exv4w2






Exhibit 4.2




PRECISION DRILLING TRUST




EMPLOYEE TRUST UNIT OPTION PLAN




·, 2009











 



 




PRECISION DRILLING TRUST




EMPLOYEE TRUST UNIT OPTION PLAN





	1.	 	The Plan
	 
	 	 	A trust unit option plan pursuant to which Options to purchase Trust Units may be granted to
the officers and key employees of the Precision Group is hereby established on the terms set
forth below.
	 
	2.	 	Purpose
	 
	 	 	The purpose of this Plan is to advance the interests of the Precision Group by encouraging
the officers and key employees of the Precision Group to acquire Trust Units, thereby (i)
increasing the proprietary interests of such persons in the Trust, (ii) aligning the
interests of such persons with the interests of the unitholders of the Trust generally,
(iii) encouraging such persons to remain associated with the Precision Group and (iv)
furnishing such persons with an additional incentive in their efforts on behalf of the
Precision Group.
	 
	3.	 	Defined Terms
	 
	3.1	 	Where used herein, the following terms shall have the following meanings, respectively:
	 
	 	 	“Black-Out Period” means the period of time when, pursuant to any policies of the Trust, any
securities of the Trust may not be traded by certain Persons as designated by the Trust,
including any holder of an Option;
	 
	 	 	“Board” means the board of directors of the Corporation;
	 
	 	 	“Canadian Option” means an Option pursuant to which the Option Price is stated and payable
in Canadian dollars;
	 
	 	 	“Canadian SIFT Rules” means the rules provided for by the ITA
concerning “Specified
Investment Flow-Through” or “SIFT” entities;
	 
	 	 	“Cause” means, unless otherwise defined in the applicable agreement evidencing the grant of
an Option hereunder, any act or omission that would entitle the Employer to terminate the
Participant’s employment without notice or compensation under the common law for just cause,
including, without in any way limiting its meaning under the common law:






	 	(i)	 	any improper conduct by the Participant which is materially detrimental to the
Employer; or
	 
	 	(ii)	 	the willful failure of the Participant to properly carry out his or her duties
on behalf of the Employer or to act in accordance with the reasonable direction of the
Employer;










 



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	 	 	“Change of Control” means the occurrence of any of:






	 	(i)	 	any transaction at any time and by whatever means pursuant to which any Person
or any group of two or more Persons acting jointly or in concert (other than the Trust
or the Corporation or any wholly-owned subsidiary of the Trust or the Corporation)
hereafter acquires the direct or indirect “beneficial ownership” (as defined in the
Business Corporations Act (Alberta)) of, or acquires the right to exercise control or
direction over, securities of the Trust or the Corporation representing 50% or more of
the then issued and outstanding voting securities of the Trust or the Corporation, as
the case may be, in any manner whatsoever, including, without limitation, as a result
of a takeover bid, an issuance or exchange of securities, an amalgamation of the Trust
or the Corporation with any other entity, an arrangement, a capital reorganization or
any other business combination or reorganization;
	 
	 	(ii)	 	the sale, assignment or other transfer of all or substantially all of the
assets of the Trust or the Corporation to a Person or any group of two or more Persons
acting jointly or in concert (other than a wholly-owned subsidiary of the Trust or the
Corporation or in connection with an income or royalty trust reorganization);
	 
	 	(iii)	 	the dissolution or liquidation of the Corporation or the Trust, as the case
may be, except in connection with the distribution of assets of the Trust or the
Corporation to one or more Persons which were wholly-owned subsidiaries of the Trust or
the Corporation prior to such event or in connection with an income trust or royalty
trust reorganization;
	 
	 	(iv)	 	the occurrence of a transaction requiring approval of the Trust’s unitholders
whereby the Trust or the Corporation is acquired through consolidation, merger,
exchange of securities, purchase of assets, amalgamation, statutory arrangement or
otherwise by any Person or any group of two or more Persons acting jointly or in
concert (other than an exchange of securities with a wholly-owned subsidiary of the
Trust or the Corporation or an income or royalty trust reorganization); or
	 
	 	(v)	 	the Board passes a resolution to the effect that an event comparable to an
event set forth in this definition has occurred;






	 	 	provided that an event described in this definition shall not constitute a Change of Control
where such event occurs as a result of a Permitted Reorganization;
	 
	 	 	“Code” means the U.S. Internal Revenue Code of 1986, as amended;
	 
	 	 	“Constructive Dismissal” has the meaning ascribed thereto pursuant to the common law, unless
otherwise defined in the applicable agreement evidencing the grant of an Option hereunder,
and shall include, without in any way limiting its meaning under the common law, any
material change (other than a change which is clearly consistent with a promotion) imposed
by the Employer without the Participant’s consent to the Participant’s title,
responsibilities or reporting relationships, or a reduction of the Participant’s










 



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	 	 	compensation except where such reduction is applicable to all officers, if the Participant
is an officer, or all employees, if the Participant is an employee, of the Employer;
	 
	 	 	“Continuing Entity” has the meaning set out in Section 10.1;
	 
	 	 	“Continuing Entity Options” has the meaning set out in Section 10.1;
	 
	 	 	“Control Period” means the period commencing on the date of the Change of Control and ending
180 days after the date of the Change of Control;
	 
	 	 	“Corporation” means Precision Drilling Corporation and includes any successor corporation
thereto;
	 
	 	 	“Date of Grant” of an Option means the date an Option is granted to a Participant under the
Plan;
	 
	 	 	“Disability” means where the Participant:






	 	(i)	 	is to a substantial degree unable, due to illness, disease, affliction, mental
or physical disability or similar cause, to fulfill his obligations as an officer or
employee of the Employer either for any consecutive 12 month period or for any period
of 18 months (whether or not consecutive) in any consecutive 24 month period; or
	 
	 	(ii)	 	is declared by a court of competent jurisdiction to be mentally incompetent or
incapable of managing his affairs;






	 	 	"Employer” means with respect to a Participant, the entity in the Precision Group that
employs the Participant or that employed the Participant immediately prior to his or her
Termination Date;
	 
	 	 	“Fair Market Value” means, on any particular date, the fair market value of a Trust Unit as
determined by the Board in accordance with the following:






	 	(i)	 	in respect of a Trust Unit issuable upon the exercise of a Canadian Option, the
Fair Market Value shall mean the weighted average trading price of a Trust Unit on the
TSX during the last five trading days prior to that particular date on which at least a
board lot of Trust Units has so traded or, if a board lot has not traded on a
particular day, the average of the bid and asked prices; provided, however, that if the
Trust Units are not then listed and posted for trading on the TSX, then the Fair Market
Value shall mean the weighted average trading price of a Trust Unit on the NYSE during
the last five trading days prior to that particular date on which at least a board lot
of Trust Units has so traded or, if a board lot has not traded on a particular day, the
average of the bid and asked prices converted to Canadian dollars using the Noon Buying
Rate; and provided further, that if the Trust Units are not then listed and posted for
trading on the NYSE, then the Fair Market Value shall mean the weighted average trading
price of a Trust Unit on such stock exchange in Canada or the United States on which
the Trust Units are










 



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	 	 	 	then listed and posted for trading during the last five trading days prior to that
particular date (and, if in United States dollars, converted to Canadian dollars
using the Noon Buying Rate) or, if the Trust Units are not then listed and posted
for trading on any stock exchange in Canada or the United States, then the Fair
Market Value shall mean the fair market value per Trust Unit (in Canadian dollars)
as determined by the Board in its sole discretion and to the extent applicable, in
accordance with Section 409A of the Code;
	 
	 	(ii)	 	in respect of a Trust Unit issuable upon the exercise of a U.S. Option, the
Fair Market Value shall mean the weighted average trading price of a Trust Unit on the
NYSE during the last five trading days prior to that particular date on which at least
a board lot of Trust Units has so traded or, if a board lot has not traded on a
particular day, the average of the bid and asked prices; provided, however, that if the
Trust Units are not then listed and posted for trading on the NYSE, then the Fair
Market Value shall mean the weighted average trading price of a Trust Unit on the TSX
during the last five trading days prior to that particular date on which at least a
board lot of Trust Units has so traded or, if a board lot has not traded on a
particular day, the average of the bid and asked prices converted to United States
dollars using the Noon Buying Rate; and provided further, that if the Trust Units are
not then listed and posted for trading on the TSX, then the Fair Market Value shall
mean the weighted average trading price of a Trust Unit on such stock exchange in
Canada or the United States on which the Trust Units are then listed and posted for
trading during the last five trading days prior to that particular date (and, if in
Canadian dollars, converted to United States dollars using the Noon Buying Rate) or, if
the Trust Units are not then listed and posted for trading on any stock exchange in
Canada or the United States, then the Fair Market Value shall mean the fair market
value per Trust Unit (in United States dollars) as determined by the Board in its sole
discretion and to the extent applicable, in accordance with Section 409A of the Code;
and
	 
	 	(iii)	 	the Fair Market Value of a Trust Unit shall be rounded up to the nearest whole
cent;






	 	 	“Insider” means an insider as defined in the TSX Company Manual, as amended from time to
time;
	 
	 	 	“ITA” means the Income Tax Act (Canada), R.S.C. 1985 (5th Supp.), c. 1, including
the regulations promulgated thereunder, as amended from time to time;
	 
	 	 	“Leave of Absence” means any period during which, pursuant to the prior written approval of
the Participant’s Employer, the Participant is considered to be on an approved leave of
absence but does not provide any services to his or her Employer;
	 
	 	 	“Noon Buying Rate” means the noon buying rate for the applicable currency published by the
Bank of Canada on the relevant date;
	 
	 	 	“NYSE” means the New York Stock Exchange;










 



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	 	 	“Option” means an option to purchase Trust Units granted in accordance with the Plan by the
Trust to an officer or other key employee of the Precision Group, subject to the provisions
contained herein;
	 
	 	 	“Option Price” means, in respect of any particular Option, the price per Trust Unit at which
Trust Units may be purchased under that Option, as the same may be adjusted in accordance
with Article 8 hereof;
	 
	 	 	“Participant” means an officer or other key employee of the Precision Group to whom an
Option has been granted and which Option, or portion thereof, remains unexercised and has
not been surrendered;
	 
	 	 	“Permitted Reorganization” means a reorganization of the Precision Group in circumstances
where the unitholdings, shareholdings or ultimate ownership remains substantially the same
upon completion of the reorganization, and includes a reorganization, in a transaction or
series of related transactions, of the Trust for the purposes of avoiding the application of
the Canadian SIFT Rules and any related tax or trust, corporate or partnership
reorganization or restructuring including, without limitation, the contemporaneous or, to
the extent entered into in connection with such reorganization or restructuring, subsequent
termination or winding-up of the Trust;
	 
	 	 	“Person” means any individual, sole proprietorship, partnership, firm, entity,
unincorporated association, unincorporated syndicate, unincorporated organization, trust,
body corporate, agency and, where the context requires, any of the foregoing when they are
acting as trustee, executor, administrator or other legal representative;
	 
	 	 	“Plan” means this Trust Unit Option Plan of the Trust, as set out herein, as the same may be
amended or varied from time to time;
	 
	 	 	“Precision Group” means the Trust and any corporations which the Trust controls, within the
meaning of the ITA, and includes, for greater certainty, the Corporation;
	 
	 	 	“Restricted Options” has the meaning set out in Section 5.9;
	 
	 	 	”Retirement” means the normal retirement of the Participant from employment with the
Employer or the early retirement of the Participant pursuant to any applicable retirement
plan of the Employer;
	 
	 	 	“Substitution Event” means a Change of Control pursuant to which the Trust Units are
converted into, or exchanged for, other property, whether in the form of securities of
another entity, cash or otherwise;
	 
	 	 	“Termination Date” means the Participant’s last day of active employment with the Employer,
regardless of the reason for the termination of employment;
	 
	 	 	“Trust” means Precision Drilling Trust, a mutual fund trust within the meaning of the ITA,
and includes any successor mutual fund trust thereto, and any reference in this Plan to
action by the Trust means action by or under the authority delegated to the Corporation










 



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		 	or the Board or any Person or committee that has been designated for the purpose by the
Corporation;
	 
	 	 	“Trust Units” means the trust units of the Trust as presently constituted, each of which
represents an equal undivided beneficial interest in the Trust and any distributions from
the Trust, or any trust units into which such trust units are changed, reclassified,
subdivided, consolidated or converted or which are substituted for such trust units, or as
such trust units may further be changed, reclassified, subdivided, consolidated, converted
or substituted;
	 
	 	 	“TSX” means The Toronto Stock Exchange;
	 
	 	 	“U.S. Option” means an Option pursuant to which the Option Price is stated and payable in
United States dollars; and
	 
	 	 	“U.S. Taxpayer” means a person who is a citizen or permanent resident of the United States
for the purposes of the Code or for whom Options granted under the Plan would otherwise be
subject to United States federal income taxation under the Code.
	 
	4.	 	Administration of the Plan
	 
	4.1	 	The Plan shall be administered by the Corporation. The Trust shall effect the grant of
Options under the Plan, in accordance with determinations made by the Board pursuant to the
provisions of the Plan, including as to:






	 	(a)	 	the officers and other key employees of the Precision Group to whom Options
will be granted;
	 
	 	(b)	 	the number of Trust Units which shall be the subject of each Option;
	 
	 	(c)	 	the Option Price in respect of each Option (subject to Section 5.7 hereof); and
	 
	 	(d)	 	any and all terms and conditions in addition to (and not inconsistent with)
those contained herein which are to be attached to any or all such Options including,
without limitation, whether the Options shall be Canadian Options or U.S. Options;






	 	 	by the execution and delivery of instruments in writing in such form or forms as shall have
been approved by the Board.
	 
	4.2	 	The Board may from time to time adopt such policies, guidelines, rules and regulations for
administering the Plan as it may deem proper and in the best interests of the Trust and may,
subject to applicable law, delegate any of its powers hereunder to a committee of the Board.
To the extent the Board considers it desirable to meet the requirements of the
performance-based compensation exception of Section 162(m) of the Code, the Plan shall be
administered by a committee of two or more “outside directors” (within the meaning of Section
162(m) of the Code).










 



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	5.	 	Granting of Options
	 
	5.1	 	The Board from time to time may grant Options to such officers and other key employees of the
Precision Group as the Board shall determine; provided, however, that Options may be granted
to an officer or other key employee of the Precision Group who is a U.S. Taxpayer only if the
corporation or entity (that is part of the Precision Group) for which he or she provides
services would, together with the Trust, be classified as the “service recipient” (as defined
in Section 409A of the Code) with respect to such officer or other key employee. Each grant
of an Option shall be made by virtue of the employment of the Participant with the Precision
Group and subject to the terms and conditions contained herein and may be subject to
additional terms and conditions (not inconsistent herewith) determined by the Board from time
to time. Unless otherwise provided in the applicable agreement evidencing the grant of an
Option hereunder, all Options shall vest and become exercisable as follows:






	 	(a)	 	1/3 of the Options shall vest on the first anniversary of the Date of Grant;
	 
	 	(b)	 	an additional 1/3 of the Options shall vest on the second anniversary of the
Date of Grant; and
	 
	 	(c)	 	the final 1/3 of the Options shall vest on the third anniversary of the Date of
Grant.






	5.2	 	Options granted to any Participant shall be approved by the unitholders of the Trust if the
rules of any stock exchange on which the Trust Units are listed require such approvals.
	 
	5.3	 	Unless prohibited by applicable law or rules of a stock exchange on which the Trust Units are
listed for trading, Canadian Options or U.S. Options may be granted to a Participant without
regard to such Participant’s domicile or residence for tax purposes. United States taxpayers
that are Participants may receive Canadian Options and Canadian taxpayers that are
Participants may receive U.S. Options.
	 
	5.4	 	The aggregate number of Trust Units reserved by the Trust for issuance under this Plan and
all other security based compensation arrangements of the Trust shall not exceed 11,103,253
Trust Units, the aggregate number of Trust Units so reserved for issuance in any one fiscal
year shall not exceed 1% of the issued and outstanding Trust Units and the aggregate number of
Trust Units so reserved for issuance to any one individual shall not exceed 2% of the issued
and outstanding Trust Units. The proportion of Trust Units reserved by the Trust for issuance
under this Plan in any one fiscal year to any one individual shall not exceed 25% of the Trust
Units so reserved for issuance under this Plan during such fiscal year.
	 
	5.5	 	(a) The number of Trust Units issuable to Insiders of the Trust or the Corporation, at any
time, under all security based compensation arrangements of the Trust, including the Plan,
cannot exceed 10% of the issued and outstanding Trust Units; and










 



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	 	(b)	 	The number of Trust Units issued to Insiders of the Trust or the Corporation,
within any one year period, under all security based compensation arrangements of the
Trust, including the Plan, cannot exceed 10% of the issued and outstanding Trust Units.






	5.6	 	If any Option granted under this Plan shall expire or terminate for any reason without having
been exercised or surrendered in full, any unpurchased Trust Units to which such Option
relates shall be available for the purposes of the granting of Options under this Plan.
	 
	5.7	 	The Board shall, at the time an Option is granted under this Plan, fix the Option Price in
respect of such Option and such Option Price shall not be less than the Fair Market Value on
the Date of Grant. If the Option is a Canadian Option, the Option Price shall be stated and
payable in Canadian dollars, and if the Option is a U.S. Option, the Option Price shall be
stated and payable in United States dollars.
	 
	5.8	 	Subject to Section 5.9, an Option must be exercised or surrendered within a period of time
not exceeding seven years from the Date of Grant (or such shorter period of time as the Board
may determine and specify in connection with the grant of the Option), otherwise the Option
shall expire immediately after the applicable period.
	 
	5.9	 	Except if not permitted by the TSX or NYSE, if any Options may not be exercised due to any
Black-Out Period being in effect at any time within the 3 business day period prior to the
normal expiry date of such Options (the “Restricted Options”), the expiry date of all
Restricted Options shall be extended for a period of 7 business days following the end of the
Black-Out Period (or such longer period as permitted by the TSX or NYSE and approved by the
Board).
	 
	6.	 	Exercise or Surrender of Options
	 
	6.1	 	Subject to the provisions of this Plan and the terms and conditions of the Option, an Option
or any portion thereof may be exercised from time to time by delivery to the Trust c/o the
Corporation at its registered office of a notice in writing signed by the Participant or, in
the case of the Participant’s death or incapacity, the Participant’s legal personal
representative. This notice shall state the intention of the Participant, or, in the case of
the Participant’s death or incapacity, the Participant’s legal personal representative, to
exercise the Option or a portion thereof and the number of Trust Units in respect of which the
Option is then being exercised, and must be accompanied by payment to the Trust in full of the
applicable Option Price (including any applicable withholding tax) in the currency in which
the Option Price is denominated for the Trust Units which are the subject of the exercise.
	 
	6.2	 	As an alternative to the exercise of an Option pursuant to Section 6.1, a Participant shall
be entitled, at his or her election, to surrender for cancellation, unexercised, any vested
Option which is otherwise then exercisable and, in consideration for such surrender for
cancellation, to receive a cash payment in an amount equal to the positive difference, if any,
obtained by subtracting the aggregate Option Price of the surrendered Option from










 



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	 	 	the then current Fair Market Value of the Trust Units subject to the surrendered Option,
less applicable source withholdings. The Board has the sole discretion to consent or
disapprove of the election of the Participant to surrender any vested Option pursuant to
this Section 6.2. If the Board disapproves of the election, the Participant may (i)
exercise the Option under Section 6.1, or (ii) retract the request to surrender such Option
and retain the Option. If the Board approves of the election, the Board shall make the cash
payment to the Participant in respect of the surrendered Option within 30 days. Any cash
payment in accordance with this Section 6.2 shall be payable in Canadian dollars, if made
with respect to a Canadian Option, and in United States dollars, if made with respect to a
U.S. Option.
	 
	7.	 	Non-Assignability of Options
	 
	 	 	Each Option granted to a Participant is non-assignable and non-transferable except pursuant
to laws of succession and, except in the case of the Participant’s death or incapacity,
shall be exercisable or surrendered only by the Participant.
	 
	8.	 	Adjustments
	 
	8.1	 	Appropriate adjustments in the number of Trust Units subject to the Plan and, with respect to
Options granted or to be granted, in the respective numbers of Trust Units optioned and in the
respective Option Prices, shall be made by the Board to give effect to adjustments in the
number of Trust Units resulting from subdivisions or consolidations of the Trust Units or the
payment of distributions in kind of Trust Units by the Trust (other than distributions in kind
of Trust Units paid in lieu of cash distributions in the ordinary course) or to give effect to
reclassifications or conversions of the Trust Units or any other relevant changes in the
authorized or issued capital of the Trust or any other event in respect of which, in the
opinion of the Board, such an adjustment would be necessary to preserve the Participant’s
rights hereunder and under the Options, in all such cases which occur subsequent to the
approval of the Plan by the Board; provided that no Option shall be adjusted to result in the
issuance of a fractional Trust Unit and all fractions shall be rounded down; provided further
that an Option, which is intended to be exempt from Section 409A of the Code, shall be
adjusted in accordance with Section 409A in order to remain exempt from Section 409A.
	 
	9.	 	Termination of Employment
	 
	9.1	 	Subject to Sections 9.2, 9.3, 9.4, 9.5, 9.6 and 9.7, and to the terms of any particular
Option, all rights to purchase Trust Units pursuant to an Option or to surrender such Option
shall expire and terminate immediately upon the Participant holding such Option ceasing to be
an officer or employee of the Precision Group, provided that if such employment of the
Participant is terminated for Cause, such rights shall terminate immediately upon notification
being given to the Participant of such termination for Cause.
	 
	9.2	 	If, before the expiry of an Option in accordance with the terms thereof, the Participant
holding such Option shall cease to be an officer or employee of the Precision Group by










 



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	 	 	reason of the death of the Participant, the unexercised part of such Option shall become
fully vested and may be exercised or surrendered (including such part, if any, thereof
which, but for this Section 9.2, would not otherwise be able to be exercised or surrendered)
at any time within 12 months of the Participant’s Termination Date unless otherwise provided
in the terms of a particular Option. Any Option that remains unexercised shall be
immediately forfeited upon the expiration of such 12 month period.
	 
	9.3	 	If, before the expiry of an Option in accordance with the terms thereof, the Participant
holding such Option shall cease to be an officer or employee of the Precision Group by reason
of Disability or Leave of Absence, such Option shall continue to vest in accordance with its
terms and may be exercised (if such Option is fully vested) or surrendered until the normal
expiry of the Option in accordance with its terms.
	 
	9.4	 	If, before the expiry of an Option in accordance with the terms thereof, the Participant
holding such Option shall cease to be an officer or employee of the Precision Group by reason
of Retirement, such Option shall continue to vest in accordance with its terms and may be
exercised (if such Option is fully vested) or surrendered at any time within 24 months of the
Participant’s Termination Date unless otherwise provided in the terms of a particular Option.
Any Option that remains unexercised shall be immediately forfeited upon the expiration of such
24 month period.
	 
	9.5	 	If, before the expiry of an Option in accordance with the terms thereof, the Participant
holding such Option shall cease to be an officer or employee of the Precision Group by reason
of voluntary resignation (i) the unvested part of the Option shall be cancelled immediately
and may not be exercised or surrendered and (ii) the vested part of such Option may be
exercised or surrendered at any time within 30 days of the Participant’s Termination Date, but
only to the extent that the Participant was entitled to exercise or surrender such Option at
the Participant’s Termination Date. Any Option that remains unexercised shall be immediately
forfeited upon the expiration of such 30 day period.
	 
	9.6	 	If, before the expiry of an Option in accordance with the terms thereof, the Participant
holding such Option shall cease to be an officer or employee of the Precision Group by reason
of termination other than for Cause, such Option shall continue to vest in accordance with its
terms and may be exercised (if such Option is fully vested) or surrendered at any time within
90 days of the Participant’s Termination Date. Any Option that remains unexercised shall be
immediately forfeited upon the expiration of such 90 day period.
	 
	9.7	 	If, before the expiry of an Option in accordance with the terms thereof, a Change of Control
shall occur and the Participant shall cease to be an officer or employee of the Employer by
reason of termination:






	 	(a)	 	by the Employer or by the entity that has entered into a valid and binding
agreement with the Trust, the Corporation and/or other members of the Precision Group
to effect the Control Change at any time after such agreement is entered into or during
the Control Period and such termination was for any reason other than for Cause; or










 



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	 	(b)	 	by the Participant within 30 days after an act of Constructive Dismissal,
provided such act of Constructive Dismissal occurs during the Control Period;






	 	 	the Participant’s Options shall become fully vested and may be exercised or surrendered by
the Participant (including such part, if any, thereto which, but for this Section 9.7, would
not otherwise be able to be exercised or surrendered) at any time within 90 days of the
Participant’s Termination Date. Any Option that remains unexercised shall be immediately
forfeited upon the expiration of such 90 day period.
	 
	9.8	 	This Plan does not confer upon a Participant any right with respect to continuation as an
officer or employee with the Precision Group nor does it interfere in any way with the right
of the Participant or the Precision Group to terminate the Participant’s employment at any
time.
	 
	9.9	 	Options shall not be affected by any change of employment of the Participant so long as the
Participant continues to be employed by the Precision Group.
	 
	10.	 	Substitution Event
	 
	10.1	 	Unless Section 10.2 applies, upon the occurrence of a Substitution Event or a Permitted
Reorganization, where the surviving or acquiring entity (the “Continuing Entity”) is a
corporation or a “mutual fund trust” (within the meaning of the ITA), then the Continuing
Entity shall substitute or replace similar options to purchase securities in the Continuing
Entity (“Continuing Entity Options”) for the Options outstanding under this Plan on
substantially the same terms and conditions as this Plan. For greater certainty, no
consideration other than Continuing Entity Options shall be received and the excess of the
aggregate fair market value of the securities of the Continuing Entity subject to the
Continuing Entity Options immediately after the substitution or replacement over the aggregate
option price of such securities under the Continuing Entity Options shall not exceed the
excess of the aggregate Fair Market Value of the Trust Units subject to the outstanding
Options immediately before such substitution or replacement over the aggregate Option Price of
such Trust Units. Any such substitution or replacement shall, at all times, be made in
compliance with the provisions of subsection 7(1.4) of the ITA and Section 409A of the Code.
	 
	10.2	 	In the event that:






	 	(a)	 	the Continuing Entity does not (or, upon the occurrence of the Substitution
Event or Permitted Reorganization, will not) substitute or replace Continuing Entity
Options for the Options outstanding under this Plan on the same terms as described in
Section 10.1;
	 
	 	(b)	 	the Board determines, acting reasonably, that such substitution or replacement
is not practicable;
	 
	 	(c)	 	the Board determines, acting reasonably, that such substitution or replacement
would give rise to adverse tax results, under the ITA or the Code, to holders of
Options; or










 



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	 	(d)	 	the securities of the Continuing Entity are not (or, upon the occurrence of the
Substitution Event or Permitted Reorganization, will not be) listed and posted for
trading on a recognizable stock exchange;






	 	 	the outstanding Options shall become fully vested and may be exercised or surrendered by the
Participant (including such part, if any, thereto which, but for this Section 10.2, would
not otherwise be able to be exercised or surrendered) at any time after the Participant
receives written notice from the Board of such accelerated vesting and prior to the
occurrence of the Substitution Event or Permitted Reorganization; provided, however, that
such vesting, exercise or surrender shall be, unless otherwise determined in advance by the
Board, effective immediately prior to, and shall be conditional on, the consummation of such
Substitution Event or Permitted Reorganization. Any Options that have not been exercised or
surrendered pursuant to this Section 10.2 shall be forfeited and cancelled without
compensation to the holder thereof upon the consummation of such Substitution Event or
Permitted Reorganization.
	 
	11.	 	Decisions of the Board
	 
	11.1	 	All decisions and interpretations of the Board respecting the Plan or any Options shall be
conclusive and binding on the Trust and the Participants and their respective legal personal
representatives.
	 
	12.	 	Amendment or Discontinuance of Plan
	 
	12.1	 	Subject to the policies, rules and regulations of any lawful authority having jurisdiction
over the Trust (including any exchange on which the Trust Units are listed for trading), the
Board may at any time, without further action by, or approval of, the holders of Trust Units,
amend this Plan or any Option granted under this Plan in such respects as it may consider
advisable and, without limiting the generality of the foregoing, it may do so to:






	 	(a)	 	ensure that Options granted under this Plan will comply with any provisions
respecting trust unit options in the income tax or other laws in force in any country
or jurisdiction of which a Person to whom an Option has been granted may from time to
time perform services or be resident;
	 
	 	(b)	 	make amendments of a procedural or “housekeeping” nature;
	 
	 	(c)	 	change the termination provisions of an Option granted under the Plan which
does not entail an extension of the expiry date of the Option beyond the original
expiry date of the Option; or
	 
	 	(d)	 	terminate this Plan.






	 	 	Any such amendments shall, if made, become effective on the date selected by the Board. The
Board may not, however, without the consent of the Option holder, except as permitted by
provisions of Articles 8 or 10 hereof, alter or impair any of the rights or obligations
under any Option theretofore granted.










 



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	12.2	 	Notwithstanding Section 12.1, approval of the holders of Trust Units will be required in
order to:






	 	(a)	 	increase the maximum number of Trust Units reserved for issuance under the
Plan;
	 
	 	(b)	 	reduce the Option Price in respect of any Option;
	 
	 	(c)	 	extend the period of time during which an Option must be exercised or
surrendered;
	 
	 	(d)	 	increase any limit on grants of Options to Insiders of the Trust or the
Corporation set out in the Plan;
	 
	 	(e)	 	add any form of financial assistance by the Trust or the Corporation for the
exercise of any Option;
	 
	 	(f)	 	expand the circumstances under which Options may be assigned or transferred as
permitted by Article 7 hereof;
	 
	 	(g)	 	amend the class of eligible participants under the Plan;
	 
	 	(h)	 	amend this Article 12; or
	 
	 	(i)	 	grant additional powers to the Board to amend the Plan or any Option without
the approval of holders of Trust Units.






	13.	 	Government Regulation
	 
	13.1	 	The Trust’s obligation to issue and deliver Trust Units on the exercise of any Option is
subject to:






	 	(a)	 	the satisfaction of all requirements under applicable securities laws in
respect thereof and obtaining all regulatory approvals as the Trust shall determine to
be necessary or advisable in connection with the authorization, issuance or sale of
such Trust Units;
	 
	 	(b)	 	the admission of such Trust Units to listing on any stock exchange on which
Trust Units may then be listed;
	 
	 	(c)	 	the receipt from the Participant of such representations, agreements and
undertakings as to future dealings in such Trust Units as the Trust determines to be
necessary or advisable in order to safeguard against the violation of the securities or
income tax laws of any jurisdiction; and
	 
	 	(d)	 	the Board being satisfied that, upon the issuance of any Trust Units pursuant
to the exercise of any Option, the Trust will continue to be in compliance with the
provisions of the subsection 132(7) of the ITA (as amended from time to time and










 



-14-


	 	 	 	any successor provision thereto) relating to the Trust’s continued satisfaction of
the requirements to constitute a mutual fund trust within the meaning of the ITA.






	 	 	The Trust shall take all reasonable steps to obtain such approvals and registrations as may
be necessary for the issuance of such Trust Units in compliance with applicable securities
laws and for the listing of such Trust Units on any stock exchange on which Trust Units are
then listed.
	 
	13.2	 	The Precision Group may withhold from any amount payable to a Participant, either under this
Plan, or otherwise, such amount as may be necessary so as to ensure that the Precision Group
will be able to comply with the applicable provisions of any federal, provincial or local law
relating to the withholding of tax or other required deductions, including on the amount, if
any, includable in the income of a Participant.
	 
	14.	 	Participant’s Rights
	 
	 	 	A Participant shall not have any rights as a unitholder of the Trust in respect of any Trust
Units issuable pursuant to an Option until the issuance of Trust Units upon the exercise of
the Option or a portion thereof, and then only with respect to the Trust Units so issued.
For greater certainty, a Participant shall not have the right or be entitled to exercise any
voting rights, receive distributions or have or be entitled to any other rights as a
unitholder of the Trust in respect of any Options.
	 
	15.	 	Approvals
	 
	15.1	 	If Trust Units cannot be issued to a Participant upon the exercise of an Option for any
reason which, in the opinion of the Board, acting reasonably, would result in undue expense to
the Trust as a result of the Trust being required to comply with non-Canadian regulatory
requirements, the obligation of the Trust to issue such Trust Units shall terminate and any
funds paid to the Trust in connection with the exercise of such Option will be returned to the
relevant Participant as soon as practicable. In such circumstances, such Participant shall be
deemed to have elected to surrender the Option in accordance with Section 6.2 and such
Participant shall be paid the amount specified in that Section.
	 
	15.2	 	If Trust Units cannot be issued to a Participant upon the exercise of an Option due to a
decision by the Board that the condition in Section 13.1(d) would be, or is at risk of being,
violated as a consequence of such issuance, the obligation of the Trust to issue such Trust
Units shall terminate and any funds paid to the Trust in connection with the exercise of such
Option shall be returned to the relevant Participant as soon as practicable. In such
circumstances, such Participant shall be deemed to have elected to surrender the Option in
accordance with Section 6.2 and such Participant shall be paid the amount specified in that
Section.
	 
	16.	 	Effective Date
	 
	 	 	This Plan is effective from ___, 2009.