Exhibit 10.7

ENCANA CORPORATION

EMPLOYEE STOCK OPTION PLAN

[EXECUTIVE] 20● STOCK OPTION GRANT AGREEMENT

 

Participant:    ###PARTICIPANT_NAME### Grant Name:    ###GRANT_NAME### Grant
Date:    ###GRANT_DATE### Expiry Date:    ###EXPIRY_DATE###, subject to the
terms and conditions contained herein Grant Price:    CDN###GRANT_PRICE### Total
Options with TSARs:    ###TOTAL_AWARDS###

THIS OPTION AND TANDEM STOCK APPRECIATION RIGHTS AGREEMENT including Schedules
“A” and “B” hereto (collectively, this “Agreement”) is made between Encana
Corporation (the “Corporation”) and the Participant listed above (the
“Participant”), an eligible employee of the Corporation or one of its Related
Corporations.

WHEREAS the Corporation has established an Employee Stock Option Plan (the
“Plan”) for employees of the Corporation and its Related Corporations
(collectively, the “Affiliated Entities” or, individually, an “Affiliated
Entity”);

AND WHEREAS the Board of Directors of the Corporation (the “Board”) has approved
the grant to the Participant under the Plan of an option to purchase the number
of Shares set out above (collectively, the “Options” and individually, an
“Option”), upon and subject to the terms and conditions of the Plan and this
Agreement;

AND WHEREAS the Plan was amended effective February 23, 2015 (the “Effective
Date”) and such amendments, as required, approved by shareholders at the
Corporation’s May 12, 2015 Annual Meeting of Shareholders, to provide for
(unless otherwise specified by the Committee) a new Option Period not to exceed
seven (7) years from the Date of Grant of the Option (the “Extended Term”), in
respect of each Option granted on or following the Effective Date;

AND WHEREAS with the Extended Term does not apply to or amend the Term or Expiry
Date of an Option granted to the Participant prior to the Effective Date, the
Option Period of which shall remain a period not exceeding five (5) years from
Date of Grant of such Option;

NOW THEREFORE in consideration of other good and valuable consideration and the
sum of one dollar ($1.00) now paid to the Corporation (the receipt whereof by
the Corporation is hereby acknowledged) it is agreed by and between the parties
hereto as follows:

 

1. DEFINITIONS

In this Agreement, capitalized terms shall have the meanings set forth in
Schedule “A” hereto unless specified.

 

2. GRANT OF OPTIONS AND TANDEM STOCK APPRECIATION RIGHTS

Subject to the terms and conditions of the Plan and this Agreement, the
Corporation hereby grants the Options to the Participant. Each Option granted,
once vested hereunder, shall entitle the Participant to acquire one Share,
subject to and in accordance with the terms and conditions of the Plan and this

 

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Agreement. Each Option granted hereunder shall have associated with it a Tandem
Stock Appreciation Right (“TSAR”). Except as otherwise provided in the Plan or
this Agreement, each associated TSAR shall be subject to the same terms and
conditions as the Option to which it relates.

 

3. EVIDENCE OF GRANT AND ACKNOWLEDGEMENT

This Agreement shall evidence the grant by the Corporation to the Participant of
the Options effective as of the Grant Date.

The Participant acknowledges that the Extended Term applies only to an Option or
Options granted on or following the Effective Date and shall not apply to an
Option or Options granted prior to such date.

The Participant further acknowledges nothing in the Plan or this Agreement shall
be construed to require the Corporation to grant to the Participant an
additional option or options beyond the Options granted hereunder. The grant of
an additional option or options to the Participant by the Corporation shall, in
each case, constitute a new and separate agreement between the Participant and
the Corporation in respect of same.

 

4. CLASSIFICATION OF OPTIONS

The Options granted to the Participant hereunder are classified as “Time-Based
Options” and shall hereinafter be referred to as “Time-Based Options”.

 

5. VESTING OF TIME-BASED OPTIONS

 

(a) Subject to Section 5(b) and Sections 6 to 11 hereof, Time-Based Options
shall become Vested Options as follows:

 

  (i) 30 percent on the first Anniversary Date;

 

  (ii) an additional 30 percent on the second Anniversary Date; and

 

  (iii) an additional 40 percent on the third Anniversary Date.

 

(b) The number of Time-Based Options that become Vested Options under Section
5(a) shall be determined by rounding the result up to the nearest whole number
of Time-Based Options, if necessary, to an aggregate maximum of the total number
of Time-Based Options granted under this Agreement. No fractional Time-Based
Options shall become Vested Options. No cash or other compensation shall be paid
to the Participant at any time in lieu thereof any fractional Time-Based
Options.

 

(c) Subject to Sections 3, 6 to 11, the Participant shall be entitled to
exercise or surrender all or any number of the Vested Options, in accordance
with Section 13, during the period from the Vesting Date of such Vested Option
pursuant to Section 5(a) to the Expiry Date, or such earlier termination date as
provided herein.

 

(d)

As an alternative to the exercise of a Vested Option, the Participant may
surrender any Vested Option as to an associated TSAR in accordance with
Section 13 hereof. Upon surrendering to the Corporation the Vested Options to
purchase a specified number of Shares, the Participant shall receive a cash
payment equal to the Appreciated Value multiplied by the number of Vested
Options surrendered, less required applicable statutory and other withholdings.
Thereafter the number of Vested Options so surrendered with respect to such
specified number

 

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  of Shares will be cancelled and terminated by the Corporation and the
Participant shall have no further right, title or interest in such surrendered
Vested Options or the underlying Shares.

 

6. TERMINATION OF EMPLOYMENT

 

(a) Upon a Termination of Employment, the Participant shall be entitled to
exercise or surrender any Vested Options during the Termination Exercise Period,
but only to the extent such Vested Options have become Vested Options pursuant
to Section 5(a) on or prior to the Date Employment Ceases.

 

(b) Notwithstanding Section 5(a), Time-Based Options which do not become Vested
Options on or prior to the Date Employment Ceases shall not thereafter become
Vested Options.

 

7. DEATH OR RETIREMENT OF PARTICIPANT

 

(a) In the event the Participant ceases to be an employee of the Corporation or
an Affiliated Entity by reason of the Participant’s death or Retirement on a
date prior to the date he or she reaches age 60:

 

  (i) the Participant shall be entitled to exercise or surrender any Vested
Options during the Death or Retirement Exercise Period, but only to the extent
they have become Vested Options pursuant to Section 5(a) on or prior to the date
of such death or Date of Retirement, as applicable; and

 

  (ii) notwithstanding Section 5(a), Time-Based Options which do not become
Vested Options on or prior to the date of such death or Date of Retirement, as
applicable, shall not thereafter become Vested Options.

 

(b) In the event the Participant ceases to be an employee of the Corporation or
an Affiliated Entity by reason of his or her death or Retirement on a date that
occurs on or after the date he or she reaches the age 60, but before age 65, his
or her Time-Based Options shall continue to become Vested Options in accordance
with the provisions of this Agreement including, without limitation, Section
5(a), and the Participant shall be entitled to exercise or surrender any such
Vested Options until the Expiry Date.

 

(c) In the event the Participant ceases to be an employee of the Corporation or
an Affiliated Entity by reason of his or her death or Retirement on a date that
occurs on or after the date he or she reaches age 65, the Participant shall be
entitled, during the period extending from the date of such death or Date of
Retirement, as applicable, to the Expiry Date, to exercise or surrender, in full
or in part, any unexercised Time-Based Option (irrespective of whether such
Time-Based Option has become a Vested Option in accordance with the provisions
of this Agreement including, without limitation Section 5(a)).

 

8. DISABILITY OF PARTICIPANT

In the event of the Participant’s Short-Term Disability or Long-Term Disability,
Time-Based Options shall continue to be and become Vested Options in accordance
with the provisions of this Agreement including, without limitation, Section
5(a) and the Participant shall be entitled to exercise or surrender any Vested
Options during the period of such Short-Term Disability or Long-Term Disability
and thereafter, unless there occurs a Termination of Employment during such
period, in which case the provisions of Section 6 shall apply, or unless the
Participant’s death or Retirement occurs during such period, in which case the
provisions of Section 7 shall apply.

 

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9. LEAVES OF ABSENCE AND FAMILY LEAVE

 

(a) In the event the Participant is on a Paid Leave of Absence or on Family
Leave, Time-Based Options shall continue to be and become Vested Options in
accordance with the provisions of this Agreement including, without limitation,
Section 5(a), and the Participant shall be entitled to exercise or surrender any
Vested Options during the period of such Paid Leave of Absence or Family Leave
and thereafter, unless there occurs a Termination of Employment during such
period, in which case the provisions of Section 6 shall apply, or unless the
Participant’s death or Retirement occurs during such period, in which case the
provisions of Section 7 shall apply.

 

(b) In the event the Participant is on an Unpaid Leave of Absence:

 

  (i) Time-Based Options shall continue to be and become Vested Options in
accordance with the provisions of Section 5(a) during the period commencing on
the Date of Unpaid Leave of Absence and ending on the 31st calendar day
following the Date of Unpaid Leave of Absence, unless there occurs a Termination
of Employment during such period, in which case the provisions of Section 6
shall apply, or unless the Participant’s death or Retirement occurs during such
period, in which case the provisions of Section 7 shall apply;

 

  (ii) notwithstanding Section 5(a), Time-Based Options which do not become
Vested Options on or prior to the 31st calendar day following the Date of Unpaid
Leave of Absence shall not become Vested Options during the balance of the
Participant’s Unpaid Leave of Absence, unless the Participant’s death or
Retirement occurs during such period, in which case the provisions of Section 7
shall apply;

 

  (iii) notwithstanding Section 5(a), Time-Based Options which do not become
Vested Options on or prior to the 31st calendar day following the Date of Unpaid
Leave of Absence shall become Vested Options on the Participant’s Return to
Service Date, but only to the extent that such Time-Based Options would have
become Vested Options pursuant to Section 5(a) on or prior to the Return to
Service Date if the period of Unpaid Leave of Absence had not occurred and
provided that the Return to Service Date occurs prior to the Expiry Date;

 

  (iv) in the event that the Participant’s Return to Service Date occurs prior
to the Expiry Date, any Time-Based Options which did not become Vested Options
on or prior to the 31st calendar day following the Date of Unpaid Leave of
Absence or pursuant to Section 9(b)(iii) shall become Vested Options solely in
accordance with the provisions of Section 5(a); and

 

  (v) from the Date of Unpaid Leave of Absence until the Expiry Date, the
Participant shall be entitled to exercise or surrender any Vested Options which
become Vested Options in accordance with the provisions hereof, unless there
occurs a Termination of Employment during such period of Unpaid Leave of
Absence, in which case the provisions of Section 6 shall apply, or unless the
Participant’s death or Retirement occurs during such period, in which case the
provisions of Section 7 shall apply.

 

10. FORFEITURE AND TERMINATION OF TIME-BASED OPTIONS

 

(a)

Unless previously forfeited in accordance with the provisions hereof, upon the
occurrence of a Termination of Employment, Time-Based Options which have not
become Vested Options on or prior to the Date Employment Ceases shall be
forfeited by the Participant and shall terminate on

 

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  the Date Employment Ceases and, thereafter, the Participant will have no
further right, title or interest in such Time-Based Options.

 

(b) Upon the occurrence of a Termination of Employment, Vested Options which are
not exercised or surrendered by the end of the Termination Exercise Period shall
be forfeited by the Participant and shall terminate on the last day of the
Termination Exercise Period and, thereafter, the Participant will have no
further right, title or interest in such Vested Options.

 

(c) Where the Participant ceases to be an employee of the Corporation or an
Affiliated Entity by reason of the Participant’s death or Retirement on a date
that is prior to the date that the Participant reaches age 60, unless previously
forfeited in accordance with the provisions hereof, Time-Based Options which
have not become Vested Options on or prior to the date of death or Date of
Retirement, as applicable, shall be forfeited by the Participant and shall
terminate on the date of death or Date of Retirement, as applicable, and,
thereafter, the Participant will have no further right, title or interest in
such Time-Based Options.

 

(d) Where the Participant ceases to be an employee of the Corporation or an
Affiliated Entity by reason of the Participant’s death or Retirement on a date
that is prior to the date that the Participant reaches age 60, Vested Options
which are not exercised or surrendered by the end of the Death or Retirement
Exercise Period shall be forfeited by the Participant and shall terminate on the
last day of the Death or Retirement Exercise Period and, thereafter, the
Participant will have no further right, title or interest in such Vested
Options.

 

(e) On the Expiry Date, all Time-Based Options which have not been exercised or
surrendered or otherwise terminated pursuant to the provisions hereof shall
expire and be of no further force or effect whatsoever.

 

(f) After the occurrence of any of the events in Sections 10(a) – (e), this
Agreement shall terminate and be of no further force or effect whatsoever with
respect to those Time-Based Options which have been forfeited and terminated or
have expired and the Participant shall have no cause of action nor make any
claim against the Corporation or any Affiliated Entity for damages or for loss
of opportunity arising from the forfeiture and termination or expiry of such
Time-Based Options or the termination of this Agreement insofar as it relates to
such Time-Based Options pursuant to this Section 10.

 

11. EARLY EXERCISE AND ACCELERATED VESTING

 

(a) Notwithstanding any other provision of this Agreement, but subject to
Section 11(b), the Committee or the Board may pass a resolution which
accelerates the vesting of a Time-Based Option and which permits the Participant
to exercise or surrender in full or in part any unexercised Time-Based Option,
whether or not the Time-Based Option has otherwise become a Vested Option, at
such time or times and/or in such manner following the passing of such
resolution as is specified in the resolution, which resolution may be passed for
any reason which, in the sole opinion of the Committee or the Board, warrants
altering the provisions pursuant to which a Time-Based Option vests or is
exercisable or can be surrendered upon the occurrence of a Change in Control,
including a Take-Over Bid which would, if successful, result in a Change in
Control.

 

(b)    (i)    Notwithstanding any other provision of this Agreement but subject
to Section 11(b)(ii), upon the occurrence of a Change in Control, the
Participant shall be entitled, on the date of the Change in Control, to exercise
or surrender in full or in part any unexercised Time-Based Option (irrespective
of whether such Time-Based Option has become a Vested Option in accordance with
Section 5(a)) until the Expiry Date.

 

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  (ii) If a “take-over bid” (within the meaning of applicable securities
legislation) made by any person for the voting securities of the Corporation (a
“Take-over Bid”) would, if successful, result in a Change in Control, then:

 

  (A) the Corporation will promptly notify the Participant of the Take-over Bid
and the Participant’s rights under this Section 11(b);

 

  (B) vesting of all Time-Based Options that have not yet become Vested Options
pursuant to Section 5(a) at the time a formal Take-over Bid offer has been made
will be accelerated so as to be and become Vested Options (irrespective of
whether such Time-Based Options have become Vested Options in accordance with
Section 5(a) on the date the formal Take-over Bid offer is made;

 

  (C) the Participant shall be entitled to exercise, in full or in part, the
Time-Based Options in the manner set out in this Agreement, with any necessary
modifications (or such other manner as may be prescribed by the Committee or the
Board including, but not limited to, a form of cashless exercise), during the
period ending on the earlier of the expiration of the Take-over Bid and the
Expiry Date, for the purpose of tendering the Shares acquired pursuant to the
exercise of the Time-Based Options to the Take-over Bid;

 

  (D) the Participant shall be entitled to deal with the Time-Based Options in
such other manner (in addition to the exercise set out in paragraph
11(b)(ii)(C)) as may be prescribed by the Committee or the Board, in its
discretion; and

 

  (E) if the Shares acquired pursuant to the exercise of the Time-Based Options
are not deposited by the Participant pursuant to the Take-over Bid or, if
deposited, are subsequently withdrawn by the Participant or not all taken up and
paid for by the offeror or if the offeror fails to take-up and pay for the
Shares pursuant to the terms of the Take-over Bid or if the Take-over Bid fails
to close for any other reason, then the Participant shall promptly return such
Shares (or the portion that are not taken up and paid for) to the Corporation
for cancellation. Such Shares shall be deemed not to have been issued and the
related Time-Based Options shall be deemed not to have been exercised, and the
Corporation shall refund to the Participant, if applicable, the aggregate
Exercise Price for the Time-Based Options. In such event, Time-Based Options
will become Vested Options solely in accordance with Section 5(a), and any other
action by the Participant permitted in accordance with Section 11(b)(ii)(D)
shall be deemed not to have occurred.

 

12. EFFECTS OF ALTERATION OF SHARE CAPITAL

In the event of any change in the Shares by reason of any stock dividend, split,
recapitalization, merger, consolidation, combination or exchange of shares or
other similar corporate change, equitable adjustments may be made in the number
of Time-Based Options, the type of shares or securities subject to the
Time-Based Options, the Exercise Price and the formula for determining the cash
payable upon the surrender of Time-Based Options pursuant to associated TSARs.
The Committee shall determine which adjustments shall be made in any such event
in its sole discretion and its determination shall be conclusive and binding for
all purposes of this Agreement; provided that such adjustments shall not result
in any adverse Canadian or United States federal income tax consequences.
Without limiting the generality of the foregoing, it is expressly intended that
no Time-Based Option or TSAR shall become subject to Section 409A and no
adjustment shall be made to the Exercise Price, the formula for determining the
cash payable upon the surrender of Time-Based

 

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Options pursuant to associated TSARs, or any other term or condition of this
Agreement if to do so would cause the Time-Based Option or TSAR to become
deferred compensation subject to Section 409A.

 

13. METHOD OF EXERCISE OR SURRENDER OF TIME-BASED OPTIONS

Any Vested Option may be exercised or surrendered by the Participant or, after
death or incapacitation, by the Participant’s duly appointed legal guardian or
legal personal representative, in a manner prescribed by the Corporation from
time to time as published on the Corporation’s internal employee website or
otherwise communicated in writing to the Participant from time to time.

 

14. OBLIGATIONS OF THE PARTICIPANT

Nothing contained in this Agreement or done pursuant to this Agreement shall
oblige the Participant to purchase and pay for any Shares except those Shares
underlying the Time-Based Options that the Participant has exercised in the
manner provided in this Agreement.

The Participant agrees and acknowledges (and shall be conclusively deemed to
have so acknowledged and agreed by participating in the Plan) that the
Participant will, at all times, act in strict compliance with Applicable Law and
all Corporation Policies applicable to the Participant in connection with the
Plan. Such Applicable Law and Corporation Policies shall include, without
limitation, those governing “insiders” or “reporting issuers” as those terms are
construed for the purposes of applicable securities laws, regulations, and
rules.

 

15. SUBJECT TO APPLICABLE LAW

The grant of any Time-Based Option hereunder and the obligation to make any
payment (including the delivery of Shares) in respect of any Time-Based Option
is subject to compliance with Applicable Law including, without limitation,
Sections 26 and 27 hereof. As a condition of participating in the Plan, each
Participant agrees to comply with all such Applicable Law and agrees to furnish
to the Corporation all information and undertakings as may be required to permit
compliance with Applicable Law.

 

16. WITHHOLDINGS

The Corporation or any Affiliated Entity may withhold or cause to be withheld
from any amount payable to a Participant, either under the Plan or this
Agreement, or otherwise, such amount as may be necessary so as to ensure that
the Corporation or any Affiliated Entity, as applicable, 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 Participant acknowledges that all taxes which may be payable by the
Participant as a result of the granting, exercise, or surrender of the
Time-Based Options are the Participant’s sole responsibility and that it is the
Participant’s duty and responsibility to comply with all provisions of the law
in relation to the reporting of the acquisition or exercise or surrender of the
Time-Based Options and the trading of any Shares issued pursuant to this
Agreement.

 

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17. NO AGREEMENT TO EMPLOY

Nothing contained in this Agreement or done pursuant to this Agreement shall
constitute or be construed to constitute or to be evidence of an agreement or
understanding, express or implied, on the part of the Corporation or an
Affiliated Entity to retain the Participant in the Participant’s employment for
any specific period of time or in any specific capacity or position.

 

18. NON-QUALIFIED STOCK OPTIONS

The Time-Based Options granted to the Participant hereunder are non-qualified
stock options for United States tax purposes.

 

19. NO REPRESENTATION AS TO PRICE

The Corporation makes no representation nor gives any warranty as to the price
of the Shares and shall not be held liable for any fluctuation in the price of
the Shares either before or after the exercise of any right conferred under this
Agreement.

 

20. NON-ASSIGNABILITY

The Time-Based Option and the rights conferred hereby are not assignable,
negotiable or otherwise transferable by the Participant other than by will or
the laws of descent and distribution. The Time-Based Option is exercisable only
during the Participant’s lifetime and only by the Participant, except in the
event of the Participant’s death or incapacity, in which case the Time-Based
Option may be exercised or surrendered by the Participant’s duly appointed legal
guardian or legal personal representative as provided herein.

 

21. SUBJECT TO CLAWBACK POLICY

You acknowledge and agree that all Options granted hereunder (and the grant
thereof), including any payment in respect thereof, are expressly subject to the
terms and conditions of the Corporation’s “Incentive Compensation Clawback
Policy”, attached hereto as Schedule “B”, as same may be amended by the
Corporation from time to time.

 

22. SUBJECT TO PLAN

The provisions of this Agreement shall be interpreted so as to be expressly
subject to the provisions of the Plan. The Participant acknowledges that the
Committee or the Board has full and complete authority to interpret the Plan and
to prescribe such rules and regulations and make such other determinations as it
deems necessary or desirable for the administration of the Plan in its sole
discretion and that any such rules, regulations or determinations shall be final
and binding on the parties to this Agreement.

 

23. AMENDMENT AND TERMINATION

Subject to Applicable Law and to Section 11 of the Plan, this Agreement and the
Plan may be amended or terminated at any time by the Board in whole or in part.

 

24. TIME OF ESSENCE

Time shall be of the essence of this Agreement.

 

25. NOTICES

Any notice to be given by the Participant hereunder shall be sent to the
Corporation at:

Encana Corporation

500 Centre Street SE

P.O. Box 2850

Calgary, Alberta T2P 2S5

 

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Fax: (403) 645-3400

Attention: Vice-President, Human Resources

and any notice from the Corporation to the Participant shall be sent to the
Participant at the Participant’s office or residence address last known to the
Corporation. Either party may change the address to which notice may be given by
mailing the same, postage prepaid, or delivering the same to the Corporation or
to the Participant, as the case may be, in accordance with the foregoing. Any
such notice if delivered shall be deemed to have been given or made on the date
on which it was delivered or if mailed shall be deemed to have been given or
made on the third business day following the date on which it was mailed. In the
event of a general postal disruption, notice shall be delivered.

The Participant hereby consents to the exchange of information and documents
between the Participant and the Corporation electronically over the Internet or
by e-mail (if to the Participant at the e-mail address most recently provided by
the Participant to the Corporation) and it is hereby agreed and acknowledged
that any such information and documents sent or received in electronic form
shall be the equivalent of original written paper documents.

 

26. GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws in
force in the Province of Alberta and the federal laws of Canada as applicable
herein. In the event of a dispute, the Participant agrees to submit to the
jurisdiction of the Alberta courts.

 

27. COMPLIANCE WITH SECTION 409A

Notwithstanding any provision of the Plan or this Agreement to the contrary,
where applicable, it is intended that the provisions of the Plan and this
Agreement comply with Section 409A, and all provisions of the Plan shall be
construed and interpreted in a manner consistent with the requirements for
avoiding taxes or penalties under Section 409A. Each US Participant is solely
responsible and liable for the satisfaction of all taxes and penalties that may
be imposed on or for the account of such US Participant in connection with the
Plan or any other Plan maintained by the Corporation or an Affiliated Entity
(including any taxes and penalties under Section 409A), and neither the
Corporation nor any Affiliated Entity shall have any obligation to indemnify or
otherwise hold such US Participant (or any beneficiary) harmless from any or all
of such taxes or penalties. In addition, should any provision of the Plan or
this Agreement be subject to Section 409A, the Date Employment Ceases and the
Date of Retirement shall be determined to mean a “separation from service” as
defined in Section 409A whenever necessary to ensure compliance therewith for
any payment or settlement of a benefit conferred under the Plan or this
Agreement that is subject to Section 409A, and, for such purposes, shall be
determined based upon a reduction in the bona fide level of services performed
to a level equal to twenty percent (20%) or less of the average level of
services performed by the Participant during the immediately preceding 36-month
period. Any distribution or settlement of a benefit conferred under the Plan or
this Agreement following the Date Employment Ceases or the Date of Retirement
that would be subject to Section 409A as a distribution following a separation
from service of a “specified employee” as defined under Section 409A, shall
occur no earlier than the expiration of the six-month period following such Date
Employment Ceases or Date of Retirement.

 

28. EXECUTION BY THE CORPORATION

This Agreement may be executed by application of the facsimile or authorized
electronic signature of the Executive Vice-President, Corporate Services of the
Corporation (or his or her written designate) and such signature shall be as
valid and effective as if such officer signed this Agreement in person.

 

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29. ACCEPTANCE BY PARTICIPANT

The Participant shall confirm acceptance of the terms and conditions of this
Agreement by electronically selecting and clicking on the button beside the
words “I Accept” from the options provided below. By indicating such acceptance,
the Participant agrees to be legally bound by the terms and conditions of this
Agreement, and hereby agrees that such acceptance shall be as valid and
effective as of the Date of Grant as if the Participant signed this Agreement in
person on that date. In the event the Participant does not accept the terms and
conditions of this Agreement because an error exists in the Option information
provided at the outset of this Agreement, the Participant must electronically
select and click on the button beside the words “I Do Not Accept” from the
options provided below, in which case the parties shall take such steps as may
be necessary to correct any such error.

IN WITNESS WHEREOF this Agreement has been executed effective as of the Grant
Date.

ENCANA CORPORATION

Mike Williams

Executive Vice-President, Corporate Services

 

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SCHEDULE “A”

DEFINITIONS

In this Agreement, the following terms shall have the meanings respectively set
forth below:

 

(a) “Agreement” means this Option and Tandem Stock Appreciation Rights Agreement
between the Corporation and the Participant;

 

(b) “Anniversary Date” means, in respect of the Time-Based Options, each
anniversary of the Date of Grant;

 

(c) “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 any rules of the Toronto Stock Exchange;

 

(d) “Appreciated Value” means, in respect of each TSAR associated with an
Time-Based Option, an amount equal to the excess of the closing price of a Share
on the Toronto Stock Exchange on the last Trading Day preceding the date of the
surrender of the Time-Based Option, over the Exercise Price;

 

(e) “Change in Control” means, for purposes of this Agreement, the date any of
the following occurs:

 

  (i) any individual, partnership, firm, corporation, association, trust,
unincorporated organization or other entity, or any persons acting jointly or in
concert with the foregoing, is, or becomes, the beneficial owner, directly or
indirectly, of securities of the Corporation representing more than 30% of the
combined voting power of the Corporation’s then outstanding securities entitled
to vote in the election of the directors of the Corporation;

 

  (ii) the Corporation shall have disposed of: (A) all or substantially all of
its assets, such that shareholder approval was required or should have been
required to be obtained under the Canada Business Corporations Act, or
(B) assets in any 12 month period representing 50% or more of the total assets
of the Corporation, determined as of the date of the audited financial
statements of the Corporation then most recently published;

 

  (iii) pursuant to a single election or appointment or a series of elections or
appointments over any period from and after the date of this Agreement (A) those
individuals who at the date of this Agreement constituted the Board, together
with (B) any new or additional director or directors whose nomination for
election by the Corporation’s shareholders, or whose appointment to the Board by
the Board, has been approved by at least 75% of the votes cast by all of the
directors then still in office, who either were directors at the date of this
Agreement or whose appointment or nomination for election was previously so
approved, cease for any reason to constitute a majority of the Board; or

 

  (iv) the Board, by resolution duly adopted by the affirmative vote of a simple
majority of the votes cast by the Board, determines that, for purposes of this
Agreement, a Change in Control of the Corporation has occurred.

 

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Securities beneficially owned or controlled or directed by an employee plan or
related trust sponsored or maintained by the Corporation or any of its
Affiliated Entities shall not be taken into account in determining whether the
threshold percentage in Section (h)(i) is exceeded.

For the purposes of this Section (h):

 

  (i) the term “acting jointly or in concert” shall be interpreted in accordance
with Section 159 of the Securities Act (Alberta), as amended; and

 

  (ii) the term “beneficial ownership” shall be interpreted in accordance with
Sections 5 and 6 of the Securities Act (Alberta) and “beneficial owner” shall
have a corresponding meaning, except that for purposes of this Agreement,
options and convertible securities granted by the Corporation to employees,
officers or directors shall not be included in determining beneficial ownership
or beneficial owner.

For greater certainty, and except as specifically provided in Sections (h)(ii)
and (h)(iv), the sale, disposition or other divestiture of an Affiliated Entity,
in whole or in part, shall not constitute a Change in Control for the purposes
of this Agreement.

 

(f) “Close of Business” means the close of trading on the Toronto Stock Exchange
on any Trading Day;

 

(g) “Committee” means the Human Resources and Compensation Committee of the
Board, or such other committee of the board, as constituted from time to time,
which may be designated by the Board to, inter alia, interpret, administer and
implement the Plan and this Agreement, and any reference in this Agreement to
action by the Committee means action by or under the authority of the Committee
or, if no Committee has been designated, by the Board;

 

(h) “Corporation Policies” means, at a particular time, the policies and
practices of the Corporation (or, if applicable, the Affiliated Entity which
employs the Participant or which employed the Retired Participant), as published
on the Corporation’s internal employee website or otherwise communicated in
writing to the employees (or, where necessary, to a Retired Participant) of the
Corporation and/or its Affiliated Entities;

 

(i) “Date Employment Ceases” means:

 

  (i) in the case of voluntary termination of employment initiated by the
Participant, the last date the Participant is, for the purposes of receiving his
or her regular salary, on the payroll of the Corporation or an Affiliated
Entity;

 

  (ii) in the case of involuntary termination of the Participant’s employment by
the Corporation or an Affiliated Entity for cause (as determined by the
Corporation or the Affiliated Entity, as applicable), the date written
notification of dismissal from employment is delivered to the Participant;

 

  (iii) in the case of involuntary termination of the Participant’s employment
by the Corporation or an Affiliated Entity other than for cause (as determined
by the Corporation or the Affiliated Entity, as applicable), the date identified
in the written notification of termination of employment delivered to the
Participant as the “Termination Date” or “Departure Date” and, where both dates
are so referred to, the earlier thereof, and, where such date is not identified
in the written notification, the date written notification of dismissal from
employment is delivered to the Participant;

 

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  (iv) in the case where the Participant is employed by an Affiliated Entity and
for any reason including, without limitation, by reason of sale, disposition or
other divestiture thereof, in whole or in part, such employer ceases to be an
Affiliated Entity of the Corporation, the effective date (in the case of a sale,
disposition or other divestiture, the closing date of such transaction or series
of transactions, as determined by the Corporation) upon which the Participant’s
employer ceases to be an Affiliated Entity;

but, for greater certainty, shall not include any notice period which arises or
may be deemed to arise upon the termination of employment of the Participant,
and shall not include the date the Participant ceases to be an employee of the
Corporation or an Affiliated Entity upon the Participant’s death or Retirement,
or the date the Participant commences Short-Term Disability, Long-Term
Disability, a Paid Leave of Absence, an Unpaid Leave of Absence, or Family
Leave;

 

(j) “Date of Grant” means the date upon which the Corporation grants the
Time-Based Options to the Participant, and as evidenced by this Agreement, which
term is sometimes referenced as “Grant Date”;

 

(k) “Date of Retirement” means the last day the Participant is, for the purposes
of receiving his or her regular salary, on the payroll of the Corporation or an
Affiliated Entity immediately prior to commencing Retirement;

 

(l) “Death or Retirement Exercise Period” means the period of time extending
from the date of the Participant’s death or Date of Retirement, as applicable,
to the earlier of: (i) the date that is six months following the date of the
Participant’s death or Date of Retirement, as applicable; and (ii) the Expiry
Date. Should the Death or Retirement Exercise Period terminate on a date other
than a Trading Day, the Death or Retirement Exercise Period shall terminate on
the Close of Business on the last Trading Day prior to that date;

 

(m) “Exercise Price” means the price payable per Share on the exercise by the
Participant of a Time-Based Option determined on the basis of the Grant Price;

 

(n) “Expiry Date” means the Close of Business on the seventh Anniversary Date,
subject to any Blackout Extension Period (as defined and set forth in the Plan).
Should the Expiry Date fall on a date other than a Trading Day, the Expiry Date
shall be the Close of Business on the last Trading Day prior to that date;

 

(o) “Family Leave” means a period during which, pursuant to the Corporation
Policies or Applicable Law, the Participant is considered to be on family leave,
and does not provide employment services to the Corporation or an Affiliated
Entity;

 

(p) “Long-Term Disability” means any period of time during which the Participant
receives, or is determined to be entitled to receive, disability benefits under
the Corporation’s or an Affiliated Entity’s long-term disability plans;

 

(q) “Paid Leave of Absence” means a period during which, pursuant to the
Corporation Policies or Applicable Law, the Participant is considered to be on a
leave of absence and continues to receive his or her normal salary, but does not
provide employment services to the Corporation or an Affiliated Entity;

 

(r) “Related Corporation” means a corporation that is related, within the
meaning of the Income Tax Act (Canada), to the Corporation;

 

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(s) “Retired Participant” means a Participant who ceases to be an employee of
the Corporation or an Affiliated Entity by reason of his or her Retirement;

 

(t) “Retirement” means the early or normal retirement of the Participant from
employment with the Corporation or an Affiliated Entity in accordance with the
Corporation Policies;

 

(u) “Return to Service Date” means the date, following an Unpaid Leave of
Absence, that the Participant recommences the provision of employment services
to the Corporation or an Affiliated Entity, in full or in part;

 

(v) “Section 409A” means section 409A of the United States Internal Revenue Code
of 1986, as amended, and any applicable United States Treasury Regulations and
other binding regulatory guidance promulgated thereunder;

 

(w) “Share” means a common share in the capital of the Corporation as is traded
on the Toronto Stock Exchange;

 

(x) “Short-Term Disability” means any period of time during which the
Participant receives disability benefits under the Corporation’s or an
Affiliated Entity’s short-term disability plans;

 

(y) “Take-over Bid” has the meaning assigned by Section 11(d)(ii);

 

(z) “Termination Exercise Period” means the period of time extending from the
Date Employment Ceases to the earlier of: (i) the Close of Business on the 60th
Trading Day after the Date Employment Ceases; and (ii) the Expiry Date;

 

(aa) “Termination of Employment” means an event by which the Participant ceases
to be an employee of the Corporation or an Affiliated Entity but, for greater
certainty, shall not include an event whereby the Participant ceases to be an
employee of the Corporation or an Affiliated Entity upon the Participant’s death
or Retirement or where the Participant commences Short-Term Disability,
Long-Term Disability, a Paid Leave of Absence, an Unpaid Leave of Absence, or
Family Leave;

 

(bb) “Time-Based Options” has the meaning assigned by Section 4(a);

 

(cc) “Trading Day” means a day on which the Toronto Stock Exchange is open for
trading;

 

(dd) “TSAR” means a tandem stock appreciation right which is associated with a
Time-Based Option and which entitles the Participant to surrender a Vested
Option in accordance with Section 5(d), subject to the terms and conditions
hereof;

 

(ee) “Unpaid Leave of Absence” means a period of time during which, pursuant to
the Corporation Policies or Applicable Law, the Participant is considered to be
on a leave of absence and does not continue to receive his or her salary or
provide employment services to the Corporation or an Affiliated Entity which,
for the purposes of this Agreement, shall be deemed to commence on the “Date of
Unpaid Leave of Absence”, being the first day of the Participant’s Unpaid Leave
of Absence, as communicated in writing to the Participant by the Corporation or
an Affiliated Entity in accordance with the Corporation Policies;

 

(ff) “US Participant” means, where applicable, a Participant whose income in
respect of services performed for the Corporation or an Affiliated Entity is
subject to Section 409A;

 

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(gg) “Vested Option” means a Time-Based Option which has vested and can be
exercised by the Participant to purchase a Share or, alternatively, can be
surrendered by the Participant in accordance with Section 5 (d), subject to the
terms and conditions hereof; and

 

(hh) “Vesting Date” means the date on which a Time-Based Option becomes a Vested
Option in accordance with the provisions of this Agreement including, without
limitation, Section 5(a) hereof.

 

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Schedule “B”

INCENTIVE COMPENSATION CLAWBACK POLICY:

By resolution of the Board of Directors (the “Board”) of Encana Corporation
(“Encana” or the “Corporation”), this Policy is effective as of this 22nd day of
October, 2012 (the “Effective Date”).

This Policy applies to the President & Chief Executive Officer and each
Executive-Vice President of the Corporation and any individual who serves in
either such capacity on or following the Effective Date (collectively, the
“Executive”). References in this Policy to the “Corporation” include, where
applicable, any affiliate thereof.

This Policy has been adopted to enhance the Corporation’s alignment with best
practices in respect of risk management and executive compensation and shall be,
at all times, subject to and interpreted in a manner consistent with applicable
laws or the rules of any applicable stock exchange (collectively, “Applicable
Rules”).

This Policy applies to “Incentive-Based Compensation” which, for the purposes of
this Policy, means compensation relating to the achievement of performance goals
or similar conditions, excluding salary, perquisites, benefits and pension
entitlements, and including, without limitation, any award or grant of or any
eligibility, entitlement or gain of, an Executive under the Corporation’s: (i)
High Performance Results Plan, or any other short-term incentive plan; or (ii)
Long-Term Incentive (“LTI”) program including, without limitation, Employee
Stock Option Plan, Employee Stock Appreciation Rights Plan, Performance Share
Unit Plan, Restricted Share Unit Plan and Deferred Share Unit Plan, as each may
be amended from time to time (including any performance-based grants under any
such plans). For greater clarity, this Policy shall not apply to any
Incentive-Based Compensation awarded, granted or paid to an Executive prior to
the Effective Date.

Where:

 

  •   the Corporation is required to prepare an accounting restatement due to
its material non-compliance with any financial reporting requirement under
applicable securities laws (the “Restatement”), (the date upon which the
Corporation is required to prepare such Restatement is hereinafter the
“Restatement Date”);

 

  •   the Executive received Incentive-Based Compensation referable to the
financial years subject to the Restatement in excess of what the Executive would
have been paid under the Restatement (the “Overcompensation Amount”); and

 

  •   the Executive engaged in gross negligence, intentional misconduct or fraud
which caused or significantly contributed to the Corporation’s material
non-compliance with applicable securities laws which resulted in the requirement
for the Restatement;

the Board shall be entitled:

 

  •   where and to the extent the Overcompensation Amount has been previously
paid, transferred or otherwise made available to the Executive, to require the
Executive, by written demand, to reimburse the Corporation for the
Overcompensation Amount; and

 

  •   where all or a portion of the Overcompensation Amount has not been paid,
transferred or otherwise made available to the Executive, the right of the
Executive to be so paid or have such benefit transferred or otherwise made
available to him or her shall, to the extent required to reimburse the
Corporation for such Overcompensation Amount, immediately terminate and be
forfeited by the Executive and where required, cancelled by the Corporation to
such extent and upon such date as may be specified by the Board; and

 

  •   to the extent the Overcompensation Amount is not immediately recovered
upon demand from the Executive, whether via direct reimbursement, forfeiture
and/or cancellation, to require a sufficient quantity or value of any
compensation owing by the Corporation to the Executive including, without
limitation, any unvested or unexercised awards under the LTIs (the “Outstanding
LTIs”), be immediately withheld and/or irrevocably cancelled by the Corporation
to compensate for (or set off the value of same against) the Overcompensation
Amount or any unrecovered portion thereof, and to bring any other actions
against the Executive which the Board may deem necessary to recover the
Overcompensation Amount.

 

 

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The period of time during which the Corporation shall be entitled to seek
recovery of the Overcompensation Amount from the Executive shall be three (3)
years from the Restatement Date. Recoupment of Overcompensation Amounts under
this Policy shall be initiated by the Corporation at the request of the Board,
and all amounts recoverable or payable hereunder shall be paid to the
Corporation or as directed by the Board.

If Applicable Rules require the Corporation to adopt a policy or provisions
relating to the recoupment or recovery of incentive-based or other compensation
based on restated financial statements which are inconsistent with or materially
differ from this Policy and the Board adopts such policy or provisions to comply
with Applicable Rules (the “New Policy”), such New Policy shall replace and
supersede this Policy and shall apply to Incentive-Based Compensation granted or
awarded to the Executive following the effective date of the New Policy. Subject
to Applicable Rules, this Policy shall continue to apply to Incentive-Based
Compensation granted or awarded to the Executive prior to the effective date of
the New Policy. This Policy may be terminated at any time by the Board.

 

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