Exhibit
10.3


 


EXECUTIVE
EMPLOYMENT AGREEMENT


 


This Executive
Employment Agreement (the “Agreement”) is
entered into by and between Atlantic Power Holdings, Inc. (“Atlantic Holdings” or the “Company”),
Atlantic Power Corporation (“Atlantic Power”)
and Patrick J. Welch (“Executive”).
Atlantic Holdings, Atlantic Power and Executive are collectively referred to
herein as the “Parties.” This Agreement shall be
effective as of December 31, 2009 (the “Effective
Date”), subject to the termination of the Management Agreement (as
defined below) becoming effective.


 


WITNESSETH:


 


WHEREAS,
Atlantic Power, a publicly traded corporation organized under the laws of the
Province of British Columbia, through Atlantic Holdings, owns interests in a
portfolio of power generation projects located predominantly in major markets
in the United States; and


 


WHEREAS,
Atlantic Holdings is a Delaware limited liability company, owned by Atlantic
Power; and


 


WHEREAS,
since 2004, Executive has served as Chief Financial Officer of Atlantic Power
Management, LLC (“Atlantic Management”),
a Delaware limited liability company previously engaged under a first amended
and restated management agreement dated as of the 24th day of April, 2007 (the “Management Agreement”) to provide certain management and
administrative services to both Atlantic Power and Atlantic Holdings and their
various subsidiary organizations, pursuant to an employment agreement dated May 1,
2009 (the “Previous Employment Agreement”);
and


 


WHEREAS
effective as of the Effective Date, the Company, Atlantic Power and Atlantic
Management have agreed to terminate the Management Agreement; and


 


WHEREAS in
connection with, and subject to, the termination of the Management Agreement,
the Executive, the Company, Atlantic Power and Atlantic Management, and their
respective affiliates, have agreed that the Executive will cease to be employed
by Atlantic Management and will be employed as the Chief Financial Officer of
the Company, on the terms and conditions set out in this Agreement;


 


NOW,
THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is hereby agreed between and among the Parties
as follows:


 


1.                                      Employment.


 


The Company agrees to employ Executive and Executive agrees to serve in
the employ of the Company as an executive, as follows:


 


(a)                                  Executive
agrees to serve as Chief Financial Officer (CFO) of the Company during the term
of this Agreement. Executive further agrees to use his best efforts, and apply
his skill and experience, to the proper performance of his duties hereunder and
to the business and affairs of the Company and its affiliates.


 

















 


Executive agrees to serve
the Company and its affiliates faithfully, diligently and to the best of his
ability.


 


(b)                                 The
principal location from which Executive will serve the Company and its
affiliates and perform his duties hereunder shall be Boston, Massachusetts.


 


2.                                      Term.


 


The Company
hereby agrees to continue to employ the Executive and Executive hereby agrees
to continue to serve the Company and its affiliates from the Effective Date
until December 31, 2012, unless further extended or sooner terminated as
hereinafter provided.


 


On the first day
of the month of October in the year 2010, and on the first day of such
month in each succeeding year, the remaining twenty-seven (27) month term of
this Employment Agreement shall be automatically extended for one additional
year unless, prior to such date, the Company shall have given the Executive, or
the Executive shall have given the Company, written notice that the Employment
Agreement shall not be extended.


 


3.                                      Compensation.


 


(a)                                  Base Salary. During the period of the
Executive’s employment hereunder, the Company shall pay to the Executive a
minimum base salary at the rate of not less than $259,500 per annum with the
same frequency and on the same basis that the Company normally makes salary
payments to its other executive personnel. This minimum base salary may be
increased from time to time in accordance with normal business practices of the
Company (the minimum base salary as increased from time to time, the “Base Salary”). If such increases take
place, the Company shall not thereafter decrease the Executive’s Base Salary
without the Executive’s consent during the term of this Agreement.


 


(b)                                 Annual Bonus. During the employment
period, in addition to the Base Salary, for each calendar performance year of
the Company ending during the employment period (and for calendar year 2009
whether within the employments period or not), the Executive shall be afforded
the opportunity to receive an annual bonus (the “Annual Bonus”). In respect of each of the initial three
calendar years of the employment period following December 31, 2009 and
for calendar year 2009 (it being agreed that the first of these will be paid in
January, 2010 for the 2009 calendar year, the Annual Bonus shall consist of the
sum of the following (it being understood that the parties shall negotiate in
good faith as to an annual bonus in respect of subsequent calendar years):


 


(i)                                    An
amount equal to the product obtained by multiplying an initial Target of
$130,000 (“Target”) by the
percentage set out in the table below that corresponds to the percentile of the
Company’s annual “total shareholder return” for such calendar year relative to
its relevant peer group (which shall be the peer group used under the proposed
LTIP):


 


2

















 


	
   

  	
  Percentile

  	
   

  	
  Percentage
  of Target

  
	
   

  	
  Last in peer group

  	
   

  	
  0

  
	
   

  	
  < 25

  	
   

  	
  20%

  
	
   

  	
  25 – 49

  	
   

  	
  50%

  
	
   

  	
  50 – 74

  	
   

  	
  80%

  
	
   

  	
  75 – 84

  	
   

  	
  95%

  
	
   

  	
  > 85

  	
   

  	
  110%

  



 


(ii)                                 An
amount up to twenty percent (20%) of such Target, determined in the discretion
of the Atlantic Power Board (based on Executive’s performance against annually
approved goals and objectives); and


 


(iii)                              An
amount equal to $130,000, being approximately the simple average of the portion
of the Executive’s Annual Bonus that was paid to the Executive by ArcLight
Capital Partners, LLC (or an affiliate thereof) for the calendar years ended December 31,
2008 and December 31, 2007.


 


Any amount payable in respect
of the Annual Bonus shall be paid in cash, as a single lump sum, as soon as
practicable in January following the calendar year for which the amount
(or prorated portion) is earned or awarded, subject as to Section 3(b)(ii) above,
to the Board’s preliminary assessment and approval of firm results, including
review of the December monthly report.


 


As used in this Agreement, “Total Annual Compensation” shall mean the Base Salary,
Annual Bonus (calculated as above) and the Company’s most recent 401-k matching
contribution paid to Executive. Where Total Annual Compensation (or any
component thereof) is required under this Agreement to be calculated for a
period, any portion of which occurred prior to the Effective Date, such
calculation shall include such portion and shall be based on the employment
arrangements that were in effect, other than the calendar 2009 bonus which is
to be paid and determined under this Agreement, between the Executive and
Atlantic Management, Atlantic Holdings and Atlantic Power during such period
pursuant to the Previous Employment Agreement.


 


(c)                                  Long Term Incentive Plan. The Atlantic
Holdings’ Long Term Incentive Plan (“LTIP”)
was approved by the shareholders of Atlantic Power on or about June 2006,
and was amended and restated April 25, 2008 by the Atlantic Power Board.
The purpose of the LTIP is to align the interests of eligible persons (such as
Executive) with those of income participating securities (IPS) holders (or,
following the conversion of Atlantic Power from an IPS structure to a common
share structure, holders of common shares) and to assist in attracting,
retaining and motivating key employees of Atlantic Holdings.


 


Executive shall participate
in the LTIP pursuant to its expressed terms (including any amendments contemplated
in the August 11, 2009 report of Hugessen 


 


3

















 


Consulting, effective for
the 2010 performance year, and amendments to address requirements of Internal
Revenue Code Section 409A) at a level that is commensurate with the
Executive’s participation in such plans immediately prior to the Effective
Date, or, if more favorable to the Executive, at the level made available to
the Executive or other similar situated officers at any time thereafter and be
entitled to the maximum award amount determined by the Plan’s Administrators,
the independent members of the Atlantic Power Board, of 150% of the relevant
year’s Base Salary.


 


(d)                                 Expenses. The Executive shall be
entitled to receive a prompt reimbursement of all reasonable business expenses
incurred by the Executive in performing his services hereunder including
expenses related to travel and other business expenses while away from home on
business. Such expenses shall be reimbursed and accounted for in accordance with
the policies and procedures presently established by Atlantic Holdings.


 


(e)                                  Other Benefits. The Company
shall maintain and the Executive shall be entitled to participate in all of the
Company’s employee benefit plans and arrangements in effect on the date hereof
including, without limitation, all pension and retirement plans, life
insurance, health, accident, medical and disability insurance, and the Company’s
holiday and vacation plans, provided, however, that such plans and arrangements
shall be no less favourable to Executive, taken as a whole, than those
previously provided to Executive by Atlantic Management. The Company may make
changes in any such arrangements provided that such changes are made pursuant
to a program which is applicable to all officers of the company and which
changes do not result in a proportionately greater reduction in the rights and
benefits to the Executive as compared with any other officers, provided that
the Executive shall be entitled to a minimum of four (4) weeks paid vacation
during each calendar year in addition to all normal and customary holidays
observed by the Company and provided further that such plans and arrangements
shall be no less favourable to Executive, taken as a whole, than those
previously provided to Executive by Atlantic Management.  The Company also shall ensure and take all
measure necessary to provide that Executive encounters or suffers no gap in any
insurance coverages and other benefits as a result of the termination of his
employment by Atlantic Management and his employment hereunder and that all
coverages and benefits are continuous through and after such transition.


 


The Executive shall also be
entitled to participate or receive benefits under any future employee benefit
plan or arrangement that the Company establishes for its key executives
consistent with the general terms of any such future benefits plans.


 


(f)                                    Bonus Calculation. Whenever the
Company is required to make payments to the Executive under this Section or
Sections 4 and 7 below, if such payments include bonus payments for a period or
periods of time which have not yet occurred, Executive will be paid his Annual
Bonus at no less than 100% of the average amount of such Annual Bonus paid to
Executive in the preceding two years.


 


4

















 


4.                                      Compensation
Upon Death Or Disability.


 


In the event
Executive shall, by reason of illness or incapacity, be unable to fulfill his
obligations on behalf of the Company for a period of 90 consecutive days, the
Company’s long term disability group coverage for Executive will pay up to 60%
of his Base Salary, subject to its terms and conditions. The Company will
provide term life insurance coverage in accordance with its group policy.


 


5.                                      Indemnification.


 


The Company and
Atlantic Power shall each indemnify and hold harmless Executive to the fullest
extent permitted under the laws of the State of Delaware (to the same extent
that a corporation organized under the laws of the State of Delaware could
indemnify an officer or employee), in the case of the Company, and to the
fullest extent permitted under the Business Corporations Act
(British Columbia), in the case of Atlantic Power, in each case with respect to
any and all costs, charges and expenses (including, without limitation,
expenses of investigations, judicial or administrative proceedings or appeals,
and attorney’s fees and disbursements), judgments, fines and amounts paid in
settlement (collectively, “Claims”)
incurred, awarded, suffered or otherwise arising in connection with any
threatened, pending or completed action, suit or proceeding, whether brought by
or in the right of the Company and/or Atlantic Power or otherwise and whether
of a civil, criminal, administrative or investigative nature, in which Executive
may be or may have been involved as a party, witness or otherwise, by reason of
the fact that Executive is or was a director, officer and/or employee of the
Company or any parent, subsidiary or affiliate of the Company, by reason of any
action taken by him or of any inaction on his part while acting as such a
director, officer and/or employee, or by reason of the fact that he is or was
serving as the request of the Company as a director, partner, trustee, officer,
employee or agent of another corporation, domestic or foreign, non-profit or
for-profit, partnership, joint venture, trust or other enterprise; in each case
whether or not he is acting or serving in any such capacity at the time any
liability or expense is incurred for which indemnification or reimbursement can
be provided under this Agreement, unless such Claims arise principally and
directly from the fraud, wilful default or gross negligence of Executive. All
indemnification required under this paragraph shall be paid by the Company and/or
Atlantic Power, as applicable, in advance of the final disposition of such
matter, provided, however, that such payment in advance of the final
disposition of such matter shall be made only upon receipt of an undertaking by
or on behalf of Executive to repay all amounts so advanced in the event that it
shall ultimately be determined that under the laws of the State of Delaware (in
the case of the Company) or the Business Corporations Act
(British Columbia) (in the case of Atlantic Power) the Executive would not be
entitled to be indemnified by the Company and/or Atlantic Power, as applicable,
as authorized in this Agreement.


 


6.                                      Termination.


 


The Executive’s employment may be terminated only under the following
conditions:


 


(a)                                  By Executive. The Executive may
voluntarily resign his employment, and thereby terminate this Agreement upon
ninety (90) days prior written notice to the Company and the Atlantic Power
Board.


 


5

















 


(b)                                 By Executive. The Executive may terminate
his employment hereunder if, within ninety (90) days preceding and one year
following a “change in control”,
as defined below:


 


(i)                                    the
Executive is assigned any duties inconsistent in any material respect with the
Executive’s current position of employment (including status, offices, titles
and reporting relationships), authority, duties or responsibilities, or any
other action that when taken as a whole results in a diminution in the
Executive’s position, authority, duties or responsibilities, excluding for this
purpose any isolated, immaterial and inadvertent action not taken in bad faith
and which is remedied within seven business days after receipt of notice
thereof given by the Executive;


 


(ii)                                 the
Executive’s base salary is reduced in any material respect without the consent
of the Executive, or the Company or, in the case of the LTIP, Atlantic Power,
fails to continue in effect any material benefit or compensation plan
(including annual cash bonus or LTIP), life insurance plan, health and accident
plan or disability plan in existence as of the date of this Agreement (or a
replacement or substitute plan providing the Executive with substantially
similar benefits) in which the Executive is participating or materially reduces
the Executive’s benefits under any of such plans (or replacement or substitute
plans);


 


(iii)                              the
Executive is required to be based at any location more than 35 miles from
Boston, Massachusetts except for requirements of travel in the ordinary course
of the Executive’s duties; or


 


(iv)                             there
is a failure by the Company or Atlantic Power to comply with any material
provisions of this Agreement and such failure has continued for a period of
thirty (30) days after notice of such failure has been given by the Executive
to the Company and the Atlantic Power Board.


 


For purposes of this
Agreement, a “change in control” means the
occurrence of any of the following events:


 


(i)                                    the
sale, lease or transfer to any person or group, in one or a series of related
transactions, of the assets of Atlantic Power or Atlantic Holdings which assets
generated more than 50 % of Atlantic Holding’s Cash Flow in a 12- month period
ended on the last day of the most recent fiscal quarter to any person or group;


 


(ii)                                 the
adoption of a plan related to the liquidation or dissolution of Atlantic Power
or Atlantic Holdings;


 


(iii)                              the
acquisition by any person or group of a direct or indirect interest in more
than 50% of: (A) the common shares of Atlantic Power or the common
membership interests of Atlantic Holdings; or (B) the voting power of
Atlantic Power or Atlantic Holdings; by way of purchase, 


 


6

















 


merger, or consolidation or
otherwise (other than a creation of a holding company that does not involve a
change in the beneficial ownership of the Company as a result of such
transaction);


 


(iv)                             the
merger or consolidation of Atlantic Power or Atlantic Holdings with or into
another person or the merger of another person into Atlantic Power or Atlantic
Holdings with the effect that immediately after such transaction the
shareholders of Atlantic Power or the holders of common membership interests of
Atlantic Holdings immediately prior to such transaction hold, directly or
indirectly, less than 50% of the voting control over the person surviving such
merger or consolidation, in each case other than the creation of a holding
company that does not involve a change in the beneficial ownership of Atlantic
Power or Atlantic Holdings as a result as such transaction; or


 


(v)                                Atlantic
Power or Atlantic Holdings or any of their shareholders or members enters into
any agreement providing for any of the foregoing, or the date which is 90 days
prior to a definitive announcement by the Company or Atlantic Power of any of
the foregoing, whichever is earlier, and the transaction contemplated thereby
is ultimately consummated.


 


provided
that the termination of the Management Agreement shall be deemed to constitute
a “change of control” occurring on the Effective Date; provided further that
the Executive acknowledges and agrees that neither the termination of the
Management Agreement, the termination of the Executive’s previous employment
agreement with Atlantic Power Management, LLC, the entering into of this
Agreement or the conversion of Atlantic Power from an IPS structure to a common
share structure, as the circumstances from such conversion exist on the
Effective Date, shall, individually or in the aggregate, be deemed to
constitute any of the circumstances set forth in Section 6(b).


 


(c)                                  By the Company. The Company may
terminate Executive’s employment immediately for Cause. As used herein, “Cause”
is a termination by reason of the Company’s good faith determination that the
Executive (i) engaged in wilful misconduct in the performance of his
duties, (ii) breached a fiduciary duty to the Company for personal profit
to himself, (iii) after determination by a court of competent
jurisdiction, wilfully violated any law, rule or regulation of a
governmental authority with jurisdiction over the Executive or the Company at
the time and place of such violation (other than traffic violation or similar
offenses) or any final cease and desist order of a court or other tribunal of
competent jurisdiction, or (iv) materially and wilfully breached this Agreement.
No act, or failure to act, on the Executive’s part shall be considered “wilful”
unless he has acted, or failed to act, with an absence of good faith and
without a reasonable belief that this action or failure to act was in the best
interest of the Company.


 


(d)                                 By the Company. The Company may
terminate Executive’s employment upon ninety (90) days prior written notice to
Executive in the event that the Company 


 


7

















 


(as determined by a majority
vote of the Atlantic Power Board) has determined that the Executive’s
performance is unsatisfactory with respect to his execution of the annually
approved Goals & Objectives, and Strategy; provided that the Company
may not be permitted to terminate Executive pursuant to this Section 6(d) during
any period that is 90 days preceding or one year following a “change of control”
as defined in Section 6(a).


 


7.                                      Compensation
Upon Termination.


 


(a)                                  If (i) the
Executive shall terminate his employment hereunder as provided in Section 6(a) hereof,
(ii) the Company shall terminate the Executive’s employment pursuant to Section 6(d) hereof,
or (iii) the Company terminates Executive’s employment for any other
reason other than as specified in Section 6(c), Executive shall be entitled
to the following:


 


(A)                             to
the extent not yet paid, the Executive’s Base Salary through the date of
termination of employment;


 


(B)                               an
amount in cash in a single lump sum equal to his Total Annual Compensation
under this Agreement (the value of which shall reflect the average Total Annual
Compensation during the preceding two years), which shall be paid to Executive
within thirty days of termination of employment;


 


(C)                               all
employee benefits including, without limitation, all pension and retirement
plans, life insurance, health, accident, medical and disability insurances, for
a period of 1 year following termination of employment, provided, however, that
if for any reason any such benefits cannot be provided through the Company’s
group or other plans, and the Company is unable to provide equivalent benefits
within 14 days of termination of employment, the Company shall reimburse the
Executive for his reasonable cost of obtaining equivalent benefits, such
payment to be made within 15 days of his submission of documentation
establishing such cost;


 


(D)                              immediate
acceleration of all awards previously made under Atlantic Holdings’ LTIP that
have not yet vested; and


 


(E)                                outplacement
services at the Company’s cost, customary for executives at his level (including,
without limitation, office space and telephone support services) provided by a
qualified and experienced third party provider acceptable to Executive, for a
period of 12 months following termination of employment with a cost capped at
$25,000


 


(b)                                 If the
Executive’s employment is terminated (i) by the Company as provided in Section 6(c) hereof,
or (ii) by Executive as provided in Section 6(a) hereof,
Executive shall be entitled to the following:


 


8






 










 


(A)                              to
the extent not yet paid, the Executive’s Base Salary through the date of
termination of employment;


 


(B)                                any
and all vested benefits under any incentive compensation or other plan of the
Company in accordance with the terms and conditions of such plan.


 


(c)                                  Not
later than 30 days following the date of this Agreement, the Company will
establish for the benefit of the Executive and on his behalf a “rabbi trust”
within the meaning of, and containing terms and provisions substantially
similar to those approved by, Internal Revenue Service Rev. Proc. 92-64, 1992-2
C.B. 422 (the “Rabbi Trust”). Within 10 days following the earlier of (1) a
change of control and (2) the occurrence of an event obligating the
Company to provide compensation pursuant to the terms of Section 7(a)(B) above,
the Company will deposit with the Rabbi Trust of the Executive cash in an
amount equal to the aggregate dollar amount of the cash payable under Section 7(a)(B).  Provided, however, that such funding shall
not be required if the funding would cause the assets to be included in the
Executive’s income at the time of funding under Internal Revenue Code Section 409A.  The Company will pay all expenses associated
with the establishment, maintenance and operation of the Rabbi Trust, including
without limitation reasonable trustee and attorneys fees, as they accrue.


 


If the Executive’s employment is terminated because of any breach of
this Agreement by the Company, the Executive shall also be entitled to any
other damages which he may sustain as a result of such breach including damages
for loss of benefits under any of the Company’s benefit, incentive
compensation, or other plans that the Executive would have received had his
employment continued for the full term provided for in this Agreement.


 


If the Executive asserts any claim in any contest (whether initiated by
the Executive or by the Company) as to the breach, validity, enforceability or
interpretation of any provision of this Agreement, the Company shall pay the
Executive’s legal expenses (or cause such expenses to be paid) including,
without limitation, his reasonable attorney’s fees, on a quarterly basis, upon
presentation of proof of such expenses, provided that the Executive shall
reimburse the Company for such amounts, plus simple interest thereon at the
90-day United States Treasury Bill rate as in effect from time to time,
compounded annually, if a court of competent jurisdiction shall find that the
Executive did not have a good faith and reasonable basis to believe that he would
prevail as to at least one material issue presented to the court.


 


The Executive shall not be required to mitigate the amount of any
payment under this Agreement by seeking other reemployment or otherwise.


 


8.                                      Confidentiality.


 


The Executive hereby agrees that, unless the written consent of the
managers of Atlantic Holdings and the Atlantic Power Board is obtained, the
Executive will not at any time use, or disclose or make available to any
individual, corporation, limited partnership, general partnership, joint stock
company, limited liability corporation, joint venture, association, company,
trust, bank, trust company, pension fund, business trust or other organization,
whether 


 


9

















 


or not legal entities
and governments and agencies and political subdivisions thereof (each a “Person”), any information (herein “Confidential
Information”) concerning the business of Atlantic Holdings and
Atlantic Power, consisting primarily of the direct and indirect ownership,
management, operation and leasing of assets and property in connection with the
generation, transmission, distribution, purchase and sale of electricity and
thermal energy, together with investments and other direct or indirect rights
in Persons involved in such business and all activities ancillary or incidental
to any of the foregoing (collectively, the “Business”)
acquired in connection with the performance of the services by the Executive
hereunder.


 


Executive acknowledges and agrees that all memoranda, notes, records
and other documents made or compiled by Executive or made available to
Executive as an employee of the Company concerning Atlantic Power or Atlantic
Holdings shall be the Company’s exclusive property and shall be delivered by
Executive to the Company upon expiration or termination of this Agreement or at
any other time upon the written request of the Company.


 


Notwithstanding the foregoing, Executive may make use of, reveal or
disclose Confidential Information:


 


(a)                                  as
may be expressly permitted by, or necessary for the performance of, Executive’s
obligations under this Agreement;


 


(b)                                 where
it is already in the public domain when disclosed to the Executive or becomes,
after having been disclosed to the Executive, generally available to the public
through publication or otherwise unless the publication or other disclosure was
made directly or indirectly by the Executive in breach of this Agreement;


 


(c)                                  as
required in order to comply with applicable laws, the orders or directions of
any governmental authority, the requirements of any stock exchange or clearing
house, or the requirements of any other regulatory authority having
jurisdiction, including compliance with the disclosure obligations of the
Executive;


 


(d)                                 where
it was made available to the Executive on a non-confidential basis from a third
party source, or where such information can be demonstrated by the Executive to
have come into its possession independently of anything done by the Executive
under or pursuant to this Agreement;


 


(e)                                  as
necessary in connection with any dispute resolution or any litigation commenced
in respect of this Agreement.


 


The provisions of this Section 8 shall survive the expiration or
termination of this Agreement or any part thereof, without regard to the reason
therefore, but shall expire and be at an end on the second anniversary of the
termination of the Executive’s employment hereunder.


 


Executive hereby acknowledges that the services to be rendered by him
are of a special, unique and extraordinary character and, in connection with
such services, he will have access to confidential information concerning the
business of Atlantic Power and Atlantic Holdings.  By reason of this, Executive consents and
agrees that if he violates any of the provisions of this Agreement with respect
to confidentiality, the Company and Atlantic Power would sustain 


 


10

















 


irreparable harm
and, therefore, in addition to any other remedies which the Company and
Atlantic Power may have under this Agreement or otherwise, the Company and
Atlantic Holdings will each be entitled to seek an injunction restraining
Executive from committing or continuing any such violation.


 


9.                                      Non-Competition
and Non-Solicitation.


 


(a)                                  Non-Compete. The Executive agrees that
during the term of this Agreement, and for a period of (i) six months
following termination of his employment as set forth in Section 7(a)(i) or
(ii) hereof or (ii) one month following termination of his employment
as set forth in Section 7(b) hereof; Executive will not be employed (i) by
any public company whose primary business is investment in independent power
projects in the United States or Canada if termination occurs in connection
with scenarios referenced in Section 7(a)(i) or 7(b), or (ii) by
any public or private company, whose primary business is investment in
independent power projects in the United States or Canada if the termination
occurs in connection with scenarios referenced in Section 7(a)(ii).


 


The Executive hereby agrees that all restrictions in this clause are
reasonable, valid and do not go beyond what is necessary to protect the
interests of the Company and Atlantic Power. The provisions of this clause are
only intended to safeguard against the Executive participating in certain
competitive endeavors against the Company and Atlantic Power relative to the
business above and not from engaging in subsequent businesses which do not meet
the description in the preceding paragraph.


 


(b)                                 Non-Solicitation. The Executive
agrees that for one year after the date of termination of employment, he will
not attempt, directly or indirectly, to induce any employee of the Company or
its affiliates to be employed elsewhere or otherwise to cease providing
services to the Company or its affiliates.


 


10.                               Deduction
and Withholding.


 


Executive agrees that the Company shall withhold from any and all
payments required to be made to Executive in accordance with this Agreement all
federal, state, local and other taxes that the Company or any such affiliates
determine are required to be withheld in accordance with applicable statutes
and regulations from time to time in effect.


 


11.                               Compliance
with Code Section 409A.


 


This Agreement is intended to comply with the requirements of Internal
Revenue Code Section 409A, or any applicable exemptions from Code Section 409A,
as the case may be. Despite any contrary provision of this Agreement:


 


(a)                                  Any
payments that qualify for the “short-term deferral” exception or another
exception under Code Section 409A will be paid under such exception.


 


(b)                                 All
payments to be made upon a termination of employment under this Agreement may
only be made upon a “separation from service” under Section 


 


11

















 


409A of the Code.  Executive may in no event, directly or
indirectly, designate the calendar year of any payment under this Agreement.


 


(c)                                  Any
reference to termination of employment or Executive’s date of termination shall
mean and refer to the date of Executive’s “separation from service,” as that
term is defined in Treas. Reg. Section 1.409A-1(h).


 


(d)                                 All
reimbursements and in-kind benefits provided under this Agreement will be made
or provided in accordance with the requirements of Code Section 409A,
including, where applicable, the requirement that (A) any reimbursement is
for expenses incurred during Executive’s lifetime (or during a shorter period
of time specified in this Agreement); (B) the amount of expenses eligible
for reimbursement, or in kind benefits provided, during a calendar year may not
affect the expenses eligible for reimbursement, or in kind benefits to be
provided, in any other calendar year; (C) the reimbursement of an eligible
expense will be made no later than the last day of the calendar year following
the year in which the expense is incurred; and (D) the right to
reimbursement or in kind benefits is not subject to liquidation or exchange for
another benefit. For clarity, the parties agree that the restriction under (B) above
does not apply to outplacement services provided under Section 7(a)(E).


 


(e)                                  If
Executive is a “specified employee” for purposes of Code Section 409A (as
determined in accordance with the methodology established by the Company as in
effect on the date of termination), (A) any payment that constitutes
nonqualified deferred compensation within the meaning of Code Section 409A
that is otherwise due to Executive under this Agreement during the six-month
period following his separation from service (as determined in accordance with
Code Section 409A) will be accumulated and paid to Executive on the first
business day of the seventh month following 
separation from service (the “Delayed Payment Date”) and (B) in the
event any equity compensation awards that vest upon termination of employment
constitute nonqualified deferred compensation within the meaning of Code Section 409A,
the delivery of shares of common stock (or cash) as applicable in settlement of
such awards shall be made on the earliest permissible payment date (including
the Delayed Payment Date) or event under Code Section 409A on which the
shares (or cash) would otherwise be delivered or paid.  Executive will be entitled to interest on any
delayed cash payments from the date of termination to the Delayed Payment Date
at a rate equal to the applicable federal short-term rate in effect under Code Section 1274(d) for
the month in which separation from service occurs. If the case of death during
the postponement period, the amounts and entitlements delayed on account of
Code Section 409A will be paid to Executive’s personal representative on
the first to occur of the Delayed Payment Date or 30 days after death.  For the avoidance of doubt, it is intended
that this provision apply only to amounts payable under this Agreement that are
subject to regulation under Code Section 409A and will not be interpreted
or applied so as to delay or otherwise defer any the payment of any amount that
qualifies as a “short-term deferral” (within the meaning of Treas. Reg. Section 1.409A-1(b)(4))
or “separation pay” (within the meaning of Treas. Reg. Section 1.409A-1(b)(9)(3).


 


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(f)                                    For
purposes of the limitations on nonqualified deferred compensation under Code
Section, each payment of compensation under this Agreement will be treated as a
separate payment of compensation for purposes of applying the Code Section 409A
deferral election rules and the exclusion under Code Section 409A for
certain short-term deferral amounts.


 


(g)                                 Within
the time period permitted by the applicable Code Section 409A or other
applicable guidance, the Parties may by mutual written agreement modify the
Agreement in order to cause the provisions of the Agreement to comply with the
requirements of Code Section 409A, so as to avoid the imposition of taxes
and penalties.


 


12.                               Assignability,
Binding Effect.


 


The rights and obligations under this Agreement shall inure to the
benefit of and shall be binding upon the heirs, executors, administrators,
successors, and legal representatives of Executive, and shall inure to the
benefit and be binding upon the Company and its successors (including, without
limitation, any person, firm, corporation, partnership or entity who succeeds
to the business of the Company), but neither this Agreement nor the rights or
obligations of Executive hereunder may be assigned, pledged, hypothecated or
otherwise transferred by Executive to another, person, firm corporation or
entity without the prior written consent of the Company, nor may the
obligations of Executive hereunder be delegated to any person, firm,
corporation or entity.


 


13.                               Notices.


 


All notices, requests, demands and other communications hereunder shall
be in writing and shall be delivered personally or sent by registered or
certified mail, prepaid and return receipt requested, to the other parties
hereto at his or their mailing address as set forth on the signature page of
this Agreement, and in the case of Atlantic Power, marked to the attention of
the Chairman of the Board of Atlantic Power. Any party may change the address
to which such communications hereunder shall be sent by sending notice of such
change to the other parties as herein provided.


 


14.                               Severability.


 


If any provision of this Agreement of any part hereof is invalid,
unlawful or incapable of being enforced by reason of any rule of law or
public policy, all conditions and provisions of this Agreement which can be
given effect without such invalid, unlawful or unenforceable provision shall,
nevertheless, remain in full force and effect.


 


15.                               Warranty.


 


Executive warrants and represents that he is not and will not become a
party to any agreement, contract, arrangement or understanding, whether of
employment or otherwise, that would in any way restrict or prohibit him from
undertaking or performing his duties in accordance with this Agreement.


 


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16.                               Authority.


 


By execution of this Agreement, (a) Atlantic Power represents that
this Agreement has been reviewed and adopted by a resolution approved by a
majority of the members of the Board of Directors of Atlantic Power, (b) Atlantic
Holdings represents that this Agreement has been reviewed and approved by its
Board of Managers; and (c) Executive represents that he has reviewed this
Agreement, had the opportunity to consult with counsel and other advisors and
is voluntarily entering into and executing this Agreement.


 


17.                               Complete
Understanding; Prior Agreements.


 


This Agreement constitutes the complete understanding among the Parties
with respect to the undertaking of the Executive hereunder, and no statement,
representation, warranty or covenant has been made by either party with respect
thereto except as expressly set forth herein. Unless otherwise specifically
referred to herein, this Agreement shall, from and after the Effective Date,
supersede, in all respects, all previous agreements in regard to employment
between Executive and the Company, and Executive shall, as of the Effective
Date, unless otherwise specifically referred to herein, have no rights under
such agreements all of which are merged herein and shall be governed hereby.
Notwithstanding the aforesaid, nothing herein shall abrogate or diminish any
right of Executive to earned compensation, to benefits or to indemnification under
his employment agreement with Atlantic Management for his service through the
termination of such agreement, to the extent not already paid or provided
(except for the bonus for calendar year 2009 to be paid under this Agreement).
This Agreement shall not be altered, modified, amended or terminated except by
written instrument signed by each of the Parties hereto.


 


18.                               Governing
Law.


 


This Employment Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the Commonwealth of Massachusetts. The
Courts of the Commonwealth of Massachusetts and the United States District
Court for the District of Massachusetts, shall have exclusive jurisdiction over
any dispute relating to this Agreement.


 


19.                               Warranty
/ Certification of Authority.


 


Each of the undersigned hereby personally warrants that he has the full
authority to execute and enter into this Agreement and has obtained all
consents, approvals and authorities of any person, committee or entity
necessary to make this Agreement binding and fully enforceable against the
party for which he signs.


 


This Agreement shall not become effective until the Secretary of
Atlantic Holdings and the Secretary of Atlantic Power each has delivered to the
Executive a duly signed certificate certifying that this Agreement and all of
its terms have been duly approved by the Board of Directors of their respective
companies.


 


[Signature
Pages Follow]


 


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IN
WITNESS WHEREOF, the parties hereto have
executed this Agreement effective as of the day of the year first written above


 


	
   

  	
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Amanda
  Wagemaker

  	
   

  	
  /s/ Patrick Welch

  
	
  Witness

  	
   

  	
  PATRICK WELCH

  



 


 


	
   

  	
   

  	
  ATLANTIC
  POWER HOLDINGS, INC., by its Manager, Atlantic
  Power Management, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Barry Welch

  
	
   

  	
   

  	
   

  	
  Name: Barry
  Welch

  
	
   

  	
   

  	
   

  	
  Title:
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ATLANTIC
  POWER CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Irving
  Gerstein

  
	
   

  	
   

  	
   

  	
  Name: Irving
  Gerstein

  
	
   

  	
   

  	
   

  	
  Title: Director

  



 


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