Exhibit 10.1

 

NISKA GAS STORAGE PARTNERS LLC

 

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PHANTOM UNIT PERFORMANCE PLAN

 

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April 1, 2011

 

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NISKA GAS STORAGE PARTNERS LLC

 

PART I

 

PHANTOM UNIT PERFORMANCE PLAN

 

1.                                       PURPOSE

 

1.1                                 The purpose of this Plan is to advance the
interests of the Niska Group by:  (a) increasing the proprietary interests of
Participants in the Company, (b) aligning the interests of Participants with the
interests of the holders of MLP Units generally, (c) encouraging Participants to
remain associated with the Company, and (d) furnishing Participants with an
additional incentive in their efforts on behalf of the Company.

 

2.                                       PLAN DEFINITIONS AND INTERPRETATIONS

 

2.1                                 In this Plan, the following terms have the
following meanings:

 

“# of PPUs Credited” has the meaning set out in Section 4.2(b);

 

“# of Vested PPUs” has the meaning set out in Section 4.2(b);

 

“Account” has the meaning set out in Section 3.2;

 

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, controls, is controlled by or
is under common control with, the Person in question. As used herein, the term
“control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise;

 

“Applicable Law” means any applicable provision of law, domestic or foreign,
including the ITA, the Code, the Securities Act (Alberta) as amended, together
with all regulations, rules, policy statements, rulings, notices, orders or
other instruments promulgated thereunder and any applicable provisions of Stock
Exchange Rules;

 

“Award Agreement” means a signed, written or electronic agreement between a
Participant and the Company, in one of the forms attached hereto as Schedules
“B”, “C” or “D”, or in such other form or forms as may be approved from time to
time by the Committee, evidencing the terms and conditions under which an award
of Phantom Units has been granted under this Plan;

 

“Below Threshold” has the meaning set out in the table in Section 4.2(b);

 

“Beneficiary” means, subject to Applicable Law, any person designated by a
Participant by written instrument filed with the Company in such form as may be
approved from time to time by the Committee, to receive any amount payable under
the Plan in the event of a Participant’s death or, failing any such effective
designation, the Participant’s estate;

 

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“Board” means the board of directors of the Company;

 

“Cause” means, unless otherwise defined in the applicable Award Agreement
evidencing the grant of Phantom Units hereunder, any act or omission that would
entitle the Employer to terminate the Participant’s employment without notice or
compensation under the common law for just cause, including, without in any way
limiting its meaning under the common law:

 

(a) any improper conduct by the Participant which is materially detrimental to
the Employer; or

 

(b) the willful failure of the Participant to properly carry out his or her
duties on behalf of the Employer or to act in accordance with the reasonable
direction of the Employer;

 

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

 

“Change of Control” means, and shall be deemed to have occurred upon: (a) the
acquisition, directly or indirectly in one or more transactions by any Person or
group of two or more Persons acting jointly or in concert, other than the
Company, the Manager or any Affiliate of the Company or the Manager, of
ownership in, or the right to exercise control or direction over, fifty percent
(50%) or more of the then issued and outstanding shares of the Manager entitled
to elect directors to the board of the Manager; or (b) a sale or other
disposition, including by liquidation or dissolution, of all or substantially
all of the assets of the Company and its Affiliates in one or more transactions
to any person other than an Affiliate of the Company or the Manager that occurs
during any eighteen month period; provided, however, that for purposes of this
definition, the following dispositions shall not constitute a Change of Control:
(c) any acquisition by investors (immediately prior to the transaction(s)) in
the Manager for financing purposes, as determined by the Board or the Committee
in its sole discretion, (d) an underwriter temporarily holding equity interests
pursuant to an offering of such interest; (e) any transfer of assets to an
entity that is controlled by the Company; or (f) any acquisition by any employee
benefit plan (or related trust) sponsored by the Company, the Manager or an
entity controlled by either the Company or the Manager.  Notwithstanding the
foregoing, the Committee may elect in an Award Agreement to specify a different
definition of “Change of Control” for purposes deemed appropriate by the
Committee.

 

“Combined Payout Percentage” has the meaning set out in Section 4.2(b);

 

“Committee” means the Compensation Committee of the Board or any other committee
of the Board, as constituted from time to time, which may be appointed by the
Board to, inter alia, interpret, administer and implement the Plan, provided,
however, that if no Compensation Committee is in existence at any particular
time and the Board has not appointed another committee of the Board to
administer the Plan, all references in the Plan to “Committee” shall at such
time be in reference to the Board;

 

“Committee Meeting Date” means the date of the meeting of the Committee or the
Board held to, inter alia, review matters related to the Phantom Units,
including the determination of the DCF Percentile and the TUR Percentile, or
other applicable

 

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Performance Measures, which meeting shall occur no later than thirty (30) days
after the end of a PPU Period;

 

“Company” means Niska Gas Storage Partners LLC and its successors and assigns;

 

“Constructive Dismissal”, unless otherwise defined in the Applicable Award
Agreement evidencing the grant of Phantom Units hereunder:

 

(a)                                  for any Participant other than a US
Taxpayer, the meaning ascribed thereto pursuant to the common law, and shall
include, without in any way limiting its meaning under the common law, any
material change (other than a change which is clearly consistent with a
promotion) imposed by the Employer without the Participant’s consent to the
Participant’s title, responsibilities or reporting relationships, or a material
reduction of the Participant’s compensation, provided that the termination of
any Participant shall be considered to arise as a result of Constructive
Dismissal only if such termination occurs due to such Participant resigning from
employment within 45 days of the occurrence of the event described as giving
rise to such Constructive Dismissal; and

 

(b)                                 for any Participant who is a US Taxpayer,
means any material change (other than a change which is clearly consistent with
a promotion) imposed by the Employer without the Participant’s consent to the
Participant’s title, responsibilities or reporting relationships, or a material
reduction of the Participant’s compensation, provided that the termination of
any Participant shall be considered to arise as a result of Constructive
Dismissal only if: (i) such Participant provides notice to the Employer of the
condition that gives rise to the Constructive Dismissal within thirty (30) days
of the occurrence of such an event, (b) the Employer does not cure the condition
that gave rise to such a Constructive Dismissal event within thirty (30) days of
the Participant’s notice to the Employer, and (c) the termination occurs due to
such Participant resigning from employment within thirty (30) days following the
last day of the Employer’s cure period;

 

“Control Period” means the period commencing on the date of the Change of
Control and ending 180 days after the date of the Change of Control;

 

“DCF” means the distributed cash flow of a trust, partnership, or corporation
calculated based on the appreciation in the distributed cash flow per MLP Unit
or other applicable publicly traded security during the PPU Period;

 

“DCF Percentile” means the Company’s percentile rank of the DCF for the MLP
Units for the PPU Period relative to the DCF for the Performance Peer Group;

 

“Date of Grant” of a Phantom Unit means the date a Phantom Unit is granted to a
Participant under the Plan, as evidenced by an Award Agreement, and, in respect
of Phantom Units credited to a Participant pursuant to Section 5.1, means the
date on which the original Phantom Units, in respect of which the additional
Phantom Units are attributable, were granted to a Participant under the Plan;

 

“Deferred Compensation Rules” means the limitations or requirements of
Section 409A of the Code and the regulations promulgated thereunder;

 

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“Disability” means where the Participant:

 

(a)                                  is unable, due to illness, disease,
affliction, mental or physical disability or similar cause, to perform his
duties as an officer or employee of the Employer either for any consecutive 12
month period or for any period of 18 months (whether or not consecutive) in any
consecutive 24 month period; or

 

(b)                                 is declared by a court of competent
jurisdiction to be mentally incompetent or incapable of managing his affairs;

 

“Employer” means with respect to a Participant, the entity in the Niska Group
that employs the Participant or that employed the Participant immediately prior
to his or her Termination Date (or of which the Participant is or was a director
or officer);

 

“Fiscal Year” has the meaning assigned thereto in the Operating Agreement;

 

“FMV” or “FMV of a Phantom Unit” or terms of similar meaning, means, subject to
Section 11.2, on any particular date, the fair market value of an MLP Unit as
determined by the Committee in accordance with the following:

 

(a)                                  the FMV shall mean the weighted average
trading price of an MLP Unit on the NYSE during the last thirty (30) trading
days prior to that particular date on which at least a round lot of MLP Units
has so traded or, if a round lot has not traded on a particular day, the average
of the bid and asked prices; provided, however, that if the MLP Units are not
then listed and posted for trading on the NYSE, then the FMV shall mean the
weighted average trading price of an MLP Unit on such stock exchange in the
United States on which the MLP Units are then listed and posted for trading
during the last thirty (30) trading days prior to that particular date; and
provided that if the MLP Units are not then listed and posted for trading on any
stock exchange in the United States, then the FMV shall mean the fair market
value per MLP Unit (in United States dollars ) as determined by the Board in its
sole discretion; and

 

(b)                                 the FMV shall be rounded up to the nearest
whole cent;

 

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

 

“Leave of Absence” means any period during which, pursuant to the prior written
approval of the Participant’s Employer or by reason of the Participant’s
disability (whether or not such disability constitutes a Disability as defined
in this Plan), the Participant is considered to be on an approved leave of
absence and does not provide any services to his or her Employer or any other
entity in the Niska Group;

 

“Manager” means Niska Gas Storage Management LLC, a Delaware limited liability
company;

 

“Minimum Quarterly Distribution” has the meaning set out in Section 4.2(c);

 

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“Operating Agreement” means the First Amended and Restated Operating Agreement
of Niska Gas Storage Partners LLC, as amended from time to time;

 

“MLP Unit” means a common unit of the Company as defined in the Operating
Agreement (which for purposes of clarity, as of the Effective Date of this Plan,
means a Unit representing a fractional part of the Company’s Membership
Interests of all Non-Managing Members, and having the rights and obligations
specified with respect to Common Units in the Operating Agreement), although,
except unless explicitly provided in a provision of the Plan, the term “Common
Unit” does not refer to, or include, any Subordinated Unit prior to its
conversion into a Common Unit pursuant to the terms of the Operating Agreement
(all capitalized terms as defined in the Operating Agreement);

 

“Niska Group” means the Company and its wholly-owned subsidiaries;

 

“NYSE” means the New York Stock Exchange;

 

“Participant” means a permanent employee (including, for greater certainty, a
director or officer) of an entity in the Niska Group who has been designated by
the Company for participation in the Plan and who has agreed to participate in
the Plan on such terms as may be specified and to whom Units have or will be
granted hereunder;

 

“Participant Information” has the meaning set out in Section 17.5(b);

 

“Performance Measure” means, where the Award Agreement in respect of the grant
of Phantom Units provides that Section 4.2 does not apply, or that, in addition
to Section 4.2, an additional performance measure applies, the applicable
performance measure specified as the vesting criteria for such Phantom Units,
and which shall be specified in the applicable Award Agreement;

 

“Performance Peer Group” means the group of partnerships, corporations, trusts,
or other entities in respect of which the Total Unit Return and DCF, or other
applicable Performance Measure, will be computed for the purposes of determining
the TUR Percentile and DCF Percentile, or other applicable Performance
Percentile, and which shall be specified in the applicable Award Agreement
evidencing the grant of a Phantom Unit hereunder.  In the event there are any
changes to the Performance Peer Group specified in an Award Agreement between
the Date of Grant of the Award Agreement and the PPU Vesting Date for any
Phantom Units granted thereunder, the Committee shall use its reasonable best
judgment to make adjustments to that Performance Peer Group for any period
following such change with the objective of achieving the same results as would
have occurred had there been no such change, to the extent possible in the
circumstances;

 

“Phantom Unit” or “PPU” means a unit granted hereunder and credited by means of
an entry on the books of the Company to a Participant pursuant to the Plan,
representing the right to receive payment therefor equal to the FMV of an MLP
Unit calculated at the date of such payment, at the time, in the manner, and
subject to the terms, set forth in the Plan;

 

“Phantom Unit Entitlement Date” has the meaning set out in Section 10.1;

 

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“Person” means any individual, sole proprietorship, partnership, firm, entity,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate, limited liability company, joint venture,
agency, governmental agency or political subdivision thereof or any other
entity, and, where the context requires, any of the foregoing when they are
acting as trustee, executor, administrator or other legal representative;

 

“Plan” means this Niska Gas Storage Partners LLC Phantom Unit Performance Plan
as set out herein, as the same may be amended and varied from time to time;

 

“PPU Period” for a Phantom Unit means, unless otherwise specified in the
applicable Award Agreement, the period extending from the April 1 of the
calendar year containing the Date of Grant to March 31 of the third calendar
year commencing after the calendar year containing the Date of Grant, provided
that, except as otherwise provided in Schedule A, no PPU Period shall extend
beyond December 31 of the third calendar year commencing after the Service Year
in respect of which the Phantom Unit was granted;

 

“PPU Vesting Date” for a Phantom Unit has the meaning, unless otherwise
specified in the applicable Award Agreement, set out in Section 4.2(a);

 

“Retirement” means the normal retirement of the Participant from employment with
the Employer or the early retirement of the Participant, each pursuant to any
applicable retirement plan of the Employer;

 

“Return to Service Date” means the date, following a Leave of Absence, that the
Participant recommences the provision of employment services to his to her
Employer or to another entity in the Niska Group, in full or in part;

 

“Service Year” has the meaning set out in Section 3.3;

 

“Stock Exchange Rules” means the applicable rules of any stock exchange upon
which the MLP Units are listed, as may be amended from time to time;

 

“Subordinated Unit” means a subordinated unit of the Company as defined in the
Operating Agreement;

 

“Target” has the meaning set out in the table in Section 4.2(b);

 

“Termination Date” of a Participant means, where the Participant’s employment
with the Niska Group has been terminated, the Participant’s last day of active
employment with the Niska Group, regardless of the reason for the termination of
employment and without regard to any notice period following termination of
employment by the Employer without Cause or by the Participant as the result of
a Constructive Dismissal, pursuant to the common law or any agreement with the
Participant;

 

“Threshold” has the meaning set out in the table in Section 4.2(b);

 

“Total Unit Return” or “TUR” means the total shareholder or unitholder return of
a trust, partnership or corporation, calculated based on appreciation in the
price of an MLP Unit or other applicable publicly traded security, as specified
in the Award Agreement,

 

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during the PPU Period, plus the value of any distributions or dividends on such
publicly traded securities during the PPU Period (which shall be deemed to have
been reinvested in additional securities effective on the distribution or
dividend date based on the closing price of such securities for purpose of
measuring TUR);

 

“TUR Percentile” means the Company’s percentile rank of the TUR for the MLP
Units for the PPU Period relative to the TUR for the Performance Peer Group;

 

“US Taxpayer” means a Participant who is a citizen of the United States of
America or a U.S. permanent resident for the purposes of the Code of a
Participant for whom the compensation subject to the Plan would otherwise be
subject to U.S. taxation under the Code; and

 

“Vested Phantom Units” has the meaning set out in Section 4.3.

 

2.2                                 In this Plan, unless the context requires
otherwise, words importing the singular number may be construed to extend to and
include the plural number, and words importing the plural number may be
construed to extend to and include the singular number.

 

2.3                                 The following Schedule is attached to the
Plan and are incorporated by reference:

 

Schedule “A” — Plan Provisions Applicable to Certain US Taxpayers

 

Schedule “B” — Award Agreement for Phantom Units (Standard Grant)

 

Schedule “C” — Award Agreement for Phantom Units (Less than 3 Year PPU Period)

 

Schedule “D” — Award Agreement for Phantom Units (Time-Based Vesting)

 

PART II

 

GRANT OF UNITS

 

3.                                       GRANT OF UNITS

 

3.1                                 Subject to the terms of the Plan, the
Committee may make Grants of Phantom Units to Participants in such number, at
such times and on such terms and conditions, as the Committee may, in its sole
discretion, determine.

 

3.2                                 An “Account” shall be maintained by the
Company for each Participant.  On each Date of Grant, the Account will be
credited with the Phantom Units granted to a Participant on that date.

 

3.3                                 For greater certainty, notwithstanding any
other provision herein, unless otherwise provided in the applicable Award
Agreement, the granting of Phantom Units to any Participant under the Plan in
any calendar year shall be awarded solely in respect of performance of such
Participant in the same calendar year (the “Service Year”).  In all cases, the
Phantom 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.

 

3.4                                 At such times as the Committee may
determine, in its sole discretion, the Company shall provide an Award Agreement
to each applicable Participant in the Plan setting out the

 

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awards of Phantom Units to such Participant at such time.  All grants of Phantom
Units under this Plan will be evidenced by Award Agreements.  Award Agreements
will be subject to the applicable provisions of this Plan and will contain such
provisions as are required by this Plan and any other provisions that the
Committee may direct.  Once the Committee has made a grant pursuant to
Section 3.1, any one executive officer of the Company is authorized and
empowered to execute and deliver, for and on behalf of the Company, an Award
Agreement to each Participant who is granted Phantom Units pursuant to the Plan;
provided, however, that an executive officer may not sign an Award Agreement
under which he or she is the Participant.

 

PART III

 

VESTING

 

4.                                       VESTING

 

4.1                                 The Committee shall designate, at the time
of grant or credit of Phantom Units, the date or dates on which all or a portion
of the Phantom Units shall vest (including any additional Phantom Units credited
to a Participant’s Account under Section 5.1) and any conditions to such vesting
including, without limitation, conditions related to one or more Performance
Measures,  provided that, except as provided in Schedule A, no such vesting
condition shall extend beyond November 30 of the third calendar year following
the Service Year in respect of which the Phantom Units were granted and provided
further that all vesting conditions shall be such that the Phantom Units comply
with the exception to the definition of “salary deferral arrangement” contained
in paragraph (k) of subsection 248(1) of the ITA or any successor provision
thereto. Any conditions to such vesting shall be as set out in Section 4.2 or as
set out in the applicable Award Agreement.

 

4.2                                 Unless otherwise provided in the applicable
Award Agreement and subject to Sections 4.2(c), 6.1, 7.1 and 8.1:

 

(a)                                  The “PPU Vesting Date” for Phantom Units
credited to a Participant’s Account shall be the day after the Committee Meeting
Date held following the end of the PPU Period.

 

(b)                                 As of the PPU Vesting Date, a number of
Phantom Units (ranging from 0% and 200% of the Phantom Units originally credited
to the Participant’s Account) shall vest in accordance with the following
formula:

 

# of Vested PPUs = Combined Payout Percentage X # of PPUs Credited

 

Where:

 

# of PPUs Credited means the number of PPUs granted to a Participant as
specified in the applicable Award Agreement plus any additional PPUs credited to
the Participant’s Account pursuant to Section 5.1; and

 

Combined Payout Percentage is determined in accordance with the table below,
with the TUR Percentile and the DCF Percentile to be given equal weight in

 

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determining the Combined Payout Percentage.  Points in between the “% of Phantom
Units Earned at Payout” in the table shall be interpolated.

 

TUR Percentile

 

% of Phantom Units Earned at Payout

 

 

 

Maximum (75th percentile)

 

0%

 

100%

 

150%

 

200%

 

Target (50th percentile)

 

0%

 

75%

 

100%

 

150%

 

Threshold (35th percentile)

 

0%

 

50%

 

75%

 

100%

 

Below Threshold (below 35th percentile)

 

0%

 

0%

 

0%

 

0%

 

 

 

Below Threshold (below 35th percentile)

 

Threshold (35th percentile)

 

Target (50th percentile)

 

Maximum (75th percentile)

 

 

DCF Percentile

 

(c)                                  Notwithstanding section 4.2(b), where, in
respect of any quarter of the Company’s Fiscal Year for which the minimum
quarterly distribution to either or both of the holders of MLP Units or the
holders of Subordinated Units, as provided for in the Operating Agreement, (the
“Minimum Quarterly Distribution”), is not made, only a pro rata proportion of
the aggregate number of Phantom Units credited to the Participant’s Account that
would otherwise vest pursuant to Section 4.2(b) shall become Vested Phantom
Units based on the number of quarters that the Minimum Quarterly Distribution
was paid on both the MLP Units and the Subordinated Units during the PPU Period
for such Phantom Units versus the number of quarters in the entire PPU Period
for such Phantom Units.

 

(d)                                 Any Phantom Unit which does not become a
Vested Phantom Unit on the applicable PPU Vesting Date pursuant to this
Section 4.2 (or, where an Award Agreement provides that Section 4.2 does not
apply, the Award Agreement) shall be terminated and forfeited as of such date. 
For greater certainty, the number of Phantom Units, for which a Participant
receives payment under the Plan may be less than or greater than the number of
Phantom Units granted to the Participant in the Award letter.

 

4.3                                 All Phantom Units recorded in a
Participant’s Account which have vested in accordance with Sections 4.2, 4.5,
7.1, 8.1, and/or Section 11.1, and are not forfeited hereunder by the
Participant on his or her Termination Date, together with any additional Phantom
Units credited to such Participant’s Account under Section 5.1 hereof before
such Participant’s Termination Date, including in all cases any fractional
Phantom Units rounded to the nearest 0.01 of a Phantom Unit, are referred to
herein as “Vested Phantom Units”.

 

4.4                                 For greater certainty, no Participant nor
any Beneficiary or other person claiming through a Participant shall be entitled
to any benefit hereunder in respect of any Phantom Units that are not Vested
Phantom Units.

 

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4.5           Notwithstanding anything else herein contained, the Committee may,
in its discretion, at any time permit the acceleration of vesting of any or all
Phantom Units, all in the manner and on the terms as may be authorized by the
Committee.

 

PART IV

 

DISTRIBUTION EQUIVALENTS

 

5.             DISTRIBUTION EQUIVALENTS

 

5.1           A Participant’s Account shall from time to time, during the period
commencing on the Date of Grant and ending on the Participant’s Phantom Unit
Entitlement Date, be credited with additional Phantom Units, the number of which
shall be (rounded to two decimal places) equal to the quotient determined by
dividing:  one hundred percent (100%) of the distributions declared by the
Company and that would have been paid to the Participant if the Phantom Units in
his or her Account on the relevant record date for distributions on the MLP
Units had been MLP Units (excluding distributions paid in the form of additional
MLP Units) by the FMV of a Phantom Unit on the payment date of such
distributions.  No Phantom Units will be credited to a Participant’s Account in
respect of distributions paid on a record date which falls after such
Participant’s Termination Date.  The proportion of Phantom Units credited to a
Participant’s Account pursuant to this Section 5.1 relating to existing Vested
Phantom Units shall, unless otherwise determined by the Committee in its sole
discretion, also be Vested Phantom Units.  The proportion of Phantom Units
credited to a Participant’s Account pursuant to this Section 5.1 relating to
existing Phantom Units that have not yet become Vested Phantom Units shall,
unless otherwise determined by the Committee in its sole discretion, vest in the
same manner as the existing unvested Phantom Units.

 

PART V

 

TERMINATION OF EMPLOYMENT

 

6.             TERMINATION OF EMPLOYMENT

 

6.1           Subject to Section 7.1 and the provisions of any applicable Award
Agreement, unless otherwise determined by the Committee in its sole discretion,
upon the Participant terminating employment with the Niska Group for any reason
including, without limitation, due to involuntary termination with Cause or
voluntary termination by the Participant, all Phantom Units previously credited
to such Participant’s  Account which did not become Vested Phantom Units on or
prior to the Participant’s Termination Date shall be terminated and forfeited as
of the Participant’s Termination Date.

 

7.             DEATH, DISABILITY OR RETIREMENT OR TERMINATION WITHOUT CAUSE

 

7.1           Subject to the provisions of any applicable Award Agreement, upon
the Participant terminating employment with the Niska Group by reason of the
death, Disability, or Retirement of the Participant or the termination of the
employment of the Participant by the Employer other than for Cause, any Phantom
Units previously credited to such Participant’s Account which did not become
Vested Phantom Units on or prior to the

 

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Participant’s Termination Date shall vest on a pro rata basis to the date of
termination (applying the “Target” level of performance for the TUR Percentile
and the DCF Percentile under Section 4.2(b)), such that only a pro rata
proportion of such Phantom Units that would otherwise vest pursuant to
Section 4.2 shall become Vested Phantom Units based on Target performance
levels, and the number of days between the Date of Grant of such Phantom Units
and the Participant’s Termination Date, versus the number of days in the entire
PPU Period for such Phantom Units.  Any Phantom Units that have been credited to
the Account of a Participant to whom this Section 7.1 applies and which do not
become Vested Phantom Units pursuant to this Section 7.1 stated be terminated
and forfeited.

 

8.             LEAVE OF ABSENCE

 

8.1           Upon a Participant commencing a Leave of Absence, unless otherwise
determined by the Committee in its sole discretion, any Phantom Units previously
credited to such Participant’s Account which did not become Vested Phantom Units
on or prior to the date the Participant commenced the Leave of Absence shall not
become Vested Phantom Units during the Participant’s Leave of Absence, unless
the Participant’s employment is terminated during such period, in which case the
provisions of Sections 6.1 and 7.1 shall apply.  Upon the Participant’s Return
to Service  Date, any Phantom Units previously credited to such Participant’s
Account which did not become Vested Phantom Units on or prior to the date the
Participant commenced the Leave of Absence shall continue to vest in accordance
with their terms and pursuant to Section 4.2 but only a pro rata proportion of
the aggregate number of Phantom Units credited to the Participant’s Account that
would otherwise vest pursuant to Section 4.2 shall become Vested Phantom Units
based on the number of days during which the Participant provided services to
the Employer and was not on a Leave of Absence during the PPU Period for such
Phantom Units versus the number of days in the entire PPU Period for such
Phantom Units. Any Phantom Units that have been credited to the Account of a
Participant to whom this Section 8.1 applies and which do not become Vested
Phantom Units pursuant to this Section 8.1 shall be terminated and forfeited.

 

9.             FORFEITED PHANTOM UNITS

 

9.1           Where a Participant forfeits any Phantom Units pursuant to
Sections 6.1, 7.1, or 8.1, such Participant shall also forfeit all of his right,
title and interest with respect to additional Phantom Units credited to his or
her Account under Section 5.1 to the extent that they are directly or indirectly
attributable, as determined by the Committee, to Phantom Units forfeited by such
Participant as above.

 

9.2           For greater certainty, no Participant shall have any entitlement
to receive any payment or other benefit in respect of any Phantom Units which
have been forfeited under this Plan, by way of damages, payment in lieu or
otherwise.

 

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PART VI

 

REDEMPTION OF PHANTOM UNITS

 

10.           REDEMPTION OF PHANTOM UNITS

 

10.1         Subject to the remainder of this Article 10, on a date to be
determined by the Committee, in its sole discretion, following the day on which
any Phantom Units become Vested  Phantom Units (which date, where the
Participant is a US Taxpayer, shall be in compliance with the Deferred
Compensation Rules and which date, except as otherwise provided in Schedule A,
shall, for all Participants, be on or before that date which is three years
following the end of the Service Year in respect of which the Phantom Units were
granted) (the “Phantom Unit Entitlement Date”), such Vested Phantom Units shall
be redeemed and paid by the Participant’s Employer to the Participant or the
Participant’s Beneficiary, as applicable, in accordance with the terms of the
Plan.  The FMV of the Vested Phantom Units, determined as of the Phantom Unit
Entitlement Date, so redeemed shall, after deduction of any applicable taxes and
other source deductions required to be withheld by the Employer, be paid in
cash.

 

10.2         Subject to Section 10.3, in the event that a Participant’s Phantom
Unit Entitlement Date as determined pursuant to Section 10.1 would otherwise
fall between the record date for a distribution on the MLP Units and the related
distribution payment date, then notwithstanding Section 10.1, the Phantom Unit
Entitlement Date shall be the day immediately following the date of payment of
such distribution for purposes of recording in the Account of the Participant
amounts referred to in Section 5.1, and making the calculation of the FMV of a
Participant’s Vested Phantom Units contemplated by Section 10.1.  Subject to
Section 10.3, in the event that the Company is unable, by a Participant’s
Phantom Unit Entitlement Date, to compute the final FMV of the Vested Phantom
Units recorded in such Participant’s Account by reason of the fact that any data
required in order to compute the FMV of an MLP Unit has not been made available
to the Company, then the Phantom Unit Entitlement Date shall be the next
following trading day on which such data is made available to the Company.

 

10.3         Except as provided in Schedule A, and notwithstanding any other
provision of the Plan, all amounts payable to, or in respect of, a Participant
under this Article 10 shall be paid within three years following the end of the
Service Year in respect of which the Phantom Units were granted.

 

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PART VII

 

REORGANIZATION TRANSACTIONS

 

11.           CHANGE OF CONTROL

 

11.1         If, before the vesting of a Phantom Unit in accordance with the
terms thereof, a Change of Control shall occur and the Participant shall cease
to be an officer, director or employee, as the case may be, of any entity in the
Niska Group by reason of termination:

 

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

 

(b)           by the Participant as the result of a Constructive Dismissal,
provided the act giving rise to the  Constructive Dismissal occurs during the
Control Period;

 

then, unless otherwise provided in the applicable Award Agreement or determined
by the Committee prior to the Change of Control:

 

(c)           at the time a Change of Control occurs, any Phantom Units credited
to a Participant’s Account which did not become Vested Phantom Units on or prior
to the date the Change of Control occurred shall vest by applying the “Target”
level of performance for the TUR Percentile and the DCF Percentile in
Section 4.2(b));

 

provided, however, that such vesting of Phantom Units shall, unless otherwise
determined in advance by the Committee, be effective as of the date of the
Change of Control and shall be conditional on the consummation of such Change of
Control.

 

11.2         Notwithstanding any other provision of the Plan, in the event that
Phantom Units become Vested Phantom Units, as contemplated in this Article 11,
the Committee may by resolution determine that the FMV with respect to such
Phantom Units shall be the price per MLP Unit offered or provided for in the
Change of Control transaction.

 

12.           CHANGES IN CAPITAL

 

12.1         If the number of outstanding MLP Units is increased or decreased as
a result of a subdivision, consolidation, reclassification or recapitalization
and not as a result of the issuance of MLP Units for additional consideration or
by way of a distribution in the ordinary course, the Committee shall make
appropriate adjustments to the number of Phantom Units outstanding under the
Plan, provided that no such adjustment shall cause the Plan or any Phantom Units
granted hereunder to cease to comply with the exception to the definition of
“salary deferral arrangement” contained in paragraph (k) of subsection 248(1) of
the ITA or any successor provision thereto.  Any determinations by the Committee
as to the adjustments shall be made in its sole discretion and all such
adjustments shall be conclusive and binding for all purposes under the Plan.

 

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PART VIII

 

ADMINISTRATION

 

13.           ADMINISTRATION

 

13.1         The Plan shall be administered by the Company in accordance with
its provisions.  All costs and expenses of administering the Plan will be paid
by the Company.  The Company, may from time to time, establish administrative
rules and regulations and prescribe forms or documents relating to the operation
of the Plan as it may deem necessary to implement or further the purpose of the
Plan and amend or repeal such rules and regulations or forms or documents.  The
Company, in its discretion, may appoint a Committee for the purpose of
interpreting, administering and implementing the Plan.  In administering the
Plan, the Company or the Committee may seek recommendations from the Chairman or
from the Chief Executive Officer of the Company.  The Company may also delegate
to the Committee or any director, officer or employee of the Company such duties
and powers relating to the Plan as it may see fit.  The Company may also appoint
or engage a trustee, custodian or administrator to administer or implement the
Plan.

 

13.2         The Company shall keep or cause to be kept such records and
accounts as may be necessary or appropriate in connection with the
administration of the Plan and the discharge of its duties.  At such times as
the Company shall determine, the Company shall furnish the Participant with a
statement setting forth the details of his or her Phantom Units including Date
of Grant and the Vested Phantom Units held by each Participant.

 

14.           NOTICES

 

14.1         Any payment, notice, statement, certificate or other instrument
required or permitted to be given to a Participant or any person claiming or
deriving any rights through him or her shall be given by:

 

(i)            delivering it personally to the Participant or to the person
claiming or deriving rights through him or her, as the case may be;

 

(ii)           other than in the case of a payment, sending it to the
Participant via facsimile or similar means of electronic transmission to the
facsimile or e-mail address which is maintained for the Participant in the
Company’s personnel records; or

 

(iii)          mailing it postage paid (provided that the postal service is then
in operation) or delivering it to the address which is maintained for the
Participant in the Company’s personnel records.

 

14.2         Any payment, notice, statement, certificate or other instrument
required or permitted to be given to the Company shall be given by mailing it
postage paid (provided that the postal service is then in operation), delivering
it to the Company at its principal address, or (other than in the case of a
payment) sending it by means of facsimile or similar means of electronic
transmission, to the attention of the Company.

 

--------------------------------------------------------------------------------

 

14.3         Any payment, notice, statement, certificate or other instrument
referred to in Section 16.2(a) or 16.2(b), if delivered, shall be deemed to have
been given or delivered on the date on which it was delivered, if mailed
(provided that the postal service is then in operation), shall be deemed to have
been given or delivered on the second business day following the date on which
it was mailed and if by facsimile or similar means of electronic transmission,
on the next business day following transmission.

 

15.           CURRENCY

 

15.1         All payments and benefits under the Plan shall be determined and
paid in the lawful currency of Canada, at a foreign exchange to be selected by
the Company, in its sole discretion.

 

16.           BENEFICIARIES AND CLAIMS FOR BENEFITS

 

16.1         Subject to the requirements of Applicable Law, a Participant shall
designate in writing a Beneficiary to receive any benefits that are payable
under the Plan upon the death of such Participant.  The Participant may, subject
to Applicable Law, change such designation from time to time.  Such designation
or change shall be in such form and executed and filed in such manner as the
Committee may from time to time determine.

 

17.           GENERAL

 

17.1         The transfer of an employee within the Niska Group shall not be
considered a termination of employment for the purposes of the Plan, so long as
such Participant continues to be a director or employee of an entity in the
Niska Group.

 

17.2         From time to time the Board may, in addition to its powers under
the Plan, add to or amend any of the provisions of the Plan or terminate the
Plan or amend the terms of any Phantom Units granted under the Plan, provided
however, that (i) any approvals required under any Applicable Law or Stock
Exchange Rules are obtained, (ii) no such amendment or termination shall be made
at any time which has the effect of adversely affecting the existing rights of a
Participant under the Plan without his or her consent in writing, and (iii) any
amendment to the Plan shall be such that it and any Phantom Units granted
hereunder comply with the exception to the definition of “salary deferral
arrangement” contained in paragraph (k) of subsection 248(1) of the ITA or any
successor provision thereto.  Upon the termination of the Plan, in whole or in
part, the Board shall, in its discretion, determine whether the Vested Phantom
Units credited to a Participant affected by the termination shall be
automatically redeemed and paid out in a lump sum cash payment net of any
applicable withholdings or otherwise paid to the Participant in accordance with
the terms of this Plan, or held for the credit of the Participant and redeemed
and paid out at a later date in accordance with the terms of the Plan in effect
immediately prior to the termination of the Plan.

 

17.3         The determination by the Company or Committee of any question which
may arise as to the interpretation or implementation of the Plan or any of the
Phantom Units granted hereunder shall be final and binding on all Participants
and other persons claiming or deriving rights through any of them.

 

--------------------------------------------------------------------------------

 

17.4         The Plan shall enure to the benefit of and be binding upon the
Niska Group and their successors and assigns.  The interest of any Participant
under the Plan or in any Unit shall not be transferable or alienable by him or
her either by pledge, assignment or in any other manner whatever, otherwise than
by testamentary disposition or in accordance with the laws governing the
devolution of property in the event of death; and after his or her lifetime
shall enure to the benefit of and be binding upon the Participant’s
Beneficiary.  Any attempt by a Participant to transfer, assign, pledge,
hypothecate, or otherwise dispose of such rights contrary to the provisions of
the Plan, or upon the levy or attachment of the or similar process upon such
rights, such rights as immediately become null and avoid.

 

17.5         (a)           The Company’s grant of any Phantom Units or any
obligation to make any payments hereunder is subject to compliance with
Applicable Law applicable thereto.

 

(b)           As a condition of participating in the Plan, each Participant
agrees to comply with all such Applicable Law and agrees to furnish to the
Company all information and undertakings as may be required to permit compliance
with such Applicable Law.  Each Participant shall provide the Committee with all
information (including personal information) the Committee requires in order to
administer the Plan (the “Participant Information”).

 

(c)           The Committee may from time to time transfer or provide access to
Participant Information to a third party service provider for purposes of the
administration of the Plan provided that such service providers will be provided
with such information for the sole purpose of providing services to the
Committee in connection with the operation and administration of the Plan.  The
Committee may also transfer and provide access to Participant Information to the
Employers for purposes of preparing financial statements or other necessary
reports and facilitating payment or reimbursement of Plan expenses.  By
participating in the Plan, each Participant acknowledges that Participant
Information may be so provided and agrees and consents to its provision on the
terms set forth herein.  The Company shall not disclose Participant Information
except (i) as contemplated above in this Section 17.5, (ii) in response to
regulatory filings or other requirements for the information by a governmental
authority or regulatory body, or (iii) for the purpose of complying with a
subpoena, warrant or other order by a court, person or body having jurisdiction
over the Company to compel production of the information.

 

17.6         (a)           Neither the Company nor any Employer shall be liable
for any tax imposed on any Participant or any Beneficiary as a result of the
crediting, holding or redemption of Phantom Units or amounts paid or credited to
such Participant (or Beneficiary) under this Plan.  It is the responsibility of
the Participant (or Beneficiary) to complete and file any tax returns which may
be required under any applicable tax laws within the period prescribed by such
laws.

 

(b)           Each of the Company or any Employer shall be authorized to deduct,
withhold and/or remit from any amount paid or credited hereunder, or otherwise,
such amount as may be necessary so as to ensure the Company or Employer will be

 

--------------------------------------------------------------------------------

 

able to comply with the applicable provisions of any federal, provincial, state
or local law relating to the withholding of tax or other required deductions,
including on the amount, if any, includable in the income of a Participant or
Beneficiary, as the case may be.

 

17.7         A Participant shall not have the right or be entitled to exercise
any voting rights, receive distributions or have or be entitled to any other
rights as a holder of MLP Units in respect of any Phantom Units.

 

17.8         Neither the designation of an employee as a Participant nor the
grant of any Phantom Units to any Participant entitles any Participant to any
additional grant, as the case may be, of any Phantom Units under the Plan. 
Neither the Plan nor any action taken thereunder shall interfere with the right
of the Employer of a Participant to terminate a Participant’s employment at any
time for any reason.  Neither any period of notice, if any, nor any payment in
lieu thereof, upon termination of employment shall be considered as extending
the period of employment for the purposes of the Plan or for the purpose of
determining any right or entitlement of a Participant or a Participant’s
Beneficiary under this Plan.

 

17.9         Participation in the Plan shall be entirely voluntary and any
decision not to participate shall not affect any employee’s employment with the
Niska Group.

 

17.10       The Plan shall be an unfunded obligation of the Niska Group. 
Neither the establishment of the Plan nor the grant of any Phantom Units or the
setting aside of any funds by the Company or any Employer (if, in its sole
discretion, it chooses to do so) shall be deemed to create a trust.  Legal and
equitable title to any funds set aside for the purposes of the Plan shall remain
in the Company or the Employer and no Participant shall have any security or
other interest in such funds.  Any funds so set aside shall remain subject to
the claims of creditors of the Company or Employer present or future.  Amounts
payable to any Participant under the Plan shall be a general, unsecured
obligation of the Company.  The right of the Participant or Beneficiary to
receive payment pursuant to the Plan shall be no greater than the right of other
unsecured creditors of the Company.

 

17.11       This Plan is established under the laws of the Province of Alberta
and the rights of all parties and the construction of each and every provision
of the Plan and any Phantom Units granted hereunder shall be construed according
to the laws of the Province of Alberta.

 

17.12       This Plan is hereby instituted this · day of ·, 2011.

 

 

 

NISKA GAS STORAGE PARTNERS LLC

 

 

 

Per:

 

 

--------------------------------------------------------------------------------

 

SCHEDULE “A”

 

Plan Provisions Applicable to Certain US Taxpayers

 

This Schedule “A” sets forth special provisions of the Plan that apply to any
Participant who is a US Taxpayer and who is not subject to Canadian federal
income tax under the provisions of the ITA in respect of any compensation
received under or in respect of the Plan.  For the avoidance of doubt, nothing
in this Schedule “A” shall be deemed to modify the Plan as it relates to any
other Participant.

 

(a)           The term “PPU Period” in Section 2.1 of the Plan shall be deleted
and replaced in its entirety with the following:

 

“PPU Period” for a Phantom Unit means, unless otherwise specified in the
applicable Award Agreement, the period extending from the April 1 of the
calendar year containing the Date of Grant to March 31 of the third calendar
year commencing after the calendar year containing the Date of Grant;

 

(b)           Section 4.1 of the Plan shall be deleted and replaced in its
entirety with the following:

 

4.1           The Committee shall designate, at the time of grant or credit of
Phantom Units, the date or dates on which all or a portion of the Phantom Units
shall vest (including any additional Phantom Units credited to a Participant’s
Account under Section 5.1) and any conditions to such vesting including, without
limitation, conditions related to one or more Performance Measures.  Any
conditions to such vesting shall be as set out in Section 4.2 or as set out in
the applicable Award Agreement.

 

(c)           Section 10.1 of the Plan shall be deleted and replaced in its
entirety with the following:

 

10.1         Subject to the remainder of this Article 10, on a date to be
determined by the Committee, in its sole discretion but in compliance with the
Deferred Compensation Rules and following the day on which any Phantom Units
become Vested Phantom Units (the “Phantom Unit Entitlement Date”), such Vested
Phantom Units shall be redeemed and paid by the Participant’s Employer to the
Participant or the Participant’s Beneficiary, as applicable, in accordance with
the terms of the Plan.  The Phantom Unit Entitlement Date will be set forth in
the individual Award Agreement that governs the Phantom Units.  The FMV of the
Vested Phantom Units, determined as of the Phantom Unit Entitlement Date, so
redeemed shall, after deduction of any applicable taxes and other source
deductions required to be withheld by the Employer, be paid in cash.

 

(d)           Section 10.3 of the Plan shall be deleted in its entirety.

 

--------------------------------------------------------------------------------

 

(e)           For purposes of interpreting the Plan, any requirement to comply
with, or any reference to, the phrase “salary deferral arrangement” shall be
stricken from the Plan.

 

--------------------------------------------------------------------------------

 

SCHEDULE “B”

 

Niska Gas Storage Partners LLC
Phantom Unit Performance Plan (the “Plan”)

 

Award Agreement for Phantom Units (Standard Grant)

 

Niska Gas Storage Partners LLC (the “Company”) hereby grants the following award
to the Participant named below in accordance with and subject to the terms,
conditions and restrictions of this Award Agreement (“Award Agreement”),
together with the provisions of the Plan:

 

Name of Participant:

 

Address of Participant:

 

 

Number of Phantom Units:

 

Date of Grant:

 

Service Year:

 

PPU Period:

 

Vesting of the Phantom Units granted hereunder shall be in accordance with
Section 4.2 and the other provisions of the Plan.  For these purposes:

 

·                  Performance Peer Group:

 

 

Other Terms and Conditions:

 

The terms and conditions of the Plan are hereby incorporated by reference as
terms and conditions of this Award Agreement and all capitalized terms used
herein, unless expressly defined in a different manner, have the meanings
ascribed thereto in the Plan.

 

Participation in the Plan is voluntary and is not a condition of employment with
the Niska Group.  No Participant shall have any claim or right to be granted
Phantom Units pursuant to the Plan.

 

None of the Company or any Employer (which for the purposes of this Award
Agreement includes their respective directors, officers and employees) shall
have any liability for:  (i) the income or other tax consequences to
Participants arising from participation in the Plan; (ii) any change in the
value of the MLP Units; or (iii) any delays or errors in the administration of
the

 

--------------------------------------------------------------------------------

 

Plan, except where such person has acted with willful misconduct. Participants
should consult their own tax and business advisors as the Niska Group is not
providing any such advice to any Participant.

 

Please acknowledge receipt of this Award Agreement and your agreement to be
bound by its terms (and the terms and conditions set out in the Plan) by signing
the acknowledgement below.  Please make a copy of this Award Agreement for your
records and return your original signed Award Agreement to the attention of
                                   within thirty (30) days of your receipt of
this Award Agreement.

 

If you fail to complete and return this Award Agreement within thirty (30) days
of your receipt of the Award Agreement, the Company reserves the right to revoke
the crediting of Phantom Units to you.

 

Thank you for your contribution to the Company.

 

 

NISKA GAS STORAGE PARTNERS LLC

 

 

 

 

 

Per:

 

 

ACKNOWLEDGEMENT

 

The undersigned Participant acknowledges that:

 

1.                                       I HAVE HAD THE OPPORTUNITY TO REVIEW A
COPY OF THE PLAN AND AGREE TO BE BOUND BY IT AND THE TERMS OF THIS AWARD
AGREEMENT.  IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE PLAN AND THIS
AWARD AGREEMENT, THE TERMS OF THE PLAN WILL GOVERN AND PREVAIL.

 

2.                                       I HAVE NOT BEEN INDUCED TO ENTER INTO
THIS AWARD AGREEMENT BY EXPECTATION OF EMPLOYMENT OR CONTINUED EMPLOYMENT WITH
THE NISKA GROUP.

 

3.                                       I WILL BE LIABLE FOR INCOME TAX AND
OTHER APPLICABLE TAXES OR SOCIAL SECURITY CONTRIBUTIONS WHEN PAYMENT IS MADE TO
ME UNDER THE PLAN IN RESPECT OF PHANTOM UNITS CREDITED TO MY ACCOUNT, IN
ACCORDANCE WITH THE TERMS OF THE PLAN.  I SHOULD CONFIRM THE TAX TREATMENT WITH
MY OWN TAX ADVISOR.

 

4.                                       THE VALUE OF A PHANTOM UNIT IS BASED ON
THE TRADING PRICE OF AN MLP UNIT AND IS THUS NOT GUARANTEED.  THE EVENTUAL CASH
VALUE

 

--------------------------------------------------------------------------------

 

OF A PHANTOM UNIT ON THE APPLICABLE PAYMENT DATE MAY BE HIGHER OR LOWER THAN THE
NOTIONAL VALUE OF THE PHANTOM UNIT AT THE TIME IT WAS ALLOCATED TO MY ACCOUNT IN
THE PLAN.

 

5.                                       EXCEPT AS OTHERWISE PROVIDED IN THE
PLAN, IF MY EMPLOYMENT WITH THE NISKA GROUP IS TERMINATED, I WILL FORFEIT ALL
UNVESTED PHANTOM UNITS IN MY ACCOUNT AT THE TIME.

 

6.                                       ANY LUMP SUM PAYMENT IN CASH OWING TO
ME PURSUANT TO THE PLAN, LESS APPLICABLE WITHHOLDING TAXES, WILL BE FORWARDED TO
ME AT THE ADDRESS ABOVE, BY REGISTERED MAIL, IN THE FORM OF A CHEQUE FROM THE
EMPLOYER.

 

7.                                       I SHALL HAVE NO ENTITLEMENT TO RECEIVE
PAYMENT IN RESPECT OF ANY PHANTOM UNITS THAT ARE FORFEITED PURSUANT TO THE TERMS
OF THE PLAN WHETHER BY WAY OF DAMAGES OR OTHERWISE.

 

8.                                       NO FUNDS WILL BE SET ASIDE TO GUARANTEE
PAYMENT OF THE PHANTOM UNITS AND THAT FUTURE PAYMENTS OF PHANTOM UNITS WILL
REMAIN AN UNFUNDED AND UNSECURED LIABILITY RECORDED ON THE BOOKS OF THE COMPANY
AND/OR EMPLOYER.

 

9.                                       I AM REQUIRED TO PROVIDE THE COMPANY
WITH ALL INFORMATION (INCLUDING PERSONAL INFORMATION) THE COMMITTEE REQUIRES TO
ADMINISTER THE PLAN AND I HEREBY CONSENT TO THE COLLECTION OF ALL SUCH
INFORMATION BY THE COMPANY.  I UNDERSTAND THAT THE COMPANY MAY FROM TIME TO TIME
TRANSFER OR PROVIDE ACCESS TO SUCH INFORMATION TO THIRD PARTY SERVICE PROVIDERS
FOR PURPOSES OF THE ADMINISTRATION OF THE PLAN AND THAT SUCH SERVICE PROVIDERS
WILL BE PROVIDED WITH SUCH INFORMATION FOR THE SOLE PURPOSE OF PROVIDING SUCH
SERVICES TO THE COMPANY.  I ACKNOWLEDGE THAT WITHDRAWAL OF THE CONSENT AT ANY
TIME MAY RESULT IN A DELAY IN THE ADMINISTRATION OF THE PLAN OR IN THE INABILITY
OF THE COMPANY OR EMPLOYER TO DELIVER A LUMP-SUM CASH PAYMENT CORRESPONDING TO
THE NUMBER OF MY PHANTOM UNITS TO ME UNDER THE PLAN.

 

Date:

 

 

 

 

 

Signature of Participant

 

 

 

 

 

 

 

 

Name of Participant [Please Print]

 

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SCHEDULE “C”

 

Niska Gas Storage Partners LLC
Phantom Unit Performance Plan (the “Plan”)

 

Award Agreement for Phantom Units (Less than 3-Year PPU Period)

 

Niska Gas Storage Partners LLC (the “Company”) hereby grants the following award
to the Participant named below in accordance with and subject to the terms,
conditions and restrictions of this Award Agreement (“Award Agreement”),
together with the provisions of the Plan:

 

Name of Participant:

 

Address of Participant:

 

 

Number of Phantom Units:

 

Date of Grant:

 

Service Year:

 

PPU Period:            of the Phantom Units granted hereunder shall have a PPU
Period commencing on the Date of Grant and concluding on           .  The
remaining        Phantom Units granted hereunder shall have a PPU Period
commencing on the Date of Grant and concluding                  .

 

Vesting of the Phantom Units granted hereunder shall be in accordance with
Section 4.2 and the other provisions of the Plan.  For these purposes:

 

·                  Performance Peer Group:

 

 

Other Terms and Conditions:

 

The terms and conditions of the Plan are hereby incorporated by reference as
terms and conditions of this Award Agreement and all capitalized terms used
herein, unless expressly defined in a different manner, have the meanings
ascribed thereto in the Plan.

 

Participation in the Plan is voluntary and is not a condition of employment with
the Niska Group.  No Participant shall have any claim or right to be granted
Phantom Units pursuant to the Plan.

 

--------------------------------------------------------------------------------

 

None of the Company or any Employer (which for the purposes of this Award
Agreement includes their respective directors, officers and employees) shall
have any liability for:  (i) the income or other tax consequences to
Participants arising from participation in the Plan; (ii) any change in the
value of the MLP Units; or (iii) any delays or errors in the administration of
the Plan, except where such person has acted with willful misconduct.
Participants should consult their own tax and business advisors as the Niska
Group is not providing any such advice to any Participant.

 

Please acknowledge receipt of this Award Agreement and your agreement to be
bound by its terms (and the terms and conditions set out in the Plan) by signing
the acknowledgement below.  Please make a copy of this Award Agreement for your
records and return your original signed Award Agreement to the attention of
                                   within thirty (30) days of your receipt of
this Award Agreement.

 

If you fail to complete and return this Award Agreement within thirty (30) days
of your receipt of the Award Agreement, the Company reserves the right to revoke
the crediting of Phantom Units to you.

 

Thank you for your contribution to the Company.

 

 

NISKA GAS STORAGE PARTNERS LLC

 

 

 

 

 

Per:

 

 

--------------------------------------------------------------------------------

 

ACKNOWLEDGEMENT

 

--------------------------------------------------------------------------------

 

The undersigned Participant acknowledges that:

 

1.                                       I HAVE HAD THE OPPORTUNITY TO REVIEW A
COPY OF THE PLAN AND AGREE TO BE BOUND BY IT AND THE TERMS OF THIS AWARD
AGREEMENT.  IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE PLAN AND THIS
AWARD AGREEMENT, THE TERMS OF THE PLAN WILL GOVERN AND PREVAIL.

 

2.                                       I HAVE NOT BEEN INDUCED TO ENTER INTO
THIS AWARD AGREEMENT BY EXPECTATION OF EMPLOYMENT OR CONTINUED EMPLOYMENT WITH
THE NISKA GROUP.

 

3.                                       I WILL BE LIABLE FOR INCOME TAX AND
OTHER APPLICABLE TAXES OR SOCIAL SECURITY CONTRIBUTIONS WHEN PAYMENT IS MADE TO
ME UNDER THE PLAN IN RESPECT OF PHANTOM UNITS CREDITED TO MY ACCOUNT, IN
ACCORDANCE WITH THE TERMS OF THE PLAN.  I SHOULD CONFIRM THE TAX TREATMENT WITH
MY OWN TAX ADVISOR.

 

4.                                       THE VALUE OF A PHANTOM UNIT IS BASED ON
THE TRADING PRICE OF AN MLP UNIT AND IS THUS NOT GUARANTEED.  THE EVENTUAL CASH
VALUE OF A PHANTOM UNIT ON THE APPLICABLE PAYMENT DATE MAY BE HIGHER OR LOWER
THAN THE NOTIONAL VALUE OF THE PHANTOM UNIT AT THE TIME IT WAS ALLOCATED TO MY
ACCOUNT IN THE PLAN.

 

5.                                       EXCEPT AS OTHERWISE PROVIDED IN THE
PLAN, IF MY EMPLOYMENT WITH THE NISKA GROUP IS TERMINATED, I WILL FORFEIT ALL
UNVESTED PHANTOM UNITS IN MY ACCOUNT AT THE TIME.

 

6.                                       ANY LUMP SUM PAYMENT IN CASH OWING TO
ME PURSUANT TO THE PLAN, LESS APPLICABLE WITHHOLDING TAXES, WILL BE FORWARDED TO
ME AT THE ADDRESS ABOVE, BY REGISTERED MAIL, IN THE FORM OF A CHEQUE FROM THE
EMPLOYER.

 

7.                                       I SHALL HAVE NO ENTITLEMENT TO RECEIVE
PAYMENT IN RESPECT OF ANY PHANTOM UNITS THAT ARE FORFEITED PURSUANT TO THE TERMS
OF THE PLAN WHETHER BY WAY OF DAMAGES OR OTHERWISE.

 

8.                                       NO FUNDS WILL BE SET ASIDE TO GUARANTEE
PAYMENT OF THE PHANTOM UNITS AND THAT FUTURE PAYMENTS OF PHANTOM UNITS WILL
REMAIN AN UNFUNDED AND UNSECURED LIABILITY RECORDED ON THE BOOKS OF THE COMPANY
AND/OR EMPLOYER.

 

9.                                       I AM REQUIRED TO PROVIDE THE COMPANY
WITH ALL INFORMATION (INCLUDING PERSONAL INFORMATION) THE COMMITTEE REQUIRES TO
ADMINISTER THE PLAN AND I HEREBY CONSENT TO THE COLLECTION OF ALL SUCH
INFORMATION BY THE COMPANY.  I UNDERSTAND THAT THE COMPANY MAY FROM TIME TO TIME
TRANSFER OR PROVIDE ACCESS TO SUCH INFORMATION TO THIRD PARTY SERVICE PROVIDERS
FOR PURPOSES

 

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OF THE ADMINISTRATION OF THE PLAN AND THAT SUCH SERVICE PROVIDERS WILL BE
PROVIDED WITH SUCH INFORMATION FOR THE SOLE PURPOSE OF PROVIDING SUCH SERVICES
TO THE COMPANY.  I ACKNOWLEDGE THAT WITHDRAWAL OF THE CONSENT AT ANY TIME
MAY RESULT IN A DELAY IN THE ADMINISTRATION OF THE PLAN OR IN THE INABILITY OF
THE COMPANY OR EMPLOYER TO DELIVER A LUMP-SUM CASH PAYMENT CORRESPONDING TO THE
NUMBER OF MY PHANTOM UNITS TO ME UNDER THE PLAN.

 

Date:

 

 

 

 

 

 

Signature of Participant

 

 

 

 

 

 

 

 

 

 

 

Name of Participant [Please Print]

 

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SCHEDULE “D”

 

 

Niska Gas Storage Partners LLC

Phantom Unit Performance Plan (the “Plan”)

 

Award Agreement for Phantom Units (Time-Based Vesting)

 

Niska Gas Storage Partners LLC (the “Company”) hereby grants the following
time-based award to the Participant named below in accordance with and subject
to the terms, conditions and restrictions of this Award Agreement (“Award
Agreement”), together with the provisions of the Plan:

 

Name of Participant:

 

Address of Participant:

 

 

Number of Phantom Units:

 

Date of Grant:

 

Service Year:

 

Vesting of the Phantom Units granted hereunder shall not be in accordance with
Sections 4.2(a), (b), or (c) of the Plan.  Phantom Units granted hereunder shall
vest solely based on the passage of time.  The PPU Vesting Date for the Phantom
Units granted hereunder shall be                 .

 

Other Terms and Conditions:

 

·                  Notwithstanding Section 7.1 of the Plan, upon the Participant
terminating employment with the Niska Group by reason of the death, Disability,
or Retirement of the Participant or the termination of the employment of the
Participant by the Employer other than for Cause, a number of Phantom Units
granted hereunder shall become Vested Phantom Units in accordance with the
following:

 

A X B/C

 

Where:

 

A = # of Phantom Units granted hereunder in Participant’s Account which did not
become Vested Phantom Units on or prior to the Participant’s Termination Date;

 

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B = the number of days between the Date of Grant of such Phantom Units and the
Participant’s Termination Date; and

 

C = the number of days in the entire PPU Period for such Phantom Units.

 

For greater certainty, no more than 100% of the Phantom Units credited to a
Participant’s Account may become Vested Phantom Units pursuant to this
provision.

 

·                  In applying Section 8.1 of the Plan to Phantom Units granted
hereunder, Section 8.1 shall be read as follows:

 

Upon a Participant commencing a Leave of Absence, any Phantom Units granted
hereunder which did not become Vested Phantom Units on or prior to the date the
Participant commenced the Leave of Absence shall not become Vested Phantom Units
during the Participant’s Leave of Absence, unless the Participant’s employment
is terminated during such period, in which case the provisions of Sections 6.1
and 7.1 (as amended by this Award Agreement) shall apply.  Upon the
Participant’s Return to Service  Date, any Phantom Units granted hereunder which
did not become Vested Phantom Units on or prior to the date the Participant
commenced the Leave of Absence shall continue to vest in accordance with their
terms but only a pro rata proportion of the aggregate number of Phantom Units
granted hereunder that would otherwise vest shall become Vested Phantom Units
based on the number of days during which the Participant provided services to
the Employer and was not on a Leave of Absence prior to the PPU Vesting Date,
versus the total number of days prior to the PPU Vesting Date. Any Phantom Units
granted hereunder to which this Section 8.1 applies which do not become Vested
Phantom Units pursuant to this Section 8.1 shall be terminated and forfeited.

 

·                  In applying Section 11.1 of the Plan to Phantom Units granted
hereunder,  Section 11.1(c) shall be read as follows:

 

at the time a Change of Control occurs, any Phantom Units credited to a
Participant’s Account which did not become Vested Phantom Units on or prior to
the date the Change of Control occurred shall become Vested Phantom Units.  For
greater certainty, no more than 100% of the Phantom Units credited to a
Participant’s Account may become Vested Phantom Units pursuant to this
provision.

 

The terms and conditions of the Plan are hereby incorporated by reference as
terms and conditions of this Award Agreement and all capitalized terms used
herein, unless expressly defined in a different manner, have the meanings
ascribed thereto in the Plan.

 

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Participation in the Plan is voluntary and is not a condition of employment with
the Niska Group.  No Participant shall have any claim or right to be granted
Phantom Units pursuant to the Plan.

 

None of the Company or any Employer (which for the purposes of this Award
Agreement includes their respective directors, officers and employees) shall
have any liability for:  (i) the income or other tax consequences to
Participants arising from participation in the Plan; (ii) any change in the
value of the MLP Units; or (iii) any delays or errors in the administration of
the Plan, except where such person has acted with willful misconduct.
Participants should consult their own tax and business advisors as the Niska
Group is not providing any such advice to any Participant.

 

Please acknowledge receipt of this Award Agreement and your agreement to be
bound by its terms (and the terms and conditions set out in the Plan) by signing
the acknowledgement below.  Please make a copy of this Award Agreement for your
records and return your original signed Award Agreement to the attention of
                                   within thirty (30) days of your receipt of
this Award Agreement.

 

If you fail to complete and return this Award Agreement within thirty (30) days
of your receipt of the Award Agreement, the Company reserves the right to revoke
the crediting of Phantom Units to you.

 

Thank you for your contribution to the Company.

 

 

NISKA GAS STORAGE PARTNERS LLC

 

 

 

 

 

Per:

 

 

ACKNOWLEDGEMENT

 

The undersigned Participant acknowledges that:

1.                                       I HAVE HAD THE OPPORTUNITY TO REVIEW A
COPY OF THE PLAN AND AGREE TO BE BOUND BY IT AND THE TERMS OF THIS AWARD
AGREEMENT.  IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE PLAN AND THIS
AWARD AGREEMENT, THE TERMS OF THE PLAN WILL GOVERN AND PREVAIL.

 

2.                                       I HAVE NOT BEEN INDUCED TO ENTER INTO
THIS AWARD AGREEMENT BY EXPECTATION OF EMPLOYMENT OR CONTINUED EMPLOYMENT WITH
THE NISKA GROUP.

 

3.                                       I WILL BE LIABLE FOR INCOME TAX AND
OTHER APPLICABLE TAXES OR SOCIAL SECURITY CONTRIBUTIONS WHEN PAYMENT IS MADE TO
ME UNDER THE PLAN IN RESPECT OF PHANTOM UNITS CREDITED TO MY

 

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ACCOUNT, IN ACCORDANCE WITH THE TERMS OF THE PLAN.  I SHOULD CONFIRM THE TAX
TREATMENT WITH MY OWN TAX ADVISOR.

 

4.                                       THE VALUE OF A PHANTOM UNIT IS BASED ON
THE TRADING PRICE OF AN MLP UNIT AND IS THUS NOT GUARANTEED.  THE EVENTUAL CASH
VALUE OF A PHANTOM UNIT ON THE APPLICABLE PAYMENT DATE MAY BE HIGHER OR LOWER
THAN THE NOTIONAL VALUE OF THE PHANTOM UNIT AT THE TIME IT WAS ALLOCATED TO MY
ACCOUNT IN THE PLAN.

 

5.                                       EXCEPT AS OTHERWISE PROVIDED IN THE
PLAN, IF MY EMPLOYMENT WITH THE NISKA GROUP IS TERMINATED, I WILL FORFEIT ALL
UNVESTED PHANTOM UNITS IN MY ACCOUNT AT THE TIME.

 

6.                                       ANY LUMP SUM PAYMENT IN CASH OWING TO
ME PURSUANT TO THE PLAN, LESS APPLICABLE WITHHOLDING TAXES, WILL BE FORWARDED TO
ME AT THE ADDRESS ABOVE, BY REGISTERED MAIL, IN THE FORM OF A CHEQUE FROM THE
EMPLOYER.

 

7.                                       I SHALL HAVE NO ENTITLEMENT TO RECEIVE
PAYMENT IN RESPECT OF ANY PHANTOM UNITS THAT ARE FORFEITED PURSUANT TO THE TERMS
OF THE PLAN WHETHER BY WAY OF DAMAGES OR OTHERWISE.

 

8.                                       NO FUNDS WILL BE SET ASIDE TO GUARANTEE
PAYMENT OF THE PHANTOM UNITS AND THAT FUTURE PAYMENTS OF PHANTOM UNITS WILL
REMAIN AN UNFUNDED AND UNSECURED LIABILITY RECORDED ON THE BOOKS OF THE COMPANY
AND/OR EMPLOYER.

 

9.                                       I AM REQUIRED TO PROVIDE THE COMPANY
WITH ALL INFORMATION (INCLUDING PERSONAL INFORMATION) THE COMMITTEE REQUIRES TO
ADMINISTER THE PLAN AND I HEREBY CONSENT TO THE COLLECTION OF ALL SUCH
INFORMATION BY THE COMPANY.  I UNDERSTAND THAT THE COMPANY MAY FROM TIME TO TIME
TRANSFER OR PROVIDE ACCESS TO SUCH INFORMATION TO THIRD PARTY SERVICE PROVIDERS
FOR PURPOSES OF THE ADMINISTRATION OF THE PLAN AND THAT SUCH SERVICE PROVIDERS
WILL BE PROVIDED WITH SUCH INFORMATION FOR THE SOLE PURPOSE OF PROVIDING SUCH
SERVICES TO THE COMPANY.  I ACKNOWLEDGE THAT WITHDRAWAL OF THE CONSENT AT ANY
TIME MAY RESULT IN A DELAY IN THE ADMINISTRATION OF THE PLAN OR IN THE INABILITY
OF THE COMPANY OR EMPLOYER TO DELIVER A LUMP-SUM CASH PAYMENT CORRESPONDING TO
THE NUMBER OF MY PHANTOM UNITS TO ME UNDER THE PLAN.

 

Date:

 

 

 

 

 

 

Signature of Participant

 

 

 

 

 

 

 

 

 

 

 

Name of Participant [Please Print]

 

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