Document:

<PAGE>
                                                               EXHIBIT 10(a)(1)

                                NEC CORPORATION

                                CERTIFICATION OF
                     CHIEF EXECUTIVE OFFICER OR EQUIVALENT
                                  PURSUANT TO
                            18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

                  In connection with the Annual Report of NEC Corporation (the
"Company") on Form 20-F for the fiscal year ended March 31, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Koji Nishigaki, President of the Company, certify, pursuant to 18 U.S.C. section
1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002,
that:

                  1.       The Report fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

                  2.       The information contained in the Report fairly
presents, in all material respects, the financial condition and result of
operations of the Company.

                                     /s/ Koji Nishigaki
                                   -----------------------------
                                   Name: Koji Nishigaki
                                   Title: President

Dated: August 6, 2002<PAGE>
                                                                EXHIBIT 10(a)(2)

                                NEC CORPORATION

                                CERTIFICATION OF
                     CHIEF FINANCIAL OFFICER OR EQUIVALENT
                                  PURSUANT TO
                            18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

                  In connection with the Annual Report of NEC Corporation (the
"Company") on Form 20-F for the fiscal year ended March 31, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Shigeo Matsumoto, Executive Vice President of the Company, certify, pursuant to
18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley
Act of 2002, that:

                  1.       The Report fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

                  2.       The information contained in the Report fairly
presents, in all material respects, the financial condition and result of
operations of the Company.

                                        /s/ Shigeo Matsumoto
                                       -----------------------------------------
                                       Name: Shigeo Matsumoto
                                       Title: Executive Vice President

Dated: August 6, 2002exv4w5

 

Exhibit 4.5

CP Ships Limited

EMPLOYEE STOCK OPTION PLAN

Effective October 1, 2001

As amended and re-stated on April 17, 2002

	 	 	 	 	 	 
	ARTICLE 1 - PURPOSE OF THE PLAN
	 	 	3	 
	 	1.1 Purpose
	 	 	3	 
	ARTICLE 2 - DEFINITIONS AND INTERPRETATION
	 	 	3	 
	 	2.1 Definitions
	 	 	3	 
	 	2.2 Interpretation
	 	 	6	 
	ARTICLE 3 - GENERAL PROVISIONS OF THE PLAN
	 	 	6	 
	 	3.1 Administration
	 	 	6	 
	 	3.2 Shares Reserved
	 	 	7	 
	 	3.3 Eligibility
	 	 	7	 
	 	3.4 Limits with respect to Insiders
	 	 	7	 
	 	3.5 Non-Exclusivity
	 	 	7	 
	 	3.6 Amendment of Plan, Options and Restricted Shares
	 	 	7	 
	 	3.7 Compliance with Laws and Stock Exchange Rules
	 	 	8	 
	ARTICLE 4 - GRANT OF OPTIONS
	 	 	8	 
	 	4.1 Grants of Options
	 	 	8	 
	 	4.2 Option Agreement
	 	 	8	 
	 	4.3 Exercise Price
	 	 	9	 
	 	4.4 Time of Exercise
	 	 	9	 
	 	4.5 Expiry Date
	 	 	9	 
	 	4.6 Grants of SARs
	 	 	10	 
	 	4.7 Early Expiry
	 	 	10	 
	 	4.8 Limited Assignment
	 	 	11	 
	 	4.9 No Rights as Shareholder or to Remain an Eligible Person; Status of Consultants
	 	 	12	 
	 	4.10 Adjustments
	 	 	12	 
	 	4.11 Change of Control
	 	 	13	 
	 	4.12 Former Canadian Pacific Limited Optionholders
	 	 	14	 
	ARTICLE 5 - EXERCISE OF OPTIONS
	 	 	14	 
	 	5.1 Manner of Exercise
	 	 	14	 
	 	5.2 Delivery of Share Certificate
	 	 	14	 
	 	5.3 Cashless Exercise
	 	 	14	 
	 	5.4 Withholding
	 	 	15	 
	ARTICLE 6 - RESTRICTED SHARES
	 	 	15	 
	 	6.1 Allocation of Restricted Shares
	 	 	15	 
	 	6.2 Early Expiry
	 	 	15	 
	 	6.3 Assignment and Transfer
	 	 	16	 
	 	6.4 No rights as Shareholder or to remain an Eligible Person
	 	 	16	 
	 	6.5 Adjustments
	 	 	16	 
	 	6.6 Change of Control
	 	 	16	 
	 	6.7 General
	 	 	17	 

 

 

	 	 	 	 	 	 
	SCHEDULE A — FORM OF OPTION AGREEMENT
	 	 	18	 
	SCHEDULE B — FORM OF NOTICE OF EXERCISE
	 	 	20	 

 

 

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ARTICLE 1 -

PURPOSE OF THE PLAN

1.1   Purpose

		
	 	The purpose of the CP Ships Limited Employee Stock Option Plan is to
assist and encourage officers, employees and Consultants of the
Corporation and its Subsidiaries to work towards and participate in the
growth and development of the Corporation and its Subsidiaries by
granting Options, SARs and/or Restricted Shares to such persons.

ARTICLE 2 -

DEFINITIONS AND INTERPRETATION

2.1   Definitions

		
	 	For the purposes of this Plan, the following terms will have the
following meanings:

	 	(a)	 	“Board” means the board of directors of the Corporation, and
is deemed to mean any compensation committee of the Board in the
circumstances described in section 3.1(a)(iii);
	 
	 	(b)	 	“Cause” means:

	 	(i)	 	the continued failure by the Grantee to
substantially perform his or her duties in connection with
his or her employment by, or service to, the Corporation or
any Subsidiary (other than as a result of physical or mental
illness) after the Corporation or Subsidiary has given the
Grantee reasonable written notice of such failure and a
reasonable opportunity to correct it;
	 
	 	(ii)	 	the engaging by the Grantee in any act which is
injurious to the Corporation or its reputation, financially
or otherwise;
	 
	 	(iii)	 	the engaging by the Grantee in any act
resulting or intended to result, directly or indirectly, in
personal gain to the Grantee at the expense of the
Corporation;
	 
	 	(iv)	 	the conviction of the Grantee by a court of
competent jurisdiction on any charge involving fraud, theft
or moral turpitude by the Grantee in connection with the
business of the Corporation; or
	 
	 	(v)	 	any other conduct that constitutes cause at
common law;

	 	(c)	 	“Change of Control” means:

	 	(i)	 	the initial acquisition by any person, or any
persons acting jointly or in concert (as determined by the
Securities Act (Ontario)), whether directly or indirectly, of
voting securities of the Corporation which, together with all
other voting securities of the Corporation held by such
persons, constitutes, in the aggregate, more than 20% of all
outstanding voting securities of the Corporation;
	 
	 	(ii)	 	an amalgamation, arrangement or other form of
business combination of the Corporation with another
corporation which results in the holders of voting securities
of that other corporation holding, in the aggregate, more
than 50% of

 

 

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	 	 	 	all outstanding voting securities of the corporation
resulting from the business combination;
	 
	 	(iii)	 	a sale, disposition, lease or exchange to or
with another person or persons (other than a Subsidiary) of
property of the Corporation representing 50% or more of the
net book value of the assets of the Corporation, determined
as of the date of the most recently published audited annual
or unaudited quarterly interim financial statements of the
Corporation; or
	 
	 	(iv)	 	a change in the composition of the Board over
any twelve month period such that more than 50% of the
persons who were directors of the Corporation at the
beginning of the period are no longer directors at the end of
the period, unless such change is a consequence of normal
attrition;

	 	(d)	 	“Common Shares” means common shares of the Corporation;
	 
	 	(e)	 	“Consultant” means a person engaged to provide ongoing
management or consulting services for the Corporation or any
Subsidiary;
	 
	 	(f)	 	“Corporation” means CP Ships Limited, and any successor
corporation thereto;
	 
	 	(g)	 	“Date of Termination” means the actual date of termination of
employment of the Grantee or termination of the Grantee’s contract
as a Consultant, and excludes any period during which the Grantee is
in receipt of or is eligible to receive any statutory, contractual
or common law notice or compensation in lieu thereof or severance or
damage payments following the actual date of termination;
	 
	 	(h)	 	“Eligible Person” means any officer, employee or Consultant
of the Corporation or any Subsidiary, and also includes a Family
Trust, Personal Holding Corporation, Retirement Trust and the
persons holding the Options described in section 4.12;
	 
	 	(i)	 	“Exercise Price” means the price per Common Share at which
Common Shares may be subscribed for by an Grantee pursuant to a
particular Option Agreement;
	 
	 	(j)	 	“Expiry Date” means the date on which an Option expires
pursuant to the Option Agreement relating to that Option;
	 
	 	(k)	 	“Family Trust” means a trust, of which at least one of the
trustees is an Eligible Person and the beneficiaries of which are
one or more of the Eligible Person and the spouse, minor children
and minor grandchildren of the Eligible Person;
	 
	 	(l)	 	“Grant Date” means the date on which an Option or Restricted
Share is granted, being the date that the Board resolves to grant
the Option or Restricted Share, unless the Board resolves to ratify
Options or Restricted Shares granted on an earlier date or to delay
the grant of Options or Restricted Shares to a later date, in which
case the Grant Date will be such earlier or later date;
	 
	 	(m)	 	“Grantee” means an Eligible Person to whom an Option or
Restricted Share has been granted or allocated;
	 
	 	(n)	 	“Insider” means:

	 	(i)	 	an insider as defined in the Securities Act
(Ontario), other than a person who falls within that
definition solely by virtue of being a director or senior
officer of a Subsidiary; and

 

 

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	 	(ii)	 	an associate, as defined in the Securities Act
(Ontario), of any person who is an insider by virtue of (i)
above;

	 	(o)	 	“Notice of Exercise” means a notice, substantially in the
form of the notice set out in Schedule B to this Plan, from an
Optionholder to the Corporation giving notice of the exercise or
partial exercise of an Option previously granted to the
Optionholder;
	 
	 	(p)	 	“Option” means an option to purchase Common Shares granted to
an Eligible Person pursuant to the terms of the Plan, and includes
any related SARs;
	 
	 	(q)	 	“Option Agreement” means an agreement, substantially in the
form of the agreement set out in Schedule A to this Plan, between
the Corporation and an Eligible Person setting out the terms of an
Option granted to the Eligible Person;
	 
	 	(r)	 	“Optioned Shares” means the Common Shares that may be
subscribed for by an Grantee pursuant to a particular Option
Agreement;
	 
	 	(s)	 	“Optionholder” means an Eligible Person to whom an Option has
been granted;
	 
	 	(t)	 	“Personal Holding Corporation” means a corporation that is
controlled by an Eligible Person and the shares of which are
beneficially owned by the Eligible Person and the spouse, minor
children or minor grandchildren of the Eligible Person;
	 
	 	(u)	 	“Plan” means this Employee Stock Option Plan of the
Corporation, as amended from time to time;
	 
	 	(v)	 	“person” has the meaning ascribed to such term in the
Securities Act (Ontario);
	 
	 	(w)	 	“Restricted Period” means the period beginning on the date of
an allocation of Restricted Shares to an Eligible Person and ending
on the date on which all restrictions on the transfer or resale of
such Restricted Shares, or any other restrictions affecting such
Restricted Shares, shall expire.
	 
	 	(x)	 	“Restricted Share” means a Common Share allocated to an
Eligible Person pursuant to the terms of the Plan and subject to the
restrictions imposed by the Board at the time of the allocation.
	 
	 	(y)	 	“Retirement Trust” means a trust governed by a registered
retirement savings plan or a registered retirement income fund
established by and for the benefit of an Eligible Person;
	 
	 	(z)	 	“SAR” means a share appreciation right granted to an Eligible
Person pursuant to the terms of the Plan;
	 
	 	(aa)	 	“Share Compensation Arrangement” means any stock option,
stock option plan, employee stock purchase plan or any other
compensation or incentive mechanism involving the issuance or
potential issuance of Common Shares to one or more Eligible Persons,
including a share purchase from treasury which is financially
assisted by the Corporation by way of a loan, guarantee or
otherwise; and
	 
	 	(bb)	 	“Subsidiary” means any corporation that is a subsidiary of
the Corporation as defined in the Securities Act (Ontario).

 

 

- 6 -

2.2   Interpretation

	(a)	 	Time shall be the essence of this Plan.
	 
	(b)	 	Words denoting the singular number include the plural and
vice versa and words denoting any gender include all genders.
	 
	(c)	 	This Plan and all matters to which reference is made herein
will be governed by and interpreted in accordance with the laws of
Ontario and the federal laws of Canada applicable therein.

ARTICLE 3 -

GENERAL PROVISIONS OF THE PLAN

3.1   Administration

	 	(a)	 	The Plan will be administered by:

	 	(i)	 	the Board;
	 
	 	(ii)	 	if determined by the Board, by a compensation
committee of the Board consisting of not less than three
directors; or
	 
	 	(iii)	 	if determined by the Board (or a compensation
committee of the Board), by the Chief Executive Officer of
the Corporation with respect to Options granted to Eligible
Persons at the commencement of the employment or engagement
of such Eligible Persons with or by the Corporation or any
Subsidiary.

		
	 	If a compensation committee is appointed to administer the Plan,
references in this Plan to the Board will, where appropriate, be
deemed to be references to the compensation committee. If the
Chief Executive Officer of the Corporation is appointed to
administer the Plan with respect to Options or Restricted Shares
granted to Eligible Persons at the commencement of their
employment or engagement, then the Options or Restricted Shares so
granted shall be conditional on subsequent ratification by the
Board.

	 	(b)	 	Subject to the limitations of the Plan, the Board has the
authority to:

	 	(i)	 	determine which Eligible Persons are to be
granted Options and Restricted Shares and grant Options and
Restricted Shares to those Eligible Persons:
	 
	 	(ii)	 	determine the terms of such Options and the
restrictions imposed on such Restricted Shares;
	 
	 	(iii)	 	prescribe the form of Option Agreement and
Notice of Exercise with respect to a particular Option, if
other than substantially as set forth in Schedules A and B to
this Plan; and
	 
	 	(iv)	 	interpret the Plan and determine all questions
arising out of the Plan and any Options and Restricted Shares
granted pursuant to the Plan, which
interpretations and determinations will be conclusive and
binding on the Corporation, Eligible Persons, Grantees and
all other affected persons.

 

 

- 7 -

3.2   Shares Reserved

	 	(a)	 	The maximum number of Common Shares that may be reserved for
issuance under the Plan is 6,000,000. The maximum number of Common
Shares will be reduced as Options are exercised and the Common
Shares so reserved are issued upon the exercise of Options or the
expiry of the Restricted Period.
	 
	 	(b)	 	The maximum number of Common Shares that may be reserved for
issuance to any one Eligible Person pursuant to Options granted
under the Plan is 5% of the number of Common Shares outstanding at
the time of reservation.
	 
	 	(c)	 	Any Common Shares subject to an Option that expires or
terminates without having been fully exercised may be made the
subject of a further Option. Restricted Shares allocated to any
Eligible Person who loses his right to Common Shares pursuant to
section 6.2 may be re-allocated to other Eligible Persons. No
fractional Common Shares may be issued under the Plan.

3.3   Eligibility

		
	 	Options and Restricted Shares may be granted by the Board to any Eligible
Person, subject to the limitations set forth in sections 3.2 and 3.4.

3.4   Limits with respect to Insiders

	 	(a)	 	The maximum number of Common Shares that may be reserved for
issuance to Insiders pursuant to Options granted under the Plan and
any other Share Compensation Arrangement is 10% of the number of
Common Shares outstanding.
	 
	 	(b)	 	The maximum number of Common Shares that may be issued to
Insiders under the Plan and any other Share Compensation Arrangement
within a one-year period is 10% of the number of Common Shares
outstanding.
	 
	 	(c)	 	The maximum number of Common Shares that may be issued to any
one Insider (and such Insider’s associates, as defined in the
Securities Act (Ontario)), under the Plan and any other Share
Compensation Arrangement within a one-year period is 5% of the
number of Common Shares outstanding.
	 
	 	(d)	 	For the purposes of (a), (b) and (c) above, any entitlement
to acquire Common Shares granted pursuant to the Plan or any other
Share Compensation Arrangement prior to the grantee becoming an
Insider is to be excluded. For the purposes of (b) and (c) above,
the number of Common Shares outstanding is to be determined on the
basis of the number of Common Shares outstanding at the time of the
reservation or issuance, as the case may be, excluding Common Shares
issued under the Plan or under any other Share Compensation
Arrangement over the preceding one-year period.

3.5   Non-Exclusivity

		
	 	Nothing in this Plan will prevent the Board from adopting other or
additional Share Compensation Arrangements, subject to obtaining any
required regulatory or shareholder approvals.

3.6   Amendment of Plan, Options and Restricted Shares

	 	(a)	 	The Board may amend, suspend or terminate the Plan at any
time, provided that no such amendment, suspension or termination
may:

 

 

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	 	(i)	 	be made without obtaining any required
regulatory or shareholder approvals (which approvals will
always be required in the case of an amendment to increase
the maximum number of Common Shares that may be reserved for
issuance pursuant to Options granted under the Plan); or
	 
	 	(ii)	 	prejudice the rights of any Grantee under any
Option or Restricted Share previously granted to the Grantee,
without the consent or deemed consent of the Grantee.

	 	(b)	 	The Board may amend the terms of any outstanding Option
(including, without limitation, to cancel an Option or amend the
date or dates on which an Option or a portion thereof vests and so
becomes exercisable), or of any Restricted Share, provided that:

	 	(i)	 	any required regulatory and shareholder
approvals are obtained;
	 
	 	(ii)	 	the Board would have had the authority to
initially grant the Option or the Restricted Share under
terms as so amended; and
	 
	 	(iii)	 	the consent or deemed consent of the Grantee
is obtained if the amendment would prejudice the rights of
the Grantee under the Option or the Restricted Share.

3.7   Compliance with Laws and Stock Exchange Rules

		
	 	The Plan, the grant and exercise of Options, the grant of Restricted
Shares and the Corporation’s obligation to issue Common Shares under the
Plan will be subject to all applicable federal, provincial and foreign
laws, rules and regulations and the rules of any stock exchange on which
the Common Shares are listed for trading. No Option or Restricted Share
will be granted and no Common Shares will be issued under the Plan where
such grant or issue would require registration of the Plan, such
Restricted Shares or such Common Shares under the securities laws of any
foreign jurisdiction. Common Shares issued to Grantees hereunder may be
subject to limitations on sale or resale under applicable securities
laws.

ARTICLE 4 -

GRANT OF OPTIONS

4.1   Grants of Options

		
	 	Options may be granted to Eligible Persons from time to time (prior to
the Date of Termination in respect of a particular Eligible Person) in
accordance with this Plan.

4.2   Option Agreement

	 	(a)	 	Upon the grant of an Option, the Corporation will deliver to
the Optionholder an Option Agreement dated the Grant Date,
containing the terms of the Option and executed by the Corporation.
Upon return to the Corporation of the Option Agreement, executed by
the Optionholder, the Optionholder will be a participant in the Plan
and have the right to
purchase the Optioned Shares on the terms set out in the Option
Agreement and in the Plan.
	 
	 	(b)	 	An Optionholder may elect at the time of grant to have all or
a portion of the Option granted to the Optionholder’s Family Trust,
Personal Holding Corporation or Retirement Trust (if permitted by
applicable securities laws). In that case, an Option Agreement will

 

 

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	 	 	 	be entered into between the Corporation and the Family Trust,
Personal Holding Corporation or Retirement Trust, which will be the
Optionholder for the purposes of this Plan.

4.3   Exercise Price

		
	 	The Exercise Price of Common Shares subject to an Option will be
determined or ratified by the Board and will not be less than the market
price of the Common Shares at the Grant Date, calculated as:

	 	(a)	 	the closing price of a board lot of the Common Shares on The
Toronto Stock Exchange on:

	 	(i)	 	the last trading day preceding the Grant Date,
if the Option is granted before the close of trading on the
Grant Date; or
	 
	 	(ii)	 	the Grant Date, if the Option is granted after
the close of trading on the Grant Date;

		
	 	provided that if the Common Shares did not trade on that trading
day, then the closing price on the last preceding trading day on
which a board lot of the Common Shares traded will be used;

	 	(b)	 	if the Options are to be granted on a pre-determined date in
the future, the weighted average trading price, rounded up to the
nearest cent, of the Common Shares on The Toronto Stock Exchange for
the five trading days preceding the Grant Date; or
	 
	 	(c)	 	such other Exercise Price as may be permitted or required by
The Toronto Stock Exchange.

4.4   Time of Exercise

	 	(a)	 	An Option may be exercised by an Optionholder from time to
time on and after such dates and in such numbers or percentages as
the Board determines on the Grant Date.
	 
	 	(b)	 	Notwithstanding section 4.4(a):

	 	(i)	 	the Board may determine on the Grant Date that
a particular Option will be exercisable in whole or in part
for reasons other than the passage of time (including the
achievement by the Corporation or the Optionholder of
specified performance or other criteria);
	 
	 	(ii)	 	the Board may determine after the Grant Date
that a particular Option will be exercisable in whole or in
part on earlier dates for any reason; and
	 
	 	(iii)	 	an Option will be exercisable on an earlier
date pursuant to section 4.11, with respect to a Change of
Control.

4.5   Expiry Date

		
	 	The Expiry Date of an Option will be ten years after the Grant Date,
subject to:

	 	(a)	 	the right of the Board to determine at the time of grant that
a particular Option will have a shorter term; and

 

 

- 10 -

	 	(b)	 	the provisions of section 4.7 relating to early expiry.

4.6   Grants of SARs

	 	(a)	 	SARs may be granted to Eligible Persons at the same time as
the grant of an Option.
	 
	 	(b)	 	SARs, if granted, will have the following terms (or such
other terms as are consistent with the related Options):

	 	(i)	 	one SAR will be granted for every two Optioned
Shares;
	 
	 	(ii)	 	the reference price for an SAR will be the same
as the Exercise Price of the related Option;
	 
	 	(iii)	 	SARs may be exercised from time to time by an
Optionholder on and after the date on which the related
Options become fully exercisable, as to 100% of the SARs or
any part thereof;
	 
	 	(iv)	 	exercise of SARs will result in a reduction in
the number of Optioned Shares on the basis of one Optioned
Share for each exercised SAR;
	 
	 	(v)	 	exercise of an Option will result in a
reduction in the number of SARs on the basis of one SAR for
each Optioned Share purchased in excess of 50% of the number
of Optioned Shares; and
	 
	 	(vi)	 	the Expiry Date of an SAR will be ten years
after the Grant Date.

	 	(c)	 	An Optionholder who wishes to exercise an SAR may do so by
delivering a completed Notice of Exercise to the Corporation on or
before the Expiry Date of the SAR.
	 
	 	(d)	 	Not later than five business days after receipt by the
Corporation pursuant to section 4.6(c) of the Notice of Exercise,
the Corporation will pay to the Optionholder, for each exercised
SAR, an amount equal to:

	 	(i)	 	the closing price of a board lot of the Common
Shares on The Toronto Stock Exchange on the last trading day
preceding the day of receipt by the Corporation of the Notice
of Exercise (provided that if the Common Shares did not trade
on that day, then the closing price on the last preceding
trading day on which a board lot of the Common Shares traded
will be used); less
	 
	 	(ii)	 	the Exercise Price.

	 	(e)	 	The provisions of this Plan with respect to Options apply to
SARs, where appropriate and with the necessary changes.

4.7   Early Expiry

		
	 	An Option will continue in effect until its Expiry Date or expire before
its Expiry Date, as the case may be, in the following events and manner:

	 	(a)	 	if an Optionholder resigns from his or her employment (other
than in the circumstances described in (c)), or an Optionholder’s
contract as a Consultant terminates at its normal termination date,
then only the portion of the Option that is exercisable at the date
of resignation or termination may be exercised by the Optionholder
and any such exercise 

 

 

- 11 -

	 	 	 	must be during the period ending on the
earlier of (i) 60 days after the date of resignation or termination
and (ii) the Expiry Date, after which period the Option will expire;
	 
	 	(b)	 	if an Optionholder’s employment is terminated by the
Corporation or a Subsidiary without Cause, including a constructive
dismissal, or an Optionholder’s contract as a Consultant is
terminated by the Corporation or a Subsidiary before its normal
termination date without Cause, then only the portion of the Option
that is exercisable at the Date of Termination may be exercised by
the Optionholder, any such exercise must be during the period ending
on the earlier of (i) 60 days after the Date of Termination and (ii)
the Expiry Date, after which period the Option will expire, and the
provisions of section 4.11 will not apply during such period;
	 
	 	(c)	 	if an Optionholder’s employment is terminated by the
Corporation or a Subsidiary for Cause, or an Optionholder’s contract
as a Consultant is terminated by the Corporation or a Subsidiary
before its normal termination date for Cause, including where an
Optionholder resigns from his or her employment or terminates his or
her contract as a Consultant after being requested to do so by the
Corporation or Subsidiary as an alternative to being terminated for
Cause, then the Option will expire on the Date of Termination;
	 
	 	(d)	 	if an Optionholder’s contract as a Consultant is frustrated
before its normal termination date due to permanent disability, then
only the portion of the Option that is exercisable at the date of
frustration may be exercised by the Optionholder and any such
exercise must be during the period ending on the earlier of (i) the
date on which the contract, if not frustrated, would have terminated
by its terms and (ii) the Expiry Date, after which period the Option
will expire;
	 
	 	(e)	 	if an Optionholder’s employment ceases due to permanent
disability, then the Option will continue to become exercisable
pursuant to section 4.4 and will expire on the Expiry Date;
	 
	 	(f)	 	if an Optionholder retires upon attaining the mandatory or
early retirement age established by the Corporation or a Subsidiary
from time to time, then the Option will continue to become
exercisable pursuant to section 4.4 and will expire on the Expiry
Date; and
	 
	 	(g)	 	if an Optionholder dies, then only the portion of the Option
that is exercisable at the date of death of the Optionholder may be
exercised, any such exercise must be effected by a legal
representative of the Optionholder’s estate or by a person who
acquires the Optionholder’s rights under the Option by bequest or
inheritance and any such exercise must be during the period ending
on the earlier of (i) six months after the death of the Optionholder
and (ii) the Expiry Date, after which period the Option will expire;

		
	 	subject to the right of the Board to:

	 	(a)	 	on the Grant Date, set shorter or longer periods for exercise
(not later than the Expiry Date) with respect to a particular
Optionholder; and
	 
	 	(b)	 	after the Grant Date, set shorter (with the consent of the
Optionholder) or longer periods for exercise (not later than the
Expiry Date) with respect to a particular Optionholder or group of
Optionholders.

4.8   Limited Assignment

	 	(a)	 	An Option may not be assigned, except to:

 

 

- 12 -

	 	(i)	 	an Optionholder’s Family Trust, Personal
Holding Corporation or Retirement Trust (or between such
entities or from either of such entities to the
Optionholder); or
	 
	 	(ii)	 	a legal representative of the Optionholder’s
estate or a person who acquires the Optionholder’s rights
under the Option by bequest or inheritance on death of the
Optionholder.

	 	(b)	 	If a Personal Holding Corporation to which an Option has been
granted or assigned is no longer controlled by the related Eligible
Person, or the shares of the Personal Holding Corporation are no
longer beneficially owned by the Eligible Person and persons who
were the spouse, minor children or minor grandchildren of the
Eligible Person at the time of the grant or assignment, then the
Option cannot be exercised until it is assigned by the Personal
Holding Corporation to that Eligible Person or another assignee
permitted by section 4.8(a).

4.9   No Rights as Shareholder or to Remain an Eligible Person; Status of Consultants

	 	(a)	 	An Optionholder will only have rights as a shareholder of the
Corporation with respect to those of the Optioned Shares that the
Optionholder has acquired through exercise of an Option in
accordance with its terms.
	 
	 	(b)	 	Nothing in this Plan or in any Option Agreement will confer
on any Optionholder any right to remain as an officer, employee or
Consultant of the Corporation or any Subsidiary.
	 
	 	(c)	 	Nothing in this Plan or in any Option Agreement entered into
with a Consultant will constitute the Consultant as an employee of
the Corporation or any Subsidiary.

4.10   Adjustments

		
	 	Adjustments will be made to (i) the Exercise Price of an Option, (ii) the
number of Common Shares delivered to an Optionholder upon exercise of an
Option and/or (iii) the maximum number of Common Shares that, pursuant to
section 3.2(a), may at any time be reserved for issuance pursuant to
Options granted under the Plan in the following events and manner,
subject to any required regulatory approvals and the right of the Board
to make such other or additional adjustments, or to make no adjustments
at all, as the Board considers to be appropriate in the circumstances:

	 	(a)	 	upon (i) a subdivision of the Common Shares into a greater
number of Common Shares, (ii) a consolidation of the Common Shares
into a lesser number of Common Shares or (iii) the issue of a stock
dividend to holders of the Common Shares (excluding a stock dividend
paid in lieu of a cash dividend in the ordinary course), the
Exercise Price will be
adjusted accordingly and the Corporation will deliver upon
exercise of an Option, in addition to or in lieu of the number of
Optioned Shares in respect of which the right to purchase is being
exercised, such greater or lesser number of Common Shares as
result from the subdivision, consolidation or stock dividend;
	 
	 	(b)	 	upon (i) a capital reorganization, reclassification or change
of the Common Shares, (ii) a consolidation, amalgamation,
arrangement or other form of business combination of the Corporation
with another person or corporation or (iii) a sale, lease or
exchange of all or substantially all of the property of the
Corporation, the Exercise Price will be adjusted accordingly and the
Corporation will deliver upon exercise of an Option, in lieu of the
Optioned Shares in respect of which the right to purchase is being
exercised, the kind and amount of shares or other securities or
property as results from such event;

 

 

- 13 -

	 	(c)	 	upon the distribution by the Corporation to holders of the
Common Shares of (i) shares of any class (whether of the Corporation
or another corporation) other than Common Shares, (ii) rights,
options or warrants, (iii) evidences of indebtedness or (iv) cash
(excluding a cash dividend paid in the ordinary course), securities
or other property or assets, the Exercise Price will be adjusted
accordingly but no adjustment will be made to the number of Optioned
Shares to be delivered upon exercise of an Option;
	 
	 	(d)	 	upon the occurrence of an event described in (a) or (b)
above, the maximum number of Common Shares that, pursuant to section
3.2(a), may at any time be reserved for issuance pursuant to Options
granted under the Plan will be adjusted accordingly;
	 
	 	(e)	 	adjustments to the Exercise Price of an Option will be
rounded up to the nearest one cent and adjustments to the number of
Common Shares delivered to an Optionholder upon exercise of an
Option and the maximum number of Common Shares that, pursuant to
section 3.2(a), may at any time be reserved for issuance pursuant to
Options granted under the Plan will be rounded down to the nearest
whole Common Share; and
	 
	 	(f)	 	an adjustment will take effect at the time of the event
giving rise to the adjustment, and the adjustments provided for in
this section are cumulative;

4.11   Change of Control

	 	(a)	 	On the occurrence of a Change of Control, an Optionholder may
exercise the Option, notwithstanding section 4.4(a), as to any of
the Optioned Shares in respect of which the Option has not been
exercised.
	 
	 	(b)	 	If a “take-over bid” (within the meaning of applicable
securities legislation) made by any person for the voting securities
of the Corporation would, if successful, result in a Change of
Control, then:

	 	(i)	 	the Corporation will promptly notify the
Optionholder of the take-over bid and the rights of the
Optionholder under this section;
	 
	 	(ii)	 	the Optionholder may exercise the Option,
notwithstanding section 4.4(a), as to any of the Optioned
Shares in respect of which the Option has not been exercised,
during the period ending on the earlier of the expiration of
the take-over bid and the Expiry Date;
	 
	 	(iii)	 	exercise of the Option shall only be for the
purpose of depositing the Optioned Shares pursuant to the
take-over bid;
	 
	 	(iv)	 	the Optionholder may elect cashless exercise
pursuant to section 5.3, which will apply with the necessary
changes; and
	 
	 	(v)	 	if the Optioned Shares are not deposited by the
Optionholder pursuant to the take-over bid or, if deposited,
are subsequently withdrawn by the Optionholder or not all
taken up and paid for by the offeror, then the Optionholder
shall promptly return the Optioned Shares (or the portion
that are not taken up and paid for) to the Corporation for
cancellation, the Option respecting such Optioned Shares
shall be deemed not to have been exercised, the Optioned
Shares shall be deemed not to have been issued and the
Corporation shall refund to the Optionholder the aggregate
Exercise Price for the Optioned Shares (unless the
Optionholder elected cashless exercise).

 

 

- 14 -

4.12   Former Canadian Pacific Limited Optionholders

		
	 	Options under this Plan include options and accompanying share
appreciation rights issued under the key employee stock option plan of
Canadian Pacific Limited which were replaced with Options and
accompanying SARs of the Corporation pursuant to the arrangement under
section 192 of the Canada Business Corporations Act described in the
management proxy circular of Canadian Pacific Limited dated August 3,
2001. Such Options and SARs are subject to the provisions of this Plan,
with the necessary changes, provided that none of the provisions of this
Plan will operate so as to adversely affect the rights of the
Optionholder as set forth in the key employee stock option plan of
Canadian Pacific Limited. If the Optionholder is not an officer or
employee of or consultant to the Corporation, then the early expiry
provisions of the replacement Options and SARs will become effective when
the Optionholder’s employment or engagement with another former
subsidiary of Canadian Pacific Limited terminates.

ARTICLE 5 -

EXERCISE OF OPTIONS

5.1   Manner of Exercise

		
	 	An Optionholder who wishes to exercise an Option may do so by delivering
the following to the Corporation on or before the Expiry Date of the
Option:

	 	(a)	 	a completed Notice of Exercise; and
	 
	 	(b)	 	subject to section 5.3, a cheque (which need not be a
certified cheque) or bank draft payable to the Corporation for the
aggregate Exercise Price of the Optioned Shares being acquired.

		
	 	If the Optionholder is deceased or mentally disabled, the Option may be
exercised by a legal representative of the Optionholder or the
Optionholder’s estate or by a person who acquires the Optionholder’s
rights under the Option by bequest or inheritance and who, in addition to
delivering to the Corporation the Notice of Exercise and (if applicable)
cheque or bank draft described above, must also deliver to the
Corporation evidence of their status.

5.2   Delivery of Share Certificate

		
	 	Not later than five business days after receipt by the Corporation
pursuant to section 5.1 of the Notice of Exercise and payment in full for
the Optioned Shares being acquired, the Corporation will direct its
registrar and transfer agent to issue a certificate in the name of the
Optionholder or an intermediary on behalf of the Optionholder (or, if
deceased, his or her legal representative or
beneficiary) for the number of Optioned Shares purchased by the
Optionholder (or his or her legal representative or beneficiary), which
will be issued as fully paid and non-assessable Common Shares.

5.3   Cashless Exercise

		
	 	An Optionholder may elect “cashless” exercise in a Notice of Exercise if
the Common Shares issuable on exercise of an Option are to be immediately
sold. In such case, the Optionholder will not be required to deliver to
the Corporation the cheque or bank draft referred to in section 5.1.
Instead, the following procedure will be followed, as detailed in a
Cashless Exercise Instruction Form to be provided by the Corporation and
completed by the Optionholder:

	 	(a)	 	the Optionholder will instruct a broker selected by the
Optionholder to sell through The Toronto Stock Exchange the Common
Shares issuable on exercise of an Option, as soon

 

 

- 15 -

	 	 	 	as possible and at
the then applicable bid price for the Common Shares of the
Corporation;
	 
	 	(b)	 	on the settlement date for the trade, the Corporation will
direct its registrar and transfer agent to issue a certificate in
the name of the broker (or as the broker may otherwise direct) for
the number of Common Shares issued on exercise of the Option,
against payment by the broker to the Corporation of the Exercise
Price for such Common Shares; and
	 
	 	(c)	 	the broker will deliver to the Optionholder the remaining
proceeds of sale, net of brokerage commission.

5.4   Withholding

		
	 	If the Corporation determines that the satisfaction of taxes, including
withholding tax, or other withholding liabilities is necessary or
desirable in respect of the exercise of any Option, the exercise of the
Option is not effective unless such taxes have been paid or withholdings
made to the satisfaction of the Corporation. The Corporation may require
an Optionholder to pay to the Corporation, in addition to the Exercise
Price for the Optioned Shares, any amount as the Corporation is obliged
to remit to the relevant taxing authority in respect of the exercise of
the Option. Any such additional payment is due no later than the date on
which any amount with respect to the Option exercised is required to be
included in the gross income of the Optionholder for tax purposes.

ARTICLE 6 -

RESTRICTED SHARES

6.1   Allocation of Restricted Shares

		
	 	Restricted Shares may be allocated to Eligible Persons from time to time
(prior to the Date of Termination in respect of a particular Eligible
Person) and subject to the early termination provisions contained in
section 6.2 below, Restricted Shares allocated to an Eligible Person
shall be issued to such Eligible Person as Common Shares within five
business days of the end of the Restricted Period, which may not be more
than ten years after the Grant Date;

6.2   Early Expiry

		
	 	The vesting of rights to acquire allocated Restricted Shares will
continue in effect until the earlier of (i) the issuance of Common Shares
to the Eligible Person at the end of the established
Restricted Period or (ii) the early expiry of the Restricted Period, as
the case may be, in the following events and manner:

	 	(a)	 	if a Grantee resigns from his or her employment or a
Grantee’s contract as a Consultant terminates prior to its normal
termination date, then the Grantee forfeits his right to be issued
Common Shares at the end of the Restricted Period;
	 
	 	(b)	 	if a Grantee’s employment is terminated by the Corporation or
a Subsidiary, whether with or without Cause, and including a
constructive dismissal, or a Grantee’s contract as a Consultant is
terminated by the Corporation or a Subsidiary before its normal
termination date, then the Grantee forfeits his right to be issued
Common Shares at the end of the Restricted Period;
	 
	 	(c)	 	if a Grantee’s employment ceases due to permanent disability,
then his vesting of rights to Restricted Shares will continue
without modification;

 

 

- 16 -

	 	(d)	 	if a Grantee retires upon attaining the mandatory or early
retirement age established by the Corporation or a Subsidiary from
time to time, then his of rights to Restricted Shares will continue
in effect without modification;
	 
	 	(e)	 	if a Grantee dies, all rights to acquire Restricted Shares
shall terminate and be of no further force or effect;

		
	 	Subject to the right of the Board to:

	 	(f)	 	on the Grant Date set shorter or longer periods (not later
than the Restricted Period) with respect to a particular Grantee;
and
	 
	 	(g)	 	after the Grant Date, set shorter (with the consent of the
Grantee) or longer periods (not longer than the Restricted Period)
with respect to a particular Grantee or group of Grantees.

6.3   Assignment and Transfer

		
	 	Restricted Shares may not be assigned or transferred until the expiry of
the Restricted Period, except to such persons as are contemplated with
respect to Options in section 4.8 hereof.

6.4   No rights as Shareholder or to remain an Eligible Person

	 	(a)	 	No rights as a shareholder of the Corporation shall accrue to
any Grantee as a result of his allocation of Restricted Shares until
the end of the Restricted Period.
	 
	 	(b)	 	The grant of Restricted Shares to a Grantee does not confer
on such Grantee any right to remain as an officer, employee or
Consultant of the Corporation or any Subsidiary and the grant of
such Restricted Shares does not constitute a Consultant as an
employee of the Corporation or any Subsidiary.

6.5   Adjustments

		
	 	The provisions of section 4.10 hereof with respect to adjustments to the
Exercise Price of an Option, the number of Common Shares delivered to
Grantees upon exercise of an Option and the maximum number of Common
Shares reserved for issuance under this Plan pursuant to adjustments in
the Corporation’s share capital shall apply, mutatis mutandis, to the
number of Restricted Shares which may be issued under this Plan.

6.6   Change of Control

	 	(a)	 	On the occurrence of a Change of Control, a Grantee may
acquire any Restricted Shares to which the Grantee was allocated
notwithstanding section 6.4(a).
	 
	 	(b)	 	If a “take-over bid” (within the meaning of applicable
securities legislation) made by any person for the voting securities
of the Corporation would, if successful, result in a Change of
Control, then:

	 	(i)	 	the Corporation will promptly notify the
Grantee of the take-over bid and the rights of the Grantee
under this section;
	 
	 	(ii)	 	the Grantee may acquire any Restricted Shares
to which the Grantee was allocated, notwithstanding section
6.4(a) during the period ending on the earlier of the
expiration of the take-over bid and the Restricted Period;

 

 

- 17 -

	 	(iii)	 	acquisition of any Restricted Shares shall
only be for the purpose of depositing the Restricted Shares
pursuant to the take-over bid; and
	 
	 	(iv)	 	if the Restricted Shares are not deposited by
the Grantee pursuant to the take-over bid or, if deposited,
are subsequently withdrawn by the Grantee or not all taken up
and paid for by the offeror, then the Grantee shall promptly
return the Restricted Shares (or the portion that are not
taken up and paid for) to the Corporation for cancellation,
the allocation respecting such Restricted Shares shall be
deemed not to have been vested, and the Restricted Shares
shall be deemed not to have been issued.

6.7   General

		
	 	The provisions of this Plan with respect to Options shall apply to
Restricted Shares, where appropriate and with the necessary changes.

 

 

SCHEDULE A — FORM OF OPTION/Restricted Share AGREEMENT

CP Ships Limited

EMPLOYEE STOCK OPTION PLAN

OPTION/RESTRICTED SHARE AGREEMENT

     This Agreement is entered into between CP Ships Limited (the
“Corporation”) and the Grantee named below pursuant to the CP Ships Limited
Employee Stock Option Plan (the “Plan”), a copy of which is attached hereto,
and confirms that:

	1.	 	on •, 200• (the “Grant Date”);
	 
	2.	 	• (the “Grantee”);
	 
	(i)	 	was granted an option (the “Option”) to purchase • Common Shares (the
“Optioned Shares”) of the Corporation, exercisable from time to time as
to:

	 	(a)	 	•% on and after the • anniversary of the Grant Date;
	 
	 	(b)	 	•% on and after the • anniversary of the Grant Date; and
	 
	 	(c)	 	the remaining •% on and after the • anniversary of the Grant
Date;

	(ii)	 	at a price (the “Exercise Price”) of Cdn. $• per Common Share; and
	 
	(iii)	 	for a term expiring at 5:00 p.m., London time, on •, 201• (the “Expiry
Date”);

     on the terms and subject to the conditions set out in the Plan.

	3.	 	The Grantee was allocated • Restricted Shares of the Corporation to be

issued in the following numbers on the dates set out below:

	 	 	 	 	 
	Number of Restricted Shares	 	Date of Issue
	
	 	

	•
	 	 	•	 
	•
	 	 	•	 

     [The Optionholder was also granted on the Grant Date • share appreciation
rights (the “SARs”) of the Corporation, exercisable from time to time on and
after the third anniversary of the Grant Date as to 100% of the SARs or any
part thereof, on the terms and subject to the conditions set out in the Plan.]

     By signing this agreement, the Grantee acknowledges that he or she has
read and understands the terms of the Plan and accepts the securities referred
to above in accordance with the terms of the Plan.

     IN WITNESS WHEREOF the Corporation and the Grantee have executed this
Agreement as of •, 200•.

	 	CP Ships Limited

	 	By:

 

 

	 	 	 
	 	 	

	 
	 
	 	By:	

	 
	 
	 	

Name of Grantee
	 
	 
	 	

Signature of Grantee

 

 

SCHEDULE B — FORM OF NOTICE OF EXERCISE

CP Ships Limited

EMPLOYEE STOCK OPTION PLAN

NOTICE OF EXERCISE

	TO:  	 	CP Ships Limited

62-65 Trafalger Square

London, England WC2N 5DY

Attention:      •

     Reference is made to the Option Agreement made as of •, 200•, between CP
Ships Limited (the “Corporation”) and the Optionholder named below. The
Optionholder hereby exercises the Option to purchase Common Shares of the
Corporation as follows:

	 	 	 
	Number of Optioned Shares (or SARs) for which Option being exercised:	 	

	 
	Exercise Price per Common Share:	$	

	 
	Total Exercise Price:	$	

	 
	Check here for exercise of the Option if a cheque (which need not be a
certified cheque) or bank draft is tendered with this Notice of Exercise:	 	
	 
	Check here for cashless exercise of the Option (in which case the shares will
be sold and no cheque or bank draft needs to be tendered with this Notice of
Exercise):1	 	
	 
	Check here for exercise of SARs:	 	
	 
	Name of Optionholder as it is to appear on share certificate (except for
cashless exercise or exercise of SARs):	 	

	 
	Address of Optionholder as it is to appear on the register of Common Shares of
the Corporation and to which a certificate representing the Common Shares being
purchased is to be delivered or, in the case of cashless exercise or exercise
of SARs, to which a cheque is to be delivered:	 	

 

	Dated  • , 200 • .	 	
Name of Optionholder

Signature of Optionholder

	1	 	An optionholder electing cashless exercise will be required to submit a
completed Cashless Exercise Instruction Form at the same time as this Notice of
Exercise. The Form may be obtained from the Corporation’s human resources
department.

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