EX-4.1






Exhibit 4.1




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.




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	 	(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.




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	 	(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




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	 	 	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.









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	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




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	 	 	 	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




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	 	 	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




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	 	 	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.




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	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 13(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




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	 	 	 	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.










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	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.




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	 	 	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.






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