Exhibit 4.3


 


SUNCOR
ENERGY INC.


STOCK
OPTION PLAN


 


Effective August 1,
2009


 

















 


TABLE OF
CONTENTS


 


	
   

  	
  Page

  
	
  ARTICLE 1 DEFINITIONS

  	
  K-3

  
	
  ARTICLE 2 GENERAL

  	
  K-5

  
	
  2.1

  	
  Purpose

  	
  K-5

  
	
  2.2

  	
  Administration

  	
  K-5

  
	
  2.3

  	
  Interpretation

  	
  K-6

  
	
  2.4

  	
  Selection for Participation

  	
  K-6

  
	
  2.5

  	
  Types of Awards under this Plan

  	
  K-6

  
	
  2.6

  	
  Shares Subject to this Plan

  	
  K-6

  
	
  2.7

  	
  Award Agreements

  	
  K-7

  
	
  2.8

  	
  Non-transferability

  	
  K-7

  
	
  ARTICLE 3 SHARE OPTIONS AND SHARE APPRECIATION RIGHTS

  	
  K-8

  
	
  3.1

  	
  Award of Options and SARs

  	
  K-8

  
	
  3.2

  	
  Exercise Term

  	
  K-8

  
	
  3.3

  	
  Exercise Price

  	
  K-8

  
	
  3.4

  	
  Payment of Exercise Price

  	
  K-8

  
	
  3.5

  	
  Share Appreciation Rights

  	
  K-8

  
	
  3.6

  	
  Death of a Participant

  	
  K-8

  
	
  3.7

  	
  Permitted Leave

  	
  K-8

  
	
  3.8

  	
  Retirement of Participant

  	
  K-9

  
	
  3.9

  	
  Termination for Cause

  	
  K-9

  
	
  3.10

  	
  Other Involuntary Termination of Employment

  	
  K-9

  
	
  3.11

  	
  Voluntary Termination of Employment

  	
  K-9

  
	
  3.12

  	
  Discretion to Permit Exercise

  	
  K-9

  
	
  ARTICLE 4 LIMITED APPRECIATION RIGHTS

  	
  K-9

  
	
  4.1

  	
  Award of LARs

  	
  K-9

  
	
  ARTICLE 5 OTHER SHARE-BASED AWARDS

  	
  K-10

  
	
  5.1

  	
  Other Share-Based Awards under this Plan

  	
  K-10

  
	
  5.2

  	
  Consideration for Other Share-Based Awards

  	
  K-10

  
	
  5.3

  	
  Payment of Consideration

  	
  K-10

  
	
  5.4

  	
  Maximum Number of Shares Issuable for Non-Cash Consideration

  	
  K-10

  
	
  ARTICLE 6 NON-DISCRETIONARY AWARDS TO NON-EMPLOYEE DIRECTORS

  	
  K-10

  
	
  6.1

  	
  General

  	
  K-10

  
	
  ARTICLE 7 ISSUANCE OF SHARES ON ACCOUNT OF DIRECTORS’ FEES

  	
  K-10

  
	
  7.1

  	
  General

  	
  K-10

  
	
  ARTICLE 8 REORGANIZATION OF THE COMPANY

  	
  K-10

  
	
  8.1

  	
  General

  	
  K-10

  
	
  8.2

  	
  Reorganization of Company’s Capital

  	
  K-11

  
	
  8.3

  	
  Other Events Affecting the Company

  	
  K-11

  
	
  8.4

  	
  Immediate Exercise of Awards

  	
  K-11

  
	
  8.5

  	
  Issue by Company of Additional Shares

  	
  K-11

  
	
  ARTICLE 9 MISCELLANEOUS PROVISIONS

  	
  K-11

  
	
  9.1

  	
  Legal Requirement

  	
  K-11

  
	
  9.2

  	
  Rights of Participant

  	
  K-11

  
	
  9.3

  	
  Amendment or Discontinuance

  	
  K-12

  
	
  9.4

  	
  Indemnification

  	
  K-12

  
	
  9.5

  	
  Effective Date

  	
  K-12

  
	
  9.6

  	
  Governing Law

  	
  K-12

  
	
  APPENDIX “A” LIMITED APPRECIATION RIGHTS AWARDS

  	
  K-13

  
	
  APPENDIX “B” NON-DISCRETIONARY AWARDS TO NON-EMPLOYEE DIRECTORS

  	
  K-15

  
	
  APPENDIX “C” ISSUANCE OF SHARES ON ACCOUNT OF DIRECTORS’ FEES

  	
  K-16

  



 

















 


ARTICLE 1


 


DEFINITIONS


 


When used herein, the following terms shall
have the following meanings:


 


(a)                                “Annual Grant” has the meaning attributed
thereto in paragraph 2(a) of Appendix “B”;


 


(b)                               “Annual Share Payment” has the meaning
attributed thereto in paragraph 1 of Appendix “C”;


 


(c)                                “Associated Company” means any subsidiary or
partnership of the Company;


 


(d)                               “Award” means an award granted or permitted
to be granted under this Plan as contemplated by paragraph 2.5 of
this Plan;


 


(e)                                “Award Agreement” means a signed written
agreement evidencing the terms and conditions upon which an Award may be
granted under this Plan, or a certificate issued by the Company, in such form
as may be approved by the Board or Committee from time to time, which evidences
the grant of an Award;


 


(f)                                  “Blackout” means a temporary trading ban
announced by the Company pursuant to its trading policies, whether a regularly
scheduled trading ban in connection with the release of quarterly financial
information, or an ad hoc trading ban, but excludes any period during which a
regulator has halted trading in the Company’s securities;


 


(g)                               “Blackout Exercise Term” means, with respect
to holders of Options, ten (10) days after the expiry of a Blackout
if the Exercise Term of the Options expired: (i) during the Blackout; or (ii) within
three (3) days of the Blackout expiring, if the holder of such Options was
subject to the Blackout;


 


(h)                               “Board” means the Board of Directors of the
Company;


 


(i)                                   “CEO” means the Chief Executive Officer of
the Company;


 


(j)                                   “Change of Control” means a transaction or
series of transactions whereby any person or combination of persons, acting
jointly or in concert, beneficially owns, directly or indirectly, or exercises
control or direction over, thirty-five percent (35%) or more of the outstanding
voting securities of the Company or any person formed by the merger,
amalgamation, consolidation or statutory arrangement of the Company with or
into any other person; provided that for the purposes of the LARs only held by
persons who are U.S. Taxpayers, in the event the foregoing definition is
inconsistent with the definition of “change of control” for the purposes of
application of section 409A (or any amended or successor provision
thereof) of the U.S. Tax Code, the definition of “change of control” in
section 409A (or any amended or successor provision thereof) of the
U.S. Tax Code shall apply. For the purposes of this definition, “person”
includes an individual, partnership, association, organization, government or
governmental body, body corporate or other entity;


 


(k)                                “Change of Control Transaction” means, for
the purposes of determining a Participant’s entitlement in respect of any
outstanding LARs, a transaction in which there is a Change of Control which
generally effects all common shareholders of the Company and provides such
shareholders with an opportunity to realize an equal amount per share in
respect of their proportionate holdings of Shares. In the event that there is
any question as to whether a change of control transaction has occurred in any
circumstances, the Board shall determine the matter and any such determination
of the Board shall be final and conclusive for the purposes of this Plan;


 


(l)                                   “Committee” means a committee of the members
of the Board;


 


(m)                             “Company” means Suncor Energy Inc., a corporation
amalgamated under the Canada Business
Corporations Act and any successor company;


 


(n)                               “Designated Person” has the meaning
attributed thereto in paragraph 2.2(c);


 


(o)                               “Director” means an individual member of the
Board;


 


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(p)                               “Director’s Annual Retainer” means the basic
annual retainer fee payable to each Director who has not waived payment thereof
in respect of his or her services as a member of the Board, as determined by
the Company from time to time;


 


(q)                               “Disability Benefits” means benefits other
than normal sick leave payments from payroll to which a Participant becomes
entitled under a disability program of the Company or an Associated Company;


 


(r)                                  “Effective Date” means the effective date of
the arrangement as defined in the arrangement agreement dated March 22,
2009 between Suncor Energy Inc. and Petro-Canada;


 


(s)                                “Employee” means a person who provides
services to the Company or an Associated Company and from whose remuneration
the Company deducts and withholds Canada
Pension Plan and Employment
Insurance remittances, or similar withholdings under applicable law
of any jurisdiction other than Canada relating to source withholding from pay
by an employer;


 


(t)                                  “Executives” means executives and senior
managers of the Company or its Associated Companies and includes, where
applicable, the relevant Directors;


 


(u)                               “Exercise Notice” means a notice in writing
signed by the Participant stating the Participant’s intention to exercise a
particular Option, SAR, LAR or other Award;


 


(v)                               “Exercise Price” means the price at which a
Share may be purchased pursuant to the exercise of an Option or SAR;


 


(w)                             “Exercise Term” means the period of time
during which Options, SARs, LARs or other Awards may be exercised;


 


(x)                                 “Initial Grant” has the meaning attributed
thereto in paragraph 2(a) of Appendix “B”;


 


(y)                               “LAR” has the meaning attributed thereto by
paragraph 4.1 and Appendix “A” to this Plan;


 


(z)                                 “Market Value” means the value represented
by the simple average of the high and low prices at which Shares were traded in
one or more board lots on the TSX on the day prior to the relevant date or, if
the Shares were not so traded on that day, the value represented by the simple
average of the high and low prices at which the Shares were traded in one or
more board lots on the TSX on the first day prior to the relevant date on which
Shares were so traded;


 


(aa)                          “Non-Employee Director” means at any
particular time, any Director at such time who is not an officer of the Company
or one of its Associated Companies or an Employee;


 


(bb)                        “Option” means an Award that may be granted
to a Participant which allows the Participant to purchase Shares at a set price
for a future period which does not exceed seven (7) years;


 


(cc)                          “Other Share-Based Awards” has the meaning
attributed thereto in paragraph 5.1;


 


(dd)                        “Participants” means those Employees whose
selection to participate in this Plan is approved by the Board, regardless of
whether he or she serves as such in an executive capacity or on a full- or
part-time basis, and also includes, for purposes of Articles 6 and 7
and the related appendices only, the relevant Directors;


 


(ee)                          “Pension Plans” means all foreign and
domestic pension plans of the Company, including but not limited to, the Suncor
Energy Pension Plan, the Suncor Energy U.S. Pension Plan and the
Petro-Canada pension plans, and any pension plan(s) of the Company that
may be in effect from time to time, as applicable;


 


(ff)                              “Permitted Leave” means any period of
absence from normal work due to a leave of absence of greater than sixty
(60) days in duration, during which the Participant continues to maintain
his or her status as an Employee as conclusively determined by the Company in
its discretion. For certainty, any maternity or paternity leave, education
leave, or Employee receiving Disability Benefits, in each case of greater than
sixty (60) days in duration, shall be deemed to be a “Permitted Leave”
within the meaning of this Plan;


 


(gg)                        “Petro-Canada Options” means the 24,276,389
options to purchase shares of Petro-Canada which were granted under the
Petro-Canada Plan and which were outstanding as at April 27, 2009, which,
following the Effective Date, 


 


K-4

















 


would, if all such options
remained outstanding at the Effective Date, represent options to purchase
31,073,778 Shares;


 


(hh)                        “Petro-Canada Plan” means the Petro-Canada
Employee Stock Option Plan, as amended and restated to April 26, 2005;


 


(ii)                                “Plan” means this Stock Option Plan,
including all appendices thereto, as same may be amended or restated from time
to time;


 


(jj)                                “Plan Maximum” has the meaning attributed
thereto in paragraph 2.6(a);


 


(kk)                          “Related Option” has the meaning attributed
thereto in paragraph 2(b) of Appendix “A”;


 


(ll)                                “Retirement” means, in the case of a
Participant who is not a Director, a Participant’s termination of employment on
a date on which such Employee would be eligible for an immediately payable
benefit pursuant to the terms of the Pension Plans, or such other date the
Employee is deemed to be eligible for retirement as defined in the applicable
Pension Plan, or, termination of employment of any Employee at or over the age
of fifty-five (55) whom the Company deems shall be treated as a retiree
under the provisions of this Plan and, in the case of a Director, shall mean
the date on which such person shall cease to be a Director;


 


(mm)                    “SAR” has the meaning attributed thereto in paragraph 3.5
and includes Tandem SARs as the context requires;


 


(nn)                        “Settlement Day” means the third Trading Day
following the date of exercise in respect of any particular exercise of
an Option;


 


(oo)                        “Shares” means the common shares of the
Company;


 


(pp)                        “Specified Percentage” has the meaning
attributed thereto in paragraph 1 of Appendix “C”;


 


(qq)                        “Tandem SARs” has the meaning attributed
thereto in paragraph 3.5;


 


(rr)                              “Termination Date” has the meaning
attributed thereto in paragraph 2.3(c);


 


(ss)                          “Trading Day” means a day on which the TSX
is open for trading in securities;


 


(tt)                              “TSX” means The Toronto Stock Exchange; and


 


(uu)                        “U.S. Taxpayer” means a person who is
required by the laws of the United States of America to file a
U.S. federal income tax return.


 


ARTICLE 2


 


GENERAL


 


2.1                             Purpose


 


The principal purpose of this Plan is to
provide Employees with an opportunity to receive a variety of different forms
of compensation awards. The Plan is designed to be flexible in order to provide
recipients of Awards hereunder with incentives for continued improved
performance thereby promoting the long term financial success of the Company
and materially increasing shareholder value by: (i) attracting and
retaining individuals of exceptional ability; (ii) strengthening the
Company’s capability to develop, maintain and direct a competent management
team; (iii) motivating Executives and other Employees, by means of
performance related incentives, to achieve long-range performance goals; (iv) providing
incentive compensation opportunities competitive with those of other major oil
and gas companies; and (v) enabling individuals who receive Awards
hereunder to participate in the long-term growth and financial success of
the Company.


 


2.2                             Administration


 


(a)                                The Plan shall
be administered by the Board.


 


K-5

















 


(b)                               Except for
matters governed by Articles 6 and 7 of this Plan, and Appendices “B”
and “C” relating thereto, in respect of which the Board shall have limited
authority as provided therein, the Board shall have the sole and complete
authority: (i) to approve the selection of Participants; (ii) to make
Awards in such forms and amounts as it shall determine; (iii) to impose
such limitations, restrictions, and conditions upon such Awards as it shall
deem appropriate; (iv) to interpret this Plan and to adopt, amend and
rescind administrative guidelines and other rules and regulations relating
to this Plan; and (v) to make all other determinations and take all other
actions necessary or advisable for the implementation and administration of
this Plan. The Board’s determinations and actions within its authority under
this Plan shall be conclusive and binding upon the Company and all
other persons.


 


(c)                                To the extent
permitted by law, the Board may from time to time delegate to a Committee or,
where appropriate, to the CEO all or any of the powers conferred on the Board
under this Plan, with the authority of the Committee or CEO, as applicable, to
further delegate such powers from time to time to the senior officer
responsible for human resources of the Company (the “Designated Person”). In such event, the
Committee, CEO or Designated Person shall exercise the delegated powers in the
manner and on the terms authorized by the Board, and all references herein to
the Board or to the Committee shall include the Board, the Committee, the CEO
or Designated Person, as applicable. Any decision made or action taken by the
Board, the Committee, the CEO or Designated Person arising out of or in
connection with the administration or interpretation of this Plan in this
context shall be final and conclusive.


 


2.3                             Interpretation


 


(a)                                Whenever the
Board or, where permitted, the Committee, CEO or Designated Person is to
exercise discretion in the administration of terms and conditions of this Plan,
the term “discretion” shall mean the “sole and absolute discretion” of the
Board, Committee, CEO or Designated Person, as the case may be.


 


(b)                               Whenever an
Award may be granted pursuant to the terms and conditions of this Plan, or
Appendix “A” hereto, the Committee, CEO or Designated Person may make
recommendations for the Board’s consideration with respect to the granting of
such Awards.


 


(c)                                For the
purposes of this Plan, a Participant shall be deemed to have ceased to be an
Employee, and the Participant’s employment with the Company shall be deemed to
be terminated: (i) in the case of resignation, Retirement or termination
of a Participant’s employment by the Company, whether or not for cause and with
or without reasonable or statutory notice or any period of salary continuance
or deemed employment, on the date the Participant or the Company, as
applicable, delivers notice of such resignation, Retirement or termination to
the other party, which shall not include any period of reasonable or statutory
notice or any period of salary continuance or deemed employment, or such date
thereafter, if any, as the Participant and Company agree in writing shall be
the effective date of resignation, Retirement or termination, as applicable,
for incentive plan purposes; and (ii) in the case of a Participant’s
death, on the date of the Participant’s death (the “Termination Date”).


 


2.4                             Selection
for Participation


 


Participants shall be
selected from those Employees who have the capacity to contribute to the
success of the Company and its Associated Companies. In approving this
selection, the Board or the Committee, CEO or Designated Person shall consider
such factors as it deems relevant subject to the provisions of this Plan, as
may be determined from time to time.


 


2.5                             Types of
Awards under this Plan


 


Awards granted under this
Plan may be in the form of any one or more of the following: (i) Options; (ii) SARs;
(iii) Tandem SARs; (iv) LARs (in conjunction with Options), as
described in Appendix “A”; and (v) Other Share-Based Awards.


 


2.6                             Shares
Subject to this Plan


 


(a)                                The Shares
which are the subject of Awards shall be those Shares which the Board from time
to time shall at its discretion have reserved and approved for issuance under
this Plan. The aggregate number of Shares which may be issued under the Plan or
reserved for issuance upon the exercise of Awards made under, or otherwise
governed by, the Plan, shall be limited to 46,490,680 Shares (the “Plan Maximum”) which consists of the
aggregate of (i) 31,073,778 Shares reserved for issuance pursuant to the
exercise of Petro-Canada Options (whether such exercise were to occur on or
prior to the Effective Date), and (ii) 15,416,902 additional Shares which
are unallocated as at April 27, 2009 and the Effective Date, provided
that, following the Effective Date, any such outstanding 


 


K-6

















 


Petro-Canada Options shall continue to be
subject to the terms and conditions of the Petro-Canada Plan until such time as
they are exercised or terminated or they expire or are cancelled pursuant to
the applicable terms and conditions of the Petro-Canada Plan; if for any
reason, any Shares subject to purchase by exercising Options or Petro-Canada
Options are not delivered or are reacquired by the Company, for reasons
including but not limited to, termination, expiration or cancellation of an
Option or Petro-Canada Option (pursuant to the terms and conditions of the Plan
or the Petro-Canada Plan, respectively), such Shares shall again become available
for the granting of Options under this Plan (and for greater certainty,
the Shares reserved for issuance upon the exercise of Petro- Canada Options
shall only become available for issuance in respect of Options granted under
this Plan following the time, if any, at which a Petro-Canada Option is
terminated, expires or is cancelled without the resulting issuance of a Share
or a share of Petro-Canada, as applicable, including in respect of any such
termination, cancellation or expiry which occurred between April 27, 2009
and the Effective Date). Of such Plan Maximum, the aggregate number of Shares
which may be issued or reserved for issuance pursuant to the provisions of
Appendices “B” and “C” of this Plan shall be 500,000 Shares.
Notwithstanding the foregoing, the aggregate number of Shares which may be
reserved for issuance under this Plan and under all other security based
compensation arrangements of the Company: (i) must not exceed ten percent
(10%) of the issued and outstanding Shares of the Company (on a
non-diluted basis); (ii) to any one (1) person must not exceed five
percent (5%) of the issued and outstanding Shares (on a non-diluted
basis); and (iii) must not, within any one (1) year period be issued,
or at any time under such security based compensation arrangements be issuable,
to insiders of the Company in an amount exceeding ten percent (10%) of the
Company’s total issued and outstanding securities (for the purposes of
this paragraph, security based compensation arrangement and insider have the
meanings attributed thereto in the TSX Company Manual).


 


(b)                               Subject to
stock exchange approval where required, the Board may, in its discretion,
decide to award shares of another authorized class or series of shares of the
Company that are convertible into Shares or make such other shares subject to
purchase under an Option, in which event the maximum number of Shares into
which such other shares may be converted shall be used in applying the
aggregate share limit under paragraph 2.6(a) and all provisions
of this Plan relating to Shares shall apply with full force and effect with
respect to such convertible shares.


 


2.7                             Award
Agreements


 


All grants of Awards shall
be evidenced by an Award Agreement. Such Award Agreement shall be subject to
the applicable provisions of this Plan and shall contain such provisions as are
required by this Plan and any other provisions which are necessary or desirable
to give effect to the Award and the provisions of this Plan. Any proper officer
of the Company is authorized and empowered to execute on behalf of the Company
and deliver any Award Agreement to the Participants from time to time
designated by the Board or, where permitted, the Committee, the CEO or the
Designated Person. Award Agreements may be executed by original, facsimile or
electronic signature.


 


2.8                             Non-transferability


 


Subject to
paragraph 3.6 relating to Options and SARs, the provisions of Appendix “A”
to this Plan relating to LARs, and the provisions of Appendix “B”
to this Plan relating to Options and LARs, any Awards granted under this
Plan may only be exercised during the lifetime of the Participant by such
Participant personally and no assignment or transfer of Awards, whether
voluntary, involuntary, by operation of law or otherwise, shall vest any interest
or right in such Awards whatsoever in any assignee or transferee, but
immediately upon any assignment or transfer, or any attempt to make the same,
such Awards shall terminate and be of no further force or effect.


 


K-7
















 


ARTICLE 3


 


SHARE OPTIONS AND SHARE APPRECIATION RIGHTS


 


3.1                               Award of
Options and SARs


 


The Board or, where
permitted, the Committee, CEO or Designated Person may, from time to time,
subject to the provisions of this Plan and such other terms and conditions as
the Board may prescribe, award Options and/or SARs (either in conjunction with
Options as Tandem SARs or standing alone) to any Participant.


 


3.2                               Exercise
Term


 


(a)                                  The maximum
term during which Options and SARs may be exercised shall be determined by the
Board, but in no event shall the Exercise Term of an Option or SAR exceed seven
(7) years from the date of its grant, unless the Exercise Term has been
extended by a Blackout Exercise Term.


 


(b)                                 Subject to
paragraph 3.2(a), the provisions of this Plan and any Award Agreement,
Options and SARs may be exercised by means of giving an Exercise Notice
addressed to the Company. Where Options or SARs are exercised, they shall be
deemed to have been exercised on the date that the Exercise Notice in respect of
such Options or SARs is received by the Treasurer or Secretary of the Company
at the Company’s head office.


 


3.3                               Exercise
Price


 


The Exercise Price of any
Option must not be less than the Market Value of a Share as determined on the
date of the granting of the Option.


 


3.4                               Payment of
Exercise Price


 


The Exercise Price shall be
fully paid on or before the Settlement Day. No Shares shall be issued or
transferred until full payment has been received therefor. As soon as
practicable after receipt of any Exercise Notice and full payment, the Company
shall deliver to the eligible Participant, a certificate or certificates
representing the acquired Shares.


 


3.5                               Share
Appreciation Rights


 


The Board may grant share
appreciation rights (“SARs”)
either alone or in conjunction with the granting of an Option (“Tandem SARs”). Where SARs are granted on a
stand alone basis, the SARs shall entitle the Participant to receive, upon the
exercise of the SARs, a payment in the aggregate amount of the number of SARs
exercised, multiplied by the excess of the Market Value of a Share determined
on the date of exercise of the SARs over the Market Value of a Share determined
on the date of grant of the SARs. Tandem SARs shall entitle the Participant to
receive, upon the exercise of the Tandem SARs, a payment in the aggregate
amount of the number of Tandem SARs exercised, multiplied by the excess of the
Market Value of a Share determined on the date of exercise of the Tandem SARs
over the Exercise Price of the related Options.


 


3.6                               Death of a
Participant


 


Notwithstanding the
provisions of paragraph 2.8, if a Participant’s employment with the
Company or any Associated Company or appointment as a Director is terminated by
reason of death, all Options and/or SARs held by the Participant shall become
exercisable by the lawful representative of such Participant’s estate on the
date of death. The right to exercise any such Options or SARs held by the
Participant shall terminate upon the earlier of: (i) a period of twelve
(12) months from the date of death; and (ii) the expiration of the
Exercise Term of the particular Option and/or SAR.


 


3.7                               Permitted
Leave


 


If a Participant is absent
from work as a result of Permitted Leave, the Participant shall have the right
to exercise the Option and/or SAR to the extent that the Option and/or SAR was
exercisable at the date of commencement of such Permitted Leave and furthermore
Options and/or SARs held by the Participant at the date the Participant is
absent from work as a result of Permitted Leave shall continue to vest and
become exercisable for a period of twenty-four (24) months from the date
of commencement of such Permitted Leave and the right to exercise the Option
and/or SAR shall terminate upon the earlier of: (a) the expiration of
twelve (12) months from the date that is twenty-four (24) months from
the date of commencement of the Participant’s Permitted Leave; or (b) the
expiration of the Exercise Term of the particular Option and/or SAR. If the 


 


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Participant has not returned to active
service as an Employee prior to the expiration of twenty-four (24) months
from the date of commencement of such Permitted Leave then the Options and/or
SARs held by the Participant which were not exercisable twenty-four
(24) months from the date of commencement of such Permitted Leave shall
immediately terminate.


 


3.8                               Retirement
of Participant


 


If a Participant’s
employment with the Company or any Associated Company or appointment as a
Director is terminated by reason of Retirement, all Options and/or SARs held by
the Participant shall become exercisable on the effective date of Retirement.
The right to exercise any such Options and/or SARs held by the Participant
shall terminate upon the earlier of: (i) a period of thirty-six
(36) months from the effective date of Retirement; and (ii) the
expiration of the Exercise Term of the particular Option and/or SAR.


 


3.9                               Termination
for Cause


 


Where a Participant’s
employment with the Company or any Associated Company is terminated for cause,
any Options and/or SARs held by the Participant shall be cancelled immediately
upon the date of such termination.


 


3.10                        Other
Involuntary Termination of Employment


 


Where a Participant’s
employment with the Company or any Associated Company is terminated by the
Company or any Associated Company for any reason other than as set out in
paragraphs 3.6, 3.7, 3.8 and 3.9, any Options and/or SARs held by the
Participant which are exercisable at the Termination Date shall continue to be
exercisable by the Participant until the earlier of: (i) three (3) months
from the Termination Date; and (ii) the expiration of the Exercise Term of
the particular Option and/or SAR. Any Options and/or SARs held by the
Participant which are not exercisable at the Termination Date shall immediately
terminate.


 


3.11                        Voluntary
Termination of Employment


 


Where a Participant
voluntarily resigns his or her employment with the Company or any Associated
Company, other than by means of Retirement, any Options and/or SARs held by the
Participant which are exercisable at the date of such voluntary termination of
employment shall continue to be exercisable by the Participant until the
earlier of: (i) three (3) months from the date of such voluntary
termination; and (ii) the expiration of the Exercise Term of the
particular Option or SAR. Any Options and/or SARs held by the Participant which
are not exercisable at the date of such termination of employment shall
immediately terminate.


 


3.12                        Discretion
to Permit Exercise


 


Notwithstanding the
provisions in paragraphs 3.6 to 3.11 inclusive, the Board may, in its
discretion, at any time prior to or following the events contemplated in such
paragraphs, permit the exercise of any or all Options and/or SARs held by a
Participant in the manner and on the terms authorized by the Board. However, in
no case shall the Board authorize the exercise of an Option and/or SAR pursuant
to this paragraph beyond the expiration of the Exercise Term of the particular
Option and/or SAR.


 


ARTICLE 4


 


LIMITED APPRECIATION RIGHTS


 


4.1                               Award of
LARs


 


Subject to the provisions of
this Plan, including, without limitation, Appendix “A” hereto and such
other terms and conditions as the Board may prescribe, the Board may award
limited appreciation rights (“LARs”)
to any Participant. The specific terms and conditions governing awards of LARs
are set forth in Appendix “A” to this Plan.


 


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ARTICLE 5


 


OTHER SHARE-BASED AWARDS


 


5.1                               Other
Share-Based Awards under this Plan


 


Subject to the provisions of
this Plan and such other terms and conditions as the Board may prescribe, the
Board may award to any Participant other share-based awards, including, without
limitation, bonus Shares, and such other awards involving the issuance or
possible issuance of Shares as the Board may consider appropriate from time to
time (collectively, the “Other Share-Based
Awards”).


 


5.2                               Consideration
for Other Share-Based Awards


 


Subject to the provisions of
this Plan, the Board may determine the consideration which shall be paid or
provided for Shares acquired pursuant to the Other Share- Based Awards. Such
consideration may consist entirely of previous services given to the Company or
its Associated Companies by the Participant.


 


5.3                               Payment of
Consideration


 


Subject to the provisions of
this Plan, the consideration for any other Share- Based Awards granted pursuant
to this Plan shall be fully paid in cash or past services by the Participant at
the time of the grant. No Shares shall be issued or transferred until full cash
or past service payment has been received therefor. As soon as practicable,
after the receipt of any full payment, the Company shall deliver to the
Participant, a certificate or certificates representing the acquired Shares.


 


5.4                               Maximum
Number of Shares Issuable for Non-Cash Consideration


 


The aggregate number of
Shares which may be issued solely for non-cash consideration (such as past
services) under this Article 5 shall not exceed 1,500,000 Shares.


 


ARTICLE 6


 


NON-DISCRETIONARY AWARDS TO NON-EMPLOYEE DIRECTORS


 


6.1                               General


 


Subject to the provisions of
this Plan, all Non-Employee Directors may receive Options and LARs on the basis
set forth in Appendix “B” to this Plan.


 


ARTICLE 7


 


ISSUANCE OF SHARES ON ACCOUNT OF DIRECTORS’ FEES


 


7.1                               General


 


Subject to the provisions of
this Plan, including without limitation, Appendix “C” hereto, Directors
may be issued Shares in lieu of cash on account of a specified percentage of
the Director’s Annual Retainer on the basis set forth in Appendix “C”
to this Plan.


 


ARTICLE 8


 


REORGANIZATION OF THE COMPANY


 


8.1                               General


 


The existence of any Awards
shall not affect in any way the right or power of the Company or its
shareholders to make or authorize any adjustment, recapitalization,
reorganization or any other change in the Company’s capital structure or its
business, or any amalgamation, combination, merger or consolidation involving
the Company or to create or issue any bonds, debentures, shares or other
securities of the Company or the rights and conditions attaching thereto or to
effect the dissolution or liquidation of the Company or any sale or transfer of
all or any part of its assets or business, or any other corporate act or
proceeding, whether of similar character or otherwise.


 


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8.2                               Reorganization
of Company’s Capital


 


Should the Company effect a
subdivision or consolidation of Shares or any similar capital reorganization or
a payment of a stock dividend (other than a stock dividend which is in lieu of
an ordinary cash dividend), or should any other change be made in the
capitalization of the Company which, in the opinion of the Board, would warrant
the replacement or modification of any existing Awards in order to adjust: (i) the
number of Shares which may be acquired on the exercise of any outstanding
Awards; (ii) the Exercise Price of any outstanding Awards; or (iii) the
number of SARs and/or LARs held by Participants, in order to preserve
proportionately the rights and obligations of Participants, the Board shall
authorize such steps to be taken as may be equitable and appropriate to that
end, subject to any required regulatory approvals. A decision of the Board in
respect of any and all matters falling within the scope of this paragraph or
paragraphs 8.3 and 8.4 shall be final and without recourse on the
part of any Participant and his or her heirs or legal representatives.


 


8.3                               Other
Events Affecting the Company


 


In the event of an
amalgamation, combination, merger or other reorganization involving the
Company, by exchange of Shares, by sale or lease of assets, or otherwise, which
in the opinion of the Board warrants the replacement or modification of any
existing Awards in order to adjust: (i) the number of Shares which may be
acquired on the exercise of any outstanding Awards; (ii) the Exercise
Price of any outstanding Awards; (iii) the number of SARs and/or LARs held
by Participants; or (iv) any other attribute of an Award, in order to
preserve proportionately the rights and obligations of Participants, the Board,
in its sole discretion, shall authorize such steps to be taken as may be
equitable and appropriate to that end, subject to any required regulatory
approvals.


 


8.4                               Immediate
Exercise of Awards


 


Where the Board determines
that the steps provided for in paragraphs 8.2 and 8.3 would not
preserve proportionately the rights and obligations of Participants in the
circumstances or otherwise determines that it is appropriate, the Board may on
thirty (30) days notice to each Participant, permit the immediate exercise
of any outstanding Awards which are not otherwise exercisable and provide that
any Awards that are not exercised within such thirty (30) day period are
terminated. In addition, if a Change of Control should occur at any time the
Board may provide that, any Award that is not by its terms then exercisable
shall be deemed to have become exercisable immediately prior to such Change of
Control and that any Award that is not exercised in connection with such Change
of Control will expire on the closing of the Change of Control.


 


8.5                               Issue by
Company of Additional Shares


 


Except as expressly provided
in this Article 8, the issue by the Company of shares of any class, or
securities convertible into shares of any class, for money, services or
property either upon direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of Shares or obligations of the Company
convertible into such shares or securities, shall not affect, and no adjustment
by reason thereof shall be made with respect to: (i) the number of Shares
which may be acquired on the exercise of any outstanding Awards; (ii) the
Exercise Price of any outstanding Awards; or (iii) the number of SARs
and/or LARs held by Participants.


 


ARTICLE 9


 


MISCELLANEOUS PROVISIONS


 


9.1                               Legal
Requirement


 


The Company shall not be
obligated to grant any Awards, issue any Shares or other securities, make any
payments or take any other action if, in the opinion of the Board exercising
its discretion, such action would constitute a violation by a Participant or
the Company of any provision of any applicable valid statutory or regulatory
enactment of any government or government agency.


 


9.2                               Rights of
Participant


 


No Participant shall have
any claim or right to be granted an Award (including, without limitation, an
Award in substitution for any Option, SAR, LAR or other Award that has expired
pursuant to the terms of this Plan), and the granting of any Award shall not be
construed as giving a Participant a right to remain in the employ of the
Company. No Participant shall have any rights as a shareholder of the Company
in respect of Shares issuable on the exercise of rights to acquire Shares under
any Award until the allotment and issuance to the Participant of such Shares
has occurred.


 


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9.3                               Amendment
or Discontinuance


 


Subject to receipt of any
necessary regulatory or other approval, the Board may, without shareholder
approval, at any time or from time to time, amend, suspend or terminate this
Plan or the securities issued hereunder or any provisions hereof in such
respects as it, in its discretion, may determine appropriate provided, however,
that no amendment, suspension or termination of this Plan shall, without the
consent of any Participant or the representatives of his or her estate, as
applicable, materially alter or impair any rights or obligations arising from
any Award previously granted to a Participant under this Plan and provided,
however, that any of the following amendments will also be subject to receipt
of shareholder approval:


 


(i)                                     an increase in
the number of securities reserved under this Plan beyond the Plan Maximum;


 


(ii)                                  a reduction in
an exercise price of Options, or cancellation and reissue of Options (other
than as permitted by the TSX) which benefits any Participant;


 


(iii)                               an amendment
that extends the term of an Award beyond its original Exercise Term;


 


(iv)                              allowing Awards
to be transferable or assignable other than for normal estate settlement
purposes; and


 


(v)                                 any amendment
that increases the maximum number of Options available for annual grants to
Non-Employee Directors.


 


9.4                               Indemnification


 


Every Director shall at all
times be indemnified and saved harmless by the Company from and against all
costs, charges and expenses whatsoever including any income tax liability
arising from any such indemnification, which such Director may sustain or incur
by reason of any action, suit or proceeding, proceeded or threatened against
the Director, otherwise than by the Company, for or in respect of any act done
or omitted by the Director in respect of this Plan, such costs, charges and
expenses to include any amount paid to settle such action, suit or proceeding
or in satisfaction of any judgement rendered therein.


 


9.5                               Effective
Date


 


This Plan shall become
effective on the Effective Date.


 


9.6                               Governing
Law


 


This Plan is created under
and shall be governed, construed and administered in accordance with the laws
of the Province of Alberta and the federal laws of Canada as applicable
therein.


 


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APPENDIX “A”


 


LIMITED APPRECIATION RIGHTS AWARDS


 


1.                                       Purpose:  The purpose of the award of a LAR is to
provide Participants with incentive to maximize the value of the Shares during
a period when the Company is subject to a Change of Control Transaction. In
particular, the award of a LAR will provide designated Participants with the
opportunity to realize the value inherent in their holdings of Options as a result
of a Change in Control Transaction without having to exercise
their Options.


 


2.                                       Granting of
LARs:


 


(a)                                  A LAR may be
granted to Participants at any time and from time to time in the discretion of
the Board.


 


(b)                                 A LAR granted
to a Participant shall confer upon such Participant a collateral right and
entitlement in respect of each and every outstanding Option and non-Tandem SAR
(a “Related Option”) held by
the Participant during the period from the date of grant of the LAR to the date
upon which the LAR expires or is otherwise cancelled or terminated, regardless
of whether the Related Option is granted before, concurrently with, or after
the date of grant of the LAR.


 


3.                                       Entitlement
Upon Exercise of a LAR:  For
persons who are not U.S. Taxpayers a LAR represents the right of the
holder thereof, exercisable upon completion of a Change of Control Transaction,
to receive a cash payment from the Company upon surrender of the Related Option
equal to the amount, if any, by which:


 


(a)                                  the greater of:


 


(i)                                     the highest
price per Share paid by a person acquiring Shares in the Change of Control
Transaction, and


 


(ii)                                  the highest “Daily
Trading Price” of the Shares on TSX during the sixty (60) day period
preceding the date of the Change of Control Transaction where “Daily Trading
Price” means the average of the high and low board lot trading prices of the
Shares on any particular day;


 


exceeds


 


(b)                                 the Exercise
Price of the Related Option.


 


4.                                       Entitlement
Upon Exercise of a LAR:  For
persons who are U.S. Taxpayers, a LAR represents the right of the holder
thereof who is a U.S. Taxpayer, to receive a cash payment from the Company
upon surrender of the Related Option equal to the amount, if any,
by which:


 


(a)                                  the average of
the “Daily Trading Price” of the Shares on TSX during the thirty (30) day
period preceding the date of exercise of the LAR, where “Daily Trading Price”
means the average of the high and low board lot trading prices of the Shares on
any particular day;


 


exceeds


 


(b)                                 the Exercise
Price of the Related Option.


 


The foregoing right is
exercisable


 


(c)                                  if the Shares
continue to trade on TSX or the New York Stock Exchange after the Change
of Control Transaction, at any time from and including the date of completion
of the Change of Control Transaction up to and including the 30th day following the date
of completion of the Change of Control Transaction.


 


(d)                                 If
subparagraph (c) is not applicable, on the day immediately following
the date of the Change of Control Transaction.


 


5.                                       Manner of
Exercise of LARs:  Subject to
the provisions hereof and any Award Agreement, a LAR attached to and forming
part of any Related Option may be exercised by the Participant giving an
Exercise Notice addressed to the 


 


K-13

















 


Company specifying the
Related Options in respect of which the LAR is exercised. The exercise of any
LAR must be accompanied by the surrender of the Related Option which will
thereupon be cancelled.


 


6.                                       Exercise Term;
Expiry and Cancellation of LARs:  Subject to paragraph 7 below, a LAR
granted to a Participant pursuant to the terms of this Plan will be exercisable
upon completion of a Change of Control Transaction, provided that the Related
Option is, by its terms, then exercisable, and the LAR will expire and be cancelled
upon the earliest of: (i) the exercise of the Related Option by a
Participant; (ii) the expiry of the Exercise Term of the Related Option; (iii) the
expiration of the Related Option pursuant to paragraph 8.4 of this Plan; (iv) with
respect to LARs held by Participants who are U.S. Taxpayers, the expiry of
the exercise period for LARs following completion of a Change of Control
Transaction as set out in paragraph 3.1(c) or (d) above; (v) the
expiry date of the LAR as designated by the Board at the date of grant thereof;
and (vi) the grant to the Participant of a new LAR on substantially the
same terms as any existing LAR but with a later stated expiry date.


 


7.                                       Other Events
Affecting Exercise of LARs:  All LARs granted to Participants pursuant to
the terms of this Plan shall terminate and be of no further effect immediately
upon the occurrence of any of the following events:


 


(a)                                  the death of
the Participant;


 


(b)                                 the entitlement
to Disability Benefits of the Participant;


 


(c)                                  the Retirement
of the Participant;


 


(d)                                 the Termination
Date in respect of the Participant’s employment with the Company, whether with
or without cause and whether with or without any or reasonable notice; or


 


(e)                                  the voluntary
termination of his/her employment with the Company by a Participant.


 


Notwithstanding the
foregoing provisions of this paragraph, upon the occurrence of any of the
foregoing events at a time when a LAR is exercisable due to the completion of a
Change of Control Transaction, the LAR shall continue to be exercisable for:


 


(f)                                    for
Participants who are U.S. Taxpayers, thirty (30) days; or


 


(g)                                 for
Participants who are not U.S. Taxpayers, six (6) months;


 


following the effective date
of the Change of Control Transaction or until such earlier date as they are
cancelled pursuant to paragraph 6; and provided further that the
Board, in its discretion, may permit the exercise of any or all LARs held by a
Participant other than a Participant who is a U.S. Taxpayer, in the manner
and on the terms authorized by the Board.


 


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APPENDIX “B”


 


NON-DISCRETIONARY AWARDS TO NON-EMPLOYEE DIRECTORS


 


1.                                       Types of Awards:  All Non-Employee Directors shall receive
Awards of Options and LARs as provided for in this Appendix “B”, commencing
from the Effective Date.


 


2.                                       Awards of
Options:  All Non-Employee Directors
shall receive the following Awards of Options:


 


(a)                                  Initial Grants
of Options:  Each
Non-Employee Director who is appointed or elected to the Board for the first
time shall be granted Options in the same amount (the “Initial Grant”) as the most recent Annual
Grant upon the effective date of such appointment or election. If the
Non-Employee Director is appointed to the Board on the same day as the Board
approves the amount of the Annual Grant, then the Initial Grant shall be
effective on the same day as the Annual Grants; and


 


(b)                                 Annual Grant of
Options:  Following the Effective Date,
on an annual basis, each Non-Employee Director who is a Director on July 1
of each year shall be granted Options to purchase up to 8,000 Shares (the “Annual Grant”) at the July meeting of
the Board, provided that if at the date of the July meeting of the Board,
a Blackout is in effect, the effective date of the grant of options shall be
the first Trading Day following the end of the Blackout. The amount of the
Annual Grant shall be determined by the Board based on review of the
competitiveness of total compensation for the Directors compared to
the market.


 


3.                                       Exercise Price
of Options:  The
Exercise Price of an Option granted to Non-Employee Directors pursuant to the
Initial Grant and the Annual Grants shall not be less than the Market Value of
the Shares determined on the date of granting of the Option.


 


4.                                       Exercise Term
of Options:  One-third
of the Options granted to Non-Employee Directors pursuant to the Initial Grant
and the Annual Grants shall be exercisable on each of the first, second and
third anniversaries of the Initial Grant and the Annual Grants, respectively,
and in no event shall the Exercise Term of the Options exceed seven (7) years
from the date of grant.


 


5.                                       Manner of
Exercise of Options:  Subject to
the provisions hereof and any Award Agreement, Options may be exercised by
means of giving an Exercise Notice addressed to the Company.


 


6.                                       Awards of LARs:  All Non-Employee Directors shall receive the
following Awards of LARs:


 


(a)                                  Initial Grant
of LARs — At the time of the Initial Grant specified in paragraph 2(a) above,
each Non-Employee Director shall receive one LAR in respect of each Option
granted pursuant to the Initial Grant; and


 


(b)                                 Annual LARs
Grants — At the time of each of the Annual Grants specified in
paragraph 2(b) above, each Non-Employee Director shall receive one
LAR for each Option received pursuant to such Annual Grants.


 


7.                                       Amendments:  Subject to any applicable regulatory or other
approval requirements, the Board may at any time amend any of the provisions of
this Appendix “B” without shareholder approval, including, without
limitation, the number of Options and/or LARs awarded to Non-Employee Directors
pursuant to paragraphs 2(b) and/or 6(b) above, or may terminate
the operation of such provisions, provided that, in no event shall the Board
amend the provisions of this Appendix “B” that relate to Awards of Options
and/or LARs to Non-Employee Directors more than once every six (6) months.


 


8.                                       Cessation of
Directorship:  In the
event that a Non-Employee Director ceases to be a Director for any reason
whatsoever, then all Options held by the Non-Employee Director shall continue
to be exercisable until the earlier of: (i) thirty-six (36) months
from the date on which the Non-Employee Director ceased to be a Director; and (ii) the
expiration of the Exercise Term of the particular Option, but all LARs held by
the Non-Employee Director shall terminate and be of no further effect
immediately upon the occurrence of such Non-Employee Director ceasing to be
a Director.


 


9.                                       Application of
Plan:  Except as otherwise
specifically provided for, or where inconsistent with, the provisions of this
Appendix “B”, the applicable provisions of this Plan shall also apply to
the Options and LARs granted to Non-Employee Directors hereunder.


 


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APPENDIX “C”


 


ISSUANCE OF SHARES ON ACCOUNT OF DIRECTORS’ FEES


 


1.                                       Issuance of
Shares on Account of Directors’ Fees:  Commencing on the Effective Date and in each
year thereafter, each Director may receive Shares on account of a specified
percentage (the “Specified Percentage”)
of the amount of the Director’s Annual Retainer, if any, payable to such
Director (the “Annual Share Payment”),
such Specified Percentage to be determined by the Board, from time to time.


 


2.                                       Aggregate
Number of Shares Issued in Respect of Annual Share Payment:  The aggregate number of Shares issuable to
Directors in respect of any Annual Share Payment shall be equal to the
Specified Percentage times, the Director’s Annual Retainer, divided by the
Market Value of a Share determined on the date of the initial issuance of
Shares in respect of such Annual Share Payment.


 


3.                                       Fractional
Shares:  In no event shall fractional
Shares be issued to Directors in respect of the Annual Share Payment. If it is
determined in paragraph 2 above that the Annual Share Payment would result
in the issuance of a fractional Share, the aggregate number of Shares issuable
in respect of the Annual Share Payment shall be rounded down to the nearest
whole number of Shares and a corresponding increase shall be made to the
balance of the Director’s Annual Retainer owing to such Director.


 


4.                                       Timing of
Annual Share Payment:  Directors
shall receive Shares in respect of the Annual Share Payment, on a pro rata
basis with the payment of the balance of the Director’s Annual Retainer, at
such time or times as such balance of the Director’s Annual Retainer
is payable.


 


5.                                       Amendments:  Subject to any applicable regulatory or other
approval requirements, the Board may at any time amend any of the provisions of
this Appendix “C” without shareholder approval, including, without limitation,
the Specified Percentage, or may terminate the operation of such provisions,
provided that, in no event shall the Board amend the provisions of this
Appendix “C” that relate to the Annual Share Payment more than once every
six (6) months.


 


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