Exhibit 10.3

ANGIOTECH PHARMACEUTICALS, INC.

2011 STOCK INCENTIVE PLAN

 

1. PURPOSE OF THE PLAN

Angiotech Pharmaceuticals, Inc. (the “Company”) hereby establishes an
equity-based long-term incentive compensation plan for Key Persons (as defined
below), to be known as the “2011 Stock Incentive Plan” (the “Plan”). The purpose
of the Plan is to promote the long-term success of the Company by providing
Participants a proprietary interest in the Company and thereby encouraging those
people to perform their duties to the best of their abilities and to devote
their business time and efforts to further the growth and development of the
Company. The Plan is also intended to assist the Company in attracting and
retaining individuals with superior experience and ability.

 

2. DEFINITIONS

For purposes of this Plan, the following terms shall have the following
meanings:

 

2.1 “Award” means an award of Stock Options, SARs (whether or not in tandem with
a grant of stock options), RSUs, DSUs and Restricted Stock granted to a
Participant under the Plan.

 

2.2 “Award Agreement” means an agreement evidencing the terms of the grant of an
Award to a Participant.

 

2.3 “Blackout Period” means an interval of time during which the Company has
determined that one or more Participants may not trade any securities of the
Company because they may be in possession of material nondisclosed confidential
information pertaining to the Company.

 

2.4 “Board” means the board of directors of the Company and any committees of
the board of directors to which any or all authority, rights, powers, and
discretion with respect to the Plan has been delegated.

 

2.5 “Cause” means, for any Participant, the meaning given to such term in an
employment agreement in effect as of or after a Grant Date, or if such term is
not defined in the Participant’s employment agreement with the Company or a
Related Entity or if the Participant has not entered into an employment
agreement with the Company or a Related Entity, then as such term is defined by
applicable law or, if not so defined, it shall mean with respect to such
Participant any of the following, as determined by the Company:

 

  (i) the failure of such Participant to substantially perform any portion of
his or her duties;

 

  (ii) misconduct or illegal conduct by such Participant causing or likely to
cause financial, reputational, or other harm to the Company;

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  (iii) such Participant’s commission of, or plea of guilty or no contest to, a
felony;

 

  (iv) any material breach by such Participant of the terms of this Plan, an
Award Agreement, or any other agreement with the Company or any of its
subsidiaries to which such Participant is a party; or

 

  (v) a material violation of the Company’s written policies regarding ethical
business practices or any other serious violation of any written policy of the
Company or any of its subsidiaries.

 

2.6 “Change of Control” means the occurrence of any one or more of the
following:

 

  (i) a change in the composition of the Board as a result of which fewer than
one-half of the incumbent directors are individuals who were directors 12 months
before the change; but excluding any such change in the composition of the Board
made with the approval of the Board as it was constituted immediately before the
change;

 

  (ii) the acquisition or aggregation by any person, entity, or group of persons
or entities acting jointly or in concert, other than the Company or any Related
Entity, or an employee benefit plan maintained by the Company or any Related
Entity (“Acquiror”) of beneficial ownership or control of Voting Securities
(including, without limitation, the power to vote or direct the voting thereof),
as a result of which the Acquiror and/or associates and/or affiliates of the
Acquiror become entitled to cast or direct the casting of more than 50% of the
votes attached to all of the outstanding Voting Securities which may be cast to
elect directors (regardless of whether a meeting has been called to elect
directors), but excluding a change in the relative beneficial ownership of the
Acquiror in Voting Securities resulting solely from a reduction in the aggregate
number of the outstanding Voting Securities, unless and until the Acquiror
increases, in any manner, directly or indirectly, the Acquiror’s beneficial
ownership or control of Voting Securities (after which the Acquiror and/or
associates and/or affiliates of the Acquiror are entitled to cast or direct the
casting of more than 50% of the votes attached to all of the outstanding Voting
Securities which may be cast to elect directors);

 

  (iii) the disposition of all or substantially all of the assets of the Company
and its subsidiaries (on a consolidated basis) pursuant to a merger,
consolidation or other transaction, unless the common shares of the entity or
entities that succeed to the business of the Company, and any other shares
entitled to vote for the election of directors of such entity or entities, are
beneficially owned or controlled by persons, entities, or groups of persons or
entities acting jointly or in concert who held beneficial ownership or control
of more than 50% of the Voting Securities immediately before such merger,
consolidation, or other transaction;

 

  (iv) the adoption of a resolution to wind-up, dissolve, or liquidate the
Company; or

 

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  (v) a consolidation, merger, amalgamation, arrangement, or other
reorganization or acquisition of the Company, as a result of which the holders
of Voting Securities immediately before the completion of such transaction hold
less than 50% of the outstanding common shares and other shares entitled to vote
for the election of directors of the successor corporation after completion of
the transaction.

In addition, if a Change of Control constitutes a payment event with respect to
any Award which provides for the deferral of compensation and is subject to Code
Section 409A, the transaction or event described in clauses (i) – (v) above with
respect to such Award must also constitute a “change in control event,” as
defined in U.S. Treasury Regulation §1.409A-3(i)(5) to the extent required by
Code Section 409A.

 

2.7 “Circular” means the offering memorandum, consent solicitation statement and
management proxy circular issued by the Company dated February 23, 2011.

 

2.8 “Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

2.9 “Company” means Angiotech Pharmaceuticals, Inc. and its successors.

 

2.10 “Disability” means any disability with respect to a Participant which the
Board, in its sole discretion, considers likely to prevent permanently the
Participant from:

 

  (i) being employed or engaged by the Company, its Related Entities or another
employer, in a position the same as or similar to that in which he was last
employed or engaged by the Company or its Related Entities; or

 

  (ii) acting as a director or officer of the Company or its Related Entities;
or

 

  (iii) engaging in any substantial gainful activity by reason of any medically
determinable mental or physical impairment that can be expected to result in
death or which has lasted or can be expected to last a continual period of not
less than 12 months.

 

2.11 “DSU” means a deferred share unit which provides a Participant with a
right, upon satisfaction of the vesting and other conditions contained in this
Plan and the relevant Award Agreement (including, without limitation, the
occurrence of the Participant’s Separation from Service), to receive a Share in
accordance with the terms of this Plan and the Award Agreement.

 

2.12 “Effective Date” shall have the meaning set forth in Section 14.2.

 

2.13 “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, including rules thereunder and successor provisions and rules
thereto.

 

2.14

“Exercise Price” means the exercise price of a Stock Option or the base price of
a SAR, each of which shall not be less than 100 percent of the Fair Market Value
of a Share on the Grant Date, subject to adjustment pursuant to Section 12;
provided, that no “incentive stock option,” within the meaning of Section 422 of
the Code, may be granted to any

 

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Participant who, at the time such option is granted, owns directly, or
indirectly within the meaning of Section 424(d) of the Code, stock possessing
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or of any parent or subsidiary thereof, unless such
incentive stock option has an exercise price of at least one hundred ten percent
(110%) of the Fair Market Value on the Grant Date of such Stock Option.

 

2.15 “Expiry Date” means the seventh anniversary of the Grant Date of a Stock
Option or a SAR, unless:

 

  (i) such Award is earlier terminated as provided under the Plan or the
applicable Award Agreement; or

 

  (ii) a Blackout Period is in effect on the Expiry Date, in which case, subject
to any terms in the applicable Award Agreement the Expiry Date will be
automatically extended to the date which is 10 days after the end of any such
Blackout Period;

provided, that no “incentive stock option,” within the meaning of Section 422 of
the Code, may be granted to any Participant who, at the time such option is
granted, owns directly, or indirectly within the meaning of Section 424(d) of
the Code, stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of any parent or
subsidiary thereof, unless such incentive stock option cannot be exercised more
than five (5) years after the date it is granted.

 

2.16 “Fair Market Value” of a Share on any date shall be the closing sale price
per Share during normal trading hours on any securities exchange upon which the
Shares are listed (as determined by the Board on the Grant Date for any
particular Award, or, if the Shares are not then listed and posted for trading
on any securities exchange, the Fair Market Value of a Share shall be the fair
market value of a Share as determined in good faith by the Board in its sole
discretion.

 

2.17 “Grant Date” means the date specified in an Award Agreement as the date on
which an Award is granted, provided that the Grant Date shall not be a date
prior to the date the Board determines an Award shall be made and, unless
otherwise specified by the Board, the Grant Date shall be the date the Board
takes a valid corporate action granting the Award.

 

2.18 “Key Persons” means directors, officers and other employees of the Company
or of a Related Entity, and, subject to applicable law, consultants to the
Company or a Related Entity.

 

2.19 “Participant” means each of the Key Persons granted an Award pursuant to
this Plan.

 

2.20 “Qualified Member” means a member of the Board who is a “Non-Employee
Director” within the meaning of Rule 16b-3 and an “outside director” within the
meaning of U.S. Treasury Regulation 1.162-27(c) under Code Section 162(m).

 

2.21 “Qualifying Committee” shall have the meaning set forth in Section 3.2
below.

 

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2.22 “Related Entities” means those persons or entities that control or are
controlled by the Company or that are controlled by the same person that
controls the Company.

 

2.23 “Restricted Stock” means Shares granted to a Participant under Section 9
hereof that are subject to certain restrictions and to a risk of forfeiture.

 

2.24 “Retirement” means a Participant’s termination of service with the Company
and each of the Related Entities after the Company has received formal written
notice by the Participant that the Participant is terminating the service
relationship and the Participant is at least 60 years of age.

 

2.25 “RSU” means a restricted stock unit which provides a Participant with a
right, upon satisfaction of the vesting and other conditions contained in this
Plan and the relevant Award Agreement, to receive a Share in accordance with the
terms of this Plan and the Award Agreement.

 

2.26 “SAR” means a right, granted under this Plan, representing the right to
receive upon the exercise thereof a payment in Shares on the terms and
conditions and calculated in accordance with the terms of this Plan and the
Award Agreement.

 

2.27 “Separation from Service” means, (i) for Participants who are employees,
termination of employment with the Company and each of the Related Entities and
(ii) for Participants who are not employees, the cessation of services for the
Company and each of the Related Entities. For greater certainty, where employees
are terminated or other Participants cease providing services, the date of such
Separation from Service will be deemed to be the date which is the later of:
(a) the date on which actual notice of such termination is provided either by
the Company or the Participant; and (b) the effective date of such termination
or cessation, if any, which is specified in such notice. For greater certainty,
the date of Separation from Service shall be determined without regard to any
statutory, common law, civil law, or contractual notice periods or any
termination pay, severance pay, notice or benefits to which the Participant may
be entitled under statute, common law, civil law or contract.

 

2.28 “Shares” means the common shares of the Company, without par value, in the
capital of the Company as constituted on the Effective Date of this Plan;
provided that, in the event of any adjustment pursuant to Section 12, “Shares”
shall thereafter mean the shares or other property resulting from the events
giving rise to the adjustment.

 

2.29 “Stock Option” means a right, granted under this Plan, to purchase a Share
from treasury at the Exercise Price in accordance with the terms of this Plan
and the Award Agreement. Stock Options granted to Participants subject to U.S.
tax are intended to be “incentive stock options” (within the meaning of
Section 422 of the Code) only to the extent the Award Agreement indicates that
such Awards are intended to be incentive stock options, and only Key Persons who
are employees of the Company or a Related Entity will be eligible to receive
incentive stock options. Any Stock Option (or portion thereof) purported to be
an incentive stock option, which, for any reason, fails to meet the requirements
of Section 422 of the Code shall be considered a non-qualified stock option.

 

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2.30 “Vested” means that (i) a Stock Option or SAR has become exercisable in
respect of a number of Shares thereunder and (ii) the restrictions, if any,
applicable to an RSU, DSU or Restricted Stock have lapsed, in each case,
pursuant to the terms of the Plan and the applicable Award Agreement.

 

2.31 “Voting Securities” means Shares and any other shares entitled to vote for
the election of directors of the Company.

 

3. ADMINISTRATION OF THE PLAN

 

3.1 The Board shall, without limitation, have full and final authority in its
discretion, but subject to the express provisions of the Plan and any Award
Agreement, to interpret the Plan and each Award Agreement, to prescribe, amend
and rescind rules and regulations relating to the Plan and the Award Agreements,
to make all other determinations deemed necessary or advisable in respect of the
Plan and the Award Agreements and to determine the terms and conditions of each
Award. The interpretation and construction of any provision of the Plan or any
Award Agreement by the Board shall be final, binding and conclusive on all
persons. Administration of the Plan shall be the responsibility of the Board and
all costs in respect thereof shall be paid by the Company. The Board may
delegate any or all of its authority hereunder to a committee of the Board and
references to the Board under this Plan shall be deemed to include such
committee.

 

3.2 At any time that a member of the Board is not a Qualified Member, (i) if the
Company is then subject to Section 162(m) of the Code, any action of the Board
relating to an Award intended by the Board to qualify as “performance-based
compensation” within the meaning of Section 162(m) of the Code shall be taken by
a subcommittee, designated by the Board, composed solely of two or more
Qualified Members (a “Qualifying Committee”); and (ii) if the Company is then
subject to Section 16 of the Exchange Act, any action relating to an Award
granted or to be granted to a Participant who is then subject to Section 16 of
the Exchange Act in respect of the Company shall be taken either by such a
Qualifying Committee, or by the Board but with each such member who is not a
Qualified Member abstaining or recusing himself from such action; provided, that
upon such abstention or recusal, the Board remains composed of two or more
Qualified Members. Any action authorized by such a Qualifying Committee or by
the Board upon the abstention or recusal of such non-Qualified Member(s) shall
be deemed to be the action of the Board for purposes of the Plan. The express
grant of any specific power to the Board, and the taking of any action by the
Board, shall not be construed as limiting any power or authority of the Board.

 

4. TERM OF AND SHARES SUBJECT TO THE PLAN

 

4.1

Term. Unless sooner terminated by the Board, the Plan shall terminate the day
before the 10th anniversary of the Effective Date. All Awards made under the
Plan prior to its termination shall remain in effect until such Awards have been
satisfied or terminated in accordance with the terms and provisions of the Plan
and the applicable Award Agreements.

 

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4.2 Aggregate Plan Limits. Subject to adjustment as provided below, the maximum
number of Shares with respect to which Awards may be granted under the Plan
shall be 2,130,150.

Notwithstanding any provision in the Plan to the contrary, the maximum number of
Shares which may be issuable pursuant to Stock Options or SARs granted under the
Plan to a participant in one calendar year shall be 700,000, subject to
adjustment pursuant to Section 12. The maximum number of Shares which may be
issuable pursuant to Awards (including Awards intended to qualify as “incentive
stock options” within the meaning of Section 422 of the Code) granted under the
Plan shall be 2,130,150, subject to adjustment pursuant to Section 12.

 

4.3 Computation of Available Shares. For purposes of computing the total number
of Shares available for grant under the Plan, (i) Shares subject to any Award
(or any portion thereof) that has expired or is forfeited (including the net
number of Shares subject to a Stock Option upon exercise of a SAR), surrendered,
cancelled or otherwise terminated prior to the issuance or transfer of such
Shares and (ii) Shares subject to an Award (or any portion thereof) that is
settled in cash in lieu of settlement in Shares, shall again be available for
grant under the Plan. Notwithstanding the foregoing, any Shares subject to an
Award that are withheld or otherwise not issued upon settlement of any Award in
order to satisfy the Participant’s withholding obligations shall reduce the
number of Shares available for grant under the Plan under the limitations set
forth in this Section 4.

 

4.4 Source of Shares. Shares delivered to Participants in connection with the
exercise or settlement of Awards shall be Shares issued from authorized but
unissued Shares. From time to time, the Board shall reserve for issuance such
number of Shares as may be necessary to permit the Company to meet its
obligations under the Plan.

 

5. TERMS OF AWARDS IN GENERAL

 

5.1 Award Agreements. Each Award shall be confirmed by the execution of an Award
Agreement. The execution of an Award Agreement shall constitute conclusive
evidence that it has been completed in compliance with this Plan.

 

5.2 Vesting Conditions. The Board may determine and impose terms upon which each
Award shall become Vested. For greater certainty, the Company may at any time
after an Award has been granted, by resolution of the Board, accelerate the
terms of Vesting in whole or in part, subject to the requirements of applicable
law, including without limitation, the requirements of Section 409A of the Code
and the Treasury Regulations thereunder.

 

5.3 Exclusion from Severance Allowance, Retirement Allowance or Termination
Settlement. If the Participant retires, resigns or otherwise incurs a Separation
from Service from the Company or any Related Entity, the loss or limitation, if
any, pursuant to the Award Agreement with respect to the right to purchase
Shares which were not Vested at that time or which, if Vested, were cancelled,
shall not give rise to any right to damages and shall not be included in the
calculation of nor form any part of any severance allowance, retiring allowance
or termination settlement of any kind whatsoever in respect of such Participant.

 

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5.4 Deferral of Payment or Other Settlement of Vested Awards. To the extent that
any Award (or portion thereof) granted to a Participant who is subject to
taxation under the Code is determined to constitute “deferred compensation”
within the meaning of Section 409A of the Code, the terms of any such Award (or
portion thereof) permitting the deferral of payment or other settlement thereof
or any amendment to an Award (with the consent of a Participant) to provide for
settlement in cash in lieu of Shares shall be subject to such requirements and
shall be administered in such manner as the Board may determine to be necessary
or appropriate to comply with the applicable provisions of Code Section 409A (or
any successor provision) as in effect from time to time.

 

5.5 No Financial Assistance. Neither the Company nor any Related Entity will
lend any money or provide any financial assistance to Participants who are
officers or directors of the Company to assist them to exercise their Awards;
provided, however, nothing in this Section 5.5 is intended to limit the ability
of a Participant to use Shares otherwise deliverable upon settlement of any
Award to satisfy any applicable exercise price or withholding tax obligation.
For greater certainty, a Participant whose Award is subject to tax under the
Income Tax Act (Canada) may not use previously issued Shares to satisfy any
applicable exercise price or withholding tax obligation.

 

6. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

 

6.1 Grant of Stock Options and SARs. The Board may grant Awards of Stock Options
and SARs in such amounts and subject to such Award Agreement terms and
conditions as the Board shall determine in its discretion, subject to the
provisions of the Plan. Grants of SARs may be made in tandem with grants of
Stock Options, in which case, to the extent a Participant exercises a Stock
Option or the tandem SAR, a proportionate amount of the related Stock Option or
tandem SAR shall terminate and be of no further force and effect.

 

6.2 Exercise of Stock Options and SARs. Except as otherwise provided in an Award
Agreement, Stock Options and SARs may only be exercised (in whole or in part) to
the extent Vested at any time during the period up to 5:00 p.m. Pacific Standard
Time on the Expiry Date and shall not be exercisable thereafter.

 

6.3 Manner of Exercise – Stock Options. Subject to Section 6.2 above, to the
extent Vested, Stock Options shall be exercisable at the election of the
Participant by delivering to the Company a notice specifying the number of
Shares in respect of which the Stock Option are exercised. Such notice shall be
accompanied by a cheque payable to the Company (or payment by such other method
as may be acceptable to the Company) representing payment of both: (a) the
Exercise Price for the Stock Option being exercised; and (b) any amounts
required by the Company to be withheld in connection with such exercise as
contemplated by Section 14.3.

 

6.4

Manner of Exercise – SARs. Subject to Section 6.2 above, to the extent Vested,
SARs shall be exercisable at the election of the Participant by delivering to
the Company a

 

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notice specifying the number of Shares in respect of which the SARs are
exercised. Such notice shall be accompanied by a cheque payable to the Company
(or payment by such other method as may be acceptable to the Company)
representing payment of any amounts required by the Company to be withheld in
connection with such exercise as contemplated by Section 14.3.

 

6.5 Issuance of Shares – Stock Options. Upon receipt of the notice and funds
contemplated in Section 6.3, the Company will issue to the Participant one fully
paid and non-assessable Share in respect of each Share underlying the Stock
Option so exercised.

 

6.6 Issuance of Shares – SARs. Upon receipt of the notice and funds contemplated
in Section 6.4, the Company shall issue a number of Shares having a value equal
to, in respect of each SAR, the difference between the Exercise Price of such
SAR and the Fair Market Value of a Share on the exercise date, where each such
Share to be issued is deemed to have a value equal to the Fair Market Value of
the Shares on the exercise date. For greater certainty, no fractional Shares
will be issuable and, in the event fractional Shares would otherwise be
issuable, the number of Shares issuable will be rounded down to the next lower
whole number of Shares and the Participant will be entitled to receive a cash
payment equal to the value of such fractional Share.

 

7. GRANTS OF RESTRICTED STOCK UNITS

 

7.1 Grant of RSUs. The Board may grant RSUs in such amounts and subject to such
Award Agreement terms and conditions as the Board shall determine in its
discretion, subject to the provisions of the Plan.

 

7.2 Vesting of RSUs. RSUs will vest in accordance with the terms and conditions
provided in the applicable Award Agreement. Subject to the applicable Award
Agreement, the vesting conditions for RSUs may be based on the passage of time,
attainment of specified performance goals or any other vesting condition as
determined by the Board in its discretion.

 

7.3 Issuance of Shares. The applicable Participant may elect the settlement date
applicable to each grant of RSUs in accordance with Section 7.2 hereof and
applicable law, including without limitation, the requirements of Section 409A
of the Code and the Treasury Regulations thereunder. Such settlement date must
be on or later than the date that such RSU Award shall become Vested. On the
settlement date:

 

  (a) the Participant shall deliver a cheque payable to the Company (or payment
by such other method as may be acceptable to the Company) representing payment
of any amounts required by the Company to be withheld in connection with such
settlement as contemplated by Section 14.3; and

 

  (b) upon receipt of the payment referred to in sub-paragraph (a), the Company
shall issue to the Participant one fully paid and non-assessable Share in
respect of each Vested RSU being submitted on such date.

 

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8. GRANTS OF DEFERRED SHARE UNITS

 

8.1 Grant of DSUs. The Board may grant DSU Awards in such amounts and subject to
such Award Agreement terms and conditions as the Board shall determine in its
discretion, subject to the provisions of the Plan; provided, however, to the
extent required by applicable law (including, but not limited to, Section 409A
of the Code), DSUs will only be granted to a Key Person who has elected by
written notice to receive compensation for a given calendar year in the form of
DSUs prior to the start of such calendar year or such later date as permitted in
accordance with applicable law, including, but not limited to, Section 409A of
the Code and the Treasury Regulations thereunder.

 

8.2 Issuance of Shares. DSUs shall be settled at the times set forth in
Section 11 below, unless otherwise provided in the applicable Award Agreement;
provided, however that in no event shall a DSU Award be settled prior to the
date of the applicable Participant’s Separation from Service. On the settlement
date for any DSU:

 

  (a) the Participant shall deliver a cheque payable to the Company (or payment
by such other method as may be acceptable to the Company) representing payment
of any amounts required by the Company to be withheld in connection with such
settlement as contemplated by Section 14.3; and

 

  (b) upon receipt of the payment referred to in sub-paragraph (a), the Company
shall issue to the Participant one fully paid and non-assessable Share in
respect of each Vested DSU being paid on such date.

 

9. RESTRICTED STOCK

 

9.1 Restricted Stock granted hereunder shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate. The terms and
conditions of each Restricted Stock grant shall be evidenced by an Award
Agreement, which agreements need not be identical. Subject to the restrictions
set forth in Section 9.2, except as otherwise set forth in the applicable Award
Agreement, the Participant shall generally have the rights and privileges of a
shareholder as to such Restricted Stock, including the right to vote such
Restricted Stock. Unless otherwise set forth in a Participant’s Award Agreement,
cash dividends and stock dividends, if any, with respect to the Restricted Stock
shall be withheld by the Company for the Participant’s account, and shall be
subject to forfeiture to the same degree as the shares of Restricted Stock to
which such dividends relate. Except as otherwise determined by the Board, no
interest will accrue or be paid on the amount of any cash dividends withheld.

 

9.2 In addition to any other restrictions set forth in a Participant’s Award
Agreement, until such time that the Restricted Stock has vested pursuant to the
terms of the Award Agreement, which vesting the Board may in its sole discretion
accelerate at any time, the Participant shall not be permitted to sell,
transfer, pledge, or otherwise encumber the Restricted Stock. Notwithstanding
anything contained herein to the contrary, the Board shall have the authority to
remove any or all of the restrictions on the Restricted Stock whenever it may
determine that, by reason of changes in applicable laws or other changes in
circumstances arising after the date of the Restricted Stock Award, such action
is appropriate.

 

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9.3 Except as may otherwise be provided in the applicable Award Agreement, in
the event of a Participant’s Separation from Service with the Company or any of
the Related Entities for any reason prior to the time that such Participant’s
Restricted Stock has vested, (i) all vesting with respect to such Participant’s
Restricted Stock shall cease, and (ii) as soon as practicable following such
Separation from Service, the Company shall repurchase from the Participant, and
the Participant shall sell, all of such Participant’s unvested shares of
Restricted Stock at a purchase price equal to the original purchase price paid
for the Restricted Stock, or if the original purchase price is equal to $0, such
unvested shares of Restricted Stock shall be forfeited by the Participant to the
Company for no consideration as of the date of such Separation from Service.

 

10. DIVIDEND EQUIVALENT RIGHTS

 

10.1 The Board may in its discretion include in the Award Agreement applicable
to an RSU or a DSU a dividend equivalent right entitling the Participant to
receive amounts equal to the ordinary cash dividends that would be paid, during
the time such Award is outstanding and unexercised, on the Shares covered by
such Award if such Shares were then outstanding. In the event such a provision
is included in an Award Agreement, the Board shall determine whether such
payments shall be made in cash, in Shares or in another form, whether they shall
be conditioned upon the exercise or vesting of the Award to which they relate,
the time or times at which they shall be made, and such other terms and
conditions as the Board shall deem appropriate.

 

11. SEPARATION FROM SERVICE; CHANGE OF CONTROL

 

11.1 Separation from Service

Except as otherwise provided in an applicable Award Agreement, upon a
Participant’s Separation from Service, such Participant’s Awards shall be
treated as follows:

 

  (a) Separation from Service Due to Death, Disability or Retirement. If the
Participant’s Separation from Service occurs as a result of his or her death,
Disability or Retirement, each of his or her Awards of (i) Stock Options and
SARs, to the extent then vested, shall remain exercisable until the first
anniversary of such Separation from Service; provided, however, that if there is
a Blackout Period, then the time that the Award then held by the Participant may
be exercised shall be extended to the earlier of (y) 10 days after the end of
any such Blackout Period and (z) the Expiry Date, and (ii) RSUs, DSUs or
Restricted Stock, to the extent vested but not paid as of the date of Separation
from Service, shall be paid promptly thereafter, unless such accelerated payment
would cause the Participant to incur an additional tax or penalty under
Section 409A of the Code. To the extent an Award is not vested as of the date of
Separation from Service, such Award shall be immediately forfeited and shall be
of no further force and effect.

 

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  (b) Separation from Service Due to Termination for Cause or Due to Voluntary
Termination by Participant. If the Participant’s Separation from Service occurs
as a result of his or her termination for Cause or due to the Participant’s
voluntary termination of employment, any outstanding Awards held by such
Participant on the date of such Separation from Service shall be cancelled as of
such date and shall be of no further force and effect.

 

  (c) Separation from Service Other than Due to Death or Disability or
Termination For Cause. If the Participant’s Separation from Service by the
Company occurs for a reason other than due to death, Disability, Retirement,
voluntary termination or termination by the Company for Cause, all then
outstanding (i) Stock Options and SARs, to the extent then vested, shall remain
exercisable until 90 days following Separation from Service; provided, however,
that if there is a Blackout Period, then the time that the Award then held by
the Participant may be exercised shall be extended to the earlier of (y) 10 days
after the end of any such Blackout Period and (z) the Expiry Date, and
(ii) RSUs, DSUs or Restricted Stock, to the extent vested but not paid as of the
date of Separation from Service, shall be paid promptly thereafter, unless such
accelerated payment would cause the Participant to incur an additional tax or
penalty under Section 409A of the Code. To the extent an Award is not vested as
of the date of Separation from Service, such Award shall be immediately
forfeited and shall be of no further force and effect.

Notwithstanding the foregoing, in no event shall any action be taken under this
Section 11.1 which shall cause an award to fail to comply with Section 409A of
the Code or the Treasury Regulations thereunder, to the extent applicable to
such Award.

 

11.2 Effect of a Change of Control

Subject to the provisions of any applicable Award Agreement or any other
employment, severance or change in control agreement or arrangement applicable
to a Participant, in the event of a Change in Control or any transaction or
event described in Section 12.1 or any unusual or nonrecurring transactions or
events affecting the Company, any affiliate of the Company, or the financial
statements of the Company or any affiliate, or of changes in applicable laws,
regulations or accounting principles, the Board, on such terms and conditions as
it deems appropriate, either by the terms of the Award or by action taken prior
to the occurrence of such transaction or event, is hereby authorized to take any
one or more of the following actions in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available under the
Plan or with respect to any Award under the Plan, to facilitate such
transactions or events or to give effect to such changes in laws, regulations or
principles:

 

  (a) To provide that such Award be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the successor or
survivor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices;

 

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  (b) To make adjustments in the number and type of Shares (or other securities
or property) subject to outstanding Awards, and in the number and kind of
outstanding Restricted Stock and/or in the terms and conditions of (including
the grant or exercise price), and the criteria included in, outstanding options,
rights and awards and options, rights and awards which may be granted in the
future;

 

  (c) To provide that such Award shall be exercisable or payable or fully vested
with respect to all shares covered thereby, notwithstanding anything to the
contrary in the Plan or the applicable Award Agreement; and

 

  (d) To provide that the Award cannot vest, be exercised or become payable
after such event.

 

12. ADJUSTMENT OF AWARD PRICE AND NUMBER OF SHARES SUBJECT TO AWARDS

 

12.1 Adjustments. In the event of any stock dividend, stock split, combination
or exchange of shares, merger, consolidation, spin-off, recapitalization or
other distribution (other than normal cash dividends) of Company assets to
shareholders, or any other change affecting the Shares or the Share price, the
Board shall make proportionate adjustments to reflect such change with respect
to (a) the aggregate number and kind of shares that may be issued under the Plan
(including, but not limited to, adjustments of the limitations in Section 4.2);
(b) the terms and conditions of any outstanding Awards (including, without
limitation, any applicable performance targets or criteria with respect
thereto); and (c) the grant or exercise price per share for any outstanding
Awards under the Plan.

 

13. REPURCHASE RIGHTS.

 

13.1 If, prior to the date the Shares are listed on any stock exchange, a
Participant undergoes a Separation from Service for any reason, then at any time
from and after the date of such Separation from Service through the date the
Shares are listed on any stock exchange, the Company shall have the right (but
not the obligation) to purchase, or designate some other person or entity to
purchase in the same manner and subject to the same terms and limitations, the
Shares received pursuant to any Awards granted hereunder at a per-share price
equal to the Fair Market Value per Share on the date of repurchase (the
“Repurchase Right”). The Repurchase Right shall be exercisable upon written
notice to a Participant indicating the name of the purchaser, the number of
Shares to be repurchased, the date on which the purchase is to be effected, such
date to be not more than thirty (30) days after the date of such notice;
provided, however, that except in extraordinary circumstances, as determined by
the Committee, the Repurchase Right shall not be exercised with respect to
Shares acquired pursuant to an Award prior to (i) the six (6) month anniversary
of the date an Award not subject to exercise vests, or (ii) the six (6) month
anniversary of the date an Award that is subject to exercise is exercised. To
the extent not otherwise held in book entry form by the Company, the
certificates representing the Shares to be purchased shall be delivered to the
Company prior to the close of business on the date specified for the purchase.

 

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13.2 In connection with any purchase of Shares pursuant to this Section 13, the
purchaser will be entitled to receive customary representations and warranties
from the Participant regarding the purchase of such Shares as may be reasonably
requested by the purchaser, including but not limited to the representation that
the Participant has good and marketable title to such Shares to be transferred
free and clear of all liens, claims, and other encumbrances.

 

14. MISCELLANEOUS

 

14.1 Right to Employment. Neither this Plan nor any of the provisions hereof
shall confer upon any Participant any right with respect to employment,
engagement or appointment or continued employment, engagement or appointment
with the Company or any Related Entity or interfere in any way with the right of
the Company or any Related Entity to terminate such employment, engagement or
appointment.

 

14.2 Necessary Approvals. The Plan shall be effective immediately after to the
earliest of (i) the consummation of the Exchange Offer (as defined in the
Circular); (ii) the implementation of the CBCA Plan (as defined in the
Circular); and (iii) the implementation of the CCAA Plan (as defined in the
Circular) (the “Effective Date”). The obligation of the Company to deliver
Shares pursuant to Awards under the Plan is subject to the approval of any
governmental authority having jurisdiction and to the terms and conditions of
applicable securities laws.

 

14.3 Withholdings. As a condition of and prior to participation in the Plan,
each Participant authorizes the Company to withhold from any amount otherwise
payable to him or her by the Company any amounts required by any taxing
authority to be withheld for taxes of any kind as a consequence of his or her
participation in the Plan. The Company may require a Participant, as a condition
to exercise or settlement of an Award to pay or reimburse the Company for any
such withholding or other required deduction amounts related to the exercise or
settlement of such Award, may withhold such amounts from any remuneration or
other amount payable by the Company to the Participant or enter into other
suitable arrangements for the satisfaction of such withholding or other required
deductions. For a Participant other than a Participant whose Award is subject to
tax under the Income Tax Act (Canada), the Company shall also have the right in
its discretion to satisfy any such withholding or other required deduction
amounts by cancelling a portion of the Award, or retaining any amount payable,
which would otherwise be issued or delivered, provided or paid to the
Participant under the Plan. Notwithstanding anything contained herein to the
contrary, prior to the date that the Shares are listed on any securities
exchange, the Participant shall be permitted to satisfy the withholding
obligations described herein by electing prior to exercise or settlement of an
Award to reduce the number of Shares otherwise deliverable upon exercise or
settlement, as applicable, of the Award by a number of Shares with an aggregate
value (based on each Share being valued at the Fair Market Value on the date the
Shares are otherwise deliverable to the Participant) equal to the amount of such
withholding obligation.

 

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14.4 Amendments to the Plan or Awards.

 

  (a) The Board may amend the Plan at any time and from time to time; provided,
however, that the Board shall not, without shareholder approval, make any
amendment to the Plan that requires shareholder approval pursuant to applicable
law or the applicable rules of each securities exchange on which the Shares are
listed.

 

  (b) The Board or the Committee may amend the terms of any one or more Awards
at any time and from time to time; provided, however, that the Participant’s
rights under any Award shall not be materially impaired by any such amendment
unless the Participant consents in writing (it being understood that no action
taken by the Board or the Committee that is expressly permitted under the Plan,
including, without limitation, any actions described in Sections 11.2 or 12
hereof, shall constitute an amendment of an Award for such purpose).

 

  (c) Notwithstanding subsection (a) or (b) above, shareholder approval will be
required for amendments that increase the number of Shares issuable under the
Plan, except increases by operation of Section 12 of the Plan.

 

  (d) Notwithstanding subsection (a) or (b) above, or any other provision of the
Plan, repricing of Awards shall not be permitted without shareholder approval.
For this purpose, a “repricing” means any of the following (or any other action
that has the same effect as any of the following): (i) changing the terms of an
Award to lower its exercise or base price (other than on account of capital
adjustments resulting from share splits, etc., as described in Section 12
hereof); (ii) any other action that is treated as “repricing” under generally
accepted accounting principles; and (iii) repurchasing for cash or canceling an
Award in exchange for another Award at a time when its exercise or base price is
greater than the Fair Market Value of the underlying Stock, unless the
cancellation and exchange occurs in connection with an event set forth in
Section 11.2 hereof.

 

14.5 Form of Notice. Any notice given to the Company shall be in writing, signed
by the Participant and delivered to the Secretary of the Company.

 

14.6 No Representation or Warranty. The Company makes no representation or
warranty as to the future market value of any Shares issued in accordance with
the provisions of the Plan.

 

14.7 Compliance with Applicable Law. If any provision of the Plan or any Award
Agreement contravenes any law or any order, policy, by-law or regulation of any
regulatory body or any securities exchange upon which the Shares are listed, if
applicable, having authority over the Company or the Plan, then such provision
shall be deemed to be amended to the extent required to bring such provision
into compliance therewith.

 

14.8 No Assignment or Transfer. No Participant may assign or transfer any of his
or her rights or Awards under the Plan, except for estate planning purposes.

 

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14.9 Rights of Participants. A Participant shall have no rights whatsoever as a
shareholder of the Company in respect of any Shares subject to an Award
(including, without limitation, voting rights or any right to receive dividends,
warrants or rights under any rights offering) unless, until and only to the
extent the relevant Awards are duly exercised and Shares are issued.

 

14.10 Conflict. In the event of any conflict between the provisions of this Plan
and an Award Agreement, the provisions of this Plan shall govern. In the event
of any conflict between or among the provisions of this Plan, an Award Agreement
and an employment agreement between the Company or one of its subsidiaries and a
Participant, the provisions of such employment agreement shall govern.

 

14.11 Participant Information. Each Participant shall provide the Company with
all information (including personal information) required by the Company in
order to administer to the Plan. Each Participant acknowledges that information
required by the Company in order to administer the Plan may be disclosed to any
custodian appointed in respect of the Plan and other third parties, and may be
disclosed to such persons located in jurisdictions other than the Participant’s
jurisdiction of residence, in connection with the administration of the Plan.
Each Participant consents to such disclosure and authorizes the Company to make
such disclosure on the Participant’s behalf.

 

14.12 Governing Law. The Plan and each Award Agreement issued pursuant to the
Plan shall be governed by the laws of the Province of British Columbia and the
federal laws of Canada applicable therein.

 

14.13 Code Section 409A. Notwithstanding anything herein or in any Award
Agreement to the contrary, in the event any Award is determined to be “deferred
compensation” (within the meaning of Section 409A of the Code and the applicable
regulations and guidance promulgated thereunder) and the applicable Participant
is deemed to be a “specified employee” (within the meaning of Section 409A of
the Code) as of the date of such Participant’s Separation from Service, then
such Award shall be settled or paid on the first business day of the seventh
calendar month following the date of such Separation from Service. For purposes
of this Plan, to the extent an Award is determined to be deferred compensation
within the meaning of Section 409A, such Award shall only be paid or settled
upon a Separation from Service to the extent such Separation from Service
constitutes a “separation from service” within the meaning of Section 409A of
the Code.

*    *    *

(May 12, 2011)

 

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