) of the Plan in the event that the CIC STIP Award
Payment exceeds the amount calculated in accordance with Section 4 of the Plan.

 

  (g) For purposes of Section 4.05(a) of the Plan, the CIC STIP Award Payment
shall be calculated on the basis of the Entitled Employee’s Group or Tier
immediately prior to the Change in Control.

 

  (h) The CIC STIP Award Payment shall be paid within 30 calendar days following
the effective date of the Change in Control.

 

  (i) Notwithstanding anything in the Plan to the contrary, to the extent that
an Entitled Employee receives an additional Award Payment under the Plan in
respect of any Year during which the Entitled Employee became entitled to
receive a CIC STIP Award Payment, any such additional Award Payment shall be
reduced (but not below zero) by the amount of the CIC STIP Award Payment.

 

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Appendix “A”—STIP Award Percentage

 

 

 

Tier    Group   

Target

Percentage

  EBITDA
Award
Multiplier1, 2    

SH&E

Award
Multiplier3

   

Individual

Award
Multiplier4

  Entitled Corporate Executives and Entitled Corporate Office Employees         

1  

   President and CEO    100%     70 %      10 %      20 % 

2  

   Exec Level 2    70%     70 %      10 %      20 % 

3  

   Exec Level 3    55%     70 %      10 %      20 % 

4  

  

Exec Levels 4a, 4b, 4c

Staff Hay Points 1900 +

   40%     70 %      10 %      20 % 

5  

   Exec Level 5    35%     60 %      10 %      30 % 

6  

  

Exec Level 6

Staff Hay Points 1600 to 1899

   30%     60 %      10 %      30 % 

7  

  

Exec Level 7

Staff Hay Points 1300 to 1599

   25%     60 %      10 %      30 % 

8  

   Staff Hay Points 900 to 1299    20%     60 %      10 %      30 % 

9  

   Staff Hay Points 650 to 899    15%     60 %      10 %      30 % 

10

   Staff Hay Points 366 to 649    10%     50 %      10 %      40 % 

11

   Staff Hay Points 0 to 365    5%     50 %      10 %      40 % 

 

17

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Tier     Group  

Target

Percentage

 

EBITDA

Award
Multiplier1, 2

   

Operations

Award
Multiplier4

   

Individual

Award
Multiplier4

 

 

Entitled Operations Employees

          6        Managing Director, Trinidad Hay Points 1600 to 1899 5   30%  
  20 %      50 %      30 %    7        Hay Points 1300 to 1599 5   25%     20 % 
    50 %      30 %    8        Hay Points 900 to 1299 5   20%     20 %      50
%      30 %    9        Hay Points 650 to 899 5   15%     20 %      50 %      30
%    10      Hay Points 366 to 649 5   10%     20 %      50 %      30 %    11   
  Hay Points 0 to 365 (excluding Trinidad) 4   5%     20 %      50 %      30 % 
  12      Hourly Employees (excluding Trinidad and those in Tier 13)   5%     50
%      50 %      0 %    13      Lanigan, Cory, Patience Lake and Allan unionized
Hourly Employees   4.5%     50 %      50 %      0 % 

Notes:

 

1. Where the Adjusted EBITDA Ratio is greater than 150 (i.e. the maximum
Adjusted EBITDA Ratio), the Adjusted EBITDA Ratio is deemed to be 150.

If the Adjusted EBITDA Ratio is between 50% and 100%, the EBITDA Award
Percentage = Target Percentage multiplied by Adjusted EBITDA Ratio.

If the Adjusted EBITDA Ratio exceeds 100% and does not exceed 150%, the EBITDA
Award Percentage = (2 times Target Percentage multiplied by Adjusted EBITDA
Ratio) minus Target Percentage.

 

2. Subject to Section 4.05 (Limitation of Award Payments and General
Discretion), where the Adjusted EBITDA Ratio is less than 50, the Adjusted
EBITDA Ratio is deemed to be zero (0).

 

3. The SH&E Award Percentage will be calculated by mathematical straight-line
interpolation between 0% and 100%, with respect to performance between Threshold
(110% of Target) and Target, and between 100% and 200% with respect to
performance between Target and Maximum (90% of Target).

 

4. The Operations and Individual Awards are by mathematical straight-line
interpolation between 0% and 200%.

 

5. Weighting in 2016 for Entitled Operations Employees who are not a General
Manager or do not report to a General Manager, or who are not otherwise
designated, is 50%/50%/0% (i.e. no individual component).

 

18