Exhibit 10.1

DIRTT ENVIRONMENTAL SOLUTIONS LTD.

LONG TERM INCENTIVE PLAN

 

1.

Purpose

The purpose of the DIRTT Environmental Solutions Ltd. Long Term Incentive Plan
(the “Plan”) is to encourage selected employees, officers, consultants, and
directors of DIRTT Environmental Solutions Ltd. (together with any corporate
successor, the “Corporation”) and its Affiliates (as defined below) to acquire a
proprietary interest in the growth and performance of the Corporation. The Plan
is intended to generate an increased incentive to contribute to the
Corporation’s future success and prosperity, thereby enhancing the value of the
Corporation for the benefit of its shareholders, and to enhance the ability of
the Corporation and its Affiliates to attract and retain exceptionally qualified
individuals upon whom, in large measure, the sustained progress, growth and
profitability of the Corporation depends. The Plan seeks to achieve these
purposes by providing for Awards in the form of Options, Share Appreciation
Rights, Restricted Shares, Restricted Share Units, Share Awards, Other
Share-Based Awards, Cash Awards, and Dividend-Equivalent Rights (each as defined
below).

 

2.

Definitions

As used in the Plan, the following terms, when capitalized, will have the
meanings set out below:

“Adjustment Event” has the meaning set out in Section 8(d) of the Plan.

“Affiliate” means any corporation that, directly or through one (1) or more
intermediaries, is controlled by the Corporation, including any corporation in
which the Corporation owns a significant equity interest, as determined by the
Committee, provided that, for the purposes of Awards granted to Canadian
Participants, an “Affiliate” shall include only those corporations which do not
deal at arm’s length with the Corporation, within the meaning of the Tax Act.

“applicable laws” means any provision of law, domestic or foreign, including,
without limitation, applicable tax and securities legislation and Exchange
rules, together with all regulations, rules, policy statements, rulings,
notices, orders or other instruments promulgated thereunder.

“Applicable Withholding Taxes” has the meaning set out in Section 9(j)(ii) of
the Plan.

“Award” means any Option, SAR, Restricted Share, Restricted Share Unit, Share
Award, Other Share-Based Award, Cash Award, or Dividend-Equivalent Right granted
under or pursuant to the Plan.

“Award Agreement” means any written agreement, contract, or other instrument or
document evidencing any Award granted under the Plan, which shall be between the
Corporation, the Employer and the Participant.

“Beneficiary” means any Person designated by a Participant by written instrument
filed with the Employer to receive any amount, securities, or property payable
under the Plan in the event of a Participant’s death or, failing any such
effective designation, the Participant’s estate.

“Blackout Period” means the period of time during which the relevant Participant
is prohibited from exercising or trading securities of the Corporation due to
restrictions on the trading of the Corporation’s securities imposed by the
Corporation in accordance with its trading policies affecting trades by persons
designated by the Corporation.

“Board” means the board of directors of the Corporation.

“Canadian Participant” means any Participant who is an Employee and who is a
resident of Canada or is granted an Award in respect of services rendered in
Canada.

“Canadian Resident” means an individual who is a “Canadian resident” within the
meaning of the Tax Act.

“Cash Award” means an Award denominated in cash granted pursuant to Section 7(g)
of the Plan.

 

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“Cause” as used in connection with the termination of a Participant’s employment
with the Corporation or an Affiliate, unless otherwise defined in an Award
Agreement or a written employment agreement between the Corporation or an
Affiliate and a Participant (which definition shall govern), means: (a) fraud,
misappropriation of the property or funds of the Corporation, embezzlement,
malfeasance, misfeasance, or nonfeasance in office, engagement, or employment
which is willfully or grossly negligent on the part of the Participant; (b) the
willful allowance by the Participant of the Participant’s duty to the
Corporation and his or her personal interests to come into conflict in a
material way in relation to any transaction or matter that is of a substantial
nature; (c) the breach by the Participant of any non-competition,
non-solicitation, or confidentiality covenant contained in his or her employment
or service agreement; (d) any other reason which would be concluded by a court
of competent jurisdiction to amount to just cause at common law; or (e) failure
to perform assigned duties.

“Change of Control” means the occurrence of any of the following: (a) the
acquisition by any Person or any Persons acting jointly or in concert, whether
directly or indirectly, of voting securities of the Corporation which together
with all other voting securities of the Corporation held by such Persons,
constitute, in the aggregate, fifty percent (50%) or more of the votes attached
to all outstanding voting securities of the Corporation; (b) a merger,
amalgamation, arrangement, or other form of business combination of the
Corporation with another Person which results in the holders of voting
securities of that other Person holding, in the aggregate, fifty percent (50%)
or more of the votes attached to all outstanding voting securities of the
Corporation; (c) the acquisition by any Person or any Persons acting jointly or
in concert, whether directly or indirectly, of all or substantially all of the
assets of the Corporation to another Person during any twelve (12) month period,
other than in the ordinary course of business of the Corporation or to any
Person that controls or is controlled by the Corporation or that is controlled
by the same Person as the Corporation; or (d) a majority of the members of the
Board are replaced during any twelve (12) month period by directors whose
appointment or election is not endorsed by a majority of the Board before the
date of appointment or election.

“Code” has the meaning set out in Section 3(c) of the Plan.

“Committee” means the Compensation Committee of the Board, that, unless
otherwise determined by the Board, shall consist solely of two or more Qualified
Members, provided, however, to the extent deemed necessary or appropriate, a
committee other than the Compensation Committee may be designated by the Board
to administer the Plan and such other committee may be vested with any of the
powers and responsibilities hereunder and shall be considered the Committee for
any and all of such purposes hereunder.

“Corporation” has the meaning set out in Section 1 of the Plan.

“Dividend-Equivalent Right” means a dividend-equivalent right granted in
connection with a Restricted Share Unit, pursuant to Section 7(c) of the Plan.

“Dividend Payment Date” has the meaning set out in Section 7(c)(ii)(B) of the
Plan.

“Dividend Record Date” has the meaning set out in Section 7(c)(ii)(B) of the
Plan.

“Effective Date” shall mean May 22, 2020.

“Employee” means an employee, within the meaning of the Tax Act, of the
Corporation or an Affiliate, which, for greater certainty, includes directors.

“Employer” means: (a) with respect to a Participant that is an Employee (other
than a director), the entity that employs the Participant or that employed the
Participant immediately prior to the termination of his or her employment;
(b) with respect to a Participant who is a director, the corporation on whose
board the Participant serves or served at the time an Award was granted to the
Participant; and (c) with respect to a Participant who is not an Employee, the
corporation to whom the Participant provides or provided consulting services;
which entity may be in any case, the Corporation or any of its Affiliates.

“Equitable Adjustments” has the meaning set out in Section 8(d) of the Plan.

“Exchange” shall mean any stock exchange, quotation system or other market on
which the Shares are listed.

 

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

“Exercise Price” in respect of an Option has the meaning set out in
Section 7(a)(i) of the Plan.

“Fair Market Value” means: (a) with respect to any property other than the
Shares, Restricted Shares, or Restricted Share Units, the fair market value of
that property determined by those methods or procedures as may be established
from time to time by the Committee, acting reasonably, and (b) with respect to
the Shares, Restricted Shares, or Restricted Share Units, the closing sale price
of the Shares, as reported by the Principal Market on the day immediately
preceding the specified date (or if no sales occur on such date, on the last
preceding date on which such sales of Shares are so reported). If the Shares did
not trade, then the Fair Market Value with respect to the Shares, Restricted
Shares or Restricted Share Units will be determined by the Committee, acting
reasonably, using any other appropriate method selected by the Committee and
compliant with applicable laws.

“Good Reason” as used in connection with the termination of a Participant’s
employment with the Corporation or an Affiliate, unless otherwise defined in an
Award Agreement or a written employment agreement between the Corporation or an
Affiliate and a Participant (which definition shall govern), means: (a) without
the express written consent of the Employee, any material negative change or
diminution of the Employee’s authority, duties, reporting relationship, or
responsibilities; (b) any material reduction in the Employee’s base salary or
hourly wage, as applicable, provided, however, that any reduction in base salary
or hourly wage that applies to all similarly situated employees will not
constitute “Good Reason” under this Plan; (c) a change in the geographic
location at which the Employee must perform his or her services that is 50 miles
or more from the principal location to which he or she was previously based as
provided in his or her employment agreement, if any; or (d) any material breach
by the Corporation or an Affiliate of the Employee’s employment agreement, if
any, in each case, so long as the Employee has provided the Corporation or an
Affiliate with written notice of the acts or omissions constituting grounds for
Good Reason within thirty (30) days of the condition first occurring and the
Corporation or an Affiliate shall have failed to rectify, as determined by the
Corporation or an Affiliate acting reasonably, any such acts or omissions within
thirty (30) days of the Corporation’s or an Affiliate’s receipt of such notice.

“insider” has the same meaning given to such term by the rules of the Toronto
Stock Exchange in respect of security based compensation arrangements; “insider”
also means any Person then subject to Section 16 of the Exchange Act in respect
of the Corporation.

“ISO” means an Option intended to be and designated as an “incentive stock
option” within the meaning of Section 422 of the Code.

“Nonstatutory Option” means an Option that is not an ISO.

“Option” means an option to acquire a Share in the capital of the Corporation
granted pursuant to Section 7(a) of the Plan, which may either be an ISO or a
Nonstatutory Option.

“Option Plan” has the meaning set out in Section 4(a)(iii) of the Plan.

“Other Share-Based Award” means an Award granted pursuant to Section 7(f) of the
Plan.

“Participant” means any individual granted an Award under the Plan or whose
Award is stated to be governed by the Plan.

“Performance Criteria” means that performance criteria determined by the
Committee as set forth in an Award Agreement, provided that such performance
criteria shall relate to the performance of the Corporation and/or an Affiliate
of the Corporation.

“Person” means any individual or entity, including a corporation, partnership,
association, joint-share corporation, trust, unincorporated organization, or
government or political subdivision of a government.

 

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“Plan” has the meaning set out in Section 1 of the Plan.

“Principal Market” means the principal Exchange, upon which has occurred the
greatest trading volume of the Shares for the six (6) months (or, to the extent
the Shares have not been listed, admitted to trading, posted for trading, or
quoted upon for at least six (6) months, the next longest period since the
Shares were initially listed, admitted to trading, posted for trading, or quoted
upon) prior to the date of reference provided, however, that to the extent
deemed necessary or appropriate, the Principal Market shall be as determined by
the Committee in accordance with applicable law.

“Qualified Member” means a member of the Board who is (a) a “non-employee
director” within the meaning of Rule 16b-3(b)(3) and (b) “independent” under the
listing standards or rules of the Exchange(s), but only to the extent such
independence is required in order to take the action at issue pursuant to such
standards or rules.

“Restricted Share” means a Share granted under Section 7(d) of the Plan that is
subject to certain restrictions and risk of forfeiture.

“Restricted Share Unit” means a unit credited by means of a bookkeeping entry on
the books of the Corporation to a Participant pursuant to Section 7(c) of the
Plan, representing the future conditional right of the Participant to receive a
cash payment equal to the Fair Market Value of a Share calculated at the date of
such payment, or, at the Corporation’s and Employer’s sole discretion, its
equivalent in Shares (or a combination of cash and Shares), at the time, in the
manner, and subject to the terms contained herein.

“Restricted Share Unit Account” has the meaning set out in Section 7(c)(ii)(A)
of the Plan.

“Restricted Share Unit Entitlement Date” has the meaning set out in
Section 7(c)(iv) of the Plan.

“RSU Service Year” has the meaning set out in Section 7(c)(iii) of the Plan.

“Rule 16b-3” means Rule 16b-3, promulgated by the SEC under Section 16 of the
Exchange Act.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended from time to time,
including the guidance, rules, and regulations promulgated thereunder and
successor provisions, guidance, rules, and regulations thereto.

“Share Appreciation Right” or “SAR” means a share appreciation right granted to
a Participant pursuant to Section 7(b) of the Plan, which is a conditional right
of the Participant to receive, upon exercise and settlement thereof, a cash
payment equal to the excess of (a) the Fair Market Value of one Share on the
date of exercise over (b) the grant price of the SAR, or, at the Corporation’s
and Employer’s sole discretion, its equivalent in Shares (or a combination of
cash and Shares), at the time, in the manner, and subject to the terms contained
herein.

“Shares” means any or all, as applicable, of the common shares of the
Corporation and any other shares of the Corporation as may become the subject of
Awards, or become subject to Awards, pursuant to an adjustment made pursuant to
Section 8(e) of the Plan, and any other shares of the Corporation or any
Affiliate or any successor that may be so designated by the Committee.

“Share Award” means an Award of unrestricted Shares granted pursuant to
Section 7(e) of the Plan.

“Tax Act” means the Income Tax Act (Canada) and the regulations thereto, as
amended from time to time.

“Termination Date” means, in respect of a Participant, the date that the
Participant ceases to be actively employed by, or ceases to provide services as
a consultant to, the Corporation or an Affiliate for any reason, without regard
to any statutory, contractual, or common law notice period that may be required
by law following the termination of the Participant’s employment or consulting
relationship with the Corporation or Affiliate. The Committee will have sole
discretion to determine whether a Participant has ceased active employment or
ceased to provide services as a consultant and the effective date on which the
Participant ceased active employment or ceased to provide services as a
consultant. A Participant will be deemed not to have ceased to be an employee of
the Corporation or an Affiliate in the case of a transfer of his or her
employment between the Corporation and an Affiliate or a transfer of employment
between Affiliates.

“U.S. Participant” has the meaning set out in Schedule “A” of the Plan.

 

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“Vested Restricted Share Unit” means a Restricted Share Unit which has vested.

 

3.

Administration

 

  (a)

The Plan will be administered by the Committee subject to the Committee
reporting to the Board as required by the Committee’s mandate. Where no
Committee is in existence, all references in the Plan to the Committee shall be
construed as being references to the Board.

 

  (b)

Subject to the provisions of the Plan and to the Committee reporting to the
Board on all matters relating to the Plan and obtaining approval of the Board
for those matters requiring such approval by the Committee’s mandate or
applicable law, the Plan will be administered by the Committee which has the
sole and absolute discretion to: (i) interpret and administer the Plan and Award
Agreements; (ii) establish, amend, and rescind any rules and regulations
relating to the Plan and Award Agreements; (iii) designate Participants and
determine the time, amount, and terms of Awards to be granted to such
Participants under the Plan, including the circumstances of vesting, settlement,
exercise, cancellation, and forfeiture; (iv) modify, waive, or adjust any term
or condition of an Award that has been granted, which may include the
acceleration of vesting, waiver of forfeiture restrictions, modification of the
form of settlement of the Award (for example, from cash to Shares or vice
versa), early termination of a performance period, or modification of any other
condition or limitation regarding an Award; and (v) make any other
determinations that the Committee deems necessary or desirable for the
administration of the Plan and Award Agreements. Any decision of the Committee
with respect to the administration and interpretation of the Plan and any Award
Agreement shall be final, conclusive, and binding on all parties concerned.

 

  (c)

Awards granted to Participants who are subject to taxation under the United
States Internal Revenue Code of 1986, as amended (the “Code”) will also be
governed by the terms and conditions set forth in Schedule “A” hereto and,
unless such Participant is also a Canadian Participant, such Awards will not be
governed by the terms of the Plan specified for Canadian Participants.

 

  (d)

Subject to the terms of the Plan and applicable law, the Board or the Committee
may delegate to one (1) or more officers or managers of the Corporation or any
Affiliate, or to a committee of such officers or managers, the authority,
subject to such terms and limitations as the Committee will determine to grant,
cancel, modify, waive rights with respect to, alter, discontinue, suspend, or
terminate Awards.

 

  (e)

Subject to the terms of the Plan, the Committee may correct any defect, supply
any omission, or reconcile any inconsistency in the Plan or any Award in the
manner and to the extent it will deem desirable to carry the Plan into effect.

 

  (f)

At any time that a member of the Committee is not a Qualified Member, any action
of the Committee relating to an Award granted or to be granted to an insider
where such action is not taken by the full Board may be taken either (i) by a
subcommittee, designated by the Committee, composed solely of two or more
Qualified Members, or (ii) by the Committee but with each such member who is not
a Qualified Member abstaining or recusing himself or herself from such action;
provided, however, that upon such abstention or recusal, the Committee remains
composed solely of two or more Qualified Members. Such action, authorized by
such a subcommittee or by the Committee upon the abstention or recusal of such
non-Qualified Member(s), shall be the action of the Committee for purposes of
the Plan. For the avoidance of doubt, the full Board may take any action
relating to an Award granted or to be granted to a Participant who is an
insider.

 

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  (g)

The Committee and each member thereof shall be entitled to, in good faith, rely
or act upon any report or other information furnished to him or her by any
officer or Employee of the Corporation or any Affiliate, the Corporation’s legal
counsel, independent auditors, consultants or any other agents assisting in the
administration of the Plan. Members of the Corporation and any officer or
Employee of the Corporation or any Affiliate acting at the direction or on
behalf of the Committee shall not be personally liable for any action or
determination taken or made in good faith with respect to the Plan, and shall,
to the fullest extent permitted by law, be indemnified and held harmless by the
Corporation with respect to any such action or determination.

 

  (h)

References to specific dollar amounts throughout the Plan refer to Canadian
dollars. The Committee shall have the discretion to implement processes and
procedures for the conversion of Canadian dollars into the currency of other
countries and vice versa as needed for the administration of the Plan and Awards
granted thereunder with respect to Participants providing services in countries
outside of Canada and/or receiving payments in currencies other than Canadian
dollars.

 

4.

Shares Available for Awards

 

  (a)

Shares Available. Subject to adjustment as provided in Section 8(e) of the Plan:

 

  (i)

Calculation of Number of Shares Available.  The maximum number of Shares
reserved and available for issuance pursuant to the settlement, exercise or
redemption, as applicable, of Awards granted under the Plan will be (A)
5,850,000 Shares, plus (B) the number of Shares that become available for Awards
under this Plan pursuant to Section 4(a)(iii) of the Plan, below. The total
number of Shares that will be available for issuance upon the exercise of ISOs
shall be 5,850,000.

 

  (ii)

Shares Becoming Again Available.

 

  (A)

Shares subject to an Award under the Plan that expires or is cancelled,
forfeited, exchanged, settled in cash, or otherwise terminated without the
actual delivery of Shares (Awards of Restricted Shares shall not be considered
“delivered Shares” for this purpose), will again be available for Awards. If an
Award may be settled only in cash, such Award need not be counted against any
Share limit under this Section 4.

 

  (B)

Notwithstanding Section 4(a)(ii)(A), the number of Shares tendered or withheld
in payment of any taxes relating to an Award, other than an Award of Options or
SARs, will not, in each case, again be available for Awards.

 

  (C)

The number of Shares tendered or withheld in payment of any exercise or purchase
price of an Option or a SAR, or taxes relating to an Option or a SAR, will, in
each case, again be available for Awards.

 

  (iii)

Shares Becoming Again Available Under the Option Plan.  Shares subject to a
stock option granted under the Amended and Restated Incentive Stock Option Plan
(the “Option Plan”) that, following the Effective Date, expires or for any
reason is canceled or terminated without having been exercised in full, will
become available for Awards under the Plan. For the avoidance of doubt, Shares
withheld in payment of any exercise or purchase price or taxes related to a
stock option granted under the Option Plan will not become available for Awards
under the Plan.

 

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  (iv)

Sources of Shares Deliverable under Awards. Where the Corporation and Employer
elect to distribute Shares pursuant to the exercise, vesting, or settlement of
an Award, such Shares may consist, in whole or in part, of authorized and
unissued Shares, or, except in respect of Options granted to Canadian
Participants, Shares purchased on the open market. For greater certainty, except
where an Award is explicitly stated to be required to be settled in Shares or as
specifically provided in the applicable Award Agreement, (A) no Participant
shall have any right to demand, be paid in, or receive Shares in respect of any
Award; and (B) notwithstanding any election by the Corporation or Employer to
settle any Award, or portion thereof, in the form of Shares, the Corporation and
Employer reserves the right to change its election in respect thereof at any
time until payment is actually made.

 

  (b)

Limitations on Awards.

 

  (i)

Provided, that this Section 4(b)(i) is not intended, and does not, increase the
number of Shares reserved for issuance under the Plan as set forth in
Section 4(a) hereof, notwithstanding anything to the contrary in the Plan:

 

  (A)

the maximum number of Shares underlying or relating to Awards which may be
granted to any one (1) Participant under the Plan in any calendar year will not
exceed ten percent (10%) of the total issued and outstanding Shares, subject to
the adjustments provided in Section 8(e) hereof;

 

  (B)

the maximum number of Shares issuable to insiders pursuant to outstanding Awards
at any time under (I) the Plan and (II) all of the Corporation’s other
security-based compensation arrangements, shall not exceed ten percent (10%) of
the total issued and outstanding Shares, subject to the adjustments provided in
Section 8(e) hereof;

 

  (C)

the maximum number of Shares issued to insiders within any one (1) year period
under (I) the Plan and (II) all of the Corporation’s other security-based
compensation arrangements, shall not exceed ten percent (10%) of the total
issued and outstanding Shares, subject to the adjustments provided in
Section 8(e) hereof; and

 

  (D)

the aggregate number of Shares issuable pursuant to outstanding Awards under the
Plan to directors of the Corporation who are not officers or Employees of the
Corporation shall be limited to one percent (1%) of the total issued and
outstanding Shares provided that the value of all Options issuable to any one
(1) director who is not an officer or Employee of the Corporation within any one
(1) year period shall not exceed one hundred thousand dollars ($100,000) and
that the value of all Awards issuable to any one (1) director who is not an
officer or Employee of the Corporation within any one (1) year period shall not
exceed one hundred fifty thousand dollars ($150,000), not including Awards
issued or taken in lieu of cash fees or a one-time initial grant to a new
director upon joining the Board.

 

  (ii)

Notwithstanding any provision of the Plan to the contrary, the Committee shall
not grant Awards to Participants with a vesting schedule that provides for full
or partial vesting less than one year after the date of grant; provided,
however, that (A) the Committee may grant Awards to Participants with a vesting
schedule that provides for full or partial vesting less than one year after the
date of grant so long as such Awards do not

 

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constitute more than five percent (5%) of the number of Shares available for
issuance under the Plan, (B) Awards may vest upon death, termination of
employment, or a Change of Control, and (C) this Section 4(b)(ii) shall not
apply to Awards described in Section 4(c) of the Plan.

 

  (c)

Shares Available Following Certain Transactions. Subject to Exchange
requirements, including Exchange approval, as applicable, Awards granted
pursuant to Section 8(f) of the Plan in substitution or exchange for awards
previously granted by a company acquired by the Corporation or any subsidiary or
with which the Corporation or any subsidiary combines shall not reduce the
Shares authorized for issuance under the Plan, nor shall shares subject to such
Awards be added to the Shares available for issuance under the Plan pursuant to
Section 4(a)(ii) of the Plan (whether or not such Awards are later cancelled,
forfeited, or otherwise terminated).

 

5.

Change of Control

 

  (a)

Notwithstanding any other provision of this Plan, in the event of a Change of
Control, any successor entity shall assume any Awards outstanding as of the
closing of the transaction or shall substitute similar Awards for such
outstanding Awards, on the same terms and conditions as the original Awards.

 

  (b)

Unless otherwise provided in the applicable Award Agreement, if, within twelve
(12) months following the Change of Control, a Participant’s service, consulting
relationship, or employment with the Corporation, an Affiliate, or the successor
entity is terminated without Cause or the Participant resigns from his or her
employment with the Corporation, an Affiliate, or the successor entity for Good
Reason, the vesting and exercisability of all Awards then held by such
Participant will be accelerated in full and the expiration date of the Options
and the SARs shall be the earlier of the date such Awards would otherwise expire
and the sixtieth (60th) day following the Participant’s Termination Date.

 

  (c)

Unless otherwise provided in the applicable Award Agreement, if, upon a Change
of Control, the successor entity does not comply with Section 5(a) above, the
vesting of all then outstanding Awards will be accelerated in full with effect
immediately prior to the occurrence of the Change of Control and:

 

  (i)

the Participant shall be permitted to conditionally exercise any or all of the
Participant’s outstanding Options effective immediately prior to the completion
of any such transaction for the sole purpose of participating in such
transaction as a shareholder;

 

  (ii)

the Participant shall be permitted to conditionally exercise any or all of the
Participant’s outstanding SARs effective immediately prior to the completion of
any such transaction, and, if the Employer exercises its discretion pursuant to
Section 7(b)(iii) to settle its cash payment obligation in respect of a SAR in
the form of Shares, such Shares shall be issued to the Participant for the sole
purpose of participating in such transaction as a shareholder;

 

  (iii)

the Restricted Share Unit Entitlement Date and, as a result, the settlement
date, for all outstanding Restricted Share Units shall be deemed to be the date
immediately prior to the occurrence of the Change of Control, and, if the
Employer exercises its discretion pursuant to Section 7(c)(iv) to settle its
cash payment obligation in respect of a Restricted Share Unit in the form of
Shares, such Shares shall be issued to the applicable Participant for the sole
purpose of participating in such transaction as a shareholder; and

 

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  (iv)

for the avoidance of doubt, all outstanding Restricted Shares shall become fully
transferable Shares effective immediately prior to the completion of any such
transaction for the sole purpose of participating in such transaction as a
shareholder;

provided that, in respect of all Awards subject to Performance Criteria, for the
purpose of the calculation of the Performance Criteria, as set forth in the
particular Award Agreement, and determining the number of such Awards that shall
vest in accordance with this Section 5(c), notwithstanding the terms of the
Award Agreement, the Performance Criteria shall be measured and calculated
assuming target performance was achieved.

 

6.

Eligibility

Any Employee or consultant of the Corporation or an Affiliate or any provider of
services to the Corporation or an Affiliate shall be eligible to be designated a
Participant. To the extent required by the Exchange(s), a consultant that is a
Canadian Resident must provide services to the Corporation or an Affiliate for
an initial, renewable, or extended period of twelve (12) months or more to be
eligible to receive an Award. Notwithstanding anything else to the contrary in
this Section 6 or any other section of the Plan, any individual that receives an
Award that may be settled in Shares must be an “employee” of the Corporation or
any of its parents or subsidiaries within the meaning of General Instruction
A.1(a) to Form S-8.

 

7.

Awards

 

  (a)

Options.  The Committee may grant to a Participant an option to purchase a Share
(each, an “Option”) which will contain the following terms and conditions and
any additional terms and conditions, not inconsistent with the provisions of the
Plan, as the Committee determines at the time of the grant, as may be reflected
in the applicable Award Agreement:

 

  (i)

Exercise Price.  The purchase price per Share purchasable under an Option (the
“Exercise Price”) will be determined by the Committee and set out in the Award
Agreement; provided, however, that, except as provided in Section 8 hereof, the
Exercise Price shall not be less than the Fair Market Value of a Share on the
date of grant of that Option.

 

  (ii)

Time and Method of Exercise.  Subject to the terms of Section 8 hereof, the
Committee will determine the vesting conditions, the time or times at which an
Option may be exercised in whole or in part (provided that the Committee may
determine that an Option may not be exercised in whole or part for a specified
period after it is granted), and the method or methods by which, and the form or
forms in which payment of the Exercise Price with respect thereto may be made.
The Committee may decide to accept any of the following forms of payment for the
Exercise Price: cash or cash equivalents, Shares (including previously owned
Shares or through a cashless exercise, i.e., “net settlement”, a broker-assisted
exercise, or other reduction of the amount of Shares otherwise issuable pursuant
to the Option, provided that, in the case of a Canadian Participant, the Shares
cannot be Shares acquired pursuant to the exercise of an Option in the preceding
twenty-four (24) months), other Awards or awards granted under other plans of
the Corporation or any Affiliate, other property, or any other legal
consideration the Committee deems appropriate. In the case of an exercise
whereby the Exercise Price is paid with Shares, such Shares shall be valued
based on the Shares’ Fair Market Value as of the date of exercise. No Option may
have a term of more than ten (10) years, and all Options granted to Canadian
Participants shall be exercisable only for the issuance by the Corporation of
authorized and previously unissued Shares from treasury (unless the Canadian
Participant is entitled to

 

9

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elect payment in an alternative form, as set out in the applicable Award
Agreement). Vesting of Options may be based upon the duration of service to the
Corporation or any Affiliate, Performance Criteria, individual performance or
other specific criteria, in each case on a specified date or dates or over any
period or periods, as determined by the Committee.

 

  (b)

SARs.  The Committee may grant to a Participant SARs which will contain the
following terms and conditions and any additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee determines at the
time of the grant, as may be reflected in the applicable Award Agreement:

 

  (i)

Grant Price.  Each Award Agreement evidencing a SAR shall state the grant price
per Share established by the Committee; provided, however, that except as
provided in Section 8 hereto, the grant price per Share subject to an SAR shall
not be less than the Fair Market Value per Share as of the date of grant of that
SAR.

 

  (ii)

Future Services Only.  Notwithstanding any provision of the Plan or in an Award
Agreement, a SAR granted to a Canadian Participant shall be granted solely in
respect of the services of such Participant to be rendered to the Corporation
and its Affiliates subsequent to the date of grant of the SAR and none of the
main purposes of such grant may to be provide the Canadian Participant with a
payment that is in lieu of salary or wages for services rendered by such
Participant in the year in a previous calendar year. For greater certainty, no
SAR granted to a Canadian Participant shall have any value prior to becoming
vested and exercisable.

 

  (iii)

Time and Method of Exercise and Settlement.  Subject to the terms of Section 8
hereof, the Committee will determine the vesting conditions, the time or times
at which a SAR may be exercised in whole or in part (provided that the Committee
may determine that a SAR may not be exercised in whole or part for a specified
period after it is granted); provided, that no SAR may have a term of more than
ten (10) years and further provided that any SAR granted to a Canadian
Participant shall have a term extending not later than December 15th of the
calendar year in which such SAR becomes vested and exercisable. Such vesting may
be based upon the duration of service to the Corporation or any Affiliate,
Performance Criteria, individual performance or other specific criteria, in each
case on a specified date or dates or over any period or periods, as determined
by the Committee. Upon exercise of a SAR, the Employer shall make to the
Participant a payment equal to the excess of (A) the Fair Market Value of one
Share on the date of exercise over (B) the grant price of the SAR, which payment
shall, after deduction of any applicable taxes and other source deductions
required to be withheld by the Employer, be paid in cash. At the Employer’s
discretion, the Employer may elect to settle the cash payment obligation in
respect of a SAR in the form of Shares (or in a combination of cash and Shares),
in which case the Employer shall cause the Corporation to deliver such Shares
directly to the Participant.

 

  (iv)

Rights Related to Options.  A SAR granted in connection with an Option shall
entitle a Participant, in lieu of exercising the vested Option, to surrender
that Option or any portion thereof, to the extent unexercised, and to receive
payment of an amount determined by multiplying (A) the difference obtained by
subtracting the Exercise Price with respect to a Share specified in the related
Option from the Fair Market Value of a Share on the date of exercise of the SAR,
by (B) the number of Shares as to which that SAR has been exercised and the
underlying Option surrendered. The Option shall then cease to be exercisable to
the extent surrendered. SARs granted in

 

10

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connection with an Option shall be subject to the terms and conditions of the
Award Agreement governing the Option, which shall provide that the SAR is
exercisable only at such time or times and only to the extent that the related
Option is exercisable and shall not be transferable except to the extent that
the related Option is transferrable.

 

  (c)

Restricted Share Units.  The Committee may grant to a Participant Restricted
Share Units which will contain the following terms and conditions and any
additional terms and conditions, not inconsistent with the provisions of the
Plan, as the Committee determines at the time of the grant, as may be reflected
in the applicable Award Agreement:

 

  (i)

Vesting.  Subject to the terms of Section 8 hereof, the Committee will determine
the vesting conditions. The Committee may impose any conditions or restrictions
on the vesting or payout of Restricted Share Units as it may deem appropriate,
including, without limitation, vesting based upon the Participant’s duration of
service to the Corporation or any Affiliate, Performance Criteria, individual
performance or other specific criteria, in each case on a specified date or
dates or over any period or periods, as determined by the Committee; provided,
that no such condition or restriction shall cause any Restricted Share Unit that
is granted to a Canadian Participant to fail to or cease to comply with the
requirements of paragraph (k) of the exception to the definition of “salary
deferral arrangement” in subsection 248(1) of the Tax Act.

 

  (ii)

Restricted Share Unit Account.

 

  (A)

An account, to be known as a “Restricted Share Unit Account”, shall be
maintained by the Corporation for each Participant. On the date of grant, the
Restricted Share Unit Account will be credited with the number of Restricted
Share Units granted to a Participant on that date.

 

  (B)

Unless otherwise determined by the Committee in its sole discretion and set out
in the applicable Award Agreement but subject to the requirements of
Section 9(o) of the Plan, each Restricted Share Unit shall include a
Dividend-Equivalent Right such that on the payment date for cash dividends paid
on Shares (the “Dividend Payment Date”), each Participant’s Restricted Share
Unit Account shall be credited with additional Restricted Share Units in respect
of Restricted Share Units credited to and outstanding in the Participant’s
Restricted Share Unit Account as of the record date for payment of such
dividends (the “Dividend Record Date”). The number of such additional Restricted
Share Units to be credited to the Participant’s Restricted Share Unit Account
will be calculated (to two (2) decimal places) by dividing the total amount of
the dividends that would have been paid to such Participant if the Restricted
Share Units in the Participant’s Restricted Share Unit Account (including
fractions thereof), as of the Dividend Record Date, were Shares, by the Fair
Market Value of a Share on the Dividend Payment Date. The terms and conditions
of any such additional Restricted Share Units shall be identical to the
underlying Restricted Share Units held by such Participant. For the avoidance of
doubt, no additional Restricted Share Units will be credited or granted pursuant
to this Section 7(c)(ii)(B) where the Dividend Record Date relating to dividends
falls after the termination of the Participant’s employment with or the
cessation of services to the Corporation and its Affiliates, as applicable, or
the settlement of such Restricted Share Units, whichever occurs first.

 

11

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  (iii)

RSU Service Year.  At the time of grant of a Restricted Share Unit to a Canadian
Participant, the Committee shall specify the year of service of the Participant
in respect of which the Restricted Share Unit is granted (the “RSU Service
Year”). Notwithstanding anything contained herein, all Restricted Share Units
granted to Canadian Participants shall be in addition to, and not in
substitution for or in lieu of, ordinary salary and wages received by such
Participant in respect of his or her services to the Corporation or an
Affiliate, as applicable.

 

  (iv)

Payout of Restricted Share Units.  On a date to be determined by the Committee,
in its sole discretion, following the day on which any Restricted Share Units
become Vested Restricted Share Units, which date, notwithstanding anything else
contained in this Plan, shall in respect of all Restricted Share Units granted
to Canadian Participants be on or before that date which is three (3) years
following the end of the relevant RSU Service Year (the “Restricted Share Unit
Entitlement Date”), such Vested Restricted Share Units shall be paid by the
Participant’s Employer to the Participant or the Participant’s Beneficiary, as
applicable. The Fair Market Value of the Vested Restricted Share Units so paid
at such time shall, after deduction of any applicable taxes and other source
deductions required to be withheld by the Employer, be paid in cash. At the
Employer’s discretion, the Employer may elect to settle the cash payment
obligation in respect of a Restricted Share Unit in the form of Shares (or in a
combination of cash and Shares), in which case the Employer shall cause the
Corporation to deliver such Shares directly to the Participant.

 

  (d)

Restricted Shares.  The Committee may grant to a Participant Restricted Shares
which will contain the following terms and conditions and any additional terms
and conditions, not inconsistent with the provisions of the Plan, as the
Committee determines at the time of the grant, as may be reflected in the
applicable Award Agreement:

 

  (i)

Vesting.  Subject to the terms of Section 8 hereof, the Committee will determine
the vesting conditions. The Committee may impose any conditions or restrictions
on the vesting or payout of Restricted Shares as it may deem appropriate,
including, without limitation, vesting based upon the Participant’s duration of
service to the Corporation or any Affiliate, Performance Criteria, individual
performance or other specific criteria, in each case on a specified date or
dates or over any period or periods, as determined by the Committee.

 

  (ii)

Rights of Restricted Share Holder.  Subject to the requirements of Section 9(o)
of the Plan and except as otherwise provided under the terms of an Award
Agreement evidencing a Restricted Share Award, the holder of Restricted Shares
will generally have rights as a shareholder, including the right to receive
dividends on the Shares subject to the award of Restricted Shares during the
restriction period and, subject to approval of the Exchange, the right to vote
the Shares subject to the award of Restricted Shares. Shares distributed in
connection with a share split or share dividend and other property (including
cash) distributed as a dividend will be subject to the same restrictions and a
risk of forfeiture as the Restricted Shares with respect to which such Shares or
other property have been distributed. As a condition to the grant of an Award of
Restricted Shares, the Committee may allow a Participant to elect, or may
require, that any cash dividends paid on a Restricted Share be automatically
reinvested in additional Restricted Shares, applied to the purchase of
additional Awards or deferred without interest to the date of vesting of the
associated Award of Restricted Shares.

 

12

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  (iii)

Restrictions.  During the period following grant and before vesting (i.e., the
restricted period) applicable to the Restricted Shares, the Restricted Shares
may not be sold, transferred, pledged, hedged, hypothecated, margined, or
otherwise encumbered by the Participant. Subject to the provisions of this Plan
and the applicable Award Agreement, upon vesting, the Restricted Shares shall
become fully transferable Shares.

 

  (e)

Share Awards.  The Committee may grant Share Awards to a Participant as a bonus,
as additional compensation, or in lieu of cash compensation any such Participant
is otherwise entitled to receive, in such amounts and subject to such other
terms as the Committee in its discretion determines is appropriate.

 

  (f)

Other Share-Based Awards.  The Committee is authorized, subject to limitations
under applicable law and approval of the Exchange(s), to grant to Participants
such other Awards that may be denominated or payable in, valued in whole or in
part by reference to, or otherwise based on, or related to, Shares, as deemed by
the Committee to be consistent with the purposes of the Plan, including
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Shares, purchase rights for Shares, Awards with value and
payment contingent upon performance of the Corporation or any other factors
designated by the Committee, and Awards valued by reference to the book value of
Shares or the value of securities of, or the performance of, specified
Affiliates. The Committee shall determine the terms and conditions of such Other
Share-Based Awards, provided that the Committee shall take all reasonable
measures to ensure that the Other Share-Based Awards are not adverse from a tax
perspective to any particular Participant. The Committee may impose any
conditions or restrictions on the vesting or payout of Other Share-Based Awards
as it may deem appropriate, including, without limitation, vesting based upon
the Participant’s duration of service to the Corporation or any Affiliate,
Performance Criteria, individual performance or other specific criteria, in each
case on a specified date or dates or over any period or periods, as determined
by the Committee. Shares delivered pursuant to an Other Share-Based Award in the
nature of a purchase right granted under this Section 7(f) shall be purchased
for such consideration, paid for at such times, by such methods, and in such
forms, including cash, Shares, other Awards, or other property, as the Committee
shall determine.

 

  (g)

Cash Awards.  The Committee is authorized to grant Cash Awards, on a
free-standing basis or as an element of, a supplement to, or in lieu of any
other Award under the Plan to Participants in such amounts and subject to such
other terms as the Committee in its discretion determines to be appropriate. The
Committee may impose any conditions or restrictions on the vesting or payout of
Cash Awards as it may deem appropriate, including, without limitation, vesting
based upon the Participant’s duration of service to the Corporation or any
Affiliate, Performance Criteria, individual performance or other specific
criteria, in each case on a specified date or dates or over any period or
periods, as determined by the Committee.

 

8.

Amendments and Adjustments

Except to the extent prohibited by applicable law and unless otherwise expressly
provided in an Award Agreement or in the Plan:

 

  (a)

Amendments to the Plan.  Subject to the requirements of applicable law, rules
and regulations, the Board may amend, alter, suspend, discontinue, or terminate
the Plan or any Award without the consent of any shareholder, Participant, other
holder or Beneficiary of an Award, or other Person; provided, however, that,
subject to the Corporation’s rights to adjust Awards under Sections 8(c), (d)
and (e) hereof, any amendment, alteration, suspension, discontinuation, or
termination that would impair the rights of any Participant or holder or

 

13

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Beneficiary of any Award previously granted, will not to that extent be
effective without the consent of the Participant or holder or Beneficiary of an
Award, as the case may be, such consent not to be unreasonably withheld.
Notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the shareholders of the Corporation, no amendment, alteration,
suspension, discontinuation, or termination will be made that would:

 

  (i)

increase the total number of Shares available for Awards under the Plan, except
as provided in Section 4(a)(ii) hereof and this Section 8;

 

  (ii)

(A) reduce the Exercise Price or extend the term of an Option or SAR beyond the
original term included in the applicable Award Agreement, (B) grant a new Option
or SAR in substitution for, or upon the cancelation of, any previously granted
Option that has the effect of reducing the Exercise Price thereof, (C) exchange
any Option or SAR for Shares, cash, or other consideration when the Exercise
Price per Share exceeds the Fair Market Value of a Share, or (D) take any other
action that would be considered a “repricing” of an Option or SAR under the
Exchange(s), in each case, except as provided in Sections 8(d), (e), or (f);

 

  (iii)

remove or exceed the insider participation limits in Section 4(b)(i)(B) and
4(b)(iii) hereof;

 

  (iv)

increase limits in Section 4(b)(i)(D) hereof imposed on the participation of
directors that are not officers or Employees of the Corporation, except as
provided in Section 8(d) or (e);

 

  (v)

have the effect of amending this Section 8(a);

 

  (vi)

modify or amend the provisions of the Plan in any manner which would permit
Awards, including those previously granted, to be transferable or assignable in
a manner otherwise than as provided for by Section 9(e);

 

  (vii)

change the eligible Participants under the Plan which would have the potential
of broadening or increasing insider participation; or

 

  (viii)

otherwise cause the Plan or any Awards previously granted to cease to comply
with any tax or regulatory requirement, including for these purposes any
approval or other requirement.

Without limitation to the generality of the foregoing, Shareholder approval will
not be required for any of the following types of amendments:

 

  (ix)

amendments for the purpose of curing any ambiguity, error or omission in the
Plan or Award or to correct or supplement any provision of the Plan or Award
that is inconsistent with any other provision of the Plan or Award;

 

  (x)

amendments necessary to comply with applicable laws;

 

  (xi)

amendments of a “housekeeping” nature;

 

  (xii)

amendments intended to comply with changes in tax or regulatory requirements; or

 

  (xiii)

a change to the termination provisions of Awards which does not entail an
extension beyond the original expiry date of such Award.

 

14

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  (b)

Amendments to Awards.  The Committee may waive any conditions or rights under,
amend any terms of, or alter, suspend, discontinue, cancel, or terminate, any
Award previously granted, prospectively or retroactively; provided, however,
that, subject to the Committee’s right to adjust Awards under Section 8(c) and
(d) hereof, any amendment, alteration, suspension, discontinuation,
cancellation, or termination that would impair the rights of any Participant or
holder or Beneficiary of any Award previously granted, will not to that extent
be effective without the consent of the Participant or holder or Beneficiary of
an Award, as the case may be, such consent not to be unreasonably withheld.

 

  (c)

Adjustments of Awards upon the Occurrence of Certain Unusual or Nonrecurring
Events.  Subject to, if applicable, approval of the Exchange(s), the Committee
is hereby authorized to make adjustments in the terms and conditions of, and the
criteria included in, Awards in recognition of unusual or non-recurring events
(including, without limitation, the events described in Section 5 and 8(e)
hereof) affecting the Corporation, any Affiliate, or the financial statements of
the Corporation or any Affiliate, or of changes in applicable laws, regulations,
or accounting principles, whenever the Committee determines that those
adjustments are appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan.

 

  (d)

Recapitalization.  In the event of any change in the capital structure or
business of the Corporation or other corporate transaction or event that would
be considered an “equity restructuring” within the meaning of ASC Topic 718 and,
in each case, that would result in an additional compensation expense to the
Corporation pursuant to the provisions of ASC Topic 718, if adjustments to
Awards with respect to such event were discretionary or otherwise not required
(each such an event, an “Adjustment Event”), then the Committee shall equitably
adjust (i) the aggregate number or kind of shares that thereafter may be
delivered under the Plan, (ii) the number or kind of shares or other property
(including cash) subject to an Award, (iii) the terms and conditions of Awards,
including the purchase price or Exercise Price of Awards and Performance
Criteria, as applicable, and (iv) the applicable limitations with respect to
Awards provided in Section 4(b) hereof to equitably reflect such Adjustment
Event (“Equitable Adjustments”).

 

  (e)

Adjustments.  In the event that the Committee determines that any dividend or
other distribution (whether in the form of cash, Shares, other securities, or
other property), recapitalization, share split, share dividend, reverse share
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Corporation,
issuance of warrants or other rights to purchase Shares or other securities of
the Corporation, or other similar corporate transactions or events affect the
Shares (which do not constitute an Adjustment Event) such that an adjustment is
determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan and any Awards granted under the Plan, then the Committee may, in
any manner as it may deem equitable, subject to, if applicable, approval of the
Exchange(s), adjust any or all of: (i) the number and kind of Shares or other
securities which thereafter may be made the subject of Awards; (ii) the number
and kind of Shares or other securities subject to outstanding Awards; (iii) the
Fair Market Value or the grant or Exercise Price with respect to any Award or,
if deemed appropriate, make provision for a cash payment to the holder of an
outstanding Award; and (iv) the limitations on the number of Shares subject to
certain Awards and issuable to insiders and directors provided for in
Section 4(b)(i) hereof; provided, however, that the number of Shares subject to
any Award denominated in Shares will always be a whole number. Notwithstanding
the foregoing, any adjustments made pursuant to this Section 8(e) shall be
compliant with all applicable law and such that the “in-the-money” value of any
Option or

 

15

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SAR granted to a Canadian Participant hereunder shall not be increased, that all
Options granted to a Canadian Participant are continuously governed by section 7
of the Tax Act, that all SARs granted to a Canadian Participant are continuously
not subject to the definition of “salary deferral arrangement” in subsection
248(1) of the Tax Act, and that all Restricted Share Units granted to a Canadian
Participant shall continuously meet the requirements to be exempted from the
definition of “salary deferral arrangement” in subsection 248(1) of the Tax Act.

 

  (f)

Substitution Following a Transaction.  Awards may also be granted under the Plan
in substitution for awards held by individuals who become Participants as a
result of a merger, consolidation or acquisition of another entity or the assets
of another entity by or with the Corporation or an Affiliate. Such substituted
Awards referred to in the immediately preceding sentence that are Options or
SARs may have an Exercise Price or grant price that is less than the Fair Market
Value of a Share on the date of the substitution if such substitution complies
with applicable laws (including tax laws) and Exchange rules.

 

9.

General Provisions

 

  (a)

Acceleration.  Notwithstanding anything else herein contained, the Committee
may, in its sole discretion, at any time permit the acceleration of vesting of
any or all Awards.

 

  (b)

No Cash Consideration for Awards.  Awards may be granted for no cash
consideration or for such minimal cash consideration as may be required by
applicable law.

 

  (c)

Awards May Be Granted Separately or Together.  Awards may, in the discretion of
the Committee, be granted either alone or in addition to, in tandem with, or in
substitution for any other Award. Awards granted in addition to or in tandem
with other Awards may be granted either at the same time as or at a different
time from the grant of such other Awards.

 

  (d)

Forms of Payment under Awards.  Subject to the terms of the Plan and of any
applicable Award Agreement, payments or transfers to be made by the Corporation
or an Affiliate upon the grant, exercise, surrender, redemption, or payment of
an Award may be made in such form or forms as the Committee will determine,
including, without limitation, cash, Shares, other securities, other Awards, or
other property, or any combination thereof and may be made in a single payment
or transfer, in installments, or on a deferred basis, in each case in accordance
with rules and procedures established by the Committee and applicable law. Such
rules and procedures may include, without limitation, provisions for the payment
or crediting of reasonable interest on installment or deferred payments.

 

  (e)

Limits on Transfer of Awards.

 

  (i)

No Award, other than a Share Award, and no right under any such Award, may be
assigned, alienated, pledged, attached, sold, or otherwise transferred or
encumbered by a Participant other than by will, by the laws of descent or by the
designation of a Beneficiary by a Participant and any such purported assignment,
alienation, pledge, attachment, sale, or other transfer or encumbrance will be
void and unenforceable against the Corporation or any Affiliate.

 

  (ii)

Each Award, and each right under any Award, will be exercisable during the
Participant’s lifetime only by the Participant or, if permissible under
applicable law, by the Participant’s guardian or legal representative.

 

16

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  (iii)

Notwithstanding the preceding provisions of this Section 9(e), an Award other
than an ISO may be transferred pursuant to a domestic relations order entered or
approved by a court of competent jurisdiction upon delivery to the Corporation
of a written request for such transfer and a certified copy of such order.

 

  (f)

Share Certificates.  All certificates for Shares delivered under the Plan
pursuant to any Award or the exercise or redemption thereof will be subject to
any stop transfer orders and other restrictions as the Committee may deem
advisable under the Plan or the rules, regulations, and other requirements of
Canadian securities regulators, the SEC, the Exchange(s), and any applicable
federal, state, provincial or territorial securities laws, and the Committee may
cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions. If Shares are issued in book entry form, a
notation to the same restrictive effect will be placed on the transfer agent’s
books in connection with such Shares.

 

  (g)

Delivery of Shares or Other Securities and Payment by Participant of
Consideration.  No Shares or other securities will be delivered pursuant to any
Award until payment in full of any amount required to be paid pursuant to the
Plan or the applicable Award Agreement is received by the Corporation. Subject
to the terms of the Plan, such payment may be made by such method or methods and
in such form or forms as the Committee will determine, including, without
limitation, cash, Shares, other securities, other Awards or other property, or
any combination thereof; provided that the combined value, as determined by the
Committee, of all cash and cash equivalents and the Fair Market Value of any
such Shares or other property so tendered to the Corporation, as of the date of
such tender, is at least equal to the full amount required to be paid pursuant
to the Plan or the applicable Award Agreement to the Corporation.

 

  (h)

No Shareholder Rights.  Under no circumstances shall any Award, other than Share
Awards and Restricted Shares, made under the Plan be considered Shares or other
securities of the Corporation and no Participant shall be considered the owner
of Shares as a result of the grant of any Award other than Share Awards and
Restricted Shares (subject to the restrictions provided in the Award Agreement
pursuant to which the Restricted Shares were granted). Further, no Award other
than a Share Award (or an Award of Restricted Shares, but only to the extent
voting rights are approved by the Exchange and further subject to Section 9(o)
of the Plan and the Award Agreement pursuant to which the Restricted Shares were
granted) shall entitle any Participant to exercise voting rights or any other
rights attaching to the ownership of Shares or other securities of the
Corporation, including, without limitation, entitlement to receive dividends or
other distributions, or rights on liquidation.

 

  (i)

No Right to Awards.  No Participant or other Person will have any claim to be
granted any Award under the Plan, and there is no obligation for uniformity of
treatment of Participants, or holders or Beneficiaries of Awards under the Plan.
The terms and conditions of Awards need not be the same with respect to each
recipient.

 

  (j)

Taxes and other Withholdings.

 

  (i)

Neither the Corporation nor any Affiliate is liable for any tax or other
liabilities or consequences imposed on any Participant (or any Beneficiary) as a
result of the granting or crediting, holding, exercise, surrender, or redemption
of any Awards under this Plan, whether or not such costs are the primary
responsibility of the Corporation or Affiliate. It is the responsibility of the
Participant (or Beneficiary) to complete and file any tax returns which may be
required under any applicable tax laws within the period prescribed by such
laws.

 

17

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  (ii)

The Corporation or any Affiliate is authorized to deduct or withhold from any
Award granted, from any payment due or transfer made under any Award or under
the Plan or from any compensation or other amount owing to a Participant such
amount as may be necessary so as to ensure the Corporation and any Affiliate
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 (the “Applicable Withholding Taxes”), and to take any other
action as may be necessary in the opinion of the Corporation or Affiliate,
acting reasonably, to satisfy all obligations for the payment of those
Applicable Withholding Taxes, including, for greater certainty, requiring a
Participant, as a condition to the exercise or redemption of an Award, to pay or
reimburse the Corporation or Affiliate, as applicable, for any Applicable
Withholding Taxes. The Committee shall determine, in its sole discretion, the
form of payment acceptable for such tax withholding obligations, including the
delivery of cash or cash equivalents, Shares (including through delivery of
previously owned Shares (other than, in the case of Canadian Participants,
Shares previously issued upon the exercise of an Option within the preceding
twenty-four (24)-month period), net settlement, a broker-assisted sale, or other
cashless withholding or reduction of the amount of Shares otherwise issuable or
delivered pursuant to the Award), other property, or any other legal
consideration the Committee deems appropriate. Any determination made by the
Committee to allow a Participant who is subject to Rule 16b-3 to pay taxes with
Shares through net settlement or previously owned Shares shall be approved by
either a committee made up of solely two or more Qualified Members or the full
Board. If such tax withholding amounts are satisfied through net settlement or
previously owned Shares, the maximum number of Shares that may be so withheld or
surrendered shall be the number of Shares that have an aggregate Fair Market
Value on the date of withholding or surrender equal to the aggregate amount of
such tax liabilities determined based on the greatest withholding rates for
federal, state, foreign, and/or local tax purposes, including payroll taxes,
that may be utilized without creating adverse accounting treatment for the
Corporation with respect to such Award, as determined by the Committee.

The Corporation or Affiliate may sell any Shares, other securities or property
withheld, in such manner and on such terms as it deems appropriate, and shall
apply the proceeds of such sale to the payment of Applicable Withholding Taxes
or other amounts, and shall not be liable for any inadequacy or deficiency in
the proceeds received or any amounts that would have been received, had such
Shares, other securities or property been sold in a different manner or on
different terms.

 

  (k)

No Limit on Other Compensation Arrangements.  Nothing contained in the Plan will
prevent the Corporation or any Affiliate from adopting or continuing in effect
other or additional compensation arrangements, and those arrangements may be
either generally applicable or applicable only in specific cases.

 

  (l)

Collection of Personal Information.  Each Participant shall provide the
Corporation, the Board, and the Committee with all information they require in
order to administer the Plan. The Corporation, any Affiliate, the Board, and the
Committee may from time to time transfer or provide access to such information
to a third party service provider for purposes of the administration of the Plan
provided that such service providers will be provided with such information for
the sole purpose of providing such services to the Corporation. By participating
in the Plan, each Participant acknowledges that information may be so provided
and agrees to its provision on the terms set forth herein. Except as
specifically contemplated in this Section 9(l), the Corporation, any Affiliate,
the Board and the Committee shall not

 

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disclose the personal information of a Participant except: (i) in response to
regulatory filings or other requirements for the information by a governmental
authority with jurisdiction over the Corporation; (ii) for the purpose of
complying with a subpoena, warrant or other order by a court, Person, or body
having jurisdiction to compel production of the information; or (iii) as
otherwise required by law. In addition, personal information of Participants may
be disclosed or transferred to another party during the course of, or completion
of, a change in ownership of, or the grant of a security interest in, all or a
part of the Corporation or its Affiliates including through an asset or share
sale, or some other form of business combination, merger, or joint venture,
provided that such party is bound by appropriate agreements or obligations.

 

  (m)

No Right to Employment or Continued Service.  The grant of an Award will not be
construed as giving a Participant the right to be employed or serve as an
officer, director, or consultant of the Corporation or any Affiliate. Further,
the Corporation or an Affiliate may at any time dismiss a Participant from
employment or from service as an officer, director, or consultant free from any
liability, or any claim under the Plan, unless otherwise expressly provided in
the Plan or in any Award Agreement.

 

  (n)

No Right to Consultancy.  The grant of an Award will not be construed as giving
a Participant the right to be retained as a consultant of the Corporation or any
Affiliate.

 

  (o)

Dividends and Dividend-Equivalent-Rights Subject to Forfeiture.  Any dividend or
Dividend-Equivalent-Right credited with respect to any Award (except for
dividends paid following the grant of a Share Award, which is an Award of fully
vested Shares) will be subject to the same time and/or performance-based vesting
conditions applicable to such Award and shall, if vested, be delivered or paid
at the same time as such Award.

 

  (p)

Neutral Gender/Singular, Plural.  In this Plan, words importing the masculine
gender include feminine and vice versa and words importing the singular include
the plural and vice versa.

 

  (q)

Governing Law.  Except where foreign law is applicable, the validity,
construction, and effect of the Plan and any rules and regulations relating to
the Plan will be determined in accordance with the laws of the Province of
Alberta and the federal laws of Canada applicable in Alberta.

 

  (r)

Severability.  If any provision of the Plan or any Award is or becomes or is
deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any
Person or Award under any law deemed applicable by the Committee, that provision
will be construed or deemed amended to conform to applicable laws, or if it
cannot be construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the Award, that
provision will be stricken as to that jurisdiction, Person, or Award and the
remainder of the Plan and any such Award will remain in full force and effect.

 

  (s)

No Trust or Fund Created.  The Plan shall be unfunded in all respects. Neither
the Plan nor any Award will create or be construed to create a trust or separate
fund of any kind or a fiduciary relationship between the Corporation or any
Affiliate and a Participant or any other Person. To the extent that any Person
acquires a right to receive payments from the Corporation or any Affiliate
pursuant to an Award, that right will be no greater than the right of any
unsecured general creditor of the Corporation or any Affiliate.

 

  (t)

No Fractional Shares.  No fractional Shares will be issued or delivered pursuant
to the Plan or any Award, and, except as otherwise provided, the Committee will
determine whether cash,

 

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other securities, or other property will be paid or transferred in lieu of any
fractional Shares or whether those fractional Shares or any rights thereto will
be canceled, terminated, or otherwise eliminated.

 

  (u)

Headings.  Headings are given to the sections and subsections of the Plan solely
as a convenience to facilitate reference. Those headings will not be deemed in
any way material or relevant to the construction or interpretation of the Plan
or any provision of the Plan.

 

  (v)

Conditions to Delivery of Shares.  Nothing herein or in any Award Agreement
shall require the Corporation to issue any Shares with respect to any Award if
that issuance would, in the opinion of counsel for the Corporation, constitute a
violation of the Securities Act, any other applicable law, or the rules of the
Exchange(s) as then in effect. In addition, each Participant who receives an
Award under the Plan shall not sell or otherwise dispose of Shares that are
acquired upon grant, exercise, or vesting of an Award in any manner that would
constitute a violation of any applicable laws, the Plan, or the rules,
regulations, or other requirements of the SEC or the Exchange(s). At the time of
any exercise of an Option, or at the time of any grant of any other Award, the
Corporation may, as a condition precedent to the exercise of such Option or
settlement of any other Award, require from the Participant (or in the event of
his or her death, his or her legal representatives, heirs, legatees, or
distributees) such written representations, if any, concerning the holder’s
intentions with regard to the retention or disposition of the Shares being
acquired pursuant to the Award and such written covenants and agreements, if
any, as to the manner of disposal of such Shares as, in the opinion of counsel
to the Corporation, may be necessary to ensure that any disposition by that
holder (or in the event of the holder’s death, his or her legal representatives,
heirs, legatees, or distributees) will not involve a violation of the Securities
Act, any other applicable state or federal statute or regulation, or any rule of
any applicable securities exchange or securities association, as then in effect.

 

  (w)

Clawback.  The Plan and all Awards granted hereunder are subject to any written
clawback policies that the Corporation, with the approval of the Board or an
authorized committee thereof, may adopt either prior to or following the
Effective Date, including, but not limited to, any policy adopted to conform to
the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules
promulgated thereunder by the SEC and that the Corporation determines should
apply to Awards. Any such policy may subject a Participant’s Awards and amounts
paid or realized with respect to Awards to reduction, cancellation, forfeiture,
or recoupment if certain specified events or wrongful conduct occur, including
an accounting restatement due to the Corporation’s material noncompliance with
financial reporting regulations or other events or wrongful conduct specified in
any such clawback policy.

 

  (x)

Participants in Non-Canadian Jurisdictions.  Notwithstanding any provision of
the Plan to the contrary, to comply with applicable laws in countries other than
Canada in which the Corporation or any Affiliate operates or has employees,
officers or directors or other service providers from time to time, or to ensure
that the Corporation complies with any applicable requirements of foreign
securities exchanges, the Committee, in its sole discretion, shall have the
power and authority to: (i) determine which of the Affiliates shall be covered
by the Plan; (ii) determine which individuals outside of Canada are eligible to
participate in the Plan; (iii) modify the terms and conditions of any Award
granted to a Participant outside of Canada to comply with applicable foreign
laws or listing requirements of any foreign exchange; (iv) establish sub-plans
and modify exercise procedures and other terms and procedures, to the extent
such actions may be necessary or advisable (any such sub-plans and/or
modifications shall be attached to the Plan as schedules), provided, however,
that no such sub-plans and/or modifications shall increase the Share limitations
contained in Section 4 of the Plan; and

 

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(v) take any action, before or after an Award is granted, that it deems
advisable to comply with any applicable governmental regulatory exemptions or
approval or listing requirements of any such foreign securities exchange. For
purposes of the Plan, all references to foreign laws, rules, regulations or
taxes shall be references to the laws, rules, regulations and taxes of any
applicable jurisdiction other than Canada or a political subdivision thereof.

 

  (y)

Blackout Periods. If the date under any Award on which: (i) cash is to be issued
in settlement of the Award, or (ii) Performance Criteria are to be evaluated by
the Corporation, occurs during a Blackout Period or within three business days
of the expiry of a Blackout Period applicable to the relevant Participant, then,
subject to Section 7(c)(iv) in respect of Restricted Share Units, the settlement
date or evaluation date, as applicable, shall be deemed to be the tenth (10th)
business day after expiry of the Blackout Period, or such earlier date following
the expiry of the Blackout Period as determined by the Administrator. For
Canadian Participants, where a Blackout Period is continuing as of December 15th
of the third (3rd) year following the RSU Service Year in respect of Restricted
Share Units, the Restricted Share Units shall be paid out automatically on such
December 15th date. Notwithstanding the foregoing, Shares may be issued in
settlement of, or upon exercise of, an Award during a Blackout Period, provided
that such Shares are subject to restrictions on trading in accordance with the
Corporation’s blackout policy.

 

10.

Adoption, Approval and Effective Date of the Plan

This Plan is effective as of the Effective Date. No Awards may be granted under
the Plan on and after the tenth (10th) anniversary of the Effective Date, which
is May 22, 2030. However, any Award granted prior to such termination (or any
earlier termination pursuant to Section 8(a) hereof), and the authority of the
Board or Committee to amend, alter, adjust, suspend, discontinue, or terminate
any such Award or to waive any conditions or rights under such Award in
accordance with the terms of the Plan, shall extend beyond such termination
until the final disposition of such Award.

 

21

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SCHEDULE “A”

Supplement to DIRTT Environmental Solutions Ltd. Long Term Incentive Plan for
United States Participants

 

1.

General.  This supplement (“Supplement”) to the DIRTT Environmental Solutions
Ltd. Long Term Incentive Plan, as such plan may be amended from time to time
(the “Plan”) shall apply to Participants who are, in respect of Awards, subject
to taxation under the Code (the “U.S. Participants”). In the event of any
inconsistency between the Plan and this Supplement, the terms and conditions of
this Supplement shall control and govern Awards granted to U.S. Participants,
except to the extent necessary to ensure that a U.S. Participant who is also a
Canadian Participant or otherwise subject to taxation under the Tax Act in
respect of Awards granted under the Plan is not subject to material adverse tax
consequences under the Tax Act. Capitalized terms not defined in this Supplement
shall have the meaning given to such terms in the Plan, the terms and conditions
of which are herein incorporated by reference.

 

2.

Governing Tax Law.  References in the Plan to section 7 and to the definition of
“salary deferral arrangement” in subsection 248(1) of the Tax Act shall not
apply to any Award granted to a U.S. Participant who is not also a Canadian
Participant. Awards granted to U.S. Participants generally shall be subject to
the requirements of the Code.

 

3.

Award Agreement.  Unless otherwise determined by the Committee, the Award
Agreement evidencing an Award granted to a U.S. Participant shall set forth the
terms, conditions, and limitations for such Award, which may include the term of
the Award, the provisions applicable in the event of the U.S. Participant’s
termination of service.

 

4.

ISOs.  The Committee is authorized to grant ISOs to U.S. Participants.
Notwithstanding the provisions of Section 7(a) of the Plan, any ISO granted to
an individual who owns Shares possessing more than ten percent (10%) of the
total combined voting power of all classes of Shares of the Corporation or any
of its subsidiaries shall (i) have an exercise price equal to at least one
hundred ten percent (110%) of the Fair market Value per Share on the date of
grant and (ii) not be exercisable for a period for more than five (5) years
following the date of grant of the ISO. The terms of any ISO granted under the
Plan shall comply in all respects with the provisions of Section 422 of the
Code. ISOs may only be granted to employees of the Corporation or any subsidiary
corporation of the Corporation. Except as otherwise provided in Section 8 of the
Plan, no term of the Plan relating to ISOs (including any SAR granted in tandem
therewith) shall be interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be exercised, so as to disqualify either the
Plan or any ISO under Section 422 of the Code, unless notice has been provided
to the Participant that such change will result in such disqualification. ISOs
shall not be granted more than ten (10) years after the earlier of the adoption
of the Plan or the approval of the Plan by the Corporation’s shareholders.
Notwithstanding the foregoing, to the extent that the aggregate Fair Market
Value of Shares subject to an ISO and the aggregate Fair Market Value of shares
of any subsidiary corporation (within the meaning of Section 424(f) of the Code)
subject to any other incentive stock options of the Corporation or subsidiary
corporation (within the meaning of Section 424(f) of the Code) that are
exercisable for the first time by a Participant during any calendar year exceeds
one hundred thousand dollars ($100,000), or such other amount as may be
prescribed under Section 422 of the Code, such excess shall be treated as
Nonstatutory Options in accordance with the Code. As used in the previous
sentence, Fair Market Value shall be determined as of the date the ISO is
granted. If a Participant shall make any disposition of Shares issued pursuant
to an ISO under the circumstances described in Section 421(b) of the Code
(relating to disqualifying dispositions), the Participant shall notify the
Corporation of such disposition within the time provided to do so in the
applicable award agreement. With respect to ISOs, if the Plan does not contain
any provision required to be included in the Plan or this Schedule “A” under
Section 422 of the Code, that provision shall be deemed to be incorporated
herein with the same force and effect as if that provision had been set out at
length herein; provided, that to the extent any Option that is intended to
qualify as an ISO cannot so qualify, that Option (to that extent) shall be
deemed a Nonstatutory Option for all purposes of the Plan.

 

22

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5.

Restricted Share Units. Unless otherwise provided in the applicable Award
Agreement, all Restricted Share Units awarded to U.S. Participants will be
settled no later than seventy (70) days of becoming Vested Restricted Share
Units.

 

6.

Dividend-Equivalent Rights. Subject to the requirements of Section 9(o) of the
Plan, to the extent that the Committee determines to grant Dividend-Equivalent
Rights, such dividend equivalents shall be converted to cash or additional
Shares or other Awards by such formula and at such time and subject to such
restrictions and limitations as may be determined by the Committee and specified
in the applicable Award Agreement. Such Dividend-Equivalent Rights shall satisfy
the requirements of Section 409A (as defined below).

 

7.

Termination Date. The Termination Date shall not occur until the date that the
Participant experiences a “separation from service” within the meaning of
Section 409A.

 

8.

Section 409A of the Code. It is the general intention, but not the obligation,
of the Committee to design Awards to comply with or to be exempt from the
limitations and requirements of Section 409A of the Code, as amended from time
to time, including the guidance and regulations promulgated thereunder and
successor provisions, guidance, and regulations thereto (“Section 409A”), and
Awards will be operated and construed accordingly. Neither this Section 8 nor
any other provision of the Plan or this Schedule “A” is or contains a
representation to any Participant regarding the tax consequences of the grant,
vesting, exercise, settlement, or sale of any Award (or the Shares underlying
such Award) granted hereunder, and should not be interpreted as such. In no
event shall the Corporation or Employer be liable for all or any portion of any
taxes, penalties, interest, or other expenses that may be incurred by the
Participant on account of non-compliance with Section 409A. Notwithstanding any
provision in the Plan or an Award Agreement to the contrary, in the event that a
“specified employee” (as defined under Section 409A) becomes entitled to a
payment under an Award that would be subject to additional taxes and interest
under Section 409A if the Participant’s receipt of such payment or benefits is
not delayed until the earlier of (a) the date of the Participant’s death, or
(b) the date that is six (6) months after the Participant’s “separation from
service,” as defined under Section 409A (such date, the “Section 409A Payment
Date”), then such payment or benefit shall not be provided to the Participant
until the Section 409A Payment Date; provided, however, that if the U.S.
Participant is also a Canadian Participant and the Award to be settled is a
Restricted Share Unit, such Award must be settled by the date specified in
Section 7(c)(iv) of the Plan. Any amounts subject to the preceding sentence that
would otherwise be payable prior to the Section 409A Payment Date will be
aggregated and paid in a lump sum without interest on the Section 409A Payment
Date; provided, however, if the U.S. Participant is also a Canadian Participant,
such payment will not be made later than the date specified in Section 7(c)(iv)
of the Plan. The applicable provisions of Section 409A are hereby incorporated
by reference and shall control over any Plan or Award Agreement provision in
conflict therewith; provided, however, in the case of a U.S. Participant that is
also a Canadian Participant, if the applicable provisions of Section 409A are
contrary to the provisions of the Tax Act, the more restrictive body of law
shall control. Notwithstanding any provision of the Plan or any Award Agreement
to the contrary, in the event that following the effective date the Committee
determines that any Award may be subject to Section 409A, the Committee may
adopt such amendments to the Plan and the applicable Award Agreement or adopt
other policies and procedures (including amendments, policies, and procedures
with retroactive effect), or take any other actions, that the Committee
determines are necessary or appropriate to (i) exempt the Award from
Section 409A and/or preserve the intended tax treatment of the benefits provided
with respect to the Award, or (ii) comply with the requirements of Section 409A
and thereby avoid the application of any penalty taxes under Section 409A.

 

9.

Substitution or Modification of Awards.  Awards granted or modified pursuant to
Section 8 of the Plan must be granted or modified in compliance with
Section 409A, including, but not limited to, Options or SARs that are
substituted pursuant to Section 8(f) of the Plan that have an Exercise Price or
grant price that is less than the Fair Market Value of a Share on the date of
the substitution.

 

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10.

Blackout Periods.  Notwithstanding the provisions of Section 9(y) of the Plan,
where a Blackout Period is continuing as of the last permissible date of payment
or settlement under the applicable Award Agreement or this Plan, such Award
shall be settled as of such payment or settlement date, irrespective of the
continuing Blackout Period, such that (i) any Award that is intended to
constitute a “short term deferral” within the meaning of Section 409A will
continue to so qualify and (ii) any Award that constitutes deferred compensation
subject to Section 409A will be timely paid or settled and shall not incur an
excise tax under Section 409A.

 

11.

Status under ERISA.  The Plan shall not constitute an “employee benefit plan”
for purposes of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended.

 

24