Exhibit 10.16


RESTRICTED
SHARE AND


PERFORMANCE UNIT AWARD AGREEMENT


THIS
AGREEMENT made the 28th day of July 2006,


BETWEEN:


IPSCO
INC., a corporation incorporated under the laws of Canada, (hereinafter
called the “Company” or the “Corporation”),


OF THE FIRST PART,


-and-


DAVID
SUTHERLAND, of the City of Naperville, in the State of
Illinois, (hereinafter called the “Participant”),


OF THE SECOND
PART.


WHEREAS the
Company has established an Incentive Share Plan (which, as amended from time to
time by the Board of Directors of the Company and approved by Shareholders, is
hereinafter referred to as the “Plan”) whereby certain designated officers,
employees and directors of the Company and its subsidiaries may from time to
time be granted options, restricted shares and performance units, or any
combination of the foregoing;


AND
WHEREAS the Participant, as a senior officer of the Company,
has been designated to receive a grant of Restricted Shares and Performance
Units (as those terms are defined herein), subject to and in accordance with
the terms of this Agreement and of the Plan;


NOW
THEREFORE THIS AGREEMENT WITNESSETH that in consideration of
the mutual covenants herein contained the parties do hereby agree as follows:


1.                                      Grant


Pursuant to Section 8 of the
Plan, the Company hereby grants and awards to the Participant Eleven Thousand
Two Hundred (11,200) restricted shares (the “Restricted Shares” and pursuant to
Section 9 of the Plan Eleven Thousand Two Hundred (11,200) performance units
(the “Performance Units”).  Each
Restricted Share and Performance Unit shall be subject to the terms of the Plan
and of this Agreement, including the terms relating to the Performance Period
and the



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Restricted Share Objective and the Performance Units Objective (as those
terms are herein defined).


2.                                      Restricted
Share Performance Period 


The Restricted Share Performance Period shall begin on
July 1, 2006 (the “Commencement Date”) and end on June 30, 2009 (the “Performance
Period”).


3.                                      Performance
Units Objective


The performance period applicable to the Performance
Units shall be the period beginning on the Commencement Date and ending on June
30, 2009 the Performance Period.  The
Performance Objective applicable to the Performance Units (the “Performance
Objective”) is as follows:


·                  Participants are eligible to earn a
Performance Unit Payout at the end of the Performance Period based on the
3-year average of IPSCO’s Return on Capital Employed (“ROCE”) relative to
3-year average ROCE for a group of steel industry peers as defined elsewhere in
this Agreement.


·                  The actual number of shares earned at
the end of the Performance Period will range from 0% to 200% of the Performance
Units granted, depending on actual performance relative to the goals
established at the beginning of the Performance Period.


Example:
Plan Year 2006


Performance Relative to Peers


3-YR Average ROCE


(%ile of peers)


	
   

  	
   

  	
  >75%ile

  	
   

  	
  0%

  	
   

  	
  100%

  	
   

  	
  150%

  	
   

  	
  175%

  	
   

  	
  200%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  62.5%ile

  	
   

  	
  0%

  	
   

  	
  75%

  	
   

  	
  125%

  	
   

  	
  150%

  	
   

  	
  175%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Performance X

  Shares or Units

  Granted:

  	
   

  	
  

  Median

  	
   

  	
  

  0%

  	
   

  	
  

  50%

  	
   

  	
  

  100%

  	
   

  	
  

  125%

  	
   

  	
  

  150%

  	
   

  	
  

  =

  	
   

  	
  Number of

  Units

  Earned

  	
   

  	
  

  X

  	
   

  	
  Stock

  Price at

  End of

  Period

  	
   

  	
  

  =

  	
   

  	
  ACTUAL AWARD VALUE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  37.5%ile

  	
   

  	
  0%

  	
   

  	
  0%

  	
   

  	
  50%

  	
   

  	
  75%

  	
   

  	
  100%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  <25%ile

  	
   

  	
  0%

  	
   

  	
  0%

  	
   

  	
  25%

  	
   

  	
  38%

  	
   

  	
  50%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  <5%

  	
   

  	
  5%

  	
   

  	
  8%

  	
   

  	
  11%

  	
   

  	
  14%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


Absolute Performance

3-year average ROCE


·                  Awards
will be interpolated for performance falling between discrete points on the
matrix.  However, below 8% IPSCO ROCE, no
awards will be paid for ROCE performance below the median of peers. And below
5% IPSCO ROCE no awards will be paid regardless of performance relative to
peers.



 2
 









·                  Return
on Capital Employed (“ROCE”), the Absolute and Relative Performance Measure,
shall be measured based on the following definition and related adjustments:


	
  

  ROCE =

  	
  After-tax
  operating profit + tax-affected Depreciation/Amortization charge

  
	
  Total
  Net Assets – Non-interest-bearing current Liabilities – Cash and Cash
  Equivalents +

  $50m base cash + Accumulated Depreciation and Amortization – Construction in
  Progress

  



 


·                  Capital
Employed (the denominator) shall be averaged for the year;


·                  The
Performance Period shall average ROCE over the three-year period;


·                  Adjustments
will be made to the ROCE measure as follows:


·                  Construction
in progress is excluded from the capital base until investments are
operational.


·                  “Excess”
cash is excluded from the capital base — $50 million of cash is required by the
Company for ongoing operations; any cash in excess of $50 million will be
excluded for the 2006 Plan Year.


·                  Acquisitions
will be excluded from the ROCE calculation until six months after transaction,
or until agreed upon with the MRCC.


·                  Deferred
tax liabilities are considered a quasi-equity account and remain in the capital
base.


·                  Peers
include:


1.                                                               AK
Steel


2.                                                               Carpenter
Technology


3.                                                               Commercial
Metals


4.                                                               Gerdau
Ameristeel


5.                                                               Lone
Star Technologies


6.                                                               Nucor


7.                                                               Oregon
Steel Mills, Inc.


8.                                                               Quanex


9.                                                               Reliance
Steel and Aluminum


10.                                                         Ryerson
Tull, Inc.


11.                                                         Steel
Dynamics


12.                                                         U.S.
Steel


13.                                                         Worthington
Industries


·                                          If
during the Performance Period any of the Peer Companies ceases to trade on a
Public Exchange, it will be removed from the Peer Comparison Group for the
entire Performance Period.



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4.                                      Restricted
Share Performance Objective


The Restricted Shares shall be 100% vested at the end
of three years by the achievement of cumulative net income of $300 million as
reported by the Company from July 1, 2006 through June 30, 2009,
which shall be the Restricted Share Objective.


5.                                      Vesting
of Restricted Shares and Vesting of Performance Units


The
Restricted Shares and the Performance Units will vest (the “Vesting Date”) upon
the earlier of:


(a)                                  the
date of a Change of Control; and


(b)                                 July
27, 2009, provided that the Restricted Shares Objective and the Performance
Unit Objective is met;


and, provided further that the Participant is employed
(or is deemed by Section 7 to be employed) by the Company or a Subsidiary (as
defined in the Plan) on that date and has been (or is deemed by Section 7 to
have been employed) employed by the Company or a Subsidiary by the Vesting
Date, or has been (or is deemed by Section 8 to have been) continuously so
employed since the date hereof. 
Restricted Shares and Performance Units not vested on or before the last
day of the Performance Period pursuant to the preceding sentence shall lapse
and be terminated and cancelled.


For the purposes of this Section 5, the date of a
Change of Control means the date on which any one of the following occurs:  (i) any person or group of persons acting in
concert acquires beneficial ownership (within the meaning of The Securities
Act, 1988 (Saskatchewan)), as amended from time to time, of 20% or more of the
outstanding Common Shares of the Company, or securities convertible into 20% or
more of the outstanding Common Shares on a post-conversion basis; (ii) during a
period of not more than 24 months, a majority of the Board of Directors ceases
to consist of the existing membership or successors nominated by the existing
membership or their similar successors; (iii) all or substantially all of the
individuals and entities who were the beneficial owners of the Company’s
outstanding securities entitled to vote do not own more than 50% of such
securities in substantially the same proportions following a shareholder
approved reorganization, merger, or consolidation; or (iv) shareholder approval
of either (a) a complete liquidation or dissolution of the Company or (b) a
sale or other disposition of all or substantially all of the assets of the
Company, or a transaction having a similar effect.  For purposes of clause (iii) above, if an
individual or entity owns stock in both companies that enter into a merger,
consolidation, purchase or acquisition of stock or similar transaction, such
shareholder is considered to be acting as a group with other shareholders only
with respect to the ownership in that company prior to the transaction giving
rise to the change and not with respect to the ownership interest in the other
Company.



 4
 









6.                                      Rights of
Restricted Shareholder


Except as set forth in this Agreement, upon the
issuance of the Restricted Shares a Participant shall have all of the rights of
the Shareholder, including the right to vote the Restricted Shares and the
right to receive dividends thereon.  The
Company shall issue the Participant’s Restricted Shares upon execution of this
Agreement, the list (or authorization of listing upon official notice of
issuance) of the Restricted Shares upon each stock exchange on which the Common
Shares are listed and there has been compliance with such laws and regulations,
as the Company may deem applicable.  The
Company agrees to use reasonable commercial efforts to effect such listing and
compliance.


7.                                      Termination
of Employment


(a)                                  If
the Participant ceases to be an employee (and, if the Participant is an
employee or officer of any Subsidiary, the Participant also ceases to be an employee
or officer of the Subsidiary) as a result of:


(i)                                     disability
(as defined in Section 7(j)(i) of the Plan);


(ii)                                  retirement
(as defined in Section 7(j)(2) of the Plan;


(iii)                               termination
of employment after either:


a.                                       attaining
sixty-five years of age or;


b.                                      attaining
sixty-two years of age and completing five years of continuous employment; or


(iv)                              death
of the Participant; or


(v)                                 such
other circumstance as may be approved by the Board of Directors;


All Restricted Shares shall vest immediately. The Performance
Units will vest as follows: the Participant shall receive a pro-rata portion of
the Performance Units awarded on the Commencement Date calculated pursuant to
Paragraph 3 of this Agreement, based upon the number of whole months employed
prior to the cessation of employment pursuant to this Paragraph 7(a) over the
number of months in the Performance Period.


(b)                                 If
the Participant ceases to be an employee (and, if the Participant is an
officer, the Participant ceases to be an officer) of the Company (and, if the
Participant is an employee or officer of any Subsidiary, the Participant also
ceases to be an employee or officer of the Subsidiary) in any circumstance
other than as described in paragraph (a) of this Section 7 (including
termination by the Company with or without cause and termination by the
Participant), all of the Restricted Shares and



 5
 









Performance
Units shall immediately lapse and be terminated and cancelled.  For greater certainty, the Participant’s
employment shall not be considered to terminate where there is a transfer of
the Participant’s employment without an intervening period from the Company to
a Subsidiary or vice versa, or from one Subsidiary to another, or by reason of
an approved leave of absence under circumstances set forth in Paragraph 14
herein.


8.                                      Payment
of Restricted Shares


Upon vesting of the Restricted Shares in accordance
with Section 4 and Section 7 hereof, the Participant shall become entitled to
payment in respect of the Restricted Shares. 
Payment shall be made by the delivery by the Company of one newly issued
Common Share for each Restricted Share held by the Participant.  Such newly issued Common Share shall be
issued without restrictive legend.


9.                                      Payment
of Performance Units and Dividend Equivalents


Upon vesting of the Performance Units in accordance
with Sections 5 and 7 hereof, the Participant shall become entitled to payment
in respect of the Performance Units. 
Payment shall be made by delivery by the Company to the Participant of
one newly issued Common Share for each Performance Unit held by the
Participant.


At the time payment is made by the Company to the
Participant under this Section 9, the Company shall also pay to the Participant
a dividend equivalent in an amount equal to the number of the Participant’s
Performance Units multiplied by the total dividends per Common Share declared
by the Company between the Commencement Date and the applicable date of
vesting.  Such payment shall be made by
the Company in cash as soon as practicable after the Vesting Date.


Where the Participant has died, all references in this
Section 9 to “Participant” shall be deemed to include the Participant’s legal
representative.


10.                               Non-Assignability
of Restricted Shares and Performance Units


The Restricted Shares and Performance Units granted
hereunder shall not be transferable or assignable (whether absolutely or by way
of mortgage, pledge or other charge) by the Participant other than by will or
other testamentary instrument, the laws of succession or other laws of general
application and during the lifetime of the Participant only the Participant
shall be entitled to payment thereunder. 
The foregoing provisions of this Paragraph 10 shall not prevent the
grant of Restricted Shares or Performance Units from being forfeited pursuant
to the terms and conditions of this Agreement and shall not prevent a
participant from designating a beneficiary to receive the Restricted Shares or
Performance Units in the event of the Participant’s death.  Any such beneficiary shall receive these amounts
subject to all conditions and restrictions set forth in this Agreement,
including but not limited to, the forfeiture provisions set forth herein.



 6
 









11.                               Rights
of Participant


The Participant shall have full rights as a
shareholder upon the grant of Restricted Shares but shall have no rights
whatsoever as a shareholder in respect of any Common Shares which are the
subject of the Performance Units held by the Participant (including, without
limitation, any right to receive dividends or other distributions from the
Company, voting rights, warrants or rights under any rights offering) until
such time as such shares have been recorded on the Company’s official
shareholder records as having been issued to the Participant.


Nothing contained in this Agreement shall give the
Participant or any other person, any interest or title in or to any Common
Shares which are the subject of the Performance Units or any rights as a
shareholder of the Company or any other legal or equitable right against the
Company whatsoever other than as set forth in this Agreement, nor shall it
confer upon the Participant any right to continue as an officer of the Company
or of its Subsidiaries.


12.
                            Withholding
Taxes


Prior to the payment by the Company in respect of the
Restricted Shares and Performance Units pursuant to Sections 8 and 9, the
Participant shall pay to the Company such amount as may be requested by the
Company for the purpose of satisfying any liability for federal, provincial,
state or other taxes with respect to such payment.  Where the Participant is subject to income
tax, the amount shall be paid by the Participant to the Company in cash or by
cheque.


13.                               Alterations
in Shares


In the
event of a share dividend, share split, issuance of shares or instruments
convertible into shares (other than pursuant to the Plan) for less than market
value, share consolidation, share reclassification, exchange of shares,
recapitalization, amalgamation, merger, consolidation, corporate arrangement,
reorganization, liquidation or the like of or by the Company, the Board of
Directors may make such adjustment, if any, of the number of Performance Units,
as it shall deem appropriate to give proper effect to such event, including to
prevent, to the extent possible, substantial dilution or enlargement of rights
granted to the Participant.  If because
of a proposed merger, amalgamation or other corporate arrangement or
reorganization, the exchange or replacement of shares in the Company for those
in another company is imminent, the Board of Directors may, in a fair and
equitable manner, determine the manner in which the Performance Units shall be
treated including, for example, requiring the acceleration of the time for
payment by the Company in respect of the Performance Units and of the time for the
fulfilment of the Performance Objectives. 
All determinations of the Board of Directors under this Section 13 shall
be conclusive and binding.



 7
 









14.                               Leave
of Absence


If the
Participant is an employee of the Company and is granted a temporary leave of
absence by the Company, such leave of absence shall be deemed a continuation of
the employment of the Participant provided if and so long as:


(a)                                  the
Company consents in writing to such leave of absence; and


(b)                                 the
Participant thereafter returns to full-time employment with the Company for a
period of six months, notwithstanding the possible expiration of the
Performance Period.


For greater certainty, the provisions of subsection
(b) of this Section 14 shall be subject always to (i) immediate vesting on the
occurrence of a Change of Control as described in Section 5 hereof and (ii) the
deemed continuous employment provisions of Section 7.


15.                               Notice


All notices, demands, payments or other communications
which may or are required to be given under this Agreement shall be given in
writing by personal delivery or ordinary prepaid mail:


(a)                                  to
the Company:


IPSCO
Inc.


650
Warrenville Road


Suite
500


Lisle,
IL 60532


Attention:
Vice President, General Counsel


and
Corporate Secretary


(b)                                 to
the Participant:


David
Sutherland


2207
Joyce Lane


Naperville, IL 60564


or
such other address as either party may give in writing from time to time.  Such notices if given by mail shall be deemed
to have been received by the party to whom they are addressed as described
herein seventy-two (72) hours after they have been put in the post, postage
prepaid, provided that if postal services are disrupted by labour disputes,
such mailed notices shall be deemed to have been given and received on the date
of actual receipt by the addressee.


16.                               Plan
to Apply


The Award is granted
under the Plan and the Award and this Agreement are subject to the terms and
conditions of the Plan.  In the event of
any inconsistent provisions between this Agreement and the Plan, the provisions
of the Plan shall control.  Capitalized
terms used in this Agreement without definition have the



 8
 









meaning
assigned to them in the Plan.  References
to the sections of this Agreement are intended solely for convenience and no
provision of this Agreement is to be construed by reference to any title of any
section.  This Agreement shall also be
subject to the applicable requirements of the Toronto Stock Exchange, the
Canadian Securities Administrators, the United States Securities and Exchange
Commission and the New York Stock Exchange from time to time.


17.                               Compliance
With Law


The
Company will make reasonable efforts to comply with all applicable federal,
state and provincial securities laws. 
However, the Company will not issue any shares or other securities
pursuant to this Agreement if their issuance would result in a violation of any
such law.  If at any time the Management
Resources and Compensation Committee (the “Committee”) shall determine, in its
discretion, that the listing, registration or qualification of any shares subject
to this Award upon any securities exchange or under any federal, state or
provincial law, or the consent or approval of any government or regulatory body
is necessary or desirable the condition of, or in connection with, the granting
of this Award or the issuance of Common Shares hereunder, no rights may be
exercised and the Common Shares may not be delivered pursuant to the Award, in
full or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee and any delay caused shall in no way affect the
dates of vesting or forfeiture of the Award.


18.                               No Implied Promises


By accepting the Award and executing this Agreement,
the Participant recognizes and agrees that the Company and its Subsidiaries,
and each of their officers, directors, agents and employees, including but not
limited to the Board of Directors and the Committee, in their oversight or
conduct of the business and affairs of the Company and its Subsidiaries may, in
good faith, cause the Company and/or a Subsidiary to act or omit to act in a
manner that will, directly or indirectly, prevent all or part of the
Performance Units from being non-forfeitable. 
No provision of this Agreement shall be interpreted or construed to
impose any liability upon the Company, any Subsidiary, or any officer,
director, agent or employee of the Company or Subsidiary, or the Board of
Directors or the Committee for any forfeiture of Performance Units that may result,
directly or indirectly, from any such action or omission, or shall be
interpreted or construed to impose any obligation on the part of any such
entity or person to refrain from any such action or omission.


19.                               Relation
to Other Benefits


The benefits received by Participant under this
Agreement will not be taken into account in determining any benefits to which
the Participant may be entitled under any profit sharing, retirement, life
insurance or other benefit or compensation plan maintained by the Company or
its Subsidiaries.



 9
 









20.                               Dispute


The Committee shall interpret and construe this
Agreement and make all determinations hereunder, and any such interpretation,
construction or determination by the Committee shall be binding and conclusive
on the Company or a Subsidiary (as the case may be), the Participant and on any
person or entity claiming under or through either of them.  Without limiting the generality of the
foregoing, any determination of whether the Participant’s employment terminates
by reason of “Retirement” or for “Disability” within the meaning of Section 7
hereof, shall be made by and in the sole discretion of the Committee, whose
decision shall be final and binding on the Company or Subsidiary (as the case
may be), the Participant and any person or entity claiming under or through any
of them.


21.                               Miscellaneous


(a)                                  Nothing
in this Agreement shall confer upon the Participant any right to continue in
the employ or other service of the Company or any Subsidiary, or shall limit in
any manner the right of the Company or any Subsidiary to terminate the
employment or other service of the Participant or adjust the compensation of
the Participant.


(b)                                 The
Participant shall forthwith and from time to time do all such acts and things
and execute and deliver all such instruments, writings and assurances as may be
necessary to carry out this Agreement in accordance with its true intent.


(c)                                  This
Agreement shall be binding upon the successors, assigns, executors and
administrators of the parties hereto and upon any beneficiary of the
Participant.


(d)                                 Any
waiver by a party of another party’s performance of, or compliance with, a term
or condition of this Agreement shall not operate or be construed as a waiver of
any subsequent failure by such party to perform or comply.


(e)                                  Any
term or provision of this Agreement that is invalid or unenforceable in any
jurisdiction shall not affect the validity or enforceability or the remaining
terms and provisions hereof, or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.


(f)                                    This
Agreement shall be governed by the laws of the State of Illinois without regard
to conflicts of law principles.


[signature
page to follow]



 10
 









IN WITNESS WHEREOF
the parties hereto have executed this Agreement as of the day and year first
above written.


	
  

  	
  IPSCO INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
   

  	
   

  
	
   

  	
  Raymond J. Rarey

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
   

  	
   

  
	
   

  	
  Leslie T. Lederer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PARTICIPANT

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  David Sutherland

  



 



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