Exhibit 10.17


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 “Corporation” or the “Company”),


OF THE FIRST PART,


-and-


PETER MACPHAIL, of the City of Regina, in
the Province of Saskatchewan, (hereinafter called the “Participant”),


OF THE SECOND PART.


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


AND WHEREAS the Participant, as an employee
of the Corporation, has been designated to receive a grant of Performance Units
(as 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 9 of
the Plan, the Corporation hereby grants and awards to the Participant, Five
Thousand One Hundred and Twenty (5,120) performance units (the “Performance
Units”).  Each 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 Performance Objective (as those
terms are herein defined).  One-half of
the Performance Units will be subject to the Performance Objective I as defined
in Section 3 herein.  The remaining
one-half of the Performance Units will be subject to the Performance Objective
II as defined in Section 4 herein.



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2.                                      Performance
Period


The
performance period applicable to the Performance Units shall be the period
beginning on July 1, 2006 (the “Commencement Date”) and ending on June 30,
2009 (the “Performance Period”).


3.                                      Performance
Objective I


The
performance objective (the “Performance Objective I”) applicable to one-half of
the Performance Units 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.  The following
Performance Award matrix will determine Awards granted under Performance Objective
I at the end 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 Units

  Granted:

  	
   

  	
  

  Median

  	
   

  	
  

  0%

  	
   

  	
  

  50%

  	
   

  	
  

  100%

  	
   

  	
  

  125%

  	
   

  	
  

  150%

  	
   

  	
  

  

  =

  	
   

  	
  Number

  of Shares

  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. Below 5%
IPSCO ROCE, no awards will be paid regardless of performance relative to peers.



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·                  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.                                      Performance
Objective II


The
performance objective (“Performance Objective II”) for the remaining one-half
of the Performance Units shall be based upon the achievement of a cumulative
net income of $300,000 by the Corporation as reported from July 1, 2006 to
June 30, 2009.


5.                                      Vesting
of Performance Units


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


(a)                                  the
date of a Change of Control;


(b)                                 July
28, 2009, provided that the Performance 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.
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 Corporation, 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 Corporation’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 Corporation or (b) a sale or other
disposition of all or substantially all of the assets of the Corporation, or a
transaction having a similar effect.  For
purposes of clause (iii) above, if an individual or entity owns stock in both
corporations 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
corporation prior to the transaction giving rise to the change and not with
respect to the ownership interest in the other corporation.



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6.                                      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
Performance Units subject to Performance Objective II shall immediately
vest.  For Performance Units subject to
Performance Objective I, the Participant shall receive a pro-rata portion of
the Performance Units awarded at the Commencement Date calculated pursuant to
Paragraph 3 hereof, based upon the whole number of months employed prior to the
cessation of employment pursuant to this Section 6(a) over the number of months
in the Performance Period.


(b)                                 If
the Participant ceases to be an employee of the Corporation or a Subsidiary in
any circumstance other than as described in Section 6(a) hereof (including
termination by the Corporation with or without cause, and termination for any
reason by the Participant) all of the Participant’s rights and interest in and
to such Performance Units and any dividend equivalents related thereto, shall
thereupon terminate without payment of consideration by the Corporation.  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 Corporation
to a Subsidiary or vice versa, or from one Subsidiary to another, or by reason
of an approved leave of absence under the circumstances set forth in Section 12
below.



 5
 









7.                                      Payment
of Performance Units and Dividend Equivalents


Upon
vesting of the Performance Units in accordance with Sections 3, 4 and 6 hereof,
the Participant shall become entitled to payment in respect of the Performance
Units.  Payment shall be made by delivery
by the Corporation to the Participant of one newly issued Common Share for each
Performance Unit held by the Participant. 
Payment shall be made as soon as practicable after the date of vesting.


At the
time payment is made by the Corporation to the Participant under this Section
7, the Corporation 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 Corporation between the
Commencement Date and the applicable date of vesting.  Such payment shall be made by the Corporation
in cash as soon as practicable after the Vesting Date.


Where
the Participant has died, all references in this Section 7 to “Participant”
shall be deemed to include the Participant’s legal representative.


8.                                      Non-Assignability
of Performance Units


The
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 hereunder.  The foregoing provisions of this Section 8
shall not prevent any Performance Unit from being forfeited pursuant to the
terms and conditions of this Agreement, and shall not prevent the Participant
from designating a beneficiary to receive the Performance Units in the event of
the Participant’s death.  Any such
beneficiary shall receive the Performance Units subject to all of the terms,
conditions and restrictions set forth in this Agreement, including but not
limited to the forfeiture provisions set forth herein.


9.                                      Rights
of Participant


The
Participant 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 Corporation, voting rights, warrants or rights
under any rights offering) until such time as such Common Shares have been recorded
on the Corporation’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 Corporation or any
other legal or equitable right against the Corporation whatsoever other than as
set forth in this Agreement.



 6
 









10.                               Withholding
Taxes


Prior
to the payment by the Corporation in respect of the Performance Units pursuant
to Section 7, the Participant shall pay to the Corporation such amount as may
be requested by the Corporation 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 Corporation in cash or
by cheque.


11.                               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 Corporation, 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 Corporation for those in another
Corporation 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 Corporation in respect of the Performance Units and of the time of
fulfilment of the Performance Objectives. 
All determinations of the Board of Directors under this Section 11 shall
be conclusive and binding.


12.                               Leave
of Absence


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


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


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


For
greater certainty, the provisions of Section 12(b) hereof, 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 6.



 7
 









13.                                    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:


Peter
MacPhail


3542
Burns Road


Regina, SK S4V 2G3


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 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.


14.                               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 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.


15.                               Compliance
With Law


The Corporation will make reasonable
efforts to comply with all applicable federal, state and provincial securities
laws.  However, the Corporation 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,



 8
 









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.


16.                               No
Implied Promises


By
accepting the Award and executing this Agreement, the Participant recognizes
and agrees the Corporation 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 Corporation and its Subsidiaries may, in good faith, cause the
Corporation 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
Corporation, any Subsidiary, or any officer, director, agent or employee of the
Corporation 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.


17.                               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 Corporation or its Subsidiaries.


18.                               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
Corporation 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 4
hereof, shall be made by and in the sole discretion of the Committee, whose
decision shall be final and binding on the Corporation or Subsidiary (as the
case may be), the Participant and any person or entity claiming under or
through any of them.



 9
 









19.                               Miscellaneous


(a)                                  Nothing
in this Agreement shall confer upon the Participant any right to continue in
the employ or other service of the Corporation or any Subsidiary, or shall
limit in any manner the right of the Corporation 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 Province of Saskatchewan 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

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Peter MacPhail

  
					



 



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