Document:

Exhibit 10.4

 

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 Paul H. Rapisarda (“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 2008, Executive has served as Managing Director,
Acquisitions and Asset Management, 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
Managing Director, Acquisitions and Asset Management, 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 Managing Director, Acquisitions and Asset Management, 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 $257,500 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 employment 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, willful 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 willful 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 willfully 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(c) 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) or 7(b), 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 Section7(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).

 

12

 

(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.

 

13

 

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]

 

14

 

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/ Paul Rapisarda

  
	
  Witness

  	
  PAUL RAPISARDA

  

 

 

	
   

  	
  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

  

 

15Exhibit 10.5

 

 

 

ATLANTIC POWER CORPORATION

 

 

DEFERRED
SHARE UNIT PLAN

 

 

April 24, 2007

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page No.

  
	
   

  	
   

  	
   

  
	
  1.

  	
  PREAMBLE AND DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  CONSTRUCTION AND INTERPRETATION

  	
  3

  
	
   

  	
   

  	
   

  
	
  3.

  	
  ELIGIBILITY AND MEMBERSHIP

  	
  3

  
	
   

  	
   

  	
   

  
	
  4.

  	
  UNIT GRANTS AND ACCOUNTS

  	
  4

  
	
   

  	
   

  	
   

  
	
  5.

  	
  REDEMPTION OF UNITS

  	
  5

  
	
   

  	
   

  	
   

  
	
  6.

  	
  ANTI-DILUTION AND RE-ORGANIZATION

  	
  6

  
	
   

  	
   

  	
   

  
	
  7.

  	
  ADMINISTRATION

  	
  7

  
	
   

  	
   

  	
   

  
	
  8.

  	
  GENERAL

  	
  8

  
	
   

  	
   

  	
   

  
	
  9.

  	
  RIGHT TO FUNDS

  	
  8

  
	
   

  	
   

  	
   

  
	
  10.

  	
  SPECIAL RULES APPLICABLE TO U.S. MEMBERS

  	
  9

  
	
   

  	
   

  	
   

  
	
  11.

  	
  DATE OF PLAN

  	
  11

  

 

 

1.              PREAMBLE AND
DEFINITIONS

 

1.1                               The Plan herein described
shall be called the “Deferred Share Unit Plan”
and is referred to herein as “the Plan”.

 

1.2                               The purpose of the Plan is to
enhance the Company’s ability to attract and retain talented individuals to
serve as members of the Board of Directors of the Company and to promote a
greater alignment of interests between members of the Board of Directors and
the shareholders of the Company.

 

1.3                               In the Plan, the following
terms shall have the meanings indicated:

 

(a)                                  “Annual Board
Retainer” means the annual retainer paid by the Company to a
Director who is not an Employee in a financial year for service on the Board,
but does not include Chair Fees, Committee Fees and Meeting Fees.

 

(b)                                 “Annual
General Meeting” means the annual general meeting of the
shareholders of the Company.

 

(c)                                  “Beneficiary”
means any person designated by the Member by written instrument filed with the
Company to receive any amount payable under the Plan in the event of a Member’s
death or, failing any such effective designation, the Member’s estate.

 

(d)                                 “Board” or
“Board of Directors” means the board of
directors of the Company.

 

(e)                                  “Chair”
means the chair of the Board.

 

(f)                                    “Chair Fees”
means the fees or retainers, other than Meeting Fees and Committee Fees, paid
by the Company to a Director for service as the Chair and as chairman of a
committee of the Board.

 

(g)                                 “Code”
means the U.S. Internal Revenue Code of 1986.

 

(h)                                 “Committee
Fees” means the fees or retainers, other than Meeting Fees and Chair
Fees, paid by the Company to a Director for service on a committee of the
Board.

 

(i)                                     “Company”
means Atlantic Power Corporation and a reference in the Plan to action by the
Company means an action taken with authority of the Board or such committee or
person, if any, to whom the Board delegates its powers hereunder.

 

(j)                                     “Director”
means a member of the Board.

 

(k)                                  “Employee”
means an employee of the Company or any affiliate thereof.

 

 

(l)                                     “Fees”
means the Annual Board Retainer, Chair Fees, Committee Fees, Meeting Fees or
any other fees payable to a Director.

 

(m)                               “IPS” means an income participating security of the
Company, each of which represents one Share and $5.767 principal amount of
Subordinated Notes.

 

(n)                                 “Meeting Fees”
means the fees or retainers, other than the Annual Board Retainer, paid by the
Company to a Director for attending meetings of the Board and committees of the
Board.

 

(o)                                 “Member”
means an individual who becomes a participant in the Plan in accordance with Article 3,
and includes an individual whose membership in the Plan is suspended in
accordance with section 3.4.

 

(p)                                 “Payment Date”
means the date of payment of Fees to the Directors.

 

(q)                                 “Reorganization”
means any (i) capital reorganization, (ii) merger, (iii) amalgamation,
(iv) offer for shares or IPSs of the Company which if successful would
entitle the offeror to acquire all of the shares of the Company or all of one
or more particular class(es) of shares of the Company to which the offer
relates, or (v) arrangement or other scheme of reorganization.

 

(r)                                    “Shares”
means the common shares in the capital of the Company, and includes any shares
of the Company into which such shares may be converted, reclassified,
redesignated, subdivided, consolidated, exchanged or otherwise changed.

 

(s)                                  “Subordinated
Notes” means the 11.0% subordinated notes of the Company that form
part of an IPS.

 

(t)                                    “Trading Day”
means any date on which the TSX is open for the trading of Shares or IPSs.

 

(u)                                 “TSX”
means the Toronto Stock Exchange.

 

(v)                                 “Unit”
means a right to receive on a deferred basis an amount of money subject to and
in accordance with the terms of this Plan, credited under this Plan to a Member
and reflected as an entry in an account in accordance with section 4.7.

 

(w)                               “Unit Account”
has the meaning ascribed thereto in section 4.7.

 

(x)                                   “U.S. Members”
has the meaning ascribed thereto in section 10.1.

 

(y)                                 “Value of a
Unit” means:

 

2

 

(i)                      if the Shares are trading on
the TSX, on the relevant day, the value of a Share determined by reference to
the five-day weighted average closing price of a Share on the immediately
preceding five Trading Days; or

 

(ii)                   if the Shares are not trading on the TSX,
on the relevant day, the value of a Share determined by reference to the
five-day weighted average closing price of an IPS on the immediately preceding
five Trading Days and then subtracting the Value of the Subordinated Note
component of the IPS on the relevant date.

 

(z)                                   “Value of the
Subordinated Note” means the value of the Subordinated Note based on
the most recent valuation of the Subordinated Notes completed by an independent
valuator in connection with an issuance of securities by the Company, as
adjusted by the Chief Financial Officer of the Company in his sole discretion
taking into account market factors.

 

2.              CONSTRUCTION AND
INTERPRETATION

 

2.1                               In the Plan, references to the
singular shall include the plural and vice versa, as the context shall require.

 

2.2                               The Plan shall be governed and
interpreted in accordance with the laws of the Province of Ontario and the
applicable laws in Canada.

 

2.3                               If any provision of the Plan
or part hereof is determined to be void or unenforceable in whole or in part,
such determination shall not affect the validity or enforcement of any other
provision or part hereof.

 

2.4                               Headings wherever used herein
are for reference purposes only and do not limit or extend the meaning of the
provisions herein contained.

 

3.              ELIGIBILITY AND
MEMBERSHIP

 

3.1                               Every Director is a Member
provided that he or she is not an Employee. 
For greater certainty, the Chair shall not be considered an Employee
solely as a result of his or her performing the responsibilities as Chair.

 

3.2                               Every Director who would have
become a Member in accordance with section 3.1 hereof except for the fact he or
she was an Employee, shall become a Member when he or she ceases to be an
Employee, provided he or she is a Director at that time.

 

3

 

3.3                               A person ceases to be a Member
at such time as such person ceases to be a Director for any reason.

 

3.4                               If a Member becomes an
Employee, his or her active membership in the Plan shall be suspended effective
the date of the commencement of his or her employment and shall resume upon
termination of such employment provided he or she continues as a Director.  During the period of such suspension, such
individual shall not be entitled to receive or be credited with Units under Article 4,
except under section 4.8 in respect of cash dividends paid on Shares.  Such individual shall, for the purposes of
section 5.1, cease to be a Director on the later of the date he or she ceases
to be a Director and the date he or she ceases to be an Employee.

 

3.5                               Nothing herein contained shall
be deemed to give any person the right to be retained, appointed or elected as
a Director.

 

4.              UNIT GRANTS AND
ACCOUNTS

 

4.1                               Each Member whose active
membership in the Plan has not been suspended in accordance with section 3.4
may elect to receive 0%, 25%, 50%, 75% or 100% of their Fees in the form of
Units under this Plan.

 

4.2                               In addition, with the approval
of the Board, an annual allotment of Units under this Plan may be made at such
time and in such amounts as the Board may determine.

 

4.3                               In addition, the Board may
determine, at their discretion, that a Director who is appointed or elected
other than at an Annual General Meeting shall become a Member, on the basis
such Director may receive a number of Units calculated in accordance with
section 4.5 for any portion of such Director’s Fees for this purpose being the
amount equal to that percentage of the Fees payable to the Director which is
the percentage of the year to be served by that Director until the next Annual
General Meeting and otherwise upon the terms which they establish.

 

4.4                               A Member shall be credited on
each Payment Date, for the elected portion of the Fees, that would otherwise be
paid in cash on such date, a number of Units calculated in accordance with
section 4.5.  A Member shall be credited
with the Units allotted to that Director pursuant to section 4.2 on the day so
designated by the Board.

 

4.5                               The number of Units to be
credited to a Member will be calculated by dividing the dollar amount of the
elected portion of the Fees payable to the Member on a Payment Date by the
Value of a Unit on such Payment Date. 
For example, assuming an IPS price of $10.00 and $10,000 of elected
Fees:

 

4

 

$10,000
[Elected Fees]   = 2,362.3907  [Number
of Units Granted]

$4.233 [Value of a Unit]

 

Value of a Unit based on: $10.00 [IPS price] – 5.767
[Value of the Subordinated Note]

 

4.6                               Fractional Units, to four
decimal places, may be credited under the Plan.

 

4.7                               An account, to be known as the
“Unit Account”, shall be maintained by
the Company for each Member and will show the Units credited to a Member from
time to time.

 

4.8                               Whenever cash dividends are
paid on the Shares, additional Units will be credited to the Member’s Unit
Account.  The number of such additional
Units will be calculated by dividing the aggregate dividends that would have
been paid to such Member if the Units in the Member’s Unit Account had been
Shares by the Value of a Unit on the date on which the dividends were paid on
the Shares.

 

4.9                               Elections by Members regarding
the amount of their Fees that they wish to receive in Units shall be made no
later than December 31 of any given year with respect to Fees for the
following year provided that for the 2007 fiscal year, Members must elect by June 30,
2007 to receive an amount of their Fees for the period July 1, 2007 to December 31,
2007 in Units.

 

5.              REDEMPTION OF UNITS

 

5.1                               Except as provided in sections
5.2 and 5.3, the value of the Units credited to a Member’s Unit Account, net of
applicable withholdings, shall be paid to the Member after the effective date
the Member ceases to be a Director for any reason on a day designated by the
Member and communicated to the Company by the Member in writing at least 10
Trading Days prior to the designated day (or such earlier date after the Member
ceases to be a Director as the Member and Company may agree, which date shall
be no later than the end of the calendar year following the year in which the
Member ceases to be a Director) and if no such notice is given, then on the
first anniversary of the effective date the Member ceases to be a Director.

 

5.2                               In the event the value of a
Unit would be determined with reference to a period commencing at a fiscal year
quarter-end of the Company and ending prior to the public disclosure of interim
financial statements for the quarter (or annual financial statements in the
case of the fourth quarter), the payment of the value of the Units will be made
to the Member with reference to the five Trading Days immediately following the
public disclosure of the interim financial statements for that quarter.

 

5

 

5.3                               If a Member dies, the value of
the Units credited to that Member’s Unit Account, net of applicable
withholdings, shall be payable to his or her Beneficiary within 120 days after
the Member’s death.

 

5.4                               In no event may the redemption
date be later than the last day of the calendar year following the calendar
year in which the death, retirement or termination takes place.

 

5.5                               For the purposes of
determining the value of Units for the purposes of a payment to a Member (or,
where the Member has died, his or her Beneficiary) under sections 5.1, 5.2 or 5.3,
the Units will be valued on a per Unit basis on (i) for section 5.1, the
Value of a Unit on the next Trading Day after that the Member ceases to be a
member of the Board, (ii) for section 5.2, the Value of a Unit on the
sixth Trading Day following the day on which public disclosure of the interim
financial statements is made, and (iii) for section 5.3, the Value of a
Unit on the next Trading Day after the Member’s death.  In each case, the Member (or his or her Beneficiary)
shall receive a payment equal to the Value of a Unit multiplied by the number
of Units (including fractional Units) credited to a Member’s Unit account.

 

5.6                               All references in the Plan to
currency refer to lawful Canadian currency.

 

5.7                               The Company shall have the
right to deduct from all cash payments made to a Member any federal  or provincial taxes required by law to be withheld with
respect to such payments.

 

6.              ANTI-DILUTION AND
RE-ORGANIZATION

 

6.1                               If the number of outstanding
Shares of the Company shall be increased or decreased as a result of a stock
split, consolidation or recapitalization and not as a result of the issuance of
Shares or IPSs for additional consideration or by way of stock dividend, the
Board may make appropriate adjustments to the number of Units credited to a
Member.  Any determinations by the Board
as to the required adjustments shall be made in its sole discretion and all
such adjustments shall be conclusive and binding for all purposes under the
Plan.

 

6.2                               In the event of a
Reorganization or proposed Reorganization, the Company, at its option, may do
either of the following:

 

(a)                                  the Company may irrevocably
commute any Unit, upon giving to the Member to whom such Unit has been granted
at least 30 days written notice of its intention to commute the Unit, and
during such period of notice, the Member may elect to receive payment of the
value of the Unit as of the date of the notice of the Company and on the expiry
of such 

 

6

 

period of notice, any Unit for which the Member has
not so elected shall lapse and be cancelled; or

 

(b)                                 the Company or any corporation which is or
would be the successor to the Company or which may issue securities in exchange
for Shares upon the Reorganization becoming effective may offer any Member the
opportunity to obtain a new or replacement stock appreciation or similar right
in respect of any securities into which the Shares are changed or are
convertible or exchangeable, on a basis proportionate to the number of Units
held by the Member; in such event, the Member shall, if he or she accepts such
offer, be deemed to have released his or her Units and such Units shall be
deemed to have been terminated.

 

6.3                               Sections 6.2(a) and 6.2(b) are
intended to be permissive and may be utilized independently or successively or
in combination or otherwise, and nothing therein contained shall be construed
as limiting or affecting the ability of the Company to deal with Units in any
other manner.

 

7.              ADMINISTRATION

 

7.1                               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 relating to the operation of the Plan as it may deem necessary to
further the purpose of the Plan and amend or repeal such rules and
regulations.  In administering the Plan,
the Company may seek recommendations from the Chair.  The Company may also delegate to any director(s) or
committee of directors, officer(s) or employee(s) of the Company such
duties and powers as it may see fit.

 

7.2                               From time to time the Company
may, in addition to its powers under Article 6, add to or amend any of the
provisions of the Plan or the terms relating to Units credited under this Plan
or terminate the Plan; provided however that (i) any approvals required
under any applicable law or under the applicable rules of any stock
exchange in Canada upon which shares of the Company are listed are obtained,
and (ii) no such amendment or termination shall be made at any time which
has the effect of adversely affecting the existing rights of a Member without
his or her consent in writing unless the Company, at its option, acquires such
existing rights at an amount equal to the fair market value of such rights at
such time as verified by an independent valuator.

 

7.3                               The determination by the
Company of any question which may arise as to the interpretation or
implementation of the Plan or any of the Units granted hereunder 

 

7

 

shall be final and binding on all Members and other
persons claiming or deriving rights through any of them.

 

7.4                               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.  At such
times as the Company shall determine, the Company shall furnish the Member with
a statement setting forth the details of the Units credited to each Member in
his or her Unit Account.  Such statement
shall be deemed to have been accepted by the Member as correct unless written
notice to the contrary is given to the Company within 30 days after such
statement is given to the Member. 
Members shall not be entitled to receive any certificate evidencing
Units.

 

7.5                               The Board may terminate the
Plan at any time.  However, if so
terminated, prior awards shall remain outstanding and in effect in accordance
with their applicable terms and condition.

 

8.              GENERAL

 

8.1                               The Plan shall enure to the
benefit of and be binding upon the Company, its successors and assigns.  The interest of any Member 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 whatsoever and, during his or her
lifetime, shall be vested only in him or her, but shall thereafter enure to the
benefit of and be binding upon the Member’s Beneficiary.

 

8.2                               A Member shall not have any
rights as a shareholder in respect of any Units.

 

9.              RIGHT TO FUNDS

 

9.1                               Neither the establishment of
the Plan, the crediting of Units or the setting aside of any funds by the
Company (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 and no Member 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 present or
future.  Amounts payable to any Member
under the Plan shall be a general, unsecured obligation of the Company.  The right of the Member or Beneficiary to
receive payment pursuant to the Plan shall be no greater than the right of
other unsecured creditors of the Company.

 

8

 

10.       SPECIAL RULES
APPLICABLE TO U.S. MEMBERS

 

10.1                        Application
to U.S. Members. Notwithstanding any other provision in the Plan, the
provisions of this section 10 will apply to all Members who are subject to U.S.
income tax with respect to Units issued under the Plan (“U.S. Members”).

 

10.2                        Elections
to Receive Units. In lieu of the election provisions specified in
section 4.9, the following rules will apply to elections by U.S. Members:

 

(a)                                  Elections
by U.S. Members regarding the amount of their Fees, if any, payable during a
calendar year that they wish to receive in Units generally must be made not
later than December 31 of the preceding calendar year.

 

(b)                                 Notwithstanding
the previous subsection, a new Director who first becomes eligible for
participation in the Plan as a U.S. Member under sections 3.1 and 3.2 during
the course of a calendar year may make an election to receive applicable Fees
in Units, provided (i) the election is made no later than the 30th day after the date the Director is first
eligible for the Plan, and (ii) the election applies only to Fees with
respect to services performed after the election.

 

(c)                                  If
a U.S. Member’s active membership in the Plan is suspended under section 3.4
because the Member becomes an Employee, the Member’s active membership will
resume on termination of the employment, provided he or she continues as a
Director.  If the Director resumes
membership in the course of a calendar year, he or she will be deemed a newly
eligible Member under section 10.2(b) above for purposes of deferring
Fees, unless such treatment is prohibited under Code Section 409A.  If the U.S. Member is not permitted under
Code Section 409A to be treated as a newly eligible Member in the calendar
year he or she resumes active membership, the Member will be permitted to elect
to resume receiving Fees in Units beginning with Fees received in the
subsequent calendar year, provided the election is made in compliance with
section 10.2(a) above.

 

10.3                        Redemption
of Units.
In lieu of the payment provisions of section 5.1, on a redemption of Units by
U.S. Members, the value of the Units credited to a U.S. Member’s Unit Account,
net of applicable withholdings, will be paid to the Member in a single lump sum
following the date the Member ceases to be a Director for any reason.  Notwithstanding anything else in the Plan, if
a Member ceases to be a Director for any reason other than death, payment will
be made as soon as practicable following a determination of the value of Units
pursuant to section 5.5.  In the event of
a Member’s death, payment will be made pursuant to section 5.3.

 

9

 

10.4                        Re-Organization. In the event of a
Reorganization or proposed Reorganization under section 6.2, the following rules will
apply to U.S. Members:

 

(a)                                  If
the Reorganization or proposed Reorganization constitutes a “change in control
event” within the meaning of Code Section 409A and related guidance (“Change in Control Event”), all U.S. Members will receive
payment of the value of all their Units as soon as practicable following the
Change in Control Event, regardless of whether they cease to be Directors,

 

(b)                                 If
the Reorganization or proposed Reorganization does not constitute a Change in
Control Event, then the following will apply:

 

(i)                      If the Company elects to
implement the option set out in section 6.2(a), a U.S. Member must cease to be
a Director within the notice period provided in section 6.2(a) to receive
payment of the value of his or her Units. 
If the U.S. Member does not cease to be a Director, all of the Member’s
Units will lapse and be cancelled on the expiry of the notice period.

 

(ii)                   If the Company elects to implement the
option set out in section 6.2(b) and the exchange provided under this
section complies with the requirements of Code Section 409A and related
guidance, a U.S. Member may participate in the exchange.  If the exchange does not comply with Code Section 409A,
then a U.S. Member must cease to be a Director during the period the exchange
offer is open in order to receive payment for his or her Units.  If the Member does not cease to be a
Director, all of the Member’s Units will lapse and be cancelled on the expiry
of the offer period.

 

10.5                        Six-Month
Delay for Specified Employees. If a U.S. Member is an Employee who is determined to
be a “specified employee” within the meaning of Code Section 409A and
related guidance, based on an identification date of December 31, and if
the Member is eligible to receive payment of his or her Unit Account solely
because that Member has “separated from service” within the meaning of Code Section 409A,
no payment will be made prior to the date that is six months after the date of
separation from service (or, if earlier, the date of death of the Member).

 

10.6                        Code Section 409A
Savings Clause. Notwithstanding any other provision in this Plan, to
the extent any amounts payable under this Plan (i) are subject to Code Section 409A,
and (ii) the time or form of payment of those amounts would not be in
compliance with Code Section 409A, then, to the extent possible, payment
of those amounts will be made at such time and in such a manner that payment
will be in compliance with Code Section 409A.  If the time or form of payment cannot be
modified in such a way as to be in compliance with Code Section 409A, then

 

10

 

the payment will be made as otherwise provided in this
Plan, disregarding the provisions of this section 10.6.

 

10.7                        409A
Liability Limitation. Benefits under the Plan payable to U.S. Members are
intended to comply with the rules of Code Section 409A and will be
construed accordingly.  However, the
Company will not be liable to any Member or Beneficiary with respect to any
benefit-related adverse tax consequences arising under Section 409A or
other provision of the Code.

 

11.       DATE OF PLAN

 

11.1                        This Plan is instituted
effective as of the date hereof.

 

11

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