Exhibit 10.7


 


EQUITY
INCENTIVE PLAN

OF 

GIBSON ENERGY HOLDING ULC


 


Gibson Energy Holding ULC, an unlimited liability
corporation formed under the laws of the Province of Alberta (the “Company”),
hereby adopts this Equity Incentive Plan (this “Plan”).  The purposes of this Plan are as follows:


 


(1)           To
further the growth, development and financial success of the Company and its
Subsidiaries (as defined herein), by providing additional incentives to
employees, consultants and directors of the Company and its Subsidiaries who
have been or will be given responsibility for the management or administration
of the Company’s (or one of its Subsidiaries’) business affairs, by assisting
them to become owners of Common Shares (as defined herein), thereby benefiting
directly from the growth, development and financial success of the Company and
its Subsidiaries.


 


(2)           To
enable the Company (and its Subsidiaries) to obtain and retain the services of
the type of professional, technical and managerial employees, consultants and
directors considered essential to the long-range success of the Company (and
its Subsidiaries) by providing and offering them an opportunity to become
owners of Common Shares pursuant to the exercise of Options and Stock
Appreciation Rights, pursuant to the grant of Restricted Stock or Restricted
Stock Units, or pursuant to an offer to purchase Common Shares.


 


ARTICLE I.


DEFINITIONS


 


Whenever the following terms are used in this Plan,
they shall have the meaning specified below unless the context clearly indicates
to the contrary.  The singular pronoun
shall include the plural where the context so indicates.


 


Section 1.1       “Administrator” shall mean the Board or any of its
Committees as shall be administering the Plan in accordance with Article VII
hereof.


 


Section 1.2       “Affiliate” shall have the meaning given thereto in the
Business Corporations Act
(Alberta).  For the purposes of this
Plan, Affiliates of the Company shall include all Principal Shareholders.


 


Section 1.3       “Applicable Laws” shall mean the
requirements relating to the administration of Options, Stock Appreciation
Rights, Stock Purchase Rights, Restricted Stock, and Restricted Stock Units
under the laws of the Province of Alberta and the federal laws of Canada
applicable therein, any stock exchange or quotation system on which the Common
Shares of the Company are listed or quoted and the applicable laws of any other
country or 


 

















 


jurisdiction,
including the United States, to which the grant of Options, Stock Appreciation
Rights, Stock Purchase Rights, Restricted Stock or Restricted Stock Units are
subject.


 


Section 1.4       “Award” shall mean an Option, a Stock
Appreciation Right, Stock Purchase Right, a Restricted Stock award or a
Restricted Stock Unit award granted to a Participant pursuant to the Plan.


 


Section 1.5       “Award Agreement” shall mean any
written agreement, contract, or other instrument or document evidencing an
Award, including through electronic medium.


 


Section 1.6       “Board” shall mean the Board of
Directors of the Company.


 


Section 1.7       “Committee” shall mean a committee
of Directors or other individuals satisfying Applicable Laws, who are appointed
by the Board in accordance with Article VII hereof.


 


Section 1.8       “Common Shares” shall mean the
common shares in the capital  of the Company
and includes any and all common shares (including shares or securities of
another entity) resulting from any subdivision, re-division, reduction,
combination or consolidation, merger, amalgamation, arrangement or
reorganization involving the Company.


 


Section 1.9       “Company” shall mean Gibson Energy
Holding ULC, an unlimited liability corporation formed under the laws of the
Province of Alberta, and any successor thereof.


 


Section 1.10     “Consultant”
shall mean any Person who is engaged by the Company or any of its Subsidiaries
to render consulting or advisory services to such entity.


 


Section 1.11     “Corporate Event” shall mean, as
determined by the Administrator in its sole discretion, any transaction or
event described in Section 8.1(a) or any unusual or nonrecurring
transaction or event affecting the Company or any Subsidiary of the Company, or
the financial statements of the Company or any of its Subsidiaries, or changes
in Applicable Laws, regulations, or accounting principles (including, without
limitation, a recapitalization of the Company).


 


Section 1.12     “Director” shall mean a member of
the Board.


 


Section 1.13     “Disability” shall mean that the
Service Provider is (i) unable to perform his or her employment duties on
behalf of the Company or any of its Subsidiaries for any consecutive twelve
(12) month period (or any period of eighteen (18) months or more, whether or
not consecutive, in any twenty-four (24) month period) because of illness,
accident, mental or physical disability or any other cause and there is no
reasonable prospect, at the end of such time, that the Service Provider will be
able to return to his or her employment duties with the Company or any of its
Subsidiaries in the reasonably foreseeable future or (ii) declared by a
court of competent jurisdiction to be mentally incompetent or incapable of
managing his affairs.  Notwithstanding
the foregoing, if the Service Provider is party to a written employment or
consulting agreement with the Company or any of its Subsidiaries which defines
disability, then “Disability” shall be as such term is defined in the
applicable written employment or consulting agreement.


 

















 


Section 1.14     “Eligible Representative” for a
Participant shall mean such Participant’s personal representative or such other
person as is empowered under the deceased Participant’s will or the then
applicable laws of descent and distribution to represent the Participant
hereunder.


 


Section 1.15     “Employee” shall mean any employee
(as determined by the Administrator) of the Company or one of its Subsidiaries,
whether such employee is so employed at the time this Plan is adopted or
becomes so employed subsequent to the adoption of this Plan, provided that such
individual is considered an employee (within the meaning of the Income Tax Act (Canada)) of the Company or any Affiliate
thereof.  A Service Provider shall not
cease to be an Employee in the case of (a) any leave of absence approved
by the Company (or the Subsidiary employing the Service Provider, if
applicable) or (b) transfers between locations of the Company or between
the Company, any of its Subsidiaries, or any of their respective successors.


 


Section 1.16     “Equity Restructuring” shall mean,
as determined by the Administrator in its sole discretion, a non-reciprocal
transaction between the Company and its shareholders, such as a share dividend,
share split, spin-off or recapitalization through a large, nonrecurring cash
dividend, that affects the Common Shares (or other securities of the Company)
or the Common Share price (or the price of other securities of the Company) and
causes a change in the per Common Share value underlying outstanding Awards.


 


Section 1.17     “Exercise Price” shall have the
meaning set forth in Section 4.3.


 


Section 1.18     “Fair Market Value” of a Common
Share as of a given date shall be:


 


(a)   If the Common Shares are listed on any established stock
exchange in Canada or the United States or a national market system, Fair
Market Value shall be the closing sales price for the Common Shares (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the date of determination, as reported in The Globe and Mail,
The Wall Street Journal or such other
source as the Administrator deems reliable;


 


(b)   If the Common Shares are regularly quoted by a recognized
securities dealer but selling prices are not reported, Fair Market Value shall
be the mean between the high bid and low asked prices for the Common Shares on
the day of determination; or


 


(c)   In the absence of an established market for the Common Shares,
Fair Market Value shall be determined by the Administrator.


 


Section 1.19     “Officer” shall mean an officer of
the Company or any of its Subsidiaries, as determined by the Administrator.


 


Section 1.20     “Options” shall mean the time
vesting and/or performance vesting options granted under the Plan to purchase
Common Shares pursuant to any Award Agreement.


 


Section 1.21     “Participant” shall mean any Service
Provider who has been granted an Award pursuant to the Plan.


 

















 


Section 1.22     “Person” shall mean an individual,
firm, partnership, corporation, limited liability company, unlimited liability
corporation, business trust, joint stock company, trust, unincorporated
association or organization, joint venture, governmental authority or any other
entity of whatever nature.


 


Section 1.23     “Plan” shall have the meaning set
forth in the Recitals hereto.


 


Section 1.24     “Principal Shareholders” shall mean (i) Riverstone/Carlyle
Global Energy & Power Fund IV (Cayman), L.P., a Cayman Islands limited
partnership, and (ii) any of its Affiliates to which (a) the Principal
Shareholder identified in clause (i) or any other Person transfers Common
Shares, or (b) the Company issues Common Shares.


 


Section 1.25     “Restricted Stock” shall mean an
Award granted pursuant to Section 6.1.


 


Section 1.26     “Restricted Stock Unit” shall mean
an Award granted pursuant to Section 6.2.


 


Section 1.27     “Secretary” shall mean the Secretary
of the Company.


 


Section 1.28     “Service Provider” shall mean an
Employee, Consultant or Director.


 


Section 1.29     “Stock Appreciation Right” shall
mean a stock appreciation right Award that represents an unfunded and unsecured
promise to deliver Common Shares equal in value to the excess, if any of the
Fair Market Value per Common Share over the Exercise Price per Common Share of
the stock appreciation right Award, subject to the terms of the applicable
Award Agreement.


 


Section 1.30     “Stock Purchase Right” shall mean an
Award granted pursuant to Section 3.3.


 


Section 1.31     “Subsidiary” has the meaning
ascribed thereto in the Alberta Securities Act. R.S.A. 2000, c. S-4, as amended.


 


Section 1.32     “Termination of Service” shall mean
the time when the engagement of a Participant as a Service Provider is
terminated for any reason, with or without cause, including, but not by way of
limitation, by resignation, failure to be elected or appointed, discharge,
death, Disability or retirement, but excluding (a) terminations where
there is simultaneous commencement by the former Service Provider of a
relationship with the Company or a Subsidiary as a Service Provider and (b) at
the discretion of the Administrator, terminations which result in a temporary
severance of the service relationship. 
The Administrator, in its absolute discretion, shall determine the
effect of all matters and questions relating to Termination of Service,
including, but not by way of limitation, the question of whether a Termination
of Service resulted from discharge for cause, and all questions of whether a
particular leave of absence constitutes a Termination of Service.  Notwithstanding any other provision of the
Plan, the Company or any Subsidiary has an absolute and unrestricted right to
terminate a Service Provider’s service at any time for any reason, with or
without cause, except to the extent expressly provided otherwise in writing.


 

















 


ARTICLE II.


SHARES SUBJECT TO PLAN


 


Section 2.1       Common Shares Subject to Plan


 


(a)   Subject to Section 2.1(b) and Section 8.1, the
aggregate number of Common Shares that may be issued under the Plan is Fifty
Nine Thousand, Seven Hundred and Thirty Nine (59,739).  The Common Shares that may be acquired upon
the exercise of Awards granted pursuant to this Plan shall consist of
authorized but unissued or reacquired Common Shares.


 


(b)   To the extent that an Award terminates, is forfeited, is
repurchased by the Company, expires, or lapses for any reason, any Common
Shares subject to the Award shall again be available for the grant of an Award
pursuant to the Plan; provided, however, that vested Common Shares which are
repurchased after being issued from the Plan shall not be available for future
issuance under the Plan.  Additionally,
any Common Shares tendered or withheld to satisfy the grant or Exercise Price
or tax withholding obligation pursuant to any Award shall again be available
for the grant of an Award pursuant to the Plan. 
To the extent permitted by Applicable Laws, Common Shares issued in
assumption of, or in substitution for, any outstanding awards of any entity
acquired in any form of combination by the Company or any of its Subsidiaries
shall not be counted against Common Shares available for grant pursuant to this
Plan.


 


ARTICLE III.


GRANTING OF OPTIONS AND STOCK
APPRECIATION RIGHTS AND


SALE OF COMMON SHARES


 


Section 3.1       Eligibility.  Options and Stock Appreciation Rights may be
granted to Service Providers.


 


Section 3.2       Granting of Options and Stock
Appreciation Rights to Service Providers.


 


(a)     The Administrator shall from time to time:


 


(i)          Select from among the Service Providers (including those to
whom Options or Stock Appreciation Rights have been previously granted under
the Plan) such of them as in its opinion should be granted Options or Stock
Appreciation Rights;


 


(ii)         Determine the number of Common Shares to be subject to such
Options or Stock Appreciation Rights granted to such Service Provider; and


 


(iii)        Determine the terms and conditions of such Options and Stock
Appreciation Rights, consistent with the Plan.


 


(b)    Upon the selection of a Service Provider to be granted an
Option or Stock Appreciation Right pursuant to subsection (a), the
Administrator shall instruct the Secretary or another authorized Officer to
issue such Option or Stock Appreciation Right and may impose such conditions on
the grant of such Option or Stock Appreciation Right as it deems appropriate.


 

















 


Section 3.3       Sale of Common Shares to Service
Providers


 


The Administrator, acting in its sole discretion, may
from time to time designate one or more Service Providers to whom an offer to
sell Common Shares shall be made and the terms and conditions thereof,
provided, however, that the price per Common Share shall not be less than the
Fair Market Value thereof on the date any such offer is accepted.  Each Common Share issued to a Service
Provider under this Section 3.3 shall be evidenced by a written
Subscription Agreement in a form approved by an authorized Officer of the
Company, which shall contain terms consistent with the terms hereof.  Any such purchase and sale shall be done on a
basis that is exempt from the prospectus requirements under Applicable
Laws.  Any Common Shares issued pursuant
to this Section 3.3 shall be subject to the same limitations, restrictions
and administration hereunder as would apply to any Common Shares issued
pursuant to the exercise of an Option or Stock Appreciation Right under this
Plan including, but not limited to, conditions and restrictions set forth in Section 5.5
hereunder.


 


ARTICLE IV.


TERMS OF OPTIONS AND STOCK
APPRECIATION RIGHTS


 


Section 4.1       Award Agreement


 


(a)     Each Option and Stock Appreciation Right shall be evidenced
by a written Award Agreement, which shall be executed by the Participant and an
authorized Officer and which shall contain such terms and conditions as the
Administrator shall determine, consistent with the Plan.


 


(b)    The Administrator at any time, and from time to time, may
amend the terms of any one or more existing Award Agreements, provided,
however, that subject to the provisions of Section 8.1, the rights of a
Participant under an Award Agreement shall not be adversely altered or impaired
in any respect without the Participant’s written consent.  The Company shall provide the Participant
with written notice of any amendment made to such Participant’s existing Award
Agreement.


 


Section 4.2       Exercisability and Vesting of Options


 


(a)     Each Option and Stock Appreciation Right shall become
exercisable according to the terms of the applicable Award Agreement; provided,
however, that by a resolution adopted by the Administrator after an Option or
Stock Appreciation Right is granted the Administrator may, on such terms and
conditions as it may determine to be appropriate, accelerate the time at which
such Option or Stock Appreciation Right or any portion thereof may be
exercised.


 


(b)    Except as otherwise provided in the applicable Award Agreement,
no portion of an Option or Stock Appreciation Right which is unexercisable on
the date that the Participant incurs a Termination of Service shall thereafter
become exercisable.


 


Section 4.3       Exercise Price.  The per Common Share purchase price of the
Common Shares subject to each Option, and the reference price per Common Share
used to calculate the amount payable to a Participant with respect to a Stock
Appreciation Right (in each case, the 


 

















 


“Exercise Price”), shall be set by
the Administrator on the date such Option or Stock Appreciation Right is
granted.


 


Section 4.4       Expiration of Options and Stock
Appreciation Rights.  No Option or
Stock Appreciation Right may be exercised to any extent by anyone after the
expiration of ten (10) years from the date the Option or Stock
Appreciation Right was granted.


 


ARTICLE V.


EXERCISE OF OPTIONS AND STOCK
APPRECIATION RIGHTS


 


Section 5.1       Person Eligible to Exercise.  During the lifetime of a Participant, only he
or she may exercise an Option or Stock Appreciation Right (or any portion
thereof granted to him or her); provided, however, that the Participant’s
Eligible Representative may exercise his or her Option or Stock Appreciation
Right during the period of the Participant’s Disability.  After the death of the Participant, any
exercisable portion of an Option or Stock Appreciation Right may, prior to the
time when such portion becomes unexercisable under the Plan or the applicable
Award Agreement, be exercised by his or her Eligible Representative.


 


Section 5.2       Partial Exercise. At any time and
from time to time prior to the time when the Option or Stock Appreciation Right
becomes unexercisable under the Plan or the applicable Award Agreement, the
exercisable portion of such Option or Stock Appreciation Right may be exercised
in whole or in part; provided, however, that the Company shall not be required
to issue fractional Common Shares, and the Administrator may, by the terms of
the Options, require any partial exercise to exceed a specified number of
Common Shares.


 


Section 5.3       Manner of Exercise.  Exercisable Options or Stock Appreciation
Right, or any exercisable portion thereof, may be exercised solely by delivery
to the Secretary of all of the following prior to the time when such Option or
Stock Appreciation Right or such portion becomes unexercisable under the Plan
or the applicable Award Agreement:


 


(a)     Subject to any conditions that may be imposed by the
Administrator, notice in writing signed by the Participant or his or her
Eligible Representative, stating that such Option or Stock Appreciation Right
or portion thereof is being exercised, and specifically stating the number of
Common Shares with respect to which the Options or Stock Appreciation Right are
being exercised;


 


(b)    Solely in the case of Options, full payment of the aggregate
Exercise Price of the Common Shares with respect to which such Options (or
portion thereof) are thereby exercised:


 


(i)         In cash, by personal, certified or bank cashier cheque, or by
wire transfer;


 


(ii)        With the consent of the Administrator or as provided in the
Award Agreement, in Common Shares otherwise owned by the Participant, duly
endorsed for transfer to the Company with a Fair Market Value on the date of
delivery equal to the aggregate Exercise Price of Common Shares with respect to
which such Options or portion thereof are thereby exercised;


 

















 


(iii)       With the consent of the Administrator or as provided in the
Award Agreement, Common Shares issuable to the Participant upon exercise of the
Option, with a Fair Market Value on the date of exercise equal to the aggregate
Exercise Price of the Common Shares with respect to which such Options or
portion are thereby exercised;


 


(iv)       With the consent of the Administrator or as provided in the
Award Agreement, pursuant to any policies and procedures adopted by the
Administrator, delivery of a notice that the Participant has placed a market
sell order with a broker with respect to Common Shares then issuable upon
exercise of the Options, and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the aggregate Exercise Price; or


 


(v)        With the consent of the Administrator or as provided in the
Award Agreement, any form of payment permitted by Applicable Laws and any
combination of the foregoing methods of payment;


 


(c)     The payment to the Company (in cash, or by personal,
certified or bank cashier cheque, or by any other means of payment approved by
the Administrator) of all minimum amounts necessary to satisfy any and all
applicable tax withholding requirements arising in connection with the exercise
of the Option or Stock Appreciation Right;


 


(d)    Such representations and documents as the Administrator deems
necessary or advisable to effect compliance with all applicable provisions of
applicable securities laws or regulations. 
The Administrator may, in its sole discretion, also take whatever
additional actions it deems appropriate to effect such compliance including,
without limitation, placing legends on share certificates and issuing
stop-transfer orders to transfer agents and registrars; and


 


(e)     In the event that the Option or Stock Appreciation Right or
portion thereof shall be exercised as permitted under Section 5.1 by any Person or Persons other than the Participant,
appropriate proof of the right of such Person or Persons to exercise the Option
or Stock Appreciation Right or portion thereof.


 


Section 5.4       Participant Representations.  The Administrator, in its sole discretion,
may require a Participant to make certain representations or acknowledgements,
on or prior to the purchase of any Common Shares pursuant to any Option or
Stock Appreciation Right granted under this Plan, in respect thereof including,
without limitation, that the Participant is acquiring the Common Shares for an
investment purpose and not for resale, that the Participant is acquiring the
Common Shares pursuant to an exemption under applicable securities laws and, if
the Participant is an Affiliate, additional acknowledgements regarding when and
to what extent any transfers of such Common Shares may occur.


 


Section 5.5       Conditions to Issuance of Stock
Certificates.  The Common Shares
issuable and deliverable upon the exercise of an Option or Stock Appreciation
Right, or any portion thereof, may be either previously authorized but unissued
Common Shares or issued Common Shares which have then been reacquired by the
Company, subject to Section 2.1(b). 
A certificate representing the Common Shares will be delivered to the
Participant at the Company’s principal place of business as soon as practicable
after the Option or Stock Appreciation Right is 


 

















 


properly exercised or the Company may, in its discretion, retain
physical possession of the certificate until such time as it the Administrator
deems appropriate.  Notwithstanding the
above, the Company shall not be required to issue or deliver any certificate or
certificates for Common Shares purchased upon the exercise of any Option or
Stock Appreciation Right or portion thereof prior to fulfillment of all of the
following conditions:


 


(a)     The admission of such Common Shares to listing on any and all
stock exchanges on which such class of stock is then listed;


 


(b)    The completion of any registration or other qualification of
such Common Shares under any law or under applicable rulings or regulations of
any governmental regulatory body, which the Administrator shall, in its sole
discretion, deem necessary or advisable;


 


(c)     The obtaining of any approval or other clearance from any
Canadian federal, provincial, territorial or U.S. federal or state governmental
agency which the Administrator shall, in its sole discretion, determine to be
necessary or advisable; and


 


(d)    The payment to the Company (or its Subsidiary, as applicable)
of all amounts which it is required to withhold under Applicable Law in
connection with the exercise of the Options and Stock Appreciation Right.


 


The Administrator shall
not have any liability to any Participant for any delay in the delivery of
Common Shares to be issued upon a Participant’s exercise of Options and any
Stock Appreciation Right.


 


Section 5.6       Rights as Shareholders.  The holder of an Option or Stock Appreciation
Right shall not be, nor have any of the rights or privileges of, a shareholder
of the Company in respect of any Common Shares purchasable upon the exercise of
any part of an Option or Stock Appreciation Right unless and until such holder
has exercised such Option or Stock Appreciation Right with respect to such
Common Shares in accordance with the terms and conditions contained herein.


 


Section 5.7       Cash Surrender Right.  In lieu of exercising vested Options issued
under an Award Agreement in accordance with Section 5.3, a holder of
Options may elect to surrender his or her Options to the Company for termination
and request the Company to pay the holder the aggregate in-the-money amount in
respect of the surrendered Options, less any amounts which the Company is
required by law to withhold.  The Company
may honour such a request but shall not be required to do so.


 


ARTICLE VI.


RESTRICTED STOCK AWARDS AND
RESTRICTED STOCK UNIT AWARDS


 


Section 6.1       Restricted Stock.


 


(a)          Grant of Restricted Stock.  The Administrator is authorized to make
Awards of Restricted Stock to any Service Provider selected by the Administrator
in such amounts and subject to such terms and conditions as determined by the
Administrator.  All Awards of Restricted
Stock shall be evidenced by an Award Agreement.


 














 


(b)    Issuance and Restrictions.  Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Administrator may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted
Stock).  These restrictions may lapse
separately or in combination at such times, pursuant to such circumstances, in
such installments, or otherwise, as the Administrator determines at the time of
the grant of the Award or thereafter.


 


(c)     Rights of a
Shareholder.  Unless otherwise
specifically provided in the applicable Award Agreement, a holder of an Award
of Restricted Stock will have the right to exercise all rights, powers and
privileges of a holder of Common Shares with respect to such Restricted Stock
(including, without limitation, the right to receive dividends with respect to
the Restricted Stock on the date that such dividends are delivered to the
Company’s regular Shareholders), except that, unless otherwise provided by the
Administrator, (i) the holder will not be entitled to delivery of the
certificate or certificates representing such Restricted Stock, and (ii) the
holder of an Award of Restricted Stock may not sell, assign, transfer, pledge,
exchange, encumber or dispose of the Restricted Stock, in the case of clauses (i) and
(ii), unless and until all vesting requirements with respect to such Restricted
Stock shall have been fulfilled or waived.


 


(d)    Forfeiture.  Except as otherwise
determined by the Administrator at the time of the grant of the Award or
thereafter, upon the holder of Restricted Stock’s Termination of Service during
the period prior to the date that all vesting requirements with respect to such
Restricted Stock shall have been fulfilled or waived, Restricted Stock that is
at that time subject to forfeiture conditions shall be forfeited; provided, however, that, the Administrator
may (i) provide in any Award Agreement that restrictions or forfeiture
conditions relating to Restricted Stock will be waived in whole or in part in
the event of Terminations of Service resulting from specified causes and (ii) in
other cases waive in whole or in part restrictions or forfeiture conditions
relating to Restricted Stock.


 


(e)     Certificates for Restricted Stock.  Restricted Stock granted pursuant to the Plan
may be evidenced in such manner as the Administrator shall determine.  If certificates representing shares of
Restricted Stock are registered in the name of the Participant, certificates
must bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock, and the Company may, at its
discretion, retain physical possession of the certificate until such time as
all applicable restrictions lapse.


 


Section 6.2       Restricted Stock Units.


 


(a)     The
Administrator is authorized to make Awards of Restricted Stock Units to any
Service Provider selected by the Administrator in such amounts and subject to
such terms and conditions as determined by the Administrator.  At the time of grant, the Administrator shall
specify the date or dates on which the Restricted Stock Units shall become
fully vested and nonforfeitable, and may specify such conditions to vesting as
it deems appropriate.  At the time of
grant, the Administrator shall specify the maturity date applicable to each
grant of Restricted Stock Units which shall be no earlier than the vesting date
or dates of the Award and may be determined at the election of the
grantee.  On the maturity date, the
Company shall, subject to the terms of the Plan, transfer to the Participant
one Common Share for each Restricted Stock Unit scheduled to be paid out on
such date and not previously forfeited. 
The Administrator shall 


 

















 


specify the
purchase price, if any, to be paid by the grantee to the Company for such
Common Shares.


 


(b)    Except as
otherwise provided in the applicable Award Agreement, if the Company makes a
dividend or other distribution with respect to Common Shares while a
Participant’s Restricted Stock Units remain outstanding, upon payment of such
dividend or other distribution, such Participant shall be entitled to the
amount in cash or the number of fully vested Common Shares or other property,
as applicable, that the Participant would have received if the Participant had
held the Common Shares underlying the Restricted Stock Units on the date that
such dividend was paid.  Any such cash,
Common Shares or other property that a Participant may become entitled to
receive pursuant to this Section 6.2(b) shall be delivered to such
Participant on the date that the dividend is paid to the Company’s regular
Shareholders.


 


ARTICLE VII.


ADMINISTRATION


 


Section 7.1       Administrator.  The Plan shall be administered by the Board
or an Administrator appointed by the Board, which Administrator shall be
constituted to comply with Applicable Laws.


 


Section 7.2       Powers of the Administrator. Subject to the provisions
of the Plan and, in the case of a Committee, the specific duties delegated by
the Board to such Administrator, and subject to the approval of any relevant
authorities, the Administrator shall have the authority in its discretion:


 


(a)     to determine the
Fair Market Value;


 


(b)    to determine the
type or types of Awards to be granted to each Service Provider;


 


(c)     to select the
Service Providers to whom Awards may from time to time be granted hereunder;


 


(d)    to determine all
matters and questions related to the Termination of Service of a Service
Provider with respect to any Award granted to him or her hereunder, including,
but not by way of limitation, all questions of whether a particular Service
Provider has taken a leave of absence, all questions of whether a leave of
absence taken by a particular Service Provider constitutes a Termination of
Service, and all questions of whether a Termination of Service of a particular
Service Provider resulted from discharge for cause;


 


(e)     to determine the
number of Awards to be granted and the number of Common Shares to which an
Award will relate;


 


(f)     to approve forms
of Award Agreements for use under the Plan, which need not be identical for
each Service Provider;


 


(g)    to determine the
terms and conditions of any Awards granted hereunder (including, but not
limited to, the Exercise Price, the time or times when Awards may be 


 

















 


exercised
(which may be based on performance criteria), any vesting acceleration or
waiver of forfeiture restrictions and any restriction or limitation regarding
any Awards or the Common Shares relating thereto) based in each case on such
factors as the Administrator, in its sole discretion, shall determine;


 


(h)    to prescribe,
amend and rescind rules and regulations relating to the Plan, including rules and
regulations relating to sub-plans established for the purpose of satisfying
applicable foreign laws;


 


(i)      to determine
whether, to what extent, and pursuant to what circumstances an Award may be
settled in, or the Exercise Price or purchase price of an Award may be paid in,
cash, Common Shares, other Awards, or other property, or an Award may be
canceled, forfeited or surrendered;


 


(j)      to construe and
interpret the terms of the Plan and Awards granted pursuant to the Plan; and


 


(k)     to make all
other decisions and determinations that may be required pursuant to the Plan or
as the Administrator deems necessary or advisable to administer the Plan.


 


Section 7.3       Effect of Board and Administrator’s Decision. All
decisions, determinations and interpretations of the Board and/or the
Administrator shall be final and binding on all Service Providers and former
Service Providers.  The Board and the
Administrator shall incur no liability by reason of any action or determination
made in good faith in the administration of the Plan or in respect of any Award
Agreement entered into pursuant to the Plan.


 


Section 7.4       Compensation, Professional Assistance, Good Faith Actions.  The Administrator may
receive such compensation for its services hereunder as may be determined by
the Board.  All expenses and liabilities
incurred by the Administrator in connection with the administration of the Plan
shall be borne by the Company.  The
Administrator may employ attorneys, consultants, accountants, appraisers,
brokers or other persons.  The
Administrator, the Company, its Subsidiaries and their Officers and Directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons.  All actions taken and all
interpretations and determinations made by the Administrator, in good faith,
shall be final and binding upon all Participants, the Company and all other
interested Persons.  No Officer, Director
or Employee of the Company or its Subsidiaries (each such Person, a “Covered
Person”) shall be liable for any action taken or omitted to be taken or any
determination or interpretation made with respect to the Plan or any Award
hereunder.  Each Covered Person shall be
indemnified and held harmless by the Company from and against (a) any
loss, cost, liability or expense (including attorneys’ fees) that may be
imposed upon or incurred by such Covered Person in connection with, based upon
or arising or resulting from any claim, action, suit or proceeding to which
such Covered Person may be a party or in which such Covered Person may be
involved by reason of any action taken or omitted to be taken under or in
connection with the Plan or any Award and (b) any and all amounts paid by
such Covered Person, with the Company’s approval, in settlement thereof, or
paid by such Covered Person in satisfaction of any judgment in any such action,
suit or proceeding against such Covered Person; provided that the Company shall
have the right, at its 


 

















 


own expense, to assume and defend against any
such claim, action, suit or proceeding, and, once the Company gives notice of
its intent to assume the defense, the Company shall have sole control over such
defense with counsel of the Company’s choice. 
The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which Covered Persons may be entitled under
the Company’s organizational documents, as a matter of law, or otherwise, or
any other power that the Company may have to indemnify such persons or hold
them harmless.  For the avoidance of
doubt, the limitations on liability and the foregoing indemnity shall not apply
to any liability incurred by a Covered Person in connection with, based upon or
arising or resulting from any claim, action, suit or proceeding to which such
Covered Person may be a party or in which such Covered Person may be involved
due to the status of such Covered Person as a Participant in the Plan, or any
amounts paid by such Covered Person, in settlement thereof, or paid by such
Covered Person in satisfaction of any judgment in any such action, suit or
proceeding against such Covered Person.


 


ARTICLE VIII.


OTHER PROVISIONS


 


Section 8.1       Changes in Common Shares; Disposition of Assets and
Corporate Events


 


(a)     In the event
that the Administrator determines that any share dividend, recapitalization,
reclassification, stock split, reverse stock split, reorganization, merger,
amalgamation, arrangement, consolidation, acquisition, disposition, split-up,
spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer,
exchange or any disposition of all or substantially all of the capital stock or
assets of the Company (including, but not limited to, a Liquidity Event or
Change in Control (as such terms may be defined in any Award Agreement)),
exchange of Common Shares or other securities of the Company, issuance of
warrants or other rights to purchase Common Shares or other securities of the
Company, the acquisition or disposition of any material assets or business or
other similar corporate transaction or event, which in the Administrator’s sole
discretion, affects the Common Shares such that an adjustment to the Awards or
Plan is determined by the Administrator to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to an Award, then the
Administrator may, in such manner as it may deem equitable to the Participant,
adjust any or all of:


 


(i)         The number
and kind of Common Shares (or other securities or property) with respect to
which an Award may be granted under the Plan (including, but not limited to,
adjustments of the limitations in Section 2.1 on the maximum number and
kind of  Common Shares which may be
issued);


 


(ii)        The number
and kind of Common Shares (or other securities or property) subject to
outstanding Awards;


 


(iii)       The Exercise
Price per Common Share for any outstanding Awards under the Plan; and


 

















 


(iv)       The terms and
conditions of any outstanding Awards (including, without limitation, any
applicable financial or other performance “targets” specified in each Award
Agreement).


 


(b)    Upon the
occurrence of a Corporate Event, the Administrator, in its sole discretion, is
hereby authorized to take any one or more of the following actions in such
manner as it may deem equitable to the Participant whenever the Administrator
determines that such action is appropriate in order to (x) prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to any Award under this Plan, (y) facilitate
such Corporate Event or (z) give effect to such changes in laws,
regulations or accounting principles:


 


(i)         In its sole
discretion, and on such terms and conditions as it deems appropriate, the
Administrator may provide, either by the terms of the applicable Award
Agreement or by action taken prior to the occurrence of such Corporate Event,
and either automatically or upon the Participant’s request, for either (A) the
purchase of any outstanding Award for an amount of cash, securities, or other
property equal to the amount that could have been attained upon the exercise of
the portion of such Award that was vested and exercisable (and such additional
portion of the Award as the Administrator may determine) immediately prior to
the occurrence of such Corporate Event or (B) the replacement of such
vested (and other) portion of such Award with other rights or property selected
by the Administrator in its sole discretion;


 


(ii)        In its sole
discretion, the Administrator may provide, either by the terms of the
applicable Award Agreement or by action taken prior to the occurrence of such
Corporate Event, that the Award (or any portion thereof) will terminate upon
the occurrence of such Corporate Event and cannot vest, be exercised or become
payable after such Corporate Event;


 


(iii)       In its sole
discretion, and on such terms and conditions as it deems appropriate, the
Administrator may provide, either by the terms of the applicable Award
Agreement or by action taken prior to the occurrence of such Corporate Event,
that for a specified period of time prior to such Corporate Event, such Award
shall be exercisable as to all Common Shares covered thereby or a specified
portion of such Common Shares, notwithstanding anything to the contrary in (A) Section 4.2
or (B) the provisions of the applicable Award Agreement;


 


(iv)       In its sole
discretion, and on such terms and conditions as it deems appropriate, the
Administrator may provide, either by the terms of the applicable Award
Agreement or by action taken prior to the occurrence of such Corporate Event,
that upon such Corporate Event, such Award (or any portion thereof) be assumed
by the successor or survivor corporation, or a parent or subsidiary thereof, or
shall be substituted for by similar options, rights or Awards covering the
stock of the successor or survivor corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and prices;
and


 


(v)        In its sole
discretion, and on such terms and conditions as it deems appropriate, the
Administrator may make adjustments in the number and type of Common Shares 


 

















 


(or other
securities or property) subject to the Plan and outstanding Awards (or any
portion thereof) and/or in the terms and conditions of (including the Exercise
Price), and the criteria included in, outstanding Awards and Awards which may
be granted in the future.


 


(c)     In connection
with the occurrence of any Equity Restructuring, and notwithstanding anything
to the contrary in Sections 8.1(a) and 8.1(b), the Administrator will
adjust each outstanding Award in such manner as it may deem equitable to the
Participant, which adjustments may include adjustments to the number and type
of securities subject to each outstanding Award and/or the Exercise Price or
grant price thereof, if applicable, the grant of new Awards to Participants,
and/or the making of a cash payment to Participants, as the Administrator deems
appropriate to reflect such Equity Restructuring.  The adjustments provided under this Section 8.1(c) shall
be nondiscretionary and shall be final and binding on the affected Participant
and the Company; provided that whether an adjustment is equitable shall be
determined in the discretion of the Administrator.


 


(d)    The Administrator
may, in its sole discretion, include such further provisions and limitations in
any Award Agreement as it may deem equitable to the Participant and in the best
interests of the Company and its Subsidiaries.


 


(e)     To the extent
required by the terms of an Award Agreement, the Company shall notify the
Participant prior to the date of a Corporate Event.


 


Section 8.2       Awards Not Transferable.  Unless otherwise agreed to in writing by the
Administrator, no Award or interest or right therein or part thereof shall be
liable for the debts, contracts or engagements of the Participant or his or her
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law, by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that nothing in this Section 8.2
shall prevent transfers by will or by the applicable laws of descent and
distribution.


 


Section 8.3       Amendment, Suspension or Termination of the Plan or Award
Agreements


 


(a)     The Plan may be
wholly or partially amended or otherwise modified, suspended or terminated at
any time or from time to time by the Administrator.  However, unless determined otherwise by the
Administrator, without Shareholder approval or ratification within twelve (12)
months before or after such action, no action of the Administrator may, except
as provided in Section 8.1, increase any limit imposed in Section 2.1
on the maximum number of Common Shares that may be issued under the Plan or
that may be issued pursuant to the exercise of Common Options under the Plan or
extend the limit imposed in this Section 8.3 on the period during which
Awards may be granted.


 


(b)    Except as
provided by Section 8.1, neither the amendment, modification, suspension
nor termination of the Plan shall, without the consent of the holder of the
Award, adversely alter or impair any rights or obligations under any Award
theretofore granted.  Except as provided
by Section 8.1, notwithstanding the foregoing, the Administrator at any
time, and 


 

















 


from time
to time, may amend the terms of any one or more existing Award Agreements, provided however, that the rights of a Participant under an
Award Agreement shall not be adversely impaired without the Participant’s
written consent.  The Company shall
provide a Participant with notice of any amendment made to such Participant’s
existing Award Agreement in accordance with the terms of this Section 8.3(b).


 


(c)     No Award may be
granted during any period of suspension nor after termination of the Plan, and
in no event may any Award be granted under this Plan after the expiration of
ten (10) years from the date the Plan is adopted by the Board.


 


Section 8.4       Withholding.  A Participant shall make payment to the
Company (in cash or by personal, certified or bank cashier cheque or by any
other means of payment approved by the Administrator) of all minimum amounts
necessary to satisfy any and all applicable tax withholding requirements
arising in connection with the exercise of an Option or Stock Appreciation
Right, vesting of Restricted Stock or settlement of a Restricted Stock
Unit.  For greater certainty, where
appropriate, the Company or any Subsidiary may withhold from any amount payable
to a Service Provider (including a withholding by way of Common Shares),
pursuant to this Plan, such amount as may be necessary so as to ensure that the
Corporation or the Subsidiary, as the case may be, complies with the applicable
provisions of any federal, provincial, territorial 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 Service Provider.


 


Section 8.5       Status as Service Provider.  Nothing in the Plan or any Award Agreement
hereunder shall imply or confer upon the Participant any right to continue as a
Service Provider for the Company or any of its Subsidiaries.


 


Section 8.6       Shareholder Approval. 
Unless determined otherwise by the Administrator, this Plan will be
submitted for the approval of the Company’s Shareholders within twelve months
of the date of the Board’s initial adoption of this Plan.


 


Section 8.7       Titles.  Titles
are provided herein for convenience only and are not to serve as a basis for
interpretation or construction of the Plan.


 


Section 8.8       Conformity to Securities Laws.  The Plan is intended to conform to the extent
necessary with all provisions of any and all applicable securities laws and
regulations, to the extent the Company, any of its Subsidiaries or any
Participant is subject to the provisions thereof.  Notwithstanding anything herein to the
contrary, the Plan shall be administered, and Awards shall be granted and may
be exercised, only in such a manner as to conform to such laws, rules and
regulations.  To the extent permitted by
Applicable Laws, the Plan and Awards granted hereunder shall be deemed amended
to the extent necessary to conform to such laws, rules and regulations.


 


Section 8.9       Governing Law.  The
Plan shall be construed in accordance with and governed by the laws of the
Province of Alberta and the federal laws of Canada applicable therein.


 


Section 8.10     Severability.  In
the event any portion of the Plan or any action taken pursuant thereto shall be
held illegal or invalid for any reason, the illegality or invalidity shall not 


 

















 


affect the remaining parts of the Plan, and the Plan shall be construed
and enforced as if the illegal or invalid provisions had not been included, and
the illegal or invalid action shall be null and void.


 


Section 8.11     Governing Documents. 
In the event of any contradiction between the Plan and any Award
Agreement or any other written agreement between a Participant and the Company
or any of its Subsidiaries that has been approved by the Administrator, the
terms of the Plan shall govern, unless it is expressly specified in such Award
Agreement or other written document that a specific provision of the Plan shall
not apply.


 


Section 8.12     Currency.  Unless
otherwise indicated, all amounts required to be paid pursuant to any Award
(including, but not limited to, paying the Exercise Price) shall be expressed
in Canadian dollars.


 


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