Document:

Exhibit 4.2

 

 

 

HYDROGENICS
CORPORATION 

RESTRICTED
SHARE UNIT PLAN

 

 

HYDROGENICS
CORPORATION

RESTRICTED
SHARE UNIT PLAN

 

SECTION 1                               INTERPRETATION AND ADMINISTRATIVE PROVISIONS

 

1.1                                Purposes

 

The purposes
of this Plan are to:

 

(a)                                  promote a greater
alignment of interests between the key employees of the Company and its
affiliates and shareholders;

 

(b)                                 assist the Company and
its affiliates to retain individuals with the experience and ability to serve
as key employees; and

 

(c)                                  allow the key
employees of the Company and its affiliates to participate in the long-term
success of the Company.

 

1.2                                Definitions

 

In this Plan,
the terms set out below have the following meanings.

 

“affiliate”,
“associate” and “jointly or in
concert” have the respective meanings set forth in the Securities Act (Ontario), as amended from time to time.

 

“Applicable
Deductions” has the meaning set out in Section 2.4.

 

“Award
Date” means the date the Board awards Restricted Share
Units under this Plan.

 

“Board”
means the Board of Directors of the Company.

 

“Business
Day” means a day other than a Saturday, Sunday or
other day when banks in the City of Toronto, Ontario are not generally open for
business.

 

“Cause”
has the meaning attributed to such term by the Courts of Ontario from time to
time.

 

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

 

(i)                                    any change in the
holding, direct or indirect, of shares of the Company as a result of which a Person
or group of Persons acting jointly or in concert, or a Person who is an associate
or affiliate of any such Person or group, becomes the beneficial owner,
directly or indirectly, of shares and/or other securities in excess of the
number which, directly or following conversion thereof, would entitle the
holders thereof to cast more than fifty percent (50%) of the votes attaching to
all shares of the Company which may be cast to elect directors of the Company;

 

 

(ii)                                 a sale or other
disposition of all or substantially all of the property or assets of the Company
to a Person, other than to a Person that was an affiliate of the Company
immediately prior to the completion of such sale or disposition; and

 

(iii)                              the dissolution or
liquidation of the Company (other than in connection with the distribution of
the assets of the Company to one or more Persons which were affiliates of the
Company immediately prior to the completion of such transfer).

 

“Committee”
means the committee of the Board responsible for recommending to the Board the
compensation of the key employees, which, as at the effective date of the Plan,
is the Human Resources & Corporate Governance Committee.

 

“Company” means
Hydrogenics Corporation.

 

“Dividend Restricted
Share Units” has the meaning set out in Section 3.4.

 

“LTI Bonus
Compensation” means amounts that are awarded to a
Participant under this Plan as part of
the Executive LTI Incentive Plan.

 

“Market
Value” means the closing price of Shares on the
Toronto Stock Exchange on the last trading day on which the Shares were traded
occurring immediately prior to the applicable date, or if the Shares are not
then traded on the Toronto Stock Exchange means the fair market value per Share
as determined by the Board in its discretion.

 

“Participant”
means any key employee of a Participating Entity who the Board, in its
discretion, determines may participate in this Plan.

 

“Participating
Entity” means the Company and any affiliate of the Company
which is designated by the Board from time to time.

 

“Person” means any individual, sole proprietorship,
partnership, unincorporated association, unincorporated syndicate,
unincorporated organization, trust, body corporate, and a natural person in
such person’s capacity as trustee, executor, administrator or other legal
representative.

 

“Plan”
means this Hydrogenics Corporation Restricted Share Unit Plan.

 

“Restricted
Share Unit” means a right granted to a Participant to
receive the cash equivalent of a Share on the terms set out in the Plan.

 

“Retirement”
means resignation in circumstances which the Board, in its discretion, determines
is Retirement and on such terms as the Board may specify.

 

“RSU
Account” means the notional account of Restricted
Share Units and Dividend 

 

2

 

Restricted
Share Units maintained for each Participant.

 

“RSU  Agreement” means a signed, written
agreement between a Participant and the Company, substantially in the form
attached as Schedule “A” hereto, subject to any amendments or additions thereto
as may, in the discretion of the Board, be necessary or advisable, evidencing
the terms and conditions on which a Restricted Share Unit has been granted under
this Plan.

 

“Service
Year” has the meaning set out in Section 3.2.

 

“Share”
means a common share of the Company.

 

“Tax Act”
means the Income Tax Act (Canada), R.S.C. (5th Supp.), c. 1, including the regulations
promulgated thereunder, as amended from time to time.

 

“Termination
Date” means the Participant’s last day of active
employment and does not include any period of statutory, contractual or
reasonable notice or any period of salary continuance or deemed employment.

 

“Vested”
means that a Restricted Share Unit has become redeemable and “Vest” has a corresponding meaning.

 

“Vesting
Date” has the meaning set out in Section 3.5.

 

1.3                                Interpretation

 

This Plan is
to be interpreted as follows:

 

(a)                                  The use of headings
is for ease of reference only and does not affect construction or
interpretation of this Plan.

 

(b)                                 Where the context so
requires, words importing the singular number include the plural and vice
versa, and words importing the masculine gender include the feminine and neuter
genders.

 

(c)                                  References to
Sections and Subsections are references to sections and subsections in this
Plan, unless otherwise specified.

 

(d)                                 All amounts paid or
values to be determined under the Plan shall be in Canadian dollars.

 

(e)                                  Whenever the Board is
to exercise discretion in the administration of the terms and conditions of
this Plan or any Restricted Share Unit, the term “discretion” means the “sole
and absolute discretion” of the Board.

 

3

 

(f)                                    Where the words “including”
or “includes” appear in this Plan, they mean “including (or includes) without
limitation”.

 

SECTION 2                               ADMINISTRATION

 

2.1                                Administration

 

This Plan will be
administered by the Board and the Board has complete authority, in its
discretion, to interpret the provisions of this Plan, provided
that the Plan shall always be interpreted in a manner such that the Plan and
any Restricted Share Units granted hereunder comply with the exception to the
definition of “salary deferral arrangement” contained in paragraph (k) of
subsection 248(1) of the Tax Act or any successor provision thereto.  In administering and interpreting the Plan,
the Board may adopt, amend and rescind administrative guidelines and other rules and
regulations relating to this Plan and make all other determinations and take
all other actions necessary or advisable for the implementation and
administration of this Plan which the Board determines, in its discretion, are
necessary or advisable.  The Board’s
determinations and actions within its authority under this Plan are final,
conclusive and binding on the Company, its affiliates and all other Persons.

 

2.2                                Delegation
to Committee

 

To the extent
permitted by applicable law, the Board may, from time to time, delegate to the
Committee all or any of the powers conferred on the Board under the Plan. In
such event, references to the Board mean and include the Committee and the
Committee will exercise the powers delegated to it by the Board in the manner
and on the terms authorized by the Board. Any decisions made or actions taken
by the Committee arising out of or in connection with the administration or
interpretation of this Plan within its authority under this Plan, are final,
conclusive and binding on the Participating Entities and all other Persons.

 

2.3                                Eligibility

 

(a)                                  Participation in the
Plan is entirely voluntary.

 

(b)                                 All employees of
Participating Entities are eligible to participate in this Plan.

 

(c)                                  Eligibility to
participate in the Plan does not confer upon any Person any right to be granted
Restricted Share Units pursuant to this Plan. 
In addition, no Participant has any claim or right to be granted a
Restricted Share Unit (including a Restricted Share Unit granted in
substitution for any Restricted Share Unit that has expired pursuant to the
terms of this Plan).

 

4

 

2.4                                Taxes and
Other Source Deductions

 

The Company is
authorized to deduct from any amount payable or credited hereunder such taxes
and other amounts as it may be required by law to deduct or withhold, in such
manner as it determines (the “Applicable Deductions”).

 

2.5                                Information

 

Each Participant
shall provide the Company with all information the Company requires from that
Participant in order to administer this Plan.

 

2.6                                Indemnification

 

Each member of
the Board and Committee is indemnified and held harmless by the Company against
any cost or expense arising out of any act or omission to act in connection
with this Plan to the extent permitted by applicable law.  This indemnification is in addition to any
rights of indemnification a Board or Committee member may have as director or
otherwise.

 

2.7                                Governing
Law

 

This Plan shall
be governed by and construed and interpreted in accordance with the laws of the
Province of Ontario and the federal laws of Canada applicable therein.

 

2.8                                Restricted
Share Unit Agreements

 

All grants of
Restricted Share Units under this Plan will be evidenced by RSU
Agreements.  Any one of the Chief
Executive Officer or Chief Financial Officer of the Company is authorized and
empowered to execute on behalf of the Company and deliver an RSU Agreement to a
Participant.

 

SECTION 3                                           GRANTS OF RESTRICTED SHARE UNITS

 

3.1                                Grants of Restricted
Share Units

 

The Board, in
its discretion, will determine the amount of LTI Bonus Compensation, if any, payable
to a Participant under this Plan taking into account such milestones and
criteria, if any, as the Committee determines in its discretion, at or prior to
the Award Date.  LTI Bonus Compensation
will be provided to the Participant in the form of Restricted Share Units.  The Restricted Share Units will be credited
to the Participant’s RSU Account on the Award Date, and the Participant shall execute
an RSU Agreement.

 

3.2                                Service Year

 

For greater
certainty, notwithstanding any other provision herein, unless otherwise
provided in the applicable RSU Award Agreement, the granting of Units to any 

 

5

 

Participant
under the Plan in any calendar year shall be awarded solely in respect of
performance of such Participant in the same calendar year as that containing
the Award Date (the “Service Year”).  In all cases, the Units shall be in addition
to, and not in substitution for or in lieu of, ordinary salary and wages
received by such Participant in respect of his or her services to his or her
employer.

 

3.3                                Number of Restricted
Share Units Granted

 

The number of Restricted
Share Units (including any fractional Restricted Share Units) that will be
credited to a Participant’s RSU Account is determined by dividing the amount of
the LTI Bonus Compensation by the Market Value of a Share on the Award Date.

 

3.4                               Reinvestment
of Distributions

 

When dividends
or distributions are paid on Shares, additional Restricted Share Units (“Dividend Restricted Share Units”) will be credited to the
Participant’s RSU Account as at the payment date of the dividends or distributions
in an amount determined by dividing the amount of the dividends or
distributions payable on the number of Shares equal to the number of Restricted
Share Units allocated to the Participant’s RSU Account by the Market Value of a
Share on the payment date of the dividends or distributions.

 

3.5                                Vesting

 

The Restricted
Share Units shall Vest and be redeemed on such date no later than December 31
of the third calendar year following the Service Year in respect of which they
were granted, as is determined by the Board in its discretion and is set forth
in the Restricted Share Unit Agreement and Dividend Restricted Share Units Vest
at the same time as the Restricted Share Units in respect of which they were
credited (the “Vesting Date”).

 

3.6                                Redemption

 

Subject to Section 3.7,
all Vested Restricted Share Units (which for the purposes of this Section 3.6
includes Vested Dividend Restricted Share Units and Vested fractional
Restricted Share Units) credited to the Participant’s RSU Account shall be
redeemed by the Company as at and within 30 days following the Vesting Date in
respect of such Restricted Share Units. 
Vested Restricted Share Units will be redeemed by the payment to the
Participant of an amount equal to the number of Vested Restricted Share Units
and Dividend Restricted Share Units credited to the Participant’s RSU Account multiplied
by the Market Value at as the Vesting Date.

 

6

 

3.7                                Final
Deadline for Redemption

 

Notwithstanding
any other provision of the Plan, all amounts payable to, or in respect of, a
Participant in respect of a Restricted Share Unit shall be paid within three
years following the end of the Service Year in respect of which the Restricted
Share Units was granted.

 

3.8                                Effect of
Redemption

 

A Participant
shall have no further rights, title or interest with respect to any Restricted
Share Unit that has been redeemed.

 

SECTION 4                               TERMINATION OF EMPLOYMENT

 

4.1                                Resignation

 

If a
Participant resigns from employment with a Participating Entity, the
Participant shall forfeit all rights, title and interest in the Participant’s Restricted
Share Units which are not Vested on the date the notice of resignation is
delivered to the Company.

 

4.2                                Termination
for Cause

 

If a
Participant’s employment is terminated by a Participating Entity for Cause the
Participant shall forfeit all rights, title and interest in all the Restricted
Share Units, whether Vested or not Vested at the Termination Date.

 

4.3                               Retirement,
Death, Disability, Termination without Cause and Disposition of a Participating
Entity

 

If a
Participant’s employment ceases because of death, disability or Retirement of
the Participant, the Participant’s employment is terminated without Cause, the
Participant resigns because he or she has been constructively dismissed, or the
Person which employs the Participant ceases to be a Participating Entity, then
a pro rata portion of the Restricted Share Units which are not Vested on the
Termination Date will Vest immediately prior to the Termination Date based on
the number of days from the Award Date to the Termination Date divided by the
number of days, if any, from the Award Date to the end of the year in respect
of which the Restricted Share Units were granted plus 1095 and the Participant’s
Vested Restricted Share Units will be redeemed pursuant to Section 3.6 as
if the Vesting Date were immediately prior to the Termination Date.

 

4.4                               Change of
Control

 

If a
Participant’s employment is terminated by a Participating Entity or the
Participant resigns because of constructive termination within 6 months
following a Change of Control, the Vesting Date in respect of all of the
Participant’s Restricted Share Units for 

 

7

 

which the
Vesting Date would otherwise be on or after such cessation of employment, shall
be deemed to be immediately prior to the Termination Date and such Vested
Restricted Share Units shall be redeemed pursuant to Section 3.6.

 

SECTION 5                               ADJUSTMENTS

 

5.1                                General

 

The provisions
contained in this Plan and any RSU Agreement and the existence of any
Restricted Share Units shall not affect in any way the right of the Company or
its shareholders or affiliates to take any action, including any change in the Company’s
capital structure or its business, or any acquisition, disposition,
amalgamation, combination, merger or consolidation, or the creation or issuance
of any bonds, debentures, shares or other securities of the Company or of an
affiliate  thereof or the determination
of the rights and conditions attaching thereto, or the dissolution or
liquidation of the Company or of any of its affiliates or any sale or transfer
of all or any part of their respective assets or businesses, whether or not any
such corporate action or proceeding would have an adverse effect on this Plan
or any Restricted Share Units granted hereunder.

 

5.2                                Reorganization
of Company’s Capital

 

If the Company
effects, a subdivision or consolidation of Shares or any similar capital
reorganization or a payment of a stock dividend (other than a stock dividend
that is in lieu of an ordinary cash dividend), or if any other change is made
in the capitalization of the Company that, in the opinion of the Board, would
warrant the amendment or replacement of any existing Restricted Share Units in
order to preserve proportionately the rights and obligations of the
Participants, the Board will authorize such steps to be taken as may be
equitable and appropriate to that end.

 

5.3                                Other Events
Affecting the Company

 

In the event
of an amalgamation, combination, or other reorganization involving the Company that,
in the opinion of the Board, warrants the amendment or replacement of any
existing Restricted Share Units in order to preserve proportionately the rights
and obligations of the Participants, the Board will authorize such steps to be
taken as may be equitable and appropriate to that end.

 

5.4                                Immediate Redemption
of Awards

 

Where the Board
determines that the steps provided in sections 5.2 and 5.3 would not
preserve proportionately the rights and obligations of the Participants in the
circumstances or the Board otherwise determines that it is appropriate, the Board
may permit the Vesting and redemption, effective no later than the Business Day
immediately prior to the date on which the event referenced in sections 5.2
and 5.3, as 

 

8

 

applicable, is
consummated, of any outstanding Restricted Share Units that are not then
otherwise Vested.

 

5.5                                Change of
Control

 

In the event
of a Change of Control, the Board may accelerate the Vesting Date of Restricted
Share Units granted under this Plan to the Business Day immediately following
the date on which such Change of Control is consummated provided that the Board
accelerates the Vesting of the Restricted Share Units prior to the date on
which the Change of Control is consummated and such Vested Restricted Share
Units shall be redeemed pursuant to Section 3.6.

 

5.6                                Fractional Restricted Share Units

 

Fractional Restricted Share Units are permitted under this Plan.

 

5.7                                Participant’s
Entitlement

 

Except as
otherwise provided in this Plan, Restricted Share Units previously granted
under this Plan are not affected by any change in the relationship between or
ownership of the Company and an affiliate.

 

5.8                                Rights of
Participant

 

The granting
of any Restricted Share Unit is not to be construed as giving a Participant a
right to remain in the employ of the Company or a Participating Entity.  No Participant has any rights as a
shareholder of the Company in respect of Restricted Share Units.

 

5.9                                Amendment or
Discontinuance

 

The Board may
amend, suspend or terminate the Plan, or any portion thereof, at any time,
subject to those provisions of applicable law (including the applicable rules,
regulations and policies of any exchange, if any) that require the approval of
shareholders or any governmental or regulatory body.

 

Except as
expressly set forth in the Plan, no action of the Board may adversely alter or
impair the rights of a Participant under any Restricted Share Units previously
granted to the Participant without the consent of the affected Participant.

 

5.10                         Not a Salary
Deferral Arrangement

 

Any action
taken pursuant to Sections 5.2, 5.3, or 5.4 shall be such that the Plan and any
Restricted Share Units granted hereunder comply with the exception to the
definition of “salary deferral arrangement” contained in paragraph (k) of
subsection 248(1) of the Tax Act or any successor provision thereto.

 

9

 

5.11                         Severability

 

If any
provision of this Plan or any RSU Agreement is determined to be illegal or
unenforceable by any court of law in any jurisdiction, the remaining provisions
are severable and enforceable in accordance with their terms, and all
provisions will remain enforceable in any other jurisdiction.

 

5.12                         General Restrictions and Assignment

 

(a)                                  Except as required by law, the rights of a
Participant under this Plan are not capable of being anticipated, assigned,
transferred, alienated, sold, encumbered, pledged, mortgaged or charged and are
not capable of being subject to attachment or legal process for the payment of
any debts or obligations of the Participant.

 

(b)                                 Rights and obligations under this Plan may be
assigned by the Company to a successor in the business of the Company, any
corporation resulting from any amalgamation, reorganization, combination,
merger or arrangement of the Company, or any corporation acquiring all or substantially
all of the assets or business of the Company.

 

5.13                         Market Fluctuations

 

(a)                                  No amount will be paid to, or in respect of, a
Participant under this Plan to compensate for a downward fluctuation in the
price of the Shares, nor will any other form of benefit be conferred upon, or
in respect of, a Participant for such purpose.

 

(b)                                 The Company makes no representations or warranties to
Participants with respect to this Plan or the Restricted Share Units
whatsoever.  Participants are expressly
advised that the value of any Restricted Share Units will fluctuate as the
trading price of the Shares fluctuates.

 

(c)                                  In seeking the benefits of participation in this
Plan, a Participant agrees to exclusively accept all risks associated with a
decline in the market price of the Shares and all other risks associated with
the holding of Restricted Share Units.

 

5.14                         No Shareholder Rights

 

Under no circumstances shall Restricted Share Units be considered Shares or other securities of the
Company, nor shall they entitle any Participant to exercise voting rights or
any other rights attaching to the ownership of Shares or other securities of the Company, nor shall
any Participant (a) be considered the owner of, or (b) be entitled to receive  Shares
by virtue of the award of Restricted Share Units.

 

10

 

5.15                         Unfunded and Unsecured Plan

 

This Plan
shall be unfunded and the Company will not secure its obligations under this
Plan.  To the extent any Participant or
his or her estate holds any rights by virtue of a grant of Restricted Share
Units under this Plan, such rights shall be no greater than the rights of an
unsecured creditor of the Company.

 

5.16                         Ownership
Requirements

 

The Restricted
Share Units and Dividend Restricted Share Units credited to the Participant’s RSU
Account are included in assessing a Participant’s ownership requirements, if
any, in the Participating Entities.

 

5.17                         Non-Exclusivity

 

Nothing
contained in this Plan prevents the Board from adopting other or additional
compensation arrangements for the benefit of any Participant, subject to any
required regulatory or shareholder approval.

 

5.18                         Other
Employee Benefits

 

The amount of
any compensation deemed to be received by a Participant as a result of the redemption
of Restricted Share Units or Dividend
Restricted Share Units will not constitute compensation with respect to which
any other employee benefits of that Participant are determined including,
without limitation, benefits under any bonus, pension, profit-sharing,
insurance or salary continuation plan, except as otherwise specifically
determined by the Board in writing.

 

5.19                         Tax
Consequences

 

It is the
responsibility of the Participant to complete and file any tax returns and pay
all taxes that may be required under Canadian and other tax laws within the
periods specified in those laws as a result of the Participant’s participation
in the Plan.  No Participating Entity
shall be held responsible for any tax consequences to a Participant as a result
of the Participant’s participation in the Plan.

 

5.20                         Effective
Date

 

This Plan will
become effective June 22, 2009.

 

11

 

SCHEDULE A

 

HYDROGENICS
CORPORATION

RESTRICTED SHARE UNIT PLAN

 

RSU
AGREEMENT

 

·

 

(the “Participant”)

 

Pursuant to the Hydrogenics
Corporation Restricted Share Unit Plan (the “Plan”) established [date], a copy of which is attached to this RSU Agreement
and in consideration of services provided to the Company by the Participant, the
Company hereby grants to the Participant ·
Restricted Share Units which Vest in accordance with the terms of the Plan on [date].

 

All capitalized
terms not defined in this agreement have the meaning set out in the Plan.

 

The Company and
the Participant understand and agree that the granting and exercise of these
Restricted Share Units are subject to the terms and conditions of the Plan, all
of which are incorporated into and form a part of this agreement.

 

DATED                                             ,
              .

 

	
   

  	
  HYDROGENICS
  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Per

  	
   

  	
  c/s

  

 

I agree to the
terms and conditions set out herein and confirm and acknowledge that I have not
been induced to enter into this agreement or acquire any Restricted Share Units
by expectation of employment or continued employment with any Participating
Company.

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·

  

 

 

ADDENDUM TO HYDROGENICS CORPORATION 

RESTRICTED SHARE UNIT PLAN

 

1.                                       Purpose

 

This is an Addendum to the
Restricted Share Unit Plan of Hydrogenics Corporation (the “Plan”).

 

This Addendum to the Plan applies
only to Participants who are United States citizens or residents  (“US Participants”). Unless otherwise defined herein, capitalized
terms shall have the respective meanings ascribed to them in the Plan.

 

The purpose of this Addendum is to ensure
that compensation paid under the Plan to US Participants is not subject to tax
under Section 409A of the Code, provided that the Company makes no
representation that the payments provided under the Plan are or will be exempt
from or comply with Section 409A and makes no undertaking to preclude Section 409A
from applying to payments under the Plan.

 

In the event that there is any conflict between the terms and
conditions of the Plan and the provisions of this Addendum, this Addendum shall
govern.

 

2.                                       Definitions

 

“Code” means the United States Internal
Revenue Code of 1986, as amended.

 

“Regulations” means the United States Treasury
Regulations promulgated under the Code.

 

“Separation
from Service” means a “separation from service” with the Company within the meaning
of, and that satisfies the requirement of, Section 409A of the Code,
including Treasury Reg. §1.409A-1(h).

 

3.                                       Administration

 

The Plan is intended to be administered in
compliance with Section 409A of the Code and shall be construed and
interpreted in accordance therewith.

 

4.                                       Redemption of Restricted
Share Units upon Constructive Termination

 

With respect
to the resignation of a US Participant for constructive termination, Sections
4.3 and 4.4 of the Plan shall apply only if such constructive termination
constitutes a Separation from Service for “good reason” within the meaning of
Treasury Reg. § 1.409A-1(n)(2).

 

 

5.                                       Redemption of Restricted Share Units upon Retirement

 

Upon the Retirement of a US Participant, unvested
Restricted Share Units shall be forfeited unless the Committee waives the
Vesting requirements and such Retirement constitutes a Separation from Service,
in which case the Company shall redeem the vested Restricted Share Units
pursuant to Section 3.5 of the Plan.

 

6.                                       Acceleration
Prohibited

 

Notwithstanding anything in the
Plan to the contrary, the acceleration of the time or schedule of any payment
under the Plan is prohibited, except as provided in the Regulations and
administrative guidance promulgated under Section 409A of the Code.

 

7.                                       Tax
Consequences

 

It is the responsibility of the US
Participant to complete and timely file any tax returns which may be required
under US tax laws as a result of the US Participant’s participation in the
Plan.  The Company shall not be held
responsible for any tax consequences to a US Participant as a result of such US
Participant’s participation in the Plan.Exhibit 4.3

 

 

 

HYDROGENICS
CORPORATION

DEFERRED
SHARE UNIT PLAN FOR DIRECTORS

 

 

HYDROGENICS
CORPORATION

DEFERRED
SHARE UNIT PLAN FOR DIRECTORS

 

SECTION 1                               INTERPRETATION AND ADMINISTRATIVE PROVISIONS

 

1.1                               Purpose

 

The purpose of
the Plan is to provide Eligible Directors
with the opportunity to acquire Deferred Share Units in order to allow them to
participate in the long term success of the
Company and to promote a greater alignment of interests between
the Eligible Directors and shareholders.

 

1.2                               Definitions

 

In this Plan,
the terms set out below have the following meanings.

 

“Affiliate”
means an affiliate of the Company, as the term “affiliate” is defined in
paragraph 8 of the Canada Revenue Agency’s Interpretation Bulletin IT-337R4, Retiring Allowances [Consolidated], or any successor
publication thereto.

 

“Applicable
Deductions” has the meaning set out in Section 2.5.

 

“Award
Date” means the date the Board awards Deferred Share
Units under this Plan which shall be, unless otherwise determined by the Board,
(i) for the purposes of Section 3.3(a), the last Business Day of each
Fiscal Quarter, and (ii) for the purposes of Section 3.3(b), the last
Business Day of each Fiscal Year.

 

“Board”
means the Board of Directors of the Company.

 

“Business
Day” means a day other than a Saturday, Sunday or
other day when banks in the City of Toronto, Ontario are not generally open for
business.

 

“Committee”
means the committee of the Board responsible for recommending to the Board the
compensation of Eligible Directors, which, as at the effective date of the
Plan, is the Human Resources & Corporate Governance Committee.

 

“Company” means
Hydrogenics Corporation.

 

“Deferred
Share Unit” means a right granted to a Participant to
receive the cash equivalent of a Share on the terms set out in the Plan.

 

“Director”
means a member of the Board.

 

“Dividend
Deferred Share Units” has the meaning set out in Section 3.4.

 

“DSU
Account” means the notional account of Deferred Share
Units and Dividend Deferred Share Units maintained for each Participant.

 

2

 

“DSU  Agreement” means a signed, written
agreement between a Participant and the Company, substantially in the form
attached as Schedule “B”, subject to any amendments or additions thereto as
may, in the discretion of the Board, be necessary or advisable, evidencing the
terms and conditions on which a Deferred Share Unit has been granted under this
Plan.

 

“Election
Form” means a document substantially in the form of
Schedule “A”, subject to any amendments or additions thereto as may, in the
discretion of the Board, be necessary or advisable.

 

“Eligible
Director” means a Director who is not an employee of
the Company.

 

“Fees”
means the fees payable for serving as a Director, including annual retainer
fees, meeting attendance fees and supplemental fees for committee
chairmanships.

 

“Fiscal
Quarter” means the three month periods ended March 31,
June 30, September 30 and December 31 in each year.

 

“Fiscal
Year” means the Company’s fiscal year which is
currently December 31.

 

“Market
Value” means the closing price of Shares on the
Toronto Stock Exchange on the last trading day on which the Company’s Shares
were traded occurring immediately prior to the applicable date, or if the
Shares are not then traded on the Toronto Stock Exchange means the fair market
value per Share as determined by the Board in its discretion.

 

“Participant”
means any Eligible Director who holds Deferred Share Units.

 

“Person” means any individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate, and a natural person in such person’s
capacity as trustee, executor, administrator or other legal representative.

 

“Plan”
means this Hydrogenics Corporation Deferred Share Unit Plan for Directors.

 

“Redemption
Notice” means a notice in writing to
redeem all or part of an Eligible Director’s Deferred Share Units under the
Plan, in the form attached as Schedule “C”, subject to any amendments or
additions thereto, as may, in the discretion of the Board, be necessary or
advisable.

 

“Retirement
Date” means, in respect of an
Eligible Director, the earliest date on which both of the following conditions
are satisfied: (i) the Eligible Director is not a member of the Board nor
a member of the board of directors of an Affiliate, and (ii) the Eligible
Director is not an employee of the Company or any Affiliate.

 

“Share”
means a common share of the Company.

 

3

 

“Tax Act” means
the Income Tax Act (Canada), R.S.C. (5th Supp.), c. 1, including the regulations
promulgated thereunder, as amended from time to time.

 

1.3                               Interpretation

 

This Plan is
to be interpreted as follows:

 

(a)                                  The
use of headings is for ease of reference only and does not affect construction
or interpretation of this Plan.

 

(b)                                 Where
the context so requires, words importing the singular number include the plural
and vice versa, and words importing the masculine gender include the feminine
and neuter genders.

 

(c)                                  References
to Sections and Subsections are references to sections and subsections in this
Plan, unless otherwise specified.

 

(d)                                 All
amounts paid or values to be determined under the Plan shall be in Canadian
dollars.

 

(e)                                  Whenever
the Board is to exercise discretion in the administration of the terms and
conditions of this Plan or any Deferred Share Unit, the term “discretion” means
the “sole and absolute discretion” of the Board.

 

(f)                                    Where
the words “including” or “includes” appear in this Plan, they mean “including
(or includes) without limitation”.

 

SECTION 2                               ADMINISTRATION

 

2.1                               Administration

 

This Plan will be
administered by the Board and the Board has complete authority, in its
discretion, to interpret the provisions of this Plan, provided
that the Plan shall always be interpreted in such a manner that Plan and any
Deferred Share Units granted hereunder continually meet the requirements of the
exception to the definition of “salary deferral arrangement” in paragraph 6801(d) of
the regulations to the Tax Act or any successor to such provision.  In administering and interpreting the Plan,
the Board may adopt, amend and rescind administrative guidelines and other rules and
regulations relating to this Plan and make all other determinations and take
all other actions necessary of desirable for the implementation and
administration of this Plan which the Board determines, in its discretion, are
necessary or advisable.  The Board’s
determinations and actions within its authority under this Plan are final,
conclusive and binding on the Company, its affiliates and all other Persons.

 

4

 

2.2                               Delegation
to Committee

 

To the extent
permitted by applicable law, the Board may, from time to time, delegate to the
Committee all or any of the powers conferred on the Board under the Plan. In
such event, references to the Board mean and include the Committee and the
Committee will exercise the powers delegated to it by the Board in the manner
and on the terms authorized by the Board. Any decisions made or actions taken
by the Committee arising out of or in connection with the administration or
interpretation of this Plan within its authority under this Plan, are final,
conclusive and binding all Persons.

 

2.3                               Eligibility

 

(a)                                  Participation
in the Plan is entirely voluntary.

 

(b)                                 All
Eligible Directors may participate in this Plan.

 

(c)                                  Eligibility
to participate in the Plan does not confer upon any Person any right to be
granted Deferred Share Units pursuant to this Plan.  In addition, no Participant has any claim or
right to be granted a Deferred Share Unit (including, without limitation, a Deferred
Share Unit granted in substitution for any Deferred Share Unit that has expired
pursuant to the terms of this Plan).

 

2.4                               Exemption
from Plan Participation

 

Notwithstanding
any other provision of this Plan, if an Eligible Director is resident in a
jurisdiction in which the award of Deferred Share Units might be considered to
be income which is subject to taxation at the time of such award, the Eligible
Director may elect not to participate in this Plan by providing a written
notice to the Corporate Secretary of the Company, provided that such election
shall be irrevocable and further provided that any notification by an Eligible
Director under this Section 2.4 shall be delivered prior to the date any
Deferred Share Units are credited to the Eligible Director’s DSU Account under
this Plan and, in any case, within 30 days of the date on which the Eligible
Director first becomes eligible to participate in this Plan.  Where such an election is validly made, no
part of a Director’s Fees shall be paid in the form of Deferred Share Units
under this Plan.

 

2.5                               Taxes and
Other Source Deductions

 

The Company is
authorized to deduct from any amount payable or credited hereunder such taxes
and other amounts as it may be required by law to deduct or withhold, in such
manner as it determines (the “Applicable Deductions”).

 

5

 

2.6                               Information

 

Each Participant
shall provide the Company with all information the Company requires from that
Participant in order to administer this Plan.

 

2.7                               Indemnification

 

Each member of
the Board and Committee is indemnified and held harmless by the Company against
any cost or expense arising out of any act or omission to act in connection
with this Plan to the extent permitted by applicable law.  This indemnification is in addition to any
rights of indemnification a Board or Committee member may have as Director or
otherwise.

 

2.8                               Governing
Law

 

This Plan
shall be governed by and construed and interpreted in accordance with the laws
of the Province of Ontario and the federal laws of Canada applicable therein.

 

2.9                               Deferred
Share Unit Agreements

 

All grants of Deferred
Share Units under this Plan will be evidenced by DSU Agreements.  Any one of the President or Chief Financial
Officer of the Company is authorized and empowered to execute on behalf of the
Company and deliver an DSU Agreement to a Participant.

 

SECTION 3                                           DEFERRED SHARE UNITS

 

3.1                               Payment of
Fees

 

The Fees for each Eligible Director are payable in quarterly
instalments, in arrears, on each Award Date, and are payable in the form of: (a) Deferred
Share Units; (b) cash; or (c) a combination of Deferred Share Units
and cash, as elected by the Eligible Director in accordance with Section 3.2.

 

3.2                               Election

 

Each Eligible Director has the right to make an irrevocable election,
once each calendar year, specifying the manner in which the Director wishes to
receive his or her Fees by completing, signing and delivering to the Corporate
Secretary of the Company the Election Form:

 

(a)                                  in the case of an existing Eligible
Director, by the end of the calendar year preceding the year to which such
election is to apply; or

 

(b)                                 in respect of the calendar year in which an Eligible Director is
first elected or appointed to the Board and becomes an Eligible Director, as
soon as possible 

 

6

 

after the individual becomes an Eligible
Director and, in any event, no later than 30 days after the individual becomes
an Eligible Director, with such election to apply only to that portion of such
Eligible Director’s Fees that would otherwise be payable to the Eligible
Director as compensation for services to be performed after the date of the
election in the form of Deferred Share Units.

 

An Eligible
Director may initiate or change the percentage of his or her Fees to be
satisfied in the form of Deferred Share Units for any subsequent calendar year
by completing and delivering to the Company a new written election no later
than December 31 of the calendar year immediately preceding the calendar
year to which the Fees relate.

 

If no election is made in respect of a particular calendar year, the
Eligible Director will receive his or her Fees in the form indicated in such
Director’s previous election, or if no previous election was made, the Eligible
Director’s Fees will be paid in cash.

 

3.3                               Award of
Deferred Share Units

 

(a)                                  Once Fees for a Fiscal Quarter have been determined,
the number of Deferred Share Units to be awarded (including fractional Deferred
Share Units) will be calculated by dividing (i) the dollar amount of the
Fees that the Eligible Director elected to be paid in Deferred Share Units by (ii) the
Market Value, as at the Award Date with fractions computed to three decimal
places.

 

(b)                                 In addition to Deferred Share Units awarded pursuant
to Section 3.3(a), the Board may, in its discretion, make awards to the
Eligible Directors of Deferred Share Units as or in lieu of non-cash
compensation.

 

(c)                                  Deferred Share Units will be fully vested in the
Participant at the time awarded.  All
Deferred Share Units (including fractional Deferred Share Units) will be
credited to the Eligible Director’s DSU Account as of the Award Date.

 

3.4                               Reinvestment
of Distributions

 

When dividends
or distributions are paid on Shares, additional Deferred Share Units (“Dividend Deferred Share Units”) will be credited to the
Participant’s DSU Account as at the payment date of the dividends or distributions
in an amount determined by dividing the amount of the dividends or
distributions payable on the number of Shares equal to the number of Deferred
Share Units allocated to the Participant’s DSU Account by the Market Value of a
Share on the payment date of the dividends or distributions.

 

3.5                               Redemption
of the Deferred Share Units

 

(a)                                  Deferred Share Units can only be redeemed after the
Retirement Date and must be redeemed no later than December 15 of the first
calendar year after the year in which the Retirement Date occurs.

 

7

 

(b)                                 In the event of death, the Eligible Director’s legal
representative shall be entitled to redeem the Deferred Share Units.

 

(c)                                  A redemption of Deferred Share Units may be made by
delivering a Redemption Notice at any time after the Retirement Date and before
December 1 of the first calendar year after the year in which the
Retirement Date occurs.  If a Redemption
Notice has not been received by the Company with respect to all of the Deferred
Share Units of an Eligible Director before December 1 of the first calendar year after the year in which
the Eligible Director’s Retirement Date occurs, a Redemption Notice will be
deemed to be received on that date.  If
that date is not a Business Day, the Redemption Notice will be deemed to be
received on the last prior Business Day.

 

(d)                                 The Board may limit the number of partial redemptions
to two.

 

(e)                                  Upon redemption, the Eligible Director shall
receive a lump sum payment in cash equal to the number of Deferred Share Units
recorded in the Eligible Director’s DSU Account on the date of redemption
multiplied by the Market Value of a Share as at the date of redemption less any
Applicable Deductions.

 

(f)                                    Notwithstanding any
other provision of the Plan, all amounts payable to, or in respect of, an
Eligible Director hereunder shall be paid, in all circumstances, prior to December 31
of the first (1st)
calendar year commencing immediately after the Eligible Director’s Retirement
Date.

 

3.6                               Effect of
Redemption

 

A Participant will
have no further rights, title or interest with respect to any Deferred Share
Unit that has been redeemed.

 

3.7                               Reporting of
Deferred Share Units

 

The Company will provide
a statement of an Eligible Director’s DSU Account to each Eligible Director at
least annually. Statements will contain such information as the Committee may
determine from time to time or as otherwise may be required by law.

 

SECTION 4                               ADJUSTMENTS

 

4.1                               General

 

The provisions
contained in this Plan and any DSU Agreement and the existence of any Deferred
Share Units shall not affect in any way the right of the Company or its
shareholders or affiliates to take any action including any change in the Company’s
capital structure or its business, or any acquisition, disposition,
amalgamation, combination, merger or consolidation, or the creation or issuance
of any bonds, debentures, shares or other securities of the Company or of an
affiliate  thereof or the 

 

8

 

determination
of the rights and conditions attaching thereto, or the dissolution or
liquidation of the Company or of any of its affiliates or any sale or transfer
of all or any part of their respective assets or businesses, whether or not any
such corporate action or proceeding would have an adverse effect on this Plan
or any Deferred Share Units granted hereunder.

 

4.2                               Reorganization
of Company’s Capital

 

If the Company
effects, a subdivision or consolidation of Shares or any similar capital
reorganization or a payment of a stock dividend (other than a stock dividend
that is in lieu of an ordinary cash dividend), or if any other change is made
in the capitalization of the Company that, in the opinion of the Board, would
warrant the amendment or replacement of any existing Deferred Share Units in
order to preserve proportionately the rights and obligations of the
Participants, the Board will authorize such steps to be taken as may be
equitable and appropriate to that end.

 

4.3                               Other Events
Affecting the Company

 

In the event
of an amalgamation, combination, or other reorganization involving the Company that,
in the opinion of the Board, warrants the amendment or replacement of any
existing Deferred Share Units in order to preserve proportionately the rights
and obligations of the Participants, the Board will authorize such steps to be
taken as may be equitable and appropriate to that end.

 

4.4                               Fractional Deferred Share Units

 

Fractional Deferred Share Units are permitted under this Plan.

 

4.5                               Participant’s
Entitlement

 

Except as
otherwise provided in this Plan, Deferred Share Units previously granted under
this Plan are not affected by any change in the relationship between or
ownership of the Company and an affiliate.

 

4.6                               Rights of
Participant

 

The granting
of any Deferred Share Unit is not to be construed as giving a Participant a right
to remain as a Director.

 

4.7                               Amendment or
Discontinuance

 

The Board may
amend, suspend or terminate the Plan, or any portion thereof, at any time,
subject to those provisions of applicable law (including the applicable rules,
regulations and policies of any exchange, if any) that require the approval of
shareholders or any governmental or regulatory body.

 

9

 

Except as
expressly set forth in the Plan, no action of the Board may adversely alter or
impair the rights of a Participant under any Deferred Share Units previously
granted to the Participant without the consent of the affected Participant.

 

4.8                               Not a Salary Deferral Arrangement

 

Any action
taken pursuant to Sections 4.2, 4.3, or 4.7 shall be such that the Plan and any
Deferred Share Units granted hereunder continually meet the requirements of the
exception to the definition of “salary deferral arrangement” in paragraph 6801(d) of
the regulations to the Tax Act or any successor to such provision.

 

4.9                               Severability

 

If any
provision of this Plan or any DSU Agreement is determined to be illegal or
unenforceable by any court of law in any jurisdiction, the remaining provisions
are severable and enforceable in accordance with their terms, and all provisions
will remain enforceable in any other jurisdiction.

 

4.10                        General Restrictions and Assignment

 

(a)                                  Except as required by law, the rights of a
Participant under this Plan are not capable of being anticipated, assigned,
transferred, alienated, sold, encumbered, pledged, mortgaged or charged and are
not capable of being subject to attachment or legal process for the payment of
any debts or obligations of the Participant.

 

(b)                                 Rights and obligations under this Plan may be
assigned by the Company to a successor in the business of the Company, any
corporation resulting from any amalgamation, reorganization, combination,
merger or arrangement of the Company, or any corporation acquiring all or
substantially all of the assets or business of the Company.

 

4.11                        Market Fluctuations

 

(a)                                  No amount will be paid to, or in respect of, a
Participant (or a Person with whom the Participant does not deal at arm’s
length within the meaning of the Tax Act) under this Plan to compensate for or
reduce the impact, in whole or in part, of a downward fluctuation in the price
of the Shares, nor will any other form of benefit be conferred upon, or in
respect of, a Participant for such purpose.

 

(b)                                 The Company makes no representations or warranties to
Participants with respect to this Plan or the Deferred Share Units
whatsoever.  Participants are expressly
advised that the value of any Deferred Share Units will fluctuate as the
trading price of the Shares fluctuates.

 

10

 

(c)                                  In seeking the benefits of participation in this
Plan, a Participant agrees to exclusively accept all risks associated with a
decline in the market price of the Shares and all other risks associated with
the holding of Deferred Share Units.

 

4.12                        No Shareholder Rights

 

Under no circumstances shall Deferred Share Units be considered Shares or other securities of the
Company, nor shall they entitle any Participant to exercise voting rights or
any other rights attaching to the ownership of Shares or other securities of the Company, nor shall
any Participant (a) be considered the owner of, or (b) be entitled to receive  Shares
by virtue of the award of Deferred Share Units.

 

4.13                        Unfunded and Unsecured Plan

 

This Plan
shall be unfunded and the Company will not secure its obligations under this
Plan.  To the extent any Participant or
his or her estate holds any rights by virtue of a grant of Deferred Share Units
under this Plan, such rights shall be no greater than the rights of an
unsecured creditor of the Company.

 

4.14                        Ownership
Requirements

 

The Deferred
Share Units and Dividend Deferred Share Units credited to the Participant’s DSU
Account are included in assessing a Participant’s ownership requirements, if
any, in the Company.

 

4.15                        Non-Exclusivity

 

Nothing
contained in this Plan prevents the Board from adopting other or additional
compensation arrangements for the benefit of any Participant, subject to any
required regulatory or shareholder approval.

 

4.16                        Tax
Consequences

 

It is the
responsibility of the Participant to complete and file any tax returns and pay
all taxes that may be required under Canadian and other tax laws within the
periods specified in those laws as a result of the Participant’s participation
in the Plan.  The Company will not be
held responsible for any tax consequences to a Participant as a result of the
Participant’s participation in the Plan.

 

4.17                        Effective
Date

 

This Plan will
become effective June 22, 2009.

 

11

 

SCHEDULE
A

 

HYDROGENICS
CORPORATION 

DEFERRED
SHARE UNIT PLAN FOR DIRECTORS (the “Plan”)

 

ANNUAL
ELECTION FORM

 

1.                                      Director’s
Fees

 

I elect to receive my Director’s Fees for the calendar year ending December 31     
as follows:

 

A.                                              
% in Deferred Share Units

 

B.                                              % in cash

 

(Note: 
The total amount of A and B must equal 100%.)

 

2.                                      I
understand that:

 

·                                          All
capitalized terms shall have the meanings attributed to them under the Plan.

 

·                                          All
payments will be net of any Applicable Withholding Taxes.

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Eligible Director Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Eligible Director Name (Please
  Print)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date

  

 

Please
return this Election Form to the Corporate Secretary by the close of
business on             ,
200      .

 

 

SCHEDULE B

 

HYDROGENICS
CORPORATION

DEFERRED
SHARE UNIT PLAN FOR DIRECTORS

 

DSU
AGREEMENT

 

·

 

(the “Participant”)

 

Pursuant to the Hydrogenics
Corporation Deferred Share Unit Plan for Directors (the “Plan”) established [date], a copy of which is attached to this DSU Agreement
and in consideration of services provided to the Company by the Participant, the
Company hereby grants to the Participant ·
Deferred Share Units.

 

All capitalized
terms not defined in this agreement have the meaning set out in the Plan.

 

The Company and
the Participant understand and agree that the granting and exercise of these Deferred
Share Units are subject to the terms and conditions of the Plan, all of which
are incorporated into and form a part of this agreement.

 

DATED                                             ,
              .

 

	
   

  	
  HYDROGENICS
  CORPORATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Per

  	
   

  	
  c/s

  

 

I agree to the
terms and conditions set out herein.

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·

  

 

 

SCHEDULE C

 

HYDROGENICS
CORPORATION

DEFERRED
SHARE UNIT PLAN FOR DIRECTORS

 

To:                              The
Corporate Secretary of Hydrogenics Corporation

 

Pursuant to the Hydrogenics
Corporation Deferred Share Unit Plan for Directors (the “Plan”), I hereby give
notice that I wish to redeem                          
Deferred Share Units on                       .

 

Dated                                     .

 

 

	
   

  	
   

  
	
   

  	
  Eligible Director Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Eligible Director Name (Please
  Print)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date

  

 

 

ADDENDUM TO HYDROGENICS CORPORATION 

DEFERRED SHARE UNIT PLAN FOR DIRECTORS

 

1.                                       Purpose

 

This is an Addendum to the
Deferred Share Unit Plan for Directors of Hydrogenics Corporation (the “Plan”).

 

This Addendum to the Plan applies
only to Participants who are United States citizens or residents  (“US Participants”). Unless otherwise defined herein, capitalized
terms shall have the respective meanings ascribed to them in the Plan.

 

The purpose of this Addendum is to ensure that
compensation paid under the Plan to US Participants is not subject to tax under
Section 409A of the Code, provided that the Company makes no
representation that the payments provided under the Plan are or will be exempt
from or comply with Section 409A and makes no undertaking to preclude Section 409A
from applying to payments under the Plan.

 

In the event that there is any conflict between the terms and
conditions of the Plan and the provisions of this Addendum, except as noted in
this Addendum, this Addendum shall govern.

 

2.                                       Definitions

 

“Code” means the United States Internal
Revenue Code of 1986, as amended.

 

“Regulations” means the United States Treasury
Regulations promulgated under the Code.

 

“Separation
from Service” means a “separation from service” with the Company within the meaning
of, and that satisfies the requirement of, Section 409A of the Code,
including U.S. Treas. Reg. §1.409A-1(h).

 

“Specified
Employee” has the meaning set forth in Section 409A(a)(2)(B) of the
Code.

 

3.                                       Administration

 

The Plan is intended to be administered in
compliance with Section 409A of the Code and shall be construed and
interpreted in accordance therewith.

 

 

4.                                       Redemption of the Deferred
Share Units

 

Notwithstanding
anything to the contrary in Section 3.5 of the Plan, the Company shall
redeem all Deferred Share Units held by a US Participant on the
first business day of the month following such US Participant’s Separation from
Service, provided, however, if a US Participant is a “specified employee”
of the Company (or a subsidiary) at the time of Separation from Service, then
no payment on account of such Separation from Service shall be made to such US
Participant until the first business day of the seventh month after such
Separation from Service (or, if earlier, the date of death), at which time full
payment shall be made, provided further that if the U.S. Participant is also
subject to tax in respect of the Deferred Share Units under the provision of
the Income Tax Act, (Canada), any payment must be made within the
time period contemplated in Section 3.5(f) of the Plan.

 

5.                                       Acceleration
Prohibited

 

The acceleration of the time or
schedule of any payment under the Plan is prohibited, except as provided in the
Regulations and administrative guidance promulgated under Section 409A of
the Code.

 

6.                                       Tax
Consequences

 

It is the responsibility of the US
Participant to complete and timely file any tax returns which may be required
under US tax laws as a result of the US Participant’s participation in the
Plan.  The Company shall not be held
responsible for any tax consequences to a US Participant as a result of such US
Participant’s participation in the Plan.

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