Document:

exv10w4

 

Exhibit
10.4

INCO LIMITED 2005 KEY EMPLOYEES INCENTIVE PLAN

	1.	 	Purpose. The 2005 Key Employees Incentive Plan of Inco Limited (the “Plan”) is designed to
provide additional incentive for selected employees (including Officers who are full-time
employees, whether or not they might also serve as Directors) of the Company and its current
or future subsidiaries by the grant of options to purchase Common Shares of the Company and/or
by the making of awards of incentive compensation. It is intended that the share options and
awards of incentive compensation will be awarded in a way calculated to be most effective to
retain or attract and to provide additional incentive to these selected employees, having
regard to their individual potential, location, contributions to the Company and other
applicable considerations.
	 
	2.	 	Administration. The Plan shall be administered by a Committee of three or more Directors,
appointed annually by the Board of Directors of the Company from those of its members who (a)
shall satisfy all applicable stock exchange and other regulatory requirements and the
Guidelines on Corporate Governance of the Board of Directors of the Company with respect to
(i) having no material relationships with the Company and who are otherwise “independent” and
(ii) any other statutory or regulatory qualifications to serve on such Committee and (b) are
not, will not be, and have not been, eligible to participate under the Plan or any other plans
of the Company or any of its subsidiaries or other affiliates entitling the participants
therein to acquire shares, share options or share appreciation rights of the Company or any of
its subsidiaries or other affiliates other than the Company’s 2002 Non-Employee Director Share
Option Plan and Non-Employee Director Share Ownership Plans which are applicable only to
independent or non-employee Directors of the Company as part of their compensation
arrangements for service as independent or non-employee Directors of the Company. The
Committee shall have full authority to establish regulations for the administration of the
Plan and to interpret the Plan.
	 
	3.	 	Share Options and Share Appreciation Rights.

	 	(a)	 	The Board of Directors of the Company may from time to time, as and if recommended by
the Committee, grant to selected employees of the Company and its subsidiaries options to
purchase not exceeding in the aggregate 5,500,000 Common Shares of the Company, provided
that the Committee, subject to ratification by the Board of Directors of the Company, may
make adjustments in the number and kind of shares available for or subject to option, and
in the purchase price of shares subject to option, as it may deem appropriate in the event
of a share subdivision, share consolidation, share dividend (other than an optional share
dividend in lieu of a cash dividend), amalgamation, merger, consolidation, share
reclassification or other change in the capital structure of the Company. The Company may
issue shares or may acquire outstanding shares for the purpose of satisfying the exercise
of an option or of a share appreciation right.
	 
	 	(b)	 	The purchase price of the shares purchasable upon exercise of each option which shall
not be less than 100% of their fair market value on the date the option is granted, and all
other terms and conditions of each option shall be fixed by the Board of Directors of the
Company or of the subsidiary, as the case may be, in each case on recommendation of the
Committee, provided that (i) no shares subject to option shall be purchasable after the
expiration date fixed in the option, which date shall not be later than seven years after
the date the option is granted, and (ii) no person shall have any of the rights of a
Shareholder in respect of shares subject to an option until such shares have been paid for
in full and issued to such person. In the case of option grants in U.S. dollars, the “fair
market value” of the shares subject to option shall be the average of the high and the low
sales prices of the Company’s Common Shares as reported as New York Stock Exchange —
Composite Transactions on the date of the grant, provided however, if there is no trading
in such shares on such Exchange on the date of grant, then the average of the high and low
sales prices for such shares on the next preceding date on which there is trading shall be
used for such calculation. In the case of option grants in Canadian dollars, the “fair
market value” of the shares subject to option shall be the average of the high and low
sales prices of the Company’s Common Shares, as reported on the Toronto Stock Exchange on
the date of the grant, provided however, if there is no trading in such

 

 

	 	 	 	shares on such Exchange on the date of grant, then the average of the high and low sales
prices for such shares on the next preceding date on which there is trading shall be used for
such calculation. If the Board of Directors of the Company shall so authorize, the purchase
price of shares payable upon exercise of options covering Common Shares granted under the
Plan, or Common Shares under the Key Employees Incentive Plans approved by the Shareholders
of the Company on April 25, 2001 and April 23, 1997 may, subject to applicable law, be paid
in lieu of cash, by the delivery to the Company of certificates for Common Shares of the
Company already owned by the optionee having a fair market value equal to the purchase price
of the shares (or any part thereof) for which the option is exercised, or by any combination
of cash and shares. In Canada, the purchase price shall be paid only in cash, but at the
request of the optionee, the Company may sell on the optionee’s behalf Common Shares already
owned by the optionee and apply the proceeds of the sale to the optionee’s purchase of the
same type or class of shares pursuant to the exercise of the share option. An option may
provide that the optionee may exercise the option by delivering to the Company an exercise
notice and irrevocable instructions for the Company to deliver directly to a broker named in
the exercise notice the number of Common Shares set forth in the notice in exchange for
payment of the purchase price of the same type or class of shares. Any share subject to an
option which shall have terminated or expired (other than to the extent surrendered upon the
exercise of a share appreciation right) may thereafter be reoptioned. In the case of options
intended to qualify for the tax treatment provided by Section 422 of the U.S. Internal
Revenue Code of 1986, as amended (“ISOs”), the aggregate fair market value (determined at the
time of the grant of such ISOs) of the shares with respect to which ISOs granted after
December 31, 1986 are exercisable for the first time by any selected employee during any
calendar year shall not exceed $100,000.

	 	(c)	 	Any option may include a share appreciation right at the time of grant, if recommended
by the Committee and authorized by the Board of Directors of the Company. Any option
previously granted under the Plan or under the Key Employees Incentive Plans approved by
the Shareholders of the Company on April 25, 2001 and April 23, 1997 and remaining
unexercised may be amended to include a share appreciation right, if recommended by the
Committee and authorized by the Board of Directors of the Company. Subject to such terms
and conditions as the authorizing Board may provide, such right shall entitle the optionee
to surrender unexercised the option to which the right relates, or any portion thereof, but
only to the extent such option is then exercisable, and to receive upon such surrender that
number of shares having an aggregate value equal to the amount of the excess of the then
market value of one share over the purchase price per share specified in the option
multiplied by the number of shares purchasable upon exercise of the option, or portion of
option, so surrendered; provided that, at the election of the Company or the subsidiary
which granted such right, it may deliver cash, or a combination of cash and shares, equal
in value to the amount of such excess.
	 
	 	(d)	 	An employee of the Company that has been granted an option shall have the right, at any
time, but subject to the discretion of the Board of Directors of the Company to suspend
this right at any time upon the determination of the Board of Directors of the Company that
it is in the best interests of the Company to do so, in lieu of the exercise of such
option, to elect to surrender to the Company for cancellation any option which is then
exercisable for Common Shares in return for the payment by the Company of an amount (the
“Cancellation Amount”) equal to the excess of the fair market value of the Common Shares
subject to such surrendered option (such fair market value being determined to be (i) for
options with a purchase price in U.S. dollars, the simple average of the high and low
prices at which the Company’s Common Shares were traded in one or more board lots on the
New York Stock Exchange for the five days on which the Common Shares were traded prior to
the date on which the options were surrendered for cancellation, and for options with a
purchase price in Canadian dollars, the simple average of the high and low prices at which
the Common Shares were traded in one or more board lots on the Toronto Stock Exchange for
the five days on which the Common Shares were so traded prior to the date on which the
options were surrendered for cancellation or (ii) with the prior consent of the Toronto
Stock Exchange, such other price as may be determined by the Board of Directors of the
Company to be appropriate in the circumstances) over the aggregate exercise price for the
Common Shares of the Company subject to such option (as of the date of surrender). The
Company shall have the right to withhold from any

 

 

	 	 	 	payment in respect of the Cancellation Amount any applicable withholding taxes or other
withholding liabilities. Any option surrendered for cancellation pursuant to this
subsection 3(d) shall be deemed to be terminated and of no further force or effect as of
the time of surrender or effective time of surrender, if later, and the total number of
Common Shares of the Company that may be issued pursuant to the exercise of options
under this Plan, as set forth in subsection 3(a), shall be reduced by the number of
Common Shares that were issuable upon the exercise of such option as of the time of
surrender or effective time of surrender, if later, unless payment of the Cancellation
Amount is not made by the Company in accordance with this subsection 3(d). Payment of
the Cancellation Amount shall be made by the Company within ten business days after the
time of surrender or effective time of surrender, if later, of an option pursuant to
this subsection 3(d).

	4.	 	Incentive Compensation. Awards of incentive compensation under the Plan may be made in
respect of each fiscal year, beginning with 2005, in accordance with the provisions of this
Section 4. Such awards may be made in, or in commitments to deliver, cash, shares of the
Company, incentive units evidencing commitments to pay or deliver at some future date or dates
cash or shares in amounts measured by or otherwise dependent upon earnings or other
performance criteria, or share units evidencing commitments to deliver or pay at some future
date or dates shares or cash equal to the market value of shares at such date or dates,
together, in each case, if so provided, with amounts equal to dividends and other
distributions paid on an equivalent number of shares, or such other kind or form of
compensation as may, in the judgment of the Committee, be best calculated to further the
purposes of the Plan, all on such terms and subject to such conditions as the Committee may
determine, provided that, the total number of Common Shares of the Company to be awarded
pursuant to this Section 4 may not exceed in the aggregate 500,000. In Canada, because of
certain tax rules that might adversely affect the recipient of a deferred award, each award
shall be paid not later than the end of the third year following the end of the year in which
the award to an employee is declared.
	 
	 	 	In respect of each year, the Committee, subject to ratification by the Board of Directors
of the Company, shall from time to time, but not later than the end of the year immediately
following such year, fix the extent, if any, to which, within the limits of the “Incentive Fund”
for such year, awards of incentive compensation shall be made in respect of such year by the
Company, and, subject to ratification by the Board of Directors of the Company, determine the
participants for the year, the award to be made to each participant and the time when such award
is to be paid. The maximum amount of the Incentive Fund in respect of any year shall be equal to
(i) 2% of the sum of (a) the consolidated net earnings of the Company and (b) the related
provisions for income and mining taxes (the “Award Pool”) in such year, as confirmed by the
Company’s independent auditors for such year, and the Award Pool for each of the two immediately
preceding years (the “Preceding Years”) less (ii) the aggregate amount of awards actually made
from the Award Pool in respect of each of the Preceding Years under the Plan or, as the case may
be, under the Key Employees Incentive Plan approved by the Shareholders of the Company on April
25, 2001. Awards made under this Section 4 shall be deemed for the purpose only of determining
the amount to be charged therefor against an Incentive Fund or Funds to have the value of the
cash or shares or incentive units or share units or other kind or form of compensation awarded
that is determined by the Committee, as of the time the award is made and disregarding the
effect of any restrictions or delayed delivery provisions which would otherwise reduce such
value, on such basis as the Committee shall deem reasonable. The value of any award made under
this Section 4 shall be charged against the Incentive Fund for the year in respect of which such
award is made, except that, in the case of any award the amount of which is measured by or
otherwise dependent upon future consolidated earnings of the Company, the Committee may, at the
time such award is made, elect that there shall be charged against the Incentive Fund for the
year in respect of which such award is made or as otherwise determined by the Committee. No
awards shall be made under this Section 4 in respect of any year unless and until the total
value of all awards made under this Section 4 in respect of prior years shall have been charged
against the Incentive Fund or Funds for such year or prior years.
	 
	 	 	If awards are, subject to the 500,000 maximum referred to above, made in shares (or amounts
of cash equal to the value of shares) or share units, or other forms measured by shares and in
the valuation thereof, to be delivered or paid in the future, appropriate adjustments in the
number and kind of shares

 

 

	 	 	or units measured by shares shall be made in the same way as is provided for share options
in Section 3 (a) in the event of a change in the capital structure of the Company. The Company
may issue shares or may acquire outstanding shares for such purpose.

	5.	 	Other Compensation; No Right To Employment; Transferability of Options. Nothing in the Plan
shall prevent a participant from being included in any other employee plan of the Company or
any of its subsidiaries or other affiliates or from receiving any compensation (whether
regular, special, supplemental, incentive, current, deferred or otherwise) now or hereafter
provided by the Company or any of its subsidiaries or other affiliates. Neither the Plan nor
any action taken thereunder shall be understood as giving to any person any right to be
retained in the employ of the Company or any subsidiary or other affiliate, nor shall any
person (including persons selected as participants for a prior year) be entitled as of right
to be selected as a participant in the Plan for any year. Any option or similar right
(including any share appreciation right, whether or not included in an option granted under
the Plan) granted or awarded under the Plan shall be nontransferable other than by will or the
laws of descent and distribution and, during the lifetime of the participant to whom such
option or right shall have been granted or awarded, shall be exercisable only by such
participant or by his guardian or legal representative, in the case of options not intended to
qualify as ISOs, or by such participant, in the case of options intended to qualify as ISOs.
	 
	6.	 	Amendment, Suspension and Termination of the Plan. The Board of Directors of the Company may
amend, suspend or terminate the Plan in whole or in part at any time, provided that the rights
and interests of participants to whom unexpired share options or awards of incentive
compensation have theretofore been granted or made shall not thereby be adversely affected
without their consent and no amendment which would increase the number of shares which may be
made subject to share options or otherwise materially increase the cost of the Plan shall be
made effective unless approved at a meeting of the holders of the shares of the Company
carrying general voting rights. Notwithstanding any other provision of the Plan, except as
provided in Section 3(a), no amendment to the Plan shall be made which would reduce the
purchase price of an option granted pursuant to the Plan. Subject to these limitations on
amendments to the Plan, amendments to this Plan shall not require shareholder approval under
the terms of this Plan. The Plan shall become effective on the date of its approval by the
Company’s Shareholders. Unless the Plan is sooner terminated by the Board of Directors, no
share options or share appreciation rights may be granted after the day before the fifth
anniversary of the date that the Plan is approved by the Company’s Shareholders, and no awards
of incentive compensation may be made in respect of any fiscal year ending after December 31,
2010, provided that the provisions of the Plan shall continue with respect to any options or
awards theretofore granted or made.
	 
	7.	 	Change of Control.

	 	(a)	 	In the event of a Change in Control (as defined in (b) below), all options and related
share appreciation rights shall become vested and exercisable in full.
	 
	 	(b)	 	For purposes of the Plan, “Change in Control” means the occurrence of any of the
following events:

	 	(i)	 	individuals who, as of the close of business on April 20, 2005, constitute the
Board of Directors of the Company (the “Incumbent Directors”) cease for any reason to
constitute at least a majority of the Board of Directors for at least one full year,
provided that any person becoming a Director subsequent to the close of business on
April 20, 2005, whose election or nomination for election was approved by a vote of at
least two-thirds of the Incumbent Directors then on the Board of Directors (either by a
specific vote or by approval of the proxy statement and circular of the Company in
which such person is named as a nominee for Director, without objection to such
nomination) shall be an Incumbent Director; provided, however, that no individual
elected or nominated as a Director of the Company initially as a result of an actual or
threatened election contest with respect to Directors or as a result of any other
actual or threatened solicitation of proxies or consents by or on behalf of any person
other than the Board of Directors shall be deemed to be an Incumbent Director;

 

 

	 	(ii)	 	any “person” (as such term is defined in Section 3(a)(9) of the U.S. Securities
Exchange Act of 1934 (the “Exchange Act”) and as used in Section 13(d)(3) and 14(d)(2)
of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company representing
25% or more of the combined voting power of the Company’s then outstanding securities
eligible to vote for the election of the Board of Directors (the “Company Voting
Securities”); provided, however, that the event described in this paragraph (ii) shall
not be deemed to be a Change in Control by virtue of any of the following acquisitions:
(A) by the Company or any subsidiary, (B) by any employee benefit plan sponsored or
maintained by the Company or any Subsidiary, (C) by any underwriter temporarily holding
securities pursuant to an offering of such securities, (D) pursuant to a Non-Qualifying
Transaction (as defined in paragraph (iii), or (E) a transaction (other than one
described in (iii) below) in which Company Voting Securities are acquired from the
Company, if a majority of the Incumbent Directors approve a resolution providing
expressly that the acquisition pursuant to this clause (E) shall not constitute a
Change in Control under this paragraph (ii);
	 
	 	(iii)	 	shareholder approval of a merger, consolidation, share exchange or similar form
of corporate transaction involving the Company or any of its subsidiaries, whether for
such transaction or for the issuance of securities in the transaction (a “Business
Combination”), unless immediately following such Business Combination: (A) more than 50%
of the total voting power of (x) the corporation resulting from such Business
Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate parent
corporation that directly or indirectly has beneficial ownership of 100% of the voting
securities eligible to elect directors of the Surviving Corporation (the “Parent
Corporation”), would be represented by Company Voting Securities that were outstanding
immediately prior to the consummation of such Business Combination (or, if applicable,
would be represented by shares into which such Company Voting Securities were converted
pursuant to such Business Combination), and such voting power among the holders thereof
is in substantially the same proportion as the voting power of such Company Voting
Securities among the holders thereof immediately prior to the Business Combination, (B)
no person (other than any employee benefit plan sponsored or maintained by the Surviving
Corporation or the Parent Corporation) would be or becomes the beneficial owner,
directly or indirectly, of 25% or more of the total voting power of the outstanding
voting securities eligible to elect directors of the Parent Corporation (or, if there is
no Parent Corporation, the Surviving Corporation), and (C) at least a majority of the
members of the board of directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) will have been Incumbent Directors at the time
of the Board’s approval of the execution of the initial agreement providing for such
Business Combination (any Business Combination which satisfies all of the criteria
specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying
Transaction”);
	 
	 	(iv)	 	shareholder approval of a plan of complete liquidation or dissolution of the
Company or a sale or other disposition of all or substantially all of the Company’s
assets; or
	 
	 	(v)	 	in the case of any employee of the Company or any subsidiary who is party to an
agreement which provides such employee with certain rights in the event of a change of
control, as defined in such agreement, any event that constitutes a change of control
as set forth in such agreement.

	 	 	Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to
occur solely because any person acquires beneficial ownership of more than 25% of Company
Voting Securities as a result of the acquisition of Company Voting Securities by the Company
which reduces the number of Company Voting Securities outstanding; provided, that if after
such acquisition by the Company such person becomes the beneficial owner of additional
Company Voting Securities that increases the percentage of outstanding Company Voting
Securities beneficially owned by such person, a Change in Control of the Company shall then
occur.

 

 

	8.	 	Breach of Conduct. Notwithstanding anything in the Plan to the contrary, the Committee may,
in its sole discretion, in the event of a serious breach of conduct by an employee or former
employee (including, without limitation, any conduct prejudicial to or in conflict with the
Company or its subsidiaries), or any activity of any employee or former employee in
competition with any of the businesses of the Company or any subsidiary, (a) cancel any
outstanding award granted to such employee or former employee, in whole or in part, whether or
not vested or deferred, and/or (b) if such conduct or activity occurs within one year
following the exercise or payment of an award, require such employee or former employee to
repay to the Company any gain realized or payment received upon the exercise or payment of
such award (with such gain or payment valued as of the date of exercise or payment). Such
cancellation or repayment obligation shall be effective as of the date specified by the
Committee. Any repayment obligation may be satisfied in Common Shares or cash or a combination
thereof (based upon the fair market value of Common Shares, determined pursuant to Section
3(b), on the day prior to the date of payment), and the Committee may provide for an offset to
any future payments owed by the Company or any subsidiary to the employee or former employee
if necessary to satisfy the repayment obligation. The determination of whether an employee or
former employee has engaged in a serious breach of conduct or any activity in competition with
any of the businesses of the Company or any subsidiary shall be determined by the Committee in
good faith and in its sole discretion. This Section 8 shall have no application following a
Change in Control.exv10w5

 

Exhibit
10.5

INCO LIMITED

NON-EMPLOYEE DIRECTOR SHARE OPTION PLAN

	1.	 	Purpose.

         
The purpose of the Inco Limited 2002 Non-Employee Director Share Option Plan (the “Plan”) is
to advance the interests of (a) Inco Limited, a corporation organized under the laws of Canada (the
“Company”), and its subsidiaries and affiliates and (b) the Company’s shareholders by (i) assisting
the Company in attracting and retaining highly qualified members of the Board of Directors of the
Company who are not full-time or part-time employees of the Company or any subsidiary of the
Company (“Non-Employee Directors”), (ii) providing additional motivation to such Non-Employee
Directors through performance related incentives to assist the Company to achieve its long range
performance and strategic goals and (iii) enabling Non-Employee Directors to increase their
participation in the Company’s growth and financial success by giving them the opportunity to
obtain additional Common Shares of the Company (the “Common Shares”).

	2.	 	Plan Administration.

         
(a)     The Plan shall be administered by the Corporate Governance and Nominating Committee (the
“Committee”) of the Board of Directors of the Company (the “Board”).

         
(b)     The Committee shall have the authority (i) to exercise all of the powers granted to it
under the Plan, (ii) to construe, interpret and implement the Plan and any Award Agreements (as
hereinafter defined), (iii) to prescribe, amend and rescind rules and regulations relating to the
Plan, including rules governing its operations, (iv) to make all determinations necessary or
advisable in administering the Plan, (v) to correct any defect, supply any omission and reconcile
any inconsistency in the Plan, (vi) to amend the Plan to reflect changes in applicable law, and
(vii) to accelerate the exercisability of any Award (as hereinafter defined) granted hereunder.

         
(c)     Actions of the Committee shall be taken by the vote of a majority of its members. Any
action may be taken by a written instrument signed by all the Committee members and any action so
taken shall be fully as effective as if it had been taken by a vote at a meeting.

         
(d)     The determination of the Committee on all matters relating to the Plan or any Award
Agreement shall be final, binding and conclusive for all purposes and upon all persons including,
but without limitation, the Company, its subsidiaries and affiliates, the Committee, the Board, the
Non-Employee Directors and their respective successors and assigns.

         
(e)     No member of the Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any Award.

         
(f)     Notwithstanding anything to the contrary contained herein, the Board may, in its sole
discretion, at any time and from time to time, grant Awards or resolve to administer the Plan. In
such event, the Board shall have all of the authority and responsibility granted to the Committee
herein.

 

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	3.	 	Eligibility.

         
Each Non-Employee Director is eligible to receive grants of options to purchase Common Shares
(“Awards”) under Section 5.

	4.	 	Shares Subject to the Plan.

         
Subject to adjustment as provided in Section 8, the number of Common Shares available and
reserved for the grant of Awards under the Plan shall not exceed 300,000 Common Shares. The shares
issued under the Plan shall be authorized and unissued Common Shares. Common Shares subject to or
underlying an Award that expires unexercised, or is forfeited, terminated or cancelled, shall
thereafter be available for grant under the Plan. The number of shares reserved for issuance to any
one person pursuant to options under the Plan may not exceed 5% of the Company’s outstanding
shares.

	5.	 	Awards.

         
(a)     Non-Discretionary Grants. Each Non-Employee Director shall receive, upon election or
appointment as a member of the Board, an initial Award to purchase 5,000 Common Shares. In
addition, each Non-Employee Director serving as a member of the Board immediately following each
Annual Meeting of Shareholders of the Company, beginning with the Annual and Special Meeting to be
held in 2002, shall automatically receive an Award to purchase 5,000 Common Shares as of the first
business day after such Meeting provided that, if a Non-Employee Director has served for at least
six but less than twelve months as of the applicable Annual Meeting of Shareholders, his or her
Award as of such day shall be pro rated based upon the number of full months of service up to and
including that day. The terms of each Award shall provide that (i) the exercise price shall be
equal to 100% of the Fair Market Value (as hereinafter defined) of the Common Shares on the date of
grant, (ii) such Award shall not be exercisable for a period more than 10 years following the date
of grant, and (iii) such Award shall vest and become exercisable on the first anniversary of the
date of grant. In the case of Awards exercisable in U.S. dollars, the “Fair Market Value” of the
Common Shares shall be the average of the high and the low sales price of the Company’s Common
Shares as reported as New York Stock Exchange — Composite Transactions on the date of the grant,
provided however, if there is no trading in such shares on such Exchange on the date of grant, then
the average of the high and low sales prices for such shares on the next preceding date on which
there is trading shall be used for such calculation. In the case of Awards exercisable in Canadian
dollars, the “Fair Market Value” of the Common Shares shall be the average of the high and low
sales prices of the Company’s Common Shares, as reported on The Toronto Stock Exchange on the date
of the grant, provided, however, if there is no trading in such shares on such Exchange on the date
of grant, then the average of the high and low sales prices for such shares on the next preceding
date on which there is trading shall be used for such calculation. If an optionee ceases to be a
Non-Employee Director, such Award shall terminate except with respect to any portion of such Award
then exercisable, which portion shall remain exercisable for a period of (x) 90 days, if the
termination as a Non-Employee Director resulted from any reason other than retirement, death or
disability, or (y) one year, if the termination resulted from retirement, death or disability;
provided, that in the event the termination resulted from a removal for cause, as determined by the
Committee, such Award shall immediately terminate and no longer be exercisable to any extent; and
provided further, that in no event shall any such Award remain exercisable past the remainder of
its scheduled term.

 

- 3 -

         
(b)     Method of Exercise. The exercise or purchase price of each Common Share as to which an
Award is exercised shall be paid in full at the time of such exercise in cash. An Award may provide
that the optionee may exercise the Award by delivering to the Company an exercise notice and
irrevocable instructions for the Company to deliver directly to a broker named in the exercise
notice the number of Common Shares set forth in the notice in exchange for payment of the exercise
or purchase price of the Common Shares. Any exercise of an Award following a Non-Employee
Director’s death shall be made only by the Non-Employee Director’s executor or administrator,
unless the Non-Employee Director’s will specifically disposes of such Award, in which case such
exercise shall be made only by such recipient’s spouse, minor children or grandchildren or trust
established in whole or in part for the benefit of such recipient and/or one or more of such
immediate family members as may be the recipients of such disposition. If a Non-Employee Director’s
personal representative or the recipient of a specific disposition under the Non-Employee
Director’s will shall be entitled to exercise any Award pursuant to the preceding sentence, such
representative or recipient shall be bound by all the terms and conditions of the Plan and the
applicable Award Agreement which would have applied to the Non-Employee Director.

         
(c)     Delivery. Promptly after receiving payment of the exercise or purchase price of each
Common Share as to which an Award is exercised, the Company shall deliver to the Non-Employee
Director or to such other person as may then have the right to exercise the Award or as directed by
the Non-Employee Director or such other person a certificate or certificates for the Common Shares
for which the Award has been exercised.

         
(d)     Rights as Shareholder; Service as a Non-Employee Director. No person shall have any of the
rights of a shareholder in respect of Common Shares subject to an Award until such Common Shares
have been paid for in full and issued to such person. Nothing contained in the Plan or in any
instrument executed pursuant hereto shall confer upon any Non-Executive Director any right to
continue in the service of the Company as a Director or interfere in any way with the right of the
Company to terminate the service of any Non-Executive Director at any time, with or without cause.

         
(e)     Surrender for Cash. A Non-Employee Director that has been granted an Award shall have the
right, at any time, but subject to the discretion of the Board to suspend this right at any time
upon the determination of the Board that it is in the best interests of the Company to do so, in
lieu of the exercise of such Award, to elect to surrender to the Company for cancellation any Award
which is then exercisable for Common Shares in return for the payment by the Company of an amount
(the “Cancellation Amount”) equal to the excess of the fair market value of the Common Shares
subject to such surrendered Award (such fair market value being determined to be (i) for Awards
with a purchase price in U.S. dollars, the simple average of the high and low prices at which the
Company’s Common Shares were traded in one or more board lots on the New York Stock Exchange for
the five days on which the Common Shares were traded prior to the date on which the Awards were
surrendered for cancellation, and for Awards with a purchase price in Canadian dollars, the simple
average of the high and low prices at which the Common Shares were traded in one or more board lots
on the Toronto Stock Exchange for the five days on which the Common Shares were so traded prior to
the date on which the Awards were surrendered for cancellation or (ii) with the prior consent of
the Toronto Stock Exchange, such other price as may be determined by the Board to be appropriate in
the circumstances) over the aggregate exercise price for the Common Shares of the Company subject
to such Award (as of

 

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the date of surrender). The Company shall have the right to withhold from any payment in
respect of the Cancellation Amount any applicable withholding taxes or other withholding
liabilities. Any Award surrendered for cancellation pursuant to this subsection 5(e) shall be
deemed to be terminated and of no further force or effect as of the time of surrender or effective
time of surrender, if later, and the total number of Common Shares of the Company that may be
issued pursuant to the exercise of Awards under this Plan, as set forth in section 4, shall be
reduced by the number of Common Shares that were issuable upon the exercise of such Award as of the
time of surrender or effective time of surrender, if later, unless payment of the Cancellation
Amount is not made by the Company in accordance with this subsection 5(e). Payment of the
Cancellation Amount shall be made by the Company within ten business days after the time of
surrender or effective time of surrender, if later, of an Award pursuant to this subsection 5(e).

	6.	 	Award Agreements.

         
Each Award under the Plan shall be evidenced by an agreement (an “Award Agreement”) setting
forth the terms and conditions, as determined by the Committee, which shall apply to such Award, in
addition to the terms and conditions specified in the Plan.

	7.	 	Nontransferability; Forfeiture.

         
No Award shall be assignable or transferable, and no right or interest of any Non-Employee
Director shall be subject to any lien, obligation or liability of the Non-Employee Director, except
by will or the laws of descent and distribution. Notwithstanding the immediately preceding
sentence, the Committee may, subject to the requirements of applicable law or any stock exchange
and on the terms and conditions it may specify, permit a Non-Employee Director to transfer any
Awards granted to him or her pursuant to the Plan to one or more of his or her spouse, minor
children or grandchildren or to trusts established in whole or in part for the benefit of the
Non-Employee Director and/or one or more of such immediate family members. During the lifetime of
the Non-Employee Director, Awards shall be exercisable only by the Non-Employee Director or by the
immediate family member or trust to whom such Awards have been transferred in accordance with this
Section 7.

	8.	 	Adjustment of and Changes in Common Shares.

         
In the event of any change in the outstanding Common Shares by reason of any share
subdivision, share consolidation, share dividend (other than a share dividend in lieu of a cash
dividend), recapitalization, merger, consolidation, share reclassification, spinoff, combination or
exchange of shares or other corporate change, or any distributions to common shareholders other
than regular cash dividends (or share dividends in lieu thereof), the Committee, subject to any
required regulatory approvals, may make such substitution or adjustment, if any, as it deems to be
equitable, as to the number and kind of Common Shares or other securities issued or reserved for
issuance pursuant to the Plan and to outstanding Awards, the number of Common Shares that may be
subject to Awards and the exercise price per Common Share subject to each Award, Except as
expressly provided herein, no issuance by the Company of shares of any class, or securities
convertible into or exchangeable for shares of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of Common Shares subject to any Award.
After any adjustment made pursuant to this Section 8, the number of shares subject to each
outstanding Award shall be rounded up to the nearest whole number.

 

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	9.	 	Change in Control.

         
(a)     In the event of a Change in Control (as defined below), all Awards shall become vested and
exercisable in full. For purposes of the Plan, “Change in Control” means the occurrence of any of
the following events:

         (i)     Individuals who, as of the close of business on April 17, 2002, constitute the
Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of
the Board for at least one full year, provided that any person becoming a Director
subsequent to the close of business on April 17, 2002, whose election or nomination for
election was approved by a vote of at least two-thirds of the Incumbent Directors then on
the Board (either by a specific vote or by approval of the proxy statement and circular of
the Company in which such person is named as a nominee for director, without objection to
such nomination) shall be an Incumbent Director; provided, however, that no individual
elected or nominated as a director of the Company initially as a result of an actual or
threatened election contest with respect to Directors or as a result of any other actual or
threatened solicitation of proxies or consents by or on behalf of any person other than the
Board shall be deemed to be an Incumbent Director;

         (ii)     Any “person” (as such term is defined in Section 3(a)(9) of the U.S. Securities
Exchange Act of 1934 (the “Exchange Act”) and as used in
Section 13(d)(3) and 14(d)(2) of
the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing 25% or more
of the combined voting power of the Company’s then outstanding securities eligible to vote
for the election of the Board (the “Company Voting Securities”); provided, however, that the
event described in this paragraph (ii) shall not be deemed to be a Change in Control by
virtue of any of the following acquisitions: (A) by the Company or any subsidiary, (B) by
any employee benefit plan sponsored or maintained by the Company or any subsidiary, (C) by
any underwriter temporarily holding securities pursuant to an offering of such securities,
(D) pursuant to a Non-Qualifying Transaction (as defined in paragraph (iii) below), or (E) a
transaction (other than one described in paragraph (iii) below in which Company Voting
Securities are acquired from the Company, if a majority of the Incumbent Directors approve a
resolution providing expressly that the acquisition pursuant to this clause (E) shall not
constitute a Change in Control under this paragraph (ii);

         (iii)     Shareholder approval of a merger, consolidation, share exchange or similar form
of corporate transaction involving the Company or any of its subsidiaries, whether for such
transaction or for the issuance of securities in the transaction (a “Business Combination”),
unless immediately following such Business Combination: (A) more than 50% of the total
voting power of (x) the corporation resulting from such Business Combination (the “Surviving
Corporation”), or (y) if applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of 100% of the voting securities eligible to elect
directors of the Surviving Corporation (the “Parent Corporation”), would be represented by
Company Voting Securities that were outstanding immediately prior to the consummation of
such Business Combination (or, if applicable, would be represented by shares into which such
Company Voting Securities were converted pursuant to such Business Combination), and such
voting power among the holders thereof is in substantially the same proportion as the voting
power of such

 

- 6 -

Company Voting Securities among the holders thereof immediately prior to the Business
Combination, (B) no person (other than any employee benefit plan sponsored or maintained by
the Surviving Corporation or the Parent Corporation) would be or becomes the beneficial
owner, directly or indirectly, of 25% or more of the total voting power of the outstanding
voting securities eligible to elect directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation), and (C) at least a majority of the members
of the board of directors of the Parent Corporation (or, if there is no Parent Corporation,
the Surviving Corporation) will have been Incumbent Directors at the time of the Board’s
approval of the execution of the initial agreement providing for such Business Combination
(any Business Combination which satisfies all of the criteria specified in (A), (B) and (C)
above shall be deemed to be a “Non-Qualifying Transaction”); or

         (iv)     Shareholder approval of the plan of complete liquidation or dissolution of the
Company or a sale or other disposition of all or substantially all of the Company’s assets.

         
Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur
solely because any person acquires beneficial ownership of more than 25% of Company Voting
Securities as a result of the acquisition of Company Voting Securities by the Company which reduces
the number of Company Voting Securities outstanding; provided, that if after such acquisition by
the Company such person becomes the beneficial owner of additional Company Voting Securities that
increases the percentage of outstanding Company Voting Securities beneficially owned by such
person, a Change in Control of the Company shall then occur.

	10.	 	Governmental Compliance.

         
Each Award under the Plan shall be subject to the requirement that if at any time the
Committee shall determine that the listing, registration or qualification of any shares issuable or
deliverable thereunder upon any stock exchange or under any applicable law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a condition thereof, or
in connection therewith, no such Award may be exercised or shares issued or delivered unless such
listing, registration, qualification, consent or approval shall have been effected or obtained free
of any conditions not acceptable to the Committee.

	11.	 	Amendment and Termination.

         
The Board may amend, suspend or terminate the Plan or any portion thereof at any time,
provided that (a) no amendment shall be made without shareholder approval (including an amendment
to increase the number of Common Shares reserved for issuance under the Plan) if such approval is
necessary in order for the Plan to comply with any applicable law, regulations or stock exchange
rule, and (b) except as provided in Section 9, no amendment shall be made that would adversely
affect the rights of a Non-Employee Director under any Award previously granted, without such
Non-Employee Director’s prior written consent.

	12.	 	Governing Law.

         
All rights and obligations under the Plan shall be construed and interpreted in accordance
with the laws of Ontario without giving effect to principles of conflict of laws.

 

- 7 -

	13.	 	Severability; Entire Agreement.

         
If any of the provisions of this Plan or any Award Agreement is finally held to be invalid,
illegal or unenforceable (whether in whole or in part), such provision shall be deemed modified to
the extent, but only to the extent, of such invalidity, illegality or unenforceability and the
remaining provisions shall not be affected thereby; provided, that if any of such provisions is
finally held to be invalid, illegal, or unenforceable because it exceeds the maximum scope
determined to be acceptable to permit such provision to be enforceable, such provision shall be
deemed to be modified to the minimum extent necessary to modify such scope in order to make such
provision enforceable hereunder.

	14.	 	No Third Party Beneficiaries.

         
Except as expressly provided therein, neither the Plan nor any Award Agreement shall confer on
any person other than the Company and the grantee of any Award any rights or remedies thereunder.

	15.	 	Successors and Assigns.

         
The terms of this Plan shall be binding upon and enure to the benefit of the Company and its
successors and assigns.

	16.	 	Effective Date.

         
The Plan shall be effective as of April 17, 2002 (“Effective Date”). Subject to earlier
termination pursuant to Section 11, the Plan shall have a term of five years from its Effective
Date. The Plan is conditioned upon the approval of the shareholders of the Company and failure to
receive such approval shall render the Plan void and of no effect.

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