exv10w6






Exhibit 10.6




EQUITY INCENTIVE PLAN





	1.	 	Purpose.
	 
	 	 	The purpose of the 2008 Equity Incentive Plan is to further align the interests of employees
and directors with those of the shareholders by providing incentive compensation
opportunities tied to the performance of the Common Stock and by promoting increased ownership of
the Common Stock by such individuals. The Plan is also intended to advance the interests
of the Company and its shareholders by attracting, retaining and motivating key personnel upon
whose judgment, initiative and effort the successful conduct of the Company’s business is largely
dependent.






	2.	 	Definitions.






	2.1	 	Wherever the following capitalized terms are used in the Plan, they shall have the
meanings specified below:






	 	(a)	 	“Affiliate” means (i) any entity that would be treated as an “affiliate” of the Company for
purposes of Rule 12b-2 under the Exchange Act and (ii) any joint venture or other entity
in which the Company has a direct or indirect beneficial ownership interest representing at least
one-third (1/3) of the aggregate voting power of the equity interests of such entity or one-third
(1/3) of the aggregate fair market value of the equity interests of such
entity, as determined by the Committee.
	 
	 	(b)	 	“Award” means an award of a Stock Option, Stock Appreciation Right, Restricted Stock
Award, Stock Unit Award, Stock Award, Performance Stock Award, Tax Bonus Award or any other cash
payment granted under the Plan.
	 
	 	(c)	 	“Award Agreement” means a written agreement entered into between the Company and a Participant
setting forth the terms and conditions of an Award granted to a Participant.
	 
	 	(d)	 	“Board” means the Board of Directors of the Company.
	 
	 	(e)	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	 	(f)	 	“Common Stock” means the Company’s common stock.
	 
	 	(g)	 	“Committee” means the Board, the Compensation Committee of the Board, or such other
committee of the Board appointed by the Board to administer the Plan, as applicable.
	 
	 	(h)	 	“Company” means KHD Humboldt Wedag International Ltd., a British Columbia, Canada corporation.
	 
	 	(i)	 	“Continuing Director” means, as of any date of determination, any member of the Board
of
Directors of the Company who (i) was a member of such Board on the effective date of the Plan or
(ii) was nominated for election or elected to such Board with the affirmative vote of a
majority of
the Continuing Directors who were members of such Board at the time of such nomination or
election.
	 
	 	(j)	 	“Date of Grant” means the date on which an Award under the Plan is made by the
Committee, or such later date as the Committee may specify to be the effective date of an Award.




 









 












	 	(k)	 	“Disability” means a Participant being considered “disabled” within the meaning of
Section
409A(a)(2)(C) of the Code or such other applicable law, unless otherwise provided in an Award
Agreement.
	 
	 	(l)	 	“Eligible Person” means any person who is an employee, director, officer or consultant of
the Company or any Affiliate or any person to whom an offer of employment with the Company or any
Affiliate is extended, as determined by the Committee. 
	 
	 	(m)	 	  “Exchange Act” means the
Securities Exchange Act of 1934, as amended.
	 
	 	(n)	 	“Fair Market Value” of a share of Common Stock as of a given date shall be
determined by such methods or procedures as shall be established from time to time by the Committee
in good faith and in accordance with applicable law. Unless otherwise determined by the Committee,
the Fair Market Value of the Common Stock shall mean the mean of the high and low sales prices of
the Common Stock on the relevant date as reported on the stock exchange or market on which the
Common Stock is primarily traded, or if no sale is made on such date, then the Fair Market
Value is the weighted average of the mean of the high and low sales prices of the Common Stock
on the next preceding day and the next succeeding day on which such sales were made, as
reported on the stock exchange or market on which the Common Stock is primarily traded. If the
Common Stock is not listed on any stock exchange or quotation system on the date as of
which Fair Market Value is to be determined, the Committee shall determine in good faith
the Fair Market Value in whatever manner it considers appropriate. 
	 
	 	(o)	 	 “Incentive
Stock Option” means a Stock Option granted under Section 6 hereof that is intended
to meet the requirements of Section 422 of the Code and the regulations
thereunder.
	 
	 	(p)	 	“Nonqualified Stock Option” means a Stock Option granted under Section 6 hereof
that is not an Incentive Stock Option.
	 
	 	(q)	 	“Participant” means any Eligible Person who holds an outstanding Award under the
Plan.
	 
	 	(r)	 	“Performance Stock Award” means an award payable in shares of Common Stock, cash or any
combination of shares or cash if the performance of the Company or its Affiliates during
the period meets certain performance goals specified by the Committee. 
	 
	 	(s)	 	  “Plan”
means the 2008 Equity Incentive Plan as set forth herein, as amended from time to time.
	 
	 	(t)	 	“Restricted Stock Award” means a grant of shares of Common Stock to an Eligible
Person under Section 8 hereof that are issued subject to such vesting and transfer
restrictions as the Committee shall determine and set forth in an Award Agreement.
	 
	 	(u)	 	“Stock Award” means a grant of shares of Common Stock to an Eligible Person under
Section 10 hereof that are issued free of transfer restrictions and forfeiture conditions.
	 
	 	(v)	 	“Stock Appreciation Right” means a contractual right granted to an Eligible
Person under Section 7 hereof entitling such Eligible Person to receive a payment,
representing the difference between the base price per share of the right and the Fair Market
Value of a share of Common Stock, at such time, and subject to such conditions, as are set
forth in the Plan and the applicable Award Agreement.
	 
	 	(w)	 	“Stock Option” means a contractual right granted to an Eligible Person under Section
6 hereof to purchase shares of Common Stock at such time and price, and subject to such
conditions, as are set forth in the Plan and the applicable Award Agreement.




2









 












	 	(x)	 	“Stock Unit Award” means a contractual right granted to an Eligible Person under
Section 9 hereof representing notional unit interests equal in value to a share of Common
Stock to be paid or distributed at such times, and subject to such conditions, as set forth in
the Plan and the applicable Award Agreement.
	 
	 	(y)	 	“Tax Bonus Award” means a payment in cash in the year in which an amount is included in the
gross income of a Participant in respect of an Award of an amount equal to the federal, foreign,
if any, and applicable state and local income and employment tax liabilities payable by the
Participant as a result of (i) the amount included in gross income in respect of the Award and (ii)
the payment of the amount in clause (i) and the amount in this clause
(ii). For purposes of determining the amount to be paid to the Participant pursuant to
the preceding sentence, the Participant shall be deemed to pay federal, foreign, if any, and state
and local income taxes at the highest marginal rate of tax imposed upon ordinary income for the
year in which an amount in respect of the Award is included in gross income, after giving
effect to any deductions therefrom or credits available with respect to the payment of any
such taxes.






	3.	 	Administration.






	3.1	 	The Plan shall be administered by the Board or, at the discretion of the Board, by a
committee which may be comprised of one or more members of the Board. Any such
committee designated by the Board, and the Board itself acting in its
capacity as administrator of the Plan, is referred to herein as the “Committee.” Any action
of the Committee in administering the Plan shall be final, conclusive and binding on all
persons, including the Company, its Subsidiaries, employees, Participants, persons claiming rights
from or through Participants and stockholders of the Company. No member of the Committee shall
be liable for any action or determination made in good faith by the Committee with respect to
the Plan or any Award thereunder.
	 
	3.2	 	The Committee shall have such powers and authority as may be necessary or appropriate for the
Committee to carry out its functions as described in the Plan. Subject to the express
limitations of the Plan, the Committee shall have authority in its discretion to determine
the Eligible Persons to whom, and the time or times at which, Awards may be granted, the number of
shares, units or other rights subject to each Award, the exercise, base or purchase price of an
Award (if any), the time or times at which an Award will become vested, exercisable or payable, the
performance goals and other conditions of an Award, the duration of the Award, and all other
terms of the Award. Subject to the terms of the Plan, the Committee shall have the authority
to amend the terms of an Award in any manner that is not inconsistent with the Plan,
provided that no such action shall adversely affect the rights of a Participant with respect to
an outstanding Award without the Participant’s consent. The Committee shall also
have discretionary authority to interpret the Plan, to make factual determinations under the Plan,
and to make all other determinations necessary or advisable for Plan administration, including,
without limitation, to correct any defect, to supply any omission or to reconcile any
inconsistency in the Plan or any Award Agreement hereunder. The Committee may prescribe, amend, and
rescind rules and regulations relating to the Plan. The Committee’s determinations under the Plan
need not be uniform and may be made by the Committee selectively among Participants and
Eligible Persons, whether or not such persons are similarly situated. The Committee shall, in
its discretion, consider such factors as it deems relevant in making its interpretations,
determinations and actions under the Plan including, without limitation, the recommendations or
advice of any officer or employee of the Company or such attorneys, consultants, accountants or
other advisors as it may select. All interpretations, determinations and actions by the Committee
shall be final, conclusive, and binding upon all parties.
	 
	3.3	 	The Committee shall have the right, from time to time, to delegate to one or more officers of
the Company the authority of the Committee to grant and determine the terms and conditions of
Awards granted under the Plan, subject to the requirements of applicable laws and such other
limitations as the Committee shall determine. In no event shall any such delegation of authority be
permitted with respect to Awards to any members of the Board or to any Eligible Person who is
subject to Rule 16b-3 under the Exchange Act or Section 162(m) of the Code. The Committee shall
also be permitted to delegate, to any appropriate officer or employee of the
Company, responsibility for performing certain ministerial functions under the Plan. In the
event that the Committee’s authority is delegated to officers or employees in accordance with
the




3









 






	 	 	foregoing, all provisions of the Plan relating to the Committee shall be interpreted in a
manner consistent with the foregoing by treating any such reference as a reference to such officer
or employee for such purpose. Any action undertaken in accordance with the Committee’s delegation
of authority hereunder shall have the same force and effect as if such action was undertaken
directly by the Committee and shall be deemed for all purposes of the Plan to have been taken by
the Committee.






	4.	 	Shares Subject to the Plan.






	4.1	 	Subject to adjustment pursuant to Section 4.2 hereof, the maximum aggregate number of shares of
Common Stock that may be issued and sold under all Awards granted under the Plan shall be equal to
1,500,000 shares of Common Stock. Shares of Common Stock issued and sold under the Plan may be
either authorized but unissued shares or shares held in the Company’s treasury. To the extent
that any Award involving the issuance of shares of Common Stock is forfeited, cancelled,
returned to the Company for failure to satisfy vesting requirements or other conditions of the
Award, or otherwise terminates without an issuance of shares of Common Stock being made thereunder,
the shares of Common Stock covered thereby will no longer be counted against the foregoing maximum
share limitations and may again be made subject to Awards under the Plan pursuant to such
limitations. Any Awards or portions thereof that are settled in cash and not in shares of
Common Stock shall not be counted against the foregoing maximum share limitations.
	 
	4.2	 	If there shall occur any change with respect to the outstanding shares of Common Stock by
reason of any recapitalization, reclassification, stock dividend, extraordinary dividend, stock
split, reverse stock split or other distribution with respect to the shares of Common Stock, or any
merger, reorganization, consolidation, combination, spin-off or other similar corporate change, or
any other change affecting the Common Stock, the Committee may, in the manner and to the extent
that it deems appropriate and equitable to the Participants and consistent with the
terms of the Plan, cause an adjustment to be made in (i) the
maximum number and kind of
shares provided in Section 4.1 hereof, (ii) the number and kind of shares
of Common Stock, units, or other rights subject to then outstanding Awards, (iii) the exercise
or base price for each share or unit or other right subject to then outstanding Awards, and
(iv) any other terms of an Award that are affected by the event. Notwithstanding the foregoing, in
the case of Incentive Stock Options, any such adjustments shall, to the extent practicable, be
made in a manner consistent with the requirements of Section 424(a) of the Code.
	 
	5.	 	Participation and Awards.
	 
	5.1	 	All Eligible Persons are eligible to be designated by the Committee to receive Awards and
become Participants under the Plan. The Committee has the authority, in its discretion, to
determine and designate from time to time those Eligible Persons who are to be granted
Awards, the types of Awards to be granted and the number of shares of Common Stock or units subject
to Awards granted under the Plan. In selecting Eligible Persons to be Participants and in
determining the type and amount of Awards to be granted under the Plan, the Committee shall
consider any and all factors that it deems relevant or appropriate.
	 
	5.2	 	The Committee shall determine the terms and conditions of all Awards granted to Participants in
accordance with its authority under Section 3.2 hereof. An Award may consist of one type of right
or benefit hereunder or of two or more such rights or benefits granted in tandem or in the
alternative. In the case of any fractional share or unit resulting from the grant, vesting, payment
or crediting of dividends or dividend equivalents under an Award, the Committee shall have the
discretionary authority to (i) disregard such fractional share or unit, (ii) round
such fractional share or unit to the nearest lower or higher whole share or unit, or (iii)
convert such fractional share or unit into a right to receive a cash payment. To the
extent deemed necessary by the Committee, an Award shall be evidenced by an Award Agreement
as described in Section 13.1 hereof.




4









 












	6.	 	Stock Options.
	 
	6.1	 	A Stock Option may be granted to any Eligible Person selected by the Committee. Subject to the
provisions of Section 6.8 hereof and Section 422 of the Code, each Stock Option shall be
designated, in the discretion of the Committee, as an Incentive Stock Option or as a Nonqualified
Stock Option.
	 
	6.2	 	The exercise price per share of a Stock Option shall not be less than 100 percent of the Fair
Market Value of the shares of Common Stock on the Date of Grant, provided that the Committee may in
its discretion specify for any Stock Option an exercise price per share that is higher than the
Fair Market Value on the Date of Grant.
	 
	6.3	 	The Committee shall in its discretion prescribe the time or times at which, or the
conditions upon which, a Stock Option or portion thereof shall become vested and/or exercisable,
and may accelerate the vesting or exercisability of any Stock Option at any time.
	 
	6.4	 	The Committee shall in its discretion prescribe in an Award Agreement the period during which a
vested Stock Option may be exercised, provided that the maximum term of a Stock Option shall be ten
years from the Date of Grant.
	 
	6.5	 	Subject to Section 6.8 hereof with respect to Incentive Stock Options, the Stock Option of
any Participant will terminate according to the provisions of the Award Agreement.
	 
	6.6	 	Subject to such terms and conditions as shall be specified in an Award Agreement, a Stock
Option may be exercised in whole or in part at any time during the term thereof by notice in the
form required by the Company, together with payment of the aggregate exercise price therefor and
applicable withholding tax. Payment of the exercise price shall be made in the manner set forth
in the Award Agreement, unless otherwise provided by the Committee: (i) in cash or
by cash equivalent acceptable to the Committee, (ii) by payment in shares of Common Stock that have
been held by the Participant for at least six months (or such period as the Committee may deem
appropriate, for accounting purposes or otherwise) valued at the Fair Market Value of such
shares on the date of exercise, (iii) through an open-market, broker-assisted sales
transaction pursuant to which the Company is promptly delivered the amount of proceeds necessary to
satisfy the exercise price, (iv) by a combination of the methods described above or (v) by
such other method as may be approved by the Committee and set forth in the Award Agreement. In
addition to and at the time of payment of the exercise price, the Participant shall pay to the
Company the full amount of any and all applicable income tax, employment tax and other amounts
required to be withheld in connection with such exercise, payable under such of the methods
described above for the payment of the exercise price as may be approved by the Committee and
set forth in the Award Agreement.
	 
	6.7	 	All Stock Options shall be nontransferable except (i) upon the Participant’s death, in
accordance with Section 13.2 hereof or (ii) in the case of Nonqualified Stock Options only, for
the transfer of all or part of the Stock Option to a Participant’s “family member” (as defined for
purposes of the Form S-8 registration statement under the Securities Act of 1933), as may be
approved by the Committee in its discretion at the time of proposed transfer. The transfer of a
Nonqualified Stock Option may be subject to such terms and conditions as the Committee may in
its discretion impose from time to time. Subsequent transfers of a Nonqualified
Stock Option shall be prohibited other than in accordance with Section 13.2 hereof.
	 
	6.8	 	Additional Rules for Incentive Stock Options.






	 	(a)	 	An Incentive Stock Option may only be granted to an Eligible Person who is considered an
employee for purposes of Treasury Regulation §1.421-7(h) with respect to the Company or any
Affiliate that qualifies as a “subsidiary corporation” with respect to the Company for
purposes of Section 424(f) of the Code.
	 
	 	(b)	 	An Award of an Incentive Stock Option may provide that such Stock Option may be exercised
not later than 3 months following termination of employment of the Participant with the Company and






5












 






	 	 	 	all Subsidiaries, or not later than one year following a permanent and total disability within
the meaning of Section 22(e)(3) of the Code, as and to the extent determined by the Committee
to comply with the requirements of Section 422 of the Code.
	 
	 	(c)	 	Any Incentive Stock Option granted hereunder shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as are deemed necessary or desirable
by the Committee, which terms, together with the terms of the Plan, shall be intended and
interpreted to cause such Incentive Stock Option to qualify as an “incentive stock option”
under Section 422 of the Code. An Award Agreement for an Incentive Stock Option may provide
that such Stock Option shall be treated as a Nonqualified Stock Option to the extent that certain
requirements applicable to “incentive stock options” under the Code shall not be satisfied. An
Incentive Stock Option shall by its terms be nontransferable other than by will or by the
laws of descent and distribution, and shall be exercisable during the lifetime of a Participant
only by such Participant.
	 
	 	(d)	 	If shares of Common Stock acquired by exercise of an Incentive Stock Option are disposed of
within two years following the Date of Grant or one year following the transfer of such shares to
the Participant upon exercise, the Participant shall, promptly following such disposition, notify
the Company in writing of the date and terms of such disposition and provide such other information
regarding the disposition as the Company may reasonably require.






	7.	 	Stock Appreciation Rights.
	 
	7.1	 	A Stock Appreciation Right may be granted to any Eligible Person selected by the Committee.
Stock Appreciation Rights may be granted on a basis that allows for the exercise of the right by
the Participant or that provides for the automatic payment of the right upon a specified date
or event. Stock Appreciation Rights shall be exercisable or payable at such time or times and
upon conditions as may be approved by the Committee, provided that the Committee may accelerate
the exercisability or payment of a Stock Appreciation Right at any time.
	 
	7.2	 	A Stock Appreciation Right may be granted without any related Stock Option and may be subject
to such vesting and exercisability requirements as specified by the Committee in an Award
Agreement. A Stock Appreciation Right will be exercisable or payable at such time or times as
determined by the Committee, provided that the maximum term of a Stock Appreciation Right shall be
ten years from the Date of Grant. The base price of a Stock Appreciation Right granted without any
related Stock Option shall be determined by the Committee in its sole discretion;
provided, however. that the base price per share of any such freestanding Stock Appreciation
Right shall not be less than 100 percent of the Fair Market Value of the shares of Common Stock on
the Date of Grant.
	 
	7.3	 	A Stock Appreciation Right may be granted in tandem with a Stock Option, either at the time of
grant or at any time thereafter during the term of the Stock Option. A tandem Stock Option/Stock
Appreciation Right will entitle the holder to elect, as to all or any portion of the number of
shares subject to such Stock Option/Stock Appreciation Right, to exercise either the Stock Option
or the Stock Appreciation Right, resulting in the reduction of the corresponding number of shares
subject to the right so exercised as well as the tandem right not so exercised. A Stock
Appreciation Right granted in tandem with a Stock Option hereunder shall have a base price per
share equal to the per share exercise price of the Stock Option, will be vested and exercisable
at the same time or times that a related Stock Option is vested and exercisable, and will
expire no later than the time at which the related Stock Option expires.
	 
	7.4	 	A Stock Appreciation Right will entitle the holder, upon exercise or other payment of the Stock
Appreciation Right, as applicable, to receive an amount determined by multiplying: (i) the excess
of the Fair Market Value of a share of Common Stock on the date of exercise or payment of the Stock
Appreciation Right over the base price of such Stock Appreciation Right, by (ii) the
number of shares as to which such Stock Appreciation Right is exercised or paid. Subject to the
requirements of Section 409A of the Code, payment of the amount determined under the foregoing may
be made, as approved by the Committee and set forth in the Award Agreement, in shares of Common
Stock valued at their Fair Market




6









 












	 	 	Value on the date of exercise or payment, in cash, or in a combination of shares of Common Stock
and cash, subject to applicable tax withholding requirements.
	 
	8.	 	Restricted Stock Awards.
	 
	8.1	 	A Restricted Stock Award may be granted to any Eligible Person selected by the Committee.
The Committee may require the payment by the Participant of a specified purchase price in
connection with any Restricted Stock Award.
	 
	8.2	 	The restrictions imposed on shares granted under a Restricted Stock Award shall lapse in
accordance with the vesting requirements specified by the Committee in the Award Agreement,
provided that the Committee may accelerate the vesting of a Restricted Stock Award at any time. If
the vesting requirements of a Restricted Stock Award shall not be satisfied, the Award shall be
forfeited and the shares of Common Stock subject to the Award shall be returned to the Company.
	 
	8.3	 	Shares granted under any Restricted Stock Award may not be transferred, assigned or subject to
any encumbrance, pledge, or charge until all applicable restrictions
are removed or have expired, unless otherwise allowed by the Committee. Failure to satisfy any applicable restrictions shall
result in the subject shares of the Restricted Stock Award being forfeited and returned to the
Company. The Committee may require in an Award Agreement that certificates representing the shares
granted under a Restricted Stock Award bear a legend making appropriate reference to the
restrictions imposed, and that certificates representing the shares granted or sold under a
Restricted Stock Award will remain in the physical custody of an escrow holder until all
restrictions are removed or have expired.
	 
	8.4	 	Subject to the foregoing provisions of this Section 8 and the applicable Award Agreement, the
Participant shall have all rights of a shareholder with respect to the shares granted to the
Participant under a Restricted Stock Award, including the right to vote the shares and receive all
dividends and other distributions paid or made with respect thereto. The Committee may provide in
an Award Agreement for the payment of dividends and distributions to the Participant at such times
as paid to shareholders generally or at the times of vesting or other payment of the Restricted
Stock Award.
	 
	8.5	 	If a Participant makes an election pursuant to Section 83(b) of the Code with respect to a
Restricted Stock Award, the Participant shall file, within 30 days following the Date of
Grant, a copy of such election with the Company and with the Internal Revenue Service, in
accordance with the regulations under Section 83 of the Code. The Committee may provide in an
Award Agreement that the Restricted Stock Award is conditioned upon the Participant’s making or
refraining from making an election with respect to the Award under Section 83(b) of the Code.
	 
	9.	 	Stock Unit Awards.
	 
	9.1	 	A Stock Unit Award may be granted to any Eligible Person selected by the Committee. The
value of each stock unit under a Stock Unit Award is equal to the Fair Market Value of the Common
Stock on the applicable date or time period of determination, as specified by the Committee. A
Stock Unit Award shall be subject to such restrictions and conditions as the Committee shall
determine. A Stock Unit Award may be granted together with a dividend equivalent right with
respect to the shares of Common Stock subject to the Award, which may be accumulated and may be
deemed reinvested in additional stock units, as determined by the Committee in its discretion.
	 
	9.2	 	On the Date of Grant, the Committee shall in its discretion determine any vesting requirements
with respect to a Stock Unit Award, which shall be set forth in the Award Agreement,
provided that the Committee may accelerate the vesting of a Stock Unit Award at any time. A
Stock Unit Award may also be granted on a fully vested basis, with a deferred payment date.
	 
	9.3	 	A Stock Unit Award shall become payable to a Participant at the time or times determined by the
Committee and set forth in the Award Agreement, which may be upon or following the
vesting of the




7









 












	 	 	Award. Payment of a Stock Unit Award may be made, at the discretion of the Committee, in cash
or in shares of Common Stock, or in a combination thereof, subject to applicable tax withholding
requirements. Any cash payment of a Stock Unit Award shall be made based upon the Fair Market
Value of the Common Stock, determined on such date or over such time period as determined by the
Committee.
	 
	9.4	 	The Participant shall not have any rights as a shareholder with respect to the
shares subject to a Stock Unit Award until such time as shares of Common Stock are
delivered to the Participant pursuant to the terms of the Award Agreement.
	 
	10.	 	Stock Awards, Performance Stock Awards and Tax Bonus Awards.
	 
	10.1	 	A Stock Award may be granted to any Eligible Person selected by the Committee. A Stock Award
may be granted for past services, in lieu of bonus or other cash compensation, as directors’
compensation or for any other valid purpose as determined by the Committee. A Stock
Award granted to an Eligible Person represents shares of Common Stock that are issued without
restrictions on transfer and other incidents of ownership and free of forfeiture conditions,
except as otherwise provided in the Plan and the Award Agreement. The Committee may,
in connection with any Stock Award, require the payment of a specified
purchase price.
	 
	10.2	 	Subject to the foregoing provisions of this Section 10 and the applicable Award Agreement,
upon the issuance of the Common Stock under a Stock Award the Participant shall have all
rights of a shareholder with respect to the shares of Common Stock, including the right to vote
the shares and receive all dividends and other distributions paid or made with respect thereto.
	 
	10.3	 	A Performance Stock Award may be granted to any Eligible Person selected by the Committee. The
Committee shall determine and include in a Performance Stock Award the period of time for which a
Performance Stock Award is made. The Committee also shall establish performance objectives to be
met by the Company or its Affiliates as a condition to payment of the Performance Stock Award.
The performance goals may include share price, pre-tax profits, earnings per share, return on
stockholders’ equity, return on assets, sales, net income or any combination of the foregoing or,
solely for a Performance Stock Award not intended to constitute “performance-based
compensation” under Section 162(m) of the Code, any other financial or other measurement
established by the Committee. The performance goals may include minimum and optimum objectives or
a single set of objectives.
	 
	10.4	 	The Committee shall establish the method of calculating the amount of payment to be made under
a Performance Stock Award if the performance goals are met, including the fixing of a maximum
payment. The Performance Stock Award shall be expressed in terms of
shares of Common Stock. The
Committee shall determine, in accordance with the terms of such Performance Stock Award, whether
all, none or any portion of a Performance Stock Award shall be paid. The Committee, in its
discretion, may elect to make payment in shares of Common Stock, cash or a combination of shares
and cash. The Committee may establish rules and procedures to permit a grantee to defer
recognition of income upon the attainment of a Performance Stock Award.
	 
	10.5	 	As to any Performance Stock Award not intended to constitute “performance-based compensation”
under Section 162(m) of the Code, at any time, the Committee may revise the performance goals and
the computation of payment if unforeseen events occur which have a substantial effect on the
performance of the Company or its Affiliates and which, in the judgment of the Committee, make
the application of the performance goals unfair unless a revision is made.
	 
	10.6	 	The Committee is authorized, subject to limitations under applicable law, to grant to
Participants Tax Bonus Awards and other cash payments, whether awarded separately or as a
supplement to any other award. The Committee shall determine the terms and conditions of such
awards.




8









 







	11.	 	Change in Control.
	 
	11.1	 	Except to the extent an Award Agreement provides for a different result (in
which case the Award Agreement will govern and this Section 11 of the Plan shall not be
applicable), notwithstanding anything elsewhere in the Plan or any rules adopted by the
Committee pursuant to the Plan to the contrary, if a Triggering Event shall occur within the
12-month period beginning with a Change in Control of the Company, then, effective immediately
prior to such Triggering Event, (i) each outstanding Stock Option and Stock Appreciation Right,
to the extent that it shall not otherwise have become vested and exercisable, shall automatically
become fully and immediately vested and exercisable, without regard to any otherwise applicable
vesting requirement, (ii) each Restricted Stock Award shall become fully and immediately vested
and all forfeiture and transfer restrictions thereon shall lapse, (iii) each outstanding Stock Unit
Award shall become immediately and fully vested and payable, (iv) each outstanding Performance
Stock Award shall become immediately payable, and (v) each Tax Bonus Award shall become
immediately payable.
	 
	11.2	 	Definitions






	 	(a)	 	For purposes of this Section 11 and Section 12.2 hereof, the term “Cause” shall mean
a determination by the Committee that a Participant (i) has been convicted of, or entered a plea
of nolo contendere to, a crime that constitutes a felony under
Federal or state law, (ii) has
engaged in willful gross misconduct in the performance of the Participant’s duties
to the Company or an Affiliate, (iii) has committed a material breach of any written
agreement with the Company or any Affiliate with respect to
confidentiality, noncompetition,
nonsolicitation or similar restrictive covenant, or (iv) has engaged in any other conduct which
would constitute cause under any applicable laws. Subject to the first sentence of
Section 11.1 hereof, in the event that a Participant is a party to an employment
agreement with the Company or any Affiliate that defines a termination on account of “Cause” (or
a term having similar meaning), such definition shall apply as the definition of a termination on
account of “Cause” for purposes hereof, but only to the extent that such definition provides the
Participant with greater rights. A termination on account of Cause shall be communicated by
written notice to the Participant, and shall be deemed to occur on the date such notice is
delivered to the Participant
	 
	 	(b)	 	For purposes of this Section 11, a “Change in Control” shall be deemed to have occurred upon:






	 	(i)	 	the occurrence of (A) an acquisition by any individual, entity or group (within the meaning
of Section l3(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of a percentage of the combined
voting power of the then outstanding voting securities of the Company entitled to vote generally
in the election of directors (the “Company Voting Securities”) (but excluding (1) any acquisition
directly from the Company (other than an acquisition by virtue of the exercise of a conversion
privilege of a security that was not acquired directly from the Company), (2) any acquisition by
the Company or an Affiliate and (3) any acquisition by an employee benefit plan (or related
trust) sponsored or maintained by the Company or any Affiliate) (an “Acquisition”) that is thirty
percent (30%) or more of the Company Voting Securities; and (B) the termination of
employment, within six (6) months following the Acquisition, of the individual who is the Chief
Executive Officer of the Company immediately prior to the Acquisition, for any reason other than
death, Disability, Cause, or voluntary resignation (but excluding any termination that
constitutes a Constructive Termination or any resignation that was requested by the Board or any
such Person (or its employees or representatives) that completes an Acquisition);
	 
	 	(ii)	 	at any time during a period of two (2) consecutive years or less, individuals who at the
beginning of such period constitute the Board (and any new directors whose election by the Board
or nomination for election by the Company’s shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were




9









 






	 	 	 	directors at the beginning of the period or whose election or nomination for election was
so approved) cease for any reason (except for death, Disability or voluntary retirement) to
constitute a majority thereof:
	 
	 	(iii)	 	an Acquisition that is fifty percent (50%) or more of the Company Voting Securities;
	 
	 	(iv)	 	the consummation of a merger, consolidation, reorganization or similar corporate
transaction, whether or not the Company is the surviving company in such transaction, other than
a merger, consolidation, or reorganization that would result in the Persons who are beneficial
owners of the Company Voting Securities outstanding immediately prior thereto continuing to
beneficially own, directly or indirectly, in substantially the same proportions, at least fifty
percent (50%) of the combined voting power of the Company Voting Securities (or the voting
securities of the surviving entity) outstanding immediately after such merger, consolidation
or reorganization;
	 
	 	(v)	 	the sale or other disposition of all or substantially all of the assets of the Company;
	 
	 	(vi)	 	the approval by the shareholders of the Company of a complete liquidation or dissolution of
the Company; or
	 
	 	(vii)	 	the occurrence of any transaction or event, or series of transactions or events, designated
by the Board in a duly adopted resolution as representing a change in the effective control
of the business and affairs of the Company, effective as of the date
specified in any such resolution.






	 	 	 	Notwithstanding the foregoing, the preceding events shall not be deemed to be a Change of
Control if, prior to any transaction or transactions causing such change, a majority of the
Continuing Directors shall have voted not to treat such transaction or transactions as resulting in
a Change of Control.
	 
	 	(c)	 	For purposes of this Section 11, a “Constructive Termination” shall mean a termination of
employment by a Participant within sixty (60) days following the
occurrence of any one or more
of the following events without the Participant’s written consent (i) any reduction in
position, title (for Vice Presidents or above), overall responsibilities, level of
authority, level of reporting (for Vice Presidents or above), base compensation, annual
incentive compensation opportunity, aggregate employee benefits or (ii) a request that the
Participant’s location of employment be relocated by more than fifty (50) miles. Subject to the
first sentence of Section 11.1 hereof, in the event that a Participant is a party to an
employment agreement with the Company or any Affiliate (or a successor entity) that defines a
termination on account of “Constructive Termination,” “Good Reason” or “Breach of Agreement” (or
a term having a similar meaning), such definition shall apply as the definition of
“Constructive Termination” for purposes hereof in lieu of the foregoing, but
only to the extent that such definition provides the Participant with greater rights. A
Constructive Termination shall be communicated by written notice to the Committee, and shall be
deemed to occur on the date such notice is delivered to the Committee, unless the circumstances
giving rise to the Constructive Termination are cured within five (5) days of such notice.
	 
	 	(d)	 	For purposes of this Section 11, a “Triggering Event” shall mean (i) the termination of Service
of a Participant by the Company or an Affiliate (or any successor thereof) other than on account
of death, Disability or Cause, (ii) the occurrence of a Constructive Termination or (iii) any
failure by the Company (or a successor entity) to assume, replace, convert or otherwise
continue any Award in connection with the Change in Control (or another corporate transaction or
other change effecting the Common Stock) on the same terms and conditions as applied immediately
prior to such transaction, except for equitable adjustments to reflect changes in the Common
Stock pursuant to Section 4.3 hereof.






10












 






	11.3	 	In the event that the vesting of Awards together with all other payments and the value of
any benefit received or to be received by a Participant would result in all or a
portion of such payment being subject to the excise tax under Section 4999 of the Code, then
the Participant’s payment shall be either (i) the full payment or (ii) such lesser amount
that would result in no portion of the payment being subject to excise tax under
Section 4999 of the Code (the “Excise Tax”), whichever of the foregoing amounts, taking into
account the applicable Federal, state, and local employment taxes, income taxes, and the Excise
Tax, results in the receipt by the Participant, on an after-tax basis, of the greatest
amount of the payment notwithstanding that all or some portion of the payment may be taxable under
Section 4999 of the Code. All determinations required to be made
under this Section 11 shall be
made by any nationally recognized accounting firm which is the Company’s outside auditor
immediately prior to the event triggering the payments that are subject to the Excise Tax (the
“Accounting Firm”). The Company shall cause the Accounting Firm to provide detailed supporting
calculations of its determinations to the Company and the Participant. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. The Accounting
Firm’s determinations
must be made with substantial authority (within the meaning of Section 6662 of the
Code). For the purposes of all calculations under Section 280G of the Code and the application of
this Section 11.3, all determinations as to present value shall be made using 120 percent of the
applicable Federal rate (determined under Section 1274(d) of the Code) compounded semiannually, as
in effect on December 30, 2004.
	 
	12.	 	Forfeirture Events.
	 
	12.1	 	The Committee may specify in an Award Agreement at the time of the Award that the
Participant’s rights, payments and benefits with respect to an Award shall be
subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain
specified events, in addition to any otherwise applicable vesting or performance conditions of an
Award. Such events shall include, but shall not be limited to, termination for cause, violation of
material Company policies, breach of noncompetition, confidentiality or other
restrictive covenants that may apply to the Participant, or other conduct by the
Participant that is detrimental to the business or reputation of the Company.
	 
	12.2	 	Unless otherwise provided by the Committee and set forth in an Award Agreement, if a
Participant’s employment with the Company or any Affiliate shall
be terminated for cause, the Company may, in its sole discretion, immediately terminate such Participant’s right to any further
payments, vesting or exercisability with respect to any Award in its entirety. The Company
shall have the power to determine whether the Participant has been terminated for cause and the date upon which such termination for cause
occurs. Any such determination shall be final, conclusive and binding
upon the Participant. In addition, if the Company shall reasonably determine that a Participant has committed or may have
committed any act which could constitute the basis for a termination of such Participant’s
employment for cause, the Company may suspend the Participant’s rights to exercise any option,
receive any payment or vest in any right with respect to any Award pending a determination by
the Company of whether an act has been committed which could constitute the basis for a
termination for “cause” as provided in this Section 12.2.
	 
	13.	 	General Provisions.
	 
	13.1	 	To the extent deemed necessary by the Committee, an Award under the Plan shall be evidenced by
an Award Agreement in a written or electronic form approved by the Committee setting forth the
number of shares of Common Stock or units subject to the Award, the exercise price, base
price, or purchase price of the Award, the time or times at which an Award will become vested,
exercisable or payable and the term of the Award. The Award Agreement may also set forth the effect
on an Award of termination of Service under certain circumstances. The Award Agreement shall
be subject to and incorporate, by reference or otherwise, all of the applicable terms and
conditions of the Plan, and may also set forth other terms and conditions applicable to the Award
as determined by the Committee consistent with the limitations of the Plan. Award Agreements
evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary
to meet the applicable provisions of Section 422 of the Code. The grant of an Award under the Plan
shall not confer any rights upon the Participant holding such Award other than such terms, and
subject to such conditions, as are specified in the Plan as being applicable to such type of Award
(or to all Awards) or as are expressly set forth in the Award Agreement. The Committee need not
require the





11









 






	 	 	execution of an Award Agreement by a Participant, in which case, acceptance of the Award by the
Participant shall constitute agreement by the Participant to the terms, conditions, restrictions
and limitations set forth in the Plan and the Award Agreement as well as the administrative
guidelines of the Company in effect from time to time.
	 
	13.2	 	Except as provided in Section 6.7 hereof, Awards under the Plan shall not be assignable or
transferable by the Participant, except by will or by the laws of descent and distribution, and
shall not be subject in any manner to assignment, alienation, pledge, encumbrance or charge.
Notwithstanding the foregoing, the Committee may provide in the terms of an Award Agreement that
the Participant shall have the right to designate a beneficiary or beneficiaries who shall be
entitled to any rights, payments or other benefits specified under an Award following the
Participant’s death. During the lifetime of a Participant, an Award shall be exercised only by such
Participant or such Participant’s guardian or legal representative. In the event of a Participant’s
death, an Award may to the extent permitted by the Award Agreement be exercised by the
Participant’s beneficiary as designated by the Participant in the manner prescribed by the
Committee or, in the absence of an authorized beneficiary designation, by the legatee of such Award
under the Participant’s will or by the Participant’s estate in accordance with the Participant’s
will or the laws of descent and distribution, in each case in the same manner and to the same
extent that such Award was exercisable by the Participant on the date of the Participant’s death.
	 
	13.3	 	The Committee may in its discretion permit a Participant to defer the receipt of payment of
cash or delivery of shares of Common Stock that would otherwise be due to the Participant by virtue
of the exercise of a right or the satisfaction of vesting or other conditions with respect to an
Award. If any such deferral is to be permitted by the Committee, the Committee shall
establish rules and procedures relating to such deferral in a manner intended to comply with the
requirements of Section 409A of the Code, including, without limitation, the time when an election
to defer may be made, the time period of the deferral and the events that would result in payment
of the deferred amount, the interest or other earnings attributable to the deferral and the method
of funding, if any, attributable to the deferred amount.
	 
	13.4	 	A Participant shall have no rights as a holder of shares of Common Stock with respect to any
unissued securities covered by an Award until the date the Participant becomes the holder of record
of such securities. Except as provided in Section 4.3 hereof, no adjustment or other provision
shall be made for dividends or other shareholder rights, except to the extent that the Award
Agreement provides for dividend payments or dividend equivalent rights.
	 
	13.5	 	Nothing in the Plan, in the grant of any Award or in any Award Agreement shall confer upon any
Eligible Person any right to continue employment or a contractual relationship with the Company or
any of its Affiliates, or interfere in any way with the right of the
Company or any of its
Affiliates to terminate the Participant’s employment or other service relationship for any reason
at any time.
	 
	13.6	 	No shares of Common Stock will be issued or transferred pursuant to an Award unless and until
all then applicable requirements imposed by Federal and state securities and other laws, rules and
regulations and by any regulatory agencies having jurisdiction, and by any exchanges upon which the
shares of Common Stock may be listed, have been fully met. As a condition precedent to the issuance
of shares pursuant to the grant or exercise of an Award, the Company may require the Participant to
take any reasonable action to meet such requirements. The Committee may impose such conditions on
any shares of Common Stock issuable under the Plan as it may deem advisable, including, without
limitation, restrictions under the Securities Act of 1933, as amended, under the requirements of
any exchange upon which such shares of the same class are then listed, and under any blue sky or
other securities laws applicable to such shares. The Committee may also require the Participant to
represent and warrant at the time of issuance or transfer that the shares of Common Stock are being
acquired only for investment purposes and without any current intention to sell or distribute such
shares.
	 
	13.7	 	The Participant shall be responsible for payment of any taxes or similar charges required by
law to be withheld from an Award or an amount paid in satisfaction of an Award, which shall be paid
by the Participant on or prior to the payment or other event that results in taxable income in
respect of an Award.





12









 






	 	 	The Award Agreement may specify the manner in which the withholding obligation shall be
satisfied with respect to the particular type of Award.
	 
	13.8	 	The adoption of the Plan and any reservation of shares of Common Stock or cash amounts by the
Company to discharge its obligations hereunder shall not be deemed to create a
trust or other funded arrangement. Except upon the issuance of Common Stock pursuant to an
Award, any rights of a Participant under the Plan shall be those of a general unsecured creditor of
the Company, and neither a Participant nor the Participant’s permitted transferees or estate shall
have any other interest in any assets of the Company by virtue of the Plan. Notwithstanding the
foregoing, the Company shall have the right to implement or set aside funds in a grantor
trust, subject to the claims of the Company’s creditors or otherwise, to discharge
its obligations under the Plan.
	 
	13.9	 	The adoption of the Plan shall not affect any other share incentive or other compensation
plans in effect for the Company or any Affiliate, nor shall the Plan preclude the Company from
establishing any other forms of share incentive or other compensation or benefit program for
employees of the Company or any Affiliate. The amount of any compensation deemed to be received by
a Participant pursuant to an Award shall not constitute includable compensation for purposes of
determining the amount of benefits to which a Participant is entitled under any other compensation
or benefit plan or program of the Company or an Affiliate, including, without limitation,
under any pension or severance benefits plan, except to the extent specifically provided by the
terms of any such plan.
	 
	13.10	 	The Plan shall be binding upon the Company, its transferees and assigns, and the Participant,
the Participant’s executor, administrator and permitted transferees and beneficiaries.
	 
	13.11	 	 If any provision of the Plan or any Award Agreement shall be determined to be illegal or
unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and
thereof shall be severable and enforceable in accordance with their
terms, and all provisions shall
remain enforceable in any other jurisdiction.
	 
	13.12	 	The Committee may adopt, amend and terminate such arrangements and grant such Awards, not
inconsistent with the intent of the Plan, as it may deem necessary or desirable to comply with any
tax, securities, regulatory or other laws of other jurisdictions with respect to Awards that may be
subject to such laws. The terms and conditions of such Awards may vary from the terms and
conditions that would otherwise be required by the Plan solely to the extent the Committee deems
necessary for such purpose. Moreover, the Board may approve such supplements to or amendments,
restatements or alternative versions of the Plan, not inconsistent with the intent of the
Plan, as it may consider necessary or appropriate for such purposes, without thereby
affecting the terms of the Plan as in effect for any other purpose.
	 
	13.13	 	Nothing contained in the Plan shall be construed to limit the right of the Committee to grant
Awards under the Plan in connection with the acquisition, whether by purchase, merger,
consolidation or other corporate transaction, of the business or assets of any
corporation or other entity. Without limiting the foregoing, the Committee may grant
Awards under the Plan to an employee or director of another corporation who becomes an
Eligible Person by reason of any such corporate transaction in substitution for awards
previously granted by such corporation or entity to such person. The terms and conditions of
the substitute Awards may vary from the terms and conditions that would otherwise be required by
the Plan solely to the extent the Committee deems necessary for such purpose.
	 
	13.14	 	The Plan and all rights hereunder shall be subject to and interpreted in accordance with
the laws of the Province of British Columbia, without reference to the principles of conflicts of
laws, and to applicable securities and other laws.
	 
	14.	 	Effective Date; Amendment and Termination.
	 
	14.1	 	The Plan shall become effective following its adoption by the Board. The term of the Plan
shall be ten (10) years from the date of adoption by the Board, subject to Section 14.3 hereof.





13









 






	14.2	 	The Board may at any time and from time to time and in any respect, amend or modify the
Plan. The Board may seek the approval of any amendment or modification by the Company’s
shareholders to the extent it deems necessary or advisable in its discretion
for purposes of compliance with Section 162(m) or Section 422 of the Code, the listing
requirements of any stock exchange or securities market or for any other purpose. No amendment or
modification of the Plan shall adversely affect any Award theretofore granted without the consent
of the Participant or the permitted transferee of the Award.
	 
	14.3	 	The Plan shall terminate on the tenth anniversary of the date of its adoption by the Board.
The Board may, in its discretion and at any earlier date, terminate the Plan. Notwithstanding the
foregoing, no termination of the Plan shall adversely affect any Award theretofore granted without
the consent of the Participant or the permitted transferee of the Award.






14