Document:

Exhibit
4.4

 

 

 

TRUST
INDENTURE

 

Providing for the Issue of
Convertible Unsecured Subordinated Debentures

 

Dated  December 17, 2009

 

 

TABLE OF
CONTENTS

 

	
  ARTICLE
  1 INTERPRETATION

  	
  1

  
	
  1.1

  	
  Definitions

  	
  1

  
	
  1.2

  	
  Meaning of “Outstanding”

  	
  10

  
	
  1.3

  	
  Interpretation

  	
  11

  
	
  1.4

  	
  Headings, etc.

  	
  11

  
	
  1.5

  	
  Day not a Business Day

  	
  12

  
	
  1.6

  	
  Applicable Law

  	
  12

  
	
  1.7

  	
  Monetary References

  	
  12

  
	
  1.8

  	
  Currency of Payment

  	
  12

  
	
  1.9

  	
  All Payments Net of Taxes

  	
  12

  
	
  1.10

  	
  Accounting Terms

  	
  12

  
	
  1.11

  	
  Calculations

  	
  12

  
	
  1.12

  	
  Language

  	
  13

  
	
  1.13

  	
  Successors and Assigns

  	
  13

  
	
  1.14

  	
  Time of Essence

  	
  13

  
	
  1.15

  	
  Invalidity/Severability

  	
  13

  
	
  1.16

  	
  Entire Agreement

  	
  13

  
	
  1.17

  	
  Benefits of Indenture

  	
  13

  
	
  1.18

  	
  Schedules

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  2 THE DEBENTURES

  	
  14

  
	
  2.1

  	
  Limit of Debentures

  	
  14

  
	
  2.2

  	
  Terms of Debentures of any Series

  	
  14

  
	
  2.3

  	
  Form of Debentures

  	
  16

  
	
  2.4

  	
  Form and Terms of Initial
  Debentures

  	
  16

  
	
  2.5

  	
  Certification and Delivery of
  Additional Debentures

  	
  24

  
	
  2.6

  	
  Issue of Global Debentures

  	
  25

  
	
  2.7

  	
  Execution of Debentures

  	
  26

  
	
  2.8

  	
  Certification

  	
  26

  
	
  2.9

  	
  Interim Debentures or
  Certificates

  	
  26

  
	
  2.10

  	
  Mutilation, Loss, Theft or
  Destruction

  	
  27

  
	
  2.11

  	
  Concerning Interest

  	
  27

  
	
  2.12

  	
  Debentures to Rank Pari Passu

  	
  28

  
	
  2.13

  	
  Payments of Amounts Due on
  Maturity

  	
  28

  
	
  2.14

  	
  Payment of Interest

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  3 REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP

  	
  30

  
	
  3.1

  	
  Fully Registered Debentures

  	
  30

  
	
  3.2

  	
  Global Debentures

  	
  30

  
	
  3.3

  	
  Transferee Entitled to
  Registration

  	
  32

  
	
  3.4

  	
  No Notice of Trusts

  	
  32

  
	
  3.5

  	
  Registers Open for Inspection

  	
  33

  
	
  3.6

  	
  Exchanges of Debentures

  	
  33

  
	
  3.7

  	
  Closing of Registers

  	
  33

  
	
  3.8

  	
  Charges for Registration,
  Transfer and Exchange

  	
  34

  
	
  3.9

  	
  Ownership of Debentures

  	
  34

  

 

 

	
  ARTICLE
  4 REDEMPTION AND PURCHASE OF DEBENTURES, CERTAIN PAYMENTS ON MATURITY

  	
  36

  
	
  4.1

  	
  Applicability of Article

  	
  36

  
	
  4.2

  	
  Partial Redemption

  	
  36

  
	
  4.3

  	
  Notice of Redemption

  	
  37

  
	
  4.4

  	
  Debentures Due on Redemption
  Dates

  	
  37

  
	
  4.5

  	
  Deposit of Redemption Monies or
  Common Shares

  	
  38

  
	
  4.6

  	
  Right to Repay Redemption Price
  in Common Shares

  	
  38

  
	
  4.7

  	
  Failure to Surrender Debentures
  Called for Redemption

  	
  41

  
	
  4.8

  	
  Cancellation of Debentures
  Redeemed

  	
  41

  
	
  4.9

  	
  Purchase of Debentures by the
  Company

  	
  42

  
	
  4.10

  	
  Deposit of Maturity Monies

  	
  42

  
	
  4.11

  	
  Right to Repay Principal Amount
  in Common Shares

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  5 SUBORDINATION OF DEBENTURES

  	
  45

  
	
  5.1

  	
  Applicability of Article

  	
  45

  
	
  5.2

  	
  Order of Payment

  	
  46

  
	
  5.3

  	
  Subrogation to Rights of Holders
  of Senior Indebtedness

  	
  47

  
	
  5.4

  	
  Obligation to Pay Not Impaired

  	
  47

  
	
  5.5

  	
  No Payment if Senior Indebtedness
  in Default

  	
  48

  
	
  5.6

  	
  Payment on Debentures Permitted

  	
  48

  
	
  5.7

  	
  Confirmation of Subordination

  	
  49

  
	
  5.8

  	
  Knowledge of Debenture Trustee

  	
  49

  
	
  5.9

  	
  Debenture Trustee May Hold
  Senior Indebtedness

  	
  49

  
	
  5.10

  	
  Rights of Holders of Senior
  Indebtedness Not Impaired

  	
  49

  
	
  5.11

  	
  Altering the Senior Indebtedness

  	
  50

  
	
  5.12

  	
  Additional Indebtedness

  	
  50

  
	
  5.13

  	
  Right of Debentureholder to
  Convert Not Impaired

  	
  50

  
	
  5.14

  	
  Invalidated Payments

  	
  50

  
	
  5.15

  	
  Contesting Security

  	
  50

  
	
  5.16

  	
  Obligations Created by
  Article 5

  	
  51

  
	
  5.17

  	
  No Set-Off

  	
  51

  
	
  5.18

  	
  Amendments to Article 5

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  6 CONVERSION OF DEBENTURES

  	
  52

  
	
  6.1

  	
  Applicability of Article

  	
  52

  
	
  6.2

  	
  Notice of Expiry of Conversion
  Privilege

  	
  52

  
	
  6.3

  	
  Revival of Right to Convert

  	
  52

  
	
  6.4

  	
  Manner of Exercise of Right to
  Convert

  	
  52

  
	
  6.5

  	
  Adjustment of Conversion Price

  	
  54

  
	
  6.6

  	
  No Requirement to Issue
  Fractional Common Shares

  	
  58

  
	
  6.7

  	
  Company to Reserve Common Shares

  	
  58

  
	
  6.8

  	
  Cancellation of Converted
  Debentures

  	
  58

  
	
  6.9

  	
  Certificate as to Adjustment

  	
  58

  
	
  6.10

  	
  Notice of Special Matters

  	
  59

  
	
  6.11

  	
  Protection of Debenture Trustee

  	
  59

  
	
  6.12

  	
  Payment of Cash in Lieu of Common
  Shares

  	
  59

  

 

2

 

	
  ARTICLE
  7 COVENANTS OF THE COMPANY

  	
  60

  
	
  7.1

  	
  To Pay Principal and Interest

  	
  60

  
	
  7.2

  	
  To Pay Debenture Trustee’s
  Remuneration

  	
  60

  
	
  7.3

  	
  To Give Notice of Default

  	
  60

  
	
  7.4

  	
  Preservation of Existence, etc.

  	
  60

  
	
  7.5

  	
  Keeping of Books

  	
  61

  
	
  7.6

  	
  Reporting Requirements

  	
  61

  
	
  7.7

  	
  Performance of Covenants by
  Debenture Trustee

  	
  61

  
	
  7.8

  	
  Maintain Listing

  	
  61

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  8 DEFAULT

  	
  61

  
	
  8.1

  	
  Events of Default

  	
  61

  
	
  8.2

  	
  Notice of Events of Default

  	
  63

  
	
  8.3

  	
  Waiver of Default

  	
  63

  
	
  8.4

  	
  Enforcement by the Debenture
  Trustee

  	
  64

  
	
  8.5

  	
  No Suits by Debentureholders

  	
  65

  
	
  8.6

  	
  Application of Monies by
  Debenture Trustee

  	
  66

  
	
  8.7

  	
  Notice of Payment by Debenture
  Trustee

  	
  67

  
	
  8.8

  	
  Debenture Trustee May Demand
  Production of Debentures

  	
  67

  
	
  8.9

  	
  Remedies Cumulative

  	
  67

  
	
  8.10

  	
  Judgment Against the Company

  	
  67

  
	
  8.11

  	
  Immunity of Directors, Officers
  and Others

  	
  68

  
	
  8.12

  	
  Subordination

  	
  68

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  9 SATISFACTION AND DISCHARGE

  	
  68

  
	
  9.1

  	
  Cancellation and Destruction

  	
  68

  
	
  9.2

  	
  Non-Presentation of Debentures

  	
  68

  
	
  9.3

  	
  Repayment of Unclaimed Monies

  	
  69

  
	
  9.4

  	
  Discharge

  	
  69

  
	
  9.5

  	
  Satisfaction

  	
  69

  
	
  9.6

  	
  Continuance of Rights, Duties and
  Obligations

  	
  71

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  10 COMMON SHARE INTEREST PAYMENT ELECTION

  	
  71

  
	
  10.1

  	
  Common Share Interest Payment
  Election

  	
  71

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  11 SUCCESSORS

  	
  75

  
	
  11.1

  	
  Company may Consolidate, etc.,
  only on Certain Terms

  	
  75

  
	
  11.2

  	
  Successor Substituted

  	
  76

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  12 COMPULSORY ACQUISITION

  	
  76

  
	
  12.1

  	
  Definitions

  	
  76

  
	
  12.2

  	
  Offer for Debentures

  	
  77

  
	
  12.3

  	
  Offeror’s Notice to Dissenting
  Debentureholders

  	
  77

  
	
  12.4

  	
  Delivery of Debenture
  Certificates

  	
  77

  
	
  12.5

  	
  Payment of Consideration to
  Debenture Trustee

  	
  78

  
	
  12.6

  	
  Consideration to be held in Trust

  	
  78

  
	
  12.7

  	
  Completion of Transfer of
  Debentures to Offeror

  	
  78

  
	
  12.8

  	
  Communication of Offer to the
  Company

  	
  79

  

 

3

 

	
  ARTICLE
  13 MEETINGS OF DEBENTUREHOLDERS

  	
  79

  
	
  13.1

  	
  Right to Convene Meeting

  	
  79

  
	
  13.2

  	
  Notice of Meetings

  	
  79

  
	
  13.3

  	
  Chairman

  	
  81

  
	
  13.4

  	
  Quorum

  	
  81

  
	
  13.5

  	
  Power to Adjourn

  	
  81

  
	
  13.6

  	
  Show of Hands

  	
  81

  
	
  13.7

  	
  Poll

  	
  82

  
	
  13.8

  	
  Voting

  	
  82

  
	
  13.9

  	
  Proxies

  	
  82

  
	
  13.10

  	
  Persons Entitled to Attend
  Meetings

  	
  83

  
	
  13.11

  	
  Powers Exercisable by
  Extraordinary Resolution

  	
  83

  
	
  13.12

  	
  Meaning of “Extraordinary
  Resolution”

  	
  85

  
	
  13.13

  	
  Powers Cumulative

  	
  86

  
	
  13.14

  	
  Minutes

  	
  86

  
	
  13.15

  	
  Instruments in Writing

  	
  86

  
	
  13.16

  	
  Binding Effect of Resolutions

  	
  86

  
	
  13.17

  	
  Evidence of Rights Of
  Debentureholders

  	
  86

  
	
  13.18

  	
  Concerning Serial Meetings

  	
  87

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  14 NOTICES

  	
  87

  
	
  14.1

  	
  Notice to the Company

  	
  87

  
	
  14.2

  	
  Notice to Debentureholders

  	
  87

  
	
  14.3

  	
  Notice to Debenture Trustee

  	
  88

  
	
  14.4

  	
  Mail Service Interruption

  	
  88

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  15 CONCERNING THE DEBENTURE TRUSTEE

  	
  88

  
	
  15.1

  	
  No Conflict of Interest

  	
  88

  
	
  15.2

  	
  Replacement of Debenture Trustee

  	
  89

  
	
  15.3

  	
  Duties of Debenture Trustee

  	
  89

  
	
  15.4

  	
  Reliance Upon Declarations,
  Opinions, etc.

  	
  90

  
	
  15.5

  	
  Evidence and Authority to
  Debenture Trustee, Opinions, etc.

  	
  90

  
	
  15.6

  	
  Debenture Trustee May Rely on
  a Certificate

  	
  91

  
	
  15.7

  	
  Experts, Advisers and Agents

  	
  91

  
	
  15.8

  	
  Debenture Trustee May Deal
  in Debentures

  	
  92

  
	
  15.9

  	
  Investment of Monies Held by
  Debenture Trustee

  	
  92

  
	
  15.10

  	
  Debenture Trustee will Disburse
  Only Monies Deposited

  	
  92

  
	
  15.11

  	
  Debenture Trustee Not Ordinarily
  Bound

  	
  92

  
	
  15.12

  	
  Debenture Trustee Not Required to
  Give Security

  	
  93

  
	
  15.13

  	
  Debenture Trustee Not Bound to
  Act on the Company’s Request

  	
  93

  
	
  15.14

  	
  Debenture Trustee Not Bound to
  Act

  	
  93

  
	
  15.15

  	
  Debenture Trustee Protected in
  Acting

  	
  93

  
	
  15.16

  	
  Conditions Precedent to Debenture
  Trustee’s Obligations to Act Hereunder

  	
  94

  
	
  15.17

  	
  Authority to Carry on Business

  	
  94

  
	
  15.18

  	
  Compensation and Indemnity

  	
  94

  
	
  15.19

  	
  Acceptance of Trust

  	
  95

  
	
  15.20

  	
  Third Party Interests

  	
  95

  
	
  15.21

  	
  Anti-Money Laundering

  	
  95

  
	
  15.22

  	
  Privacy Laws

  	
  96

  

 

4

 

	
  15.23

  	
  Withholding Obligation

  	
  96

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  16 SUPPLEMENTAL INDENTURES

  	
  97

  
	
  16.1

  	
  Supplemental Indentures

  	
  97

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  17 EXECUTION AND FORMAL DATE

  	
  98

  
	
  17.1

  	
  Execution

  	
  98

  
	
  17.2

  	
  Formal
  Date

  	
  98

  

 

SCHEDULE
A  FORM OF GLOBAL DEBENTURE

 

SCHEDULE
B  FORM OF REDEMPTION NOTICE

 

SCHEDULE
C  FORM OF MATURITY NOTICE

 

SCHEDULE
D  FORM OF NOTICE OF CONVERSION

 

SCHEDULE
E  FORM OF NOTICE OF PUT EXERCISE

 

5

 

TRUST
INDENTURE

 

THIS TRUST
INDENTURE made as of the 17th day of December, 2009,

 

BETWEEN:

 

ATLANTIC POWER CORPORATION, a corporation continued under
the laws of the Province of British Columbia

 

(the “Company”)

 

- and -

 

COMPUTERSHARE TRUST COMPANY
OF CANADA,
a trust company authorized to carry on business in all of the provinces and
territories of Canada

 

(the “Debenture
Trustee”)

 

WHEREAS the Company deems it
advisable to create and issue the Debentures to be created and issued in the
manner as herein provided;

 

AND
WHEREAS
the Company, under the laws relating thereto, is duly authorized to create and
issue the Debentures to be issued as herein provided;

 

AND
WHEREAS
all necessary steps in relation to the Company have been duly enacted, passed
and/or confirmed and other proceedings taken and conditions complied with to
make the Debentures, when certified by the Debenture Trustee and issued as in
this Indenture provided, legal, valid and binding obligations of the Company;

 

AND
WHEREAS
the foregoing recitals are made as representations and statements of fact by
the Company and not by the Debenture Trustee;

 

NOW
THEREFORE
it is hereby covenanted, agreed and declared as follows:

 

ARTICLE 1

INTERPRETATION

 

1.1                                                                               Definitions

 

In this
Indenture and in the Debentures, unless there is something in the subject
matter or context inconsistent therewith, the expressions following shall have
the following meanings, namely:

 

(a)                                                          “90% Redemption Right”  has
the meaning ascribed thereto in Section 2.4(i)(iv);

 

 

(b)                                                         “Additional Debentures” means Debentures of any one or more series,
other than the first series of Debentures being the Initial Debentures, issued
under this Indenture;

 

(c)                                                          “Affiliate”
of any specified Person means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified
Person.  For purposes of this definition,
“control” (including, with correlative meanings, the terms “controlling”, “controlled
by” and “under common control with”), as used with respect to any Person, means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise;

 

(d)                                                         “Applicable
Laws” means any and all laws, including all federal, state,
provincial and local statutes, codes, ordinances, decrees, rules, regulations
and municipal by-laws and all judicial, arbitral, administrative, ministerial,
departmental or regulatory judgments, orders, decisions, rulings or awards or
other requirements of any other governmental entity, binding on or affecting
the Person referred to in the context in which the term was used;

 

(e)                                                          “Applicable Securities Legislation” means applicable securities laws
(including rules, regulations, policies and instruments) in each of the
provinces and territories of Canada;

 

(f)                                                            “Authorized
Officer” means
authorized officer(s) of the Manager, and after the Management
Internalization, authorized officer(s) of the Company;

 

(g)                                                         “Bankruptcy
Law” means Title 11, United States Code, or any similar federal or
state law for the relief of debtors, or the Bankruptcy
and Insolvency Act (Canada) or any other Canadian federal or
provincial law or foreign law relating to bankruptcy, insolvency, winding up,
liquidation, reorganization or relief of debtors;

 

(h)                                                         “Beneficial Holder” means any person who holds a beneficial
interest in a Global Debenture as shown on the books of the Depository or a
Depository Participant;

 

(i)                                                             “Business
Day” means any day other than a Saturday, Sunday or other day on
which banking institutions in the Province of Ontario are authorized or
required by law to close;

 

(j)                                                             “Canadian Dollars”, “C$” or “$” means the lawful
money in Canada;

 

(k)                                                          “Capital
Stock” means:  (i) in the
case of a corporation, corporate stock or equity interests; (ii) in the
case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock; (iii) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and (iv) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person;

 

2

 

(l)                                                             “Cash
Change of Control” means a Change of Control in which 10% or more of
the consideration for the Common Shares in the transaction or transactions constituting
a Change of Control consists of: (i) cash, other than cash payments for
fractional Common Shares and cash payments made in respect of dissenter’s
appraisal rights; (ii) equity securities that are not traded or intended
to be traded immediately following such transactions on a stock exchange; or (iii) other
property that is not traded or intended to be traded immediately following such
transactions on a stock exchange;

 

(m)                                                       “Cash
Change of Control Conversion Period” has the meaning ascribed
thereto in Section 2.4(j)(i);

 

(n)                                                         “Certificate” means a written certificate signed by any
one of the Chief Executive Officer or Chief Financial Officer of the Manager,
and after the Management Internalization, a written certificate signed by any
one of the Chief Executive Officer or Chief Financial Officer of the Company;

 

(o)                                                         “Change of Control” will be deemed to occur upon the occurrence
of any of the following events:

 

(i)                 the acquisition by any Person or group of persons
acting jointly or in concert (within the meaning of the Securities
Act (Ontario)) of ownership of, or voting control or direction over,
50% or more of the Common Shares; or

 

(ii)              the sale or other transfer of all or substantially all
of the consolidated assets of the Company;

 

and a “Change of Control” will not include a sale, merger,
reorganization or similar transaction if the previous holders of the Common
Shares hold at least 50% of the voting control or direction in such merged,
reorganized or other continuing entity;

 

(p)                                                         “Change of Control Notice”
has the meaning attributed to it in Section 2.4(i)(ii);

 

(q)                                                         “Common
Share”  means common
shares in the capital of the Company, as such common shares are constituted on
the date of execution and delivery of this Indenture; provided that in the event
of a change or a subdivision, revision, reduction, combination or consolidation
thereof, any reclassification, capital reorganization, consolidation,
amalgamation, arrangement, merger, sale or conveyance or liquidation,
dissolution or winding-up, or such successive changes, subdivisions,
redivisions, reductions, combinations or consolidations, reclassifications,
capital reorganizations, consolidations, amalgamations, arrangements, mergers,
sales or conveyances or liquidations, dissolutions or windings-up, then,
subject to adjustments,  if any, having
been made in accordance with the provisions of Section 6.5, “Common Shares” shall mean the shares or
other securities or property resulting from such change, subdivision,
redivision, reduction, combination or consolidation, reclassification, capital
reorganization, consolidation, amalgamation, arrangement, merger, sale or
conveyance or liquidation, dissolution or winding-up;

 

3

 

(r)                                                            “Common Share Bid Request” means a request for bids to
purchase Common Shares (to be issued by the Company on the Common Share
Delivery Date) made by the Debenture Trustee in accordance with the Common
Share Interest Payment Election Notice and which shall make the acceptance of
any bid conditional upon the acceptance of sufficient bids to result in
aggregate net proceeds from such issue and sale of Common Shares which,
together with the cash payments by the Company, if any, equal the Interest
Obligation;

 

(s)                                                          “Common Share Delivery Date”
means a date not less than one Business Day prior to the applicable
Interest Payment Date, upon which Common Shares are delivered by the Company to
the Debenture Trustee for sale pursuant to Common Share Purchase Agreements
(together with the cash payments by the Company, if any, required to be made in
order to pay in full the applicable Interest Obligation);

 

(t)                                                            “Common Share Interest Payment Election”
means an election by the Company to raise funds to satisfy all or
part of an Interest Obligation on the applicable Interest Payment Date by the
delivery of Common Shares in the manner described in the Common Share Interest
Payment Election Notice;

 

(u)                                                         “Common Share Interest Payment Election Amount”
means the sum of (i) the amount of the aggregate net proceeds
resulting from the sale of Common Shares on the Common Share Delivery Date
pursuant to acceptable bids obtained pursuant to the Common Share Bid Request;
and (ii) the cash payments by the Company, if any, including any cash
amount paid by the Company in respect of fractional Common Shares pursuant to Section 10.1(g),
which sum shall be equal to the aggregate amount of the Interest Obligation in
respect of which the Common Share Interest Payment Election Notice was
delivered;

 

(v)                                                         “Common Share Interest Payment Election Notice”
means a written notice made by the Company to the Debenture Trustee
specifying:

 

(i)                                   the Interest Obligation to which the election
relates;

 

(ii)                                the Common Share Interest Payment Election
Amount;

 

(iii)                             the investment banks, brokers or dealers
(i) through which the Debenture Trustee shall seek bids to purchase the
Common Shares and the conditions of such bids, which may include the minimum
number of Common Shares, minimum price per Common Share, timing for closing for
bids and such other matters as the Company may specify, or (ii) with which
the Company will establish an account or accounts for the purpose of selling
Common Shares; and

 

(iv)                            that the Debenture Trustee
shall accept through the investment banks, brokers or dealers selected by the
Company only those bids which comply with such notice;

 

(w)                                                       “Common Share Proceeds Investment”
has the meaning attributed thereto in Section 10.1(h);

 

4

 

 

(x)                                                         “Common Share Purchase Agreement”
means an agreement in customary form among the Company, the
Debenture Trustee and the Persons making acceptable bids pursuant to a Common
Share Bid Request, providing for the purchase of Common Shares, which complies with
all Applicable Laws, including the Applicable Securities Legislation and the rules and
regulations of any stock exchange on which the Debentures or Common Shares are
then listed;

 

(y)                                                         “Common Share
Redemption Right”
has the meaning ascribed thereto in Section 4.6(a);

 

(z)                                                           “Common
Share Repayment Right” has the meaning ascribed thereto in Section 4.11(a);

 

(aa)                                                    “Company” has the meaning attributed to it in the
recitals;

 

(bb)                                                  “Company’s Auditors” or “Auditors of the Company” means an independent firm of
chartered accountants duly appointed as auditors of the Company;

 

(cc)                                                    “Conversion Price” means (i) with respect to the Initial
Debentures, the C$13.00 amount
for which each Common Share may be issued from time to time upon the conversion
of the Initial Debentures, as adjusted in accordance with the provisions of Article 6
and (ii) for any other series of Debentures which are by their terms
convertible, the amount set upon their creation, as adjusted in accordance with
the provisions of Article 6;

 

(dd)                                                  “Counsel” means a barrister or solicitor or firm of
barristers or solicitors retained or employed by the Debenture Trustee or
retained or employed by the Company and acceptable to the Debenture Trustee,
acting reasonably;

 

(ee)                                                  “Current Market Price” means the volume weighted average price of
the Common Shares on the TSX for the 20 consecutive trading days ending on the
fifth trading day preceding the date of the applicable event (or, if not listed
thereon, on such stock exchange on which Common Shares are listed or, if the
Common Shares are not listed on any stock exchange, then on the
over-the-counter market) or, if there is no market, fair value as determined by
an independent financial advisor;

 

(ff)                                                       “Date of Conversion” has the meaning ascribed thereto in Section 6.4(b);

 

(gg)                                                 “Debenture Liabilities” means the indebtedness, liabilities and
obligations of the Company under Debentures issued under this Indenture of any
series, including on account of principal, interest or otherwise but excluding
the issuance of Common Shares upon any Conversion pursuant to Article 6,
upon any redemption pursuant to Article 4, or at maturity pursuant to Article 4;

 

(hh)                                                 “Debenture Trustee” means Computershare Trust Company of Canada
and includes any successor or successors or any other trustee subsequently
appointed pursuant to Section 15.2;

 

(ii)                                                         “Debentureholders” or “holders” means the Persons for the time being
entered in the register for Debentures as registered holders of Debentures;

 

5

 

(jj)                                                         “Debentures” means the debentures, notes or other
evidence of indebtedness of the Company issued and certified hereunder, or
deemed to be issued and certified hereunder, including, without limitation, the
Initial Debentures, and for the time being outstanding, whether in definitive
or interim form or in the form of Global Debentures;

 

(kk)                                                  “Depository” means, with respect to the Debentures of
any series issuable or issued in the form of one or more Global Debentures, the
Person designated as depository by the Company pursuant to Section 2.6(a) until
a successor depository shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter “Depository” shall mean each Person who is then a
depository hereunder, and if at any time there is more than one such Person, “Depository” as used with respect to the
Debentures of any series shall mean each depository with respect to the Global
Debentures of such series and, in the case of the Initial Debentures, the
Depository shall initially be the CDS Clearing and Depository Services Inc. (“CDS”);

 

(ll)                                                       “Depository
Participant” means a broker, dealer, bank, other financial
institution or other person for whom from time to time, a Depository effects
book entries for a Global Debenture deposited with the Depository;

 

(mm)                                            “Directors” means the directors of the Company on the
date hereof or such directors as may, from time to time, be appointed or
elected directors of the Company pursuant to the Company’s articles and by-laws,
and applicable laws, and “Director”
means any one of them, and reference to action by the Directors means action by
the Directors as a board;

 

(nn)                                                  “Effective
Date” has the meaning ascribed thereto in Section 2.4(j)(i);

 

(oo)                                                  “Event of Default” has the meaning ascribed thereto in Section 8.1;

 

(pp)                                                  “Extraordinary Resolution” has the meaning ascribed thereto
in Section 13.12;

 

(qq)                                                  “Fair
Market Value” means, with respect to any asset or property, the
price which could be negotiated in an arm’s-length, free market transaction,
for cash, between a willing seller and a willing and able buyer, neither of
whom is under undue pressure or compulsion to complete the transaction;

 

(rr)                                                       “Freely Tradeable” means, in respect of any Common Shares or
any other securities of the Company or any other Person, as the case may be,
which securities (i) may be issued without the necessity of filing a
prospectus or any other similar offering document (other than such prospectus
or similar offering document that has already been filed) under Applicable
Securities Legislation and such issue does not constitute a distribution (other
than a distribution already qualified by prospectus or similar offering
document or that is otherwise exempt from prospectus requirements) under Applicable
Securities Legislation; and (ii) can be traded by the holder thereof
without any restriction under Applicable Securities Legislation, such as hold
periods, except in the case of a control distribution (as defined in the
Applicable Securities Legislation);

 

6

 

(ss)                                                    “Fully Registered
Debentures” means
Debentures registered as to both principal and interest;

 

(tt)                                                        “generally accepted accounting principles  or
GAAP” means generally accepted accounting principles in Canada or
the United States, as amended from time to time, as applicable to the Company
and for greater certainty includes International Financial Reporting Standards
as and to the extent applicable to the Company;

 

(uu)                                                  “Global Debenture” means a Debenture that is issued to and
registered in the name of the Depository, or its nominee, pursuant to Section 2.6
for purposes of being held by or on behalf of the Depository as custodian for
participants in the Depository’s book-entry only registration system;

 

(vv)                                                  “Government Obligations” means short-term Canadian government
obligations;

 

(ww)                                           “guarantee” means a guarantee (other than by
endorsement of negotiable instruments for collection in the ordinary course of
business) direct or indirect, in any manner (including, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
indebtedness or other obligations;

 

(xx)                                                      “Initial Debentureholders” means the Persons for the time
being entered into the register of Debentures as registered holders of the
Initial Debentures;

 

(yy)                                                  “Initial Debentures” means the Debentures designated as “6.25%
Convertible Unsecured Subordinated Debentures” and described in Section 2.4;

 

(zz)                                                     “Interest Obligation” means the obligation of the Company to pay
interest on the Debentures, as and when the same becomes due;

 

(aaa)                                              “Interest Payment Date” means a date specified for a series of
Debentures as the date on which an instalment of interest on such Debentures
shall be due and payable and which , for the Initial Debentures shall be
semi-annually on the 15th day of March and September in each
year, commencing on September 15, 2010 computed on the basis of a 360-day
year composed of twelve 30-day months;

 

(bbb)                                           “Lien”
means, with respect to any asset, any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind in respect of such asset, whether or not
filed, recorded or otherwise perfected under applicable law (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Personal Property Security Act (Ontario)
(or equivalent statutes) of any jurisdiction); provided that in no event will
an operating lease be deemed to constitute a Lien;

 

(ccc)                                              “Make
Whole Premium” has the meaning ascribed thereto in Section 2.4(j)(i);

 

(ddd)                                           “Make
Whole Premium Shares” has the meaning ascribed thereto in Section 2.4(j)(ii);

 

7

 

(eee)                                              “Management
Internalization”
means the termination of the management agreement between the Company and the
Manager and the hiring by the Company of employees of the Manager all of which
is expected to be effective before the end of 2009;

 

(fff)                                                    “Manager” means Atlantic Power Management, LLC, the
manager of the Company;

 

(ggg)                                           “Material
Adverse Effect” means  (i) a
material adverse change in, or a material adverse effect upon, the operations,
business, properties, financial condition, or assets of the Company on a
consolidated basis; or (ii) a material adverse effect upon the legality,
validity, binding effect or enforceability of this Indenture against the
Company;

 

(hhh)                                           “Maturity Account” means an account or accounts required to be
established by the Company (and which shall be maintained by and subject to the
control of the Debenture Trustee) for each series of Debentures pursuant to and
in accordance with this Indenture;

 

(iii)                                                     “Maturity Date” for a Debenture means the date of maturity
for such Debenture as prescribed in this Indenture or in any supplement hereto;

 

(jjj)                                                     “Offering” means the public offering by short form
prospectus dated December 10, 2009 of $75,000,000 aggregate principal
amount of Initial Debentures and up to an additional $11,250,000 principal
amount of Initial Debentures pursuant to an over-allotment option;

 

(kkk)                                            “Ordinary Resolution” has the same meaning as “Extraordinary
Resolution” except that references in the latter to “662/3%” shall become references to “a majority” for the purposes of defining
“Ordinary Resolution”;

 

(lll)                                                     “Periodic Offering” means an offering of Debentures of a series
from time to time, the specific terms of which Debentures, including, without
limitation, the rate or rates of interest, if any, thereon, the stated maturity
or maturities thereof and the redemption and conversion provisions, if any,
with respect thereto, are to be determined by the Company upon the issuance of
such Debentures from time to time;

 

(mmm)                                  “Person” includes an individual, corporation,
company, limited liability company, partnership, joint venture, association,
trust, trustee, unincorporated organization or government or any agency or
political subdivision thereof;

 

(nnn)                                           “Privacy
Laws” has the meaning ascribed thereto in Section 15.22;

 

(ooo)                                           “Put Date”  has
the meaning ascribed thereto in Section 2.4(i)(i);

 

(ppp)                                           “Put Price”  has
the meaning ascribed thereto in Section 2.4(i)(i);

 

(qqq)                                           “Put Right”  has
the meaning ascribed thereto in Section 2.4(i)(i);

 

(rrr)                                                   “Redemption Date” has the meaning ascribed thereto in Section 4.3;

 

8

 

(sss)                                              “Redemption Notice” has the meaning ascribed thereto in Section 4.3;

 

(ttt)                                                    “Redemption Price” means, in respect of a Debenture, the
amount, excluding interest, payable on the Redemption Date fixed for such
Debenture;

 

(uuu)                                           “Representative”
means the trustee, agent or representative (if any) for an issue of Senior
Indebtedness;

 

(vvv)                                           “Senior Creditor” means a holder or holders of Senior
Indebtedness and includes any agent or agents or representative or
representatives or trustee or trustees of any such holder or holders;

 

(www)                                   “Senior
Indebtedness” means  all
obligations, liabilities and indebtedness of the Company which would, in
accordance with GAAP, be classified upon a consolidated balance sheet of the
Company as liabilities of the Company and, whether or not so classified, shall
include (without duplication): (a) indebtedness of the Company for borrowed
money; (b) obligations of the Company evidenced by bonds, debentures,
notes or other similar instruments; (c) obligations of the Company arising
pursuant or in relation to bankers’ acceptances, letters of credit and letters
of guarantee (including payment and reimbursement obligations in respect
thereof) or indemnities issued in connection therewith; (d) obligations of
the Company under any swap, hedging or other similar contracts or arrangements;
(e) obligations of the Company under guarantees, indemnities, assurances,
legally binding comfort letters or other contingent obligations relating to the
Senior Indebtedness or other obligations of any other Person which would
otherwise constitute Senior Indebtedness within the meaning of this definition;
(f) all indebtedness of the Company representing the deferred purchase
price of any property including, without limitation, purchase money mortgages; (g) accounts
payable to trade creditors; (h) all renewals, extensions and refinancing
of any of the foregoing; and (i) all costs and expenses incurred by or on
behalf of the holder of any Senior Indebtedness in enforcing payment or
collection of any such Senior Indebtedness including enforcing any security
interest securing the same.

 

(xxx)                                             “Senior Security” means all mortgages, liens, pledges,
charges (whether fixed or floating), security interests or other encumbrances
of any kind, contingent or absolute, held by or on behalf of any Senior
Creditor and in any manner securing any Senior Indebtedness;

 

(yyy)                                           “Stock
Price” has the meaning ascribed thereto in Section 2.4(j)(ii);

 

(zzz)                                            “Subsidiary”
has the meaning ascribed thereto in National Instrument 45-106 — Prospectus and
Registration Exemptions;

 

(aaaa)                                        “Tax Act” means the Income Tax Act (Canada) and the regulations thereunder, in
each case in effect on the date hereof;

 

(bbbb)                                    “this Indenture”, “this Trust Indenture”, “hereto”, “herein”, “hereby”, “hereunder”, “hereof” and similar expressions refer to this
Indenture and not to any 

 

9

 

particular Article, Section, subsection, clause, subdivision or other
portion hereof and include any and every instrument supplemental or ancillary
hereto;

 

(cccc)                                        “Time of Expiry” means the time of expiry of certain rights
with respect to the conversion of Debentures under Article 6 which is to
be set forth for each series of Debentures which by their terms are to be
convertible;

 

(dddd)                                    “Total Put Price”  has
the meaning ascribed thereto in Section 2.4(i)(i);

 

(eeee)                                        “trading day” means, with respect to the TSX or other
market for securities, any day on which such exchange or market is open for
trading or quotation;

 

(ffff)                                                “TSX” means the Toronto Stock Exchange or its successor or successors;

 

(gggg)                                    “U.S.” means the United States of America, its territories and possessions
and States of the U.S.;

 

(hhhh)                                    “U.S. Tax Code” means the United States Internal Revenue
Code of 1986;

 

(iiii)                                                “Voting
Stock” of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the board of
directors, managers or trustees, as the case may be, of such Person;

 

(jjjj)                                                    “Written Direction” means an instrument in writing signed by any
one of the Chief Executive Officer or Chief Financial Officer of the Manager,
or after the Management Internalization, an instrument in writing signed by any
one of the Chief Executive Officer or Chief Financial Officer of the Company.

 

1.2                                                                               Meaning
of “Outstanding”

 

Every Debenture certified and delivered by
the Debenture Trustee hereunder shall be deemed to be outstanding until it is
cancelled, converted, redeemed or delivered to the Debenture Trustee for
cancellation, conversion or redemption or monies and/or Common Shares or other
applicable securities or property, as the case may be, for the payment thereof
shall have been set aside under Section 9.2, provided that:

 

(a)                                                          Debentures which have been
partially redeemed, purchased or converted shall be deemed to be outstanding
only to the extent of the unredeemed, unpurchased or unconverted part of the
principal amount thereof;

 

(b)                                                         when a new Debenture has been
issued in substitution for a Debenture which has been lost, stolen or
destroyed, only one of such Debentures shall be counted for the purpose of
determining the aggregate principal amount of Debentures outstanding; and

 

(c)                                                          for the purposes of any provision
of this Indenture entitling holders of outstanding Debentures to vote, sign
consents, requisitions or other instruments or take any other action under this
Indenture, or to constitute a quorum of any meeting of Debentureholders,
Debentures owned directly or indirectly, legally or equitably, by the Company
shall be disregarded except that:

 

10

 

(i)                       for the purpose of determining
whether the Debenture Trustee shall be protected in relying on any such vote,
consent, acquisition or other instrument or action, or on the holders of
Debentures present or represented at any meeting of Debentureholders, only the
Debentures which the Debenture Trustee knows are so owned shall be so
disregarded;

 

(ii)                    Debentures so owned which have been pledged
in good faith other than to the Company or a Subsidiary of the Company shall
not be so disregarded if the pledgee shall establish to the satisfaction of the
Debenture Trustee the pledgee’s right to vote such Debentures, sign consents,
requisitions or other instruments or take such other actions in his or her
discretion free from the control of the Company or a Subsidiary of the Company;
and

 

(iii)                 Debentures so owned shall not be disregarded if they
are the only Debentures outstanding.

 

1.3                                                                               Interpretation

 

In this Indenture:

 

(a)                                                          words importing the singular
number or masculine gender shall include the plural number or the feminine or
neuter genders, respectively, and vice versa;

 

(b)                                                         all references to Articles and
Schedules refer, unless otherwise specified, to articles of and schedules to
this Indenture;

 

(c)                                                          all references to Sections,
subsections or clauses refer, unless otherwise specified, to sections,
subsections or clauses of this Indenture;

 

(d)                                                         words and terms denoting
inclusiveness (such as “include” or “includes” or “including”), whether or not so stated, are not limited by and do not imply
limitation of their context or the words or phrases which precede or succeed
them;

 

(e)                                                          unless otherwise indicated,
reference to any agreement or other instrument in writing means such agreement
or other instrument in writing as amended, modified, replaced or supplemented
from time to time;

 

(f)                                                            unless otherwise indicated,
reference to a statute shall be deemed to be a reference to such statute as
amended, re-enacted or replaced from time to time; and

 

(g)                                                         unless otherwise indicated, time
periods within which a payment is to be made or any other action is to be taken
hereunder shall be calculated by including the day on which the period
commences and excluding the day on which the period ends.

 

1.4                                                                               Headings,
etc.

 

The division of this Indenture into
Articles and Sections, the provision of a Table of Contents and the insertion
of headings are for convenience of reference only and shall not affect the
construction or interpretation of this Indenture or of the Debentures.

 

11

 

1.5                                                                               Day
not a Business Day

 

In the event that any day on which any
action required to be taken hereunder is not a Business Day, then such action
shall be required to be taken on or before the requisite time on the next
succeeding day that is a Business Day.

 

1.6                                                                               Applicable
Law

 

This Indenture and the Debentures shall be
construed in accordance with the laws of the Province of Ontario and the laws
of Canada applicable therein and shall be treated in all respects as Ontario
contracts.  The Company hereby
irrevocably attorns to the jurisdiction of the courts of the Province of
Ontario.

 

1.7                                                                               Monetary
References

 

Whenever any amounts of money are referred
to herein, such amounts shall be deemed to be in lawful money of Canada unless
otherwise expressed.

 

1.8                                                                               Currency
of Payment

 

Unless otherwise indicated in a
supplemental indenture with respect to any particular series of Debentures, all
payments to be made under this Indenture or a supplemental indenture shall be
made in Canadian dollars.

 

1.9                                                                               All
Payments Net of Taxes

 

For greater certainty, any and all payments
to be made pursuant to this Indenture of or on account of principal, premium,
if any, and interest or any deemed interest on the Debentures (including upon
redemption, purchase or conversion of the Debentures) or of any other amount, whether
paid or payable in money, Common Shares or other securities or property, shall
be made subject to the deduction of any and all applicable taxes or
withholdings.

 

1.10                                                                        Accounting
Terms

 

Except as hereinafter provided or as
otherwise indicated in this Indenture, all calculations required or permitted
to be made hereunder pursuant to the terms of this Indenture shall be made in
accordance with GAAP.

 

1.11                                                                        Calculations

 

The Company shall be responsible for making
all calculations called for hereunder including, without limitation,
calculations of Current Market Price. The Company shall make such calculations
in good faith and, absent manifest error, the Company’s calculations shall be
final and binding on holders and the Trustee. The Company will provide a
schedule of its calculations to the Trustee and the Trustee shall be entitled
to rely conclusively on the accuracy of such calculations without independent
verification.

 

12

 

1.12                                                                        Language

 

Each of the parties hereto hereby
acknowledges that it has consented to and requested that this Indenture and all
documents relating thereto, including, without limiting the generality of the
foregoing, the form of Debenture attached hereto as Schedule A, be drawn up in the English language only.

 

Les parties aux présentes reconnaissent
avoir accepté  et demandé  que le présent acte de fiducie et tous les
documents s’y rapportant, y compris, sans restreindre la portée générale de ce
qui précède, le formulaire de débenture joint aux présentes à titre d’annexe A,
soient rédigés en langue anglaise seulement.

 

1.13                                                                        Successors
and Assigns

 

All covenants and agreements in this
Indenture by the Company shall bind its respective successors and assigns,
whether expressed or not.  All covenants
and agreements in this Indenture by the Trustee shall bind its successors,
whether expressed or not.

 

1.14                                                                        Time
of Essence

 

Time shall be of the essence of this
Indenture.

 

1.15                                                                        Invalidity/Severability

 

In case any provision in this Indenture or in
the Debentures shall be invalid, illegal, prohibited or unenforceable, such
provision shall be deemed to be severed herefrom or therefrom and shall be
ineffective only to the extent of such prohibition or unenforceability.  The validity, legality and enforceability of
the remaining provisions shall not in any way be affected, prejudiced or
impaired thereby.

 

1.16                                                                        Entire
Agreement

 

This Indenture and all supplemental
indentures and Schedules hereto and thereto, any Written Direction establishing
the terms of Debentures pursuant to Section 2.2 and the Debentures issued
hereunder and thereunder, together constitute the entire agreement between the
parties hereto with respect to the indebtedness created hereunder and
thereunder and under the Debentures and supersedes as of the date hereof all
prior memoranda, agreements, negotiations, discussions and term sheets, whether
oral or written, with respect to the indebtedness created hereunder or
thereunder and under the Debentures.

 

1.17                                                                        Benefits
of Indenture

 

Nothing in this Indenture or in the
Debentures, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, any paying agent, the holders of
Debentures, the Senior Creditors (to the extent provided in Article 5 only),
and (to the extent provided in Section 8.11) the holders of Common Shares,
any benefit or any legal or equitable right, remedy or claim under this
Indenture.

 

13

 

1.18                                                                        Schedules

 

The following Schedules form part of this
Indenture:

 

	
  Schedule A

  	
  —

  	
  Form of Global Debenture

  
	
  Schedule B

  	
  —

  	
  Form of Redemption Notice

  
	
  Schedule C

  	
  —

  	
  Form of Maturity Notice

  
	
  Schedule D

  	
  —

  	
  Form of Notice of Conversion

  
	
  Schedule E

  	
  —

  	
  Form of Notice of Put Exercise

  

 

ARTICLE 2

THE DEBENTURES

 

2.1                                                                               Limit
of Debentures

 

Subject to the limitation in respect of the
Initial Debentures set out in Section 2.4(a), the aggregate principal
amount of Debentures authorized to be issued under this Indenture is unlimited;
provided, however that Debentures may be issued only upon and subject to the
conditions and limitations herein set forth.

 

2.2                                                                               Terms
of Debentures of any Series

 

The Debentures may be issued in one or more
series.  There shall be established
herein or in or pursuant to one or more indentures supplemental hereto or
pursuant to a Written Direction,  prior to the
initial issuance of Debentures of any particular series (other than the Initial
Debentures, which are provided for in Section 2.4):

 

(a)                                                          the designation of the Debentures
of the series (which need not include the term “Debentures”), which shall distinguish the Debentures of
the series from the Debentures of all other series;

 

(b)                                                         any limit upon the aggregate
principal amount of the Debentures of the series that may be certified and delivered
under this Indenture (except for Debentures certified and delivered upon
registration of, transfer of, amendment of, or in exchange for, or in lieu of,
other Debentures of the series pursuant to Sections 2.9, 2.10, 3.2, 3.3 and
3.6);

 

(c)                                                          the date or dates on which the
principal of the Debentures of the series is payable;

 

(d)                                                         the rate or rates at which the
Debentures of the series shall bear interest, if any, the date or dates from
which such interest shall accrue, on which such interest shall be payable and
on which a record, if any, shall be taken for the determination of holders to
whom such interest shall be payable and/or the method or methods by which such
rate or rates or date or dates shall be determined;

 

(e)                                                          the place or places where the
principal of and any interest on Debentures of the series shall be payable or
where any Debentures of the series may be surrendered for registration of
transfer or exchange;

 

14

 

 

(f)                                                            the right, if any, of the Company
to redeem Debentures of the series, in whole or in part, at its option and the
period or periods within which, the price or prices at which and any terms and
conditions upon which, Debentures of the series may be so redeemed, pursuant to
any sinking fund or otherwise;

 

(g)                                                         the obligation, if any, of the
Company to redeem, purchase or repay Debentures of the series pursuant to any
mandatory redemption, sinking fund or analogous provisions or at the option of
a holder thereof and the price or prices at which, the period or periods within
which, the date or dates on which, and any terms and conditions upon which,
Debentures of the series shall be redeemed, purchased or repaid, in whole or in
part, pursuant to such obligations;

 

(h)                                                         if other than denominations of
$1,000 and any integral multiple thereof, the denominations in which Debentures
of the series shall be issuable;

 

(i)                                                             subject to the provisions of this
Indenture, any trustees, Depositories, authenticating or paying agents,
transfer agents or registrars or any other agents with respect to the
Debentures of the series;

 

(j)                                                             any other events of default or
covenants with respect to the Debentures of the series;

 

(k)                                                          whether and under what
circumstances the Debentures of the series will be convertible into or
exchangeable, in whole or in part, for securities of any Person;

 

(l)                                                             whether the Debentures of the
series will be guaranteed by any Person and the terms of any such guarantee;

 

(m)                                                       the form and terms of the Debentures
of the series;

 

(n)                                                         if applicable, that the Debentures
of the series shall be issuable in whole or in part as one or more Global
Debentures and, in such case, the Depository or Depositories for such Global
Debentures in whose name, or whose nominee’s name, the Global Debentures will
be registered, and any circumstances other than or in addition to those set
forth in Section 2.9 or 3.2 or those applicable with respect to any
specific series of Debentures, as the case may be, in which any such Global
Debenture may be exchanged for Fully Registered Debentures, or transferred to
and registered in the name of a person other than the Depository for such
Global Debentures or a nominee thereof;

 

(o)                                                         if other than Canadian currency,
the currency in which the Debentures of the series are issuable; and

 

(p)                                                         any other terms of the Debentures
of the series (which terms shall not be inconsistent with the provisions of
this Indenture).

 

All Debentures of any one series shall be substantially identical,
except as may otherwise be established herein or by or pursuant to a resolution
of the Directors, in a Certificate or in an indenture supplemental hereto.  All Debentures of any one series need not be
issued at the same time and may be issued from time to time, including pursuant
to a Periodic Offering, consistent with the terms of 

 

15

 

this Indenture, if so provided herein, by or pursuant to such
resolution of the Directors, in a Certificate or in an indenture supplemental
hereto.

 

2.3                                                                               Form of
Debentures

 

Except in respect of the Initial Debentures,
the form of which is provided for herein, the Debentures of each series shall
be substantially in such form or forms (not inconsistent with this Indenture)
as shall be established herein or by or pursuant to one or more resolutions of
the Directors (as set forth in a resolution of the Directors or to the extent
established pursuant to, rather than set forth in, a resolution of the
Directors, in a Certificate  detailing such
establishment)  or in one or more indentures
supplemental hereto, in each case, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have imprinted or otherwise reproduced thereon such legend
or legends or endorsements, not inconsistent with the provisions of this
Indenture, as may be required to comply with any law, or with any rules or
regulations pursuant thereto or with any rules or regulations of any
securities exchange or securities regulatory authority or to conform to general
usage, all as may be determined by the Directors or Authorized Officer
executing such Debentures on behalf of the Company , as conclusively evidenced
by his or her execution of such Debentures. 
The Debenture Trustee shall not be required to ensure compliance with
any law or with any rules or regulations pursuant thereto or with any rules or
regulations of any securities exchange or securities regulatory authority or to
conform to general usage in connection with the issue, transfer or conversion
of the Debentures.  The responsibility
for compliance with the foregoing shall be that of the Company or the holder,
as applicable.

 

2.4                                                                               Form and
Terms of Initial Debentures

 

(a)                                                          The first series of Debentures (the
“Initial
Debentures”)
authorized for issue immediately is limited to an aggregate principal amount of
not more than $86,250,000
and shall be designated as “6.25% Convertible Unsecured Subordinated
Debentures”.

 

(b)                                                         The Initial Debentures shall be
dated as of the date of closing of the Offering and shall mature on March 15, 2017 (the “Maturity  Date”).

 

(c)                                                          The Initial Debentures shall bear
interest from the date of issue at the rate of 6.25% per annum, payable
semi-annually in arrears on the 15th day of March and September in
each year computed on the basis of a 360-day year composed of twelve 30-day
months.  The first such payment will fall
due on  September 15,
2010 and the last such payment (representing interest payable from and
including the last Interest Payment Date to, but excluding, the Maturity Date
or the earlier date of redemption or conversion of the Initial Debentures) will
fall due on the Maturity Date or the earlier date of redemption or conversion,
payable after as well as before maturity and after as well as before default,
with interest on amounts in default at the same rate, compounded semi-annually, computed on the basis of a 360-day year
composed of twelve 30-day months.  For
certainty, the first interest payment will include interest accrued and unpaid
from and including December 17, 2009 up to, but excluding, September 15,
2010 which will be equal to $46.53 for each $1,000 principal amount of the
Initial Debentures.

 

16

 

(d)                                                         The Initial Debentures will be
redeemable at the option of the Company in accordance with the terms of Article 4,
provided that the Initial Debentures will not be redeemable on or prior to December 31,
2012 (except in certain limited circumstances following a Change of Control as
provided herein).  After December 31,
2012 and prior to December 31, 2014, the Initial Debentures may be
redeemed by the Company, in whole at any time or in part from time to time, on
notice as provided for in Section 4.3, provided that the Current Market
Price is not less than 125% of the Conversion Price at the time notice of
redemption is given.  On or after December 31,
2014 and prior to the Maturity Date, the Initial Debentures may be redeemed by
the Company, in whole at any time or in part from time to time, on notice as
provided for in Section 4.3.  In
such circumstances, the Initial Debentures will be redeemable at a price equal
to their principal amount plus accrued and unpaid interest.  The Redemption Notice for the Initial
Debentures shall be substantially in the form of Schedule B.  In
connection with the redemption of the Initial Debentures, the Company may, at
its option and subject to the provisions of Section 4.6 and subject to
regulatory approval, elect to satisfy its obligation to pay all or a portion of
the aggregate Redemption Price of the Initial Debentures to be redeemed by
issuing and delivering to the holders of such Initial Debentures, such number
of Freely Tradeable Common Shares as is obtained by dividing the principal amount
of the Initial Debentures which are to be redeemed by 95% of the Current Market
Price on the Redemption Date. If the Corporation elects to exercise such
option, it shall so specify and provide details in the Redemption Notice.

 

(e)                                                          The Initial Debentures will be
subordinated to the Senior Indebtedness in accordance with the provisions of Article 5.  In accordance with Section 2.12, the
Initial Debentures will rank pari passu
with each other series of Debentures issued under this Indenture or under indentures
supplemental to this Indenture (regardless of their actual date or terms of
issue) and, except as prescribed by law, with all other present and future
subordinated indebtedness and unsecured indebtedness of the Company, other than
Senior Indebtedness.

 

(f)                                                            Upon and subject to the provisions
and conditions of Article 6, the holder of each Initial Debenture shall
have the right, at such holder’s option, at any time prior to the close of
business on the earlier of: (i) the Maturity Date; and (ii) the last
Business Day immediately preceding the Redemption Date specified by the Company
for redemption of the Initial Debentures by notice to the holders of Initial
Debentures in accordance with Sections 2.4(d) and 4.3 (the earlier of
which will be the “Time of Expiry” for the purposes of Article 6 in respect of the Initial
Debentures), to convert the whole or, in the case of a Debenture of a
denomination in excess of $1,000, any part which is $1,000 or an integral
multiple thereof, of the principal amount of such Debenture into Common Shares
at the Conversion Price in effect on the Date of Conversion (as defined in Section 6.4(b)).  To the extent a redemption is a redemption in
part only of the Initial Debentures, such right to convert, if not exercised
prior to the applicable Time of Expiry, shall survive as to any Initial
Debentures not redeemed or converted and be applicable to the next succeeding
Time of Expiry.

 

The Conversion Price in effect on the date hereof
for each Common Share to be issued upon the conversion of Initial Debentures
shall be equal to $13.00 per

 

17

 

Common Share being a conversion ratio of
approximately 76.9231 Common Shares for each $1,000 principal amount of Initial
Debentures so converted.  No adjustment
to the Conversion Price will be made for dividends or distributions payable on
Common Shares issuable upon conversion or for interest accrued or accruing on
Initial Debentures surrendered for conversion. 
Holders converting their Initial Debentures will receive interest which
has accrued but not been paid from the date of the most recent Interest Payment
Date on which interest was paid in full in accordance with this Indenture to,
but not including, the Date of Conversion. 
The Conversion Price applicable to, and the Common Shares, securities or
other property receivable on the conversion of, the Initial Debentures is
subject to adjustment pursuant to the provisions of Section 6.5.

 

(g)                                                         The Initial Debentures shall be
issued in denominations of $1,000 and integral multiples of $1,000 and the
Debenture Trustee is hereby appointed as registrar and transfer agent for the
Initial Debentures.  Each Initial
Debenture and the certificate of the Debenture Trustee endorsed thereon shall
be issued in substantially the form set out in Schedule A, with such insertions, omissions, substitutions or other
variations as shall be required or permitted by this Indenture, and may have
imprinted or otherwise reproduced thereon such legend or legends or endorsements,
not inconsistent with the provisions of this Indenture, as may be required to
comply with any law or with any rules or regulations pursuant thereto or
with any rules or regulations of any securities exchange or securities
regulatory authority or to conform with general usage, all as may be determined
by the Directors or an Authorized Officer executing such Initial Debenture in
accordance with Section 2.7 hereof, as conclusively evidenced by his or
her execution of an Initial Debenture. 
Each Initial Debenture shall additionally bear such distinguishing
letters and numbers as the Debenture Trustee shall approve.  Notwithstanding the foregoing, an Initial
Debenture may be in such other form or forms as may, from time to time, be,
approved by a resolution of the Directors or as specified in a
Certificate.  The Initial Debentures may
be engraved, lithographed, printed, mimeographed or typewritten or partly in
one form and partly in another.

 

The Initial Debentures shall be issued as one or
more Global Debentures and the Global Debentures will be registered in the name
of the Depository which, as of the date hereof, shall be CDS (or any nominee of
the Depository).  No Beneficial Holder
will receive definitive certificates representing its interest in Debentures
except as provided in Section 3.2. 
A Global Debenture may be exchanged for Debentures in registered form
that are not Global Debentures, or transferred to and registered in the name of
a Person other than the Depository for such Global Debentures or a nominee
thereof as provided in Section 3.2.

 

(h)                                                         Upon and subject to the provisions
and conditions of Article 10, and provided no Event of Default has
occurred and is continuing, the Company may elect, from time to time, to raise
funds to satisfy all or part of an Interest Obligation on the Initial
Debentures on any Interest Payment Date (including, for greater certainty,
following conversion or upon maturity or redemption) by delivering Common
Shares to an agent, including the Debenture Trustee, for sale through the
facilities of a registered broker/dealer.

 

18

 

(i)                                                             Subject to Applicable Securities
Legislation and any required regulatory approval, upon the occurrence of a
Change of Control and subject to the provisions and conditions of this Section 2.4(i) and
Article 5, Debentureholders have a right to require the Company to
purchase all of their Initial Debentures. 
The terms and conditions of such right are set forth below.

 

(i)         Upon the occurrence of a Change of Control,
each holder of Initial Debentures shall have the right (the “Put Right”) to require the Company to
purchase, on the date (the “Put Date”) which is 30 days following the date upon which the
Debenture Trustee delivers a Change of Control Notice (as defined below) to the
holders of Initial Debentures, all or any part of such holder’s Initial
Debentures at a price equal to 100% of the principal amount thereof (the “Put Price”) plus accrued and unpaid
interest, if any, on such Initial Debenture up to, but excluding, the Put Date
(collectively, the “Total Put Price”).

 

(ii)        The Company will, as soon as practicable,
and in any event no later than two Business Days after the occurrence of a
Change of Control, give written notice to the Debenture Trustee of the Change
of Control.  The Debenture Trustee will,
as soon as practicable thereafter, and in any event no later than four Business
Days after receiving notice from the Company of the Change of Control, provide
written notice to the holders of Initial Debentures of the Change of Control (a
“Change
of Control Notice”).  The Change
of Control Notice shall include a description of the Change of Control, details
of the Debentureholders’ Put Right under the terms of the Indenture (including
identifying the Put Date), a statement that each holder will be entitled to
withdraw his election to require the Company to purchase if the Debenture
Trustee receives, no later than the close of business on the third Business Day
immediately preceding the Put Date, a facsimile transmission or letter setting
forth the name of such holder, the principal amount of the Initial Debentures
tendered for purchase and a statement that such holder is withdrawing his
election to have the Initial Debentures purchased and a description of the
rights of the Company to redeem untendered Initial Debentures in accordance
with Section 2.4(i)(iv) hereof.

 

(iii)       To exercise the Put Right the
Debentureholder must deliver to the Debenture Trustee, not less than five
Business Days prior to the Put Date, written notice of the holder’s exercise of
such right in the form attached as Schedule E.

 

(iv)       If 90% or more in aggregate principal
amount of Initial Debentures outstanding on the date the Company provides
notice of a Change of Control to the Debenture Trustee have been tendered for
purchase pursuant to the Put Right on the Put Date, the Company shall have the
right, upon written notice provided to the Debenture Trustee within 10 days
following the Put Date, to redeem all the remaining outstanding Initial
Debentures effective as of the Put Date at the Total Put Price (the “90%
Redemption Right”).

 

(v)        Upon receipt of notice that the Company
shall exercise the 90% Redemption Right and acquire the remaining Initial
Debentures, the Debenture Trustee shall as soon as reasonably practicable
provide written notice to all Debentureholders that did not previously exercise
the Put Right that:

 

19

 

(A)                              the Company has exercised the 90%
Redemption Right and will purchase all outstanding Initial Debentures effective
as of the Put Date at the Total Put Price, including a calculation of such
holder’s Total Put Price;

 

(B)                                each holder must transfer their
Initial Debentures to the Debenture Trustee on the same terms as those holders
that exercised the Put Right and must send their respective Initial Debentures,
duly endorsed for transfer, to the Debenture Trustee within 10 days after the
sending of such notice and the Depository shall make notations on the Global
Debenture of the principal amount thereof so transferred; and

 

(C)                                the rights of such holder under
the terms of the Initial Debentures and this Indenture shall cease to be
effective as of the Put Date provided the Company has paid the Total Put Price
to, or to the order of, the Debenture Trustee and thereafter the Initial
Debentures shall not be considered to be outstanding and the holder shall not
have any right except to receive such holder’s Total Put Price upon surrender
and delivery of such holder’s Initial Debentures in accordance with the
Indenture.

 

(vi)       The Company shall, on or before 11:00 a.m.
(Toronto time) on the Business Day immediately prior to the Put Date, deposit
with the Debenture Trustee or any paying agent to the order of the Debenture
Trustee, such sums of money as may be sufficient to pay the Total Put Price of
the Initial Debentures to be purchased or redeemed by the Company on the Put
Date, provided the Company may elect to satisfy this requirement by providing
the Debenture Trustee with a certified cheque or wire transfer for such amounts
required under this Section 2.4(i)(vi). 
The Company shall also deposit with the Debenture Trustee a sum of money
sufficient to pay any charges or expenses that may be incurred by the Debenture
Trustee in connection with such purchase and/or redemption, as the case may
be.  Every such deposit shall be
irrevocable.  From the sums so deposited,
the Debenture Trustee shall pay or cause to be paid to the holders of such
Initial Debentures, the Total Put Price to which they are entitled (less any
tax required by law to be deducted in respect of accrued and unpaid interest)
on the Company’s purchase or redemption.

 

(vii)      In the event that one or more of such
Initial Debentures being purchased in accordance with this Section 2.4(i) becomes
subject to purchase in part only, upon surrender of such Initial Debentures for
payment of the Total Put Price, the Depository shall make notations on the
Global Debenture of the principal amount thereof so purchased.

 

(viii)     Initial Debentures for which holders have
exercised the Put Right and Initial Debentures which the Company has elected to
redeem in accordance with the 90% Redemption Right shall become due and payable
at the Total Put Price on the Put Date, in the same manner and with the same
effect as if it were the date of maturity specified in such Initial Debentures,
anything therein or herein to the contrary notwithstanding, and from and after
such Put Date, if the money necessary to purchase or redeem the Initial Debentures
shall have 

 

20

 

been deposited as provided in this Section 2.4(i) and
affidavits or other proofs satisfactory to the Debenture Trustee as to the
publication and/or mailing of such notices shall have been lodged with it,
interest on the Initial Debentures shall cease. 
If any question shall arise as to whether any notice has been given as
above provided and such deposit made, such question shall be decided by the Debenture
Trustee whose decision shall be final and binding upon all parties in interest.

 

(ix)       In case the holder of any Initial Debenture
to be purchased or redeemed in accordance with this Section 2.4(i) shall
fail on or before the Put Date to surrender such holder’s Initial Debenture or
shall not within such time accept payment of the money payable; or give such
receipt therefor, if any, as the Debenture Trustee may require, such monies may
be set aside in trust, either in the deposit department of the Debenture
Trustee or in a chartered bank, and such setting aside shall for all purposes
be deemed a payment to the Debentureholder of the sum so set aside and, to that
extent, the Initial Debenture shall thereafter not be considered as outstanding
hereunder and the Debentureholder shall have no other right except to receive
payment of the monies so paid and deposited, upon surrender and delivery up of
such holder’s Initial Debenture, of the Total Put Price.  In the event that any money required to be
deposited hereunder with the Debenture Trustee or any depository or paying
agent on account of the Total Put Price shall remain so deposited for a period
of six years from the Put Date, then such monies shall at the end of such
period be paid over or delivered over by the Debenture Trustee or such depository
or paying agent to the Company and the Debenture Trustee shall not be
responsible to Debentureholders for any amounts owing to them.

 

(x)        Subject to the provisions above related to
Initial Debentures purchased in part, all Initial Debentures redeemed and paid
under this Section 2.4(i) shall forthwith be delivered to the
Debenture Trustee and cancelled and no Initial Debentures shall be issued in
substitution therefor.

 

(j)                                                             In addition to the requirements of
Section 2.4(i) in respect of a Change of Control, the following
provisions shall apply in respect of the occurrence of a Cash Change of
Control:

 

(i)         In the event of the occurrence of a Cash
Change of Control, then subject to regulatory approval, during the period (the “Cash Change of Control Conversion Period”)
beginning 10 trading days before the anticipated effective date of the Change
of Control (the “Effective Date”)
and ending on the date that is 30 days after the Change of Control Notice and
Change of Control Purchase Offer are delivered or mailed to holders of Initial
Debentures in accordance with Section 2.4(i), holders of Initial
Debentures will be entitled to convert their Initial Debentures, in whole or in
part, and receive, in addition to the number of Common Shares (or cash or other
property or securities in substitution therefor) that such holders are entitled
to receive upon such conversion in accordance with the provisions and
conditions of Sections 2.4(f) and 2.4(j) and Article 6, an
additional number of Common Shares (or cash or other property or securities in
substitution 

 

21

 

therefor) per $1,000 principal amount of Initial Debentures converted
as set forth below (the “Make Whole Premium”).

 

(ii)        The number of additional Common Shares per
$1,000 principal amount of Initial Debentures constituting the Make Whole
Premium (the “Make Whole Premium Shares”)
shall be determined by reference to the table following subsection (iii) below,
based on the actual Effective Date and the price (the “Stock Price”) paid per Common Share in the
transaction constituting the Change of Control. If holders of Common Shares
receive only cash in the transaction constituting the Change of Control, the
Stock Price shall be the cash amount paid per Common Share. Otherwise, the
Stock Price shall be equal to the Current Market Price of the Common Shares
immediately preceding the actual Effective Date of such transaction.
Notwithstanding the foregoing, in no circumstances can the effective Conversion
Price (calculated by dividing $1,000 by the number of Common Shares issuable
upon conversion, including the maximum number of Make Whole Premium Shares
hereunder) be less than the maximum permitted discounted price permitted by the
TSX at the time of announcement of the Offering (estimated by the Company to be
$8.92), prior to any
adjustments that may be made to the Stock Price to correspond to an adjustment
to the Conversion Price under this Indenture.

 

(iii)       The following table shows the number of
Make Whole Premium Shares for each hypothetical Stock Price and Effective Date
set forth below, expressed as additional Common Shares per $1,000 principal
amount of Debentures. For the avoidance of doubt, the Company shall not be
obliged to pay the Make Whole Premium otherwise than by issuance of Common
Shares upon conversion of the Initial Debentures in accordance with the
provisions and conditions of Section 2.4(f) and Article 6. If
the Stock Price or Effective Date are not set forth on the table then: (i) if
the actual Stock Price on the Effective Date is between two Stock Prices on the
table or the Effective Date is between two Effective Dates on the table, the
number of Make Whole Premium Shares will be determined by a straight-line
interpolation between the amounts set forth for the two Stock Prices and the
two Effective Dates on the table based on a 365-day year, as applicable, (ii) if
the Stock Price on the Effective Date exceeds $17.50 per Common Share, subject to adjustment as set
forth herein, the number of Make Whole Premium Shares to be issued will be
zero, and (iii) if the Stock Price on the Effective Date is less than $10.44 per Common Share, subject to
adjustment as set forth herein, the number of Make Whole Premium Shares to be
issued will be zero.

 

22

 

Make Whole Premium Upon a
Cash Change of Control

(Number of Additional
Common Shares per $1,000 Initial Debenture)

 

	
  Effective

  	
   

  	
  Stock Price

  	
   

  
	
  Date

  	
   

  	
  $10.44

  	
   

  	
  $10.50

  	
   

  	
  $10.75

  	
   

  	
  $11.00

  	
   

  	
  $11.25

  	
   

  	
  $11.50

  	
   

  	
  $11.75

  	
   

  
	
  15-Dec-09

  	
   

  	
  18.86

  	
   

  	
  18.45

  	
   

  	
  16.46

  	
   

  	
  14.63

  	
   

  	
  12.94

  	
   

  	
  11.38

  	
   

  	
  9.95

  	
   

  
	
  15-Mar-10

  	
   

  	
  18.86

  	
   

  	
  18.31

  	
   

  	
  16.10

  	
   

  	
  14.26

  	
   

  	
  12.60

  	
   

  	
  11.08

  	
   

  	
  9.67

  	
   

  
	
  15-Mar-11

  	
   

  	
  18.86

  	
   

  	
  18.31

  	
   

  	
  16.10

  	
   

  	
  13.99

  	
   

  	
  11.97

  	
   

  	
  10.03

  	
   

  	
  8.69

  	
   

  
	
  15-Mar-12

  	
   

  	
  18.86

  	
   

  	
  18.31

  	
   

  	
  16.10

  	
   

  	
  13.99

  	
   

  	
  11.97

  	
   

  	
  10.03

  	
   

  	
  8.18

  	
   

  
	
  15-Mar-13

  	
   

  	
  18.86

  	
   

  	
  18.31

  	
   

  	
  16.10

  	
   

  	
  13.99

  	
   

  	
  11.97

  	
   

  	
  10.03

  	
   

  	
  8.18

  	
   

  
	
  15-Mar-14

  	
   

  	
  18.86

  	
   

  	
  18.31

  	
   

  	
  16.10

  	
   

  	
  13.99

  	
   

  	
  11.97

  	
   

  	
  10.03

  	
   

  	
  8.18

  	
   

  
	
  15-Mar-15

  	
   

  	
  18.86

  	
   

  	
  18.31

  	
   

  	
  16.10

  	
   

  	
  13.99

  	
   

  	
  11.97

  	
   

  	
  10.03

  	
   

  	
  8.18

  	
   

  
	
  15-Mar-16

  	
   

  	
  18.86

  	
   

  	
  18.31

  	
   

  	
  16.10

  	
   

  	
  13.99

  	
   

  	
  11.97

  	
   

  	
  10.03

  	
   

  	
  8.18

  	
   

  
	
  15-Mar-17

  	
   

  	
  18.86

  	
   

  	
  18.31

  	
   

  	
  16.10

  	
   

  	
  13.99

  	
   

  	
  11.97

  	
   

  	
  10.03

  	
   

  	
  8.18

  	
   

  

 

	
  Effective

  	
   

  	
  Stock Price

  	
   

  
	
  Date

  	
   

  	
  $12.00

  	
   

  	
  $12.50

  	
   

  	
  $13.00

  	
   

  	
  $14.00

  	
   

  	
  $15.00

  	
   

  	
  $17.50

  	
   

  	
  $20.00

  	
   

  
	
  15-Dec-09

  	
   

  	
  8.64

  	
   

  	
  6.38

  	
   

  	
  4.54

  	
   

  	
  1.92

  	
   

  	
  0.54

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  
	
  15-Mar-10

  	
   

  	
  8.40

  	
   

  	
  6.18

  	
   

  	
  4.38

  	
   

  	
  1.87

  	
   

  	
  0.53

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  
	
  15-Mar-11

  	
   

  	
  7.50

  	
   

  	
  5.46

  	
   

  	
  3.84

  	
   

  	
  1.59

  	
   

  	
  0.45

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  
	
  15-Mar-12

  	
   

  	
  7.06

  	
   

  	
  5.12

  	
   

  	
  3.56

  	
   

  	
  1.53

  	
   

  	
  0.48

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  
	
  15-Mar-13

  	
   

  	
  6.75

  	
   

  	
  4.83

  	
   

  	
  3.33

  	
   

  	
  1.32

  	
   

  	
  0.37

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  
	
  15-Mar-14

  	
   

  	
  6.41

  	
   

  	
  4.20

  	
   

  	
  2.72

  	
   

  	
  0.94

  	
   

  	
  0.23

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  
	
  15-Mar-15

  	
   

  	
  6.41

  	
   

  	
  3.08

  	
   

  	
  1.15

  	
   

  	
  0.15

  	
   

  	
  0.14

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  
	
  15-Mar-16

  	
   

  	
  6.41

  	
   

  	
  3.08

  	
   

  	
  1.30

  	
   

  	
  0.23

  	
   

  	
  0.17

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  
	
  15-Mar-17

  	
   

  	
  6.41

  	
   

  	
  3.08

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  

 

(iv)       The Stock Prices set forth in the first row
of table above will be adjusted as of any date on which the Conversion Price of
the Initial Debentures is adjusted. The adjusted Stock Prices will equal the
Stock Prices applicable immediately preceding such adjustment multiplied by a
fraction, the numerator of which is the Conversion Price immediately preceding
the adjustment giving rise to the Stock Price adjustment and the denominator of
which is the Conversion Price as so adjusted. The number of additional Make
Whole Premium Shares set forth in the table above will be adjusted in the same
manner as the Conversion Price as set forth in Section 6.5 hereof, other
than as a result of an adjustment of the Conversion Price by adding the Make
Whole Premium as described above.

 

(v)        Notwithstanding the foregoing, if the Date
of Conversion of any Initial Debentures occurs during the period beginning on
the 10th trading day prior to the Effective Date and
ending at the close of business on the actual Effective Date, the holders of
such Initial Debentures shall, on conversion of their Initial Debentures, only
be entitled to receive that number of Make Whole Premium Shares (as may be
adjusted pursuant to Section 6.5) on the Business Day immediately
following the actual Effective Date and, for greater certainty, only if the
Change of Control occurs.

 

(vi)       The Make Whole Premium Shares shall be
deemed to have been issued to a holder of Initial Debentures who exercises
conversion rights on or prior to the Effective Date upon conversion of Initial
Debentures on the Business Day 

 

23

 

immediately following the Effective Date. Section 6.5 shall apply
to such conversion and, for greater certainty, the former holders of Initial
Debentures in respect of which the Make Whole Premium Shares are issuable shall
be entitled to receive and shall accept, in lieu of the Make Whole Premium
Shares, the number of shares or other securities or cash or other property of
the Company or of the Person or other entity resulting from the transaction
that constitutes the Cash Change of Control that such holders would have been
entitled to receive if such holders had been the registered holders of the
applicable number of Make Whole Premium Shares on the Effective Date.

 

(vii)      Except as otherwise provided in this Section 2.4(i),
all other provisions of this Indenture applicable to a conversion of Initial
Debentures shall apply to a conversion of Initial Debentures during the Cash
Change of Control Conversion Period.

 

(k)                                                          The Debenture Trustee shall be
provided with the documents and instruments referred to in Sections 2.5(b), (c) and
(d) with respect to the Initial Debentures prior to the issuance of the
Initial Debentures.

 

2.5                                                                               Certification
and Delivery of Additional Debentures

 

The Company
may from time to time request the Debenture Trustee to certify and deliver
Additional Debentures of any series by delivering to the Debenture Trustee the
documents referred to below in this Section 2.5 whereupon the Debenture
Trustee shall certify such Additional Debentures and cause the same to be
delivered in accordance with the Written Direction referred to below or
pursuant to such procedures acceptable to the Debenture Trustee as may be
specified from time to time by a Written Direction.  The maturity date, issue date, interest rate
(if any) and any other terms of the Additional Debentures of such series shall
be set forth in a supplemental indenture or determined by or pursuant to such
Written Direction.  In certifying such
Additional Debentures, the Debenture Trustee shall be entitled to receive and
shall be fully protected in relying upon, unless and until such documents have
been superseded or revoked:

 

(a)                                                          a Certificate  and/or executed supplemental indenture by
or pursuant to which the form and terms of such Additional Debentures are
established;

 

(b)                                                         a Written Direction, addressed to
the Debenture Trustee, requesting certification and delivery of such Additional
Debentures and setting forth delivery instructions, provided that, with respect
to Additional Debentures of a series subject to a Periodic Offering:

 

(i)         such Written Direction may be delivered by
the Company to the Debenture Trustee prior to the delivery to the Debenture
Trustee of such Additional Debentures of such series for certification and
delivery;

 

(ii)        the Debenture Trustee shall certify and
deliver Additional Debentures of such series for original issue from time to
time, in an aggregate principal amount not exceeding the aggregate principal
amount, if any, established for such series, pursuant to a Written Direction or
pursuant to procedures acceptable to the Debenture Trustee as may be specified
from time to time by a Written Direction;

 

24

 

 

(iii)          the maturity date or dates, issue date or
dates, interest rate or rates (if any) and any other terms of Additional
Debentures of such series shall be determined by an executed supplemental
indenture or by a Written Direction or pursuant to such procedures; and

 

(iv)          if provided for in such procedures, such
Written Direction may authorize certification and delivery pursuant to oral or
electronic instructions from the Company which oral or electronic instructions
shall be promptly confirmed in writing.

 

(c)                                                          an opinion of Counsel that all
requirements imposed by this Indenture or by law in connection with the
proposed issue of Additional Debentures have been complied with, subject to the
delivery of certain documents or instruments specified in such opinion; and

 

(d)                                                         a Certificate addressed to
Debenture Trustee, certifying that the Company is not in default under this
Indenture, that the terms and conditions for the certification and delivery of
Additional Debentures (including those set forth in Section 15.5), have
been complied with subject to the delivery of any documents or instruments
specified in such Certificate and that no Event of Default exists or will exist
upon such certification and delivery.

 

2.6                                                                               Issue
of Global Debentures

 

(a)                                                          The Company may specify that the
Debentures of a series are to be issued in whole or in part as one or more
Global Debentures registered in the name of a Depository, or its nominee,
designated by the Company in a Written Direction delivered to the Debenture
Trustee at the time of issue of such Debentures, and in such event the Company
shall execute and the Debenture Trustee shall certify and deliver one or more
Global Debentures that shall:

 

(i)            represent an aggregate amount equal to the
principal amount of the outstanding Debentures of such series to be represented
by one or more Global Debentures;

 

(ii)           be delivered to such Depository or pursuant
to such Depository’s instructions; and

 

(iii)          bear a legend in substantially the
following form subject to modification as required by the Depository:

 

“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF CDS CLEARING AND DEPOSITORY SERVICES INC. (“CDS”)
TO ATLANTIC POWER CORPORATION (THE “COMPANY”) OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS &
CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
CDS (AND ANY PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER ENTITY AS
IS 

 

25

 

REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
SINCE THE REGISTERED HOLDER HEREOF, CDS & CO., HAS A PROPERTY INTEREST
IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE HEREIN AND IT IS A VIOLATION
OF ITS RIGHTS FOR ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS
CERTIFICATE.”

 

(b)                                                         Each Depository designated for a
Global Debenture must, at the time of its designation and at all times while it
serves as such Depository, be a clearing agency registered or designated under
the securities legislation of the jurisdiction where the Depository has its
principal offices.

 

2.7                                                                               Execution
of Debentures

 

All Debentures shall be signed (either
manually or by facsimile signature) by any one Director of the Company or
Authorized Officer  holding office
at the time of signing.  A facsimile
signature upon a Debenture shall for all purposes of this Indenture be deemed
to be the signature of the person whose signature it purports to be.  Notwithstanding that any person whose
signature, either manual or in facsimile, appears on a Debenture as a Director
of the Company or Authorized Officer  may no longer
hold such office at the date of the Debenture or at the date of the
certification and delivery thereof, such Debenture shall be valid and binding
upon the Company and entitled to the benefits of this Indenture.

 

2.8                                                                               Certification

 

No Debenture shall be issued or, if issued,
shall be obligatory or shall entitle the holder to the benefits of this
Indenture, until it has been manually certified by or on behalf of the
Debenture Trustee substantially in the form set out in this Indenture, in the
relevant supplemental indenture, or in some other form approved by the
Debenture Trustee.  Such certification on
any Debenture shall be conclusive evidence that such Debenture is duly issued,
is a valid obligation of the Company and the holder is entitled to the benefits
hereof.

 

The certificate of the Debenture Trustee
signed on the Debentures, or interim Debentures hereinafter mentioned, shall
not be construed as a representation or warranty by the Debenture Trustee as to
the validity of this Indenture or of the Debentures or interim Debentures or as
to the issuance of the Debentures or interim Debentures and the Debenture
Trustee shall in no respect be liable or answerable for the use made of the
Debentures or interim Debentures or any of them or the proceeds thereof.  The certificate of the Debenture Trustee signed
on the Debentures or interim Debentures shall, however, be a representation and
warranty by the Debenture Trustee that the Debentures or interim Debentures
have been duly certified by or on behalf of the Debenture Trustee pursuant to
the provisions of this Indenture.

 

2.9                                                                               Interim
Debentures or Certificates

 

Pending the delivery of definitive
Debentures of any series to the Debenture Trustee, the Company may issue and
the Debenture Trustee may certify in lieu thereof interim Debentures in such
forms and in such denominations and signed in such manner as provided herein,
entitling the 

 

26

 

holders
thereof to definitive Debentures of the series when the same are ready for
delivery; or the Company may execute and the Debenture Trustee may certify a
temporary Debenture for the whole principal amount of Debentures of the series
then authorized to be issued hereunder and the Company may deliver the same to
the Debenture Trustee and thereupon the Debenture Trustee may issue its own
interim certificates in such form and in such amounts, not exceeding in the
aggregate the principal amount of the temporary Debenture so delivered to it,
as the Company, and the Debenture Trustee may approve entitling the holders
thereof to definitive Debentures of the series when the same are ready for
delivery; and, when so issued and certified, such interim or temporary
Debentures or interim certificates shall, for all purposes but without
duplication, rank in respect of this Indenture equally with Debentures duly
issued hereunder and, pending the exchange thereof for definitive Debentures,
the holders of the interim or temporary Debentures or interim certificates
shall be deemed without duplication to be Debentureholders and entitled to the
benefit of this Indenture to the same extent and in the same manner as though
the said exchange had actually been made. 
Forthwith after the Company shall have delivered the definitive
Debentures to the Debenture Trustee, the Debenture Trustee shall cancel such
temporary Debentures, if any, and shall call in for exchange all interim
Debentures or certificates that shall have been issued and forthwith after such
exchange shall cancel the same.  No
charge shall be made by the Company or the Debenture Trustee to the holders of
such interim or temporary Debentures or interim certificates for the exchange
thereof.  All interest paid upon interim
or temporary Debentures or interim certificates shall be noted thereon as a
condition precedent to such payment unless paid by cheque to the registered
holders thereof.

 

2.10                                                                        Mutilation,
Loss, Theft or Destruction

 

In case any of the Debentures issued
hereunder shall become mutilated or be lost, stolen or destroyed  and in the absence of the Company’s
receipt of any notice that such Debenture has been acquired by a bona fide purchaser, the Company, in its
discretion, may issue, and thereupon the Debenture Trustee shall certify and
deliver, a new Debenture upon surrender and cancellation of the mutilated
Debenture, or in the case of a lost, stolen or destroyed Debenture, in lieu of
and in substitution for the same, and the substituted Debenture shall be in a
form approved by the Debenture Trustee and shall be entitled to the benefits of
this Indenture and rank equally in accordance with its terms with all other
Debentures issued or to be issued hereunder. 
The new or substituted Debenture may have endorsed upon it the fact that
it is in replacement of a previous Debenture. 
In case of loss, theft or destruction, the applicant for a substituted
Debenture shall furnish to the Company and to the Debenture Trustee such
evidence of the loss, theft or destruction of the Debenture and such other
documents as shall be satisfactory to them in their discretion and shall also
furnish an indemnity and surety bond. 
The applicant shall pay all reasonable expenses incidental to the
issuance of any substituted Debenture.

 

2.11                                                                        Concerning
Interest

 

(a)                                                          Except as may otherwise be
provided in this Indenture or in any supplemental indenture or in a Written
Direction in respect of a series of Debentures and subject to Section 2.4(c) with
respect to the calculation of interest in respect of the initial interest
payment to be paid on the Initial Debentures, all Debentures issued hereunder,
whether originally or upon exchange or in substitution for previously issued
Debentures which are interest bearing, shall bear interest (i) from their
issue date, or (ii) from and including the last Interest Payment Date in
respect of which interest shall have been paid or made available for payment on
the outstanding Debentures of that series, whichever shall be the later, or, in
respect of Debentures 

 

27

 

subject to a Periodic Offering, from their issue date or from and
including
the last Interest
Payment Date in respect of which interest shall have been paid or made
available for payment on such Debentures, in all cases, to but excluding the
next Interest Payment Date.  All interest
shall accrue from day to day and shall be payable in arrears for the actual
number of days lapsed in the relevant interest period. Interest payable in a
calendar year shall be payable semi-annually in arrears. Interest on all
Debentures issued hereunder shall cease to accrue on, but not including, the
Maturity Date, Redemption Date or Date of Conversion, as applicable, for such
Debentures, unless, upon due presentation, payment of principal or delivery of
amounts, securities or other property payable or deliverable hereunder and payment
of any accrued and unpaid interest or other amounts payable hereunder is
improperly withheld or refused.

 

(b)                                                         Unless otherwise specifically
provided in the terms of the Debentures of any series, interest shall be
computed on the basis of a 360-day year composed of twelve 30-day months.  With respect to any series of Debentures,
whenever interest is computed on a basis of a year (the “deemed year”) which contains fewer days than
the actual number of days in the calendar year of calculation, such rate of interest
shall be expressed as a yearly rate for purposes of the Interest Act (Canada) by multiplying such rate
of interest by the actual number of days in the calendar year of calculation
and dividing it by the number of days in the deemed year.

 

2.12                                                                        Debentures
to Rank Pari Passu

 

The Debentures will be direct unsecured
obligations of the Company.  Each
Debenture of the same series of Debentures will rank pari passu with each other Debenture of the same series
(regardless of their actual date or terms of issue) and, subject to statutory
preferred exceptions, with all other present and future subordinated
indebtedness and unsecured indebtedness of the Company, other than Senior
Indebtedness.  The payment of the
principal of, and interest on,  the
Debentures shall, as provided in Article 5, be subordinated and postponed
in right of payment to all Senior Indebtedness.

 

2.13                                                                        Payments
of Amounts Due on Maturity

 

Except as may otherwise be provided in this
Indenture or any supplemental indenture in respect of any series of Debentures
and subject to Section 4.11, payments of amounts due upon maturity of the
Debentures will be made in the following manner.  The Company will establish and maintain with
the Debenture Trustee a Maturity Account for each series of Debentures.  Each such Maturity Account shall be
maintained by and be subject to the control of the Debenture Trustee for the
purposes of this Indenture.  On or before
11:00 a.m. (Toronto time) on the Business Day immediately prior to each
Maturity Date for Debentures outstanding from time to time under this
Indenture, the Company will deposit in the applicable Maturity Account an
amount sufficient to pay the cash amount payable in respect of such Debentures
(including the principal amount and premium (if any), together with any accrued
and unpaid interest thereon less any tax required or permitted by law to be
deducted or withheld), provided the Company may elect to satisfy this
requirement by providing the Debenture Trustee with one or more certified
cheques, or with funds by electronic transfer, for such amounts required under
this Section 2.13.  The Debenture
Trustee, on behalf of the Company, will pay to each holder entitled to receive
payment the principal amount of and premium (if any) and accrued and unpaid interest
on the Debenture, upon surrender of the Debenture at any branch of the
Debenture Trustee designated for such purpose from time to time by the Company
and 

 

28

 

the Debenture
Trustee.  The deposit or the making
available of such amounts to the applicable Maturity Account will satisfy and
discharge the liability of the Company for the Debentures to which the deposit
or making available of funds relates to the extent of the amount deposited or
made available (plus the amount of any tax deducted as aforesaid) and such
Debentures will thereafter to that extent not be considered as outstanding
under this Indenture and such holder will have no other right in regard thereto
other than to receive out of the money so deposited or made available the
amount to which such holder is entitled.

 

2.14                                                                        Payment
of Interest

 

The following provisions shall apply to
Debentures, except as otherwise provided in Section 2.4(c) or
permitted by Article 10 or specified in a resolution of the
Directors, a Certificate  or a
supplemental indenture or Written Direction relating to a particular series of
Additional Debentures:

 

(a)                                                          As interest becomes due on each
Debenture (except at maturity, on redemption or conversion, when interest may
at the option of the Company be paid upon surrender of such Debenture) the
Company, either directly or through the Debenture Trustee or any agent of the
Debenture Trustee, shall send or forward by prepaid ordinary mail, electronic
transfer of funds or such other means as may be agreed to by the Debenture
Trustee, payment of such interest (less any tax required or permitted to be
withheld therefrom) to the order of the registered holder of such Debenture
appearing on the registers maintained by the Debenture Trustee at the close of
business on the fifth Business Day prior to the applicable Interest Payment
Date and addressed to the holder at the holder’s last address appearing on the
register, unless such holder otherwise directs. 
If payment is made by cheque, such cheque shall be forwarded at least
three days prior to each date on which interest becomes due and if payment is
made by other means (such as electronic transfer of funds), such payment shall
be made in a manner whereby the holder receives credit for such payment on the
date such interest on such Debenture becomes due.  The mailing of such cheque or the making of
such payment by other means shall, to the extent of the sum represented
thereby, plus the amount of any withholding tax withheld as aforesaid, satisfy
and discharge all liability for interest on such Debenture, unless in the case
of payment by cheque, such cheque is not paid at par on presentation.  In the event of non-receipt of any cheque for
or other payment of interest by the person to whom it is so sent as aforesaid,
the Company or the Debenture Trustee will issue to such person a replacement
cheque or other payment for a like amount upon being furnished with such
evidence of non-receipt as it shall reasonably require and upon being indemnified
to its satisfaction.  Notwithstanding the
foregoing, if the Company is prevented by circumstances beyond its control
(including, without limitation, any interruption in mail service) from making
payment of any interest due on each Debenture in the manner provided above, the
Company may make payment of such interest or make such interest available for
payment (less any tax required or permitted to be withheld therefrom) in any
other manner acceptable to the Debenture Trustee with the same effect as though
payment had been made in the manner provided above.

 

(b)                                                         Notwithstanding Section 2.14(a),
if a series of Debentures is represented by a Global Debenture, then all
payments of interest on the Global Debenture shall be made by 

 

29

 

electronic funds transfer or cheque made payable to the Depository or
its nominee for subsequent payment (less applicable taxes, if any) to
Beneficial Holders of interests in the applicable Global Debenture, unless the
Company and the Depository otherwise agree. 
None of the Company, the Debenture Trustee or any agent of the Debenture
Trustee for any Debenture issued as a Global Debenture will be liable or
responsible to any person for any aspect of the records related to or payments
made on account of beneficial interests in any Global Debenture or for
maintaining, reviewing, or supervising any records relating to such beneficial
interests.

 

ARTICLE 3

REGISTRATION,
TRANSFER, EXCHANGE AND OWNERSHIP

 

3.1                                                                               Fully
Registered Debentures

 

(a)                                                          With respect to each series of
Debentures issuable as Fully Registered Debentures, the Company shall cause to
be kept by and at the principal offices of the Debenture Trustee in Toronto,
Ontario and by the Debenture Trustee or such other registrar as the Company,
with the approval of the Debenture Trustee, may appoint at such other place or
places, if any, as may be specified in the Debentures of such series or as the
Company may designate with the approval of the Debenture Trustee, a register in
which shall be entered the names and last known addresses of the holders of
Fully Registered Debentures and particulars of the Debentures held by them
respectively and of all transfers of Fully Registered Debentures.  Such registration shall be noted on the
Debentures by the Debenture Trustee or other registrar unless a new Debenture
shall be issued upon such transfer.

 

(b)                                                         No transfer of a Fully Registered
Debenture shall be valid unless made on such register referred to in Section 3.1(a) by
the registered holder or such holder’s executors, administrators or other legal
representatives or an attorney duly appointed by an instrument in writing in
form and execution satisfactory to the Debenture Trustee or other registrar
upon surrender of the Debentures together with a duly executed form of transfer
acceptable to the Debenture Trustee and upon compliance with such other
reasonable requirements as the Debenture Trustee or other registrar may
prescribe, nor unless the name of the transferee shall have been noted on the
Debenture by the Debenture Trustee or other registrar.

 

3.2                                                                               Global
Debentures

 

(a)                                                          With respect to each series of
Debentures issuable in whole or in part as one or more Global Debentures, the
Company shall cause to be kept by and at the principal offices of the Debenture
Trustee in Toronto and by the Debenture Trustee or such other registrar as the
Company, with the approval of the Debenture Trustee, may appoint at such other
place or places, if any, as the Company may designate with the approval of the
Debenture Trustee, a register in which shall be entered the name and address of
the holder of each such Global Debenture (being the Depository, or its nominee,
for such Global Debenture) as holder thereof and particulars of the Global
Debenture held by it, and of all transfers thereof.  If any Debentures of such series are at any
time not Global Debentures, the provisions of Section 3.1 shall govern
with respect to registrations and transfers of such Debentures.

 

30

 

(b)                                                         Notwithstanding any other
provision of this Indenture, a Global Debenture may not be transferred by the
registered holder thereof and accordingly, no definitive certificates shall be
issued to Beneficial Holders of Debentures, except in the following
circumstances or as otherwise specified in a resolution of the Directors, a
Certificate or supplemental indenture relating to a particular series of
Additional Debentures:

 

(i)            Global Debentures may be transferred by a
Depository to a nominee of such Depository or by a nominee of a Depository to
such Depository or to another nominee of such Depository or by a Depository or
its nominee to a successor Depository or its nominee;

 

(ii)           Global Debentures may be transferred at any
time after the Depository for such Global Debentures (i) has notified the
Company that it is unwilling or unable to continue as Depository in connection
with Global Debentures, or (ii) if at any time the Depository ceases to be
a clearing agency or otherwise ceases to be eligible to be a Depository under Section 2.6(b) and
the Company has not appointed a successor Depository for such Global
Debentures;

 

(iii)          Global Debentures may be transferred at any
time after the Company has determined, in its sole discretion, to terminate the
book-entry only registration system in respect of such Global Debentures and
has communicated such determination to the Debenture Trustee in writing;

 

(iv)          Global Debentures may be transferred at any
time after the Debenture Trustee has determined that an Event of Default has
occurred and is continuing with respect to the Debentures of the series issued
as a Global Debenture, provided that Beneficial Holders of the Debentures
representing, in the aggregate, not less than 25% of the aggregate principal
amount of the Debentures of such series advise the Depository in writing,
through the Depository Participants, that the continuation of the book-entry
only registration system for such series of Debentures is no longer in their
best interest and also  provided
that at the time of such transfer the Debenture Trustee has not waived the
Event of Default pursuant to Section 8.3;

 

(v)           Global Debentures may be transferred if
required by applicable law; and

 

(vi)          Global Debentures may be transferred if the
book-entry only registration system ceases to exist.

 

(c)                                                          With respect to the Global
Debentures, unless and until definitive certificates have been issued to
Beneficial Holders pursuant to subsection 3.2(b):

 

(i)            the Company and the Debenture Trustee may
deal with the Depository for all purposes (including paying interest on the
Debentures) as the sole holder of such series of Debentures and the authorized
representative of the Beneficial Holders;

 

(ii)           the rights of the Beneficial Holders shall
be exercised only through the Depository and shall be limited to those
established by law and agreements 

 

31

 

between such
Beneficial Holders and the Depository or the Depository Participants;

 

(iii)          the Depository will make book-entry
transfers among the Depository Participants; and

 

(iv)          whenever this Indenture requires or permits
actions to be taken based upon instruction or directions of Debentureholders
evidencing a specified percentage of the outstanding Debentures, the Depository
shall be deemed to be counted in that percentage only to the extent that it has
received instructions to such effect from the Beneficial Holders or the
Depository Participant, and has delivered such instructions to the Debenture
Trustee.

 

(d)                                                         Whenever a notice or other
communication is required to be provided to Debentureholders, unless and until
definitive certificate(s) have been issued to Beneficial Holders pursuant
to this Section 3.2, the Debenture Trustee shall provide all such notices
and communications to the Depository and the Depository shall deliver such
notices and communications to such Beneficial Holders in accordance with
Applicable Securities Legislation.  Upon
the termination of the book-entry only registration system on the occurrence of
one of the conditions specified in Section 3.2(b) with respect to a
series of Debentures issued hereunder, the Debenture Trustee shall notify all
applicable Depository Participants and Beneficial Holders, through the
Depository, of the availability of definitive Debenture certificates.  Upon surrender by the Depository of the
certificate(s) representing the Global Debentures and receipt of new
registration instructions from the Depository, the Debenture Trustee shall
deliver the definitive Debenture certificates for such Debentures to the
holders thereof in accordance with the new registration instructions and
thereafter, the registration and transfer of such Debentures will be governed
by Section 3.1 and the remaining Sections of this Article 3.

 

3.3                                                                               Transferee
Entitled to Registration

 

The transferee of a Debenture shall be
entitled, after the appropriate form of transfer is lodged with the Debenture
Trustee or other registrar and upon compliance with all other conditions in
that behalf required by this Indenture or by law, to be entered on the register
as the owner of such Debenture free from all equities or rights of set-off or
counterclaim between the Company and the transferor or any previous holder of
such Debenture, save in respect of equities of which the Company is required to
take notice by statute or by order of a court of competent jurisdiction.

 

3.4                                                                               No
Notice of Trusts

 

Neither the Company, the Debenture Trustee
nor any registrar shall be bound to take notice of or see to the execution of
any trust (other than that created by this Indenture) whether express, implied
or constructive, in respect of any Debenture, and may transfer the same on the
direction of the person registered as the holder thereof, whether named as
trustee or otherwise, as though that person were the beneficial owner thereof.

 

32

 

3.5                                                                               Registers
Open for Inspection

 

The registers referred to in Sections 3.1
and 3.2 shall, during regular business hours of the Debenture Trustee, be open
for inspection by the Company, the Debenture Trustee or any Debentureholder,
subject to applicable laws.  Every
registrar, including the Debenture Trustee, shall from time to time when
requested so to do by the Company or by the Debenture Trustee, in writing,
furnish the Company or the Debenture Trustee, as the case may be, with a list
of names and addresses of holders of registered Debentures entered on the
register kept by them and showing the principal amount and serial numbers of
the Debentures held by each such holder, provided the Debenture Trustee shall
be entitled to charge a reasonable fee to provide such a list.

 

3.6                                                                               Exchanges
of Debentures

 

(a)                                                          Subject to Section 3.7,
Debentures in any authorized form or denomination, other than Global Debentures,
may be exchanged for Debentures in any other authorized form or denomination,
of the same series and date of maturity, bearing the same interest rate and of
the same aggregate principal amount as the Debentures so exchanged.

 

(b)                                                         In respect of exchanges of
Debentures permitted by Section 3.6(a), Debentures of any series may be
exchanged only at the principal offices of the Debenture Trustee in Toronto or
at such other place or places, if any, as may be specified in the Debentures of
such series and at such other place or places as may from time to time be
designated by the Company with the approval of the Debenture Trustee.  Any Debentures tendered for exchange shall be
surrendered to the Debenture Trustee. 
The Company shall execute and the Debenture Trustee shall certify all
Debentures necessary to carry out exchanges as aforesaid.  All Debentures surrendered for exchange shall
be cancelled.

 

(c)                                                          Debentures issued in exchange for
Debentures which at the time of such issue have been selected or called for
redemption at a later date shall be deemed to have been selected or called for
redemption in the same manner and shall have noted thereon a statement to that
effect.

 

3.7                                                                               Closing
of Registers

 

(a)                                                          Neither the Company nor the
Debenture Trustee nor any registrar shall be required to:

 

(i)            make transfers or exchanges or conversions
of Fully Registered Debentures on any Interest Payment Date for such Debentures
or during the five preceding Business Days;

 

(ii)           make transfers or exchanges of any Debentures
on the day of any selection by the Debenture Trustee of Debentures to be
redeemed or during the five preceding Business Days; or

 

(iii)          make exchanges of any Debentures which will
have been selected or called for redemption unless upon due presentation
thereof for redemption such Debentures shall not be redeemed.

 

 

33

 

(b)                                                         Subject to any restriction herein
provided, the Company with the approval of the Debenture Trustee may at any
time close any register for any series of Debentures, other than those kept at
the principal offices of the Debenture Trustee in Toronto, and transfer the
registration of any Debentures registered thereon to another register (which
may be an existing register) and thereafter such Debentures shall be deemed to
be registered on such other register. 
Notice of such transfer shall be given to the holders of such
Debentures.

 

3.8                                                                               Charges
for Registration, Transfer and Exchange

 

For each Debenture exchanged, registered,
transferred or discharged from registration, the Debenture Trustee or other
registrar, except as otherwise herein provided, may make a reasonable charge
for its services and in addition may charge a reasonable sum for each new
Debenture issued (such amounts as agreed upon by the Debenture Trustee and the
Company from time to time), and payment of such charges and reimbursement of
the Debenture Trustee or other registrar for any stamp taxes or governmental or
other charges required to be paid shall be made by the party requesting such
exchange, registration, transfer or discharge from registration as a condition
precedent thereto.  Notwithstanding the
foregoing provisions, no charge shall be made to a Debentureholder hereunder:

 

(a)                                                          for any exchange, registration,
transfer or discharge from registration of any Debenture applied for within a
period of two months from the date of the first delivery of Debentures of that
series or, with respect to Debentures subject to a Periodic Offering, within a
period of two months from the date of delivery of any such Debenture;

 

(b)                                                         for any exchange of any interim or
temporary Debenture or interim certificate that has been issued under Section 2.9
for a definitive Debenture;

 

(c)                                                          for any exchange of a Global
Debenture as contemplated in Section 3.2;

 

(d)                                                         for any conversion of any
Debenture resulting from a partial redemption under Section 4.2;

 

(e)                                                          for any conversion of any
Debenture resulting from a partial conversion under Section 6.4(d); or

 

(f)                                                            for any conversion of any
Debenture resulting from a partial purchase under Section 2.4(i).

 

3.9                                                                               Ownership
of Debentures

 

(a)                                                          Unless otherwise required by law,
the person in whose name any registered Debenture is registered shall for all
the purposes of this Indenture be and be deemed to be the owner thereof and
payment of or on account of the principal of and premium, if any, on such
Debenture and, interest thereon, shall be made to such registered holder.

 

34

 

(b)                                                         Neither the Company nor the
Debenture Trustee shall have any liability for:

 

(i)                                    any aspect of the records
relating to the beneficial ownership of the Debentures held by a Depository or
of the payments relating thereto; or

 

(ii)                                 maintaining, supervising or
reviewing any such records relating to the Debentures.

 

The rules governing Depositories provide that they act as the
agent and depository for Depository Participants.  As a result, such Depository Participants
must look solely to the Depository and Beneficial Holders of Debentures must
look solely to the Depository Participants for the payment of principal and
interest on the Debentures paid by or on behalf of the Company to the
Depository.

 

(c)                                                          Beneficial Holders of Debentures:

 

(i)                                    may not have Debenture
certificates registered in their name;

 

(ii)                                 may not have physical
certificates representing their interest in the Debentures;

 

(iii)                              may not be able to sell the
Debentures to institutions required by law to hold certificates for securities
they own; and

 

(iv)                             may be unable to pledge
Debentures as security.

 

(d)                                                         The registered holder for the time
being of any registered Debenture shall be entitled to the principal, premium,
if any, and/or interest evidenced by such instruments, respectively, free from
all equities or rights of set-off or counterclaim between the Company and the
original or any intermediate holder thereof and all Persons may act accordingly
and the receipt of any such registered holder for any such principal, premium
or interest shall be a good discharge to the Company and/or the Debenture
Trustee for the same and neither the Company nor the Debenture Trustee shall be
bound to inquire into the title of any such registered holder.

 

(e)                                                          Where Debentures are registered in
more than one name, the principal, premium, if any, and interest (in the case
of Fully Registered Debentures) from time to time payable in respect thereof
may be paid to the order of all such holders, failing written instructions from
them to the contrary, and the receipt of any one of such holders therefor shall
be a valid discharge, to the Debenture Trustee, any registrar and to the
Company.

 

(f)                                                            In the case of the death of one or
more joint holders of any Debenture the principal, premium, if any, and
interest from time to time payable thereon may be paid to the order of the
survivor or survivors of such registered holders and the receipt of any such
survivor or survivors therefor shall be a valid discharge to the Debenture
Trustee and any registrar and to the Company.

 

35

 

ARTICLE 4

REDEMPTION
AND PURCHASE OF DEBENTURES,

CERTAIN
PAYMENTS ON MATURITY

 

4.1                                                                               Applicability
of Article

 

Subject to Applicable Laws and any required
regulatory approval, the Company shall have the right at its option to redeem,
either in whole or in part before maturity by payment of money any Debentures
issued hereunder of any series which by their terms are made so redeemable
(subject, however, to any applicable restriction on the redemption of Debentures
of such series) at such rate or rates of premium, if any, and on such date or
dates and in accordance with such other provisions as shall have been
determined at the time of issue of such Debentures and as shall have been
expressed in this Indenture, in the Debentures, in a Certificate, or in a
supplemental indenture authorizing or providing for the issue thereof, or in
the case of Additional Debentures issued pursuant to a Periodic Offering, in a
Written Direction requesting the certification and delivery thereof.

 

Subject to regulatory approval and Article 5,
the Company shall also have the right at its option to repay, either in whole
or in part, on redemption or maturity, either by payment of money in accordance
with Section 2.13, by issuance of Freely Tradeable Common Shares as
provided in Section 4.6 or 4.11, as applicable, or any combination
thereof, the principal amount of any Debentures issued hereunder of any series
which by their terms are made so repayable on redemption or maturity (subject
however, to any applicable restriction on the repayment of the principal amount
of the Debentures of such series) at such rate or rates of premium, if any, and
on such date or dates and in accordance with such other provisions as shall
have been determined at the time of issue of such Debenture and shall have been
expressed in this Indenture, in the Debentures, in a Certificate, or in a
supplemental indenture authorizing or providing for the issue thereof, or in
the case of Additional Debentures issued pursuant to a Periodic Offering, in a
Written Direction requesting the certification and delivery thereof.

 

4.2                                                                               Partial
Redemption

 

If less than all the Debentures of any
series for the time being outstanding are at any time to be redeemed or if a
portion of the Debentures being redeemed are being redeemed for cash and a
portion of such debentures are being redeemed by the payment of Freely
Tradeable Common Shares pursuant to Section 4.6, the Debentures to be so
redeemed shall be selected by the Debenture Trustee on a pro rata basis to the nearest multiple of
$1,000 in accordance with the principal amount of the Debentures registered in
the name of each holder, or in such other manner as the Debenture Trustee deems
equitable, subject to the approval of the TSX or such other exchange on which
the Debentures are then listed, as may be required from time to time.  Unless otherwise specifically provided in the
terms of any series of Debentures, no Debenture shall be redeemed in part
unless the principal amount redeemed is $1,000 or a multiple thereof.  For this purpose, the Debenture Trustee may
make, and from time to time vary, regulations with respect to the manner in
which such Debentures may be drawn for redemption and regulations so made shall
be valid and binding upon all holders of such Debentures notwithstanding the
fact that as a result thereof one or more of such Debentures may become subject
to redemption in part only or for cash only. 
In the event that one or more of such Debentures becomes subject to redemption
in part only, upon surrender of any such Debentures for payment of the
Redemption Price, together with interest accrued to but excluding the
Redemption Date, the Company shall execute and the Debenture Trustee shall
certify and deliver without charge to the holder thereof or upon the holder’s
order one or more new Debentures for the 

 

36

 

unredeemed
part of the principal amount of the Debenture or Debentures so surrendered or,
with respect to a Global Debenture, the Depository shall make notations on the
Global Debenture of the principal amount thereof so redeemed.  Unless the context otherwise requires, the
terms “Debenture” or “Debentures” as used in this Article 4
shall be deemed to mean or include any part of the principal amount of any
Debenture which in accordance with the foregoing provisions has become subject
to redemption.

 

4.3                                                                               Notice
of Redemption

 

Notice of redemption (the “Redemption Notice”) of Debentures of any
series shall be given to the holders of the Debentures so to be redeemed not
more than 60 days nor less than 30 days prior to the date fixed for redemption
(the “Redemption Date”) in the
manner provided in Section 14.2. 
Every such notice shall specify the aggregate principal amount of
Debentures called for redemption, the Redemption Date, the Redemption Price,
together with accrued and unpaid interest to but excluding the Redemption Date,
if applicable the portion to be redeemed for cash and the portion to be
redeemed by issuing Freely Tradeable Common Shares and the places of payment
and shall state that interest upon the principal amount of Debentures called
for redemption shall cease to accrue and be payable from and after the
Redemption Date.  In addition, unless all
the outstanding Debentures are to be redeemed, the Redemption Notice shall
specify:

 

(a)                                                          the distinguishing letters and
numbers of the registered Debentures which are to be redeemed (or of such
thereof as are registered in the name of such Debentureholder);

 

(b)                                                         in the case of a published notice,
the distinguishing letters and numbers of the Debentures which are to be
redeemed or, if such Debentures are selected pro rata or by other similar system, such particulars
as may be sufficient to identify the Debentures so selected;

 

(c)                                                          in the case of a Global Debenture,
that the redemption will take place in such manner as may be agreed upon by the
Depository, the Debenture Trustee and the Company; and

 

(d)                                                         in all cases, the principal
amounts of such Debentures or, if any such Debenture is to be redeemed in part
only, the principal amount of such part.

 

In the event that all Debentures to be redeemed are registered
Debentures, publication shall not be required.

 

4.4                                                                               Debentures
Due on Redemption Dates

 

Notice having been given as aforesaid, all
the Debentures so called for redemption shall thereupon be and become due and
payable at the Redemption Price, together with accrued and unpaid interest to
but excluding the Redemption Date (less any taxes required or permitted to be
deducted or withheld), on the Redemption Date specified in such notice, in the
same manner and with the same effect as if it were the date of maturity
specified in such Debentures, anything therein or herein to the contrary
notwithstanding, and from and after such Redemption Date, if the monies
necessary to redeem such Debentures shall have been deposited as provided in Section 4.5
and affidavits or other proof satisfactory to the Debenture Trustee as to the
publication and/or mailing of such notices shall have been lodged with it,
interest upon the Debentures shall cease. 
If any question 

 

37

 

shall arise as
to whether any notice has been given as above provided and such deposit made,
such question shall be decided by the Debenture Trustee whose decision shall be
final and binding upon all parties in interest.

 

4.5                                                                               Deposit
of Redemption Monies or Common Shares

 

Redemption of Debentures shall be provided
for by the Company depositing with the Debenture Trustee or any paying agent to
the order of the Debenture Trustee, on or before 11:00 a.m. (Toronto) time
on the Business Day immediately prior to the Redemption Date specified in such
notice, such sums of money, or certificates representing such Common Shares, or
both as the case may be, as may be sufficient to pay the Redemption Price of
the Debentures so called for redemption, plus a sum of money sufficient to pay
accrued and unpaid interest thereon up to but excluding the Redemption Date,
provided the Company may elect to satisfy this requirement by providing the
Debenture Trustee with one or more certified cheques  or wire transfer  for such amounts required under
this Section 4.5 post-dated to the Redemption Date, or by providing the
Debenture Trustee with such funds through electronic transfer of funds on the
Business Day immediately prior to the Redemption Date.  The Company shall also deposit with the
Debenture Trustee a sum of money sufficient to pay any charges or expenses that
may be incurred by the Debenture Trustee in connection with such
redemption.  Every such deposit shall be
irrevocable.  From the sums so deposited,
or certificates so deposited, or both, the Debenture Trustee shall pay or cause
to be paid, or issue or cause to be issued, to the holders of such Debentures
so called for redemption, upon surrender of such Debentures, the principal,
premium (if any) and interest (if any) to which they are respectively entitled
on redemption, less applicable taxes, if any. 
The Company may pay the interest hereunder in accordance with Article 10.

 

4.6                                                                               Right
to Repay Redemption Price in Common Shares

 

(a)                                                          Subject to the receipt of any
required regulatory approvals and the other provisions of this Section 4.6,
the Company may, at its option, in exchange for or in lieu of paying the
Redemption Price in money, elect to satisfy its obligation to pay all or any
portion of the principal amount of Debentures due upon redemption by issuing
and delivering to holders on the Redemption Date that number of Freely
Tradeable Common Shares obtained by dividing the principal amount of the
Debentures (or applicable portion thereof to be satisfied by the issuance and
delivery of Freely Tradeable Common Shares) by 95% of the Current Market Price
on the Redemption Date (the “Common Share
Redemption Right”).

 

(b)                                                         The Company shall exercise the
Common Share Redemption Right by providing notice of the Company’s decision to
exercise the Common Share Redemption Right to the holders of the Debentures so
to be redeemed not more than 60 days nor less than 40 days prior to the
Redemption Date in the manner provided in Section 14.2 Notice shall also
specify the aggregate principal amount of Debentures in respect of which it is
exercising the Common Share Redemption Right in such notice.

 

(c)                                                          The Company’s right to exercise
the Common Share Redemption Right shall be conditional upon the following
conditions being met on the Business Day preceding the Redemption Date:

 

38

 

(i)                                    the issuance of the Common
Shares on the exercise of the Common Share Redemption Right shall be made in
accordance with Applicable Securities Legislation and such Common Shares shall
be issued as Freely Tradeable Common Shares;

 

(ii)                                 such additional Freely
Tradeable Common Shares shall be listed on each stock exchange on which the
Common Shares are then listed, the TSX or national securities exchange or
quoted in an inter-dealer quotation system of any registered national
securities association;

 

(iii)                              the Company shall be a reporting
issuer (or equivalent) in good standing under Applicable Securities Legislation
where the distribution of such Freely Tradeable Common Shares occurs;

 

(iv)                             no Event of Default shall have
occurred and be continuing;

 

(v)                                the Debenture Trustee shall
have received a Certificate stating that conditions (i), (ii), (iii) and (iv) above
have been satisfied and setting forth the number of Common Shares to be
delivered for each $1,000 principal amount of Debentures and the Current Market
Price on the Redemption Date; and

 

(vi)                             the Debenture Trustee shall
have received an opinion of Counsel to the effect that such Common Shares have
been duly authorized and, when issued and delivered pursuant to the terms of
this Indenture in payment of the Redemption Price, will be validly issued as
fully paid and non-assessable, that conditions (i) and (ii) above
have been satisfied and that, relying exclusively on a list of issuers in
default maintained by the relevant securities authorities, condition (iii) above
is satisfied, except that the opinion in respect of condition (iii) need
not be expressed with respect to those provinces where certificates are not
issued.

 

If the foregoing conditions are not satisfied prior to the close of
business on the Business Day preceding the Redemption Date, the Company shall
pay the Redemption Price in cash in accordance with Section 4.5 unless the
Debentureholder waives the conditions which are not satisfied. The Company may
not change the form of components or percentage of consideration to be paid for
the Debentures except as described in the preceding sentence. When the Company
determines the actual number of the Common Shares to be issued pursuant to the
Company’s exercise of its Common Share Redemption Right, it will issue a press
release on a national newswire disclosing the Current Market Price and such
actual number of Common Shares.

 

(d)                                                         In the event that the Company duly
exercises its Common Share Redemption Right, upon presentation and surrender of
the Debentures for payment on the Redemption Date, at any place where a
register is maintained pursuant to Article 3 or any other place specified
in the Redemption Notice, the Company shall on or before 11:00 a.m.
(Toronto time) on the Business Day immediately prior to the Redemption Date make
delivery to the Debenture Trustee, for delivery to and on account of the
holders, of 

 

39

 

certificates representing the Freely Tradeable Common Shares to which
such holders are entitled.

 

(e)                                                          No fractional Freely Tradeable
Common Shares shall be delivered upon the exercise of the Common Share
Redemption Right but, in lieu thereof, the Company shall pay to the Debenture
Trustee for the account of the holders, at the time contemplated in Section 4.6(d),
the cash equivalent thereof determined on the basis of the Current Market Price
of the Common Shares on the Redemption Date (less any tax required to be
deducted, if any).

 

(f)                                                            A holder shall be treated as the
shareholder of record of the Freely Tradeable Common Shares issued on due
exercise by the Company of its Common Share Redemption Right effective
immediately after the close of business on the Redemption Date, and shall be
entitled to all substitutions therefor, all income earned thereon or accretions
thereto and all dividends or distributions (including distributions and
dividends in kind) thereon and arising thereafter, and in the event that the
Debenture Trustee receives the same, it shall hold the same in trust for the
benefit of such holder.

 

(g)                                                         The Company shall reserve and keep
available out of its authorized Common Shares (if the number thereof is or
becomes limited), solely for the purpose of issue and delivery upon the
exercise of the Company’s Common Share Redemption Right as provided herein, and
shall issue to Debentureholders to whom Freely Tradeable Common Shares will be
issued pursuant to exercise of the Common Share Redemption Right, such number
of Freely Tradeable Common Shares as shall be issuable in such event. All
Freely Tradeable Common Shares which shall be so issuable shall be duly and
validly issued as fully paid and non-assessable.

 

(h)                                                         The Company shall comply with all
Applicable Securities Legislation regulating the issue and delivery of Freely
Tradeable Common Shares upon exercise of the Common Share Redemption Right and
shall cause to be listed and posted for trading such Common Shares on each
stock exchange on which the Common Shares are then listed.

 

(i)                                                             The Company shall from time to
time promptly pay, or make provision satisfactory to the Debenture Trustee for
the payment of, all taxes and charges which may be imposed by the laws of
Canada or any province thereof (except income tax, withholding tax or security
transfer tax, if any) which shall be payable with respect to the issuance or
delivery of Freely Tradeable Common Shares to holders upon exercise of the
Common Share Redemption Right pursuant to the terms of the Debentures and of
this Indenture.

 

(j)                                                             If the Company elects to satisfy
its obligation to pay all or any portion of the Redemption Price by issuing
Freely Tradeable Common Shares in accordance with this Section 4.6 and if
the Redemption Price (or any portion thereof) to which a holder is entitled is
subject to withholding taxes and the amount of the cash payment of the
Redemption Price, if any, is insufficient to satisfy such withholding taxes,
the Debenture Trustee, on a Written Direction but for the account of the
holder, shall sell, through the investment banks, brokers or dealers selected
by the Company, out of the 

 

40

 

Freely Tradeable Common Shares issued by the Company for this purpose,
such number of Freely Tradeable Common Shares that together with the cash
payment of the Redemption Price, if any, is sufficient to yield net proceeds
(after payment of all costs) to cover the amount of taxes required to be
withheld, and shall remit same on behalf of the Company to the proper tax
authorities within the period of time prescribed for this purpose under
applicable laws.

 

4.7                                                                               Failure
to Surrender Debentures Called for Redemption

 

In case the holder of any Debenture so
called for redemption shall fail on or before the Redemption Date to so
surrender such holder’s Debenture, or shall not within such time accept payment
of the Redemption Price payable or take delivery of Common Shares and/or
certificates representing such Common Shares issuable in respect thereof, or
give such receipt therefor, if any, as the Debenture Trustee may require, such
redemption monies may be set aside in trust, without interest, or such
certificates may be held in trust, either in the deposit department of the
Debenture Trustee or in a chartered bank, and such setting aside shall for all
purposes be deemed a payment to the Debentureholder of the sum so set aside
and, to that extent, the Debenture shall thereafter not be considered as
outstanding hereunder and the Debentureholder shall have no other right except
to receive payment out of the monies so paid and deposited or take delivery of
the Common Shares and/or certificates so deposited, or both, upon surrender and
delivery of such holder’s Debenture of the Redemption Price, as the case may
be, of such Debenture, plus accrued interest and unpaid interest to the
Redemption Date.  In the event that any
money, or Common Shares and/or certificates representing Common Shares,
required to be deposited hereunder with the Debenture Trustee or any depository
or paying agent on account of principal, premium, if any, or interest, if any,
on Debentures issued hereunder shall remain so deposited for a period of six
years from the Redemption Date, then such monies shall at the end of such
period be paid over or delivered over by the Debenture Trustee or such
depository or paying agent to the Company on its demand, and thereupon the
Debenture Trustee shall not be responsible to Debentureholders for any amounts
owing to them and subject to applicable law, thereafter the holder of a
Debenture in respect of which such money or Common Shares and/or certificates
was so repaid to the Company shall have no rights in respect thereof except to
obtain payment of the money or Common Shares and/or certificates due from the
Company, subject to any limitation period provided by the laws of the Province
of Ontario.  Notwithstanding the foregoing, the
Debenture Trustee will pay any remaining funds prior to the expiry of six years
after the Redemption Date to the Company upon receipt from the Company, of an
unconditional letter of credit from a Canadian chartered bank in an amount equal
to or in excess of the amount of the remaining funds.  If the remaining funds are paid to the
Company prior to the expiry of six years after the Redemption Date, the Company
shall reimburse the Debenture Trustee for any amounts required to be paid by
the Debenture Trustee to a holder of a Debenture pursuant to the redemption
after the date of such payment of the remaining funds to the Company but prior
to six years after the redemption.

 

4.8                                                                               Cancellation
of Debentures Redeemed

 

Subject to the provisions of Sections 4.2
and 4.9 as to Debentures redeemed or purchased in part, all Debentures redeemed
and paid whose obligations have been satisfied under this Article 4 shall
forthwith be delivered to the Debenture Trustee and cancelled and no Debentures
shall be issued in substitution therefor.

 

41

 

4.9                                                                               Purchase
of Debentures by the Company

 

Unless otherwise specifically provided with
respect to a particular series of Debentures, the Company or an Affiliate may,
if the Company is not at the time in default hereunder, at any time and from
time to time, purchase Debentures in the market (which shall include purchases
from or through an investment dealer or a firm holding membership on a
recognized stock exchange) or by tender or by private contract, at any
price.  All Debentures so purchased may,
at the option of the Company or such Affiliate, be delivered to the Debenture
Trustee and shall be cancelled and no Debentures shall be issued in
substitution therefor.

 

If, upon an invitation for tenders, more
Debentures than the Company or an Affiliate is prepared to accept are tendered
at the same lowest price, the Debentures to be purchased by the Company or such
Affiliate shall be selected by the Debenture Trustee, in such manner (which may
include selection by lot, selection on a pro
rata basis, random selection by computer or any other method)
consented to by the TSX or such other exchange on which the Debentures are then
listed which the Debenture Trustee considers appropriate, from the Debentures
tendered by each tendering Debentureholder who tendered at such lowest
price.  For this purpose the Debenture
Trustee may make, and from time to time amend, regulations with respect to the
manner in which Debentures may be so selected, and regulations so made shall be
valid and binding upon all Debentureholders, notwithstanding the fact that as a
result thereof one or more of such Debentures become subject to purchase in
part only or not subject to purchase at all. 
The holder of a Debenture of which a part only is purchased, upon
surrender of such Debenture for payment, shall be entitled to receive, without
expense to such holder, one or more new Debentures for the unpurchased part so
surrendered, and the Debenture Trustee shall certify and deliver such new
Debenture or Debentures upon receipt of the Debenture so surrendered or, with
respect to a Global Debenture, the Depository shall make notations on the
Global Debenture of the principal amount thereof so purchased.

 

4.10                                                                        Deposit
of Maturity Monies

 

Subject to Section 4.11, payment on
maturity of Debentures shall be provided for by the Company depositing with the
Debenture Trustee or any paying agent to the order of the Debenture Trustee, on
or before 11:00 a.m. (Toronto time) on the Business Day immediately prior
to the Maturity Date such sums of money and/or Common Shares as may be
sufficient to pay the principal amount of the Debentures, together with a sum
of money sufficient to pay all accrued and unpaid interest thereon up to but
excluding the Maturity Date, provided the Company may elect to satisfy this
requirement by providing the Debenture Trustee with one or more certified
cheques or with funds by electronic transfer, for such amounts required under
this Section 4.10.  The Company
shall also deposit with the Debenture Trustee a sum of money sufficient to pay
any charges or expenses which may be incurred by the Debenture Trustee in
connection therewith.  Every such deposit
shall be irrevocable.  From the sums so
deposited, the Debenture Trustee shall pay or cause to be paid to the holders
of such Debentures, upon surrender of such Debentures, the principal, premium
(if any) and interest (if any) to which they are respectively entitled on
maturity.

 

4.11                                                                        Right
to Repay Principal Amount in Common Shares

 

(a)                                                          Subject to the receipt of any
required regulatory approvals and the other provisions of this Section 4.11,
the Company may, at its option, in exchange for or in lieu of repaying the
principal amount of Debentures in money, elect to satisfy its obligation to pay
all or any portion of the principal amount of Debentures outstanding at the 

 

42

 

Maturity Date by issuing and delivering to holders on the Maturity Date
that number of Freely Tradeable Common Shares obtained by dividing the
principal amount of the Debentures (or applicable portion thereof to be
satisfied by the issuance and delivery of Freely Tradeable Common Shares) by
95% of the Current Market Price on the Maturity Date (the “Common Share Repayment Right”).

 

(b)                                                         The Company shall exercise the
Common Share Repayment Right by so specifying in the Maturity Notice, which
shall be delivered to the Debenture Trustee and the holders of Debentures not
more than 60 days and not less than 40 days prior to the Maturity Date, and
which shall also specify the aggregate principal amount of Debentures in
respect of which it is exercising the Common Share Repayment Right on the
Maturity Date.

 

(c)                                                          The Company’s right to exercise
the Common Share Repayment Right shall be conditional upon the following
conditions being met on the Business Day preceding the Maturity Date:

 

(i)                                    the issuance of the Common
Shares on the exercise of the Common Share Repayment Right shall be made in
accordance with Applicable Securities Legislation and such Common Shares shall
be issued as Freely Tradeable Common Shares;

 

(ii)                                 such additional Freely
Tradeable Common Shares shall be listed on each stock exchange on which the
Common Shares are then listed, the TSX or a national securities exchange or
quoted in an inter-dealer quotation system of any registered national
securities association;

 

(iii)                              the Company shall be a
reporting issuer in good standing under Applicable Securities Legislation where
the distribution of such Freely Tradeable Common Shares occurs;

 

(iv)                             no Event of Default shall have
occurred and be continuing;

 

(v)                                the Debenture Trustee shall
have received a Certificate stating that conditions (i), (ii), (iii) and (iv) above
have been satisfied and setting forth the number of Common Shares to be
delivered for each $1,000 principal amount of Debentures and the Current Market
Price of the Common Shares on the Maturity Date; and

 

(vi)                             the Debenture Trustee shall
have received an opinion of Counsel to the effect that such Common Shares have
been duly authorized and, when issued and delivered pursuant to the terms of
this Indenture in payment of the principal amount of the Debentures outstanding
will be validly issued as fully paid and non-assessable, that conditions (i) and
(ii) above have been satisfied and that, relying exclusively on a list of
issuers in default maintained by the relevant securities authorities, condition
(iii) above is satisfied, except that the opinion in respect of condition (iii) need
not be expressed with respect to those provinces where certificates are not
issued.

 

43

 

If the foregoing conditions are not satisfied prior to the close of
business on the Business Day preceding the Maturity Date, the Company shall pay
the principal amount of the Debentures outstanding in cash in accordance with Section 2.13,
unless the Debentureholder waives the conditions which are not satisfied. The
Company may not change the form of components or percentages of consideration
to be paid for the Debentures once it has given the notice required to be given
to Debentureholders hereunder, except as described in the preceding sentence.
When the Company determines the actual number of Common Shares to be issued
pursuant to the exercise of its Common Share Repayment Right, it will issue a
press release on a national newswire disclosing the Current Market Price and
such actual number of Common Shares.

 

(d)                                                         In the event that the Company duly
exercises its Common Share Repayment Right, upon presentation and surrender of
the Debentures for payment on the Maturity Date, at any place where a register
is maintained pursuant to Article 3 or any other place specified in the
Maturity Notice, the Company shall on or before 11:00 a.m. (Toronto time)
on the Business Day immediately prior to the Maturity Date make the delivery to
the Trustee Debenture for delivery to and on account of the holders, of
certificates representing the Freely Tradeable Common Shares to which such holders
are entitled. The Company shall also deposit with the Debenture Trustee a sum
of money sufficient to pay any charges or expenses which may be incurred by the
Debenture Trustee in connection with the Common Share Repayment Right. Every
such deposit shall be irrevocable. From the certificates so deposited in
addition to amounts payable by the Debenture Trustee pursuant to Section 2.13,
the Debenture Trustee shall pay or cause to be paid, to the holders of such
Debentures, upon surrender of such Debentures, the principal amount of and
premium (if any) on the Debentures to which they are respectively entitled on
maturity and deliver to such holders the certificates to which such holders are
entitled. The delivery of such certificates to the Debenture Trustee will
satisfy and discharge the liability of the Company for the Debentures to which
the delivery of certificates relates to the extent of the amount delivered
(plus the amount of any certificates sold to pay applicable taxes in accordance
with this Section 4.11) and such Debentures will thereafter to that extent
not be considered as outstanding under this Indenture and such holder will have
no other right in regard thereto other than to receive out of the certificates
so delivered, the certificate(s) to which it is entitled.

 

(e)                                                          No fractional Freely Tradeable
Common Shares shall be delivered upon the exercise of the Common Share
Repayment Right but, in lieu thereof, the Company shall pay to the Debenture
Trustee for the account of the holders, at the time contemplated in Section 4.11(d),
the cash equivalent thereof determined on the basis of the Current Market Price
of the Common Shares on the Maturity Date (less any tax required to be
deducted, if any).

 

(f)                                                            A holder shall be treated as the
shareholder of record of the Freely Tradeable Common Shares issued on due
exercise by the Company of its Common Share Repayment Right effective
immediately after the close of business on the Maturity Date, and shall be
entitled to all substitutions therefor, all income earned thereon or accretions
thereto and all dividends or distributions (including distributions and
dividends in kind) thereon and arising thereafter, and in the event that the
Debenture

 

44

 

Trustee receives the same, it shall hold the same in trust for the
benefit of such holder.

 

(g)                                                         The Company shall at all times
reserve and keep available out of its authorized Common Shares (if the number
thereof is or becomes limited), solely for the purpose of issue and delivery
upon the exercise of the Company’s Common Share Repayment Right as provided
herein, and shall issue to Debentureholders to whom Freely Tradeable Common
Shares will be issued pursuant to exercise of the Common Share Repayment Right,
such number of Freely Tradeable Common Shares as shall be issuable in such
event. All Freely Tradeable Common Shares which shall be so issuable shall be
duly and validly issued as fully paid and non-assessable.

 

(h)                                                         The Company shall comply with all
Applicable Securities Legislation regulating the issue and delivery of Freely
Tradeable Common Shares upon exercise of the Common Share Repayment Right and
shall cause to be listed and posted for trading such Freely Tradeable Common
Shares on each stock exchange on which the Common Shares are then listed.

 

(i)                                                             The Company shall from time to
time promptly pay, or make provision satisfactory to the Debenture Trustee for
the payment of, all taxes and charges which may be imposed by the laws of
Canada or any province thereof (except income tax, withholding tax or security
transfer tax, if any) which shall be payable with respect to the issuance or
delivery of Freely Tradeable Common Shares to holders upon exercise of the
Common Share Repayment Right pursuant to the terms of the Debentures and of
this Indenture.

 

(j)                                                             If the Company elects to satisfy
its obligation to pay all or any portion of the principal amount of Debentures
due on maturity by issuing Freely Tradeable Common Shares in accordance with
this Section 4.11 and if the amount (or any portion thereof) to which a
holder is entitled is subject to withholding taxes and the amount of the cash
payment of the amount due on maturity, if any, is insufficient to satisfy such
withholding taxes, the Debenture Trustee, on a Written Direction but for the
account of the holder, shall sell, through the investment banks, brokers or
dealers selected by the Company, out of the Freely Tradeable Common Shares
issued by the Company for this purpose, such number of Freely Tradeable Common
Shares that together with the cash component of the amount due on maturity is
sufficient to yield net proceeds (after payment of all costs) to cover the
amount of taxes required to be withheld, and shall remit same on behalf of the
Company to the proper tax authorities within the period of time prescribed for
this purpose under applicable laws.

 

ARTICLE 5

SUBORDINATION
OF DEBENTURES

 

5.1                                                                               Applicability
of Article

 

The Debenture Liabilities of the Company
under any Debentures issued hereunder of any series, shall be subordinated and
postponed and subject in right of payment, to the extent and in the manner
hereinafter set forth in the following sections of this Article 5, to the
full and final payment of all existing and future Senior Indebtedness and the
termination of all related 

 

45

 

commitments
and the expiration or termination of any letters of credit or other similar
instruments issued in connection therewith and each holder of any such Debenture
by his acceptance thereof agrees to and shall be bound by the provisions of
this Article 5.

 

5.2                                                                               Order
of Payment

 

Upon the distribution of the assets of the
Company upon any dissolution, winding-up, liquidation, bankruptcy, insolvency,
receivership, creditor enforcement or realization or other similar proceedings
relating to the Company or any of its property (whether voluntary or
involuntary, partial or complete) or any other marshalling of the assets and
liabilities of the Company:

 

(a)                                                          all existing and future Senior
Indebtedness shall first be paid in full and all related commitments shall have
been terminated and all letters of credit or other similar instruments issued
in connection therewith shall have expired or shall have been terminated before
any payment is made on account of Debenture Liabilities;

 

(b)                                                         any payment or distribution of
assets of the Company, whether in cash, property or securities, to which the
holders of the Debentures or the Debenture Trustee on behalf of such holders
would be entitled except for the provisions of this Article 5, shall be
paid or delivered by the trustee in bankruptcy, receiver, assignee for the
benefit of creditors, or other liquidating agent making such payment or
distribution, directly to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness may have been issued, to the extent necessary to pay all Senior Indebtedness
in full after giving effect to any concurrent payment or distribution, or
provision therefor, to the holders of such Senior Indebtedness; and

 

(c)                                                          the Senior Creditors or a receiver
or a receiver-manager of the Company or of all or part of its assets or any
other enforcement agent may sell, mortgage, or otherwise dispose of the Company’s
assets in whole or in part, free and clear of all Liens securing the Debenture
Liabilities (if any) and without the approval of the Debentureholders or the
Debenture Trustee, but subject to the requirement to account to the Debenture
Trustee or the Debentureholders for any surplus from any such disposition.

 

The rights and priority of the Senior Indebtedness
and the subordination pursuant hereto shall not be affected by:

 

(a)                                                          whether or not the Senior
Indebtedness is secured;

 

(b)                                                         the time, sequence or order of
creating, granting, executing, delivering of, or registering, perfecting or
failing to register or perfect any security notice, caveat, financing statement
or other notice in respect of the Senior Security;

 

(c)                                                          the time or order of the
attachment, perfection or crystallization of any security constituted by the
Senior Security;

 

46

 

(d)                                                         the taking of any collection,
enforcement or realization proceedings pursuant to the Senior Security or any
release of any Senior Security;

 

(e)                                                          the date of obtaining of any
judgment or order of any bankruptcy court or any court administering
bankruptcy, insolvency or similar proceedings as to the entitlement of the
Senior Creditors, or any of them or the Debentureholders or any of them to any
money or property of the Company;

 

(f)                                                            the failure to exercise any power
or remedy reserved to the Senior Creditors under the Senior Security or to
insist upon a strict compliance with any terms thereof;

 

(g)                                                         whether any Senior Security is now
perfected, hereafter ceases to be perfected, is avoidable by any trustee in
bankruptcy or like official or is otherwise set aside, invalidated or lapses;

 

(h)                                                         the date of giving or failing to
give notice to or making demand upon the Company;

 

(i)                                                             any amendment, modification,
increase, extension, renewal, replacement of any Senior Indebtedness or Senior
Security; or

 

(j)                                                             any other matter whatsoever.

 

5.3                                                                               Subrogation
to Rights of Holders of Senior Indebtedness

 

After all Senior Indebtedness of the
Company is paid in full and all related commitments are terminated and letters
of credit or other similar instruments issued in connection therewith have
expired or terminated and until the Debentures are paid in full, the
Debentureholders’ rights hereunder shall be subrogated to the rights of the
existing and future holders of such Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to Senior Indebtedness. A
distribution made under this Article 5 to the existing and future holders
of such Senior Indebtedness of the Company which otherwise would have been made
to Debentureholders is not, as between the Company and the Debentureholders, a
payment by the Company to such Debentureholders, it being understood that the
provisions of this Article 5 are and are intended solely for the purpose
of defining the relative rights of the holders of the Debentures, on the one
hand, and the holders of Senior Indebtedness, on the other hand.

 

The Debenture Trustee, on behalf of each of
the Debentureholders, hereby waives any and all rights to require a Senior
Creditor to pursue or exhaust any rights or remedies with respect to the
Company or any property and assets subject to the Senior Security or in any
other manner to require the marshalling of property, assets or security in
connection with the exercise by the Senior Creditors of any rights remedies or
recourses available to them.

 

5.4                                                                               Obligation
to Pay Not Impaired

 

Subject at all times to the terms and
provisions of this Article 5, nothing contained in this Indenture or in
the Debentures is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Indebtedness, and the holders of the
Debentures, the obligation of the Company, which is absolute and unconditional,
to pay to the holders of the Debentures the principal, premium, if any, and
interest on the Debentures, as and when the same shall become due and payable
in accordance with their terms, or affect the relative rights of the 

 

47

 

holders of the
Debentures and creditors of the Company other than the holders of the Senior
Indebtedness nor, subject to the terms and provisions of this Article 5,
shall anything herein or therein prevent the Debenture Trustee or the holder of
any Debenture from exercising all remedies otherwise permitted by applicable
law upon default under this Indenture, subject to the rights, if any, under
this Article 5 of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.

 

5.5                                                                               No
Payment if Senior Indebtedness in Default

 

Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration or otherwise, or any other enforcement of any Senior Indebtedness,
then, except as provided in Section 5.8, all such Senior Indebtedness
shall first be paid in full, or shall first have been duly provided for, before
any payment is made on account of the Debenture Liabilities.

 

In case of a circumstance constituting a default or event of default
with respect to any Senior Indebtedness permitting (whether at that time or
upon notice, lapse of time, or satisfaction of any other condition precedent) a
Senior Creditor to demand payment or accelerate the maturity thereof where the
notice of such default or event of default has been given by or on behalf of
the holders of Senior Indebtedness to the Company or the Company otherwise has
knowledge thereof, unless and until such default or event of default shall have
been cured or waived or shall have ceased to exist or the Senior Indebtedness
has been paid in full, no payment (by purchase of Debentures or otherwise)
shall be made by the Company (except as provided in Section 5.8) with
respect to the Debenture Liabilities and neither the Trustee nor the holders of
Debentures shall be entitled to demand, institute proceedings for the
collection of (which shall, for certainty include proceedings related to an
adjudication or declaration as to the insolvency or bankruptcy of the Company
and other similar creditor proceedings), or receive any payment or benefit
(including without limitation by set-off, combination of accounts or otherwise
in any manner whatsoever) on account of the Debentures after the happening of
such a default or event of default (except as provided in Section 5.8),
and unless and until such default or event of default shall have been cured or
waived or shall have ceased to exist or the Senior Indebtedness has been paid
in full, such payments shall be held in trust for the benefit of, and, if and
when such Senior Indebtedness shall have become due and payable, shall be paid
over to, the holders of the Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture under which
any instruments evidencing an amount of the Senior Indebtedness remaining
unpaid until all such Senior Indebtedness shall have been paid in full, after
giving effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness.

 

The fact that any payment hereunder is
prohibited by this Section 5.5 shall not prevent the failure to make such
payment from being an Event of Default hereunder.

 

5.6                                                                               Payment
on Debentures Permitted

 

Except as provided by Section 5.5,
nothing contained in this Article 5 or elsewhere in this Indenture, or in
any of the Debentures, shall affect the obligation of the Company to make, or
prevent the Company from making, at any time except during the pendency of any
dissolution, winding up or liquidation of the Company or reorganization
proceeding specified in Section 5.2 affecting the affairs of the Company
any payment of principal of or interest on the Debentures.  For greater certainty, except as provided in Section 5.5,
the Company shall not be prevented from making any payment of principal of or
interest on the Debentures on each Interest Payment Date, on the 

 

48

 

Maturity Date
or on the Redemption Date.  The fact that
any payment in respect of the Debentures is prohibited by this Article 5
or under any instrument relating to Senior Indebtedness shall not prevent the
failure to make such payment from being an Event of Default hereunder.  Nothing contained in this Article 5 or
elsewhere in this Indenture, or in any of the Debentures, shall prevent the
conversion of the Debentures or, except as prohibited by Section 5.5, the
application by the Debenture Trustee of any monies deposited with the Debenture
Trustee hereunder for the purpose, to the payment of or on account of the
Debenture Liabilities.

 

5.7                                                                               Confirmation
of Subordination

 

Each holder of Debentures by his acceptance
thereof authorizes and directs the Debenture Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in this Article 5 and appoints the Debenture Trustee his
attorney-in-fact for any and all such purposes. 
This power of attorney, being coupled with an interest and rights, shall
be irrevocable.  Upon request of the
Company, and upon being furnished a Certificate stating that one or more named
persons are Senior Creditors and specifying the amount and nature of the Senior
Indebtedness of such Senior Creditor, the Debenture Trustee shall enter into a
written acknowledgement, confirmation and/or agreement with the Company and/or
the person or persons named in such Certificate, acknowledging, confirming
and/or providing that such person or persons are entitled to all the rights and
benefits of this Article 5 as a Senior Creditor.  Such instruments shall be conclusive evidence
that the indebtedness specified therein is Senior Indebtedness.  However, nothing herein shall impair the
rights of any Senior Creditor who has not entered into such an agreement or
instrument.

 

5.8                                                                               Knowledge
of Debenture Trustee

 

Notwithstanding the provisions of this Article 5
or any provision in this Indenture or in the Debentures, the Debenture Trustee
will not be charged with knowledge of any Senior Indebtedness or of any default
in the payment thereof or any other default or event of default, or of the
existence of any other fact that would prohibit the making of any payment of
monies to or by the Debenture Trustee, or the taking of any other action by the
Debenture Trustee, unless and until the Debenture Trustee has received written
notice thereof from the Company, any Debentureholder, any Senior Creditor or a
trustee on behalf of anyone or more Senior Creditors, and such notice to the
Debenture Trustee shall be deemed to be notice to holders of the
Debentures.  The Debenture Trustee will
notify holders of Debentures as soon as reasonably practical of such notice.

 

5.9                                                                               Debenture
Trustee May Hold Senior Indebtedness

 

The Debenture Trustee is entitled to all
the rights set forth in this Article 5 with respect to any Senior
Indebtedness at the time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture deprives the Debenture
Trustee of any of its rights as such holder.

 

5.10                                                                        Rights
of Holders of Senior Indebtedness Not Impaired

 

No right of any present or future holder of
any Senior Indebtedness to enforce the subordination herein will at any time or
in any way be prejudiced or impaired by any act or failure to act on the part
of the Company or by any non-compliance by the Company with the terms,
provisions 

 

49

 

and covenants
of this Indenture, regardless of any knowledge thereof which any such holder
may have or be otherwise charged with.

 

5.11                                                                        Altering
the Senior Indebtedness

 

The holders of the Senior Indebtedness have
the right to extend, renew, increase, modify or amend the terms of the Senior
Indebtedness (including increasing the principal amount of the Senior
Indebtedness) or the Senior Security and to release, sell or exchange the
Senior Security and otherwise to deal freely with the Company and the Company’s
Subsidiaries, all without notice to or consent of the Debentureholders or the
Debenture Trustee and without affecting the liabilities and obligations of the
parties to this Indenture or the Debentureholders or the Debenture Trustee.

 

5.12                                                                        Additional
Indebtedness

 

This Indenture does not restrict the
Company from incurring additional indebtedness for borrowed money or otherwise
or mortgaging, pledging or charging its real or personal property or properties
to secure any indebtedness or other financing.

 

5.13                                                                        Right
of Debentureholder to Convert Not Impaired

 

The subordination of the Debentures to the
Senior Indebtedness and the provisions of this Article 5 do not impair in
any way the right of a Debentureholder to convert its Debentures pursuant to Article 6.

 

5.14                                                                        Invalidated
Payments

 

In the event that any of the Senior Indebtedness shall be paid in full
and any related commitments shall be terminated and any letters of credit or
other similar instruments issued in connection therewith shall have been
terminated or otherwise expired and subsequently, for whatever reason, such
formerly paid or satisfied Senior Indebtedness becomes unpaid or unsatisfied,
such commitments are reinstated or such letters of credit or other instruments
become effective and are outstanding, the terms and conditions of this Article 5
shall be reinstated and the provisions of this Article shall again be
operative until all Senior Indebtedness is repaid in full and any related
commitments shall be terminated and any letters of credit or other similar
instruments issued in connection therewith shall have been terminated or
otherwise expired, provided that such reinstatement shall not give the Senior
Creditors any rights or recourses against the Debenture Trustee or the
Debentureholders for amounts paid to the Debentureholders subsequent to such
payment or satisfaction in full and prior to such reinstatement.

 

5.15                                                                        Contesting
Security

 

The Debenture Trustee, for itself and on
behalf of the Debentureholders, agrees that it shall not contest or bring into
question the validity, perfection or enforceability of any of the Senior
Security or Senior Indebtedness, or the relative priority of the Senior
Security or Senior Indebtedness including, without limitation, pursuant to this
Indenture, any Debentures or any Guarantee.

 

50

 

5.16                                                                        Obligations
Created by Article 5

 

The Company
and the Debenture Trustee, in its capacity as trustee hereunder and not in its
corporate personal capacity, agree, and each holder by its acceptance of a
Debenture likewise agrees, that:

 

(a)                                                          the provisions of this Article 5
are an inducement and consideration to each holder of Senior Indebtedness to
give or continue credit to the Company, the Company’s Subsidiaries or others or
to acquire Senior Indebtedness;

 

(b)                                                         each holder of Senior Indebtedness
may accept the benefit of this Article 5 on the terms and conditions set
forth in this Article 5 by giving or continuing credit to the Company, the
Company’s Subsidiaries or others or by acquiring or having outstanding as of
the date hereof Senior Indebtedness, in each case without notice to the
Debenture Trustee and without establishing actual reliance on this Article 5;
and

 

(c)                                                          each obligation created by this Article 5
is created for the benefit of the holders of Senior Indebtedness and is hereby
declared to be created in trust for those holders by the Company, the Debenture
Trustee and each holder of a Debenture and shall be binding on the Company, the
Debenture Trustee and each holder of a Debenture whether or not any confirmation
described in Section 5.7 is requested, executed or delivered.

 

5.17                                                                        No
Set-Off

 

Each of the Company and the Debenture
Trustee agrees, and each holder of a Debenture, by his acceptance thereof,
likewise agrees, that it shall have no rights of set-off or counterclaim with
respect to the principal of, premium, if any, and interest on the Debentures at
any time when any payment of, or in respect of, such amounts to the Debenture
Trustee or the holder of a Debenture is prohibited by this Article 5 or is
otherwise required to be paid to the holders of Senior Indebtedness or their
representative or to the trustee under any indenture under which any
instruments evidencing any of such Senior Indebtedness may have been issued, as
their respective interests may appear.

 

5.18                                                                        Amendments
to Article 5

 

Each of the Company and the Debenture
Trustee (relying on the opinion of Counsel) agrees, and each holder of a
Debenture, by his acceptance thereof, likewise agrees, not to make any changes
to this Indenture or the Debentures, including this Article 5 or the
definition of Senior Indebtedness, which prejudice the rights of the holders of
Senior Indebtedness under this Article 5 without the consent of the
holders of Senior Indebtedness or their representative or the trustee under any
indenture under which any instruments evidencing any of such Senior
Indebtedness may have been issued.

 

51

 

ARTICLE 6

CONVERSION OF DEBENTURES

 

6.1                                                                               Applicability
of Article

 

Any Debentures issued hereunder of any
series which by their terms are convertible (subject, however, to any
applicable restriction of the conversion of Debentures of such series) will be
convertible into Freely Tradeable Common Shares or, if applicable, other
securities or property, at such exchange rate or rates, and on such date or
dates and in accordance with such other provisions as shall have been
determined at the time of issue of such Debentures and shall have been
expressed in this Indenture, in such Debentures, in a  Certificate,
or in a supplemental indenture authorizing or providing for the issue thereof.

 

Such right of conversion shall extend only
to the maximum number of whole Common Shares into which the aggregate principal
amount of the Debenture or Debentures surrendered for conversion at any one
time by the holder thereof may be converted. 
Fractional interests in Common Shares shall be adjusted for in the
manner provided in Section 6.6.

 

6.2                                                                               Notice
of Expiry of Conversion Privilege

 

Notice of the expiry of the conversion
privileges of the Debentures shall be given by or on behalf of the Company, not
more than 60 days and not less than 30 days prior to the date fixed for the
Time of Expiry, in the manner provided in Section 14.2.

 

6.3                                                                               Revival
of Right to Convert

 

If the redemption of any Debenture called
for redemption by the Company is not made or the payment of the purchase price
of any Debenture which has been tendered pursuant to the Put Right or in
acceptance of any offer by the Company to purchase Debentures for cancellation
is not made, in the case of a redemption upon due surrender of such Debenture
or in the case of a purchase on the date on which such purchase is required to
be made, as the case may be, then, the right to convert such Debenture shall
revive and continue as if such Debenture had not been called for redemption or
tendered in acceptance of the Company’s offer, respectively.

 

6.4                                                                               Manner
of Exercise of Right to Convert

 

(a)                                                          The holder of a Debenture desiring
to convert such Debenture in whole or in part into Common Shares shall
surrender such Debenture to the Debenture Trustee at its principal offices in
Toronto together with the conversion form attached hereto as Schedule D duly executed by the holder or his or her
executors or administrators or other legal representatives or his, her or their
attorney duly appointed by an instrument in writing in form and executed in a
manner satisfactory to the Debenture Trustee, exercising his or her right to
convert such Debenture in accordance with the provisions of this Article 6;
provided that with respect to a Global Debenture, the obligation to surrender a
Debenture to the Debenture Trustee shall be satisfied if the Debenture Trustee
makes notation on the Global Debenture of the principal amount thereof so
converted and the Debenture Trustee is provided with all other documentation
which it may request.  Thereupon, subject
to payment of all applicable stamp or security transfer, income, withholding or
other taxes or other governmental 

 

52

 

charges and compliance with all reasonable requirements of the
Debenture Trustee (including, for greater certainty, the withholding obligation
of the Debenture Trustee pursuant to Section 15.23 hereof), the Conversion
Price shall have been paid and such Debentureholder or his or her nominee(s) or
assignee(s) shall be entitled to be entered in the books of the Company on
the Business Day immediately after the Date of Conversion (or such later date
as is specified in Section 6.4(b)), as the holder of the number of Common
Shares into which such Debenture is convertible, net of applicable withholding
taxes, if any, in accordance with the provisions of this Article and, as
soon as practicable thereafter, the Company shall (i) deliver or cause to
be delivered to the Debentureholder, or subject as aforesaid, his or her
nominee(s) or assignee(s) such certificate or certificates for such
Common Shares; and (ii) make or cause to be made any payment of interest
to which such holder is entitled in accordance with Section 6.4(e) hereof
or in respect of fractional Common Shares as provided in Section 6.6.

 

(b)                                                         For the purposes of this Article,
a Debenture shall be deemed to be surrendered for conversion on the date on
which it is so surrendered in proper form when the register of the Debenture
Trustee is open and in accordance with the provisions of this Article or,
in the case of a Global Debenture, on the date on which the Debenture Trustee
received notice of and all necessary documentation in respect of the exercise
of the conversion rights and, in the case of a Debenture so surrendered by post
or other means of transmission, on the date on which it is received in proper
form by the Debenture Trustee at its office specified in Section 6.4(a);
provided that if a Debenture is surrendered for conversion on a day on which
the register of Common Shares is closed, the Person or Persons entitled to
receive Common Shares shall become the holder or holders of record of such
Common Shares as at the date on which such registers are next reopened (in each
case the “Date of Conversion”).

 

(c)                                                          Any part, being $1,000 (in the
currency of the applicable Debenture) or an integral multiple thereof, of a
Debenture in a denomination in excess of $1,000 (in the currency of the
applicable Debenture) may be converted as provided in this Article 6 and
all references in this Indenture to conversion of Debentures shall be deemed to
include conversion of such parts.

 

(d)                                                         The holder of any Debenture of
which only a part is converted shall, upon the exercise of his or her right of
conversion, surrender such Debenture to the Debenture Trustee, and the
Debenture Trustee shall cancel the same and shall without charge forthwith
certify and deliver to the holder a new Debenture or Debentures in an aggregate
principal amount equal to the unconverted part of the principal amount of the
Debenture so surrendered or, with respect to a Global Debenture, the Depository
shall make notations on the Global Debentures of the principal amount thereof
so converted.

 

(e)                                                          The holder of a Debenture
surrendered for conversion in accordance with this Section 6.4 shall be
entitled (subject to any applicable restriction on the right to receive
interest on conversion of Debentures of any series) to receive accrued and
unpaid interest in respect thereof from and including the most recent Interest
Payment Date to which interest has been paid to, but not including, the Date of
Conversion of such Debenture (less applicable withholding taxes, if any)  and the Common Shares issued 

 

53

 

upon such conversion shall rank only in respect of distributions or
dividends declared in favour of holders of Common Shares of record on and after
the Date of Conversion or such later date as such holder shall become the
holder of record of such Common Shares pursuant to Section 6.4(b), from
which applicable date they will for all purposes be and be deemed to be issued
and outstanding as fully paid and non-assessable Common Shares.

 

6.5                                                                               Adjustment
of Conversion Price

 

The Conversion
Price in effect at any date shall be subject to adjustment from time to time as
set forth below.

 

(a)                                                          If and whenever at any time prior
to the Time of Expiry the Company shall (i) subdivide or redivide the
outstanding Common Shares into a greater number of Common Shares, (ii) reduce,
combine or consolidate the outstanding Common Shares into a smaller number of
Common Shares, or (iii) issue Common Shares (or other securities
convertible into or exchangeable for Common Shares) to the holders of all or
substantially all of the outstanding Common Shares by way of a stock dividend
or other distribution (other than the issue of Common Shares to holders of
Common Shares who have elected to receive dividends in the form of Common
Shares in lieu of cash dividends paid in the ordinary course on the Common
Shares), the Conversion Price in effect on the effective date of such
subdivision, redivision, reduction, combination or consolidation or on the
record date for such issue of Common Shares by way of a stock dividend or other
distribution, as the case may be, shall in the case of any of the events
referred to in (i) and (iii) above be decreased in proportion to the
number of outstanding Common Shares resulting from such subdivision, redivision
or dividend or distribution, or shall, in the case of any of the events
referred to in (ii) above, be increased in proportion to the number of
outstanding Common Shares resulting from such reduction, combination or consolidation.  Such adjustment shall be made successively
whenever any event referred to in this Section 6.5(a) shall
occur.  Any such issue of Common Shares
by way of a stock dividend or other distribution shall be deemed to have been
made on the record date for the stock dividend or other distribution for the
purpose of calculating the number of outstanding Common Shares under
subsections (b) and (c) of this Section 6.5.  Upon any adjustment to the Conversion Price
as set out in this Section 6.5(a), the number of Common Shares to be
issued upon conversion shall, in the case of any of the events referred to in (i) or
(iii) above, be increased in proportion to the number of outstanding
Common Shares resulting from such subdivision, redivision, dividend or distribution,
or shall, in the case of any of the events referred to in (ii) above, be
decreased in proportion to the number of outstanding Common Shares resulting
from such reduction, combination or consolidation.

 

(b)                                                         If and whenever at any time prior
to the Time of Expiry, the Company shall fix a record date for the issuance of
options, rights or warrants to all or substantially all the holders of its
outstanding Common Shares entitling them, for a period expiring not more than
45 days after such record date, to subscribe for or purchase Common Shares (or
securities convertible into or exchangeable for Common Shares) at a price per
Common Share (or having a conversion price per Common Share) less than 95% of
the Current Market Price of the Common Shares on such record date, the

 

54

 

Conversion Price shall be adjusted immediately after such record date
so that it shall equal the price determined by multiplying the Conversion Price
in effect on such record date by a fraction, of which the numerator shall be
the total number of Common Shares outstanding on such record date plus a number
of Common Shares equal to the number arrived at by dividing the aggregate price
of the total number of additional Common Shares offered for subscription or
purchase (or the aggregate conversion price of the convertible or exchangeable
securities so offered) by such Current Market Price per Common Share, and of
which the denominator shall be the total number of Common Shares outstanding on
such record date plus the total number of additional Common Shares offered for
subscription or purchase (or into which the convertible or exchangeable
securities so offered are convertible or exchangeable).  Such adjustment shall be made successively
whenever such a record date is fixed.  To
the extent that any such options, rights or warrants are not so issued or any
such options, rights or warrants are not exercised prior to the expiration
thereof, the Conversion Price shall be re-adjusted to the Conversion Price
which would then be in effect if such record date had not been fixed or to the
Conversion Price which would then be in effect based upon the number of Common
Shares (or securities convertible into or exchangeable for Common Shares)
actually issued upon the exercise of such options, rights or warrants, as the
case may be.

 

(c)                                                          If and whenever at any time prior
to the Time of Expiry, the Company shall fix a record date for the making of a
distribution to all or substantially all the holders of its outstanding Common
Shares of any (i) securities, (ii) rights, options or warrants
(excluding rights, options or warrants entitling the holders thereof for a
period of not more than 45 days to subscribe for or purchase Common Shares or
securities convertible into or exchangeable for Common Shares), (iii) evidences
of its indebtedness, or (iv) assets (excluding cash dividends and
equivalent dividends in securities paid in lieu of cash dividends in the
ordinary course) then, in each such case, the Conversion Price shall be
adjusted immediately after such record date so that it shall equal the price
determined by multiplying the Conversion Price in effect on such record date by
a fraction, of which the numerator shall be the total number of Common Shares
outstanding on such record date multiplied by the Current Market Price per Common
Share on such record date, less the fair market value (as determined by the
Directors, which determination shall be conclusive) of such Common Shares,
securities or assets so distributed, and of which the denominator shall be the
total number of Common Shares outstanding on such record date multiplied by
such Current Market Price per Common Share. 
Such adjustment shall be made successively whenever such a record date
is fixed.  To the extent that such
distribution is not so made, the Conversion Price shall be re-adjusted to the
Conversion Price which would then be in effect if such record date had not been
fixed or to the Conversion Price which would then be in effect based upon such
Common Shares, securities or assets actually distributed, as the case may
be.  In clause (ii) of this Section 6.5(c) the
term “dividends or equivalent dividends paid in the ordinary course” shall
include the value of any securities or other property or assets distributed in
lieu of cash dividends paid in the ordinary course at the option of holders of
Common Shares.

 

(d)                                                         If and whenever at any time prior
to the Time of Expiry, there is a reclassification of the Common Shares or a
capital reorganization of the Company other than as 

 

55

 

described in Section 6.5(a) or a consolidation, amalgamation,
arrangement or merger of the Company with or into any other Person or other
entity, or a sale or conveyance of the property and assets of the Company as an
entirety or substantially as an entirety to any other Person or other entity or
a liquidation, dissolution or winding-up of the Company, any holder of a
Debenture who has not exercised its right of conversion prior to the effective
date of such reclassification, capital reorganization, consolidation,
amalgamation, arrangement or merger, sale or conveyance or liquidation,
dissolution or winding-up or other similar transaction, upon the exercise of
such right thereafter, shall be entitled to receive and shall accept, in lieu
of the number of Common Shares then sought to be acquired by it, the kind and
amount of securities or property of the Company or of the Person or other
entity resulting from such reclassification, capital reorganization, merger,
amalgamation, arrangement or consolidation or other similar transaction, or to
which such sale or conveyance may be made or which holders of Common Shares
receive pursuant to such liquidation, dissolution or winding-up, as the case
may be, that such holder of a Debenture would have been entitled to receive on
such reclassification, capital reorganization, consolidation, amalgamation,
arrangement or merger, sale or conveyance or liquidation, dissolution or
winding-up or other similar transaction, if, on the record date or the
effective date thereof, as the case may be, the holder had been the registered
holder of the number of Common Shares sought to be acquired by it and to which
it was entitled to acquire upon the exercise of the conversion right prior to
the effective date of such reclassification, capital reorganization,
consolidation, amalgamation, arrangement or merger, sale or conveyance or
liquidation, dissolution or winding-up or other similar transaction.  If determined appropriate by the Directors,
to give effect to or to evidence the provisions of this Section 6.5(d),
the Company, its successor, or such purchasing Person or other entity, as the
case may be, shall, prior to or contemporaneously with any such
reclassification, capital reorganization, consolidation, amalgamation, arrangement,
merger, sale or conveyance or liquidation, dissolution or winding-up or other
similar transaction, enter into an indenture which shall provide, to the extent
possible, for the application of the provisions set forth in this Indenture
with respect to the rights and interests thereafter of the holder of Debentures
to the end that the provisions set forth in this Indenture shall thereafter
correspondingly be made applicable, as nearly as may reasonably be, with
respect to the kind and amount of securities or property of the Company or
other securities or property to which a holder of Debentures is entitled on the
exercise of its acquisition rights thereafter. 
Any indenture entered into between the Company and the Debenture Trustee
pursuant to the provisions of this Section 6.5(d) shall be a
supplemental indenture entered into pursuant to the provisions of Article 16.  Any indenture entered into between the
Company, any successor to the Company or such purchasing Person or other
entity, the Company and the Debenture Trustee shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided in this Section 6.5(d) and which shall apply to successive
reclassifications, capital reorganizations, amalgamations, arrangements,
consolidations, mergers, sales or conveyances or other similar transactions.

 

(e)                                                          In any case in which this Section 6.5
shall require that an adjustment shall become effective immediately after a
record date for an event referred to herein, the Company may defer, until the
occurrence of such event, issuing to the holder of any Debenture 

 

56

 

converted after such record date and before the occurrence of such
event the additional Common Shares or other securities or property issuable
upon such conversion by reason of the adjustment required by such event before
giving effect to such adjustment; provided, however, that the Company shall
deliver to such holder an appropriate instrument evidencing such holder’s right
to receive such additional Common Shares or other securities or property upon
the occurrence of the event requiring such adjustment and the right to receive
any distributions made on such additional Common Shares or other securities or
property declared in favour of holders of record of Common Shares on and after
the Date of Conversion or such later date as such holder would, but for the
provisions of this Section 6.5(e), have become the holder of record of
such additional Common Shares pursuant to Section 6.4(b).

 

(f)                                                            The adjustments provided for in
this Section 6.5 are cumulative and shall apply to successive
subdivisions, redivisions, reductions, combinations, consolidations,
distributions, issues or other events resulting in any adjustment under the
provisions of this Section, provided that, notwithstanding any other provision
of this Section, no adjustment of the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Conversion Price then in effect; provided however, that any adjustments which
by reason of this Section 6.5(f) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.

 

(g)                                                         For the purpose of calculating the
number of Common Shares outstanding, Common Shares owned by or for the benefit
of the Company shall not be counted.

 

(h)                                                         In the event of any question
arising with respect to the adjustments provided in this Section 6.5, such
question shall be conclusively determined by a firm of chartered accountants
appointed by the Company and acceptable to the Debenture Trustee (who may be
the auditors of the Company); such accountants shall have access to all
necessary records of the Company and such determination shall be binding upon
the Company,
the Debenture
Trustee, and the Debentureholders.

 

(i)                                                             In case the Company shall take any
action, or any event shall occur, affecting the Common Shares other than action
described in this Section 6.5, which in the opinion of the Directors,
would materially affect the rights of Debentureholders, the Conversion Price
and the Common Shares or other securities or property issuable or deliverable
upon a conversion of Debentures, as applicable, shall be adjusted in such
manner and at such time, by action of the Directors, subject to, as required,
the prior written consent of the TSX (or, if the Debentures are not listed
thereon, such other exchange on which the Debentures are then listed), as the
Directors, in their sole discretion may determine to be equitable in the
circumstances.  Failure of the Directors
to make such an adjustment shall be conclusive evidence that they have
determined that it is equitable to make no adjustment in the circumstances.

 

(j)                                                             Subject to, as required, the prior
written consent of the TSX (or, if the Debentures are not listed thereon, such
other exchange on which the Debentures are then listed), no adjustment in the
Conversion Price shall be made in respect of any event described in Sections
6.5(a), 6.5(b) or 6.5(c) other than the events described in 6.5(a)(i) or

 

57

 

6.5(a)(ii) if the holders of the Debentures are entitled to
participate in such event on the same terms mutatis mutandis as though and with the same effect as if they
had converted their Debentures prior to the effective date or record date, as
the case may be, of such event.

 

(k)                                                          Except as stated above in this Section 6.5,
no adjustment will be made in the Conversion Price for any Debentures as a
result of the issuance of Common Shares at less than the Current Market Price
for such Common Shares on the date of issuance.

 

6.6                                                                               No
Requirement to Issue Fractional Common Shares

 

The Company shall not be required to cause
the issuance of fractional Common Shares upon the conversion of Debentures
pursuant to this Article.  If more than
one Debenture shall be surrendered for conversion at one time by the same
holder, the number of whole Common Shares issuable upon conversion thereof
shall be computed on the basis of the aggregate principal amount of such
Debentures to be converted.  If any
fractional interest in a Common Share would, except for the provisions of this
Section, be deliverable upon the conversion of any principal amount of
Debentures, the Company shall, in lieu of delivering, or causing the delivery
of, any certificate representing such fractional interest, make a cash payment
to the holder of such Debenture of an amount equal to the Current Market Price
of such fractional interest.

 

6.7                                                                               Company
to Reserve Common Shares

 

The Company covenants with the Debenture
Trustee that it will at all times reserve and keep available out of its
authorized Common Shares (if the number thereof is or becomes limited), solely
for the purpose of issuing such Common Shares in connection with a conversion
of Debentures, such number of Common Shares as shall then be deliverable by the
Company upon the conversion of all outstanding Debentures at that time, to
enable and permit the Company to perform its obligation hereunder to deliver
the requisite number of Common Shares to Debentureholders who exercise their
conversion rights hereunder.  The Company
covenants with the Debenture Trustee that all Common Shares, which shall be so
issuable, shall be duly and validly issued as fully-paid and non-assessable
upon receipt by the Company of the Conversion Price.  The Company further covenants with the
Debenture Trustee that it shall take all actions and do all things necessary or
desirable to enable and permit the Company, in accordance with applicable law,
to perform all of its obligations hereunder.

 

6.8                                                                               Cancellation
of Converted Debentures

 

All Debentures converted in whole or in
part under the provisions of this Article shall be forthwith delivered to
and cancelled by the Debenture Trustee and, subject to the provisions of Section 6.4
as to Debentures converted in part, no Debenture shall be issued in
substitution therefor.

 

6.9                                                                               Certificate
as to Adjustment

 

The Company shall from time to time
immediately after it has acquired actual knowledge of the occurrence of any
event which requires an adjustment or readjustment as provided in Section 6.5,
deliver a Certificate to the Debenture Trustee specifying the nature of the
event requiring the same and the amount of the adjustment necessitated thereby
and setting forth in reasonable detail the method of calculation and the facts
upon which such calculation is based, which 

 

58

 

certificate
and the amount of the adjustment specified therein may be relied upon by the
Debenture Trustee and shall be verified by an opinion of a nationally
recognized firm of chartered accountants appointed by the Company and
acceptable to the Debenture Trustee (who may be the auditors of  the Company) and shall be conclusive and
binding on all parties in interest.  When
so approved, the Company shall, except in respect of any subdivision,
redivision, reduction, combination or consolidation of Common Shares, forthwith
give notice to the Debentureholders in the manner provided in Section 14.2
specifying the event requiring such adjustment or readjustment and the results
thereof, including the resulting Conversion Price; provided that, if the
Company has given notice under this Section 6.9 covering all the relevant
facts in respect of such event and if the Debenture Trustee approves, no such
notice need be given under this Section 6.9.

 

6.10                                                                        Notice
of Special Matters

 

The Company covenants with the Debenture
Trustee that so long as any Debenture remains outstanding, it will give written
notice to the Debenture Trustee, and to the Debentureholders in the manner
provided in Section 14.2, of its intention to fix a record date for any
event referred to in Section 6.5(a), (b) or (c) or (d) (other
than the subdivision, redivision, reduction, combination or consolidation of
its Common Shares) which may give rise to an adjustment in the Conversion
Price, and, in each case, such notice shall specify the particulars of such
event and the record date and the effective date for such event; provided that
the Company shall only be required to specify in such notice such particulars
of such event as shall have been fixed and determined on the date on which such
notice is given.  Such notice shall be given
not less than fourteen (14) days in each case prior to such applicable record
date.

 

6.11                                                                        Protection
of Debenture Trustee

 

Subject to Section 15.3,
the Debenture Trustee:

 

(a)                                                          shall not at any time be under any
duty or responsibility to any Debentureholder to determine whether any facts
exist which may require any adjustment in the Conversion Price, or with respect
to the nature or extent of any such adjustment when made, or with respect to
the method employed in making the same;

 

(b)                                                         shall not be accountable with
respect to the validity or value (or the kind or amount) of any Common Shares
or other securities or property which may at any time be issued or delivered
upon the conversion of any Debenture; and

 

(c)                                                          shall not be responsible for any
failure of the Company to make any cash payment or to issue, transfer or
deliver Common Shares upon the surrender of any Debenture for the purpose of
conversion, or to comply with any of the covenants contained in this Article.

 

6.12                                                                        Payment
of Cash in Lieu of Common Shares

 

Upon conversion, the Company may offer and
the converting holder may agree to the delivery of cash for all or a portion of
the Debentures surrendered in lieu of Common Shares.

 

59

 

ARTICLE 7

COVENANTS OF THE COMPANY

 

The Company hereby covenants and agrees
with the Debenture Trustee for the benefit of the Debenture Trustee and the
Debentureholders, that so long as any Debentures remain outstanding:

 

7.1                                                                               To
Pay Principal and Interest

 

Subject at all times to the provisions of Article 5
hereof, the Company will duly and punctually pay or cause to be paid to every
Debentureholder the principal of and interest accrued on the Debentures of
which it is the holder on the dates, at the places and in the manner mentioned
herein and in the Debentures.

 

7.2                                                                               To
Pay Debenture Trustee’s Remuneration

 

The Company will pay the Debenture Trustee
reasonable remuneration for its services as Debenture Trustee hereunder and
will repay to the Debenture Trustee on demand all monies which shall have been
paid by the Debenture Trustee in connection with the execution of the trusts
hereby created and such monies including the Debenture Trustee’s remuneration,
shall be payable out of any funds coming into the possession of the Debenture
Trustee in priority to any of the Debentures or interest thereon.  Any amount due under this Section 7.2
and unpaid thirty days after written request for such payment shall bear
interest from the expiration of such thirty days at a rate per annum equal to
the then rate charged by the Debenture Trustee under similar indentures from
time to time, payable on demand.  Such
remuneration shall continue to be payable until the trusts hereof be finally
wound up and whether or not the trusts of this Indenture shall be in the course
of administration by or under the direction of a court of competent
jurisdiction.

 

7.3                                                                               To
Give Notice of Default

 

The Company shall notify the Debenture
Trustee in writing immediately upon obtaining knowledge of any Event of Default
hereunder.

 

7.4                                                                               Preservation
of Existence, etc.

 

Subject to Article 11 hereof, the
Company shall, and shall cause each of its Subsidiaries in which it directly or
indirectly owns more than 50% of the total voting or equity interests and (to
the extent that the Company has any direct or indirect contractual or other
approval rights over the actions of such Subsidiary) to preserve, renew and
maintain in full force and effect its legal existence and good standing under
the laws of the jurisdiction of its organization; and, except where failure to
do so would not have a Material Adverse Effect, take all reasonable action to
maintain all rights, privileges, permits, licenses and franchises necessary or
desirable in the normal conduct of its business.

 

60

 

7.5                                                                               Keeping
of Books

 

The Company will keep or cause to be kept
proper books of record and account, in which full and correct entries shall be
made of all financial transactions and the assets and business of the Company
in accordance with generally accepted accounting principles.

 

7.6                                                                               Reporting
Requirements

 

In the event that the Company has Global
Debentures outstanding, the Company  will
provide the Depository with copies of continuous disclosure documents furnished
to holders of its Common Shares under Applicable Securities Legislation.

 

7.7                                                                               Performance
of Covenants by Debenture Trustee

 

If the Company shall fail to perform any of
its covenants contained in this Indenture, the Debenture Trustee may notify the
Debentureholders of such failure on the part of the Company or may itself
perform any of the covenants capable of being performed by it, but (subject to
Sections 8.2 and 15.3) shall be under no obligation to do so or to notify the
Debentureholders.  All sums so expended
or advanced by the Debenture Trustee shall be repayable as provided in Section 7.2.  No such performance, expenditure or advance
by the Debenture Trustee shall be deemed to relieve the Company of any default
hereunder or from its continuing indebtedness.

 

7.8                                                                               Maintain
Listing

 

The Company shall use commercially
reasonable efforts to ensure that the Common Shares and the Debentures,
respectively, are listed and posted for trading on the TSX and/or the New York
Stock Exchange, and shall maintain such listing and posting for trading of the
Common Shares and the Debentures, respectively, on the TSX and/or the New York
Stock Exchange, and to maintain the Company’s status as a “reporting issuer”
not in default of Applicable Securities Legislation; provided that the
foregoing covenant shall not prevent or restrict the Company from carrying out
a transaction to which Article 11 would apply if carried out in compliance
with Article 11 even if as a result of such transaction the Company ceases
to be a “reporting issuer” in all or any of the provinces and territories of
Canada or the Common Shares or Debentures cease to be listed on the TSX or any
other stock exchange.

 

ARTICLE 8

DEFAULT

 

8.1                                                                               Events
of Default

 

Each of the
following events constitutes, and is herein sometimes referred to as, an “Event of Default”:

 

(a)                                                          failure for 15 days to pay
interest on the Debentures when due;

 

(b)                                                         failure to pay principal or
premium, if any, on the Debentures when due whether at maturity, upon
redemption, by declaration or otherwise (whether such payment is due in cash,
Common Shares or other securities or property or a combination thereof);

 

61

 

(c)                                                          default in the delivery, when due,
of all cash and any Common Shares or other consideration, including any Make Whole
Premium, payable on conversion with respect to the Debentures, which default
continues for 15 days;

 

(d)                                                         the Company fails to comply with Article 11
hereof;

 

(e)                                                          the Company, pursuant to or within
the meaning of any Bankruptcy Law:

 

(i)                                     commences a voluntary case or
proceeding;

 

(ii)                                  consents to the entry of an
order for relief against it in an involuntary case or proceeding;

 

(iii)                               consents to the appointment of
a custodian of it or for any substantial part of its property; or

 

(iv)                              makes a general assignment for
the benefit of its creditors;

 

or takes any comparable action under any
foreign laws relating to insolvency;

 

(f)                                                            a court of competent jurisdiction
enters an order or decree under any Bankruptcy Law that:

 

(i)                                     is for relief against the
Company in an involuntary case;

 

(ii)                                  appoints a custodian of the
Company or for any substantial part of the property of the Company; or

 

(iii)                               orders the winding up or
liquidation of the Company;

 

or any similar relief is granted under any
foreign laws and the order or decree remains unstayed and in effect for 90
days;

 

(g)                                                         if a resolution is passed for the
winding-up or liquidation of the Company except in the course of carrying out
or pursuant to a transaction in respect of which the conditions of Section 11.1
are duly observed and performed;

 

(h)                                                         if, after the date of this
Indenture, any proceedings with respect to the Company are taken with respect
to a compromise or arrangement, with respect to creditors of the Company
generally, under the applicable legislation of any jurisdiction; or

 

(i)                                                             default in the observance or
performance of any other material covenant of this Indenture by the Company for
a period of 30 days after notice in writing has been given by the Debenture
Trustee to the Company specifying such default and requiring the Company to
remedy such default.

 

In each and every such event the Debenture
Trustee may, in its discretion, and shall, upon receipt of a request in writing
signed by the holders of not less than 25% in principal amount of the Debentures
then outstanding, and upon being indemnified to its reasonable satisfaction
against all fees, costs, expenses and liabilities to be incurred, subject to
the provisions of Section 8.3, by notice 

 

62

 

in writing to
the Company declare the principal of (and premium, if any) and interest on all
Debentures then outstanding and all other monies outstanding hereunder to be
due and payable and the same shall forthwith become immediately due and payable
to the Debenture Trustee, and the Company shall subject to Article 5
forthwith pay to the Debenture Trustee for the benefit of the Debentureholders
such principal, premium, if any, accrued and unpaid interest and interest on
amounts in default on such Debenture and all other monies outstanding
hereunder, together with subsequent interest at the rate borne by the
Debentures on such principal, interest and such other monies from the date of
such declaration until payment is received by the Debenture Trustee, such subsequent
interest to be payable at the times and places and in the monies mentioned in
and according to the tenor of the Debentures. 
Such payment when made shall be deemed to have been made in discharge of
the Company’s obligations hereunder and any monies so received by the Debenture
Trustee shall be applied in the manner provided in Section 8.6.

 

For greater certainty, for the purposes of
this Section 8.1, a series of Debentures shall be in default in respect of
an Event of Default if such Event of Default relates to a default in the
payment of principal, premium, if any, or interest on the Debentures of such
series in which case references to Debentures in this Section 8.1 refer to
Debentures of that particular series.

 

For purposes of this Article 8, where
the Event of Default refers to an Event of Default with respect to a particular
series of Debentures as described in this Section 8.1, then this Article 8
shall apply mutatis mutandis to
the Debentures of such series and references in this Article 8 to the
Debentures shall mean Debentures of the particular series and references to the
Debentureholders shall refer to the Debentureholders of the particular series,
as applicable.

 

8.2                                                                               Notice
of Events of Default

 

If an Event of Default shall occur and be continuing
the Debenture Trustee shall, within 30 days after it receives written notice of
the occurrence of such Event of Default, give notice of such Event of Default
to the Debentureholders in the manner provided in Section 14.1; provided
that the Debenture Trustee shall be entitled to rely on such notice and shall
not be subject to any liability as a result of its inadvertent failure to
provide such notice.  Notwithstanding the
foregoing, unless the Debenture Trustee shall have been requested to do so by
the holders of at least 25% of the principal amount of the Debentures then
outstanding, the Debenture Trustee shall not be required to give such notice if
the Debenture Trustee in good faith shall have determined that the withholding
of such notice is in the best interests of the Debentureholders and shall have
so advised the Company in writing.

 

When notice of the occurrence of an Event
of Default has been given and the Event of Default is thereafter cured, notice
that the Event of Default is no longer continuing shall be given by the
Debenture Trustee to the Debentureholders within 15 days after the Debenture
Trustee receives written notice that the Event of Default has been cured.

 

8.3                                                                               Waiver
of Default

 

Upon the
happening of any Event of Default hereunder:

 

(a)                                                          the holders of the Debentures
shall have the power (in addition to the powers exercisable by Extraordinary
Resolution as hereinafter provided) by requisition in writing by the holders of
a majority of the principal amount of Debentures then 

 

63

 

outstanding or by Ordinary Resolution of Debentureholders at a meeting
held in accordance with Article 13 hereof, to instruct the Debenture
Trustee to waive any Event of Default and to cancel any declaration made by the
Debenture Trustee pursuant to Section 8.1 and the Debenture Trustee shall
thereupon waive the Event of Default and cancel such declaration, or either,
upon such terms and conditions as shall be prescribed in such requisition;
provided that notwithstanding the foregoing, if the Event of Default has
occurred by reason of the non-observance or non-performance by the Company of
any covenant applicable only to one or more series of Debentures, then the
holders of more than 50% of the principal amount of the outstanding Debentures
of that series shall be entitled to exercise the foregoing power and the
Debenture Trustee shall so act and it shall not be necessary to obtain a waiver
from the holders of any other series of Debentures; and

 

(b)                                                         the Debenture Trustee, so long as
it has not become bound to declare the principal and interest on the Debentures
then outstanding to be due and payable, or to obtain or enforce payment of the
same, shall have power to waive any Event of Default if, in the Debenture
Trustee’s opinion, relying on the opinion of Counsel, the same shall have been
cured or adequate satisfaction made therefor, and in such event to cancel any
such declaration theretofore made by the Debenture Trustee in the exercise of
its discretion, upon such terms and conditions as the Debenture Trustee may
deem advisable.

 

No such act or
omission either of the Debenture Trustee or of the Debentureholders shall
extend to or be taken in any manner whatsoever to affect any subsequent Event
of Default or the rights resulting therefrom.

 

8.4                                                                               Enforcement
by the Debenture Trustee

 

Subject to the provisions of Section 8.3
and to the provisions of any Extraordinary Resolution that may be passed by the
Debentureholders, if the Company shall fail to pay to the Debenture Trustee,
forthwith after the same shall have been declared to be due and payable under Section 8.1,
the principal of and premium (if any) and interest on all Debentures then
outstanding, together with any other amounts due hereunder, the Debenture Trustee
may in its discretion and shall upon receipt of a request in writing signed by
the holders of not less than 25% in principal amount of the Debentures then
outstanding and upon being funded and indemnified to its reasonable
satisfaction against all costs, expenses and liabilities to be incurred,
proceed in its name as trustee hereunder to obtain or enforce payment of such
principal of and premium (if any) and interest on all the Debentures then
outstanding together with any other amounts due hereunder by such proceedings
authorized by this Indenture or by law or equity as the Debenture Trustee in
such request shall have been directed to take, or if such request contains no
such direction, or if the Debenture Trustee shall act without such request, then
by such proceedings authorized by this Indenture or by suit at law or in equity
as the Debenture Trustee shall deem expedient.

 

The Debenture Trustee shall be entitled and
empowered, either in its own name or as trustee of an express trust, or as
attorney-in-fact for the holders of the Debentures, or in any one or more of
such capacities, to file such proof of debt, amendment of proof of debt, claim,
petition or other document as may be necessary or advisable in order to have
the claims of the Debenture Trustee and of the holders of the Debentures
allowed in any insolvency, bankruptcy, liquidation or other judicial
proceedings relative to the Company or its creditors or relative to or
affecting its

 

64

 

property.  The Debenture Trustee
is hereby irrevocably appointed (and the successive respective holders of the
Debentures by taking and holding the same shall be conclusively deemed to have
so appointed the Debenture Trustee) the true and lawful attorney-in-fact of the
respective holders of the Debentures with authority to make and file in the
respective names of the holders of the Debentures or on behalf of the holders
of the Debentures as a class, subject to deduction from any such claims of the
amounts of any claims filed by any of the holders of the Debentures themselves,
any proof of debt, amendment of proof of debt, claim, petition or other
document in any such proceedings and to receive payment of any sums becoming
distributable on account thereof, and to execute any such other papers and
documents and to do and perform any and all such acts and things for and on
behalf of such holders of the Debentures, as may be necessary or advisable in
the opinion of the Debenture Trustee, in order to have the respective claims of
the Debenture Trustee and of the holders of the Debentures against the Company
or its property allowed in any such proceeding, and to receive payment of or on
account of such claims; provided, however, that subject to Section 8.3,  nothing contained in this Indenture shall
be deemed to give to the Debenture Trustee, unless so authorized by
Extraordinary Resolution, any right to accept or consent to any plan of
reorganization or otherwise by action of any character in such proceeding to waive
or change in any way any right of any Debentureholder.

 

The
Debenture Trustee shall also have the power at any time and from time to time
to institute and to maintain such suits and proceedings as it may be advised
shall be necessary or advisable to preserve and protect its interests and the
interests of the Debentureholders.

 

All
rights of action hereunder may be enforced by the Debenture Trustee without the
possession of any of the Debentures or the production thereof at the trial or
other proceedings relating thereto.  Any
such suit or proceeding instituted by the Debenture Trustee shall be brought in
the name of the Debenture Trustee as trustee of an express trust, and any
recovery of judgment shall be for the rateable benefit of the holders of the
Debentures subject to the provisions of this Indenture.  In any proceeding brought by the Debenture
Trustee (and also any proceeding in which a declaratory judgment of a court may
be sought as to the interpretation or construction of any provision of this Indenture,
to which the Debenture Trustee shall be a party) the Debenture Trustee shall be
held to represent all the holders of the Debentures, and it shall not be
necessary to make any holders of the Debentures parties to any such proceeding.

 

8.5                                                                               No
Suits by Debentureholders

 

No
holder of any Debenture shall have any right to institute any action, suit or
proceeding at law or in equity for the purpose of enforcing payment of the
principal of or premium (if any) or interest on the Debentures or for the
execution of any trust or power hereunder or for the appointment of a
liquidator or receiver or for a receiving order under the Bankruptcy and Insolvency Act (Canada) or
any other bankruptcy, insolvency or analogous laws, or to have the Company
wound up or to file or prove a claim in any liquidation or bankruptcy
proceeding or for any other remedy hereunder, unless: (a) such holder
shall previously have given to the Debenture Trustee written notice of the
happening of an Event of Default hereunder; and (b) the Debentureholders
by Extraordinary Resolution or by written instrument signed by the holders of
at least 25% in principal amount of the Debentures then outstanding shall have
made a request to the Debenture Trustee and the Debenture Trustee shall have
been afforded reasonable opportunity either itself to proceed to exercise the
powers hereinbefore granted or to institute an action, suit or proceeding in
its name for such purpose; and (c) the Debentureholders or any of them
shall have furnished to the Debenture Trustee, when so requested by the
Debenture Trustee, sufficient funds and security and indemnity satisfactory to
it 

 

65

 

against the costs, expenses and liabilities to be incurred therein or
thereby; and (d) the Debenture Trustee shall have failed to act within a
reasonable time after such notification, request and offer of indemnity and
such notification, request and offer of indemnity are hereby declared in every
such case, at the option of the Debenture Trustee, to be conditions precedent
to any such proceeding or for any other remedy hereunder by or on behalf of the
holder of any Debentures.

 

8.6                                                                               Application
of Monies by Debenture Trustee

 

(a)                                                          Except as herein otherwise
expressly provided, any monies received by the Debenture Trustee from the
Company pursuant to the foregoing provisions of this Article 8, or as a
result of legal or other proceedings or from any trustee in bankruptcy or
liquidator of the Company, shall be applied, together with any other monies in
the hands of the Debenture Trustee available for such purpose, as follows:

 

(i)                                     first, in payment or in
reimbursement to the Debenture Trustee of its compensation, costs, charges,
expenses, borrowings, advances or other monies furnished or provided by or at
the instance of the Debenture Trustee in or about the execution of its trusts
under, or otherwise in relation to, this Indenture, with interest thereon as
herein provided;

 

(ii)                                  second, but subject as
hereinafter in this Section 8.6 provided, in payment, rateably and
proportionately to (and in the case of applicable withholding taxes, if any, on
behalf of) the holders of Debentures, of the principal of and premium (if any)
and accrued and unpaid interest and interest on amounts in default on the
Debentures which shall then be outstanding in the priority of principal first
and then premium and then accrued and unpaid interest and interest on amounts
in default unless otherwise directed by Extraordinary Resolution and in that
case in such order or priority as between principal, premium (if any) and
interest as may be directed by such resolution; and

 

(iii)                               third, in payment of the
surplus, if any, of such monies to the Company or its assigns; provided,
however, that no payment shall be made pursuant to clause (ii) above in
respect of the principal, premium or interest on any Debenture held, directly
or indirectly, by or for the benefit of the Company or any of its Significant
Entities (other than any Debenture pledged for value and in good faith to a
person other than the Company or any of its Significant Entities but only to
the extent of such person’s interest therein) except subject to the prior
payment in full of the principal, premium (if any) and interest (if any) on all
Debentures which are not so held.

 

(b)                                                         The Debenture Trustee shall
not be bound to apply or make any partial or interim payment of any monies
coming into its hands if the amount so received by it, after reserving thereout
such amount as the Debenture Trustee may think necessary to provide for the
payments mentioned in Section 8.6(a), is insufficient to make a
distribution of at least 2% of the aggregate principal amount of the
outstanding Debentures, but it may retain the money so received by it and
invest or deposit the same as provided in Section 15.9 until the money or
the investments representing the same, with the income derived therefrom,
together with any other monies for the time being under its control shall be
sufficient for the said purpose or until it shall consider 

 

66

 

it advisable to apply the same in the manner
hereinbefore set forth.  The foregoing
shall, however, not apply to a final payment or distribution hereunder.

 

8.7                                                                               Notice
of Payment by Debenture Trustee

 

Not
less than 15 days notice shall be given in the manner provided in Section 14.2
by the Debenture Trustee to the Debentureholders of any payment to be made
under this Article 8.  Such notice
shall state the time when and place where such payment is to be made and also
the liability under this Indenture to which it is to be applied.  After the day so fixed, unless payment shall
have been duly demanded and have been refused, the Debentureholders will be
entitled to interest only on the balance (if any) of the principal monies,
premium (if any) and interest due (if any) to them, respectively, on the
Debentures, after deduction of the respective amounts payable in respect
thereof on the day so fixed.

 

8.8                                                                               Debenture
Trustee May Demand Production of Debentures

 

The
Debenture Trustee shall have the right to demand production of the Debentures
in respect of which any payment of principal, interest or premium required by
this Article 8 is made and may cause to be endorsed on the same a
memorandum of the amount so paid and the date of payment, but the Debenture
Trustee may, in its discretion, dispense with such production and endorsement,
upon such indemnity being given to it and to the Company as the Debenture
Trustee shall deem sufficient.

 

8.9                                                                               Remedies
Cumulative

 

No
remedy herein conferred upon or reserved to the Debenture Trustee, or upon or
to the holders of Debentures is intended to be exclusive of any other remedy,
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now existing or hereafter to exist by law
or by statute.

 

8.10                                                                        Judgment
Against the Company

 

The
Company covenants and agrees with the Debenture Trustee that, in case of any
judicial or other proceedings to enforce the rights of the Debentureholders,
judgment may be rendered against it in favour of the Debentureholders or in
favour of the Debenture Trustee, as trustee for the Debentureholders, for any
amount which may remain due in respect of the Debentures and premium (if any)
and the interest thereon and any other monies owing hereunder.

 

67

 

8.11                                                                        Immunity
of Directors, Officers and Others

 

The Debentureholders and the Debenture Trustee hereby
waive and release any right, cause of action or remedy now or hereafter
existing in any jurisdiction against any past, present or future officer,
director or employee of the Company or holder of Common Shares of the Company
or of any successor for the payment of the principal of or premium or interest
on any of the Debentures or on any covenant, agreement, representation or
warranty by the Company contained herein or in the Debentures.

 

8.12                                                                        Subordination

 

This Article 8
and the powers, rights and authority granted to the Debenture Trustee
hereunder, are subject to the terms and provisions of Article 5.

 

ARTICLE 9

SATISFACTION AND DISCHARGE

 

9.1                                                                               Cancellation
and Destruction

 

Subject
to applicable retention requirements, all Debentures shall forthwith after
payment thereof be delivered to the Debenture Trustee and cancelled by it.  All Debentures cancelled or required to be
cancelled under this or any other provision of this Indenture shall be
destroyed by the Debenture Trustee and, if required by the Company, the Debenture
Trustee shall furnish to it a destruction certificate setting out the
designating numbers of the Debentures so destroyed.

 

9.2                                                                               Non-Presentation
of Debentures

 

In case
the holder of any Debenture shall fail to present the same for payment on the
date on which the principal, premium (if any) or the interest thereon or
represented thereby becomes payable either at maturity or otherwise or shall
not accept payment on account thereof and give such receipt therefor, if any,
as the Debenture Trustee may require:

 

(a)                                                          the Company shall be entitled
to pay or deliver to the Debenture Trustee and direct the Debenture Trustee to
set aside;

 

(b)                                                         in respect of monies in the
hands of the Debenture Trustee which may or should be applied to the payment of
the Debentures, the Company shall be entitled to direct the Debenture Trustee
to set aside; or

 

(c)                                                          if the redemption was pursuant
to notice given by the Debenture Trustee, the Debenture Trustee may itself set
aside the monies or Common Shares, as the case may be (after deduction of any
applicable withholding taxes), in trust to be paid or delivered to the holder
of such Debenture upon due presentation or surrender thereof in accordance with
the provisions of this Indenture; and thereupon the principal or premium (if
any) or the interest payable on or represented by each Debenture in respect
whereof such monies or Common Shares have been set aside shall be deemed to
have been paid and the holder thereof shall thereafter have no right in respect
thereof except that of receiving delivery and payment of the monies or Common
Shares, if applicable, (less applicable withholding taxes, if any), so set
aside by the 

 

68

 

Debenture Trustee upon due presentation and surrender
thereof, subject always to Section 9.3.

 

9.3                                                                               Repayment
of Unclaimed Monies

 

Subject to applicable law, any monies set aside under Section 9.2
and not claimed by and paid to holders of Debentures as provided in Section 9.2
within six years after the date of such setting aside shall be repaid and
delivered to the Company by the Debenture Trustee and thereupon the Debenture
Trustee shall be released from all further liability with respect to such
monies or Common Shares, if applicable, and thereafter the holders of the
Debentures in respect of which such monies or Common Shares, if applicable,
were so repaid to the Company shall have no rights in respect thereof except to
obtain payment and delivery of the monies or Common Shares, if applicable, from
the Company subject to any limitation provided by the laws of the Province of
Ontario.  Notwithstanding the foregoing,
the Debenture Trustee will pay any remaining funds prior to the expiry of six
years after the setting aside described in Section 9.2 to the Company upon
receipt from the Company, of an unconditional letter of credit from a Canadian
chartered bank in an amount equal to or in excess of the amount of the
remaining funds. If the remaining funds are paid to the Company prior to the
expiry of ten years after such setting aside, the Company shall reimburse the
Debenture Trustee for any amounts so set aside which are required to be paid by
the Debenture Trustee to a holder of a Debenture after the date of such payment
of the remaining funds to the Company but prior to ten years after such setting
aside.

 

9.4                                                                               Discharge

 

The
Debenture Trustee shall at the written request of the Company release and
discharge this Indenture and execute and deliver such instruments as it shall
be advised by Counsel are requisite for that purpose and to release the Company
from its covenants herein contained (other than the provisions relating to the
indemnification of the Debenture Trustee), upon proof being given to the
reasonable satisfaction of the Debenture Trustee that the principal and premium
(if any) of and interest (including interest on amounts in default, if any), on
all the Debentures and all other monies payable hereunder have been paid or
satisfied or that all the Debentures having matured or having been duly called
for redemption, payment of the principal of and interest (including interest on
amounts in default, if any) on such Debentures and of all other monies payable
hereunder has been duly and effectually provided for in accordance with the
provisions hereof.

 

9.5                                                                               Satisfaction

 

(a)                                                          The Company shall be deemed to
have fully paid, satisfied and discharged all of the outstanding Debentures of
any series and the Debenture Trustee, at the expense of the Company, shall
execute and deliver proper instruments acknowledging the full payment,
satisfaction and discharge of such Debentures, when, with respect to all of the
outstanding Debentures or all of the outstanding Debentures of any series, as
applicable, either:

 

(i)                                     the Company has deposited or
caused to be deposited with the Debenture Trustee as trust funds or property in
trust for the purpose of making payment on such Debentures, an amount in money
or Common Shares, if applicable, sufficient to pay, satisfy and discharge the
entire amount of principal, premium, if any, and interest, if any, to maturity
or any repayment date or 

 

69

 

Redemption Dates, or any Change of Control Purchase
Date or upon conversion or otherwise, as the case may be, of such Debentures
(including the maximum amount that may be payable as a Make Whole Premium); or

 

(ii)                                  the Company has deposited or
caused to be deposited with the Debenture Trustee as trust property in trust
for the purpose of making payment on such Debentures:

 

(A)                              if the Debentures are issued
in Canadian dollars, such amount in Canadian dollars of direct obligations of,
or obligations the principal and interest of which are guaranteed by, the
Government of Canada or Common Shares, if applicable; or

 

(B)                                if the Debentures are issued
in a currency other than Canadian Dollars, cash in the currency in which the
Debentures are payable and/or such amount in such currency of direct
obligations of, or obligations the principal and interest of which are
guaranteed by, the Government of Canada or the government that issued the
currency in which the Debentures are payable or Common Shares, if applicable,

 

as will, together with the income to accrue thereon
and reinvestment thereof, be sufficient to pay and discharge the entire amount
of principal and accrued and unpaid interest to maturity or any repayment date,
as the case may be, of all such Debentures, provided that, for the purposes of Section 9.5(a)(ii)(B),
the Debenture Trustee will be entitled to rely on an opinion of Counsel or such
other advisor satisfactory to it in making such a determination; or

 

(iii)                               all Debentures authenticated
and delivered (other than (A) Debentures which have been destroyed, lost
or stolen and which have been replaced or paid as provided in Section 2.9
and (B) Debentures for whose payment has been deposited in trust and
thereafter repaid to the Company as provided in Section 9.3) have been
delivered to the Debenture Trustee for cancellation;

 

so long as in any such event:

 

(iv)                              the Company has paid, caused
to be paid or made provisions to the satisfaction of the Debenture Trustee for
the payment of all other sums payable or which may be payable (including the
maximum amount that may be payable as a Make Whole Premium) with respect to all
of such Debentures (together with all applicable expenses of the Debenture Trustee
in connection with the payment of such Debentures); and

 

(v)                                 the Company has delivered to
the Debenture Trustee a Certificate stating that all conditions precedent
herein provided relating to the payment, satisfaction and discharge of all such
Debentures have been complied with.

 

Any deposits with the Debenture Trustee referred to in
this Section 9.5 shall be irrevocable, subject to Section 9.6, and
shall be made under the terms of an escrow and/or trust agreement in form and
substance satisfactory to the Debenture Trustee 
and the Company and which provides for the due and punctual payment of
the principal of, and interest and premium, if any, on the Debentures being
satisfied.  In the event that the
Debenture Trustee enters into any such agreement contemplated by this Section 9.5(a),
the Debenture Trustee shall be deemed to have completely and 

 

70

 

satisfactorily discharged its duties and obligations
under this indenture with respect to the Debentures being satisfied and all
future duties and obligations of the Debenture Trustee with respect to the
satisfied Debentures shall be governed solely pursuant to the terms of the new
escrow and/or trust agreement, as applicable.

 

(b)                                                         Notwithstanding anything to the
contrary in Section 9.5(a), the Debenture Trustee shall not be obligated
to accept holdings of any nature or kind which it does not hold for its clients
in the ordinary course of business.

 

(c)                                                          Upon the satisfaction of the
conditions set forth in this Section 9.5 with respect to all the
outstanding Debentures, or all the outstanding Debentures of any series, as
applicable, the terms and conditions of the Debentures, including the terms and
conditions with respect thereto set forth in this Indenture (other than those
contained in Article 2, Article 4, Section 15.18 and the other
provisions of this Indenture pertaining to the foregoing provisions) shall no
longer be binding upon or applicable to the Company.

 

(d)                                                         Any funds or obligations
deposited with the Debenture Trustee pursuant to this Section 9.5 shall be
denominated in the currency or denomination of the Debentures in respect of
which such deposit is made.

 

(e)                                                          If the Debenture Trustee is
unable to apply any money or securities in accordance with this Section 9.5
by reason of any legal proceeding or any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company’s obligations under this Indenture and the affected
Debentures shall be revived and reinstated as though no money or securities had
been deposited pursuant to this Section 9.5 until such time as the
Debenture Trustee is permitted to apply all such money or securities in
accordance with this Section 9.5, provided that if the Company has made
any payment in respect of principal, premium or interest on Debentures or, as
applicable, other amounts because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the holders of such Debentures to
receive such payment from the money or securities held by the Debenture
Trustee.

 

9.6                                                                               Continuance
of Rights, Duties and Obligations

 

Where
trust funds or trust property have been deposited pursuant to Section 9.5,
the holders of Debentures and the Company shall continue to have and be subject
to their respective rights, duties and obligations under Article 2, Article 4,
Section 15.18 and the other provisions of this Indenture pertaining to the
foregoing provisions.

 

ARTICLE 10

COMMON SHARE INTEREST PAYMENT ELECTION

 

10.1                                                                        Common
Share Interest Payment Election

 

(a)                                                          Provided that no Event of
Default has occurred and is continuing and that all necessary regulatory
approvals have been obtained (including any required approval of any stock
exchange on which the Debentures or Common Shares are then listed), 

 

71

 

the Company shall have the right, at any time and from
time to time, to make a Common Share Interest Payment Election in respect of
any Interest Obligation, in whole or in part, by delivering a Common Share
Interest Payment Election Notice to the Debenture Trustee no later than the
earlier of: (i) the date required by applicable law or the rules of
any stock exchange on which the Debentures or Common Shares are then listed,
and (ii) the day which is 15 Business Days prior to the Interest Payment
Date to which the Common Share Interest Payment Election relates.

 

(b)                                                         Upon receipt of a Common Share
Interest Payment Election Notice, the Debenture Trustee shall, as directed in
writing by the Company, as agent of the Company, in accordance with this Article 10
and such Common Share Interest Payment Election Notice: (i) deliver Common
Share Bid Requests to the investment banks, brokers or dealers (each, a “Broker”) identified by the Company,
in its absolute discretion, in the Common Share Interest Payment Election
Notice, or (ii) agree to the Company establishing an account or accounts
(in the name of the Debenture Trustee, if necessary) with a Broker identified
by the Company, in its absolute discretion, in the Common Share Interest
Payment Election Notice for the purpose of such Broker selling Freely Tradeable
Common Shares on behalf of the Company in accordance with the terms hereof
(which Broker shall notify the Company and the Debenture Trustee as such Common
Shares are sold and the settlement rules prescribed by securities
regulatory policies shall apply in respect of the payment for such Common
Shares).  The Broker shall send copies of
the monthly statements and transaction slips in respect of all sales of Common
Shares to the Company (with a duplicate copy to the Debenture Trustee, or as it
may otherwise in writing direct), as soon as reasonably practicable after
preparation thereof.  All fees payable in
respect of such accounts shall be paid by the Company; provided, however, that
it shall be a condition precedent to the Company establishing such an account
with one or more Brokers that all necessary legal, regulatory and other
requirements have been satisfied by the Company and the Debenture Trustee, if
applicable, and the Company shall assume, to the maximum extent permitted
herein and at law, all responsibility for administering such account(s).

 

In
connection with the Common Share Interest Payment Election, the Debenture
Trustee shall have the power to: (i) accept delivery of the Common Shares
from the Company and process the Common Shares in accordance with the Common
Share Interest Payment Election Notice, (ii) accept bids with respect to,
and consummate sales of, such Common Shares, each as the Company shall direct
in its absolute discretion through the Broker identified by the Company in the
Common Share Interest Payment Election Notice, (iii) invest the proceeds
of such sales in Canadian Government Obligations which mature prior to the
applicable Interest Payment Date, (iv) deliver proceeds to holders of
Debentures to satisfy all or a portion of the Company’s Interest Obligations,
as directed by the Company in the Common Share Interest Payment Election Notice,
and (v) perform any other action necessarily incidental thereto as
directed by the Company in its absolute discretion.  The Common Share Interest Payment Election
Notice shall, where the Debenture Trustee delivers Common Share Bid Requests,
direct the Debenture Trustee to solicit and accept only, and each Common Share
Bid Request shall provide that the acceptance of any bid is conditional on the
acceptance of, sufficient bids to result in aggregate net proceeds from such
issue and sale of Common Shares which, together with the 

 

72

 

cash
payments to be made by the Company, if any, equal the Interest Obligation on
the Common Share Delivery Date.

 

(c)                                                          The Common Share Interest
Payment Election Notice shall provide confirmation from the Company that all
necessary regulatory approvals have been obtained and shall also provide for,
and all bids, if any, shall be subject to, the right of the Company, by
delivering written notice to the Debenture Trustee at any time prior to the
consummation of such delivery and sale of the Common Shares on the Common Share
Delivery Date, to withdraw the Common Share Interest Payment Election (which
shall have the effect of withdrawing each related Common Share Bid Request),
whereupon the Company shall be obliged to pay in cash the Interest Obligation
in respect of which the Common Share Interest Payment Election Notice has been
delivered.

 

(d)                                                         Any sale of Common Shares
pursuant to this Article 10 may be made to one or more Persons whose bids
are solicited, but all such sales with respect to a particular Common Share
Interest Payment Election shall take place concurrently on the Common Share
Delivery Date.

 

(e)                                                          The amount receivable in cash
by a holder of a Debenture in respect of the Interest Obligation or the
entitlement thereto will not be affected by whether or not the Company elects
to satisfy the Interest Obligation pursuant to a Common Share Interest Payment
Election.

 

(f)                                                            The Debenture Trustee shall
inform the Company promptly following receipt of any bid or bids for Common
Shares solicited pursuant to the Common Share Bid Requests.  The Debenture Trustee shall accept such bid
or bids as the Company, in its absolute discretion, shall direct by a Written
Direction, provided that the aggregate net proceeds of all sales of Common
Shares through the facilities of a registered broker/dealer resulting from the
acceptance of such bids, together with the amount of any cash payment by the
Company, on the Common Share Delivery Date, must be equal to the related Common
Share Interest Payment Election Amount in connection with any bids so
accepted.  The Company, the Debenture
Trustee (if required by the Company in its absolute discretion) and the
applicable bidders shall, not later than the Common Share Delivery Date, enter
into Common Share Purchase Agreements in a form satisfactory to the Debenture
Trustee and shall comply with all Applicable Securities Legislation, including
the securities rules and regulations of any stock exchange on which the
Debentures or Common Shares are then listed. 
The Company shall pay all fees and expenses in connection with the
Common Share Purchase Agreements including the fees and commissions charged by
the investment banks, brokers and dealers and the fees of the Debenture
Trustee.

 

(g)                                                         Provided that (i) all
conditions specified in each Common Share Purchase Agreement to the closing of
all sales thereunder have been satisfied, other than the delivery of the Common
Shares to be sold thereunder against payment of the purchase price thereof, and
(ii) the purchasers under each Common Share Purchase Agreement shall be
ready, willing and able to perform thereunder, in each case on the Common Share
Delivery Date, the Company shall, on the Common Share Delivery Date, deliver to
the Debenture Trustee the Common Shares to be sold on such date through the 

 

73

 

facilities of a registered broker/dealer, an amount in
cash equal to the value of any fractional Common Shares and a Certificate to
the effect that all conditions precedent to such sales, including those set
forth in this Indenture and in each Common Share Purchase Agreement, have been
satisfied.  Upon such deliveries, the
Debenture Trustee shall consummate such sales through the facilities of a
registered broker/dealer on such Common Share Delivery Date by the delivery of
the Common Shares to such purchasers against payment to the Debenture Trustee
in immediately available funds of the purchase price therefor in an aggregate
amount equal to the Common Share Interest Payment Election Amount (less any
amount attributable to any fractional Common Shares), whereupon the sole right
of a holder of Debentures to receive such holder’s portion of the Common Share
Interest Payment Election Amount will be to receive same from the Debenture
Trustee out of the proceeds of such sales of Common Shares plus any amount
received by the Debenture Trustee from the Company attributable to any
fractional Common Shares in full satisfaction of the Interest Obligation and
the holder will have no further recourse to the Company in respect of the
Interest Obligation.

 

(h)                                                         The Debenture Trustee shall,
on the Common Share Delivery Date, use the sale proceeds of the Common Shares
(together with any cash received from the Company in lieu of any fractional
Common Shares) to purchase, on the direction of the Company in writing,
Canadian Government Obligations which mature prior to the applicable Interest
Payment Date and which the Debenture Trustee is required to hold until maturity
(the “Common
Share Proceeds Investment”) and shall, on such date, deposit the balance, if
any, of such sale proceeds in the Property Account for such Debentures.  The Debenture Trustee shall hold such Common
Share Proceeds Investment (but not income earned thereon) under its exclusive
control in an irrevocable trust for the benefit of the holders of the
Debentures.  At least one Business Day
prior to the Interest Payment Date, the Debenture Trustee shall deposit amounts
from the proceeds of the Common Share Proceeds Investment in the Property
Account to bring the balance of the Property Account to the Common Share
Interest Payment Election Amount.  On the
Interest Payment Date, the Debenture Trustee shall pay the amount held in the Property
Account to the holders of record of the Debentures on the record date of such
Interest Payment Date (less any tax required to be withheld or deducted, if
any) and, provided that there is no Event of Default, shall remit amounts, if
any, in respect of income earned on the Common Share Proceeds Investment or
otherwise in excess of the Common Share Interest Payment Election Amount to the
Company.

 

(i)                                                             Neither the making of a Common
Share Payment Election nor the consummation of sales of Common Shares on a
Common Share Delivery Date shall (i) result in the holders of the
Debentures not being entitled to receive on the applicable Interest Payment
Date cash in an aggregate amount equal to the Interest Obligation payable on
such date or (ii) entitle or require such holders to receive any Freely
Tradeable Common Shares in satisfaction of such Interest Obligation.

 

(j)                                                             No fractional Common Shares
will be issued in satisfaction of interest but in lieu thereof the Company will
satisfy such fractional interest by a cash payment equal to the market price of
such fractional interest (less any tax required to be deducted, if any).

 

74

 

ARTICLE 11

SUCCESSORS

 

11.1                                                                        Company
may Consolidate, etc., only on Certain Terms

 

(a)                                                          The Company may not, without
the consent of the holders, consolidate with or amalgamate or merge with or
into, or undertake a reorganization or arrangement with, any Person (other than
a directly or indirectly wholly-owned Subsidiary of the Company) or sell,
convey, transfer or lease all or substantially all of the properties and assets
of the Company to another Person (other than a directly or indirectly
wholly-owned Subsidiary of the Company) unless:

 

(i)                                     the Person formed by such
consolidation or into which the Company is amalgamated or merged, or who is the
successor resulting from such reorganization or arrangement or the Person which
acquires by sale, conveyance, transfer or lease all or substantially all of the
properties and assets of the Company is a corporation, organized and existing
under the laws of Canada or any province or territory thereof or the laws of
the United States or any state thereof and such corporation (if other than the
Company or the continuing corporation resulting from such a transaction of the
Company with another corporation under the laws of Canada or any province or
territory thereof) expressly assumes, by an indenture supplemental hereto, executed
and delivered to the Trustee, in form satisfactory to the Trustee, the
obligations of the Company under the Debentures and this Indenture and the
performance or observance of every covenant and provision of this Indenture and
the Debentures required on the part of the Company to be performed or observed
and the conversion rights shall be provided for in accordance with Article 6,
by supplemental indenture satisfactory in form to the Trustee, executed and
delivered to the Trustee, by the Person (if other than the Company or the
continuing corporation resulting from such a transaction, formed by such
consolidation or into which the Company shall have been merged or who is the
successor or by the Person which shall have acquired the Company’s assets;

 

(ii)                                  after giving effect to such
transaction, no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have occurred and be
continuing; and

 

(iii)                               if the Company or the
continuing corporation resulting from such transaction will not be the
resulting, continuing or surviving corporation, the Company shall have, at or
prior to the effective date of such consolidation, amalgamation, merger or
sale, conveyance, transfer or lease, delivered to the Trustee a Certificate and
an opinion of Counsel, each stating that such consolidation, merger or transfer
or other transaction complies with this Article 11 and, if a supplemental
indenture is required in connection with such transaction, such supplemental indenture
complies with this Article 11, and that all conditions precedent herein
provided for relating to such transaction have been complied with.

 

75

 

(b)                                                         For purposes of the foregoing,
the sale, conveyance, transfer or lease (in a single transaction or a series of
related transactions) of the properties or assets of one or more Subsidiaries
of the Company (other than to the Company or another wholly-owned Subsidiary of
the Company), which, if such properties or assets were directly owned by the
Company, would constitute all or substantially all of the properties and assets
of the Company and its Subsidiaries, taken as a whole, shall be deemed to be
the sale, conveyance, transfer or lease of all or substantially all of the
properties and assets of the Company.

 

11.2                                                                        Successor
Substituted

 

Upon
any consolidation, reorganization or arrangement of the Company with, or
amalgamation or merger of the Company into, any other Person or any sale,
conveyance, transfer or lease of all or substantially all of the properties and
assets of the Company and its Subsidiaries, taken as a whole, in accordance
with Section 11.1, the successor Person formed by such transaction shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter, except in the case
of a lease, and except for obligations the predecessor Person may have under a
supplemental indenture entered into pursuant to Section 11.1(a)(iii), the
predecessor Person shall be relieved of all obligations and covenants under
this Indenture and the Debentures.

 

ARTICLE 12

COMPULSORY ACQUISITION

 

12.1                                                                        Definitions

 

In this Article:

 

(a)                                                          “Affiliate” and “Associate” shall have their respective
meanings set forth in the Securities Act (Ontario);

 

(b)                                                         “Dissenting
Debentureholders” means a Debentureholder who does not accept an Offer
referred to in Section 12.2 and includes any assignee of the Debenture of
a Debentureholder to whom such an Offer is made, whether or not such assignee
is recognized under this Indenture;

 

(c)                                                          “Offer” means an offer to acquire
outstanding Debentures where, as of the date of the offer to acquire, the
Debentures that are subject to the offer to acquire, together with the Offeror’s
Debentures, constitute in the aggregate 20% or more of the outstanding
principal amount of the Debentures;

 

(d)                                                         “offer to
acquire”
includes an offer to purchase, or a satisfaction of an offer to sell, an
acceptance of an offer to sell whether or not such offer to sell has been
solicited or any combination thereof and the Person accepting an offer to sell
shall be deemed to be making an offer to acquire to the Person that made the
offer to sell;

 

(e)                                                          “Offeror” means a Person, or two or
more Persons acting jointly or in concert, who make an Offer to acquire
Debentures;

 

76

 

(f)                                                            “Offeror’s
Debentures” means Debentures beneficially owned, or over which control or
direction is exercised, on the date of an Offer by the Offeror, any Affiliate
or Associate of the Offeror or any person or the Company acting jointly or in
concert with the Offeror; and

 

(g)                                                         “Offeror’s
Notice”
means the notice described in Section 12.3.

 

12.2                                                                        Offer
for Debentures

 

If an Offer for outstanding Debentures of a series
(other than Debentures held by or on behalf of the Offeror or an Affiliate or
Associate of the Offeror) is made and:

 

(a)                                                          not more than 4 months after
the date the Offer is made, the Offer is accepted by Debentureholders
representing at least 90% of the outstanding principal amount of the
Debentures, other than the Offeror’s Debentures;

 

(b)                                                         the Offeror is bound to take
up and pay for, or has taken up and paid for the Debentures of the
Debentureholders who accepted the Offer; and

 

(c)                                                          the Offeror complies with
Sections 12.3 and 12.5;

 

the
Offeror is entitled to acquire, and the Dissenting Debentureholders are
required to sell to the Offeror, the Debentures held by the Dissenting
Debentureholder for the same consideration per Debenture payable or paid, as
the case may be, under the Offer.

 

12.3                                                                        Offeror’s
Notice to Dissenting Debentureholders

 

Where
an Offeror is entitled to acquire Debentures held by Dissenting
Debentureholders pursuant to Section 12.2 and the Offeror wishes to
exercise such right, the Offeror shall send by registered mail within 10  days after the date of termination of the
Offer a notice (the “Offeror’s Notice”)
to each Dissenting Debentureholder stating that:

 

(a)                                                          Debentureholders holding at
least 90% of the principal amount of all outstanding Debentures, other than
Offeror’s Debentures, have accepted the Offer;

 

(b)                                                         the Offeror is bound to take
up and pay for, or has taken up and paid for, the Debentures of the
Debentureholders who accepted the Offer;

 

(c)                                                          Dissenting Debentureholders
must transfer their respective Debentures to the Offeror on the terms on which
the Offeror acquired the Debentures of the Debentureholders who accepted the Offer
within 21  days after the date of the sending of the Offeror’s
Notice; and

 

(d)                                                         Dissenting Debentureholders
must send their respective Debenture certificate(s) to the Trustee within
21 days after the date of the sending of the Offeror’s Notice.

 

12.4                                                                        Delivery
of Debenture Certificates

 

A
Dissenting Debentureholder to whom an Offeror’s Notice is sent pursuant to Section 12.3
shall, within 21  days after the
date of receiving the Offeror’s Notice with respect to the 

 

77

 

election in Section 12.3(c), in the case of Fully Registered
Debentures, send his or her Debenture certificate(s) to the Debenture
Trustee duly endorsed for transfer.

 

12.5                                                                        Payment
of Consideration to Debenture Trustee

 

Within
21  days after the Offeror sends an
Offeror’s Notice pursuant to Section 12.3, the Offeror shall pay or
transfer to the Debenture Trustee, or to such other person as the Debenture
Trustee may direct, the cash or other consideration that would be payable if
all Dissenting Debentureholders elected to accept the Offer in accordance with Section 12.3.  The acquisition by the Offeror of all
Debentures held by all Dissenting Debentureholders shall be effective as of the
time of such payment or transfer.

 

12.6                                                                        Consideration
to be held in Trust

 

The
Debenture Trustee, or the person directed by the Debenture Trustee, shall hold
in trust for the Dissenting Debentureholders the cash or other consideration
they or it receives under Section 12.5. 
The Debenture Trustee, or such person, shall deposit cash in a separate
account in a Canadian chartered bank, or other body corporate, which may
include an Affiliate of the Debenture Trustee, any of whose deposits are
insured by the Canada Deposit Insurance Corporation, and shall place other consideration
in the custody of a Canadian chartered bank or such other body corporate.

 

12.7                                                                        Completion
of Transfer of Debentures to Offeror

 

Within
30  days after the date of the
sending of an Offeror’s Notice pursuant to Section 12.3, the Debenture
Trustee, if the Offeror has complied with Section 12.5, shall:

 

(a)                                                          do all acts and things and
execute and cause to be executed all instruments as in the Debenture Trustee’s
opinion may be necessary or desirable to cause the transfer of the Debentures
of the Dissenting Debentureholders to the Offeror;

 

(b)                                                         send to each Dissenting
Debentureholder who has made or deemed to have made an election and, if
applicable has complied with Section 12.4, the consideration to which such
Dissenting Debentureholder is entitled under this Article 12 net of
applicable withholding taxes, if applicable; and

 

(c)                                                          send to each Dissenting
Debentureholder a notice stating that:

 

(i)                                     his or her Debentures have
been transferred to the Offeror;

 

(ii)                                  the Debenture Trustee or some
other Person designated in such notice are holding in trust the consideration
to which the Dissenting Debentureholder is entitled to receive for such
Debentures if the Debentureholder elected to receive the consideration payable
or paid under the Offer; and

 

(iii)                               the Debenture Trustee, or such
other Person, will send the consideration to such Dissenting Debentureholder as
soon as possible after receiving such Dissenting Debentureholder’s Debenture
certificate(s) or such other documents as the Debenture Trustee or such
other Person may require in lieu thereof,

 

78

 

and the
Debenture Trustee is hereby appointed the agent and attorney, and is granted
power of attorney with respect to the Debentures, of the Dissenting Debentureholders
for the purposes of giving effect to the foregoing provisions, including,
without limitation, the power and authority to execute such transfers as may be
necessary or desirable in respect of the book-entry only registration system of
the Depository.

 

12.8                                                                        Communication
of Offer to the Company

 

An
Offeror cannot make an Offer for Debentures unless, concurrent with the
communication of the Offer to any Debentureholder, a copy of the Offer is
provided to the Company.

 

ARTICLE 13

MEETINGS OF DEBENTUREHOLDERS

 

13.1                                                                        Right
to Convene Meeting

 

The
Debenture Trustee or the Company may at any time and from time to time, and the
Debenture Trustee shall, on receipt of a written request of the Company or a
written request signed by the holders of not less than 25% of the principal
amount of the Debentures then outstanding and upon receiving funding and being
indemnified to its reasonable satisfaction by the Company or by the
Debentureholders signing such request against the costs which may be incurred
in connection with the calling and holding of such meeting, convene a meeting
of the Debentureholders.  In the event of
the Debenture Trustee failing, within 30  days
after receipt of any such request and such funding and indemnification, to give
notice convening a meeting, the Company or such Debentureholders, as the case
may be, may convene such meeting.  Every
such meeting shall be held in the City of Toronto or at such other place as may
be approved or determined by the Debenture Trustee.

 

13.2                                                                        Notice
of Meetings

 

(a)                                                          At least 21 days notice of any
meeting shall be given to the Debentureholders in the manner provided in Section 14.2
and a copy of such notice shall be sent by post to the Debenture Trustee,
unless the meeting has been called by it. 
Such notice shall state the time when and the place where the meeting is
to be held and shall state briefly the general nature of the business to be
transacted thereat and it shall not be necessary for any such notice to set out
the terms of any resolution to be proposed or any of the provisions of this
Article.  The accidental omission to give
notice of a meeting to any holder of Debentures shall not invalidate any
resolution passed at any such meeting.  A
holder may waive notice of a meeting either before or after the meeting.

 

(b)                                                         If the business to be
transacted at any meeting by Extraordinary Resolution or otherwise, or any
action to be taken or power exercised by instrument in writing under Section 13.15,
especially affects the rights of holders of Debentures of one or more series in
a manner or to an extent differing in any material way from that in or to which
the rights of holders of Debentures of any other series are affected
(determined as provided in Sections 13.2(c) and (d)), then:

 

(i)                                     a reference to such fact,
indicating each series of Debentures in the opinion of the Debenture Trustee,
as advised by counsel, so especially affected 

 

79

 

(hereinafter referred to as the “especially
affected series”) shall be made in the notice of such meeting, and in
any such case the meeting shall be and be deemed to be and is herein referred
to as a “Serial
Meeting”;
and

 

(ii)                                  the holders of Debentures of
an especially affected series shall not be bound by any action taken at a Serial
Meeting or by instrument in writing under Section 13.15 unless in addition
to compliance with the other provisions of this Article 13:

 

(A)                              at such Serial Meeting: (I) there
are Debentureholders present in person or by proxy and representing at least
25% in principal amount of the Debentures then outstanding of such series,
subject to the provisions of this Article 13 as to quorum at adjourned
meetings; and (II) the resolution is passed by the affirmative vote of the
holders of more than 50% (or in the case of an Extraordinary Resolution not
less than 66 2/3%) of the principal amount of the Debentures of such series
then outstanding voted on the resolution; or

 

(B)                                in the case of action taken or
power exercised by instrument in writing under Section 13.15, such
instrument is signed in one or more counterparts by the holders of not less
than 66 2/3% in principal amount of the Debentures of such series then
outstanding.

 

(c)                                                          Subject to Section 13.2(d),
the determination as to whether any business to be transacted at a meeting of
Debentureholders, or any action to be taken or power to be exercised by
instrument in writing under Section 13.15, especially affects the rights
of the Debentureholders of one or more series in a manner or to an extent
differing in any material way from that in or to which it affects the rights of
Debentureholders of any other series (and is therefore an especially affected
series) shall be determined by an opinion of Counsel, which shall be binding on
all Debentureholders, the Debenture Trustee and the Company for all purposes
hereof.

 

(d)                                                         A proposal:

 

(i)                                     to extend the maturity of
Debentures of any particular series or to reduce the principal amount thereof,
the rate of interest or any redemption premium thereon or to impair any conversion
right thereof;

 

(ii)                                  to modify or terminate any
covenant or agreement which by its terms is effective only so long as
Debentures of a particular series are outstanding; or

 

(iii)                               to reduce with respect to
Debentureholders of any particular series any percentage stated in this Section 13.2
or Sections 13.4, 13.12 and 13.15,

 

shall be deemed to especially affect the rights of the
Debentureholders of such series in a manner differing in a material way from
that in which it affects the rights of holders of Debentures of any other
series, whether or not a similar extension, reduction, modification or
termination is proposed with respect to Debentures of any or all other series.

 

80

 

13.3                                                                        Chairman

 

Some
person, who need not be a Debentureholder, nominated in writing by the Company
(in case it convenes the meeting) or the Debenture Trustee (in any other case)
shall be chairman of the meeting and if no person is so nominated, or if the
person so nominated is not present within 15 minutes from the time fixed for
the holding of the meeting, a majority of the Debentureholders present in
person or by proxy shall choose some person present to be chairman.

 

13.4                                                                        Quorum

 

Subject
to the provisions of Section 13.12, at any meeting of the Debentureholders
a quorum shall consist of not less than two Debentureholders present in person
or by proxy and representing at least 25% in principal amount of the
outstanding Debentures and, if the meeting is a Serial Meeting, at least 25% of
the Debentures then outstanding of each especially affected series.  If a quorum of the Debentureholders shall not
be present within 30 minutes from the time fixed for holding any meeting, the
meeting, if summoned by the Debentureholders or pursuant to a request of the
Debentureholders, shall be dissolved, but in any other case the meeting shall
be adjourned to the same day in the next week (unless such day is not a
Business Day in which case it shall be adjourned to the next following Business
Day thereafter) at the same time and place, to the extent possible, and no
notice shall be required to be given in respect of such adjourned meeting.  At the adjourned meeting, the
Debentureholders present in person or by proxy shall, subject to the provisions
of Section 13.12, constitute a quorum and may transact the business for
which the meeting was originally convened notwithstanding that they may not
represent 25% of the principal amount of the outstanding Debentures or of the
Debentures then outstanding of each especially affected series.  Any business may be brought before or dealt
with at an adjourned meeting which might have been brought before or dealt with
at the original meeting in accordance with the notice calling the same.  No business shall be transacted at any
meeting unless the required quorum be present at the commencement of business.

 

13.5                                                                        Power
to Adjourn

 

The
chairman of any meeting at which a quorum of the Debentureholders is present
may, with the consent of the holders of a majority in principal amount of the
Debentures represented thereat, adjourn any such meeting and no notice of such
adjournment need be given except such notice, if any, as the meeting may
prescribe.

 

13.6                                                                        Show
of Hands

 

Every
question submitted to a meeting shall, subject to Section 13.7, be decided
in the first place by a majority of the votes given on a show of hands except
that votes on Extraordinary Resolutions shall be given in the manner
hereinafter provided.  At any such
meeting, unless a poll is duly demanded as herein provided, a declaration by
the chairman that a resolution has been carried or carried unanimously or by a
particular majority or lost or not carried by a particular majority shall be
conclusive evidence of the fact.  The
chairman of any meeting shall be entitled, both on a show of hands and on a
poll, to vote in respect of the Debentures, if any, held by him.

 

81

 

13.7                                                                        Poll

 

On
every Extraordinary Resolution, and on any other question submitted to a meeting
when demanded by the chairman or by one or more Debentureholders or proxies for
Debentureholders, a poll shall be taken in such manner and either at once or
after an adjournment as the chairman shall direct.  Questions other than Extraordinary Resolutions
shall, if a poll be taken, be decided by the votes of the holders of a majority
in principal amount of the Debentures and of each especially affected series,
if applicable, represented at the meeting and voted on the poll.

 

13.8                                                                        Voting

 

On a show of hands every person who is present and
entitled to vote, whether as a Debentureholder or as proxy for one or more
Debentureholders or both, shall have one vote. 
On a poll each Debentureholder present in person or represented by a
proxy duly appointed by an instrument in writing shall be entitled to one vote
in respect of each $1,000 principal amount of Debentures of which he or she
shall then be the holder. A proxyholder need not be a Debentureholder.  In the case of joint holders of a Debenture,
any one of them present in person or by proxy at the meeting may vote in the
absence of the other or others but in case more than one of them be present in
person or by proxy, they shall vote together in respect of the Debentures of
which they are joint holders.

 

13.9                                                                        Proxies

 

A
Debentureholder may be present and vote at any meeting of Debentureholders by
an authorized representative.  The
Company (in case it convenes the meeting) or the Debenture Trustee (in any
other case) for the purpose of enabling the Debentureholders to be present and
vote at any meeting without producing their Debentures, and of enabling them to
be present and vote at any such meeting by proxy and of lodging instruments
appointing such proxies at some place other than the place where the meeting is
to be held, may from time to time make and vary such regulations as it shall
think fit providing for and governing any or all of the following matters:

 

(a)                                                          the form of the instrument
appointing a proxy, which shall be in writing, and the manner in which the same
shall be executed and the production of the authority of any person signing on
behalf of a Debentureholder;

 

(b)                                                         the deposit of instruments
appointing proxies at such place as the Debenture Trustee, the Company or the
Debentureholder convening the meeting, as the case may be, may, in the notice
convening the meeting, direct and the time, if any, before the holding of the
meeting or any adjournment thereof by which the same must be deposited; and

 

(c)                                                          the deposit of instruments
appointing proxies at some approved place or places other than the place at
which the meeting is to be held and enabling particulars of such instruments
appointing proxies to be mailed, faxed or sent by other electronic means before
the meeting to the Company or to the Debenture Trustee at the place where the
same is to be held and for the voting of proxies so deposited as though the
instruments themselves were produced at the meeting.

 

82

 

Any
regulations so made shall be binding and effective and the votes given in
accordance therewith shall be valid and shall be counted.  Save as such regulations may provide, the
only persons who shall be recognized at any meeting as the holders of any Debentures,
or as entitled to vote or be present at the meeting in respect thereof, shall
be Debentureholders and persons whom Debentureholders have by instrument in
writing duly appointed as their proxies.

 

13.10                                                                 Persons
Entitled to Attend Meetings

 

The
Company, the Manager (if prior to the Management Internalization) and the
Debenture Trustee, by their respective officers, directors, employees and
agents (as applicable), the Auditors of the Company and the legal advisers of
the Company, the Debenture Trustee or any Debentureholder may attend any
meeting of the Debentureholders, but shall have no vote as such.

 

13.11                                                                 Powers
Exercisable by Extraordinary Resolution

 

In addition to the powers conferred upon them by any
other provisions of this Indenture or by applicable law, a meeting of the
Debentureholders shall have the following powers exercisable from time to time
by Extraordinary Resolution, subject in the case of the matters in paragraphs
(a), (b), (c), (d) and (l) to receipt of the prior approval of the
TSX or such other exchange on which the Debentures are then listed:

 

(a)                                                          power to authorize the
Debenture Trustee to grant extensions of time for payment of any principal,
premium or interest on the Debentures, whether or not the principal, premium,
or interest, the payment of which is extended, is at the time due or overdue;

 

(b)                                                         power to sanction any
modification, abrogation, alteration, compromise or arrangement of the rights
of the Debentureholders or the Debenture Trustee against the Company, or
against its property, whether such rights arise under this Indenture or the
Debentures or otherwise;

 

(c)                                                          power to assent to any
modification of or change in or addition to or omission from the provisions
contained in this Indenture or any Debenture which shall be agreed to by the
Company and to authorize the Debenture Trustee to concur in and execute any
indenture supplemental hereto embodying any modification, change, addition or
omission;

 

(d)                                                         power to sanction any scheme
for the reconstruction, reorganization or recapitalization of the Company or for
the consolidation, amalgamation or merger of the Company with any other Person
or for the sale, leasing, transfer or other disposition of all or substantially
all of the undertaking, property and assets of the Company or any part thereof,
provided that no such sanction shall be necessary in respect of any such
transaction if the provisions of Section 11.1 shall have been complied
with;

 

(e)                                                          power to direct or authorize
the Debenture Trustee to exercise any power, right, remedy or authority given
to it by this Indenture in any manner specified in any such Extraordinary
Resolution or to refrain from exercising any such power, right, remedy or
authority;

 

83

 

(f)                                                            power to waive, and direct the
Debenture Trustee to waive, any default hereunder and/or cancel any declaration
made by the Debenture Trustee pursuant to Section 8.1 either
unconditionally or upon any condition specified in such Extraordinary
Resolution;

 

(g)                                                         power to restrain any
Debentureholder from taking or instituting any suit, action or proceeding for
the purpose of enforcing payment of the principal, premium or interest on the
Debentures, or for the execution of any trust or power hereunder;

 

(h)                                                         power to direct any
Debentureholder who, as such, has brought any action, suit or proceeding to
stay or discontinue or otherwise deal with the same upon payment, if the taking
of such suit, action or proceeding shall have been permitted by Section 8.5,
of the costs, charges and expenses reasonably and properly incurred by such
Debentureholder in connection therewith;

 

(i)                                                             power to assent to any
compromise or arrangement with any creditor or creditors or any class or
classes of creditors, whether secured or otherwise, and with holders of any
Common Shares or other securities of the Company;

 

(j)                                                             power to appoint a committee
with power and authority (subject to such limitations, if any, as may be
prescribed in the resolution) to exercise, and to direct the Debenture Trustee
to exercise, on behalf of the Debentureholders, such of the powers of the
Debentureholders as are exercisable by Extraordinary Resolution or other
resolution as shall be included in the resolution appointing the
committee.  The resolution making such appointment
may provide for payment of the expenses and disbursements of and compensation
to such committee.  Such committee shall
consist of such number of persons as shall be prescribed in the resolution
appointing it and the members need not be themselves Debentureholders.  Every such committee may elect its chairman
and may make regulations respecting its quorum, the calling of its meetings,
the filling of vacancies occurring in its number and its procedure
generally.  Such regulations may provide
that the committee may act at a meeting at which a quorum is present or may act
by minutes signed by the number of members thereof necessary to constitute a
quorum.  All acts of any such committee
within the authority delegated to it shall be binding upon all Debentureholders.  Neither the committee nor any member thereof
shall be liable for any loss arising from or in connection with any action
taken or omitted to be taken by them in good faith;

 

(k)                                                          power to remove the Debenture
Trustee from office and to appoint a new Debenture Trustee or Debenture Trustees
provided that no such removal shall be effective unless and until a new
Debenture Trustee or Debenture Trustees shall have become bound by this
Indenture;

 

(l)                                                             power to sanction the
conversion of the Debentures for or the conversion thereof into Common Shares,
bonds, debentures or other securities or obligations of the Company or of any
other Person formed or to be formed;

 

(m)                                                       power to authorize the
distribution in
specie of
any securities received pursuant to a transaction authorized under the provisions
of Section 13.11(l); and

 

84

 

(n)                                                         power to amend, alter or
repeal any Extraordinary Resolution previously passed or sanctioned by the
Debentureholders or by any committee appointed pursuant to Section 13.11(j).

 

Notwithstanding the foregoing provisions of
this Section 13.11, none of such provisions shall in any manner allow or
permit any amendment, modification, abrogation or addition to the provisions of
Article 5 which could reasonably be expected to detrimentally affect the
rights, remedies or recourse of the priority of the Senior Creditors.

 

13.12                                                                 Meaning
of “Extraordinary Resolution”

 

(a)                                                          The expression “Extraordinary
Resolution”
when used in this Indenture means, subject as hereinafter in this Article provided,
a resolution proposed to be passed as an Extraordinary Resolution at a meeting
of Debentureholders (including an adjourned meeting) duly convened for the
purpose and held in accordance with the provisions of this Article at
which the holders of not less than 25% of the principal amount of the
Debentures then outstanding, and if the meeting is a Serial Meeting, at which
holders of not less than 25% of the principal amount of the Debentures then
outstanding of each especially affected series, are present in person or by
proxy and passed by the favourable votes of the holders of not less than 662/3% of the principal amount of
the Debentures, and if the meeting is a Serial Meeting by the affirmative vote
of the holders of not less than 662/3% of each especially affected series, in
each case present or represented by proxy at the meeting and voted upon on a
poll on such resolution.

 

(b)                                                         If, at any such meeting, the
holders of not less than 25% of the principal amount of the Debentures then
outstanding and, if the meeting is a Serial Meeting, 25% of the principal
amount of the Debentures then outstanding of each especially affected series,
in each case are not present in person or by proxy within 30 minutes after the
time appointed for the meeting, then the meeting, if convened by or on the
requisition of Debentureholders, shall be dissolved but in any other case it
shall stand adjourned to such date, being not less than 14 nor more than 60
days later, and to such place and time as may be appointed by the
chairman.  Not less than 10 days notice shall
be given of the time and place of such adjourned meeting in the manner provided
in Section 14.2.  Such notice shall
state that at the adjourned meeting the Debentureholders present in person or
by proxy shall form a quorum.  At the
adjourned meeting the Debentureholders present in person or by proxy shall form
a quorum and may transact the business for which the meeting was originally
convened and a resolution proposed at such adjourned meeting and passed thereat
by the affirmative vote of holders of not less than 662/3% of the principal amount of
the Debentures and, if the meeting is a Serial Meeting, by the affirmative vote
of the holders of not less than 662/3% of the principal amount of the Debentures
of each especially affected series, in each case present or represented by
proxy at the meeting voted upon on a poll shall be an Extraordinary Resolution
within the meaning of this Indenture, notwithstanding that the holders of not
less than 25% in principal amount of the Debentures then outstanding, and if
the meeting is a Serial Meeting, at which holders of not less than 25% of the
principal amount of the Debentures then outstanding of each especially affected
series, are not present in person or by proxy at such adjourned meeting.

 

85

 

(c)                                                          Votes on an Extraordinary
Resolution shall always be given on a poll and no demand for a poll on an
Extraordinary Resolution shall be necessary.

 

13.13                                                                 Powers
Cumulative

 

Any one or more of the powers in this
Indenture stated to be exercisable by the Debentureholders by Extraordinary
Resolution or otherwise may be exercised from time to time and the exercise of
any one or more of such powers from time to time shall not be deemed to exhaust
the rights of the Debentureholders to exercise the same or any other such power
or powers thereafter from time to time.

 

13.14                                                                 Minutes

 

Minutes of all resolutions and proceedings
at every meeting as aforesaid shall be made and duly entered in books to be
from time to time provided for that purpose by the Debenture Trustee at the
expense of the Company, and any such minutes as aforesaid, if signed by the
chairman of the meeting at which such resolutions were passed or proceedings
had, or by the chairman of the next succeeding meeting of the Debentureholders,
shall be prima facie evidence of
the matters therein stated and, until the contrary is proved, every such
meeting, in respect of the proceedings of which minutes shall have been made,
shall be deemed to have been duly held and convened, and all resolutions passed
thereat or proceedings taken thereat to have been duly passed and taken.

 

13.15                                                                 Instruments
in Writing

 

All actions which may be taken and all
powers that may be exercised by the Debentureholders at a meeting held as
hereinbefore in this Article provided may also be taken and exercised by
the holders of 662/3% of the principal amount of
all the outstanding Debentures and, if the meeting at which such actions might
be taken would be a Serial Meeting, by the holders of 662/3% of the principal amount of
the Debentures then outstanding of each especially affected series, by an
instrument in writing signed in one or more counterparts and the expression “Extraordinary Resolution” when used in this
Indenture shall include an instrument so signed.

 

13.16                                                                 Binding
Effect of Resolutions

 

Every resolution and every Extraordinary
Resolution passed in accordance with the provisions of this Article at a
meeting of Debentureholders shall be binding upon all the Debentureholders,
whether present at or absent from such meeting, and every instrument in writing
signed by Debentureholders in accordance with Section 13.15 shall be
binding upon all the Debentureholders, whether signatories thereto or not, and
each and every Debentureholder and the Debenture Trustee (subject to the
provisions for its indemnity herein contained) shall be bound to give effect
accordingly to every such resolution, Extraordinary Resolution and instrument
in writing.

 

13.17                                                                 Evidence
of Rights Of Debentureholders

 

(a)                                                          Any request, direction,
notice, consent or other instrument which this Indenture may require or permit
to be signed or executed by the Debentureholders may be in any number of
concurrent instruments of similar tenor signed or executed by such
Debentureholders.

 

86

 

(b)                                                         The Debenture Trustee may, in
its discretion, require proof of execution in cases where it deems proof
desirable and may accept such proof as it shall consider proper.

 

13.18                                                                 Concerning
Serial Meetings

 

If in the opinion of Counsel any business
to be transacted at any meeting, or any action to be taken or power to be
exercised by instrument in writing under Section 13.15, does not adversely
affect the rights of the holders of Debentures of one or more series, the
provisions of this Article 13 shall apply as if the Debentures of such
series were not outstanding and no notice of any such meeting need be given to
the holders of Debentures of such series. 
Without limiting the generality of the foregoing, a proposal to modify
or terminate any covenant or agreement which is effective only so long as
Debentures of a particular series are outstanding shall be deemed not to
adversely affect the rights of the holders of Debentures of any other series.

 

ARTICLE 14

NOTICES

 

14.1                                                                        Notice
to the Company

 

Any notice to the Company or any Guarantor
or to the Debenture Trustee (on its own account or on behalf of the
Debentureholders) under the provisions of this Indenture shall be valid and
effective if delivered to the Company at 355 Burrard Street, Suite 1900, Vancouver, BC, V6C 2G8,
Attention: Chief Executive Officer, Fax (604)
682-7131, with a copy delivered to the Manager (if deliver is to
occur prior to the Management Internalization) at: 200 Clarendon Street, 25th Floor, Boston, MA, 02116, Attention: Chief
Executive Officer, Fax: (617) 531-6370
a copy delivered to Goodmans LLP, if on or before December 22, 2009 at
250 Yonge Street, Suite 2400, Toronto, Ontario, M5B 2M6, and if after
December 22, 2009 at Bay Adelaide Centre, 333 Bay Street, Suite 3400,
Toronto, Ontario M5H 2S7  Attention:
William Gorman, Fax: (416) 979-1234 and a copy delivered to the Debenture
Trustee at 100 University Avenue, 9th Floor, Toronto,
Ontario, M5J 2Y1, Attention: Manager, Corporate Trust, Fax: (416) 981-9777 or
if given by registered letter, postage prepaid, or facsimile transmission to
such offices and so addressed and if mailed, shall be deemed to have been
effectively given three days following the mailing thereof or if sent by
facsimile transmission on the first Business Day after confirmed
transmission.  The Company may from time
to time notify the Debenture Trustee in writing of a change of address which
thereafter, until changed by like notice, shall be the address of the Company
for all purposes of this Indenture.

 

14.2                                                                        Notice
to Debentureholders

 

All notices to be given hereunder with
respect to the Debentures shall be deemed to be validly given to the holders
thereof if sent by first class mail, postage prepaid, by letter or circular
addressed to such holders at their post office addresses appearing in any of
the registers hereinbefore mentioned and shall be deemed to have been
effectively given three days following the day of mailing.  Any notice to be given hereunder with respect
to the Debentures delivered or served by telecopier or courier shall be deemed
to have been given or served on the day upon which it is delivered.  Accidental error or omission in giving notice
or accidental failure to mail or otherwise deliver notice to any
Debentureholder or the inability of the Company to give or mail or otherwise
deliver any notice due to any event beyond the reasonable control of the
Company shall not invalidate any action or proceeding founded thereon.

 

87

 

If any notice given in accordance with the
foregoing paragraph would be unlikely to reach the Debentureholders to whom it
is addressed in the ordinary course of post by reason of an interruption in
mail service, whether at the place of dispatch or receipt or both, the Company
shall give such notice by publication at least once in the City of Toronto,
Ontario (or in such of those cities as, in the opinion of the Debenture
Trustee, is sufficient in the particular circumstances), such publication to be
made in a daily newspaper of general circulation in the designated city.

 

Any notice given to Debentureholders by
publication shall be deemed to have been given on the day on which publication
shall have been effected at least once in the newspaper in which publication
was required.

 

All notices with respect to any Debenture
may be given to whichever one of the holders thereof (if more than one) is
named first in the registers hereinbefore mentioned, and any notice so given
shall be sufficient notice to all holders having an interest in such Debenture.

 

14.3                                                                        Notice
to Debenture Trustee

 

Any notice to the Debenture Trustee under
the provisions of this Indenture shall be valid and effective if delivered to
the Debenture Trustee at its principal office in the City of Toronto, 100 University Avenue, 9th Floor, Toronto, Ontario M5J 2Y1,  Attention:
Director, Corporate Trust Department or if given by registered letter, postage
prepaid, to such office and so addressed and, if mailed, shall be deemed to
have been effectively given three days following the mailing thereof.  The Debenture Trustee may from time to time
notify the Company in writing of a change of address which thereafter, until by
like notice shall be the address of the Debenture Trustee to receive notices
from the Company.

 

14.4                                                                        Mail
Service Interruption

 

If by reason of any interruption of mail
service, actual or threatened, any notice to be given to the Debenture Trustee
would reasonably be unlikely to reach its destination by the time notice by
mail is deemed to have been given pursuant to Section 14.3, such notice
shall be valid and effective only if delivered at the appropriate address in
accordance with Section 14.3.

 

ARTICLE 15

CONCERNING THE DEBENTURE TRUSTEE

 

15.1                                                                        No
Conflict of Interest

 

The Company acknowledges that the Debenture
Trustee is acting as indenture trustee with respect to the 11% secured
subordinated notes issued by the Company and the 6.50% secured convertible
debentures of the Company.  The Company
hereby agrees and consents to the appointment of the Debenture Trustee pursuant
to this indenture.

 

Other than as disclosed above in this Section 15.1,
the Debenture Trustee represents to the best of its knowledge to the Company
that at the date of execution and delivery by it of this Indenture there exists
no material conflict of interest in the role of the Debenture Trustee as a
fiduciary hereunder but if, notwithstanding the provisions of this Section 15.1,
such a material conflict of interest exists, or hereafter arises, the validity
and enforceability of this Indenture, and the Debentures issued hereunder,
shall not be affected in any manner whatsoever by reason only that 

 

88

 

such material
conflict of interest exists or arises but the Debenture Trustee shall, within
30 days after ascertaining that it has a material conflict of interest, either
eliminate such material conflict of interest or resign in the manner and with
the effect specified in Section 15.2.

 

15.2                                                                        Replacement
of Debenture Trustee

 

The Debenture Trustee may resign its trust
and be discharged from all further duties and liabilities hereunder by giving
to the Company 30 days notice in writing or such shorter notice as the Company
may accept as sufficient.  If at any time
a material conflict of interest exists in the Debenture Trustee’s role as a
fiduciary hereunder the Debenture Trustee shall, within 30 days after
ascertaining that such a material conflict of interest exists, either eliminate
such material conflict of interest or resign in the manner and with the effect
specified in this Section 15.2.  The
validity and enforceability of this Indenture and of the Debentures issued
hereunder shall not be affected in any manner whatsoever by reason only that
such a material conflict of interest exists. 
In the event of the Debenture Trustee resigning or being removed or
being dissolved, becoming bankrupt, going into liquidation or otherwise
becoming incapable of acting hereunder, the Company shall forthwith appoint a
new Debenture Trustee unless a new Debenture Trustee has already been appointed
by the Debentureholders.  Failing such
appointment by the Company, the retiring Debenture Trustee or any
Debentureholder may apply to a Judge of the Ontario Superior Court of Justice,
on such notice as such Judge may direct at the Company’s expense, for the
appointment of a new Debenture Trustee but any new Debenture Trustee so
appointed by the Company or by the Court shall be subject to removal as
aforesaid by the Debentureholders and the appointment of such new Debenture
Trustee shall be effective only upon such new Debenture Trustee becoming bound
by this Indenture.  Any new Debenture
Trustee appointed under any provision of this Section 15.2 shall be a
corporation authorized to carry on the business of a trust company in all of
the provinces and territories of Canada. 
On any new appointment the new Debenture Trustee shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named herein as Debenture Trustee.

 

Any company into which the Debenture
Trustee may be merged or, with or to which it may be consolidated, amalgamated
or sold, or any company resulting from any merger, consolidation, sale or
amalgamation to which the Debenture Trustee shall be a party, or any company succeeding
to the corporate trust business of the Debenture Trustee shall be the successor
trustee under this Indenture without the execution of any instrument or any
further act.  Nevertheless, upon the
written request of the successor Debenture Trustee or of the Company, the
Debenture Trustee ceasing to act shall execute and deliver an instrument
assigning and transferring to such successor Debenture Trustee, upon the trusts
herein expressed, all the rights, powers and trusts of the Debenture Trustee so
ceasing to act, and shall duly assign, transfer and deliver all property and
money held by such Debenture Trustee to the successor Debenture Trustee so
appointed in its place.  Should any deed,
conveyance or instrument in writing from the Company be required by any new
Debenture Trustee for more fully and certainly vesting in and confirming to it
such estates, properties, rights, powers and trusts, then any and all such
deeds, conveyances and instruments in writing shall on request of said new
Debenture Trustee, be made, executed, acknowledged and delivered by the
Company.

 

15.3                                                                        Duties
of Debenture Trustee

 

In the exercise of the rights, duties and
obligations prescribed or conferred by the terms of this Indenture, the
Debenture Trustee shall act honestly and in good faith and exercise that 

 

89

 

degree of
care, diligence and skill that a reasonably prudent trustee would exercise in
comparable circumstances.

 

15.4                                                                        Reliance
Upon Declarations, Opinions, etc.

 

In the exercise of its rights, duties and
obligations hereunder the Debenture Trustee may, if acting in good faith, act
and rely, as to the truth of the statements and accuracy of the opinions
expressed therein, upon statutory declarations, opinions, reports or certificates
furnished pursuant to any covenant, condition or requirement of this Indenture
or required by the Debenture Trustee to be furnished to it in the exercise of
its rights and duties hereunder, if the Debenture Trustee examines such
statutory declarations, opinions, reports or certificates and determines that
they comply with Section 15.5, if applicable, and with any other
applicable requirements of this Indenture. 
The Debenture Trustee may nevertheless, in its discretion, require
further proof in cases where it deems further proof desirable.  Without restricting the foregoing, the
Debenture Trustee may act and rely on an opinion of Counsel satisfactory to the
Debenture Trustee notwithstanding that it is delivered by a solicitor or firm
which acts as solicitors for the Company.

 

15.5                                                                        Evidence
and Authority to Debenture Trustee, Opinions, etc.

 

The Company shall furnish to the Debenture
Trustee evidence of compliance with the conditions precedent provided for in
this Indenture relating to any action or step required or permitted to be taken
by the Company or the Debenture Trustee under this Indenture or as a result of
any obligation imposed under this Indenture, including without limitation, the
certification and delivery of Debentures hereunder, the satisfaction and
discharge of this Indenture and the taking of any other action to be taken by
the Debenture Trustee at the request of or on the application of the Company,
forthwith if and when (a) such evidence is required by any other Section of
this Indenture to be furnished to the Debenture Trustee in accordance with the
terms of this Section 15.5, or (b) the Debenture Trustee, in the
exercise of its rights and duties under this Indenture, gives the Company
written notice requiring it to furnish such evidence in relation to any
particular action or obligation specified in such notice.

 

Such evidence
shall consist of:

 

(a)                                                          a Certificate, stating that
any such condition precedent has been complied with in accordance with the
terms of this Indenture;

 

(b)                                                         in the case of a condition
precedent compliance with which is, by the terms of this Indenture, made
subject to review or examination by a solicitor, an opinion of Counsel that
such condition precedent has been complied with in accordance with the terms of
this Indenture; and

 

(c)                                                          in the case of any such
condition precedent compliance with which is subject to review or examination
by auditors or accountants, an opinion or report of the Auditors of the Company
whom the Debenture Trustee for such purposes hereby approves, that such
condition precedent has been complied with in accordance with the terms of this
Indenture.

 

Whenever such evidence relates to a matter
other than the certificates and delivery of Debentures and the satisfaction and
discharge of this Indenture, and except as otherwise specifically 

 

90

 

provided
herein, such evidence may consist of a report or opinion of any solicitor,
auditor, accountant, engineer or appraiser or any other person whose qualifications
give authority to a statement made by him, provided that if such report or
opinion is furnished by a trustee, officer or employee of the Company it shall
be in the form of a statutory declaration. 
Such evidence shall be, so far as appropriate, in accordance with the
immediately preceding paragraph of this Section 15.5.

 

Each statutory declaration, certificate,
opinion or report with respect to compliance with a condition precedent
provided for in the Indenture shall include (a) a statement by the person
giving the evidence that he has read and is familiar with those provisions of
this Indenture relating to the condition precedent in question, (b) a
brief statement of the nature and scope of the examination or investigation
upon which the statements or opinions contained in such evidence are based, (c) a
statement that, in the belief of the person giving such evidence, he has made
such examination or investigation as is necessary to enable him to make the
statements or give the opinions contained or expressed therein, and (d) a
statement whether in the opinion of such person the conditions precedent in
question have been complied with or satisfied.

 

The Company shall furnish to the Debenture
Trustee at any time if the Debenture Trustee reasonably so requires, a
Certificate affirming compliance with all covenants, conditions or other
requirements contained in this Indenture, the non-compliance with which would,
with the giving of notice or the lapse of time, or both, or otherwise,
constitute an Event of Default, or if such is not the case, specifying the
covenant, condition or other requirement which has not been complied with and
giving particulars of such non-compliance. 
The Company shall, whenever the Debenture Trustee so requires, furnish
the Debenture Trustee with evidence by way of statutory declaration, opinion,
report or certificate as specified by the Debenture Trustee as to any action or
step required or permitted to be taken by the Company or as a result of any
obligation imposed by this Indenture.

 

15.6                                                                        Debenture
Trustee May Rely on a Certificate

 

Except as otherwise specifically provided
or prescribed by this Indenture, whenever in the administration of the
provisions of this Indenture the Debenture Trustee shall deem it necessary or
desirable that a matter be proved or established prior to taking or omitting
any action hereunder, the Debenture Trustee, if acting in good faith, may act
and rely upon a Certificate.

 

15.7                                                                        Experts,
Advisers and Agents

 

The Debenture
Trustee may:

 

(a)                                                          employ or retain and act and
rely on the opinion or advice of or information obtained from any solicitor,
auditor, valuator, engineer, surveyor, appraiser or other expert or advisor,
whether obtained by the Debenture Trustee or by the Company, or otherwise, and
shall not be liable for acting, or refusing to act, in good faith on any such
opinion or advice and may pay proper and reasonable compensation for all such
legal and other advice or assistance as aforesaid; and

 

(b)                                                         employ such agents and other
assistants as it may reasonably require for the proper discharge of its duties
hereunder, and may pay reasonable remuneration for all services performed for
it (and shall be entitled to receive reasonable remuneration for all services
performed by it) in the discharge of the trusts hereof and compensation for all
disbursements, costs and expenses made or incurred by it in the discharge of 

 

91

 

its duties hereunder and in the management of the
trusts hereof, and any solicitors employed or consulted by the Debenture
Trustee may, but need not be, solicitors for the Company.

 

15.8                                                                        Debenture
Trustee May Deal in Debentures

 

Subject to Sections 15.1 and 15.3, the
Debenture Trustee may, in its personal or other capacity, buy, sell, lend upon
and deal in the Debentures and generally contract and enter into financial
transactions with the Company or otherwise, without being liable to account for
any profits made thereby.

 

15.9                                                                        Investment
of Monies Held by Debenture Trustee

 

Upon receipt of a Written Direction, the
Debenture Trustee shall invest the funds in Government Obligations in its name
in accordance with such direction.  Any
such Written Direction shall be in writing and shall be provided to the
Debenture Trustee no later than 9:00 a.m. on the day on which the
investment is to be made.  Any such
direction received by Debenture Trustee after 9:00 a.m. or received on a
non-Business Day, shall be deemed to have been given prior to 9:00 a.m.
the next Business Day.  For the purpose
of this Section, “Business Day”
shall not include any day on which banks are not open for business in Toronto,
Ontario.

 

In addition to a Written Direction to
invest cash in Government Obligations, the Debenture Trustee may hold cash
balances constituting part or all of the funds and may, but need not, invest
same in its deposit department or the deposit department of one of its
Affiliates; provided that the Debenture Trustee and its Affiliates shall not be
liable to account for any profit to any parties to this Indenture or to any
other person or entity other than at a rate, if any, established from time to
time by the Debenture Trustee or one of its Affiliates.  For the purpose of this Section, “Affiliate” means affiliated companies
within the meaning of the Business
Corporations Act (Ontario) (“OBCA”)
and includes Computershare Investor Services Inc. and each of their affiliates
within the meaning of the OBCA.

 

The Debenture Trustee shall not be held
liable for any losses incurred in the investment of any funds in Government
Obligations.

 

15.10                                                                 Debenture
Trustee will Disburse Only Monies Deposited

 

The Debenture Trustee will disburse monies
according to this Indenture only to the extent that monies have been deposited
with it.

 

15.11                                                                 Debenture
Trustee Not Ordinarily Bound

 

Except as provided in Section 8.2 and
as otherwise specifically provided herein, the Debenture Trustee shall not,
subject to Section 15.3, be bound to give notice to any person of the
execution hereof, nor to do, observe or perform or see to the observance or
performance by the Company of any of the obligations herein imposed upon the
Company or of the covenants on the part of the Company herein contained, nor in
any way to supervise or interfere with the conduct of the Company’s business,
unless the Debenture Trustee shall have been required to do so in writing by
the holders of not less than 25% of the aggregate principal amount of the
Debentures then outstanding or by any Extraordinary Resolution of the
Debentureholders passed in accordance with the provisions 

 

92

 

contained in Article 13,
and then only after it shall have been funded and indemnified to its
satisfaction against all actions, proceedings, claims and demands to which it
may render itself liable and all costs, charges, damages and expenses which it
may incur by so doing.

 

15.12                                                                 Debenture
Trustee Not Required to Give Security

 

The Debenture Trustee shall not be required
to give any bond or security in respect of the execution of the trusts and
powers of this Indenture or otherwise in respect of the premises.

 

15.13                                                                 Debenture
Trustee Not Bound to Act on the Company’s Request

 

Except as in this Indenture otherwise
specifically provided, the Debenture Trustee shall not be bound to act in
accordance with any direction or request of the Company or of the Directors
until a duly authenticated copy of the instrument or resolution containing such
direction or request shall have been delivered to the Debenture Trustee, and
the Debenture Trustee shall be empowered to act upon any such copy purporting
to be authenticated and believed by the Debenture Trustee to be genuine.

 

15.14                                                                 Debenture
Trustee Not Bound to Act

 

The Debenture Trustee shall retain the
right not to act and shall not be liable for refusing to act if, due to a lack
of information or for any other reason whatsoever, the Debenture Trustee, in
its sole judgment and acting reasonably, determines that such act might cause
it to be in non-compliance with any applicable anti-money laundering or
anti-terrorist legislation, regulation or guideline.  Further, should the Debenture Trustee, in its
sole judgment and acting reasonably, determine at any time that its acting
under this Indenture has resulted in its being in non-compliance with any applicable
anti-money laundering or anti-terrorist legislation, regulation or guideline,
then it shall have the right to resign on 30 days’ written notice to the
Company or any shorter period of time as agreed to by the Company,
notwithstanding the provisions of Section 15.2 of this Indenture, provided
that:

 

(a)                                                          the Debenture Trustee’s
written notice shall describe, if permissible by applicable legislation, the
circumstances of such non-compliance; and

 

(b)                                                         if such circumstances are
rectified to the Debenture Trustee’s satisfaction within such 30 day period,
then such resignation shall not be effective.

 

15.15                                                                 Debenture
Trustee Protected in Acting

 

The Debenture Trustee may act and rely, and
shall be protected in acting and relying absolutely, upon any resolution,
Certificate, statement, instrument, opinion, report, notice, request, consent,
order, letter, facsimile transmission, directions or other paper document
believed in good faith by it to be genuine and to have been signed, sent or
presented by or on behalf of the proper party or parties.  The Debenture Trustee shall be protected in
acting and relying upon any written notice, request, waiver, consent,
certificate, receipt, statutory declaration, affidavit or other paper or
document furnished to it, not only as to its due execution and the validity and
the effectiveness of its provisions but also as to the truth and acceptability
of any information therein contained which it in good faith believes to be
genuine and what it purports to be.

 

93

 

15.16                                                                 Conditions
Precedent to Debenture Trustee’s Obligations to Act Hereunder

 

The obligation of the Debenture Trustee to
commence or continue any act, action or proceeding for the purpose of enforcing
the rights of the Debenture Trustee and of the Debentureholders hereunder shall
be conditional upon the Debentureholders furnishing when required by notice in
writing by the Debenture Trustee, sufficient funds to commence or continue such
act, action or proceeding and indemnity reasonably satisfactory to the
Debenture Trustee to protect and hold harmless the Debenture Trustee against
the costs, charges and expenses and liabilities to be incurred thereby and any
loss and damage it may suffer by reason thereof.

 

None of the provisions contained in this
Indenture shall require the Debenture Trustee to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers unless indemnified as
aforesaid.

 

The Debenture Trustee may, before
commencing or at any time during the continuance of any such act, action or
proceeding require the Debentureholders at whose instance it is acting to
deposit with the Debenture Trustee the Debentures held by them for which
Debentures the Debenture Trustee shall issue receipts.

 

15.17                                                                 Authority
to Carry on Business

 

The Debenture Trustee represents to the
Company that at the date of execution and delivery by it of this Indenture it
is authorized to carry on the business of a trust company in all of the
provinces and territories of Canada but if, notwithstanding the provisions of
this Section 15.13, it ceases to be so authorized to carry on business,
the validity and enforceability of this Indenture and the securities issued
hereunder shall not be affected in any manner whatsoever by reason only of such
event but the Debenture Trustee shall, within 90 days after ceasing to be
authorized to carry on the business of a trust company in any of the provinces
or territories of Canada either become so authorized or resign in the manner
and with the effect specified in Section 15.2.

 

15.18                                                                 Compensation
and Indemnity

 

(a)                                                          The Company shall pay to the
Debenture Trustee from time to time compensation for its services hereunder as
agreed separately by the Company and the Debenture Trustee, and shall pay and
reimburse the Debenture Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Debenture Trustee in the
administration or execution of its duties under this Indenture (including the
reasonable and documented compensation and disbursements of its Counsel and all
other advisers and assistants not regularly in its employ), both before any
default hereunder and thereafter until all duties of the Debenture Trustee
under this Indenture shall be finally and fully performed.  The Debenture Trustee’s compensation shall
not be limited by any law on compensation of a trustee of an express trust.

 

(b)                                                         The Company hereby indemnifies
and saves harmless the Debenture Trustee and its directors, officers and
employees and agents (collectively, the “Indemnified Parties” and each an “Indemnified
Party”)
from and against any and all loss, damages, charges, expenses, claims, demands,
actions or liability whatsoever which may be brought against an Indemnified
Party or which it may suffer or incur as a result of or arising out of the
performance of its duties and obligations hereunder save only in the

 

94

 

event of the negligent failure to act, or the wilful
misconduct or bad faith of an Indemnified Party.  This indemnity will survive the termination
or discharge of this Indenture and the resignation or removal of the Debenture
Trustee.  An Indemnified Party shall
notify the Company promptly of any claim for which it may seek indemnity.  The Company shall defend the claim and the
Indemnified Party shall co-operate in the defence.  An Indemnified Party may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
Counsel.  The Company need not pay for
any settlement made without its consent, which consent must not be unreasonably
withheld.  This indemnity shall survive
the resignation or removal of the Debenture Trustee or the discharge of this
Indenture.

 

(c)                                                          The Company need not reimburse
any expense or indemnify against any loss or liability incurred by any
Indemnified Party through any of such party’s negligence, wilful misconduct or
bad faith.

 

15.19                                                                 Acceptance
of Trust

 

The Debenture Trustee hereby accepts the
trusts in this Indenture declared and provided for and agrees to perform the
same upon the terms and conditions herein set forth and to hold all rights,
privileges and benefits conferred hereby and by law in trust for the various
persons who shall from time to time be Debentureholders, subject to all the
terms and conditions herein set forth.

 

15.20                                                                 Third
Party Interests

 

Each party to this Indenture (in this
paragraph referred to as a “representing party”)
hereby represents to the Debenture Trustee that any account to be opened by, or
interest to held by, the Debenture Trustee in connection with this Indenture,
for or to the credit of such representing party, either (i) is not
intended to be used by or on behalf of any third party; or (ii) is
intended to be used by or on behalf of a third party, in which case such
representing party hereby agrees to complete, execute and deliver forthwith to
the Debenture Trustee a declaration, in the Debenture Trustee’s prescribed form
or in such other form as may be satisfactory to it, as to the particulars of
such third party.

 

15.21                                                                 Anti-Money
Laundering

 

The Debenture Trustee shall retain the
right not to act and shall not be liable for refusing to act if, due to a lack
of information or for any other reason whatsoever, the Debenture Trustee, in
its sole judgment, acting reasonably, determines that such act might cause it
to be in noncompliance with any applicable anti-money laundering or
anti-terrorist legislation, regulation or guideline. Further, should the
Debenture Trustee, in its sole judgment, acting reasonably, determine at any
time that its acting under this Indenture has resulted in its being in
non-compliance with any applicable anti-money laundering or anti-terrorist
legislation, regulation or guideline, then it shall have the right to resign on
10 days’ prior written notice sent to the Company provided that (i) the
Debenture Trustee’s written notice shall describe the circumstances of such
non-compliance; and (ii) if such circumstances are rectified to the
Debenture Trustee’s satisfaction within such 10-day period, then such
resignation shall not be effective.

 

95

 

15.22                                                                 Privacy
Laws

 

The parties acknowledge that federal and/or
provincial legislation that addresses the protection of individuals’ personal
information (collectively, “Privacy Laws”)
applies to certain obligations and activities under this Indenture.
Notwithstanding any other provision of this Indenture, neither party shall take
or direct any action that would contravene, or cause the other to contravene,
applicable Privacy Laws. The Company shall, prior to transferring or causing to
be transferred personal information to the Debenture Trustee, obtain and retain
required consents of the relevant individuals to the collection, use and
disclosure of their personal information, or shall have determined that such
consents either have previously been given upon which the parties can rely or
are not required under the Privacy Laws. The Debenture Trustee shall use
commercially reasonable efforts to ensure that its services hereunder comply
with Privacy Laws. Specifically, the Debenture Trustee agrees: (a) to have
a designated chief privacy officer; (b) to maintain policies and
procedures to protect personal information and to receive and respond to any
privacy complaint or inquiry; (c) to use personal information solely for
the purposes of providing its services under or ancillary to this Indenture and
to comply with applicable laws and not to use it for any other purpose except
with the consent of or direction from the Company or the individual involved or
as permitted by Privacy Laws; (d) not to sell or otherwise improperly
disclose personal information to any third party; and (e) to employ
administrative, physical and technological safeguards to reasonably secure and
protect personal information against loss, theft, or unauthorized access, use
or modification.

 

15.23                                                                 Withholding
Obligation

 

(a)                                                          For greater certainty, the Debenture
Trustee shall, as directed by the Company, withhold, from any payment made to a
holder of a Debenture pursuant to the terms of this Indenture, whether of
interest or other amounts, and including with respect to delivery of Common
Shares or other securities or property upon conversion of Debentures, the
amount of any applicable withholding taxes required or permitted to be withheld
in respect of such payment, and the Debenture Trustee shall remit such withheld
amounts to the appropriate governmental authority, as and when required.

 

(b)                                                         In connection with the
Debenture Trustee’s obligation to withhold pursuant to Section 15.23(a) above,
to the extent any payment to be made to a holder of a Debenture pursuant to the
terms of this Indenture is to be satisfied by the Company delivering, or
causing the delivery of, Common Shares or other securities or property to the
Debentureholder (including, without limitation, the delivery of Common Shares
or other securities or property upon a conversion of Debentures pursuant to Article 6),
the Debenture Trustee shall, subject to Applicable Laws, upon a Written
Direction but for the account of the Debentureholder, sell, through the
investment banks, registered brokers or registered dealers or other Persons
selected by the Company, out of the Common Shares or other securities or
property issued on conversion pursuant to Article 6 or otherwise, such
number of Common Shares or other securities that is sufficient to yield net
proceeds (after payment of all costs) to cover the amount of applicable
withholding taxes required to be withheld, and the Debenture Trustee shall
withhold such net proceeds and remit such amounts to the appropriate
governmental authority, as and when required. 
Any amounts of net proceeds (after payment of all costs) in excess of
the amount required to cover applicable withholding taxes will be remitted to
the Debentureholder.

 

96

 

(c)                                                          For the purposes of
determining the appropriate withholdings to be made from any payment to be made
to a holder of a Debenture, the Company and the Debenture Trustee agree to
co-operate and to provide each other with any relevant information they have
with respect to the holders of the Debentures. 
For greater certainty, the parties acknowledge and agree that the
withholding tax obligations with respect to a conversion of Debentures may be
different than those in connection with interest or other payments on the
Debentures.

 

ARTICLE 16

SUPPLEMENTAL INDENTURES

 

16.1                                                                        Supplemental
Indentures

 

From time to time the Debenture Trustee
and, when authorized by a resolution of the Directors, the Company, may, and
shall when required by this Indenture, subject to the prior written approval of
the TSX, as required, execute, acknowledge and deliver by its proper officers,
deeds or indentures supplemental hereto which thereafter shall form part
hereof, for any one or more of the following purposes:

 

(a)                                                          providing for the issuance of
Additional Debentures under this Indenture;

 

(b)                                                         adding to the covenants of the
Company herein contained for the protection of the Debentureholders, or of the
Debentures of any series, or providing for events of default, in addition to
those herein specified;

 

(c)                                                          making such provisions not
inconsistent with this Indenture as may be necessary or desirable with respect
to matters or questions arising hereunder, including the making of any
modifications in the form of the Debentures which do not affect the substance
thereof and which in the opinion of the Debenture Trustee (relying on an
opinion of Counsel), will not be prejudicial to the interests of the
Debentureholders;

 

(d)                                                         evidencing the succession, or
successive successions, of others to the Company and the covenants of and
obligations assumed by any such successor in accordance with the provisions of
this Indenture;

 

(e)                                                          giving effect to any
Extraordinary Resolution passed as provided in Article 13; and

 

(f)                                                            for any other purpose not
inconsistent with the terms of this Indenture, provided that, in the opinion of
the Debenture Trustee (relying on an opinion of Counsel), the rights of the
Debentureholders are in no way prejudiced thereby.

 

Unless the supplemental indenture requires
the consent or concurrence of Debentureholders or the holders of a particular
series of Debentures, as the case may be, by Extraordinary Resolution, the
consent or concurrence of Debentureholders or the holders of a particular
series of Debentures, as the case may be, shall not be required in connection
with the execution, acknowledgement or delivery of a supplemental
indenture.  The Company and the Debenture
Trustee (relying on the opinion of Counsel) may amend any of the provisions of
this Indenture related to matters of United States law or the issuance of
Debentures into the United States in order to ensure that such issuances can be
properly done in accordance with applicable law in the 

 

97

 

United States
without the consent or approval of the Debentureholders.  Further, the Company  and the Debenture Trustee may without the
consent or concurrence of the Debentureholders or the holders of a particular
series of Debentures, as the case may be, by supplemental indenture or
otherwise, make any changes or corrections in this Indenture which it shall
have been advised by Counsel are required for the purpose of curing or
correcting any ambiguity or defective or inconsistent provisions or clerical
omissions or mistakes or manifest errors contained herein or in any indenture
supplemental hereto or a Written Direction provided for the issue of
Debentures, providing that in the opinion of the Debenture Trustee (relying
upon an opinion of Counsel) the rights of the Debentureholders and the Senior
Creditors are in no way prejudiced thereby.

 

ARTICLE 17

EXECUTION AND FORMAL DATE

 

17.1                                                                        Execution

 

This Indenture may be simultaneously
executed in several counterparts, each of which when so executed shall be
deemed to be an original and such counterparts together shall constitute one
and the same instrument.

 

17.2                                                                        Formal
Date

 

For the purpose of convenience this
Indenture may be referred to as bearing the formal date of December 17,
2009 irrespective of the actual date of execution hereof.

 

98

 

IN WITNESS whereof the parties hereto have
executed these presents by the hands of their proper officers.

 

COMPUTERSHARE TRUST COMPANY OF CANADA

 

 

	
  Per: 

  	
  /s/ Chris Nitsis

  	
   

  
	
   

  	
  Name:
  Chris Nitsis

  	
   

  
	
   

  	
  Title:
  Professional, Corporate Trust

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Per:

  	
  /s/ Daniel Marz

  	
   

  
	
   

  	
  Name: Daniel
  Marz

  	
   

  
	
   

  	
  Title:
  Professional, Corporate Trust

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATLANTIC POWER
  CORPORATION, by its manager, ATLANTIC POWER 

  MANAGEMENT, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Per:

  	
  /s/ Barry Welch

  	
   

  
	
   

  	
  Name: Barry
  Welch

  	
   

  
	
   

  	
  Title:   President and Chief
  Executive Officer

  	
   

  

 

 

Signature Page — Trust Indenture

 

 

SCHEDULE
“A”

 

TO
THE TRUST INDENTURE AMONG

 

 

ATLANTIC
POWER CORPORATION

 

-
and -

 

COMPUTERSHARE
TRUST COMPANY OF CANADA

 

Form of
Debenture

 

 

SCHEDULE A

FORM OF GLOBAL DEBENTURE

 

UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS CLEARING AND
DEPOSITORY SERVICES INC. (“CDS”) TO
ATLANTIC POWER CORPORATION OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE
NAME OF CDS & CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF CDS (AND ANY PAYMENT IS MADE TO CDS & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED HOLDER HEREOF, CDS & CO.,
HAS A PROPERTY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HEREIN AND IT IS A VIOLATION OF ITS RIGHTS FOR ANOTHER PERSON TO HOLD, TRANSFER
OR DEAL WITH THIS CERTIFICATE.

 

	
  Certificate
  No. ·

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CUSIP
  No. 04878QAM5

  	
   

  	
  CDN$·

  
	
  ISIN No. CA04878QAM56

  	
   

  	
   

  

 

ATLANTIC
POWER CORPORATION

(A corporation continued under and governed by the laws of the Province of
British Columbia)

 

6.25%
CONVERTIBLE UNSECURED SUBORDINATED DEBENTURE

DUE MARCH 15, 2017

 

ATLANTIC POWER CORPORATION (“the Company”) for value received hereby
acknowledges itself indebted and, subject to the provisions of the trust
indenture (the “Indenture”) dated
as of December 17, 2009 between the Company and Computershare Trust
Company of Canada (the “Debenture Trustee”),
promises to pay to the registered holder hereof on March 15, 2017 (the “Maturity Date”) or on such earlier date as
the principal amount hereof may become due in accordance with the provisions of
the Indenture the principal sum of seventy-five million dollars in lawful money
of Canada (CDN$75,000,000)
on presentation and surrender of this Debenture at the principal offices of the
Debenture Trustee in Toronto, Ontario in accordance with the terms of the
Indenture and, subject as hereinafter provided, to pay interest on the
principal amount hereof from the date hereof, or from the last Interest Payment
Date to which interest shall have been paid or made available for payment
hereon, whichever is later, at the rate of 6.25% per annum, in like money, in
arrears semi-annually (less any withholding tax required or permitted by law to
be deducted) on March 15 and September 15 in each year commencing on September 15,
2010 and the last payment (representing interest payable from the last Interest
Payment Date to, but excluding, the Maturity Date or the earlier date of
redemption) to fall due on the Maturity Date and, should the Company at any
time make default in the payment of any principal, premium or interest, to pay
interest on the amount in default at the same rate, in like money and on the
same dates.  For certainty, the first
interest payment will include interest accrued from December 17, 2009 to, but excluding, September

 

 

15, 2010,
which will be equal to CDN$46.53
for each CDN$1,000 principal amount of the Initial Debentures.

 

Reference is hereby expressly made to the
Indenture for a description of the terms and conditions upon which the Initial
Debentures are or are to be issued and held and the rights and remedies of the
holders of the Initial Debentures and of the Company and of the Debenture
Trustee, all to the same effect as if the provisions of the Indenture were
herein set forth, and to all of which provisions the holder of this Initial
Debenture by acceptance hereof assents. 
To the extent that the terms and conditions stated in this Debenture
conflict with the terms and conditions of the Indenture, the latter shall
prevail.  All capitalized terms used
herein have the meaning ascribed thereto in the Indenture unless otherwise
indicated.

 

Interest hereon shall be payable by
electronic transfer of funds to the registered holder hereof or such other
means provided in the Indenture and, subject to the provisions of the
Indenture, the sending of such electronic transfer of funds shall, to the
extent of the sum represented thereby (plus the amount of any tax withheld),
satisfy and discharge all liability for interest on this Initial Debenture.

 

This Initial Debenture is one of the
Debentures of the Company issued or issuable in one or more series under the
provisions of the Indenture.  The Initial
Debentures authorized for issue immediately are limited to an aggregate
principal amount of eighty-six million two hundred and fifty thousand dollars  in lawful money of Canada (CDN$86,250,000).  The Initial Debentures are issuable only in
denominations of CDN$1,000 and integral multiples thereof.  Upon compliance with the provisions of the
Indenture, Debentures of any denomination may be exchanged for an equal
aggregate principal amount of Debentures in any other authorized denomination
or denominations.

 

Any part, being CDN$1,000 or an integral
multiple thereof, of the principal of this Initial Debenture, provided that the
principal amount of this Initial Debenture is in a denomination in excess of
CDN$1,000, is convertible, at the option of the holder hereof, upon surrender
of this Initial Debenture at the principal offices of the Debenture Trustee in
the City of Toronto, Ontario, at any time prior to the close of business on the
Maturity Date or, if this Initial Debenture is called for redemption on or
prior to such date, then up to but not after the close of business on the last
Business Day immediately preceding the date specified for redemption of this
Initial Debenture, into Common Shares (without adjustment for interest accrued
hereon or for dividends, distributions or interest payments on the Common
Shares issuable upon conversion)  at
a conversion price of CDN$13.00 per Common
Share (the “Conversion Price”), being a
conversion ratio of approximately 76.9231 for each CDN$1,000 principal amount
of Debentures so converted, all subject to the terms and conditions and in the
manner set forth in the Indenture.  The
Indenture makes provision for the adjustment of the Conversion Price in the events
therein specified.  No fractional Common
Shares will be issued on any conversion but in lieu thereof, the Company will
satisfy such fractional interest by a cash payment equal to the market price of
such fractional interest determined in accordance with the Indenture.  No adjustment to the Conversion Price will be
made for dividends or distributions payable on Common Shares issuable upon
conversion or for interest accrued or accruing on Initial Debentures surrendered
for conversion.  Holders converting their
Initial Debentures will receive interest which has accrued and is unpaid in
respect thereof from the most recent Interest Payment Date to which interest
has been paid to, but not including, the Date of Conversion.

 

This Initial Debenture may be redeemed at
the option of the Company on the terms and conditions set out in the Indenture
at the Redemption Price therein and herein set out provided that this Initial
Debenture is not redeemable prior to or on December 31, 2012.  After December 31, 

 

2

 

2012 and prior
to December 31, 2014, this Initial Debenture is redeemable at the option
of the Company provided that the Current Market Price is at least 125% of
Conversion Price.  On or after December 31,
2014 and prior to the Maturity Date, the Initial Debentures may be redeemed at
any time by the Company.  In such
circumstances, the Initial Debentures will be redeemable at a price equal to
their principal amount plus accrued and unpaid interest.  In connection with the redemption of the
Initial Debentures, the Company may, at its option and subject to regulatory
approval, elect to satisfy its obligation to pay all or a portion of the
aggregate principal amount of Debentures due upon redemption of the Initial
Debentures by issuing and delivering to the holders of such Initial Debentures,
such number of Freely Tradeable Common Shares as is obtained by dividing the
principal amount of the Initial Debentures which are to be redeemed by 95% of
the Current Market Price on the Redemption Date. If the Company elects to
exercise such option, it shall so specify and provide details in the Redemption
Notice.

 

Upon the occurrence of a Change of Control,
each holder of Initial Debentures may subject to the terms and provisions of Section 2.4(i) and
Article 5 of the Indenture require the Company to purchase the whole or
any part of such holder’s Initial Debentures at a price equal to 100% of the
principal amount of such Initial Debentures plus accrued and unpaid interest up
to, but excluding, the date the Initial Debentures are so repurchased (the “Put Right”).  The Company shall satisfy such purchase price
by payment in cash.  If 90% or more of
the principal amount of all Initial Debentures outstanding on the date the
Company provides notice of a Change of Control to the Debenture Trustee have
been tendered for purchase pursuant to the Put Right, the Company has the right
to redeem all the remaining outstanding Initial Debentures on the same date and
at the same price.

 

If an Offer for outstanding Debentures of a
series (other than Debentures held by or on behalf of the Offeror, Associates
or Affiliates of the Offeror or anyone acting jointly or in concert with the
Offeror) is made and 90% or more of the outstanding principal amount of the
Debentures is taken up and paid for by the Offeror, the Offeror wil1 be
entitled to acquire the Debentures of those holders who did not accept the
offer on the same terms as the Offeror acquired the first 90% of the principal
amount of the Debentures.

 

The Company may, on notice as provided in
the Indenture, at its option and subject to any applicable regulatory approval,
elect to satisfy the obligation to repay all or any portion of the principal
amount of this Initial Debenture due on the Maturity Date by the issue of that
number of Freely Tradeable Common Shares obtained by dividing the principal
amount of the outstanding Initial Debentures which have matured by 95% of the
Current Market Price on the Maturity Date.

 

The indebtedness evidenced by this Initial
Debenture, and by all other Initial Debentures now or hereafter certified and
delivered under the Indenture, is a direct unsecured obligation of the
Corporation, and is subordinated in right of payment, to the extent and in the
manner provided in the Indenture, to the prior payment in full of all Senior
Indebtedness, whether outstanding at the date of the Indenture or thereafter
created, incurred, assumed or guaranteed.

 

The principal hereof may become or be
declared due and payable before the stated maturity in the events, in the
manner, with the effect and at the times provided in the Indenture.

 

Any payment of money to any holder of
Debentures will be reduced by the amount of applicable withholding taxes, if
any.  The Indenture contains provisions
making binding upon all holders of Debentures outstanding thereunder (or in
certain circumstances specific series of Debentures) resolutions passed at
meetings of such holders held in accordance with such provisions 

 

3

 

and
instruments signed by the holders of a specified majority of Debentures
outstanding (or specific series), which resolutions or instruments may have the
effect of amending the terms of this Initial Debenture or the Indenture.

 

This Initial Debenture may only be
transferred, upon compliance with the conditions prescribed in the Indenture,
in one of the registers to be kept at the principal offices of the Debenture
Trustee in Toronto and in such other place or places and/or by such other
registrars (if any) as the Company with the approval of the Debenture Trustee
may designate.  No transfer of this
Initial Debenture shall be valid unless made on the register by the registered
holder hereof and upon compliance with such reasonable requirements as the
Debenture Trustee and/or other registrar may prescribe and upon surrender of
this Initial Debenture for cancellation. 
Thereupon a new Initial Debenture or Initial Debentures in the same
aggregate principal amount shall be issued to the transferee in exchange
hereof.

 

This Initial Debenture shall not become
obligatory for any purpose until it shall have been certified by the Debenture
Trustee under the Indenture.

 

The Indenture and this Debenture shall be
governed by, and construed in accordance with, the laws of the Province of
Ontario and the federal laws of Canada applicable therein.

 

Capitalized words or expressions used in
this Initial Debenture shall, unless otherwise defined herein, have the meaning
ascribed thereto in the Indenture.  In the event that the terms and conditions stated in
this Debenture conflict, or are inconsistent, with the terms and conditions of
the Indenture, the Indenture shall prevail and take priority.

 

[The
remainder of this page has been intentionally left blank.]

 

4

 

IN WITNESS WHEREOF ATLANTIC POWER
CORPORATION has caused this Debenture to be signed by its authorized
signatories as of the 17th day of
December, 2009.

 

	
   

  	
  ATLANTIC POWER CORPORATION, by its Manager, ATLANTIC
  POWER MANAGEMENT, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

5

 

(FORM OF DEBENTURE TRUSTEE’S CERTIFICATE)

 

This Initial
Debenture is one of the 6.25%
Convertible Secured Debentures due March 15,
2017 referred to in the Indenture within mentioned.

 

	
   

  	
  COMPUTERSHARE
  TRUST COMPANY OF CANADA

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  (Authorized
  Officer)

  	
   

  

 

 

(FORM OF REGISTRATION PANEL)

 

(No writing hereon except by Debenture Trustee or
other registrar)

 

	
   

  	
  Signature
  of Debenture Trustee or Registrar

  
	
   

  	
   

  
	
   

  	
   

  

 

 

CDS & Co.

85 Richmond Street West

Toronto, Ontario

M5H 2C9

 

	
   

  	
  Date of
  Registration:

  	
   

  	
   

  
	
   

  
	
  In Whose
  Name Registered:    CDS & Co.

  

 

 

FORM OF ASSIGNMENT

 

FOR
VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ·, whose address, if applicable, is set
forth below, this Initial Debenture (or $· principal amount hereof*) of ATLANTIC
POWER CORPORATION standing in the name(s) of the undersigned in the
register maintained by ATLANTIC POWER CORPORATION with respect to such Initial
Debenture and does hereby irrevocably authorize and direct the Debenture
Trustee to transfer such Initial Debenture in such register, with full power of
substitution in the premises.

 

	
  Dated:

  	
   

  	
   

  
	
   

  
	
  Address
  of Transferee:

  	
   

  	
   

  
	
   

  	
  (Street
  Address, City, Province and Postal Code)

  
					

 

(*) If less
than the full principal amount of the within Initial Debenture is to be transferred,
indicate in the space provided the principal amount (which must be CDN$1,000 or
an integral multiple thereof, unless you hold an Initial Debenture in a
non-integral multiple of CDN$1,000, in which case such Initial Debenture is
transferable only in its entirety) to be transferred.

 

 

	
   

  	
   

  
	
   

  	
  Signature
  of transferring registered holder

  

 

 

EXHIBIT “1”

TO CDS GLOBAL DEBENTURE

ATLANTIC POWER CORPORATION

 

6.25% CONVERTIBLE SECURED DEBENTURES

 

	
  Initial
  Principal Amount:

  	
  CDN$75,000,000

  	
   

  	
   

  	
   

  	
  CUSIP No. 04878QAM5

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  ISIN No. CA04878QAM56

  

 

	
  Signature
  of the Debenture Trustee:

  	
   

  	
   

  

 

ADJUSTMENTS

 

	
  Date

  	
   

  	
  Amount of

  Increase

  	
   

  	
  Amount of

  Decrease

  	
   

  	
  New Principal

  Amount

  	
   

  	
  Authorization

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

SCHEDULE “B”

 

TO THE TRUST INDENTURE AMONG

 

 

ATLANTIC POWER CORPORATION

 

- and -

 

COMPUTERSHARE TRUST COMPANY OF CANADA

 

Form of Redemption Notice

 

 

SCHEDULE B

FORM OF REDEMPTION NOTICE

 

To:                              Holders of 6.25% Convertible Secured
Debentures (the “Debentures”) of
Atlantic Power Corporation (the “Company”)

 

Note:                   All capitalized terms used herein have the meaning
ascribed thereto in the Indenture mentioned below, unless otherwise indicated.

 

Notice
is hereby given pursuant to Section 4.3 of the trust indenture (the “Indenture”) dated as of December 17,
2009 between the Company and Computershare Trust Company of Canada (the “Debenture Trustee”), that the aggregate
principal amount of CDN$· of the CDN$· of Debentures outstanding will be redeemed
as of ·, 20· (the “Redemption Date”), upon payment of a
redemption amount of CDN$· for each CDN$1,000 principal
amount of Debentures, being equal to the aggregate of (i) CDN$· (the “Redemption
Price”), and (ii) accrued and unpaid interest on such redeemed
Debentures to but excluding the Redemption Date, in each case less any
withholding taxes required to be deducted (collectively, the “Total Redemption Price”).

 

The
Total Redemption Price will be payable upon presentation and surrender of the
Debentures called for redemption at the following corporate trust office:

 

Computershare Trust Company of Canada

100 University Ave., 9th Floor

Toronto, Ontario, M5J 2Y1

Attention:  ·

 

The
interest upon the principal amount of Debentures called for redemption shall
cease to be payable from and after the Redemption Date, unless payment of the
Redemption Price shall not be made on presentation for surrender of such
Debentures at the above-mentioned corporate trust office on or after the
Redemption Date or prior to the setting aside of the Redemption Price pursuant
to the Indenture.

 

 

	
  DATED:

  	
   

  	
   

  
	
   

  	
   

  
	
  ATLANTIC POWER CORPORATION

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signatory

  

 

 

SCHEDULE “C”

TO THE TRUST INDENTURE AMONG

 

 

ATLANTIC POWER CORPORATION

 

- and -

 

COMPUTERSHARE TRUST COMPANY OF CANADA

 

Form of Maturity Notice

 

 

SCHEDULE C

FORM OF MATURITY NOTICE

 

TO:                                                                            Holders of  6.25%
Convertible Secured Debentures due March 15, 2017 (the “Debentures”) of Atlantic Power Corporation (the “Company”)

 

AND TO:                                             Computershare Trust Company of
Canada, as Debenture Trustee

 

NOTE:                                                            All capitalized terms used
herein have the meaning ascribed thereto in the Indenture mentioned below,
unless otherwise indicated.

 

Notice is
hereby given pursuant to the Trust Indenture (the “Indenture”)
dated as of December 17, 2009 between the Company and Computershare Trust
Company of Canada, as debenture trustee (the “Debenture
Trustee”), that the Debentures are due and payable as of March 15,
2017 (the “Maturity Date”) and the Company
hereby advises the holders of Debentures that it will deliver to holders of
Debentures a cash payment upon presentation and surrender of the Debentures
representing any principal amount and all accrued and unpaid interest to the
Maturity Date, to which the holder is entitled.

 

DATED:                                                  ·

 

 

	
   

  	
   

  	
  ATLANTIC POWER CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
   

  

 

 

SCHEDULE “D”

 

 

 TO THE
TRUST INDENTURE  AMONG

 

 

ATLANTIC POWER CORPORATION

 

- and -

 

COMPUTERSHARE TRUST COMPANY OF CANADA

 

 

Form of Notice of Conversion

 

 

SCHEDULE D

FORM OF NOTICE OF CONVERSION

 

TO:                            ATLANTIC POWER CORPORATION

 

Note:                   All capitalized terms used herein have the
meaning ascribed thereto in the Indenture mentioned below, unless otherwise
indicated.

 

The
undersigned registered holder of 6.25% Convertible Secured Debentures in the
principal amount of CDN$· irrevocably elects to convert
such Debentures (or CDN$· principal amount thereof*) in
accordance with the terms of the Indenture referred to in such Debentures and
tenders herewith the Debentures, and, if applicable, directs that the Common
Shares of Atlantic Power Corporation
issuable upon a conversion (net of applicable withholding taxes, if any) be
issued and delivered to the person indicated below.  (If Common Shares are to be issued in the
name of a person other than the holder, all requisite transfer taxes must be
tendered by the undersigned.)

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Signature
  of Registered Holder)

  

 

(*) If less
than the full principal amount of the Debentures, indicate in the space
provided the principal amount (which must be CDN$1,000 or integral multiples
thereof).

 

(Print name in
which Common Shares are to be issued, delivered and registered)

 

	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Address)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (City,
  Province and Postal Code)

  	
   

  
	
   

  	
   

  	
   

  
	
  Name
  of guarantor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Authorized
  signature:

  	
   

  	
   

  

 

 

SCHEDULE “E”

 

 

TO THE TRUST INDENTURE AMONG

 

 

ATLANTIC POWER CORPORATION

 

- and -

 

COMPUTERSHARE TRUST COMPANY OF CANADA

 

Form of Notice of Put Exercise

 

 

SCHEDULE E

FORM OF NOTICE OF PUT EXERCISE

 

(Change of Control)

 

PUT EXERCISE

 

TO:                            ATLANTIC POWER CORPORATION
(the “Company”)

 

Note:                   All capitalized terms used herein have the
meaning ascribed thereto in the Indenture mentioned below, unless otherwise
indicated.

 

The
undersigned registered holder of 6.25% Convertible Secured Debentures in the
principal amount of CDN$· irrevocably elects to put
such Debentures (or CDN$· principal amount thereof*) to
the Company to be purchased by the Company on · (the “Put
Date”) in accordance with the terms of the Indenture referred to in
such Debentures at a price of CDN$· for each CDN$1,000 principal
amount of Debentures plus all accrued and unpaid interest thereon (net of
applicable withholding tax, if any) to, but excluding, the Put Date
(collectively, the “Total Put Price”)
and tenders herewith the Debentures,

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Signature
  of Registered Holder)

  

 

(*)                                 If less than the full principal amount of
the Debentures, indicate in the space provided the principal amount (which must
be CDN$1,000 or integral multiples thereof).

 

The total Put
Price (after deduction of applicable taxes) will be payable upon presentation
and surrender of the Debentures with this form on or after the Put Date at the
following corporate trust office:

 

Computershare Trust Company of Canada

100 University Ave., 9th Floor

Toronto, Ontario M5J 2Y1

 

The interest
upon the principal amount of Debentures put to the Company shall cease to be
payable from and after the Put Date unless payment of the Total Put Price shall
not be made on presentation for surrender of such Debentures at the above
mentioned corporate trust office on or after the Put Date or prior to the setting
aside of the Total Put Price pursuant to the Indenture dated December 17,
2009 between the Company and Computershare Trust Company of Canada as trustee.Exhibit
10.1

 

EXECUTION COPY

 

 

CREDIT
AGREEMENT

 

Dated as of November 18,
2004

 

among

 

ATLANTIC
POWER HOLDINGS, LLC,

as Borrower,

 

BANK
OF MONTREAL,

as Administrative Agent, 

L/C Issuer, and Collateral Agent

 

and

 

The Other Lenders Party Hereto

 

HARRIS NESBITT CORP.,

as

Arranger

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I.

  	
  DEFINITIONS AND ACCOUNTING
  TERMS

  	
  1

  
	
  1.01

  	
  Defined Terms

  	
  1

  
	
  1.02

  	
  Other Interpretive Provisions

  	
  25

  
	
  1.03

  	
  Accounting Terms

  	
  26

  
	
  1.04

  	
  Rounding

  	
  26

  
	
  1.05

  	
  References to Agreements and Laws

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE II.

  	
  THE COMMITMENTS AND CREDIT
  EXTENSIONS

  	
  27

  
	
  2.01

  	
  Loans

  	
  27

  
	
  2.02

  	
  Borrowings, Conversions and Continuations of Loans

  	
  27

  
	
  2.03

  	
  Intentionally Blank

  	
  28

  
	
  2.04

  	
  Letters of Credit

  	
  29

  
	
  2.05

  	
  Intentionally Blank

  	
  35

  
	
  2.06

  	
  Prepayments

  	
  36

  
	
  2.07

  	
  Reduction or Termination of Commitments

  	
  36

  
	
  2.08

  	
  Repayment of Loans

  	
  36

  
	
  2.09

  	
  Interest

  	
  36

  
	
  2.10

  	
  Fees

  	
  37

  
	
  2.11

  	
  Computation of Interest and Fees

  	
  37

  
	
  2.12

  	
  Evidence of Debt

  	
  38

  
	
  2.13

  	
  Payments Generally

  	
  38

  
	
  2.14

  	
  Sharing of Payments

  	
  40

  
	
  2.15

  	
  Extension of Maturity Date

  	
  41

  
	
  2.16

  	
  Cleandown

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE III.

  	
  TAXES, YIELD PROTECTION
  AND ILLEGALITY

  	
  42

  
	
  3.01

  	
  Taxes

  	
  42

  
	
  3.02

  	
  Illegality

  	
  43

  
	
  3.03

  	
  Inability to Determine Rates

  	
  44

  
	
  3.04

  	
  Increased Cost and Reduced Return; Capital Adequacy; Reserves on
  Eurodollar Rate Loans

  	
  44

  
	
  3.05

  	
  Funding Losses

  	
  45

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  3.06

  	
  Matters Applicable to all Requests for Compensation

  	
  46

  
	
  3.07

  	
  Survival

  	
  46

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV.

  	
  CONDITIONS PRECEDENT TO
  Credit Extensions

  	
  46

  
	
  4.01

  	
  Conditions of Initial Credit Extension

  	
  46

  
	
  4.02

  	
  Conditions to all Credit Extensions

  	
  50

  
	
   

  	
   

  	
   

  
	
  ARTICLE V.

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
  50

  
	
  5.01

  	
  Existence, Qualification and Power; Compliance with Laws

  	
  50

  
	
  5.02

  	
  Authorization; No Contravention

  	
  51

  
	
  5.03

  	
  Governmental Authorization; Consents

  	
  51

  
	
  5.04

  	
  Binding Effect

  	
  51

  
	
  5.05

  	
  Financial Statements; No Material Adverse Effect

  	
  52

  
	
  5.06

  	
  Litigation

  	
  52

  
	
  5.07

  	
  No Default

  	
  52

  
	
  5.08

  	
  Ownership of Property; Liens

  	
  52

  
	
  5.09

  	
  Environmental Compliance

  	
  52

  
	
  5.10

  	
  Insurance

  	
  53

  
	
  5.11

  	
  Taxes

  	
  53

  
	
  5.12

  	
  ERISA Compliance

  	
  53

  
	
  5.13

  	
  Subsidiaries

  	
  54

  
	
  5.14

  	
  Margin Regulations; Investment Company Act; Public Utility Holding
  Company Act

  	
  55

  
	
  5.15

  	
  Disclosure

  	
  55

  
	
  5.16

  	
  Intellectual Property; Licenses, Etc.

  	
  55

  
	
  5.17

  	
  Direct Benefit

  	
  55

  
	
  5.18

  	
  Solvency

  	
  56

  
	
  5.19

  	
  IPSs and Subordinated Note Documents

  	
  56

  
	
  5.20

  	
  Labor Relations

  	
  56

  
	
  5.21

  	
  Undisclosed Liabilities; Absence of Burdensome Obligations

  	
  56

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI.

  	
  AFFIRMATIVE COVENANTS

  	
  56

  
	
  6.01

  	
  Financial Statements

  	
  57

  

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  6.02

  	
  Certificates; Other Information

  	
  58

  
	
  6.03

  	
  Notices

  	
  59

  
	
  6.04

  	
  Payment of Obligations

  	
  59

  
	
  6.05

  	
  Continuation of Business, Etc.

  	
  60

  
	
  6.06

  	
  Maintenance of Properties

  	
  60

  
	
  6.07

  	
  Maintenance of Insurance

  	
  60

  
	
  6.08

  	
  Compliance with Laws

  	
  60

  
	
  6.09

  	
  Books and Records

  	
  60

  
	
  6.10

  	
  Inspection Rights

  	
  60

  
	
  6.11

  	
  Compliance with Contractual Obligations

  	
  60

  
	
  6.12

  	
  Use of Proceeds

  	
  61

  
	
  6.13

  	
  Guaranties

  	
  61

  
	
  6.14

  	
  Unrestricted Subsidiaries

  	
  61

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
  NEGATIVE COVENANTS

  	
  61

  
	
  7.01

  	
  Liens

  	
  62

  
	
  7.02

  	
  Limitation on Incurrence of Indebtedness and Issuance of Disqualified
  Stock and Preferred Stock

  	
  62

  
	
  7.03

  	
  Limitation on Restricted Payments

  	
  66

  
	
  7.04

  	
  Dividend and Other Payment Restrictions Affecting Subsidiaries

  	
  69

  
	
  7.05

  	
  Asset Sales

  	
  71

  
	
  7.06

  	
  Transactions with Affiliates

  	
  72

  
	
  7.07

  	
  Merger, Consolidation or Sale of All or Substantially All Assets

  	
  73

  
	
  7.08

  	
  ERISA

  	
  75

  
	
  7.09

  	
  Change in Nature of Business or Project Documents

  	
  75

  
	
  7.10

  	
  Use of Proceeds

  	
  75

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII.

  	
  EVENTS OF DEFAULT AND
  REMEDIES

  	
  75

  
	
  8.01

  	
  Events of Default

  	
  75

  
	
  8.02

  	
  Remedies Upon Event of Default

  	
  78

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX.

  	
  ADMINISTRATIVE AGENT

  	
  79

  
	
  9.01

  	
  Appointment and Authorization of Administrative Agent

  	
  79

  

 

iii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  9.02

  	
  Delegation of Duties

  	
  79

  
	
  9.03

  	
  Liability of Administrative Agent

  	
  79

  
	
  9.04

  	
  Reliance by Administrative Agent

  	
  80

  
	
  9.05

  	
  Notice of Default

  	
  80

  
	
  9.06

  	
  Credit Decision; Disclosure of Information by Administrative Agent

  	
  81

  
	
  9.07

  	
  Indemnification of Administrative Agent

  	
  81

  
	
  9.08

  	
  Administrative Agent in its Individual Capacity

  	
  82

  
	
  9.09

  	
  Successor Administrative Agent

  	
  82

  
	
  9.10

  	
  Other Agents; Arrangers, Etc.

  	
  83

  
	
   

  	
   

  	
   

  
	
  ARTICLE X.

  	
  MISCELLANEOUS

  	
  83

  
	
  10.01

  	
  Amendments, Etc.

  	
  83

  
	
  10.02

  	
  Notices and Other Communications; Facsimile Copies

  	
  84

  
	
  10.03

  	
  No Waiver; Cumulative Remedies

  	
  85

  
	
  10.04

  	
  Attorney Costs, Expenses and Taxes

  	
  85

  
	
  10.05

  	
  Indemnification by the Borrower

  	
  86

  
	
  10.06

  	
  Payments Set Aside

  	
  86

  
	
  10.07

  	
  Successors and Assigns

  	
  87

  
	
  10.08

  	
  Confidentiality

  	
  89

  
	
  10.09

  	
  Set-off

  	
  90

  
	
  10.10

  	
  Interest Rate Limitation

  	
  90

  
	
  10.11

  	
  Counterparts

  	
  91

  
	
  10.12

  	
  Integration

  	
  91

  
	
  10.13

  	
  Survival of Representations and Warranties

  	
  91

  
	
  10.14

  	
  Severability

  	
  91

  
	
  10.15

  	
  Foreign Lenders

  	
  91

  
	
  10.17

  	
  Governing Law

  	
  93

  
	
  10.18

  	
  Waiver of Right to Trial by Jury

  	
  93

  
	
  10.19

  	
  ENTIRE AGREEMENT

  	
  94

  

 

iv

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT
dated as of November 18, 2004 is made and entered into by and among ATLANTIC POWER HOLDINGS,
LLC, a Delaware limited liability company (the “Borrower”), each
lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), BANK OF MONTREAL as Administrative
Agent and L/C Issuer, and as Collateral Agent.

 

The Borrower has
requested that the Lenders provide a revolving credit facility, and the Lenders
are willing to do so on the terms and conditions set forth herein.

 

In consideration of the
mutual covenants and agreements herein contained, the parties hereto covenant
and agree as follows:

 

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

 

1.01        Defined
Terms.  As used in this Agreement, the following
terms shall have the meanings set forth below:

 

“Acceptable Security
Interest” in any Property means a Lien which (a) exists in favor of
the Administrative Agent for the benefit of any of the Administrative Agent,
the L/C Issuer, the Lenders or any of their respective Affiliates, (b) is
superior to all Liens or rights of any other Person (other than Liens
specifically permitted under Section 7.01) in the Property or
Collateral encumbered thereby (c) secures the Secured Obligations, and (d) is
perfected and enforceable.

 

“Administrative Agent” means Bank of Montreal
in its capacity as administrative agent under any of the Loan Documents, or any
successor administrative agent.

 

“Administrative Agent’s Office” means the
Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02, or such other address or
account as the Administrative Agent may from time to time notify to the
Borrower and the Lenders.

 

“Affiliate” of any specified Person
means any other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified Person. For
purposes of this definition, “control” (including, with correlative meanings,
the terms “controlling”, “controlled by” and “under common control with”), as
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement
or otherwise.

 

“Agent/Arranger Fee Letter” has the meaning
specified in Section 2.10(c).

 

“Agent-Related Persons” means the
Administrative Agent (including any successor administrative agent permitted hereby),
together with its Affiliates (including, in the case of 

 

 

Bank of Montreal
in its capacity as the Administrative Agent, the Arranger), and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.

 

“Aggregate Commitments” means at any time the
sum of the Commitments of all the Lenders under this Agreement.

 

“Agreement” means this Credit Agreement.

 

“Applicable Margin” means the following
percentages per annum:

 

Base Rate Loans: 
50.0 basis points;

 

Commitment Fee: 
37.5 basis points;

 

Eurodollar Rate Loans: 
200.0 basis points; and

 

Letters of Credit: 
200.0 basis points.

 

“Approved Fund” means any Fund that is
administered or managed by (a) a Lender or (b) an Affiliate of a
Lender or (c) an entity or an Affiliate of an entity that administers or
manages a Lender.

 

“Arranger” means Harris Nesbitt Corp. in its
capacity as arranger.

 

“Asset Sale” means: (i) the
sale, conveyance, transfer or other disposition (whether in a single
transaction or a series of related transactions) of Property or assets
(including by way of a Sale/Leaseback Transaction) of the Borrower or any
Subsidiary or Unrestricted Subsidiary of the Borrower (each referred to in this
definition as a “disposition”) or (ii) the
issuance or sale of Equity Interests of any Subsidiary or Unrestricted
Subsidiary of the Borrower (other than to the Borrower or another Subsidiary or
Unrestricted Subsidiary of the Borrower) (whether in a single transaction or a
series of related transactions), in each case other than:  (a) a disposition of Cash Equivalents or
Investment Grade Securities or obsolete or worn out equipment in the ordinary
course of business; (b) the disposition of all or substantially all of the
assets of the Borrower in a manner permitted pursuant to Section 7.04
or any disposition that constitutes a Change of Control; (c) any
Restricted Payment or Permitted Investment that is permitted to be made, and is
made, under Section 7.03; (d) any disposition of Property or
assets by a Subsidiary or Unrestricted Subsidiary of the Borrower to the
Borrower or by the Borrower or a Subsidiary or Unrestricted Subsidiary of the
Borrower to a Subsidiary or Unrestricted Subsidiary of the Borrower; (e) any
exchange of like Property for use in a Similar Business; (f) sales of
assets received by the Borrower upon the foreclosure on a Lien; and (g) sales
of inventory in the ordinary course of business consistent with past practices
and sales of equipment upon termination of a contract with a client entered
into in the ordinary course of business pursuant to the terms of such contract.

 

“Assignee Conditions”
means, in relation to any Person described in clause (c) of the
defined term “Eligible Assignee”, the conditions as follow:  (i) if a Lender assigns to such an Eligible
Assignee less than all of its Commitment and the Loans at the time owing to it
(or a 

 

2

 

participation in
its L/C Obligations), any right of such assigning Lender and such assignee to
vote as a Lender, or any other direct claim or right against the Borrower or
any Guarantor in relation to this Agreement, shall be uniformly exercised or
pursued by such assigning Lender and such assignee; and (ii) such assignee
shall not be entitled to payment from any Loan Party under Article III
of amounts in excess of those payable to such Lender assignor under such Article (determined
without regard to such assignment or transfer).

 

“Assignment and Acceptance” means an
Assignment and Acceptance substantially in the form of Exhibit D.

 

“Attorney Costs” means and includes all
reasonable fees and disbursements of any law firm or other external counsel and
expressly includes the allocated reasonable costs of internal legal services
and disbursements of internal counsel.

 

“Audited Financial Statements” means the
audited consolidated balance sheet of the Parent Guarantor and each of its
consolidated Subsidiaries, for the fiscal year ended December 31, 2003, and the
related consolidated statements of income and cash flows for such fiscal year
of such Persons.

 

“Available Aggregate Commitment” means, at any
time, the Aggregate Commitment then in effect minus the aggregate Outstanding
Amount of Loans and L/C Obligations at such time.

 

“Base Rate” means for any day a fluctuating rate
per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1%
and (b) the rate of interest as publicly announced from time to time by
Bank of Montreal as its “reference rate.” 
Such reference rate is a rate set by Bank of Montreal based upon various
factors including Bank of Montreal’s costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced reference
rate.  Any change in such reference rate
announced by Bank of Montreal shall take effect at the opening of business on
the day specified in the public announcement of such change.

 

“Base Rate Loan” means a Loan that bears
interest based on the Base Rate.

 

“BMO ISDA Master
Agreement” means that certain ISDA Master Agreement and the Schedule
thereto, dated as of November 9, 2004, documenting the FX swap transaction
entered into between Bank of Montreal and the Borrower on November 9,
2004.

 

“Board” means the Board of Governors of the
Federal Reserve System of the United States of America.

 

“Borrower” has the meaning set forth in the
introductory paragraph hereto and with respect to such Person, includes its
successors and assigns permitted hereby, if any.

 

“Borrowing” means a borrowing consisting of
simultaneous Loans of the same Type and having the same Interest Period made by
each of the Lenders pursuant to Section 2.01.

 

3

 

“Business Day” means any day other than a
Saturday, Sunday, or other day on which commercial banks are authorized to
close under the Laws of, or are in fact closed in, each of (a) the state
where the Administrative Agent’s Office is located and (b) the City of
Toronto, Ontario, Canada, and if such day relates to any Eurodollar Rate Loan,
it must also be a day on which dealings in Dollar deposits are conducted by and
between banks in the applicable offshore Dollar interbank market.

 

“Capitalized Lease Obligations”
means, at the time any determination thereof is to be made, the amount of the
liability in respect of a capital lease that would at such time be required to
be capitalized and reflected as a liability on a balance sheet (excluding the
footnotes thereto) in accordance with GAAP.

 

“Capital Stock” means: (i) in
the case of a corporation, corporate stock or equity interests, including,
without limitation, corporate stock represented by IPSs and corporate stock
outstanding upon the separation of IPSs into the securities represented
thereby; (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock; (iii) in the case of a partnership or
limited liability company, partnership or membership interests (whether general
or limited); and (iv) any other interest or participation that confers on
a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.

 

“Cash” means U.S. Dollars or Cdn. Dollars.

 

“Cash Collateralize” means to pledge and
deposit with or deliver to the Administrative Agent, for the benefit of the L/C
Issuer and the Lenders, as collateral for the L/C Obligations, cash or deposit
account balances denominated in U.S. Dollars or Cdn. Dollars pursuant to
documentation in form and substance reasonably satisfactory to the
Administrative Agent and the L/C Issuer (which documents are hereby consented
to by the Lenders).  Derivatives of such term
shall have corresponding meaning.

 

“Cash Equivalents”
means (i) (A) Cdn. Dollars and foreign currency exchanged into Cdn.
Dollars within 180 days or (B) U.S. Dollars and foreign currency exchanged
into U.S. Dollars within 180 days; (ii) securities issued or directly and
fully guaranteed or insured by the U.S. or Canadian government or any agency or
instrumentality thereof; (iii) certificates of deposit, time deposits and
eurodollar time deposits with maturities of one year or less from the date of
acquisition, bankers’ acceptances with maturities not exceeding one year and
overnight bank deposits, in each case with any commercial bank having capital
and surplus in excess of U.S.$200,000,000 and whose long-term debt is rated “A”
or the equivalent thereof by Moody’s or S&P; (iv) repurchase
obligations for underlying securities of the types described in clauses (ii) and
or by DBRS (iii) above entered into with any financial institution meeting
the qualifications specified in clause (iii) above; (v) commercial
paper issued by a corporation (other than an Affiliate of the Borrower or an
Affiliate of a Subsidiary of the Borrower) rated at least “A (low)” or higher
by DBRS or “A3” or higher by Moody’s or “A-”
or higher by S&P and in each case maturing within one year after the date
of acquisition; (vi) investment funds investing at least 95% of their
assets in securities of the types described in clauses (i) through (v) above;
(vii) readily marketable direct obligations issued by or guaranteed by the
Government of the United States or Canada, any state of the United States of
America or any political subdivision thereof 

 

4

 

having one of the
two highest rating categories obtainable from DBRS,  Moody’s or S&P; and (viii) Indebtedness
or preferred stock issued by Persons with a rating of P-2  or higher by
DBRS, “A” or higher from S&P or “A-2” or higher from Moody’s.

 

“Cash Flow” means, for any period,
the difference of (i) the aggregate amount of all cash distributions
received or receivable in respect of such period, by the Parent Guarantor from
the Borrower, any Subsidiary or Unrestricted Subsidiary of the Borrower or any
other source during such period plus the Parent Guarantor’s pro rata share (based on its common
membership ownership interest in the Borrower) of any cash distributions
received by the Borrower in respect of such period and retained by the
Borrower, in each such case exclusive of any distribution attributable to any
net proceeds realized by the Parent Guarantor or any Subsidiary of the Parent
Guarantor, including without limitation, the Borrower, any Subsidiary of the
Borrower and any Unrestricted Subsidiary of the Borrower upon the sale or
disposition of plant property and equipment, which is not disposed of in the
ordinary course of business and any other extraordinary items, minus (ii) any
amounts paid by the Parent Guarantor in respect of expenses (other than
Interest Expense), including taxes determined on a pro forma,
annual basis for a full tax year.

 

“Cash Flow Coverage Ratio” means
for the most recently ended four fiscal quarters of the Parent Guarantor for
which financial statements are available, the ratio of Cash Flow for such
period to the total Interest Expense of the Parent Guarantor plus any
mandatory principal repayments on outstanding Indebtedness of the Parent
Guarantor for such period.

 

“Cdn. Dollars” and “Cdn.$”
means lawful money of Canada.

 

“Cdn. GAAP” means generally accepted
accounting principles from time to time approved by the Canadian Institute of
Chartered Accountants.

 

“Change of 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 Parent
Guarantor’s or the Borrowers’ assets generating more than 66 2/3% of the
Parent Guarantor’s Cash Flow for the 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 relating to
the liquidation or dissolution of the Borrower or the Parent Guarantor;

 

(iii)          the acquisition by any Person or group
of a direct or indirect interest in more than 50% of: (A) the Common
Shares of the Borrower or the common membership interests of the Parent
Guarantor; or (B) the voting power or Voting Stock of the Borrower or the
Parent Guarantor; by way of purchase, 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 Borrower as a result of such transaction); or

 

(iv)          the merger or consolidation of the
Borrower or the Parent Guarantor with or into another Person or the merger of
another Person into the Borrower or the Parent 

 

5

 

Guarantor with the effect
that immediately after such transaction the shareholders of the Borrower or the
holders of common membership interests of the Borrower immediately prior to
such transaction hold, directly or indirectly, less than 50% of the total
Voting Stock of 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 the Borrower or the Parent Guarantor as a result of
such transaction.

 

“Closing Date” means the first date all the
conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 4.01
(or, in the case of Section 4.01(b),
waived by the Person entitled to receive the applicable payment).

 

“Code” means the United States Internal Revenue Code of 1986, as
amended, and any rules and regulations issued pursuant thereto.

 

“Collateral” means
the Property of any Loan Party upon which Liens in favor of the Lenders have
been granted or have been purported to have been granted by the terms of the
applicable Security Documents.

 

“Collateral Agent”
means Bank of Montreal, in its capacity as collateral agent under any of the
Loan Documents, or any other successor collateral agent.

 

“Collateral Agency and
Intercreditor Agreement” means that certain Collateral Agency and
Intercreditor Agreement among the Loan Parties, the Collateral Agent and the
Trustee, dated as of the Closing Date and substantially in the form of Exhibit I,
as amended and in effect from time to time.

 

“Commitment” means, as to each Lender, its
obligation to (a) make Loans to the Borrower pursuant to Section 2.01 and (b) purchase
participations in L/C Obligations, in an aggregate principal amount at any one
time outstanding not to exceed the amount set forth opposite such Lender’s name
on Schedule 2.01, as such amount may be
reduced or adjusted from time to time in accordance with this Agreement (the
aggregate Commitments of all the Lenders, collectively, the “Commitments”).

 

“Common Shares” means the common
shares in the capital of the Borrower.

 

“Compliance Certificate” means a certificate
substantially in the form of Exhibit C.

 

“Contractual Obligation” means, as to any
Person, any provision of any security issued by such Person or of any contract,
agreement, instrument or other undertaking to which such Person is a party or
by which it or any of its Property is bound pursuant to which such Person is
obligated to perform an agreement or other undertaking.

 

“Credit Extension” means each of the
following: (a) a Borrowing or (b) an L/C Credit Extension.

 

6

 

“DBRS” means
Dominion Bond Rating Service Limited or any successor to the rating agency
business thereof, or if no such successor, any other debt rating agency
selected by the Borrower and approved by the Required Lenders.

 

“Debtor Relief Laws” means the Bankruptcy Code
of the United States of America, and all other liquidation, conservatorship,
bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief Laws of the
United States of America or other applicable jurisdictions from time to time in
effect and affecting the rights of creditors generally.

 

“Default” means any event that, with the
giving of any notice, the passage of time, or both, would be an Event of
Default.

 

“Default Rate” means an interest rate equal to
(a) the Base Rate plus (b) the
Applicable Margin, if any, applicable to Base Rate Loans plus (c) 2% per annum; provided, however,
that with respect to a Eurodollar Rate Loan, the Default Rate shall be an
interest rate equal to the interest rate (including any Applicable Margin)
otherwise applicable to such Loan plus 2% per annum, in each case to the
fullest extent permitted by applicable Laws.

 

“Deposit and
Disbursement Agreement” means that certain Deposit and Disbursement
Agreement among the Loan Parties, the Collateral Agent and Harris Bank as the
depositary bank, dated as of the Closing Date and substantially in the form of Exhibit H,
as amended and in effect from time to time.

 

“Designated Non-Cash Consideration”
means the Fair Market Value of non-cash consideration received by the Borrower
or one of its Subsidiaries in connection with an Asset Sale that is so
designated as Designated Non-Cash Consideration pursuant to an Officers’
Certificate, setting forth the basis of such valuation, less the amount of Cash
Equivalents received in connection with a subsequent sale of such Designated
Non-Cash Consideration.

 

“Disqualified Stock” means, with
respect to any Person, any Capital Stock of such Person which, by its terms (or
by the terms of any security into which it is convertible or for which it is
redeemable or exchangeable), or upon the happening of any event: (i) matures
or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise; (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock; or (iii) is redeemable at the option of the holder
thereof, in whole or in part, in each case prior to the first anniversary of
the Stated Maturity of the Securities; provided, however, that only the portion
of Capital Stock which so matures or is mandatorily redeemable, is so
convertible or exchangeable or is so redeemable at the option of the holder thereof
prior to such first anniversary shall be deemed to be Disqualified Stock;
provided further, however, that if such Capital Stock is issued to any
director, manager,  officer, employee or
to any plan for the benefit of such parties of the Borrower or its Subsidiaries
or by any such plan to such parties, such Capital Stock shall not constitute
Disqualified Stock solely because it may be required to be repurchased by the
Borrower in order to satisfy applicable statutory or regulatory obligations or
as a result of such parties’ termination, death or disability.

 

7

 

“Distribution” for any Person means, with
respect to any shares of any capital stock, any units, any partnership
interests or other equity securities or ownership interests issued by such
Person, (a) the retirement, redemption, purchase, or other acquisition for
value of any such securities, (b) the declaration or payment of any
dividend on or with respect to any such securities, and (c) any other payment
by such Person with respect to such securities.

 

“Eligible Assignee” means (a) a Lender; (b) an
Affiliate of a Lender that is financially capable of performing the obligations
of a Lender under this Agreement; (c) an Approved Fund that is financially
capable of performing the obligations of such Lender under this Agreement; and (d) any
other Person (other than a natural Person) approved by the Administrative
Agent, in the case of any assignment of a Loan, the L/C Issuer, and, unless an
Event of Default has occurred and is continuing, the Borrower (each such
approval not to be unreasonably withheld or delayed).

 

“Environmental Laws” means all Laws relating
to environmental, health, safety and land use matters applicable to any
property.

 

“Equity Interests” means Capital
Stock and all warrants, options or other rights to acquire Capital Stock (but
excluding any debt security that is convertible into, or exchangeable for,
Capital Stock).

 

“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended, and any rules and regulations issued
pursuant thereto.

 

“ERISA Affiliate” means any trade or business
(whether or not incorporated) under common control with the Borrower within the
meaning of Section 414(b) or (c) of the Code.

 

“ERISA Event” means (a) a Reportable
Event with respect to a Pension Plan; (b) the incurrence by the Borrower
of liability with respect to a withdrawal by the Borrower or any ERISA
Affiliate from a Pension Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of
ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) the incurrence by the Borrower of liability with respect to a
complete or partial withdrawal by the Borrower or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the incurrence by the Borrower of liability with
respect to the filing of a notice of intent to terminate, the treatment of a
Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the
commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) the incurrence by the Borrower of liability with
respect to an event or condition which could reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan or Multiemployer
Plan; or (f) the imposition of any liability under Title IV of ERISA,
other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Borrower or any ERISA Affiliate; and with respect to each of
the occurrences described in the preceding clauses (a) through (f),
which could reasonably be expected to have a Material Adverse Effect.

 

8

 

“Eurodollar Rate” means for any Interest
Period with respect to any Eurodollar Rate Loan:

 

(a)           the rate per annum
equal to the rate determined by the Administrative Agent to be the offered rate
that appears on the page of the Telerate screen (or any successor thereto)
that displays an average British Bankers Association Interest Settlement Rate
for deposits in Dollars (for delivery on the first day of such Interest Period)
with a term equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, or

 

(b)           if the rate
referenced in the preceding subsection (a) does not appear on such page or
service or such page or service shall cease to be available, the rate per
annum equal to the rate determined by the Administrative Agent to be the
offered rate on such other page or other service that displays an average
British Bankers Association Interest Settlement Rate for deposits in Dollars
(for delivery on the first day of such Interest Period) with a term equivalent
to such Interest Period, determined as of approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period, or

 

(c)           if the rates
referenced in the preceding subsections (a) and (b) are not
available, the rate per annum determined by the Administrative Agent as the
rate of interest (rounded upward to the next 1/100th of 1%) at which deposits
in Dollars for delivery on the first day of such Interest Period in same day
funds in the approximate amount of the Eurodollar Rate Loan being made,
continued or converted by Bank of Montreal and with a term equivalent to such
Interest Period would be offered by Bank of Montreal’s London Branch to major
banks in the offshore Dollar market at their request at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period.

 

“Eurodollar Rate Loan” means a Loan that bears
interest at a rate based on the Eurodollar Rate.

 

“Event of Default” means any of the events or
circumstances specified in Article VIII.

 

“Excluded Contributions” means the
net cash proceeds received by the Borrower after the Closing Date from (i) contributions
to its common equity capital and (ii) the sale (other than to a Subsidiary
of the Borrower or to the Borrower or Subsidiary management equity plan or
stock option plan or any other management or employee benefit plan or
agreement) of Capital Stock (other than Disqualified Stock and Designated
Preferred Stock) of the Borrower, in each case designated as Excluded
Contributions pursuant to an Officers’ Certificate executed by an Officer of
the Borrower.

 

“Fair Market Value” means, with respect
to any asset or Property, the price which could be negotiated in an arm’s-length,
free market transaction, for cash, between a willing seller and a willing and
able buyer, neither of who is under undue pressure or compulsion to complete
the transaction.

 

“Federal Funds Rate” means, for any day, the
rate per annum (rounded upwards to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds 

 

9

 

transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that
(a) if such day is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as
so published on the next succeeding Business Day, and (b) if no such rate
is so published on such next succeeding Business Day, the Federal Funds Rate
for such day shall be the average rate charged to Bank of Montreal on such day
on such transactions as determined by the Administrative Agent.

 

“Foreign Lender” has the meaning specified in Section 10.15.

 

“Fund” means any Person (other than a natural
Person) that is (or will be) engaged in making, purchasing, holding or
otherwise investing in commercial loans and similar extensions of credit in the
ordinary course of its business.

 

“GAAP” means either Cdn. GAAP or U.S. GAAP, as
the context may require.

 

“Government Obligations” means
direct obligations (or certificates representing an ownership interest in such
obligations) of Canada or the United States of America (including any agency or
instrumentality thereof) for the payment of which the full faith and credit of
Canada or of the United States of America is pledged and which are not callable
or redeemable at the Borrower’s option.

 

“Governmental Authority” means any nation or
government, any state or other political subdivision thereof, any agency,
authority, instrumentality, regulatory body, court, administrative tribunal,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.

 

“Guarantee” means each Guarantee made by the
Guarantors in favor of the Administrative Agent on behalf of the Lenders,
substantially in the form of Exhibit E,
as amended and in effect from time to time.

 

“Guarantee Obligation” means, as to any
Person, (a) any obligation, contingent or otherwise, of such Person
guarantying or having the economic effect of guarantying any Indebtedness or
other obligation payable or performable by another Person (the “primary obligor”)
in any manner, whether directly or indirectly, and including any obligation of
such Person, direct or indirect, (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or other
obligation, (ii) to purchase or lease Property, securities or services for
the purpose of assuring the obligee in respect of such Indebtedness or other
obligation of the payment or performance of such Indebtedness or other
obligation, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered
into for the purpose of assuring in any other manner the obligees in respect of
such Indebtedness or other obligation of the payment or performance thereof or
to protect such obligees against loss in respect thereof (in whole or in part),
or (b) any Lien on any 

 

10

 

assets of such
Person securing any Indebtedness or other obligation of any other Person,
whether or not such Indebtedness or other obligation is assumed by such Person;
provided, however,
that the term “Guarantee Obligation” shall not include endorsements of
instruments for deposit or collection in the ordinary course of business.  The amount of any Guarantee Obligation shall
be deemed to be an amount equal to the stated or determinable amount of the
related primary obligation, or portion thereof, in respect of which such
Guarantee Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guarantying Person in good faith.

 

“Guarantors” means, collectively, the Parent
Guarantor and each Subsidiary that executes and delivers to the Administrative
Agent a Guarantee, so long as such Guarantee shall not have been expressly
terminated by the Administrative Agent and the Lenders or shall not have been terminated
in accordance with its express terms, in each case with respect to such Person.

 

“Hedging Obligations” means, with
respect to any Person, the obligations of such Person under (i) currency
exchange, interest rate or commodity swap agreements, currency exchange,
interest rate or commodity cap agreements and currency exchange, interest rate
or commodity collar agreements and (ii) other agreements or arrangements
designed to protect such Person against fluctuations in currency exchange,
interest rates or commodity prices.

 

“Honor Date” has the meaning set forth in Section 2.04(c)(i).

 

“Incur” means issue, assume,
guarantee, incur or otherwise become liable for and “Incurred” or “Incurrence”
will have a corresponding meaning; provided, however, that any Indebtedness or
Capital Stock of a Person existing at the time such Person becomes a Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be Incurred by such Person at the time it becomes a Subsidiary.

 

“Indebtedness” means, with respect
to any Person:  (i) the principal of
any indebtedness of such Person, whether or not contingent: (a) in respect
of borrowed money, (b) evidenced by bonds, notes, debentures or similar
instruments or letters of credit or bankers’ acceptances (or, without
duplication, reimbursement agreements in respect thereof), (c) representing
the deferred and unpaid purchase price of any Property, except any such balance
that constitutes a trade payable or similar obligation to a trade creditor due
within six months from the date on which it is Incurred, in each case Incurred
in the ordinary course of business, which purchase price is due more than six
months after the date of placing the Property in service or taking delivery and
title thereto, or (d) in respect of Capitalized Lease Obligations; (ii) to
the extent not otherwise included, any obligation of such Person to be liable
for, or to pay, as obligor, guarantor or otherwise, on the Indebtedness of
another Person (other than by endorsement of negotiable instruments for
collection in the ordinary course of business); and (iii) to the extent
not otherwise included, Indebtedness of another Person secured by a Lien on any
asset owned by such Person (whether or not such Indebtedness is assumed by such
Person); provided, however, that the amount of such Indebtedness will be the
lesser of (a) the Fair Market Value of such asset at such date of
determination and (b) the amount of such Indebtedness of such other
Person; provided, further, that any obligation of Borrower or any Subsidiary in
respect of account credits or participants under any employee, director or
officer compensation plan of the Borrower or Subsidiary and any obligation of
the Borrower or any Subsidiary or Unrestricted Subsidiary in 

 

11

 

respect of the
Liquidity Right (as defined in the Subordinated Note Indenture), will be deemed
not to constitute Indebtedness.

 

“Indemnified Liabilities” has the meaning set
forth in Section 10.05.

 

“Indemnitees” has the meaning set forth in Section 10.05.

 

“Independent Financial Advisor”
means an accounting, appraisal or investment banking firm or consultant to
Persons engaged in a Similar Business, in each case of nationally recognized
standing that is, in the good faith determination of the Borrower, qualified to
perform the task for which it has been engaged.

 

“Interest Expense” means, in
respect of any Person, for any period, the total cash interest expense
(including that attributable to Capitalized Lease Obligations) of such Person
for such period with respect to all outstanding Indebtedness of such Person
(including, without limitation, all commissions, discounts and other fees and
charges owed by such Person with respect to letters of credit and bankers’ acceptance
financing and net costs of such Person under hedge agreements in respect of
interest rates to the extent such net costs are allocable to such period in
accordance with GAAP).

 

“Interest Payment Date” means, (a) as to
any Loan other than a Base Rate Loan, the last day of each Interest Period
applicable to such Loan; provided, however, that if any Interest Period for a
Eurodollar Rate Loan exceeds three months, the respective dates that fall every
three months after the beginning of such Interest Period shall also be Interest
Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of
each March, June, September and December and the Maturity Date.

 

“Interest Period” means as to each Eurodollar
Rate Loan, the period commencing on the date such Eurodollar Rate Loan is
disbursed or converted to or continued as a Eurodollar Rate Loan and ending on
the date one, two, three or six months thereafter, as selected by the Borrower
in its Loan Notice; provided that:

 

(i)            any Interest Period that would
otherwise end on a day that is not a Business Day shall be extended to the next
succeeding Business Day unless, in the case of a Eurodollar Rate Loan, such
Business Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Business Day;

 

(ii)           any Interest Period pertaining to a
Eurodollar Rate Loan that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; and

 

(iii)          no Interest Period shall extend beyond
the scheduled Maturity Date.

 

“Investment Grade Securities” means
(i) securities issued or directly and fully guaranteed or insured by the
United States or Canadian government or any agency or instrumentality thereof
(other than Cash Equivalents), (ii) debt securities or debt instruments
with a rating of BBB (low) 

 

12

 

or higher by DBRS,
BBB- or higher by S&P or Baa3 or higher by Moody’s or the equivalent of
such rating by such rating organization, or if no rating of DBRS, S&P or
Moody’s then exists, the equivalent of such rating by any other nationally
recognized securities rating agency, but excluding any debt securities or
instruments constituting loans or advances among the Borrower and its
Subsidiaries and Unrestricted Subsidiaries, and (iii) investments in any
fund that invests exclusively in investments of the type described in clauses (i) and
(ii) which fund may also hold immaterial amounts of cash pending
investment and/or distribution.

 

“Investments” means, with respect
to any Person, all investments by such Person in other Persons (including Affiliates)
in the form of loans (including guarantees), advances or capital contributions
(excluding accounts receivable, trade credit and advances to customers and
commission, travel and similar advances to officers, employees and consultants
made in the ordinary course of business), purchases or other acquisitions for
consideration (including agreements providing for the adjustment of purchase
price) of Indebtedness, Equity Interests or other securities issued by any
other Person and investments that are required by GAAP to be classified on the
balance sheet of the Borrower in the same manner as the other investments
included in this definition to the extent such transactions involve the
transfer of cash or other Property.

 

“IPSs” means the
Income Participating Securities as defined in and contemplated by that certain
Issuer’s Final Prospectus, dated as of November 10, 2004.

 

“IPS Prospectus”
means that certain Issuer’s Final Prospectus, dated as of November 10,
2004.

 

“IPS Transaction”
means the issuance of the IPSs and the Subordinated Notes as contemplated by
the IPS Prospectus and the Subordinated Note Indenture.

 

“IRS” means the United States Internal Revenue
Service.

 

“Issuer” means
Atlantic Power Corporation, a corporation established under the laws of the
Province of Ontario, Canada, in its capacity as the issuer of the IPSs and
Subordinated Notes.

 

“Laws” means, collectively, all international,
foreign, federal, state, provincial and local statutes, treaties, decrees,
rules, guidelines, regulations, ordinances, codes, municipal by-laws and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable arbitral, administrative, ministerial, departmental or regulatory
judgments, order, directed duties, requests, licenses, decisions, rulings or
awards, authorizations and permits of, and agreements with, any Governmental
Authority, in each case whether or not having the force of law binding on or
affecting the Person referred to in the context in which the term was used.

 

“L/C Advance” means, with respect to each
Lender, such Lender’s funded participation in any Unreimbursed Amount in
accordance with Section 2.04(c)(iii).

 

13

 

“L/C Borrowing” means an extension of credit
resulting from a drawing under any Letter of Credit which has not been
reimbursed on the date when made or refinanced as a  Borrowing.

 

“L/C Credit Extension” means, with respect to
any Letter of Credit, the issuance thereof or extension of the expiry date
thereof, or the renewal or increase of the amount thereof.

 

“L/C Issuer” means Bank of Montreal in its
capacity as issuer of Letters of Credit hereunder, or any successor issuer of
Letters of Credit hereunder.

 

“L/C Obligations” means, as at any date of
determination, the aggregate undrawn face amount of all outstanding Letters of
Credit plus to the extent unreimbursed,
the aggregate of all Unreimbursed Amounts, including, without duplication, all
L/C Borrowings and L/C Advances.

 

“Lender” has the meaning specified in the
introductory paragraph hereto and, as the context requires, includes the L/C
Issuer.

 

“Lending Office” means, as to any Lender, the
office or offices of such Lender described as such on Schedule 10.02, or such other office or
offices as a Lender may from time to time notify the Borrower and the
Administrative Agent.

 

“Letter of Credit” means any letter of credit
issued hereunder.  A Letter of Credit may be a commercial letter
of credit or a standby letter of credit.

 

“Letter of Credit
Application” means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the L/C
Issuer and on terms satisfactory to the L/C Issuer and the Borrower; provided, in the event of any conflict
between such application and agreement and the terms of this Agreement, the
terms of this Agreement shall control.

 

“Letter of Credit Expiration Date” means the
day that is seven days prior to the Maturity Date (or, if such day is not a
Business Day, the next preceding Business Day).

 

“Letter of Credit Sublimit” means an amount
equal to the
lesser of the Commitments and U.S.$30,000,000.  The Letter of Credit Sublimit is part of, and
not in addition to, the Commitments.

 

“Lien” means, with respect to any
asset, any mortgage, lien, pledge, charge, security interest or encumbrance of
any kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in and any filing of or agreement
to give any financing statement under the Uniform Commercial Code or the Personal Property Security Act (Ontario)
(or equivalent statutes) of any jurisdiction); provided that in no event will
an operating lease be deemed to constitute a Lien.

 

“Loan” means an extension of credit by a
Lender to the Borrower under Section 2.01.

 

14

 

“Loan Documents” means this Agreement, each
Note, the Agent/Arranger Fee Letter, each Request for Credit Extension, each
Compliance Certificate, each
Guarantee and each other Security Document.

 

“Loan Notice” means
written or telephonic notice of (a) a Borrowing, (b) a conversion of  Loans from one Type to the other, or (c) a
continuation of Loans as the same Type, pursuant to Section 2.02(a),
which, if in writing, shall be substantially in the form of Exhibit A or
if telephonic, shall be immediately followed by written notice in the form of Exhibit
A; provided, any such telephone notice shall be irrevocable when given
notwithstanding that it is required to be so confirmed in writing.

 

“Loan Parties” means, collectively, the
Borrower and
the Guarantors.

 

“Material Adverse Effect” means (a) a
material adverse change in, or a material adverse effect upon, the operations,
business, properties, financial condition, or assets of (i) the Parent
Guarantor or (ii) the Borrower and its consolidated Subsidiaries taken as
a whole; (b) a material impairment of the ability of any Loan Party to pay
any Obligation when due or otherwise to perform its material obligations under
this Agreement, any Guarantee, any other Security Document or any Note, in each
case, to which it is a party; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability of this Agreement, any
Guarantee, any other Security Document or any Note, in each case, against any
Loan Party a party thereto.

 

“Maturity Date” means (a) November 18, 2007, or such later date to which the
tenor of the Commitments may be extended in accordance with the terms hereof,
or (b) such earlier date upon which the Commitments may be terminated in
accordance with the terms hereof.

 

“Moody’s” means Moody’s Investors
Service, Inc. or any successor to the rating agency business thereof, or
if no such successor, any other debt rating agency selected by the Borrower and
approved by the Required Lenders.

 

“Multiemployer Plan” means any employee
benefit plan of the type described in Section 4001(a)(3) of ERISA, to
which the Borrower or any ERISA Affiliate makes or is obligated to make
contributions.

 

“Net Proceeds” means the aggregate
cash proceeds received by the Borrower or any of its Subsidiaries in respect of
any Asset Sale (including, without limitation, any cash received in respect of
or upon the sale or other disposition of any Designated Non-Cash Consideration
received in any Asset Sale and any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding the assumption by the acquiring
Person of Indebtedness relating to the disposed assets or other considerations
received in any other non-cash form), net of the direct costs to the Borrower
or such Subsidiary relating to such Asset Sale and the sale or disposition of
such Designated Non-Cash Consideration (including, without limitation, legal,
accounting and investment banking fees, and brokerage and sales commissions),
and any relocation expenses Incurred as a result thereof, taxes paid or payable
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements related thereto), amounts required
to be applied to the repayment of principal, premium (if any) and interest on 

 

15

 

Indebtedness
required other than pursuant to Section 7.05(b) to be paid as a
result of such transaction, and any deduction of appropriate amounts to be
provided by the Borrower as a reserve in accordance with GAAP against any
liabilities associated with the asset disposed of in such transaction and
retained by the Borrower after such sale or other disposition thereof,
including, pension and other post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification
obligations associated with such transaction.

 

“Note” means, a promissory note made by the
Borrower in favor of a Lender evidencing Loans made by such Lender,
substantially in the form of Exhibit B.

 

“Obligations” means all advances to, and
debts, liabilities and obligations of, any Loan Party arising under any Loan
Document, whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising and including interest that accrues
after the commencement by or against any Loan Party of any proceeding under any
Debtor Relief Laws naming such Person as the debtor in such proceeding.

 

“Officers’ Certificate” means a
certificate signed on behalf of the Borrower by two Responsible Officers of the
Borrower, one of whom must be the principal executive officer, the principal
financial officer, the treasurer or the principal accounting officer of the
Borrower that meets the requirements set forth in this Agreement.

 

“Onondaga Swap” means that certain swap
agreement between Niagara Mohawk Power Corporation and the Mortgagor dated as
of June 30, 1998 and expiring on June 30, 2008.

 

“Organization Documents” means, (a) with
respect to any corporation, the certificate or articles of incorporation and
the bylaws; (b) with respect to any limited liability company, the
certificate of formation and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation and any
agreement, instrument, filing or notice with respect thereto filed in connection
with its formation with the secretary of state or other department in the state
of its formation, in each case as amended from time to time.

 

“Outstanding Amount” means (i) with
respect to Loans, on any date, the aggregate outstanding principal amount
thereof after giving effect to any borrowings and prepayments or repayments
occurring on such date; and (ii) with respect to any L/C Obligations on
any date, the amount of such L/C Obligations on such date after giving effect
to any L/C Credit Extension occurring on such date and any other changes in the
aggregate amount of the L/C Obligations as of such date, including as a result
of any reimbursements of outstanding unpaid drawings under any Letters of
Credit or any reductions in the maximum amount available for drawing under
Letters of Credit taking effect on such date.

 

“Parent Guarantor”
means Atlantic Power Corporation, a corporation established under the laws of
the Province of Ontario, Canada.

 

“Participant” has the meaning specified in Section 10.07(d).

 

16

 

“PBGC” means the Pension Benefit Guaranty
Corporation.

 

“Pension Plan” means any “employee pension
benefit plan” (as such term is defined in Section 3(2) of ERISA),
other than a Multiemployer Plan, that is subject to Title IV of ERISA, and in
respect of which the Borrower or any ERISA Affiliate contributes or has an
obligation to contribute, or in the case of (or if such plan were terminated
would under Section 4069 of ERISA be deemed to be ) an “employer”, as
defined in Section 3(5) of ERISA, contributed or had an obligation to
contribute at any time during the immediately preceding five plan years.

 

“Permitted Investments” means: (i) any
Investment in the Borrower or any Subsidiary; (ii) any Investment in Cash
Equivalents or Investment Grade Securities; (iii) any Investment by the
Borrower or any Subsidiary of the Borrower in a Person that is primarily
engaged in a Similar Business; (iv) any Investment in securities or other
assets not constituting Cash Equivalents and received in connection with an
Asset Sale made pursuant to Section 7.05 or any other disposition
of assets not constituting an Asset Sale; (v) any Investment existing on
the Closing Date; (vi) advances to employees of the Borrower or any
Subsidiary not in excess of U.S.$5,000,000 outstanding at any one time in the
aggregate; (vii) any Investment acquired by the Borrower or any of its
Subsidiaries: (a) in exchange for any other Investment or accounts
receivable held by the Borrower or any such Subsidiary in connection with or as
a result of a bankruptcy, workout, reorganization or recapitalization of the
issuer of such other Investment or accounts receivable, or (b) as a result
of a foreclosure by the Borrower or any of its Subsidiaries with respect to any
secured Investment or other transfer of title with respect to any secured
Investment in default; (viii) Hedging Obligations permitted under Section 7.02(b)(vii);
(ix) additional Investments having an aggregate Fair Market Value, taken
together with all other Investments made pursuant to this clause that are at
that time outstanding, not to exceed the greater of 7.5% of the total assets of
the Borrower and its Subsidiaries or U.S.$5,000,000 at the time of such
Investment (with the Fair Market Value of each Investment being measured at the
time made and without giving effect to subsequent changes in value); (x) loans
and advances to officers, directors and employees for business-related travel
expenses, moving expenses and other similar expenses, in each case Incurred in
the ordinary course of business, and account credits and payments to
participants under the Borrower’s or its Subsidiaries’ long-term compensation
plan or any successor or similar compensation plan; (xi) Investments the
payment for which consists of Equity Interests of the Borrower (other than
Disqualified Stock); (xii) Intentionally Blank; (xiii) Intentionally Blank;
(xiv) Guarantees Incurred in accordance with Section 7.02; (xv) any
Investment by Subsidiaries in other Subsidiaries; (xvi) Investments consisting
of purchases and acquisitions of inventory, supplies, materials and equipment
or purchases of contract rights or licenses or leases of intellectual property,
in each case in the ordinary course of business; (xvii) loans and advances to
current or former management personnel of the Borrower and/or any entity in
which any current or former management personnel of the Borrower has a
beneficial or equity interest, pursuant to any management equity plan or stock
option plan or any other management or employee benefit or incentive plan or
agreement or any other agreement pursuant to which stock is held for the
benefit of such Persons not to exceed U.S.$5,000,000 in aggregate principal
amount at any time outstanding, the proceeds of which will be used to purchase
or redeem, directly or indirectly, shares of Capital Stock of the Borrower; and
(xviii)  Investments made by any
Unrestricted Subsidiary; provided such Investments do not otherwise
violate the restrictions and limitations of Article VII.

 

17

 

“Permitted Liens” means, with
respect to any Person:  (i) pledges
or deposits by such Person under workmen’s compensation laws, unemployment
insurance laws or similar legislation, or good faith deposits in connection
with bids, tenders, contracts (other than for the payment of Indebtedness) or
leases to which such Person is a party, or deposits to secure public or
statutory obligations of such Person or deposits of cash or Canadian or United
States government bonds to secure surety or appeal bonds to which such Person
is a party, or deposits as security for contested taxes or import duties or for
the payment of rent, in each case Incurred in the ordinary course of business; (ii) Liens
imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens, in each
case for sums not yet due or being contested in good faith by appropriate
proceedings or other Liens arising out of judgments or awards against such
Person with respect to which such Person will then be proceeding with an appeal
or other proceedings for review; (iii) Liens for taxes, assessments or
other governmental charges not yet due or payable or subject to penalties for
non-payment or which are being contested in good faith by appropriate
proceedings; (iv) Liens in favour of issuers of performance and surety
bonds or bid bonds or completion guarantees or with respect to other regulatory
requirements or letters of credit issued pursuant to the request of and for the
account of such Person in the ordinary course of its business; (v) minor
survey exceptions, minor encumbrances, easements or reservations of, or rights
of others for, licenses, rights-of-way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions as
to the use of real properties or Liens incidental to the conduct of the
business of such Person or to the ownership of its properties which were not
Incurred in connection with Indebtedness and which do not in the aggregate
materially adversely affect the value of said properties or materially impair
their use in the operation of the business of such Person; (vi) Liens
securing Indebtedness permitted to be incurred pursuant to this Agreement; (vii) Liens
existing on the Closing Date; (viii) Liens on property or shares of stock
of a Person at the time such Person becomes a Subsidiary; provided, however,
that such Liens are not created or Incurred in connection with, or in
contemplation of, such other Person becoming such a Subsidiary; provided,
further, however, that such Liens may not extend to any other property
owned by the Borrower or any Subsidiary of the Borrower; (ix) Liens on
property at the time the Borrower or a Subsidiary other of the Borrower
acquired the property, including any acquisition by means of a merger or
consolidation with or into the Borrower or any Subsidiary of the Borrower; provided,
however, that such Liens are not created or Incurred in connection with,
or in contemplation of, such acquisition; provided, further,
however, that the Liens may not extend to any other property owned by the
Borrower or any Subsidiary; (x) Liens securing Indebtedness or other
obligations of a Subsidiary of the Borrower owing to the Borrower or another
Subsidiary of the Borrower permitted to be Incurred in accordance with Section 7.02;
(xi) Liens securing Hedging Obligations of the Borrower so long as the related
Indebtedness is, and is permitted to be under this Agreement, secured by a Lien
on the same property securing such Hedging Obligations of the Borrower; provided
that any such Liens securing the Hedging Obligation of the Borrower and a
counterparty that is not a Lender or Bank of Montreal or an Affiliate of a
Lender or Bank of Montreal, under certain circumstances shall be subordinated
in right of payment to the Secured Obligations as provided in Sections
3.1(b)(ii), 3.2(b)(ii) and 3.3(b)(ii) of the
Deposit and Disbursement Agreement; and provided  further that in
order to have the benefits of such collateral and to be a “Secured Party” for
purposes of the Deposit and Disbursement Agreement and the Collateral Agency
and Intercreditor Agreement, such counterparty to such Hedging Obligations has
become a party to the Collateral Agency and Intercreditor Agreement by
executing and delivering to the Collateral 

 

18

 

Agent a Joinder
Agreement substantially in the form of Exhibit A to the Collateral Agency
and Intercreditor Agreement (xii) leases and subleases of real property
which do not materially interfere with the ordinary conduct of the business of
the Borrower or any of its Subsidiaries; (xiii) Liens arising from Personal
Property Registry filings or Uniform Commercial Code financing statement
filings regarding operating leases entered into by the Borrower and its
Subsidiaries in the ordinary course of business; (xiv) Liens in favour of the
Borrower; (xv) Liens encumbering deposits made in the ordinary course of
business to secure obligations arising from statutory, regulatory, contractual
or warranty requirements, including rights of offset and set-off; (xvi) Liens
to secure any refinancing, refunding, extension, renewal or replacement or
successive refinancings, refundings, extensions, renewals or replacements as a
whole, or in part, of any Indebtedness secured by any Lien referred to in the
foregoing clauses (vii), (viii), (ix), (x) and (xi); provided, however,
that (A) such new Lien shall be limited to all or part of the same
property that secured the original Lien (plus improvements on such property)
and (B) the Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of (1) the outstanding
principal amount or, if greater, committed amount of the Indebtedness described
under clauses (vii), (viii), (ix), (x) and (xi) at the time the original
Lien became a Permitted Lien under this Agreement and (2) an amount
necessary to pay any fees and expenses, including premiums, related to such
refinancing, refunding, extension, renewal or replacement; and (xvii) Liens
created or Incurred by an Unrestricted Subsidiary; provided, however,
that any such Liens permitted pursuant to this clause (xvii) shall not
encumber, restrict or in any other way affect the Property of the Borrower or
any other Subsidiary of the Borrower.

 

“Person” means any individual,
corporation, partnership, business trust, limited liability company, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.

 

“Plan” means any “employee benefit plan” (as
such term is defined in Section 3(3) of ERISA) established by the
Borrower or any ERISA Affiliate.

 

“Pledge Agreements”
means, each pledge and security agreement made by the applicable Loan Party in
favor of the Administrative Agent on behalf of the Lenders, as may be required
by the Administrative Agent from time to time and substantially in the form of
either Exhibit G or Exhibit G-1, as
amended and in effect from time to time.

 

“Preferred Stock” means any Equity
Interest with preferential right of payment of dividends or upon liquidation,
dissolution, or winding up.

 

“Project Documents” includes all
power purchase agreements, steam sales contracts, operating and maintenance
agreements, administrative services contracts, lease agreements, construction
contracts (other than purchase orders), transmission agreements, fuel supply
and transportation contracts, Project loan agreements, partnership agreements,
limited liability company agreements and other organizational documents that
relate to a Project, other than any such agreement that has a term of one year
or less or that may be cancelled or terminated by a party thereto on less than
one year’s notice without substantial economic detriment.

 

“Project Holding
Entities” has the meaning specified in the IPS Prospectus.

 

19

 

“Project Level
Subsidiary” means any Subsidiary that is not a Project Holding Entity.

 

“Projects” means
the projects described in the Prospectus.

 

“Property” means
any interest or right in any kind of property or assets, whether real,
personal, or mixed, owned or leased, tangible or intangible, and whether now
held or hereafter acquired.

 

“Pro Rata Share” means, with respect to each
Lender, the percentage (carried out to the ninth decimal place) of the
Commitments set forth opposite the name of such Lender on Schedule 2.01, as such share may be adjusted
as contemplated herein.

 

“Quarterly Base Dividend Level”
means the U.S. Dollar Equivalent of Cdn.$ 0.3657 per Common Share of the
Issuer, divided by four, subject to adjustment in the event of a stock split,
recombination, consolidation or reclassification, issuance at less than fair
market value, or the issuance of Common Shares at less that the U.S. Dollar
Equivalent of Cdn. $4.23 per Common Share (which adjustment shall be
accompanied by an opinion of an independent advisor that the adjustment is fair
to the Secured Parties).

 

“Register” has the meaning set forth in Section 10.07(c).

 

“Reportable Event” means any of the events set
forth in Section 4043(c) of ERISA, other than events for which the 30
day notice period has been waived.

 

“Request for Credit Extension” means (a) with
respect to a Borrowing, conversion or continuation of Loans, a Loan Notice, and
(b) with respect to an L/C Credit Extension, a Letter of Credit
Application.

 

“Required Lenders” means, as of any date of
determination, Lenders whose Voting Percentages aggregate to more than 66 2/3%.

 

“Responsible Officer” means the chairman of
the board, the president, any chief executive officer, chief financial officer,
senior vice president or vice president, the assistant treasurer, secretary or
assistant secretary, manager, board of managers or attorney-in-fact (i) of
a Loan Party, or (ii) of any Person appointed or authorized to act by any
Loan Party pursuant to any management or similar agreement.

 

“Restricted Investment” means an
Investment other than a Permitted Investment.

 

“Restricted Payment” has the
meaning set forth in Section 7.03(a).

 

“S&P” means
Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. or any successor to the rating agency business thereof, or
if no such successor, any other debt rating agency selected by the Borrower and
approved by the Required Lenders.

 

“Sale/Leaseback Transaction” means
an arrangement relating to Property now owned or hereafter acquired by the
Borrower or its Subsidiary whereby the Borrower or its Subsidiary transfers
such Property to a Person and the Borrower or such Subsidiary leases it from
such 

 

20

 

Person, other than
leases between the Borrower and a Wholly-Owned
Subsidiary or between Wholly-Owned
Subsidiaries.

 

“Securities” has
the meaning set forth in the Subordinated Note Indenture.

 

“Security Documents”
means each Guarantee, the Deposit and Disbursement Agreement, the Collateral
Agency and Intercreditor Agreement, each Pledge Agreement, the Security
Agreement and any and all other agreements, deeds of trust, mortgages, chattel
mortgages, security agreements, pledges, control agreements, guaranties,
depositary agreements, assignments of production or proceeds of production,
assignments of income, assignments of contract rights, assignments of equity
interests, assignments of royalty interests, assignments of performance,
completion or surety bonds, standby agreements, subordination agreements,
undertakings and other instruments and financing statements now or hereafter
executed and delivered by any Person (other than solely by any Administrative
Agent or any Lenders and/or any other creditor participating in the Loans or
any collateral or security therefor) in connection with, or as security for any
Secured Obligation of a Loan Party (each as they may be amended or modified
from time to time).

 

“Secured Indebtedness” means any
Indebtedness of the Borrower or any Subsidiary secured by a Lien, including the
Indebtedness hereunder.

 

“Secured Obligations”
means, any or all of (i) the Obligations, (ii) any Hedging Obligation
of the Borrower to any of the Lenders, Bank of Montreal or their respective
Affiliates (iii) any obligation of a Borrower to any of the Lenders, Bank
of Montreal or their respective Affiliates with respect to cash management
exposure and funds transfer and deposit account liabilities.

 

“Security Agreement”
means, each security agreement made by the applicable Loan Party in favor of
the Administrative Agent on behalf of the Lenders, as may be required by the
Administrative Agent from time to time and substantially in the form of either Exhibit J
as amended and in effect from time to time

 

“Senior Indebtedness” with respect
to the Borrower or any Subsidiary of the Borrower  means all Secured Indebtedness of the Borrower or any such
Subsidiary including interest thereon (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Borrower or any Subsidiary of the Borrower whether or not a claim for
post-filing interest is allowed in such proceeding) and other amounts
(including make-whole, fees, expenses, reimbursement obligations under letters
of credit and indemnities) owing in respect thereof, whether outstanding on the
Closing Date or thereafter Incurred, unless in the instrument creating or
evidencing the same or pursuant to which the same is outstanding it is provided
that such obligations are not superior in right of payment to the obligations
hereunder or such Subsidiary’s Guarantee, as applicable; provided, however, that Senior
Indebtedness shall not include, as applicable, (i) any obligation of the
Borrower to any Subsidiary or Unrestricted Subsidiary of the Borrower, or of
such Subsidiary or Unrestricted Subsidiary to the Borrower or any other
Subsidiary or Unrestricted Subsidiary of the Borrower, (ii) any liability
for federal, state, provincial, local or other taxes owed or owing by the
Borrower or such Subsidiary, (iii) any accounts payable or other liability
to trade creditors arising in the ordinary course of business 

 

21

 

(including
guarantees thereof or instruments evidencing such liabilities), (iv) any
Indebtedness or obligation of the Borrower or such Subsidiary which is Pari Passu Indebtedness (as defined in the
Subordinated Note Indenture) under the Subordinated Note Indenture, or (v) any
obligations with respect to any Capital Stock.

 

“Similar Business” means a
business, the majority of whose revenues are derived from the generation of
electric power, or the activities of the Borrower and its Subsidiaries as of
the Closing Date or any business or activity that is reasonably similar thereto
or a reasonable extension, development or expansion thereof or ancillary
thereto, including investing in power generation facilities.

 

“Solvent” means, with respect to any Person at
any time, a condition under which (a) the fair saleable value of such
Person’s assets is, on the date of determination, greater than the total amount
of such Person’s liabilities (including contingent and unliquidated
liabilities) at such time; and (b) such Person is able to pay all of its
liabilities as such liabilities mature. 
For purposes of this definition (i) the amount of a Person’s
contingent or unliquidated liabilities at any time shall be that amount which,
in light of all the facts and circumstances then existing, represents the
amount which can reasonably be expected to become an actual or matured
liability, (ii) the “fair saleable value” of an asset shall be the amount
which may be realized within a reasonable time either through collection or
sale of such asset at its regular market value, and (iii) the “regular
market value” of an asset shall be the amount which a capable and diligent
business person could obtain for such asset from an interested buyer who is
willing to purchase such asset under ordinary selling conditions.

 

“Specified
Project Effect”  means, from time to
time, defaults with respect to Contractual Obligations of any Loan Party or any
Subsidiary of any Loan Party, as applicable, related to one or more Projects
which Contractual Obligations, in the aggregate, impact at least 20% of the
Loan Parties’ net cash flow from all of the Projects for the 12 month period
ending the date of the most recent quarterly financial statements delivered
pursuant to Section 6.01; provided, that for purposes hereof
such net cash flow shall be reduced on a pro forma basis
to reflect any Asset Sales occurring since the date of such financials.

 

“Stated Maturity” means, with
respect to any security, the date specified in such security as the fixed date
on which the final payment of principal of such security is due and payable,
including pursuant to any mandatory redemption provision (but excluding any
provision providing for the repurchase of such security at the option of the
holder thereof upon the happening of any contingency beyond the control of the
Borrower unless such contingency has occurred).

 

“Subordinated Indebtedness” means,
with respect to the Borrower or any Subsidiary, all Indebtedness of the
Borrower or any Subsidiary which is not Senior Indebtedness.

 

“Subordinated Note
Indenture” means that certain 11% Subordinated Notes Indenture dated November 18,
2004 among the Issuer, the guarantors a party thereto and Computershare Trust
Company of Canada, in its capacity as trustee to the Indenture.

 

22

 

“Subordinated Notes” means the Subordinated
Notes issued pursuant to the Subordinated Note Indenture and as defined in and
contemplated by the IPS Prospectus.

 

“Subsidiary” means, with respect to
any Person, (i) any corporation, association or other business entity
(other than a partnership, joint venture or limited liability company) of which
40% or more of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, managers or trustees thereof is at the time of determination
owned or controlled, directly or indirectly, by such Person or one or more of
the other Subsidiaries of that Person or a combination thereof and (ii) any
partnership, joint venture or limited liability company of which (x) 40%
or more of the capital accounts, distribution rights, total equity and voting
interests or general and limited partnership interests, as applicable, are
owned or controlled, directly or indirectly, by such Person or one or more of
the other Subsidiaries of that Person or a combination thereof, whether in the
form of membership, general, special or limited partnership interests or
otherwise and such Person owns or controls, directly or indirectly, 40% or more
of the total equity and voting rights of the general partner of such entity;
for greater certainty, the Subsidiaries of the Borrower will include all
entities listed on Schedule 5.13. 
Notwithstanding the foregoing or anything contained or referred to in
any Loan Document to the contrary, no Unrestricted Subsidiary shall be deemed a
Subsidiary of the Borrower for any purpose under any Loan Document.

 

“Swap Contract” means (a) any and all
rate swap transactions, basis swaps, credit derivative transactions, forward
rate transactions, commodity swaps, commodity options, forward commodity
contracts, equity or equity index swaps or options, bond or bond price or bond
index swaps or options or forward bond or forward bond price or forward bond
index transactions, interest rate options, forward foreign exchange
transactions, cap transactions, floor transactions, collar transactions,
currency swap transactions, cross-currency rate swap transactions, currency
options, spot contracts, or any other similar transactions or any combination
of any of the foregoing (including any options to enter into any of the
foregoing), whether or not any such transaction is governed by or subject to
any master agreement, and (b) any and all transactions of any kind, and
the related confirmations, which are subject to the terms and conditions of, or
governed by, any form of master agreement published by the International Swaps
and Derivatives Association, Inc., any International Foreign Exchange
Master Agreement, or any other master agreement (any such master agreement,
together with any related schedules, a “Master
Agreement”), including any such obligations or liabilities under any
Master Agreement.

 

“Swap Termination Value” means, in respect of
any one or more Swap Contracts, after taking into account the effect of any
legally enforceable netting agreement relating to such Swap Contracts, (a) for
any date on or after the date such Swap Contracts have been closed out and
termination value(s) determined in accordance therewith, such termination
value(s), and (b) for any date prior to the date referenced in clause (a) the
amount(s) determined as the mark-to-market value(s) for such Swap
Contracts, as determined based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in such Swap Contracts
(which may include any Lender).

 

“Taxes” means U.S. Taxes as defined
in Section 3.01.

 

23

 

“Threshold Amount”
means U.S.$25,000,000.

 

“Treasury Regulations”
means the U.S. Treasury regulations (including final, temporary and proposed
regulations) promulgated under the Code.

 

“Trustee” has the
meaning set forth in the Subordinated Note Indenture.

 

“Type” means with
respect to a Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.

 

“Unfunded Pension
Liability” means the excess of a Pension Plan’s benefit liabilities under
Section 4001(a)(16) of ERISA, over the current value of that Pension
Plan’s assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

 

“Unreimbursed Amount”
has the meaning set forth in Section 2.04(c)(i).

 

“Unrestricted Subsidiary”
means any Subsidiary of the Borrower that is designated as such to the
Administrative Agent pursuant to Section 6.14 after the date
hereof; provided, however, that no Guarantor, Project Holding
Entity, or other Subsidiary of the Borrower as of the Closing Date shall be
designated as an Unrestricted Subsidiary without the prior written consent of
the Administrative Agent and the Required Lenders, such consent to be granted
in the sole discretion of the Administrative Agent and the Required Lenders.

 

“U.S. Dollar” and
“U.S.$” mean lawful money of the United States of America.

 

“U.S. Dollar
Equivalent” of Cdn. Dollars with respect to any amount of U.S. Dollars at
any date shall mean the equivalent in Cdn. Dollars of U.S. Dollars calculated
on the basis of the arithmetical mean of the buy and sell spot price rates of
exchange of the Administrative Agent for Cdn. Dollars at 11:00 a.m. New
York time, on the date on or as of which such amount is to be determined.

 

“U.S. GAAP” means
United States of America generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession, that are generally accepted in the United States of America and
applicable to the circumstances as of the date of determination, consistently
applied.

 

“Voting Percentage”
means, as to any Lender, (a) at any time when the Commitments are in
effect, such Lender’s Pro Rata Share and (b) at any time after the
termination of the Commitments, the percentage (carried out to the ninth
decimal place) which (i) the sum of (A) the Outstanding Amount of
such Lender’s Loans, plus (B) such Lender’s Pro Rata Share of the
Outstanding Amount of L/C Obligations, divided by (ii) the Outstanding
Amount of all Loans and L/C Obligations; provided, however, that
if any Lender has failed to fund any portion of the Loans or participations in
L/C Obligations required to be funded by it hereunder, such Lender’s 

 

24

 

Voting Percentage shall be deemed to be zero percent
(0%), and the respective Pro Rata Shares and Voting Percentages of the other
Lenders shall be recomputed for purposes of this definition and the definition
of “Required Lenders” without regard to such Lender’s Commitment or the
outstanding amount of its Loans, and L/C Advances, as the case may be.

 

“Voting Stock” of
any Person as of any date means the Capital Stock of such Person that is at the
time entitled to vote in the election of the board of directors, managers or
trustees, as the case may be, of such Person.

 

“Weighted Average Life
to Maturity” means, when applied to any Indebtedness or Disqualified Stock,
as the case may be, at any date, the quotient obtained by dividing (i) the
sum of the products of the number of years from the date of determination to
the date of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Disqualified Stock
multiplied by the amount of such payment, by (ii) the sum of all such
payments.

 

“Wholly-Owned
Subsidiary” of any Person means a Subsidiary of such Person 100% of the
outstanding Capital Stock or other ownership interests of which will at the
time be owned by such Person or by one or more Wholly-Owned Subsidiaries of
such Person.

 

1.02        Other Interpretive Provisions.

 

(a)           The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.

 

(b)           (i)            The
words “herein” and “hereunder” and words of similar import when
used in any Loan Document shall refer to such Loan Document as a whole and not
to any particular provision thereof.

 

(ii)           Unless otherwise specified herein,
Article, Section, Exhibit and Schedule references are to this Agreement.

 

(iii)          The term “including” is by way
of example and not limitation.

 

(iv)          The term “documents” includes
any and all instruments, documents, agreements, certificates, notices, reports,
financial statements and other writings, however evidenced.

 

(v)           The verb “continue”, and its
usage in correlative forms, with reference to a Default or an Event of Default,
shall mean that such Default or Event of Default has occurred and continues
and, if applicable, after the passage of the applicable notice or cure period
continues uncured, unwaived or otherwise unremedied, or with respect to the
event or circumstance giving rise thereto, and after the passage of the
applicable notice or cure period, continues uncured, unwaived or otherwise
unremedied.

 

(vi)          all “dollars” are in U.S. dollars,
unless otherwise stated;

 

(vii)         a term has the meaning assigned to it;

 

25

 

(viii)        “or” is not exclusive;

 

(ix)           the principal amount of any
non-interest bearing or other discount security at any date shall be the
principal amount thereof that would be shown on a balance sheet of the issuer
dated such date prepared in accordance with GAAP;

 

(x)            the principal amount of any
Preferred Stock shall be (i) the maximum liquidation value of such
Preferred Stock or (ii) the maximum mandatory redemption or mandatory
repurchase price with respect to such Preferred Stock, whichever is greater;

 

(xi)           for the purposes of calculating a
financial ratio all dollar amounts will be converted into the appropriate
currency in accordance with GAAP or as otherwise provided herein;

 

(xii)          for the purposes of any the financial
covenants and related definition set out in this Agreement or the other Loan
Documents in respect of the period between the date hereof and such date ending
March 31, 2006, financial results that are available for periods of less
than 12 months shall be annualized; and

 

(xiii)         the financial provisions and
information set forth in the IPS Prospectus shall be deemed to (i) satisfy
any condition precedent set forth in Section 4.01 or Section 4.02
relating to the provision of any financial statements, balance sheets or other
financial information, and (ii) constitute the basis for any comparisons
of any financial statements, balance sheets or other financial information
through December 31, 2005.

 

(c)           In the computation of periods of time
from a specified date to a later specified date, the word “from” means “from
and including;” the words “to” and “until” each mean “to
but excluding;” and the word “through” means “to and including.”

 

(d)           Section headings herein and the
other Loan Documents are included for convenience of reference only and shall
not affect the interpretation of this Agreement or any other Loan Document.

 

1.03        Accounting Terms. 
All accounting terms not specifically or completely defined herein shall
be construed in conformity with, and all financial data required to be
submitted pursuant to this Agreement shall be prepared in conformity with, GAAP
applied on a consistent basis, as in effect from time to time, applied in a
manner consistent with that used in preparing the Audited Financial Statements,
except as otherwise specifically prescribed herein.

 

1.04        Rounding.  Any financial
ratios required to be maintained by the Borrower pursuant to this Agreement
shall be calculated by dividing the appropriate component by the other component,
carrying the result to one place more than the number of places by which such
ratio is expressed herein and rounding the result up or down to the nearest
number (with a rounding-up if there is no nearest number).

 

1.05        References to Agreements and Laws. 
Unless otherwise expressly provided herein, (a) references to
documents (including the Loan Documents) shall be deemed to include 

 

26

 

all subsequent
amendments, restatements, extensions, supplements and other modifications
thereto, but only to the extent that such amendments, restatements, extensions,
supplements and other modifications are not prohibited by any Loan Document,
and (b) references to any Law shall include all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting such Law.

 

ARTICLE
II.

THE
COMMITMENTS AND CREDIT EXTENSIONS

 

2.01        Loans.  Subject to
the terms and conditions set forth herein, each Lender severally agrees to make
loans (each such loan, a “Loan”) to the Borrower from time to time on
any Business Day during the period from the Closing Date to the Maturity Date,
in an aggregate amount for all Loans to the Borrower not to exceed at any time
outstanding the amount of such Lender’s Commitment; provided, however,
that after giving effect to any Borrowing, (i) the aggregate Outstanding
Amount of all Loans and L/C Obligations shall not exceed the Commitments, and
(ii) the aggregate Outstanding Amount of the Loans of any Lender, plus
such Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations
shall not exceed such Lender’s Commitment. 
Within the limits of each Lender’s Commitment, and subject to the other
terms and conditions hereof, the Borrower may borrow under this Section 2.01,
prepay under Section 2.06, and reborrow under this Section 2.01.  Loans may be Base Rate Loans or Eurodollar
Rate Loans, as further provided herein.

 

2.02        Borrowings, Conversions and
Continuations of Loans.

 

(a)           Each Borrowing (other than an L/C
Borrowing), each conversion of Loans from one Type to the other, and each
continuation of Loans as the same Type shall be made upon the Borrower’s
irrevocable notice to the Administrative Agent. 
Each such notice must be received by the Administrative Agent not later
than 12:00 p.m., New York time, (i) three Business Days prior to
the requested date of any Borrowing of, conversion to or continuation of
Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base
Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate
Loans.  Each Borrowing of, conversion to
or continuation of Eurodollar Rate Loans shall be in a principal amount of
U.S.$1,000,000 or a whole multiple of U.S.$1,000,000 in excess thereof.  Each Borrowing of or conversion to Base Rate
Loans shall be in a principal amount of U.S.$500,000 or a whole multiple of
U.S.$100,000 in excess thereof.  Each
Loan Notice shall specify (i) whether the Borrower is requesting a Borrowing,
a conversion of Loans from one Type to the other, or a continuation of Loans as
the same Type, (ii) the requested date of the Borrowing, conversion or
continuation, as the case may be (which shall be a Business Day),
(iii) the principal amount of Loans to be borrowed, converted or continued,
(iv) the Type of  Loans to be
borrowed or to which existing Loans are to be converted, and (v) if
applicable, the duration of the Interest Period with respect thereto.  If the Borrower fails to specify a Type
of  Loan in a Loan Notice or if the
Borrower fails to give a timely notice requesting a conversion or continuation,
then the applicable Loans shall be made or continued as, or converted to, Base
Rate Loans.  Any such automatic
conversion to Base Rate Loans shall be effective as of the last day of the
Interest Period then in effect with respect to the applicable Eurodollar Rate
Loans.  If the Borrower requests a
Borrowing of, conversion to, or 

 

27

 

continuation of
Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest
Period, it will be deemed to have specified an Interest Period of one month.

 

(b)           Following receipt of a Loan Notice,
the Administrative Agent shall promptly notify each Lender of its Pro Rata
Share of the applicable Loans, and if no timely notice of a conversion or
continuation is provided by the Borrower, the Administrative Agent shall notify
each Lender of the details of any automatic conversion to Base Rate Loans
described in the preceding subsection. 
In the case of a Borrowing, each Lender shall make the amount of its
Loan available to the Administrative Agent in immediately available funds at
the Administrative Agent’s Office not later than 1:00 p.m., New York  time, on the Business Day specified in the
applicable Loan Notice.  Upon
satisfaction of the applicable conditions set forth in Section 4.02
(and, if such Borrowing is the initial Credit Extension, Section 4.01),
the Administrative Agent shall make all funds so received available to the
Borrower in like funds as received by the Administrative Agent either by
(i) crediting the account of the Borrower on the books of the
Administrative Agent with the amount of such funds or (ii) wire transfer
of such funds, in each case in accordance with instructions provided to the
Administrative Agent by the Borrower; provided, however, that if,
on the date of the Borrowing there are L/C Borrowings outstanding, then the
proceeds of such Borrowing shall be applied, first, to the payment in
full of any such L/C Borrowings, and second, to the Borrower as provided
above.

 

(c)           Except as otherwise provided herein,
a Eurodollar Rate Loan may be continued or converted only on the last day of
the Interest Period for such Eurodollar Rate Loan.  During the existence of a Default or Event of
Default, no Loans may be requested as, converted to or continued as Eurodollar
Rate Loans without the consent of the Required Lenders, and the Required
Lenders may demand among other things, that any or all of the then outstanding
Eurodollar Rate Loans be converted to Base Rate Loans at the end of the
respective Interest Periods therefor, if at the end of such periods, a Default
or an Event of Default is then in existence.

 

(d)           The Administrative Agent shall
promptly notify the Borrower and the Lenders of the interest rate applicable to
any Eurodollar Rate Loan upon determination of such interest rate.  The determination of the Eurodollar Rate by
the Administrative Agent shall be conclusive in the absence of manifest error.  The Administrative Agent shall notify the
Borrower and the Lenders of any change in Bank of Montreal’s reference rate
used in determining the Base Rate promptly following the public announcement of
such change.

 

(e)           After giving effect to all
Borrowings, all conversions of Loans from one Type to the other, and all
continuations of Loans as the same Type, there shall not be more than ten
(10) Interest Periods in effect with respect to Loans.

 

2.03        Intentionally Blank.

 

28

 

2.04        Letters of Credit.

 

(a)           The Letter of Credit Commitment.

 

(i)            Subject to the terms and conditions
set forth herein, (A) the L/C Issuer agrees, in reliance upon the
agreements of the other Lenders set forth in this Section 2.04,
(1) from time to time on any Business Day during the period from the
Closing Date until the Letter of Credit Expiration Date, to issue Letters of
Credit for the account of the Borrower, and to amend Letters of Credit
previously issued by it, in accordance with subsection (b) below, and (2) to
honor drafts under the Letters of Credit; and (B) the Lenders severally
agree to participate in Letters of Credit issued for the account of the
Borrower; provided that the L/C Issuer shall not be obligated to make
any L/C Credit Extension with respect to any Letter of Credit, and no Lender
shall be obligated to participate in, any Letter of Credit if as of the date of
such L/C Credit Extension, (x) the Outstanding Amount of all L/C
Obligations and all Loans would exceed the Commitments, (y) the aggregate
Outstanding Amount of the Loans of any Lender, plus such Lender’s Pro
Rata Share of the Outstanding Amount of all L/C Obligations, would exceed such
Lender’s Commitment, or (z) the Outstanding Amount of the L/C Obligations
would exceed the Letter of Credit Sublimit. 
Within the foregoing limits, and subject to the terms and conditions
hereof, the Borrower’s ability to obtain Letters of Credit shall be fully
revolving, and accordingly the Borrower may, during the foregoing period,
obtain Letters of Credit to replace Letters of Credit that have expired or that
have been drawn upon and reimbursed.

 

(ii)           The L/C Issuer shall be under no
obligation to issue any Letter of Credit if:

 

(A)          any order, judgment or decree of any
Governmental Authority or arbitrator, in each case with jurisdiction over the
L/C Issuer, shall by its terms purport to enjoin or restrain the L/C Issuer
from issuing such Letter of Credit, or any Law applicable to the L/C Issuer or
any request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or
request that the L/C Issuer refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon the L/C
Issuer with respect to such Letter of Credit any restriction, reserve or
capital requirement (for which the L/C Issuer is not otherwise compensated
hereunder) not in effect on the Closing Date, or shall impose upon the L/C
Issuer any unreimbursed loss, cost or expense which was not applicable on the
Closing Date and which the L/C Issuer in good faith deems material to it;

 

(B)           the expiry date of such requested
Letter of Credit would occur more than twelve months after the date of
issuance, unless all the Lenders have approved such expiry date;

 

(C)           the expiry date of such requested
Letter of Credit would occur after the Letter of Credit Expiration Date, unless
all the Lenders have approved such expiry date;

 

(D)          the issuance of such Letter of Credit
would violate one or more policies of the L/C Issuer; or

 

29

 

(E)           such Letter of Credit is in a face
amount less than U.S.$100,000, in the case of a commercial Letter of Credit, or
U.S.$500,000, in the case of any other type of Letter of Credit,
or is to be denominated in a currency other than Dollars.

 

(iii)          The L/C Issuer shall be under no
obligation to amend any Letter of Credit if (A) the L/C Issuer would have
no obligation at such time to issue such Letter of Credit in its amended form
under the terms hereof, or (B) the beneficiary of such Letter of Credit
does not accept the proposed amendment to such Letter of Credit.

 

(b)           Procedures for Issuance and
Amendment of Letters of Credit.

 

(i)            Each Letter of Credit shall be
issued or amended, as the case may be, upon the request of the Borrower
delivered to the L/C Issuer (with a copy to the Administrative Agent) in the
form of a Letter of Credit Application, appropriately completed and signed by a
Responsible Officer of the Borrower.  Such
L/C Application must be received by the L/C Issuer and the Administrative Agent
not later than 11:00 a.m., New York time, at least two Business Days (or such
later date and time as the L/C Issuer may agree in a particular instance in its
sole discretion) prior to the proposed issuance date or date of amendment, as
the case may be.  In the case of a
request for an initial issuance of a Letter of Credit, such Letter of Credit
Application shall specify in form and detail satisfactory to the L/C Issuer:
(A) the proposed issuance date of the requested Letter of Credit (which
shall be a Business Day); (B) the amount thereof; (C) the expiry date
thereof; (D) the name and address of the beneficiary thereof; (E) the
documents to be presented by such beneficiary in case of any drawing
thereunder; (F) the full text of any certificate to be presented by such
beneficiary in case of any drawing thereunder; and (G) such other matters
as the L/C Issuer may require.  In the
case of a request for an amendment of any outstanding Letter of Credit, such
Letter of Credit Application shall specify in form and detail satisfactory to
the L/C Issuer (A) the Letter of Credit to be amended; (B) the
proposed date of amendment thereof (which shall be a Business Day); (C) the
nature of the proposed amendment; and (D) such other matters as the L/C
Issuer may require.

 

(ii)           Promptly after receipt of any Letter
of Credit Application, the L/C Issuer will confirm with the Administrative
Agent (by telephone or in writing) that the Administrative Agent has received a
copy of such Letter of Credit Application from the Borrower and, if not, the
L/C Issuer will provide the Administrative Agent with a copy thereof.  Upon receipt by the L/C Issuer of confirmation
from the Administrative Agent that the requested issuance or amendment is
permitted in accordance with the terms hereof, then, subject to the terms and
conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter
of Credit for the account of the Borrower or enter into the applicable
amendment, as the case may be, in each case in accordance with the L/C Issuer’s
usual and customary business practices. 
Immediately upon the issuance of each Letter of Credit, each Lender
shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the L/C Issuer a participation in such Letter of Credit in an
amount equal to the product of such Lender’s Pro Rata Share times the
amount of such Letter of Credit.

 

30

 

(iii)          Promptly after its delivery of any
Letter of Credit or any amendment to a Letter of Credit to an advising bank
with respect thereto or to the beneficiary thereof, the L/C Issuer will also
deliver to the Borrower and the Administrative Agent a true and complete copy
of such Letter of Credit or amendment.

 

(c)           Drawings and Reimbursements;
Funding of Participations.

 

(i)            Upon any drawing under any Letter of
Credit, the L/C Issuer shall notify the Borrower and the Administrative Agent
thereof.  Not later than 12:00 p.m.,
New York time, on the date of any payment by the L/C Issuer under a Letter of Credit
(each such date, an “Honor Date”), the Borrower shall reimburse the L/C
Issuer through the Administrative Agent in an amount equal to the amount of
such drawing; provided that if  
Borrower has not received notice of such drawing prior to
11:00 a.m. on the Honor Date, Borrower shall reimburse the L/C Issuer
through the Administrative Agent in an amount equal to the amount of such
drawing no later than 11:00 a.m. on the Business Day immediately following
the Honor Date.  If the Borrower fails to
so reimburse the L/C Issuer by such time, the Administrative Agent shall
promptly notify each Lender of the Honor Date, the amount of the unreimbursed
drawing (the “Unreimbursed Amount”), and such Lender’s Pro Rata Share
thereof.  In such event, the Borrower
shall be deemed to have requested a Borrowing of Base Rate Loans to be
disbursed on the Honor Date in an amount equal to the Unreimbursed Amount,
without regard to the minimum and multiples specified in Section 2.02
for the principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Commitments and the conditions set forth in Section 4.02
(other than the delivery of a Loan Notice). 
Any notice given by the L/C Issuer or the Administrative Agent pursuant
to this Section 2.04(c)(i) may be given by telephone if
immediately confirmed in writing; provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.

 

(ii)           Each Lender (including the Lender
acting as L/C Issuer) shall upon receipt of any notice pursuant to Section 2.04(c)(i) make
funds available to the Administrative Agent for the account of the L/C Issuer
at the Administrative Agent’s Office in an amount equal to its Pro Rata Share
of the Unreimbursed Amount not later than 1:00 p.m., New York
time, on the Business
Day specified in such notice by the Administrative Agent if such notice is
received by 12:00 noon on such day and otherwise by 1:00 p.m. on the next
Business Day, whereupon, subject to the provisions of Section 2.04(c)(iii),
each Lender that so makes funds available shall be deemed to have made a Base
Rate Loan to the Borrower in such amount. 
The Administrative Agent shall remit the funds so received to the L/C
Issuer.

 

(iii)          With respect to any Unreimbursed
Amount that is not fully paid by a Borrowing of Base Rate Loans because the
conditions set forth in Section 4.02 (other than the delivery of a
Loan Notice) cannot be satisfied or for any other reason (other than a Lender’s
bad faith refusal to make such Base Rate Loan available to Borrower), the
Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing
in the amount of the Unreimbursed Amount that is not so paid, which L/C
Borrowing shall be 

 

31

 

due and payable on
demand (together with interest) and shall bear interest at the Default
Rate.  In such event, each Lender’s
payment to the Administrative Agent for the account of the L/C Issuer pursuant
to Section 2.04(c)(ii) shall be deemed payment in respect of
its participation in such L/C Borrowing and shall constitute an L/C Advance
from such Lender in satisfaction of its participation obligation under this Section 2.04.

 

(iv)          Until each Lender funds its Base Rate
Loan pursuant to clause (ii), or L/C Advance pursuant to clause (iii), of  this Section 2.04(c) to
reimburse the L/C Issuer for any amount drawn under any Letter of Credit,
interest in respect of such Lender’s Pro Rata Share of such amount shall be
solely for the account of the L/C Issuer.

 

(v)           Each Lender’s obligation to make Base
Rate Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under
Letters of Credit, as contemplated by this Section 2.04(c), shall
be absolute and unconditional and shall not be affected by any circumstance,
including (A) any set-off, counterclaim, recoupment, defense or other
right which such Lender may have against the L/C Issuer, the Borrower or any
other Person for any reason whatsoever; (B) the occurrence or continuance
of a Default or Event of Default, or (C) any other occurrence, event or
condition, whether or not similar to any of the foregoing.  Any such reimbursement shall not relieve or
otherwise impair the obligation of the Borrower to reimburse the L/C Issuer for
the amount of any payment made by the L/C Issuer under any Letter of Credit,
together with interest as provided herein.

 

(vi)          If any Lender fails to make available
to the Administrative Agent for the account of the L/C Issuer any amount
required to be paid by such Lender pursuant to the foregoing provisions of this
Section 2.04(c) by the time specified in Section 2.04(c)(ii),
the L/C Issuer shall be entitled to recover from such Lender (acting through
the Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the L/C Issuer at a rate per annum equal to the
Federal Funds Rate from time to time in effect. 
A certificate of the L/C Issuer submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this clause
(vi) shall be conclusive absent manifest error.

 

(d)           Repayment of L/C Advances.

 

(i)            At any time after the L/C Issuer has
made a payment under any Letter of Credit and has received from any Lender such
Lender’s Base Rate Loan in accordance with Section 2.04(c)(ii) or
its L/C Advance in respect of such payment in accordance with Section 2.04(c)(iii),
if the Administrative Agent receives for the account of the L/C Issuer any
payment related to such Letter of Credit (whether directly from the Borrower or
otherwise, including proceeds of Cash Collateral applied thereto by the
Administrative Agent), or any payment of interest thereon, the Administrative
Agent will distribute to such Lender its Pro Rata Share thereof in the same
funds as those received by the Administrative Agent.

 

32

 

(ii)           If any payment received by the
Administrative Agent for the account of the L/C Issuer pursuant to Section 2.04(c)(i) is
required to be returned, each Lender shall pay to the Administrative Agent for
the account of the L/C Issuer its Pro Rata Share thereof on demand of the
Administrative Agent, plus interest thereon from the date of such demand to the
date such amount is returned by such Lender, at a rate per annum equal to the
Federal Funds Rate from time to time in effect and such payments shall
constitute L/C Advances hereunder with respect to such Lenders.

 

(e)           Obligations Absolute.  The obligation of the Borrower to reimburse
the L/C Issuer for each drawing under each Letter of Credit that it has
requested to be issued, and to repay each such L/C Borrowing and each drawing
under a Letter of Credit that is paid by a corresponding Borrowing of Loans or
L/C Advances, shall be absolute, unconditional and irrevocable, and shall be
paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:

 

(i)            any lack of validity or
enforceability of such Letter of Credit, this Agreement, or any other agreement
or instrument relating thereto;

 

(ii)           the existence of any claim,
counterclaim, set-off, defense or other right that the Borrower may have at any
time against any beneficiary or any transferee of such Letter of Credit (or any
Person for whom any such beneficiary or any such transferee may be acting), the
L/C Issuer or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by such Letter of Credit or any agreement
or instrument relating thereto, or any unrelated transaction;

 

(iii)          any draft, demand, certificate or
other document presented under such Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under such Letter of Credit;

 

(iv)          any payment by the L/C Issuer under
such Letter of Credit against presentation of a draft or certificate that does
not strictly comply with the terms of such Letter of Credit; or any payment
made by the L/C Issuer under such Letter of Credit to any Person purporting to
be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of such Letter of Credit, including any arising
in connection with any proceeding under any Debtor Relief Law; or

 

(v)           any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing, including any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrower, except for the gross negligence, willful misconduct
or violation of Law by the L/C Issuer in connection with its payment of a
Letter of Credit.

 

The Borrower shall
promptly examine a copy of each Letter of Credit that it has requested to be
issued and each amendment thereto that is delivered to it and, in the event of
any

 

33

 

claim of
noncompliance with the Borrower’s instructions or other irregularity, the
Borrower shall immediately notify the L/C Issuer.  The Borrower shall be conclusively deemed to
have waived any such claim against the L/C Issuer and its correspondents unless
such notice is immediately given as aforesaid.

 

(f)            Role of L/C
Issuer.  Each Lender and the Borrower
agree that, in paying any drawing under a Letter of Credit, the L/C Issuer
shall not have any responsibility to obtain any document (other than any sight
draft, certificates and documents expressly required by the Letter of Credit)
or to ascertain or inquire as to the validity or accuracy of any such document
or the authority of the Person executing or delivering any such document.  No Agent-Related Person nor any of the
respective correspondents, participants or assignees of the L/C Issuer shall be
liable to any Lender for (i) any action taken or omitted in connection
herewith at the request or with the approval of the Lenders or the Required
Lenders, as applicable; (ii) any action taken or omitted in the absence of
gross negligence, willful misconduct or violation of Law; or (iii) the due
execution, effectiveness, validity or enforceability of any document or
instrument related to any Letter of Credit or Letter of Credit
Application.  The Borrower hereby assumes
all risks of the acts or omissions of any beneficiary or transferee with
respect to its use of any Letter of Credit; provided,
however, that this assumption is not
intended to, and shall not, preclude the Borrower’s pursuing such rights and
remedies as it may have against the beneficiary or transferee at law or under
any other agreement.  No Agent-Related
Person, nor any of the respective correspondents, participants or assignees of
the L/C Issuer, shall be liable or responsible for any of the matters described
in clauses (i) through (v) of Section 2.04(e);
provided, however,
that anything in such clauses to the contrary notwithstanding, the Borrower may
have a claim against the L/C Issuer, and the L/C Issuer may be liable to the
Borrower, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Borrower which the Borrower
proves were caused by the L/C Issuer’s willful misconduct, gross negligence or
violation of Law or the L/C Issuer’s willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a
Letter of Credit.  In furtherance and not
in limitation of the foregoing, the L/C Issuer may accept documents that appear
on their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary, and the L/C Issuer
shall not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason.

 

(g)           Cash Collateral.  Upon the request of the Administrative Agent,
(i) if the L/C Issuer has honored any full or partial drawing request
under any Letter of Credit and such drawing has resulted in an L/C Borrowing
and until such borrowing has been reimbursed or otherwise paid (including
pursuant to a Borrowing), or (ii) if, as of the Letter of Credit
Expiration Date, any Letter of Credit may for any reason remain outstanding and
partially or wholly undrawn, the Borrower shall, upon the Administrative Agent’s
request, immediately Cash Collateralize the then Outstanding Amount of all such
L/C Obligations (in an amount equal to such Outstanding Amount).  The Borrower hereby grants the Administrative
Agent, for the benefit of the L/C Issuer and the Lenders, a Lien on its
interest in such Cash Collateral to secure the outstanding and unpaid amount of
a L/C Borrowing or Letter of Credit remaining outstanding 

 

34

 

as of the Letter
of Credit Expiration Date, in each case as referred to in clause (i) or
(ii) of this Section 2.04(g); provided that when such
amount shall no longer be outstanding and unpaid, such Cash Collateral shall be
released from such Lien and returned to the Borrower.  Cash Collateral shall be maintained in
blocked, non-interest bearing deposit accounts at Bank of Montreal or other institutions satisfactory to it.

 

(h)           Applicability of
ISP98 and UCP.  Unless otherwise
expressly agreed by the L/C Issuer and the Borrower with the consent of the
Required Lenders when a Letter of Credit is issued (including any such
agreement applicable to an Existing Letter of Credit), (i) the rules of
the “International Standby Practices 1998” published by the Institute of
International Banking Law & Practice (or such later version thereof as
may be in effect at the time of issuance) shall apply to each standby Letter of
Credit, and (ii) the rules of the Uniform Customs and Practice for
Documentary Credits, as most recently published by the International Chamber of
Commerce (the “ICC”) at the time of
issuance (including, to the extent it is applicable,  the ICC decision published by the Commission
on Banking Technique and Practice on April 6, 1998 regarding the European
single currency (euro)) shall apply to each commercial Letter of Credit.

 

(i)            Letter of Credit
Fees.  The Borrower shall pay to the
Administrative Agent for the account of each Lender in accordance with its Pro
Rata Share a Letter of Credit fee for each Letter of Credit issued at its
request equal to the Applicable Margin for Letters of Credit multiplied by the
actual daily maximum amount available to be drawn under such Letter of
Credit.  Such fee for each Letter of Credit
shall be due and payable on the last Business Day of each March, June, September and
December, commencing with the first such date to occur after the issuance of
such Letter of Credit, and on the Letter of Credit Expiration Date.

 

(j)            Fronting Fee and Documentary and Processing Charges
Payable to L/C Issuer.  The
Borrower shall pay directly to the L/C Issuer for its own account a fronting
fee with respect to each Letter of Credit issued at its request, as provided in
the Agent/Arranger Fee Letter, due and payable quarterly in arrears on the last
Business Day of each March, June, September and December, commencing with
the first such date to occur after the issuance of such Letter of Credit, and
on the Letter of Credit Expiration Date. 
In addition, the Borrower shall pay directly to the L/C Issuer for its
own account an issuance fee and any other customary presentation, amendment and
other processing fees, and other standard costs and charges, of the L/C Issuer
relating to letters of credit issued at its request as from time to time in
effect, such fees as set forth in the schedule delivered to the Borrower by the
L/C Issuer, as such schedule may be updated from time to time to reflect the
reasonable customary presentation, amendment and other processing fees, and
other reasonable standard costs and charges, of the L/C Issuer.  Such fees and charges are due and payable on
demand and are nonrefundable.

 

(k)           Conflict with
Letter of Credit Application.  In the
event of any conflict between the terms hereof and the terms of any Letter of
Credit Application, the terms hereof shall control.

 

2.05        Intentionally Blank.

 

35

 

2.06        Prepayments.

 

(a)           The Borrower may,
upon notice to the Administrative Agent, at any time or from time to time
voluntarily prepay Loans in whole or in part without premium or penalty; provided that (i) such notice must be
received by the Administrative Agent not later than 11:00 a.m., New York time, (A) three
Business Days prior to any date of prepayment of Eurodollar Rate Loans, and (B) one
Business Day prior to any date of prepayment of Base Rate Loans; (ii) any
prepayment of Eurodollar Rate Loans shall be in a principal amount of
U.S.$1,000,000 or a whole multiple of U.S.$500,000 in excess thereof; and (iii) any
prepayment of Base Rate Loans shall be in a principal amount of U.S.$500,000 or
a whole multiple of U.S.$100,000 in excess thereof.  Each such notice shall specify the date and
amount of such prepayment and the Type(s) of Loans to be prepaid.  The Administrative Agent will promptly notify
each Lender of its receipt of each such notice, and of such Lender’s Pro Rata
Share of such prepayment.  If such notice
is given by the Borrower, the Borrower shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein.  Any prepayment of a
Eurodollar Rate Loan shall be accompanied by all accrued interest thereon,
together with any additional amounts required pursuant to Section 3.05.  Each such prepayment shall be applied to the
Loans of the Lenders in accordance with their respective Pro Rata Shares.

 

(b)           If for any reason
the Outstanding Amount of all Loans and L/C Obligations at any time exceeds the
Commitments then in effect, the Borrower shall immediately prepay the Loans
and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to
such excess.

 

2.07        Reduction
or Termination of Commitments.  The Borrower
may, and if required pursuant to Section 7.05 shall upon notice to
the Administrative Agent, terminate the Commitments, or permanently reduce the
Commitments to an amount not less than the then Outstanding Amount of all Loans
and L/C Obligations; provided that (i) any
such notice shall be received by the Administrative Agent not later than 11:00 a.m.
New York time, five Business Days prior to the date of termination or
reduction, and (ii) any such partial reduction shall be in an aggregate
amount of U.S.$5,000,000 or any whole multiple of U.S.$1,000,000 in excess
thereof.  The Administrative Agent shall
promptly notify the Lenders of any such notice of reduction or termination of
the Commitments.  Once reduced in
accordance with this Section, the Commitments may not be increased.  Any reduction of the Commitments shall be
applied to the Commitment of each Lender according to its Pro Rata Share.  All commitment fees
described in Section 2.10(a) accrued until the effective date
of any termination of the Commitments shall be paid on the effective date of
such termination.

 

2.08        Repayment
of Loans.

 

The Borrower shall repay
to the Lenders on the Maturity Date the aggregate principal amount of Loans
outstanding on such date which were made to it.

 

2.09        Interest.

 

(a)           Subject to the
provisions of subsection (b) below, (i) each Eurodollar Rate Loan
shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable
Margin; and (ii) each Base Rate Loan shall bear interest on the
outstanding principal amount thereof from the 

 

36

 

applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable Margin.

 

(b)           In the event any amount due hereunder or
under any other Loan Document (including, without limitation, any interest
payment) is not paid when due (whether by acceleration or otherwise), the
Borrower shall pay interest on such unpaid amount (including, without
limitation, interest on interest) at a fluctuating interest rate per annum equal
to the Default Rate for Base Rate Loans to the fullest extent permitted by
applicable Law. 
Accrued and unpaid interest on past due amounts (including interest on
past due interest) shall be due and payable upon demand.

 

(c)           Interest on each
Loan shall be due and payable in arrears on each Interest Payment Date
applicable thereto and at such other times as may be specified herein.  Interest hereunder shall be due and payable
in accordance with the terms hereof before and after judgment, and before and after
the commencement of any proceeding under any Debtor Relief Law.

 

2.10        Fees. 
In addition to certain fees described in subsections (i) and (j) of
Section 2.04:

 

(a)           Commitment Fee.  The Borrower agrees to pay to the
Administrative Agent for the account of each Lender in accordance with its Pro
Rata Share a commitment fee at a per annum rate equal to the Applicable Margin
on the average daily Available Aggregate Commitment from the date hereof to and
including the Maturity Date, payable on each Payment Date hereafter and on the
Maturity Date.  The commitment fee shall
be due and payable quarterly in arrears on the last Business Day of each March,
June, September and December, commencing with the first such date to occur
after the Closing Date, and on the Maturity Date.  The commitment fee shall be calculated
quarterly in arrears.  The commitment fee
shall accrue at all times, including at any time during which one or more of
the conditions in Article IV is not met.

 

(b)           Intentionally Blank.

 

(c)           Agent’s/Arranger’s Fees.  The Borrower agrees to pay to the
Administrative Agent and the Arranger, for their own respective accounts, the
applicable fees heretofore agreed in writing pursuant to the fee letter dated
as of November    , 2004 (the “Agent/Arranger Fee Letter”)
between the Borrower and the Administrative Agent and the Arranger.  The Borrower agrees to pay to the
Administrative Agent for the respective accounts of each Lender in accordance
with its Pro Rata Share, an upfront fee in an amount set forth in the
Agent/Arranger Fee Letter.

 

2.11        Computation
of Interest and Fees.  Computation of interest on Base Rate Loans
shall be calculated on the basis of a year of 365 or 366 days, as the case may
be, and the actual number of days elapsed. 
Computation of all other types of interest and all fees shall be
calculated on the basis of a year of 360 days and the actual number of days
elapsed, which results in a higher yield to the payee thereof than a method
based on a year of 365 or 366 days. 
Interest shall accrue on each Loan for the day on which the Loan is
made, and shall not accrue on 

 

37

 

a Loan, or any
portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the
same day on which it is made shall bear interest for one day.

 

2.12        Evidence
of Debt.

 

(a)           The Credit
Extensions made by each Lender shall be evidenced by one or more accounts or
records maintained by such Lender and by the Administrative Agent in the
ordinary course of business.  The
accounts or records maintained by the Administrative Agent and each Lender
shall be conclusive absent manifest error of the amount of the Credit
Extensions made by the Lenders to the Borrower and the interest and payments
thereon.  Any failure so to record or any
error in doing so shall not, however, limit or otherwise affect the obligation
of the Borrower hereunder to pay any amount owing with respect to the Loans and
L/C Obligations.  In the event of any
conflict between the accounts and records maintained by any Lender and the
accounts and records of the Administrative Agent in respect of such matters,
the accounts and records of the Administrative Agent shall be presumed to be
prima facie evidence of such matters absent manifest error.  Upon the request of any Lender made through
the Administrative Agent, such Lender’s Loans may be evidenced by a Note, in
addition to such accounts or records. 
Each Lender may attach schedules to its Note(s) and endorse thereon
the date, Type (if applicable), amount and maturity of the applicable Loans and
payments with respect thereto.

 

(b)           In addition to the
accounts and records referred to in subsection (a), each Lender and the
Administrative Agent shall maintain in accordance with its usual practice
accounts or records evidencing the purchases and sales by such Lender of
participations in Letters of Credit. In the event of any conflict between the
accounts and records maintained by the Administrative Agent and the accounts
and records of any Lender in respect of such matters, the accounts and records
of the Administrative Agent shall control.

 

2.13        Payments
Generally.

 

(a)           All payments to be
made by the Borrower shall be made without condition or deduction for any
counterclaim, defense, recoupment or setoff. 
Except as otherwise expressly provided herein, all payments by the
Borrower hereunder shall be made to the Administrative Agent, for the account
of the respective Lenders to which such payment is owed, at the Administrative
Agent’s Office in Dollars and in immediately available funds not later than
12:00 noon, New York time,
on the date specified herein.  The
Administrative Agent will promptly distribute to each Lender its Pro Rata Share
(or other applicable share as provided herein) of such payment in like funds as
received by wire transfer to such Lender’s Lending Office.  All payments received by the Administrative
Agent after 12:00 noon, New
York time, shall be deemed received on the next
succeeding Business Day and any applicable interest or fee shall continue to
accrue.

 

(b)           Subject to the
definition of “Interest Period,” if any payment to be made by the Borrower
shall come due on a day other than a Business Day, payment shall be made on the
next following Business Day, and such extension of time shall be reflected in
computing interest or fees, as the case may be.

 

38

 

(c)           If at any time
insufficient funds are received by and available to the Administrative Agent to
pay fully all amounts of principal, L/C Borrowings, interest and fees then due
hereunder, such funds shall be applied (i) first,
toward costs and expenses (including Attorney Costs and amounts payable under Article III) incurred by the
Administrative Agent and each Lender, (ii) second,
toward repayment of interest and fees then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (iii) third,
toward repayment of principal and L/C Borrowings then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of principal
and L/C Borrowings then due to such parties.

 

(d)           Unless the Borrower
or any Lender has notified the Administrative Agent prior to the date any
payment is required to be made by it to the Administrative Agent hereunder,
that the Borrower or such Lender, as the case may be, will not make such
payment, the Administrative Agent may assume that the Borrower or such Lender,
as the case may be, has timely made such payment and may (but shall not be so
required to), in reliance thereon, make available a corresponding amount to the
Person entitled thereto.  If and to the
extent that such payment was not in fact made to the Administrative Agent in
immediately available funds, then:

 

(i)            if the Borrower failed to make such
payment, each Lender shall forthwith on demand repay to the Administrative
Agent the portion of such assumed payment that was made available to such
Lender in immediately available funds, together with interest thereon in
respect of each day from and including the date such amount was made available
by the Administrative Agent to such Lender to the date such amount is repaid to
the Administrative Agent in immediately available funds, at the Federal Funds
Rate from time to time in effect; and

 

(ii)           if any Lender failed to make such
payment, such Lender shall forthwith on demand pay to the Administrative Agent
the amount thereof in immediately available funds, together with interest
thereon for the period from the date such amount was made available by the
Administrative Agent to the Borrower to the date such amount is recovered by
the Administrative Agent (the “Compensation Period”)
at a rate per annum equal to the Federal Funds Rate from time to time in
effect.  If such Lender pays such amount
to the Administrative Agent, then such amount shall constitute such Lender’s
Loan included in the applicable Borrowing. 
If such Lender does not pay such amount forthwith upon the
Administrative Agent’s demand therefor, the Administrative Agent may make a
demand therefor upon the Borrower, and the Borrower shall pay (subject to its
recoupment rights from and remedies against such defaulting Lender of any
breakage costs paid by the Borrower when repaying such amount) such amount to
the Administrative Agent, together with interest thereon for the Compensation
Period at a rate per annum equal to the rate of interest applicable to the
applicable Borrowing.  Nothing herein
shall be deemed to relieve any Lender from its obligation to fulfill its
Commitment or to prejudice any rights which the Administrative Agent or the
Borrower may have against any Lender as a result of any default by such Lender
hereunder.

 

A notice of the
Administrative Agent to any Lender with respect to any amount owing under this
subsection (d) shall be conclusive, absent manifest error.

 

39

 

(e)           If any Lender makes
available to the Administrative Agent funds for any Loan to be made by such Lender
as provided in the foregoing provisions of this Article II,
and the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived
in accordance with the terms hereof, the Administrative Agent shall return such
funds (in like funds as received from such Lender) to such Lender, without
interest.

 

(f)            The obligations of
the Lenders hereunder to make Loans and to fund participations in Letters of
Credit are several and not joint.  The
failure of any Lender to make any Loan or to fund any such participation on any
date required hereunder shall not relieve any other Lender of its corresponding
obligation to do so on such date, and no Lender shall be responsible for the
failure of any other Lender to so make its Loan or purchase its participation.

 

(g)           Nothing herein shall
be deemed to obligate any Lender to obtain the funds for any Loan in any
particular place or manner or to constitute a representation by any Lender that
it has obtained or will obtain the funds for any Loan in any particular place
or manner.

 

2.14        Sharing
of Payments.  If, other than as expressly provided
elsewhere herein, any Lender shall obtain on account of the Loans made by it,
or the participations in L/C Obligations held by it, any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, litigation or
otherwise) in excess of its Pro Rata Share (or other share contemplated
hereunder) thereof, such Lender shall immediately (a) notify the
Administrative Agent of such fact, and (b) purchase from the other Lenders
such participations in the Loans made by them and/or such subparticipations in
the participations in L/C Obligations held by them, as the case may be, as
shall be necessary to cause such purchasing Lender to share the excess payment
in respect of such Loan or such participations, as the case may be, pro rata
with each of them; provided, however, that if all or any portion of such
excess payment is thereafter recovered from the purchasing Lender, such
purchase shall to that extent be rescinded and each other Lender shall repay to
the purchasing Lender the purchase price paid therefor, together with an amount
equal to such paying Lender’s ratable share (according to the proportion of (i) the
amount of such paying Lender’s required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid
or payable by the purchasing Lender in respect of the total amount so
recovered.  The Borrower agrees that any
Lender so purchasing a participation from another Lender may, to the fullest
extent permitted by law, exercise all its rights of payment (including the
right of set-off, but subject to Section 10.09)
with respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.  The Administrative Agent will keep records
(which shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify
the Lenders following any such purchases or repayments.  Each Lender that purchases a participation
pursuant to this Section shall from and after such purchase have the right
to give all notices, requests, demands, directions and other communications
under this Agreement with respect to the portion of the Obligations purchased
to the same extent as though the purchasing Lender were the original owner of
the Obligations purchased.

 

40

 

2.15        Extension of Maturity Date.

 

(a)           Not earlier than 60
days prior to, nor later than 30 days prior to, the first anniversary of the
Closing Date, the Borrower may, upon notice to the Administrative Agent (who
shall promptly notify the Lenders), request a one year extension of the Maturity
Date.  Within 15 days of delivery of such
notice, each Lender shall notify the Administrative Agent whether or not it
consents to such extension (which consent may be given or withheld in such
Lender’s sole and absolute discretion). 
Any Lender not responding within the above time period shall be deemed
not to have consented to such extension. 
The Administrative Agent shall promptly notify the Borrower and the
Lenders of the Lenders’ responses.  If
any Lender declines, or is deemed to have declined, to consent to such
extension, the Borrower may cause any such Lender to be removed or replaced as
a Lender pursuant to Section 10.16.

 

(b)           The Maturity Date
shall be extended only if Lenders holding more than 66 2/3% of the Commitments
(calculated prior to giving effect to any removals and/or replacements of
Lenders permitted herein) (the “Consenting Lenders”) have consented
thereto, with respect only to Consenting Lenders and any Replacement
Lenders.  If so extended, the Maturity
Date, as to the Consenting Lenders, shall be extended to the
same date in the following year (the “Extension
Effective Date”) but the pre-existing Maturity Date shall remain in effect
with respect to any Lender that is not a Consenting Lender and is not
replaced.  The Administrative Agent and
the Borrower shall promptly confirm to the Lenders such extension and the
Extension Effective Date.  As a condition
precedent to such extension, the Borrower shall deliver to the Administrative
Agent a certificate of each Loan Party dated as of the Extension Effective Date
(in sufficient copies for each Lender) signed by a Responsible Officer of each
such Loan Party (i) certifying and attaching the resolutions adopted by
such Loan Party approving or consenting to such extension, or if the Borrower’s
resolutions delivered pursuant to Section 4.01(a)(iii) provided
for such extension, certifying that such resolutions of the applicable Loan
Party have not been amended, modified or rescinded and remain in full force and
effect and, (ii) in the case of the Borrower, certifying that, (A) before
and after giving effect to such extension, the representations and warranties
contained in Article V are true
and correct on and as of the Extension Effective Date, except to the extent
that such representations and warranties specifically refer to a different
date, in which case they shall be true and correct as of such date, and (B) no
Default or Event of Default exists.  The
Administrative Agent shall distribute an amended  Schedule 2.01 (which shall be deemed incorporated
into this Agreement), to reflect any changes in Lenders and their Commitment
amounts.  The Borrower shall (i) on
the existing Maturity Date, prior to or contemporaneous with giving effect to
any extension, pay amounts due, in full, to any Lender which is not a
Consenting Lender and is not replaced as a Lender pursuant to Section 10.16,
and (ii) prepay any Loans outstanding on the Extension Effective Date
which were made to it (and pay any additional amounts required pursuant to Section 3.05) to the extent necessary to keep
outstanding Loans ratable with the Pro Rata Shares of all the Lenders.

 

2.16        Cleandown. 
The Borrower shall from time to time arrange the Loans and shall repay
to the Lenders from time to time the outstanding Loans and other Obligations
such that during the term of this Agreement for at least once during each
twelve-month period commencing on the Closing Date for a period of at least ten
(10) consecutive Business Days (each such period, a “Cleandown Period”)
the Outstanding Amount with respect to Loans shall be no greater than
U.S.$1,000,000 (the “Cleandown Maximum Amount”).  For the avoidance of doubt, for purposes of
determining the Outstanding Amount with respect to the Borrower’s 

 

41

 

compliance with
the Cleandown Maximum Amount, the Borrower’s L/C Obligations and Outstanding
Amounts with respect to undrawn Letters of Credit shall not be counted towards
the Clean Down Maximum Amount.

 

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01        Taxes.

 

(a)           Any and all payments
by the Borrower to or for the account of the Administrative Agent or any Lender
under any Loan Document shall be made free and clear of and without deduction
for any and all present or future taxes, duties, levies, imposts, deductions,
assessments, fees, withholdings or similar charges, and all liabilities with
respect thereto, excluding, in the case
of the Administrative Agent and each Lender, taxes imposed on or measured by
its net income, and franchise taxes imposed on it (in lieu of net income
taxes), by the jurisdiction (or any political subdivision thereof) under the
Laws of which the Administrative Agent or such Lender, as the case may be, is
organized or maintains a lending office (all such non-excluded taxes, duties,
levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and liabilities being hereinafter referred to as “Taxes”). 
If the Borrower shall be required by any Laws to deduct any Taxes from
or in respect of any sum payable under any Loan Document to the Administrative
Agent or any Lender, (i) the sum payable shall be increased as necessary
so that after making all required deductions (including deductions applicable
to additional sums payable under this Section), the Administrative Agent and
such Lender each receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrower shall make such
deductions, (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
Laws, and (iv) within 30 days after the date of such payment, the Borrower
shall furnish to the Administrative Agent (which shall forward the same to such
Lender) the original or a certified copy of a receipt evidencing payment
thereof.

 

(b)           In addition, the
Borrower agrees to pay any and all present or future stamp, court or
documentary taxes and any other excise or property taxes or charges or similar
levies which arise from any payment made by it under any Loan Document or from
its execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, any Loan Document to which it is a party
(hereinafter referred to as “Other Taxes”).

 

(c)           If the Borrower
shall be required to deduct or pay any Taxes or Other Taxes from or in respect
of any sum payable under any Loan Document to the Administrative Agent or any
Lender, the Borrower shall also pay to the Administrative Agent (for the
account of such Lender) or to such Lender, at the time interest is paid, such
additional amount that such Lender specifies as necessary to preserve the
after-tax yield (after factoring in all taxes, including taxes imposed on or
measured by net income) such Lender would have received if such Taxes or Other
Taxes had not been imposed.

 

(d)           In respect to
related Obligations owed by it, the Borrower agrees to indemnify the
Administrative Agent, the L/C Issuer and each Lender for (i) the full
amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or
asserted by any jurisdiction on amounts 

 

42

 

payable under this
Section) paid by the Administrative Agent, the L/C Issuer and such Lender, (ii) amounts
payable under Section 3.01(c) and
(iii) any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, in each case whether or not such Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority.  Payment under
this subsection (d) shall be made within 30 days after the date the Lender
or the Administrative Agent makes a demand therefor which demand shall be
accompanied by a certificate setting forth in reasonable detail the amounts
demanded, the basis therefor and the calculations in respect thereto.

 

(e)           Each Lender that is
not organized under the laws of the United States of America or a state thereof
agrees that such Lender will deliver to the Borrower and the Administrative
Agent two (2) duly completed copies of United States Internal Revenue
Service Form W-8 BEN or W-8 ECI or successor forms (or if such forms are
no longer required, a representation by such Lender) certifying in either case
that such Lender is entitled to receive payments from the Loan Parties under
the Loan Documents without deduction or withholding of any United States
federal income taxes.  Each Lender that
so delivers a Form W-8 BEN or W-8 ECI further undertakes to deliver to the
Borrower and the Administrative Agent two (2) additional copies of such
form (or a successor form) on or before such form expires or becomes obsolete
or after the occurrence of any event requiring a change in the most recent form
so delivered by it and such amendments thereto or extensions or renewals thereof
as may be reasonably requested by the Borrower or the Administrative Agent, in
each case, certifying that such Lender is entitled to receive payments from the
Borrower under the Loan Documents without deduction or withholding of any
United States federal income taxes, unless (i) an event (including without
limitation any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender from duly completing
and delivering any such form with respect to it and (ii) such Lender
advises the Borrower and the Administrative Agent that it is not capable of
receiving such payments without any deduction or withholding of United States federal
income tax.

 

(f)            If the Borrower at
any time pays an amount under Section 3.01(a),
(b) or (c) to any
Lender, the Administrative Agent or the L/C Issuer, and such payee receives a
refund of or credit for any part of any Taxes or Other Taxes which such payee
determines in its reasonable judgment is made with respect to such amount paid
by the Borrower, such Lender, the Administrative Agent or the L/C Issuer, as
the case may be, shall pay to the Borrower the amount of such refund or credit
promptly, and in any event within 60 days, following the receipt of such refund
or credit by such payee.

 

3.02        Illegality. 
If any Lender determines that any Law enacted, construed or announced
after the Closing Date has made it unlawful, or that any Governmental Authority
has asserted that it is unlawful, for any Lender or its applicable Lending
Office to make, maintain or fund Eurodollar Rate Loans, or materially restricts
the authority of such Lender to purchase or sell, or to take deposits of,
Dollars in the applicable offshore Dollar market, or to determine or charge
interest rates based upon the Eurodollar Rate, then, on notice thereof by such
Lender to the Borrower through the Administrative Agent, any obligation of such
Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Loans
to Eurodollar Rate Loans shall be suspended until such Lender notifies the
Administrative Agent and the Borrower that the

 

43

 

circumstances
giving rise to such determination no longer exist.  Upon receipt of such notice, the Borrower
shall, upon demand from such Lender (with a copy to the Administrative Agent),
prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to
Base Rate Loans, either on the last day of the Interest Period thereof, if such
Lender may lawfully continue to maintain such Eurodollar Rate Loans to such
day, or immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Rate Loans.  Upon any such
prepayment or conversion, the Borrower shall also pay interest on the amount so
prepaid or converted.  If any such Law,
or change therein, shall only affect a portion of such Lender’s obligations
under this Agreement which is, in the opinion of such Lender and the
Administrative Agent, severable from the remainder of this Agreement so that
the remainder of this Agreement may be continued in full force and effect
without otherwise affecting any of the obligations of the Administrative Agent,
the other Lenders or the Borrower, such Lender shall only declare its
obligations under that portion so terminated. 
Each Lender agrees to designate a different Lending Office if such
designation will avoid the need for such notice and will not, in the good faith
judgment of such Lender, otherwise be disadvantageous to such Lender.

 

3.03        Inability to Determine Rates. 
If the Administrative Agent determines in connection with any request
for a Eurodollar Rate Loan or a conversion to or continuation thereof that (a) Dollar
deposits are not being offered to banks in the applicable offshore Dollar
market for the applicable amount and Interest Period of such Eurodollar Rate
Loan, (b) adequate and reasonable means do not exist for determining the
Eurodollar Rate for such Eurodollar Rate Loan, or (c) the Eurodollar Rate
for such Eurodollar Rate Loan does not adequately and fairly reflect the cost
to the Lenders of funding such Eurodollar Rate Loan, the Administrative Agent
will promptly notify the Borrower and all Lenders.  Thereafter, the obligation of the Lenders to
make Eurodollar Rate Loans or maintain Eurodollar Rate Loans past the Interest
Period in effect on the date of such determination shall be suspended until the
Administrative Agent revokes such notice. 
Upon receipt of such notice, the Borrower may, without liability for any
attendant breakage costs, revoke any pending request for a Borrowing,
conversion or continuation of Eurodollar Rate Loans or, failing that, will be
deemed to have converted such request into a request for a Borrowing of Base
Rate Loans in the amount specified therein.

 

3.04        Increased Cost and Reduced
Return; Capital Adequacy;  Reserves on Eurodollar Rate Loans.

 

(a)           If any Lender determines that as a result
of the introduction of, or any change in, or in the interpretation of, any Law,
in each case on or after the Closing Date, or such Lender’s compliance
therewith, there shall be any increase in the cost to such Lender of agreeing
to make or making, funding or maintaining Eurodollar Rate Loans or (as the case
may be) issuing or participating in Letters of Credit, or a reduction in the
amount received or receivable by such Lender in connection with any of the
foregoing (excluding for purposes of this subsection (a) any such increased
costs or reduction in amount resulting from (i) Taxes or Other Taxes (as
to which Section 3.01 shall
govern), (ii) changes in the basis of taxation of overall net income or
overall gross income by the United States or any foreign jurisdiction or any
political subdivision of either thereof under the Laws of which such Lender is
organized or has its Lending Office, and (iii) reserve requirements contemplated by Section 3.04(c)),
then from time to time upon demand of such Lender (with a copy of such demand
to the Administrative Agent), the Borrower shall 

 

44

 

pay to such Lender
such additional amounts as will compensate such Lender for such increased cost
or reduction; provided, that Borrower shall not be required to
compensate a Lender pursuant to this Section 3.04(a) for any
increased costs or reductions incurred more than 180 days prior to the date
that such Lender notifies Borrower of the introduction of, change in or
interpretation of any Law giving rise to such increased costs or reductions and
of such Lender’s intention to claim compensation thereof.

 

(b)           If any Lender determines that the
introduction of any Law regarding capital adequacy or any change therein or in
the interpretation thereof, or compliance by such Lender (or its Lending
Office) therewith, has the effect of reducing the rate of return on the capital
of such Lender or any corporation controlling such Lender as a consequence of
such Lender’s obligations hereunder (taking into consideration its policies
with respect to capital adequacy and such Lender’s desired return on capital),
then from time to time upon demand of such Lender (with a copy of such demand
to the Administrative Agent), the Borrower shall pay to such Lender such additional
amounts as will compensate such Lender for such reduction.

 

(c)           The Borrower shall pay to each Lender, as
long as such Lender shall be required under regulations of the Board to
maintain reserves with respect to liabilities or assets consisting of or including
Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”),
additional costs on the unpaid principal amount of each Eurodollar Rate Loan
equal to the actual costs of such reserves allocated to such Loan by such
Lender (as determined by such Lender in good faith, which determination shall
be conclusive), which shall be due and payable on each date on which interest
is payable on such Loan, provided the
Borrower shall have received at least 15 days’ prior notice (with a copy to the
Administrative Agent) of such additional interest from such Lender.  If a Lender fails to give notice 15 days
prior to the relevant Interest Payment Date, such additional interest shall be
due and payable 15 days from receipt of such notice.

 

(d)           Each Lender agrees that it will not
claim, and that it shall not be entitled to claim, from any Loan Party the
payment of any of the amounts referred to in this Section 3.04 (i) if
it is not generally claiming similar compensation from its other similar
customers in similar circumstances and (ii) unless the relevant
introduction or change affects all banks and other financial institutions
substantially similar to such Lender having regard to the size, business
activities and regulatory capital of such banks and other financial
institutions, but excluding differences based solely on the residency of
Persons controlling such banks or other financial institutions.  In addition, each Lender shall use its
reasonable efforts to reduce the amount it requests pursuant to Section 3.04,
including using its reasonable efforts to not assign or transfer any Loan to
any Person if such assignment or transfer would or would be likely to increase
the amount of such amounts payable; provided, however, such
Lender shall have no obligation to take or omit to take any action that such
Lender in its good faith judgment believes would be disadvantageous to it.  Each amount required to be paid to any Lender
pursuant to this Section 3.04 shall be accompanied by a certificate
of the requisite Lender setting forth in reasonable detail the amount owed, the
basis therefor and the calculations in respect thereto.

 

3.05        Funding Losses. 
Upon demand of any Lender (with a copy to the Administrative Agent) from
time to time (which demand shall be accompanied by a certificate of such
demanding Lender setting forth in reasonable detail the amount demanded, the
bases therefor and 

 

45

 

the calculations
in respect thereto), the Borrower shall promptly compensate such Lender for and
hold such Lender harmless from any loss, cost or expense incurred by it as a
result of:

 

(a)           any continuation, conversion, payment or
prepayment of any Loan made to the Borrower other than a Base Rate Loan on a
day other than the last day of the Interest Period for such Loan (whether
voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

 

(b)           any failure by the Borrower (for a reason
other than the failure of such Lender to make a Loan) to prepay, borrow,
continue or convert any Loan made to the Borrower other than a Base Rate Loan
on the date or in the amount notified by the Borrower; or

 

(c)           any assignment of a Eurodollar Rate Loan
on a day other than the last day of the Interest Period as a result of a
request by the Borrower pursuant to Section 10.16;

 

including any loss or
expense arising from the liquidation or reemployment of funds obtained by it to
maintain such Loan or from fees payable to terminate the deposits from which
such funds were obtained.  The Borrower
shall also pay any customary administrative fees charged by such Lender in
connection with the foregoing.

 

For purposes of
calculating amounts payable by the Borrower to the Lenders under this Section 3.05, each Lender shall be
deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Rate
for such Loan by a matching deposit or other borrowing in the applicable
offshore Dollar interbank market for a comparable amount and for a comparable
period, whether or not such Eurodollar Rate Loan was in fact so funded.

 

3.06        Matters Applicable to all
Requests for Compensation.

 

(a)           A certificate of the Administrative Agent
or any Lender claiming compensation under this Article III and
setting forth in reasonable detail the additional amount or amounts to be paid
to it hereunder and such other information as otherwise specified in this Article III
shall be conclusive in the absence of manifest error.  In determining such amount, the
Administrative Agent or such Lender may use any reasonable averaging and
attribution methods customarily used by it in comparable circumstances.

 

(b)           Upon any Lender’s making a claim for
compensation under Section 3.01 or 3.04 the Borrower may
remove or replace such Lender in accordance with Section 10.16.

 

3.07        Survival. 
All of the Borrower’s obligations under this Article III
shall survive termination of the Commitments and payment in full of all the
other Obligations.

 

ARTICLE IV.

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

4.01        Conditions of Initial Credit
Extension.  The obligation of each Lender to make its
initial Credit Extension hereunder is subject to satisfaction of the following
conditions precedent:

 

46

 

(a)           Unless waived by all the Lenders the
Administrative Agent’s receipt of the following, each of which shall be
originals or facsimiles (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of the signing Loan
Party, each dated the Closing Date (or, in the case of certificates of
governmental officials, a recent date before the Closing Date) and each in form
and substance reasonably satisfactory to the Administrative Agent:

 

(i)            executed counterparts of this Agreement and each Guarantee,
sufficient in number for distribution to the Administrative Agent, each Lender
and the Borrower;

 

(ii)           Notes executed by the Borrower in favor of each Lender
requesting such a Note, each in a principal amount equal to such Lender’s
Commitment;

 

(iii)          an Officer’s Certificate certified by Responsible
Officers of the Borrower certifying, inter alia, (1) true and
correct copies of resolutions adopted by the board of managers or other
appropriate body of the Borrower (A) authorizing the execution, delivery
and performance by the Borrower of the Loan Documents to which it is or will be
a party and the consummation of the transactions contemplated thereby, (B) authorizing
the Responsible Officers of the Borrower to negotiate the Loan Documents on
behalf of the Borrower, and (C) authorizing the Responsible Officers of
the Borrower to execute and deliver the Loan Documents and any related
documents, including, without limitation, any Security Document or other pledge
agreement, security agreement or other document contemplated by this Agreement;
(2) the incumbency and, if such Responsible Officer is an individual,
specimen signatures of the Responsible Officers of the Borrower executing any
Loan Documents to which it is a party, upon which Officer’s Certificate the
Administrative Agent and the Lenders shall be entitled to rely until informed
of any change in writing by the Borrower; and (3) such evidence as the
Administrative Agent may reasonably require to verify that the Borrower is duly
organized or formed, validly existing, in good standing and qualified to engage
in business in each jurisdiction in which it is required to be qualified to
engage in business, including any required approvals of any applicable
Government Authority, certified copies of the Borrower’s Organization Documents,
certificates of organization, good standing and/or qualification to engage in
business;

 

(iv)          an Officer’s Certificate certified by Responsible
Officers of each Guarantor certifying, inter alia, (1) true and
correct copies of resolutions adopted by the board of directors, board of
managers, general partner or other appropriate body of such Guarantor (A) authorizing
the execution, delivery and performance by such Guarantor of any Loan Documents
to which it is or will be a party and the consummation of the transactions
contemplated thereby, (B) authorizing the Responsible Officers of such
Guarantor to negotiate the Loan Documents to which such Guarantor is or will be
a party on behalf of such Guarantor, and (C) authorizing the Responsible
Officers of such Guarantor to execute and deliver the Loan Documents and any
related documents, including, without limitation, any pledge agreement,
security agreement or other document contemplated by this Agreement to which
such Guarantor is or will be a party; (2) the incumbency and, if such
Responsible Officer is an individual, specimen signatures 

 

47

 

of the Responsible
Officers of such Guarantor executing any Loan Documents to which such Guarantor
is or will be a party, upon which Officer’s Certificate the Administrative
Agent and the Lenders shall be entitled to rely until informed of any change in
writing by such Guarantor; and (3) such evidence as the Administrative
Agent may reasonably require to verify that each such Guarantor is duly
organized or formed, validly existing, in good standing and qualified to engage
in business in each jurisdiction in which it is required to be qualified to
engage in business, including any required approvals of any applicable Government
Authority, certified copies of each such Guarantor’s Organization Documents,
certificates of organization, good standing and/or qualification to engage in
business;

 

(v)           (1) executed counterparts of each of the Security
Documents the Administrative Agent may reasonably require, sufficient in number
for distribution to the Administrative Agent, each Lender and the Borrower, (2) all
appropriate evidence required by the Administrative Agent in its sole
discretion necessary to determine that the Administrative Agent (for its
benefit and the benefit of the L/C Issuer and the Lenders) shall have an
Acceptable Security Interest in the Collateral, including, without limitation,
physical delivery of any certificated securities or other Collateral for which
possession is the required means for perfection under the Uniform Commercial
Code as in effect on the date hereof in the State of New York, along with any
related stock powers or other similar grants in favor of the Administrative
Agent, (3) delivery of any control agreements or other similar agreements
related to any accounts or other Collateral for which control is the required
means for perfection under the Uniform Commercial Code as in effect on the date
hereof in the State of New York, and (4) the Agent shall be satisfied that
the Liens granted to it under the Security Documents are Acceptable Security
Interests and that all actions or filings necessary to protect, preserve and
validly perfect such Liens have been made, taken or obtained, as the case may
be, and are in full force and effect;

 

(vi)          an Officer’s Certificate signed by a Responsible
Officer of the Borrower certifying (1) that the conditions specified in Sections 4.02(a), (b) and
(c) have been satisfied, (2) the Properties of the Loan Parties are insured
with financially sound and reputable insurance companies in such amounts, with
such deductibles and covering such risks as are customarily carried by
companies engaged in similar businesses and owning similar properties in
localities where the Loan Parties operate, and (3) that
immediately prior to and after giving effect to the transactions contemplated
by the Loan Documents, the Borrower shall be Solvent.;

 

(vii)         an opinion of
counsel to each Loan Party each substantially in the form of Exhibits F-1,
F-2 or F-3;

 

(viii)        copies of duly executed UCC-1 financing statements and
all other requisite filing documents necessary to perfect the Liens granted
pursuant to the Security Documents and duly executed releases or assignments of
Liens and UCC-3 financing statements in recordable form, covering all of the
Collateral, as may be necessary to 

 

48

 

reflect that the Liens
granted to the Administrative Agent for the benefit of the Lenders are first
and prior Liens, except for the Liens permitted under Section 7.01;

 

(ix)           copies of all environmental surveys or reports
relating to the real Property owned or leased by each Loan Party as deemed
necessary or prudent by the Administrative Agent in scope and results acceptable
to the Administrative Agent;

 

(x)            all legal matters incident to the transaction herein
contemplated shall be reasonably satisfactory to counsel for the Administrative
Agent and the Lenders;

 

(xi)           copies of (1) Audited Financial Statements for
the fiscal year ended December 31, 2003; and (2) unaudited interim
consolidated financial statements of the Parent Guarantor and its consolidated
Subsidiaries, for the fiscal quarters ending March 31, 2004 and June 30,
2004 including, without limitation any management discussion and analysis
related thereto;

 

(xii)          confirmation that on the Closing Date, the Available
Aggregate Commitment shall be at least U.S.$25,000,000;

 

(xiii)         such other assurances, certificates, documents,
consents or opinions as the Administrative Agent, the L/C Issuer, or the
Required Lenders reasonably may require; and

 

(xiv)        executed copies of the BMO ISDA Master Agreement.

 

(b)           Any fees required to be paid on or before
the Closing Date shall have been paid.

 

(c)           Unless waived by the Administrative
Agent, the Borrower shall have paid all Attorney Costs of the Administrative
Agent to the extent invoiced prior to or on the Closing Date, plus such
additional amounts of Attorney Costs as shall constitute its reasonable
estimate of Attorney Costs incurred or to be incurred by it through the closing
proceedings (provided that such estimate shall not thereafter preclude a final
settling of accounts between the Borrower and the Administrative Agent).

 

(d)           The Issuer shall have consummated the IPS
Transaction and proceeds therefrom shall have been applied to the repayment in
full of all existing indebtedness of each of the Loan Parties, including, but
not limited to, those certain term loans of Teton Power Funding LLC.  Pursuant to the IPS Transaction, the Issuer
shall have delivered to the Administrative Agent the following documents, each
in form and substance satisfactory to the Administrative Agent:

 

(i)            a pro forma
consolidated balance sheet of the Parent Guarantor as delivered in connection
with the consummation of the IPS Transaction;

 

(ii)           a copy of the final IPS Prospectus;

 

(iii)          a copy of the “Independent Engineer’s Report” referred
to in the IPS Prospectus; and

 

49

 

(iv)          an Officer’s Certificate certified by Responsible
Officers of the Issuer certifying that the proceeds of the IPS Transaction have
been applied to the repayment in full of all existing indebtedness, if any, of
the Project Holding Entities.

 

(e)           Each Lender shall be satisfied in its
sole discretion with the proposed plans and arrangements of the Borrower with
respect to the continued operation and maintenance of any Projects being
directly or indirectly operated by the Borrower as of the Closing Date.

 

4.02        Conditions to all Credit
Extensions.

 

The obligation of each
Lender to honor any Request for Credit Extension (other than a Loan Notice requesting only
a conversion of Loans to the other Type, or a continuation of Loans as the same
Type) is subject to the following conditions precedent:

 

(a)           The representations and warranties of the
Borrower contained in Article V,
or which are contained in any Loan Document furnished by the Borrower at any
time under or in connection herewith, shall be true and correct on and as of
the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to a different date, in
which case they shall be true and correct as of such date.

 

(b)           No Default or Event of Default shall
exist, or would result from such proposed Credit Extension.

 

(c)           Since the Closing Date no event or events
shall have occurred which in the aggregate could reasonably be expected to have
a Material Adverse Effect.

 

(d)           The Administrative Agent and, if
applicable, the L/C Issuer shall have received a Request for Credit Extension
in accordance with the requirements hereof.

 

Each Request for Credit
Extension submitted by the Borrower shall be deemed to be a representation and
warranty that the conditions specified in Sections
4.02(a), (b) and
(c) have been satisfied on and as of the date of the applicable
Credit Extension.

 

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

 

The Borrower represents
and warrants as set forth below:

 

5.01        Existence, Qualification and
Power; Compliance with Laws.

 

(a)           Intentionally Blank.

 

(b)           The Borrower is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and is duly qualified and in good standing as a foreign Person in
each jurisdiction where its ownership, lease or operation of Property or the
conduct of its business requires such qualification and in which the failure to
so qualify could not reasonably be expected to have a Material Adverse
Effect.  As of the Closing Date, the
Parent Guarantor owns 50.06%of the common membership interests and 100% of the Class A
Preferred 

 

50

 

Membership
interests in the Borrower.  As of the
Closing Date, the Borrower does not have any Subsidiaries or Unrestricted
Subsidiaries or own any equity interests in any Person other than those
Subsidiaries and Unrestricted Subsidiaries and equity interests of the type
listed in Schedule 5.13 hereto.

 

(c)           Intentionally Blank.

 

(d)           Each Loan Party has all requisite power
and authority and all requisite governmental licenses, authorizations, consents
and approvals to own its assets, carry on its business and to execute, deliver,
and perform its obligations under the Loan Documents to which it is a party
(except for the absence of which could not reasonably be expected to have a
Material Adverse Effect).

 

(e)           Intentionally Blank.

 

(f)            Each Loan Party is in compliance with all
Laws, except in each case referred to in clause (d) or this clause (f), to
the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect.

 

5.02        Authorization; No Contravention. 
The execution, delivery and performance by each Loan Party of each Loan
Document to which such Person is a party, have been duly authorized by all
necessary corporate or other organizational action, and do not and will not (a) violate
the terms of any of such Person’s Organization Documents (except as such, in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect), (b) violate or result in any breach or contravention of,
constitute a default under, or creation of any Lien on the properties of such
Loan Party under, any Contractual Obligation to which such Person is a party or
any order, injunction, writ or decree of any Governmental Authority to which
such Person or its Property is subject (except as such, in the aggregate, could
not reasonably be expected to have a Material Adverse Effect), or (c) violate
any Law (except as such, in the aggregate, could not reasonably be expected to have
a Material Adverse Effect).

 

5.03        Governmental Authorization;
Consents.  No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person or entity (including, without limitation,
any creditor or equity holder of the Borrower or any Guarantor) (other than
those already obtained or the absence of which could not reasonably be expected
to have a Material Adverse Effect) is necessary or required to be obtained or
made by any Loan Party as a condition to the execution, delivery or performance
by, or enforcement against, any Loan Party of any Loan Document.

 

5.04        Binding Effect. 
This Agreement has been, and each other Loan Document, when delivered
hereunder, will have been, duly executed and delivered by each Loan Party that
is a party thereto.  This Agreement
constitutes, and each other Loan Document when so delivered will constitute, a
legal, valid and binding obligation of such Loan Party, enforceable against
each Loan Party that is a party thereto in accordance with its terms, subject
as to enforcement to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’
rights and to general equity principles. 
Upon making the initial Credit Extensions and recording the necessary
Security Documents, the Liens created by the 

 

51

 

Security Documents
will be Acceptable Security Interests, constituting valid and perfected first
and prior Liens on any Property described therein subject to no other Liens
other than those Liens specifically permitted by Section 7.01.

 

5.05        Financial Statements; No Material
Adverse Effect.

 

(a)           The Audited Financial Statements (i) were
prepared in accordance with Cdn. GAAP consistently applied throughout the
period covered thereby, except as otherwise expressly noted therein; (ii) fairly
present the financial condition of each of the Parent Guarantor and its
consolidated Subsidiaries as of the date thereof and their results of
operations for the period covered thereby on a pro forma basis in accordance
with Cdn. GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein; and (iii) reflect all material
indebtedness and other liabilities, direct or contingent, of each of the Parent
Guarantor and its consolidated Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Indebtedness on a pro forma
basis in accordance with Cdn. GAAP consistently applied throughout the period
covered thereby.

 

(b)           Since the date of the Audited Financial
Statements no event or events have occurred which in the aggregate have, or
could reasonably be expected to have, a Material Adverse Effect.

 

5.06        Litigation.  Except as specifically disclosed in Schedule
5.06, there are no actions, suits, proceedings,
claims or disputes pending or, to the knowledge of the Borrower after
reasonable investigation, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, by or against any Loan Party
or any of the Borrower’s Subsidiaries or Unrestricted Subsidiaries or against
any of their properties or revenues that (A) purport to adversely affect
any Loan Document or enjoin any of the transactions contemplated hereby, or (B) if
determined adversely, could have a Material Adverse Effect.

 

5.07        No Default. 
No Loan Party is in default under or with respect to any Contractual
Obligations that could be reasonably expected to have a Material Adverse
Effect; provided, however, that, notwithstanding the foregoing, (i) if
and only if such defaults are defaults with respect to Contractual Obligations
of any Loan Party related to one or more Projects and (ii) such defaults do
not in the aggregate constitute a Specified Project Effect, then (iii) such
defaults shall be deemed not to have a Material Adverse Affect for purposes of
this Section 5.07.  No
Default or Event of Default has occurred and is continuing or would result from
the consummation of the transactions contemplated by this Agreement or any
other Loan Document.

 

5.08        Ownership of Property; Liens. 
Each Loan Party has good record and marketable title in fee simple to,
or valid leasehold interests in, all material Property necessary or used in the
ordinary conduct of its business, except for such defects in title as would
not, individually or in the aggregate, have a Material Adverse Effect.  There is no Lien on any Property of any Loan
Party, other than Liens permitted by Section 7.01.

 

5.09        Environmental Compliance. 
The Loan Parties have conducted a review of the effect of existing
Environmental Laws and claims alleging potential liability or responsibility
for violation of any Environmental Law on their respective businesses,
operations and properties, 

 

52

 

and as a result
thereof have reasonably concluded that, except as specifically disclosed in Schedule
5.09:  (a) with respect to the
Property of any Loan Party or the operations conducted thereon, they are in
compliance with all applicable Environmental Laws, except to the extent that
any non-compliance would not reasonably be expected to have a Material Adverse
Effect; (b) they are not subject to any judicial, administrative,
government, regulatory or arbitration proceeding alleging the violation of any
applicable Environmental Laws or to the best of their knowledge that may lead
to claim for cleanup costs, contribution, remedial work, reclamation,
conservation, natural resources damages or personal injury or to the issuance
of a stop-work order, suspension order, control order, prevention order or
clean-up order, except to the extent that any such proceeding would not
reasonably be expected to have a Material Adverse Effect; (c) they are not
subject to any federal, state, local or foreign review, audit or investigation
which may lead to a proceeding referred to in (b) above; (d) they
have no knowledge that any of their predecessors in title to any of their
Property and assets are the subject of any currently pending federal, state,
local or foreign review, audit or investigation which may lead to a proceeding
referred to in (b) above; (e) they have not filed any notice under
any applicable Environmental Laws indicating past or present treatment, storage
or disposal of, or reporting a release of Hazardous Materials into the
environment where the circumstances surrounding such notice would reasonably be
expected to have a Material Adverse Effect; and (f) they possess, and are
in compliance with, all approvals, licenses, permits, consents and other
authorizations which are necessary under any applicable Environmental Laws to
conduct their business, except to the extent that the failure to possess, or be
in compliance with, such authorizations would not reasonably be expected to
have a Material Adverse Effect.

 

5.10        Insurance. 
The properties of the Borrower and its respective Subsidiaries are
insured with financially sound and reputable insurance companies that are not
Affiliates of the Borrower, in such amounts, with such deductibles and covering
such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the Borrower or
its respective Subsidiaries operate.

 

5.11        Taxes. 
Each of the Parent Guarantor and the Borrower and its Subsidiaries and
Unrestricted Subsidiaries have filed all Federal, state and other material tax
returns and reports required to be filed, and have paid all Federal, state and
other material taxes, assessments, fees and other governmental charges levied
or imposed upon any of the Parent Guarantor, the Borrower or its Subsidiaries
or Unrestricted Subsidiaries or their properties, income or assets otherwise
due and payable, except those which are being contested in good faith by
appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP.  There is no
proposed tax assessment against any of the Parent Guarantor, or the Borrower or
any Subsidiary or Unrestricted Subsidiary that would, if made, have a Material
Adverse Effect.

 

5.12        ERISA Compliance.

 

(a)           Except as could not reasonably be
expected to result in a material Adverse Effect, each Plan is in compliance
with the applicable provisions of ERISA, the Code and other Federal or state
Laws.  Each Plan that is intended to
qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS or an application for such a letter
is currently being processed by the IRS with respect thereto and, to the best
knowledge of the

 

53

 

Borrower, nothing
has occurred which would prevent, or cause the loss of, such qualification
under circumstances as could reasonably be expected to result in a Material
Adverse Effect.  The Borrower and each
ERISA Affiliate of the Borrower have made all required contributions to each
Plan subject to Section 412 of the Code, and no application for a
funding waiver or an extension of any amortization period pursuant to Section 412
of the Code has been made with respect to any Plan

 

(b)           There are no pending or, to the best
knowledge of the Borrower, threatened claims, actions or lawsuits, or action by
any Governmental Authority, with respect to any Plan that could be reasonably
be expected to have a Material Adverse Effect. 
There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or could
be reasonably expected to result in a Material Adverse Effect.

 

(c)           No ERISA Event has occurred or is
reasonably expected to occur; (ii) no Pension Plan has any Unfunded
Pension Liability in such amount as could reasonably be expected to Result in a
Material Adverse Effect; (iii) neither the Borrower nor any ERISA
Affiliate of the Borrower has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA with respect to any Pension Plan (other than
premiums due and not delinquent under Section 4007 of ERISA in such amount
as could reasonably be expected to Result in a Material Adverse Effect); (iv) neither
the Borrower nor any ERISA Affiliate of the Borrower has incurred, or
reasonably expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in
such liability) under Sections 4201 or 4243 of ERISA with respect to a
Multiemployer Plan in such amount as could reasonably be expected to Result in
a Material Adverse Effect; and (v) neither the Borrower nor any ERISA
Affiliate of the Borrower has engaged in a transaction that could reasonably be
expected to be subject to Sections 4069 or 4212(c) of ERISA.

 

5.13        Subsidiaries.

 

(a)           As of the Closing Date, the Borrower has
no Subsidiaries or Unrestricted Subsidiaries other than those specifically
disclosed in Part (a) of Schedule 5.13.  All Subsidiaries and Unrestricted Subsidiaries
of the Borrower are duly organized, validly existing and in good standing under
the laws of their respective jurisdictions of organization and are duly
qualified to do business in each jurisdiction where failure to so qualify would
have an Material Adverse Effect.  All
outstanding shares of stock of each class of each Subsidiary or Unrestricted
Subsidiary of Borrower have been and will be validly issued and are and will be
fully paid and nonassessable and are and will be owned, beneficially and of
record, by the Borrower or a Wholly-Owned Subsidiary of the Borrower free and
clear of any Liens (other than Liens permitted by Section 7.01).

 

(b)           As of the Closing Date, part (b) of Schedule 5.13
sets forth each of the Subsidiaries of the Borrower that shall have delivered a
Guaranty on the Closing Date.  Each such
Guarantor is and will remain a Wholly-Owned Subsidiary of the Borrower.

 

(c)           As of the Closing Date, the Borrower has
no equity investments in any other corporation or entity other than those
specifically disclosed in Part (c) of Schedule 5.13.

 

54

 

5.14        Margin Regulations; Investment
Company Act; Public Utility Holding Company Act.

 

(a)           The Borrower is not engaged and will not
be engaged principally or as one of its important activities, in the business
of purchasing or carrying margin stock (within the meaning of Regulation U
issued by the Board), or extending credit for the purpose of purchasing or
carrying margin stock.

 

(b)           None of the Loan Parties, any Person
directly or indirectly controlling any of the Loan Parties or any Subsidiary or
Unrestricted Subsidiary (i) is a “holding company,” or a “subsidiary
company” of a “holding company,” or an “affiliate” of a “holding company” or of
a “subsidiary company” of a “holding company,” within the meaning of the Public
Utility Holding Company Act of 1935, or (ii) is or is required to be
registered as an “investment company” under the Investment Company Act of 1940.

 

5.15        Disclosure. 
No statement, information, report, representation, or warranty (other
than projections) made by any Loan Party in any Loan Document, when so made (or
if dated or otherwise specified therein, as of such date), or furnished to the
Administrative Agent, the L/C Issuer or any Lender by or at the direction of
any Loan Party in connection with any Loan Document, when so furnished (or if
dated or otherwise specified therein, as of such date), contains any untrue
statement of a material fact or omits any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.  There is no fact known to the Borrower which
has caused, or which likely would in the future in the reasonable judgment of
the Borrower cause, a Material Adverse Effect (except for any economic
conditions which affect generally the industry in which the Borrower and its
Subsidiaries conduct business), that has not been set forth in this Agreement
or in the other documents, certificates, statements, reports and other
information furnished in writing to the Lenders by or on behalf of the Borrower
or any other Loan Party in connection with the transactions contemplated
hereby.

 

5.16        Intellectual Property; Licenses, Etc. 
The Borrower and its Subsidiaries and Unrestricted Subsidiaries own, or
possess the right to use, all of the trademarks, service marks, trade names,
copyrights, patents, patent rights, franchises, licenses and other rights that
are reasonably necessary for the operation of their respective businesses,
without conflict with the rights of any other Person.  To the best knowledge of the Borrower, no
slogan or other advertising device, product, process, method, substance, part
or other material now employed, or now contemplated to be employed, by the
Borrower or any Subsidiary or Unrestricted Subsidiary infringes upon any rights
held by any other Person.  No claim or
litigation regarding any of the foregoing is pending or, to the best knowledge
of the Borrower, threatened, and no patent, invention, device, application,
principle or any statute, law, rule, regulation, standard or code is pending
or, to the knowledge of the Borrower, proposed, which, in any case described in
this Section 5.16, could reasonably be expected to have a Material
Adverse Effect.

 

5.17        Direct Benefit.  The initial
Loans and Letters of Credit hereunder and all additional Loans and Letters of
Credit hereunder are for the direct benefit of the Borrower or one or more of
the Guarantors.  The Borrower and the
Guarantors are engaged as an integrated group in the business of energy
production and distribution and related fields, and any benefits to the 

 

55

 

Borrower or any
Guarantor is a benefit to all of them, both directly or indirectly, inasmuch as
the successful operation and condition of the Borrower and the Guarantors is
dependent upon the continued successful performance of the functions of the
integrated group as a whole.

 

5.18        Solvency.  The Borrower,
each individual Guarantor and the Loan Parties on a consolidated basis are
Solvent.

 

5.19        IPSs and Subordinated Note Documents. 
Before and after giving effect to all the Credit Extensions contemplated
hereunder, all representations and warranties of the Borrower or any Guarantor
contained in the IPS Prospectus, the Subordinated Note Indenture and any
documents related thereto are true and correct in all material respects (except
to the extent such representations or warranties relate or refer to a
specified, earlier date).  Before and
after giving effect to all the Credit Extensions contemplated hereunder, there
is no event of default or event or condition that could become an event of
default with notice or lapse of time or both, under the IPS Prospectus, the
Subordinated Note Indenture and any documents related thereto and each of the
IPS Prospectus, the Subordinated Notes and any document related thereto is in
full force and effect.

 

5.20        Labor Relations. 
Neither the Borrower nor any Subsidiary or Unrestricted Subsidiary is
engaged in any unfair labor practice that could reasonably be expected to have
a Material Adverse Effect. There is (i) no unfair labor practice complaint
pending against the Borrower or any Subsidiary or Unrestricted Subsidiary or
threatened against any of them, before the National Labor Relations Board, and
no grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Borrower or any Subsidiary or
Unrestricted Subsidiary or, to the best of the Borrower’s knowledge, threatened
against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending
against the Borrower or any Subsidiary or Unrestricted Subsidiary or, to the
Borrower’s knowledge, threatened in writing against the Borrower or any
Subsidiary or Unrestricted Subsidiary and (iii) no union representation
petition existing with respect to the employees of the Borrower or any
Subsidiary or Unrestricted Subsidiary and no union organizing activities are
taking place, except with respect to any matter specified in clause (i), (ii) or
(iii) above, either individually or in the aggregate, such as could not
reasonably be expected to have a Material Adverse Effect.

 

5.21        Undisclosed Liabilities; Absence
of Burdensome Obligations.  Neither the Borrower nor any
Subsidiary (i) is a party to any material agreement or arrangement, or
subject to any order, judgment, writ or decree, which either restricts or
purports to restrict its ability to grant Liens to the Administrative Agent and
the Lenders on or in respect of their Properties to secure the Indebtedness and
the Security Documents or (ii) has any material Indebtedness or any
contingent liabilities, off balance sheet liabilities, liabilities for taxes, long
term commitments or unrealized or anticipated losses from any unfavorable
commitments, except as reflected in the financial statements referred to in Section 5.05.

 

ARTICLE VI.

AFFIRMATIVE COVENANTS

 

So long as any Lender
shall have any Commitment hereunder, any Loan or other Obligation or Secured
Obligation shall remain unpaid, or any Letter of Credit shall remain 

 

56

 

outstanding, the
Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01, 6.02
and 6.03) cause each Loan Party and
each Subsidiary in which it directly or indirectly owns more than 50% of the
total voting or equity interests and (to the extent that the Borrower has any
direct or indirect contractual or other approval rights over the actions of
such Subsidiary) any of its other Subsidiaries to:

 

6.01        Financial Statements. 
Deliver to the Administrative Agent and each Lender, in form and detail
reasonably satisfactory to the Administrative Agent and the Required Lenders:

 

(a)           (i) as soon as available, but in any
event within 90 days after the end of the fiscal year of the Parent Guarantor,
an audited consolidated balance sheet of the Parent Guarantor and its
consolidated Subsidiaries and (ii) (a) if and when audited financial
statements become available, the consolidated balance sheet of the  Borrower and its consolidated Subsidiaries and Unrestricted
Subsidiaries; provided that Borrower shall use its commercially
reasonable efforts to obtain such audited financials and (b) notwithstanding
clause (ii)(a), within 90 days after the end of the fiscal year of the
Borrower, an unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries, each of the balance sheet described in clauses (i),
(ii)(a) and (ii)(b) as at the end of such fiscal year, and the
related consolidated statements of income and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, and with respect to the balance sheets
described in clauses (i) and (ii)(b) audited and accompanied by a
report and opinion of an independent certified public accountant of nationally
recognized standing selected by the Borrower and reasonably acceptable to the
Required Lenders, which report and opinion shall be prepared in accordance with
Cdn. GAAP (in the case of the balance sheet referred to in clause (i)) and U.S.
GAAP (in the case of the balance sheet referred to in clause (ii)(a) and
(ii)(b)) and shall not be subject to any qualifications or exceptions as to the
scope of the audit nor to any qualifications and exceptions not reasonably
acceptable to the Required Lenders; and

 

(b)           as soon as available, but in any event
within 45 days after the end of each of the first three fiscal quarters of each
fiscal year of each of the Parent Guarantor and the  Borrower,
a consolidated balance sheet of each of (i) the Parent Guarantor and its
consolidated Subsidiaries and (ii) the Borrower and its consolidated
Subsidiaries and Unrestricted Subsidiaries as at the end of such fiscal
quarter, and the related consolidated statements of income and cash flows for
such fiscal quarter and for the portion of the Parent Guarantor and the  Borrower’s fiscal year then ended, as applicable, setting
forth in each case in comparative form the figures for the corresponding fiscal
quarter of the previous applicable fiscal year and the corresponding portion of
the previous applicable fiscal year, all in reasonable detail and certified by a
Responsible Officer of the Borrower and the Parent Guarantor, as applicable  as fairly presenting the financial condition, results of
operations and cash flows of the Borrower and its Subsidiaries and Unrestricted
Subsidiaries in accordance with Cdn. GAAP (in the case of the balance sheet
referred to in clause (i)) and U.S. GAAP (in the case of the balance sheet
referred to in clause (ii)), subject only to normal year-end audit adjustments
and the absence of footnotes.

 

(c)           at least 15 days prior to the commencement
of each fiscal year of the Borrower, a projected consolidated balance sheet of
the Borrower and its Subsidiaries and Unrestricted Subsidiaries as of the end
of such next fiscal year and related projected consolidated statements 

 

57

 

of income and
equity interests including, without limitation, all limited liability and
partners’ equity and cash flows for such fiscal year, including therein an
annual operating budget for the Borrower and its Subsidiaries and Unrestricted
Subsidiaries for such fiscal year certified by an Responsible Officer of the
Borrower as being a true and complete copy of the projected consolidated
balance sheet and operating budget approved by the Borrower for such fiscal
year.

 

(d)           The Borrower shall deliver to the
Administrative Agent each of the following documents, if available, promptly
following the receipt of such by the Borrower: any and all audited annual
financial statements, unaudited annual financial statements, management
reports, or other similar reports or financial information prepared pursuant to
(i) the Organization Documents of any Project Level Subsidiary of the
Borrower or (ii) any other agreement regarding preparation and delivery of
such reports between the Parent Guarantor or the Borrower and any Project Level
Subsidiary of the Borrower.

 

6.02        Certificates; Other Information. 
Deliver to the Administrative Agent and each Lender, in form and detail
reasonably satisfactory to the Administrative Agent and the Required Lenders:

 

(a)           concurrently with the delivery of the
financial statements referred to in Section 6.01(a),
a certificate of its independent certified public accountants certifying such
financial statements have been prepared in accordance with GAAP and fairly
present the financial condition of the Parent Guarantor or the Borrower and its
Subsidiaries and Unrestricted Subsidiaries, as applicable, as of the date
thereof;

 

(b)           concurrently with the delivery of the
financial statements referred to in Sections 6.01(a) and
(b), a duly completed Compliance
Certificate signed by Responsible Officers of the Parent Guarantor or the
Borrower, as applicable;

 

(c)           promptly after the same are available,
copies of each annual report, proxy or financial statement or other report or
communication sent to the shareholders of the Parent Guarantor or the  unit holders of the Borrower, and copies of all annual,
regular, periodic and special reports and registration statements (if any)
which the Parent Guarantor or the  Borrower has
filed with the Securities and Exchange Commission under Section 13 or 15(d) of
the Securities Exchange Act of 1934, and not otherwise required to be delivered
to the Administrative Agent pursuant hereto, in each case, (i) which are
not confidential in nature, as permitted by applicable Laws, as required by
contractual restrictions not entered into in contemplation of this Section 6.02(c), as permitted by
recognized principles of privilege or as otherwise determined in good faith by
the Borrower, and (ii) which are not publicly available on the United
States Securities and Exchange Commission’s Electronic Data Gathering, Analysis
and Retrieval System (or “EDGAR”), the Canadian Securities Administrators
System for Electronic Document Analysis and Retrieval ( or “SEDAR”) or other
similar publicly accessible sources of which the Parent Guarantor or the  Borrower provides written notice to the Administrative
Agent and the Lenders; and

 

(d)           promptly after the same are available,
copies of quarterly and annual management reports setting forth the respective
cash flows of each Project;

 

58

 

(e)           promptly, such additional information
regarding the business, financial or organizational affairs of the Parent
Guarantor or the  Borrower or any Subsidiary or
Unrestricted Subsidiary as the Administrative Agent, at the request of any
Lender, may from time to time reasonably request.

 

6.03        Notices. 
Promptly notify the Administrative Agent and each Lender within 5
Business Days after actual knowledge thereof by any Responsible Officer of the
Borrower:

 

(a)           of the occurrence of any Default or Event
of Default;

 

(b)           of any matter that has resulted or could
reasonably be expected to result in a Material Adverse Effect, including without
limitation (i) breach or non-performance of, or any default under, a
Contractual Obligation of the Parent Guarantor or the  Borrower
or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding
or suspension between the Borrower or any Subsidiary and any Governmental
Authority; or (iii) the commencement of, or any material development in,
any litigation or proceeding affecting the Parent Guarantor or the  Borrower or any Subsidiary, including pursuant to any
applicable Environmental Laws;

 

(c)           of any litigation, investigation or
proceeding affecting any Loan Party which if determined adversely, to any Loan
Party, could reasonably be expected to result in liability to one or more Loan
Parties in at an amount that exceeds, in the aggregate for all such matters,
after giving effect to applicable in-force insurance and related third-party
indemnity and similar agreements, U.S.$5,000,000, or in which injunctive relief
or similar relief is sought, which relief, if granted, could be reasonably expected
to have a Material Adverse Effect;

 

(d)           of the occurrence of any ERISA Event; and

 

(e)           of any announcement by Moody’s or S&P
of any change in a debt rating or by DBRS of any change to the stability rating
of the Parent Guarantor.

 

Each notice pursuant to
this Section shall be accompanied by a statement of a Responsible Officer
of the Borrower setting forth details of the occurrence referred to therein and
stating what action the relevant Loan Party or Subsidiary has taken and
proposes to take with respect thereto. 
Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement or other
Loan Document that have been breached.

 

6.04        Payment of Obligations. 
Pay and discharge as the same shall become due and payable, all its
obligations and liabilities, that if not paid could reasonably be expected to
result in a Material Adverse Effect, including: 
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves in accordance
with U.S. GAAP are being maintained by the relevant Loan Party or such
Subsidiary; (b) all material lawful claims which, if unpaid, would by law become
a Lien upon its Property; and (c) all Indebtedness, as and when due and
payable, but subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness.

 

59

 

6.05        Continuation of Business, Etc. 
Except in a transaction permitted by Section 7.05 or
pursuant to statutory conversions to another form of entity as permitted by
applicable Law, preserve, renew and maintain in full force and effect its legal
existence and good standing under the Laws of the jurisdiction of its
organization; and except where it will not have a Material Adverse Effect, take
all reasonable action to maintain all rights, privileges, permits, licenses and
franchises necessary or desirable in the normal conduct of its business and
preserve or renew all of its registered patents, trademarks, trade names and
service marks.

 

6.06        Maintenance of Properties. 
Except where it will not have a Material Adverse Effect, (a) maintain,
preserve and protect all of its material properties and equipment necessary in
the operation of its business in good working order and condition, ordinary
wear and tear excepted, (b) make all necessary repairs thereto and
renewals and replacements thereof and (c) use
the standard of care typical in the industry in the operation and maintenance
of its facilities.

 

6.07        Maintenance of Insurance. 
Maintain with financially sound and reputable insurance companies (which
are not Affiliates of the Parent Guarantor or the  Borrower),
insurance with respect to its properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons.

 

6.08        Compliance with Laws. 
Comply in all material respects with the requirements of all Laws
applicable to it or to its business or Property, except in such instances in
which (i) such requirement of Law is being contested in good faith or a
bona fide dispute exists with respect thereto or (ii) the failure to
comply therewith could not be reasonably expected to have a Material Adverse
Effect.

 

6.09        Books and Records. 
Maintain proper books of record and account necessary to prepare the
financial statements required to be delivered pursuant to Section 6.01
in accordance with U.S. GAAP.

 

6.10        Inspection Rights. 
Permit representatives and independent contractors of the Administrative
Agent, the L/C Issuer and each Lender, at their respective expense, to visit
and inspect any of its properties, to examine its corporate, financial and
operating records, and make copies thereof or abstracts therefrom, and to
discuss its affairs, finances and accounts with its directors, officers, and independent
public accountants, in each case, all at such reasonable times during normal
business hours and as reasonably often as may be necessary, upon reasonable
advance notice to the Borrower and subject to compliance with applicable safety
standards, with contractual or attorney-client privilege (as applicable) and
non-disclosure agreements; provided, however, that during an Event of Default, the
Administrative Agent, the L/C Issuer or any Lender (or any of their respective
representatives or independent contractors) may, without duplication of the
efforts of the others, do any of the foregoing at the reasonable expense of the
Borrower at any time during normal business hours.

 

6.11        Compliance with Contractual
Obligations.  Comply with all Contractual Obligations,
except in such instances in which (i) such non-compliance is being
contested in 

 

60

 

good faith or a
bona fide dispute exists with respect thereto or (ii) the failure to
comply therewith could not be reasonably expected to have a Material Adverse
Effect.

 

6.12        Use of Proceeds. 
Use the proceeds of the Credit Extensions for working capital
(including, managing accounts receivables, inventory and other short-term cash
requirements, including timing differences with regard to withholding taxes in
the United States), certain limited distributions and for other general
corporate purposes of the Borrower in the ordinary course of business.

 

6.13        Guaranties.  Cause each
Subsidiary which has not previously executed and delivered to the
Administrative Agent a Guarantee and other related collateral documents to
execute and deliver to the Administrative Agent promptly, and in any event
within five (5) Business Days following such Subsidiary’s becoming a
Subsidiary, (i) a Guarantee and collateral documents in form and substance
satisfactory to the Administrative Agent, together with a resolution of its
board of directors or other similar governing body authorizing such Guarantee
and collateral documents, (ii) a favorable opinion of counsel to such
Guarantor in form and substance satisfactory to the Administrative Agent
regarding the valid existence and good standing of such Subsidiary in its
jurisdiction of incorporation and its good standing in any jurisdiction in
which it is qualified to do business, and to the effect that the execution and
delivery of the Guarantee and any collateral documents by such Subsidiary has
been duly authorized by all necessary corporate or equivalent action and that
the Guarantee and such collateral documents constitute the valid, legal and
binding obligation of such Subsidiary, and that such collateral documents
create a perfected lien on such Collateral, in each case, subject to related
normal and customary qualifications and exceptions, which opinion may be
rendered by counsel who is an employee of the Borrower and (iii) documentation
of the type described in clauses (iv), (v), and (viii) of Section 4.01(a).  Notwithstanding anything to the contrary and
for the avoidance of doubt, any Subsidiary designated as an Unrestricted
Subsidiary pursuant to Section 6.14 
hereto shall not be subject to the requirements of this Section 6.13.

 

6.14        Unrestricted
Subsidiaries.  Following
the Closing Date and subject to the restrictions and limitations of this
Agreement, if the Borrower, or a Subsidiary or an Unrestricted Subsidiary of
the Borrower, is permitted to create, purchase or otherwise acquire an entity
that would otherwise qualify as a Subsidiary of the Borrower, the Borrower
shall be permitted to designate such Subsidiary as an Unrestricted Subsidiary
by providing the Administrative Agent with written notice 10 Business Days
prior to such designation; provided  that notwithstanding
anything in this Agreement to the contrary, no Subsidiary of the Borrower in
existence as of the Closing Date shall be designated as an Unrestricted
Subsidiary without the prior written consent of the Administrative Agent and
the Required Lenders acting in their sole and absolute discretion.

 

ARTICLE VII.

NEGATIVE COVENANTS

 

So long as any Lender
shall have any Commitment hereunder, any Loan or other Obligation shall remain
unpaid, or any Letter of Credit shall remain outstanding or any other Secured
Obligation shall remain outstanding, the Borrower shall not, nor shall it
permit any Loan Party or Subsidiary to, directly or indirectly:

 

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7.01        Liens. 
The Borrower will not, and will not permit any Subsidiaries in which it
directly or indirectly owns more than 50% of the total voting or equity
interests and will not permit (to the extent that the Borrower has any direct
or indirect contractual or other approval rights over the actions of such
Subsidiary) any of its other Subsidiaries to, directly or indirectly, create, Incur
or suffer to exist any Lien (other than Permitted Liens) on any asset or
Property of the Borrower or such Subsidiary, or any income or profits
therefrom, or assign or convey any right to receive income therefrom, that
secures any Obligations of the Borrower or any of its Subsidiaries or any other
Person.  The Borrower will not permit any
Unrestricted Subsidiary to directly or indirectly, create, Incur or suffer to
exist any Lien (other than Permitted Liens) on any asset or Property of the
Borrower or any Subsidiary, or any income or profits therefrom, or assign or
convey any right to receive income therefrom; provided, that
notwithstanding the foregoing, the Borrower will not, and will not permit any
of its Subsidiaries or Unrestricted Subsidiaries in which it directly or
indirectly owns more than 50% of the total voting or equity interests and will
not permit (to the extent that the Borrower has any direct or indirect
contractual or other approval rights over the actions of such Subsidiary) any
of its other Subsidiaries or Unrestricted Subsidiaries to, directly or
indirectly, create, Incur or suffer to exist any Lien on any asset or Property
of Onondaga Cogeneration Limited Partnership except for Permitted Liens and
Liens reasonably Incurred by Onondaga Cogeneration Limited Partnership in the
ordinary course of its business and in accordance with its commercially
reasonable past business practices and otherwise permitted under this
Agreement.

 

7.02        Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred Stock.

 

(a)           The Borrower will not, and will not
permit any Subsidiary or Unrestricted Subsidiary in which it directly or
indirectly owns more than 50% of the total voting or equity interests, and
shall not permit (to the extent that the Borrower has any direct or indirect
contractual or other approval rights over the actions of such Subsidiary or
Unrestricted Subsidiary) any of its other Subsidiaries or Unrestricted
Subsidiaries to, directly or indirectly, Incur or suffer to exist any
Indebtedness or issue any shares of Disqualified Stock or Preferred Stock;

 

(b)           The limitations set out in Section 7.02(a) will
not apply to the following, provided that at the time any such
Indebtedness is Incurred or any Disqualified Stock or Preferred Stock is
issued, the Cash Flow Coverage Ratio of the Parent Guarantor for the previous
four-quarter period is 1.5 to 1.0 on a pro forma basis,
after giving effect to the Incurrence of such Indebtedness or the issuance of
such Disqualified Stock or Preferred Stock and the application of the proceeds
therefrom:

 

(i)            the Incurrence by the Borrower and its Subsidiaries of
Indebtedness represented by the Guarantees and the other Loan Documents;

 

(ii)           Indebtedness, Disqualified Stock or Preferred Stock of
the Borrower or any Subsidiary or Unrestricted Subsidiary existing on the
Closing Date as detailed in Schedule 7.02(b)(ii);

 

62

 

(iii)          Indebtedness to be issued in the form of Additional
Securities forming part of the IPSs, issued by the Issuer to finance the
redemption by Borrower of any Existing Investor Interests (as defined in the
Subordinated Note Indenture) and related issuance of Class A preferred
membership interests of Borrower in connection with such issuance;

 

(iv)          Indebtedness arising from agreements of the Borrower
or a Subsidiary or Unrestricted Subsidiary of the Borrower providing for
indemnification, adjustment of purchase price or similar obligations, in each
case, Incurred in connection with the acquisition or disposition of any
business, assets or a Subsidiary or Unrestricted Subsidiary of the Borrower in
accordance with the terms of this Agreement, other than guarantees of
Indebtedness Incurred by any Person acquiring all or any portion of such
business, assets or Subsidiary for the purpose of financing such acquisition;

 

(v)           Indebtedness of the Borrower to the Issuer or a
Subsidiary of the Borrower; provided that any such Indebtedness is
expressly subordinated in right of payment to the Obligations and the other
Secured Obligations, in form and substance reasonably satisfactory to the
Administrative Agent and the Required Lenders; provided,  further
that any subsequent issuance or transfer of any Capital Stock or any other
event which results in any such Subsidiary ceasing to be a Subsidiary of the
Borrower or any other subsequent transfer of any such Indebtedness (except to
the Borrower or another Subsidiary of the Borrower) will be deemed, in each
case, to be an Incurrence of such Indebtedness;

 

(vi)          Indebtedness of a Subsidiary of the Borrower to the
Issuer, the Borrower or another Subsidiary of the Borrower; provided
that (x) any such Indebtedness is made pursuant to an intercompany note
subordinated in right of payment to the Obligations and the other Secured
Obligations, in form and substance reasonably satisfactory to the
Administrative Agent and the Required Lenders and (y) if a Guarantor
Incurs such Indebtedness to a Subsidiary of the Borrower that is not a
Guarantor, such Indebtedness is subordinated in form and substance satisfactory
to the Administrative Agent and the Required Lenders in right of payment to the
Guarantee of such Guarantor; provided, further that any
subsequent issuance or transfer of any Capital Stock or any other event which
results in any Subsidiary of the Borrower lending such Indebtedness ceasing to
be a Subsidiary of the Borrower or any other subsequent transfer of any such
Indebtedness (except to the Borrower or another Subsidiary of the Borrower)
will be deemed, in each case, to be an Incurrence of such Indebtedness;

 

(vii)         Hedging Obligations that are incurred in the ordinary
course of business (1) for the purpose of fixing or hedging interest rate
risk with respect to any Indebtedness that is permitted by the terms of this
Agreement to be outstanding, (2) for the purpose of fixing or hedging
currency exchange rate risk with respect to any currency exchanges or (3) for
the purpose of fixing or hedging commodity price risk with respect to any
commodity purchases;

 

(viii)        any guarantee by the Borrower or a Subsidiary of the
Borrower of other obligations of the Borrower or any of its Subsidiaries so
long as the Incurrence of such Indebtedness by the Borrower or such Subsidiary
is permitted under the terms of this

 

63

 

Agreement; provided
that if such Indebtedness is by its express terms subordinated in right of
payment to the Obligations and the other Secured Obligations or the Guarantee
of such Subsidiary, as applicable, any such guarantee of such Subsidiary with
respect to such Indebtedness shall be subordinated in right of payment to such
Subsidiary’s Guarantee with respect to the Obligations and the other Secured
Obligations substantially to the same extent as such Indebtedness is
subordinated to the Securities or the Guarantee of such Subsidiary, as
applicable;

 

(ix)           the Incurrence by the Borrower or any of its
Subsidiaries or Unrestricted Subsidiaries of Indebtedness which serves to
refund or refinance any Indebtedness Incurred as permitted under this Section 7.02
and clauses (i), (ii), (v) and (vi), above, and (xiii) below, or any
Indebtedness issued to so refund or refinance such Indebtedness (subject to the
following proviso, “Refinancing Indebtedness”)
prior to its respective maturity; provided, however, that such
Refinancing Indebtedness:

 

(A)          has a Weighted Average Life to Maturity at the time
such Refinancing Indebtedness is Incurred which is not less than the remaining
Weighted Average Life to Maturity of the Indebtedness being refunded or
refinanced;

 

(B)           has a Stated Maturity which is no earlier than the
Stated Maturity of the Indebtedness being refunded or refinanced;

 

(C)           to the extent such Refinancing Indebtedness refinances
Indebtedness pari passu with the
Obligations and the other Secured Obligations of the Subsidiaries that are
Guarantors, is pari passu with or
subordinated to the Obligations and the other Secured Obligations of such
Subsidiaries under such guarantee, as applicable; and

 

(D)          is Incurred in an aggregate amount (or if issued with
original issue discount, an aggregate issue price) that is equal to or less
than the aggregate principal amount (or if issued with original issue discount,
the aggregate accreted value) then outstanding of the Indebtedness being
refinanced plus premium and fees Incurred in connection with such refinancing;

 

(x)            Indebtedness of Persons that are acquired by the
Borrower or any of its Subsidiaries or merged into a Subsidiary in accordance
with the terms of this Agreement; provided, however, that such
Indebtedness is not Incurred in contemplation of such acquisition or to provide
all or a portion of the funds or credit support required to consummate such
acquisition or merger; provided, further, however, that
the Cash Flow Coverage Ratio of the Parent Guarantor for the previous
four-quarter period is 1.5 to 1.0 on a pro forma
basis, after giving effect to such acquisition and the Incurrence of such
Indebtedness, would be greater than the actual Cash Flow Coverage Ratio for
such period without giving effect to such acquisition;

 

(xi)           the Incurrence by the Borrower or any of its
Subsidiaries or Unrestricted Subsidiaries of Indebtedness which serves to
finance in whole or in part the making of 

 

64

 

capital improvements required
to maintain compliance with applicable Laws or Project Documents, provided,
however, that the principal amount of all such Indebtedness does not
exceed an aggregate of U.S.$20,000,000 and an independent engineer confirms in
writing to the Administrative Agent that such capital improvements are required
to maintain compliance with applicable Laws or Project Documents;

 

(xii)          the Incurrence by the Borrower or any of its
Subsidiaries or Unrestricted Subsidiaries of Indebtedness in connection with
performance, surety or similar bonds, letters of credit or performance
guarantees or other similar obligations in the ordinary course of business, provided,
however, the principal amount of all such Indebtedness does not exceed
an aggregate of U.S.$15,000,000; and

 

(xiii)         (A) the Incurrence of Indebtedness by any
Subsidiary that is (1) a Subsidiary on the Closing Date and (2) as of
the Closing Date does not have any outstanding obligations with respect to any
material Indebtedness; provided, however that (X) any Indebtedness
Incurred by such Subsidiary shall be on commercially reasonable terms and (Y) prior
to Incurring such Indebtedness, such Subsidiary shall have received the written
consent of the Administrative Agent, such consent not to be unreasonably
withheld.

 

(c)           The Project Level Subsidiaries and
Unrestricted Subsidiaries may incur Indebtedness and issue Disqualified Stock
or Preferred Stock as follows; provided that at the time any such
Indebtedness is Incurred or any such Disqualified Stock or Preferred Stock is
issued, the Cash Flow Coverage Ratio of the Parent Guarantor for the previous
four-quarter period is 1.5 to 1.0 on a pro forma
basis, after giving effect to the Incurrence of such Indebtedness or the
issuance of such Disqualified Stock or Preferred Stock and the application of
the proceeds therefrom;

 

(i)            Indebtedness of any Unrestricted Subsidiary or the
issuance of any shares of Disqualified Stock or Preferred Stock by an
Unrestricted Subsidiary; provided, that neither (X) such
Indebtedness or the Incurrence thereof, nor (Y) the issuance of such
shares of Disqualified Stock or Preferred Stock shall encumber, restrict or in
any other way affect any asset or Property of the Borrower or any Subsidiary,
or any income or profits therefrom, or assign or convey any right to receive
income therefrom;

 

(ii)           Indebtedness of any Project Level Subsidiary; provided,
that (X) such Indebtedness is non-recourse to the Borrower and
non-recourse to any Project Holding Entity and (Y) such Indebtedness or
the Incurrence thereof, shall not encumber, restrict or in any other way affect
any asset or Property of the Borrower or any Subsidiary, or any income or
profits therefrom, or assign or convey any right to receive income therefrom.

 

provided, that notwithstanding anything to the
contrary in this Section 7.02, the Borrower will not, and will not
permit any of its Subsidiaries or Unrestricted Subsidiaries in which it
directly or indirectly owns more than 50% of the total voting or equity
interests and will not permit (to the extent that the Borrower has any direct
or indirect contractual or other approval rights over the actions of such
Subsidiary or Unrestricted Subsidiary) any of its other Subsidiaries or
Unrestricted Subsidiaries to, directly or indirectly, Incur or suffer to exist
any Indebtedness of or 

 

65

 

by Onondaga Cogeneration
Limited Partnership or issue any shares of Disqualified Stock or Preferred
Stock with respect to Onondaga Cogeneration Limited Partnership, except for
Indebtedness Incurred with respect to the Onondaga Swap and Indebtedness
reasonably Incurred by Onondaga Cogeneration Limited Partnership in the
ordinary course of its business and in accordance with its commercially
reasonable past business practices and otherwise permitted under this
Agreement.

 

For purposes of
determining compliance with this Section 7.02, in the event that an
item of Indebtedness meets the criteria of more than one of the categories of
permitted Indebtedness described in clauses above or is entitled to be Incurred
pursuant to Section 7.02(a), the Borrower will, in its sole
discretion, classify or reclassify such item of Indebtedness in any manner that
complies with this covenant and such item of Indebtedness will be treated as
having been Incurred pursuant to only one of such clauses of Section 7.02.  Accrual of interest and the accretion of
accreted value will not be deemed to be an Incurrence of Indebtedness for
purposes of this Section.

 

7.03        Limitation on Restricted Payments.

 

(a)           The Borrower will not, and will not
permit any Subsidiaries in which it directly or indirectly owns more than 50%
of the total voting or equity interest, and shall not permit (to the extent
that the Borrower has any direct or indirect contractual or other approval
rights over the actions of such Subsidiary) any of its other Subsidiaries, to
directly or indirectly:

 

(i)            declare or pay any dividend or make any distribution
on account of the Borrower’s or any of its Subsidiaries’ Equity Interests, including
any payment made in connection with any merger or consolidation involving the
Borrower (other than (A) dividends or distributions by the Borrower
payable solely in Equity Interests (other than Disqualified Stock) of the
Borrower or (B) dividends or distributions by a Subsidiary so long as, in
the case of any dividend or distribution payable on or in respect of any class
or series of securities issued by a Subsidiary other than a Wholly-Owned
Subsidiary, the Borrower or a Subsidiary receives at least its pro rata share of such dividend or
distribution in accordance with the terms of such Equity Interests);

 

(ii)           purchase, redeem or otherwise acquire or retire for
value any Equity Interests of the Borrower or any Subsidiary other than
repurchases of Existing Investor Interests (as defined in the Subordinated Note
Indenture) by the Borrower pursuant to the exercise by the Existing Investors
(as defined in the Subordinated Note Indenture) of the Liquidity Right (as
defined in the Subordinated Note Indenture) to the extent that such repurchase
is funded through the issuance of equity securities by the Borrower;

 

(iii)          make a Restricted Investment;

 

(all such payments and other actions set forth in
clauses (i), (ii) and (iii) above being collectively referred to as “Restricted Payments”);

 

unless, at the time of such Restricted Payment:

 

66

 

(A)          no Default or Event of Default will have occurred and
be continuing or would occur as a consequence thereof;

 

(B)           the Cash Flow Coverage Ratio of the Parent Guarantor
for the previous four-quarter period is 1.5 to 1.0 on a pro forma
basis, after giving effect to the making of such Restricted Payment; and

 

(C)           such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Borrower and its
Subsidiaries after the Closing Date (including Restricted Payments permitted by
clauses (i), (iii) and (v) of Section 7.03(b),
but not including all other Restricted Payments permitted by Section 7.03(b)), is less than the sum
of, without duplication:

 

(1)                                  100% of the Borrower’s Cash Flow less
Interest Expense and any required principal repayments on outstanding
Indebtedness of the Borrower for the period (taken as one accounting period)
from the first date of the fiscal quarter in which the Closing Date occurs to
the end of the Borrower’s most recently-ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment, plus

 

(2)                                  100% of the aggregate net proceeds,
including cash and the Fair Market Value (as determined below) of Property
other than cash, received by the Borrower after the Closing Date from the issue
or sale of Equity Interests of the Borrower excluding Refunding Capital Stock
(as defined herein), Disqualified Stock and Excluded Contributions, including
Equity Interests issued upon conversion of Indebtedness or upon exercise of
warrants or options (other than an issuance or sale to a Subsidiary or
Unrestricted Subsidiary of the Borrower), plus

 

(3)                                  100% of the aggregate amount of
contributions to the capital of the Borrower received in cash and the Fair
Market Value (as determined below) of Property other than cash received by the
Borrower as a contribution to capital since the Closing Date excluding
Refunding Capital Stock (as defined herein), Disqualified Stock and Excluded
Contributions, plus

 

(4)                                  100% of the aggregate amount received in
cash and the Fair Market Value (as determined below) of Property other than
cash received since the Closing Date from (X) the sale or other
disposition (other than to the Borrower or a Subsidiary or Unrestricted
Subsidiary of the Borrower) of Restricted Investments made by the Borrower and
its 

 

67

 

Subsidiaries or
Unrestricted Subsidiaries and from repurchases and redemptions of such
Restricted Investments from the Borrower and its Subsidiaries or Unrestricted
Subsidiaries by any Person (other than the Borrower or any of its Subsidiaries
or Unrestricted Subsidiaries) and from repayments of loans or advances which
constituted Restricted Investments, and/or (Y) the sale (other than to the
Borrower or a Subsidiary or Unrestricted Subsidiary) of the Capital Stock of a
Subsidiary or Unrestricted Subsidiary.

 

The Fair Market Value of
Property other than cash covered by clauses (2), (3) and (4) above
will be determined in good faith by the Borrower and (X) in the case of
Property with a Fair Market Value in excess of U.S.$2,500,000, shall be set
forth in an Officers’ Certificate or (Y) in the case of Property with a
Fair Market Value in excess of U.S.$10,000,000, shall be set forth in a
resolution approved by at least a majority of the board of directors or other
similar governing body of the Borrower.

 

(b)           The provisions of Section 7.03(a) shall
not prohibit:

 

(i)            the payment of any dividend or distribution within 60
days after the date of declaration thereof, if at the date of declaration such
payment would have been permitted under the provisions of this Agreement;

 

(ii)           (A) the repurchase, retirement or other
acquisition of any Equity Interests (“Retired
Capital Stock”) or Subordinated Indebtedness of the Borrower in
exchange for, or out of the proceeds of the substantially concurrent sale of,
Equity Interests of the Borrower or contributions to the equity capital of the
Borrower (other than any Disqualified Stock or any Equity Interests sold to a
Subsidiary or Unrestricted Subsidiary of the Borrower or to an employee stock
ownership plan or any trust established by the Borrower or any of its
Subsidiaries or Unrestricted Subsidiaries) (collectively, including any such
contributions, “Refunding Capital Stock”)
and (B) the declaration and payment of accrued dividends on the Retired
Capital Stock out of the proceeds of the substantially concurrent sale (other
than to a Subsidiary or Unrestricted Subsidiary of the Borrower or to an
employee stock ownership plan or any trust established by the Borrower or any
of its Subsidiaries or Unrestricted Subsidiaries) of Refunding Capital Stock;

 

(iii)          the declaration and payment of dividends or
distributions to holders of any class or series of Disqualified Stock of the
Borrower or any of its Subsidiaries or Unrestricted Subsidiaries issued or
incurred in accordance with Section 7.02(b) hereof;

 

(iv)          the declaration and payment of dividends on the Class A
member interests or Class B member interests of the Borrower in accordance
with the terms of such member interests and this Agreement;

 

68

 

(v)           the payment of dividends on the Common Shares of the
Borrower up to an aggregate amount in any fiscal quarter not to exceed the
Quarterly Base Dividend Level, provided that the Cash Flow Coverage
Ratio of the Parent Guarantor is at least 1:25 to 1.0;

 

(vi)          other Restricted Payments in an aggregate amount not
to exceed U.S.$5,000,000  from the
Closing Date;

 

(vii)         repurchases of Equity Interests deemed to occur upon
exercise of stock options if such Equity Interests represent a portion of the
exercise price of such options; and

 

(viii)        the declaration and payment of dividends or
distributions or other Restricted Payments made by an Unrestricted Subsidiary.

 

provided, that at the time of and after giving
effect to, any Restricted Payment permitted by clauses (i), (iii), (v), (vi), (vii) and
(viii), no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence  thereof;
provided, further, that with respect to clause (viii), unless the
Cash Flow Coverage Ratio of the Parent Guarantor for the previous four-quarter
period is at least 1.25 to 1.0 on a pro forma  basis,
after giving effect to the making of such Restricted Payment (X) no
Unrestricted Subsidiary shall be permitted to declare or pay dividends or
distributions except for dividends and distributions made to such Unrestricted
Subsidiary’s immediate parent entity which entity is a Subsidiary of the
Borrower and (Y) no Unrestricted Subsidiary shall be permitted to make any
Restricted Investments; provided, further, that unless the Cash Flow Coverage
Ratio of the Parent Guarantor for the previous four-quarter period is at least
1.25 to 1.0 on a pro
forma basis after giving effect to the making of such Restricted
Payment, any such Restricted Payment may be made only out of, and to the extent
of funds in, the US Levelization Reserve Account (as defned in the Depositary
Agreement) or the Canadian Levelization Reserve Account (as defined in the
Depositary Agreement), and in accordance with the terms of the Depositary Agreement.

 

7.04        Dividend and Other Payment
Restrictions Affecting Subsidiaries.

 

The Borrower will not,
and will not permit any Subsidiary or Unrestricted Subsidiary in which it
directly or indirectly owns more than 50% of the total voting or equity
interests, and will not permit (to the extent that the Borrower has any direct
or indirect contractual or other approval rights over the actions of such
Subsidiary) any of its other Subsidiaries or Unrestricted Subsidiaries, to
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or consensual restriction on the ability
of any Subsidiary to:

 

(a)           (i) pay dividends or make any other
distributions to the Borrower or any of its Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation
in, or 

 

69

 

measured by, its
profits, or (ii) pay any Indebtedness owed to the Borrower or any of its
Subsidiaries;

 

(b)           make loans or advances to the Borrower or
any of its Subsidiaries; or

 

(c)           sell, lease or transfer any of its
properties or assets to the Borrower or any of its Subsidiaries;

 

except in each case for
such encumbrances or restrictions existing under or by reason of:

 

(A)          contractual encumbrances or restrictions in effect on
the Closing Date, including pursuant to this Agreement;

 

(B)           the Subordinated Note Indenture;

 

(C)           applicable law or any applicable rule, regulation or
order;

 

(D)          any agreement or other instrument relating to
Indebtedness of a Person acquired by the Borrower or any Subsidiary or
Unrestricted Subsidiary which was in existence at the time of such acquisition
(but not created in contemplation thereof or to provide all or any portion of
the funds or credit support utilized to consummate such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties
or assets of any Person, other than the Person, or the Property or assets of
the Person, so acquired;

 

(E)           any restriction with respect to a Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all or
substantially all the Capital Stock or assets of such Subsidiary pending the
closing of such sale or disposition;

 

(F)           Secured Indebtedness or Liens otherwise permitted to be Incurred pursuant to Sections
7.01 and 7.02 hereof that limit the right of the debtor to dispose
of the assets securing such Indebtedness;

 

(G)           restrictions on cash or other deposits or net worth
imposed by customers under Contracts entered into in the ordinary course of
business that impose restrictions of the type described in Section 7.04(c) herein;

 

(H)          customary provisions in joint venture agreements,
limited partnership agreements and other similar agreements entered into in the
ordinary course of business;

 

(I)            customary provisions contained in leases and other
similar agreements entered into in the ordinary course of business; or

 

(J)            any encumbrances or restrictions of the type referred
to in clauses (a), (b) and (c) above imposed by any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings of the 

 

70

 

contracts, instruments or
obligations referred to in clauses (A) through (I) above; provided
that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are, in the good faith
judgment of the board of directors or other similar governing body of the Borrower,
no more restrictive with respect to such dividend and other payment
restrictions than those contained in the dividend or other payment restrictions
prior to such amendment, modification, restatement, renewal, increase,
supplement, refunding, replacement or refinancing.

 

7.05        Asset Sales.

 

(a)           The Borrower will not, and will not
permit any Subsidiary or Unrestricted Subsidiary in which it owns more than 50% of the total voting or equity interests,
and will not permit (to the extent that the Borrower has any direct or indirect
contractual or other approval rights over the actions of such Subsidiary or
Unrestricted Subsidiary) any of its other Subsidiaries or Unrestricted
Subsidiaries to, cause or make an Asset Sale, unless the Borrower or its
Subsidiaries or Unrestricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value (as determined in good faith by the Borrower) of the assets sold or
otherwise disposed of.

 

(b)           Within 365 days after the Borrower’s or
any Subsidiary’s receipt of the Net Proceeds of any Asset Sale permitted under Section 7.05(a),
the Borrower or such Subsidiary shall apply the Net Proceeds from such Asset
Sale, at its option:

 

(A)          to permanently reduce Obligations under the Credit
Facilities and to correspondingly reduce commitments with respect thereto
pursuant to Section 2.07;

 

(B)           to make an investment in any one or more businesses,
capital expenditures or acquisitions of other assets in each case used or useful
in a Similar Business; provided that any such investment is made in or
for the direct benefit of a Subsidiary;

 

(C)           to make an investment in properties or assets that
replace the properties and assets that are the subject of such Asset Sale; provided
that any such investment is made in or for the direct benefit of a Subsidiary;
and/or

 

(D)          to make a disbursement from the Borrower to the Parent
Guarantor pursuant to Section 7.03(b)(iv) or (v) in
accordance with the restrictions and limitations of Section 7.03; provided,
at the time such disbursement is made the Cash Flow Coverage Ratio of the
Parent Guarantor for the previous four-quarter period is 1.5 to 1.0 on a pro forma basis, after giving effect to the making of such
disbursement; provided, further, no Default or Event of Default
shall have occurred and be continuing or would occur as a consequence  thereof.

 

71

 

Pending the final
application of any such Net Proceeds, the Borrower or such Subsidiary may temporarily
reduce Indebtedness hereunder or otherwise invest such Net Proceeds in Cash
Equivalents or Investment Grade Securities.

 

provided, that notwithstanding the foregoing, the
Borrower will not, and will not permit any of its Subsidiaries or Unrestricted
Subsidiaries in which it directly or indirectly owns more than 50% of the total
voting or equity interests and will not permit (to the extent that the Borrower
has any direct or indirect contractual or other approval rights over the
actions of such Subsidiary or Unrestricted Subsidiary) any of its other
Subsidiaries or Unrestricted Subsidiaries to, sell, transfer, lease or
otherwise dispose of any of the Property of Onondaga Cogeneration Limited
Partnership to any Person other than any reasonable sales, transfers, leases or
other dispositions of any Property by Onondaga Cogeneration Limited Partnership
in the ordinary course of its business and in accordance with its commercially
reasonable past business practices and otherwise permitted under this Agreement.

 

7.06        Transactions with Affiliates.

 

(a)           The Borrower will not, and will not
permit any Subsidiaries in which it owns more than 50% of the total voting or
equity interests and will not permit (to the extent that the Borrower has any
direct or indirect contractual or other approval rights over the actions of
such Subsidiary) any of its other Subsidiaries, to directly or indirectly, make
any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any Property or assets from, or enter into
or make or amend any transaction or series of transactions, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate of the Borrower (each of the foregoing, an “Affiliate Transaction”) unless:

 

(i)            such Affiliate Transaction is on terms that are not
materially less favourable to the Borrower or the relevant Subsidiary than
those that could have been obtained in a comparable transaction by the Borrower
or such Subsidiary with an unrelated Person;

 

(ii)           with respect to any Affiliate Transaction with an
Unrestricted Subsidiary or any other Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of U.S.$5
million but less than or equal to U.S.$10 million, the Borrower delivers to the
Administrative Agent a resolution adopted by the majority of the board of
directors or other similar governing body of the Borrower, approving such
Affiliate Transaction and an Officers’ Certificate certifying that such
Affiliate Transaction complies with clause (i) above; and

 

(iii)          with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
U.S.$10 million, the Borrower delivers to the Administrative Agent a resolution
adopted by the majority of the board of directors or other similar governing
body of the Borrower, approving such Affiliate Transaction and a letter from an
independent financial advisor of recognized standing stating that such
transaction is fair to the Borrower or such Subsidiary from a financial point
of view or meets the requirement of clause (i) above.

 

72

 

(b)           The provisions of this Section 7.06
shall not apply to the following:

 

(i)            Permitted Investments and Restricted Payments
permitted by Section 7.04;

 

(ii)           the payment of reasonable and customary fees paid to,
and indemnity provided on behalf of, officers, directors, employees or
consultants of the Borrower, or any Subsidiary or the Manager including, for
greater certainty, any fees payable under the Management Agreement (as defined
in the Subordinated Note Indenture);

 

(iii)          an Affiliate Transaction between one or more
Unrestricted Subsidiaries; provided that for the avoidance of doubt, any
Affiliate Transaction involving a Subsidiary and an Unrestricted Subsidiary
shall be subject to the provisions of Section 7.06, unless
otherwise excluded pursuant to a provision of this clause (b) other
than this Section 7.06(b)(iii);

 

(iv)          Intentionally Blank;

 

(v)           Intentionally Blank;

 

(vi)          any agreement in effect as of the Closing Date or any
amendment thereto (so long as any such amendment is not disadvantageous to the
Lenders in any material respect) or any transaction contemplated thereby; and

 

(vii)         the existence of, or the performance by the Borrower
or any Subsidiary or Unrestricted Subsidiary of the Borrower of its obligations
under the terms of, any shareholders agreement (including any registration
rights agreement or purchase agreement related thereto) to which it is a party
as of the Closing Date and any similar agreements (including any operating
agreements or limited partnership agreements) which it may enter into
thereafter; provided, however, that the existence of, or the
performance by the Borrower or any of its Subsidiaries of its obligations under
any future amendment to any such existing agreement or under any similar
agreement entered into after the Closing Date shall only be permitted by this
clause (vii) to the extent that the terms of any such amendment or new
agreement are not otherwise disadvantageous to the Lenders in any material
respect.

 

7.07        Merger, Consolidation or Sale of
All or Substantially All Assets.

 

(a)           The Borrower will not consolidate or
merge with or into or wind up into (whether or not the Borrower is the
surviving corporation) or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or more
related transactions, to any Person unless:

 

(i)            the Borrower is the surviving corporation or the
Person formed by or surviving any such consolidation or merger (if other than
the Borrower) or to which such sale, assignment, transfer, lease, conveyance or
other disposition will have been made is a corporation, partnership or limited
liability company organized or existing under the laws

 

73

 

of the United States (the
Borrower or such Person, as the case may be, being herein called the “Successor Borrower”)

 

(ii)                                  the Successor Borrower (if other than the
Borrower) expressly assumes all the obligations of the Borrower under this
Agreement pursuant to a such documents or instruments in form reasonably
satisfactory to the Administrative Agent;

 

(iii)                               all of the Guarantees of the Obligations
and the other Secured Obligations, and related security, remain in full force
and effect or replacement guarantees and security reasonably satisfactory to
the Administrative Agent are provided;

 

(iv)                              immediately after giving effect to such
transaction (and treating any Indebtedness which becomes an obligation of the
Successor Borrower or any of its Subsidiaries as a result of such transaction
as having been Incurred by the Successor Borrower or such Subsidiary at the
time of such transaction) no Default or Event of Default shall have occurred
and be continuing;

 

(v)                                 Intentionally Blank;

 

(vi)                              each party to the Guarantees, unless they
are the other party to the transactions described above, will have by
supplemental Security Documents and guarantees confirmed that such securities
and guarantees will apply to such Person’s obligations under the Guarantees
(or, such parties will have entered into guarantees in form and substance
substantially the same as the Guarantees); and

 

(vii)                           the Borrower will have delivered to the
Administrative Agent an Officers’ Certificate and an opinion of counsel stating that such consolidation, merger
or transfer and such supplemental guarantees (if any) and supplemental Security
Documents comply with this Agreement and applicable requirements of Law.

 

The Successor Borrower
shall succeed to, and be substituted for, the Borrower under this Agreement and
such Security Documents.  Notwithstanding
the foregoing Sections 7.07(a)(iii) and
7.07(a)(v) any
Subsidiary or Unrestricted Subsidiary of the Borrower may consolidate with,
merge into or transfer all or part of its properties and assets to the Borrower
or to another Subsidiary of the Borrower; provided, however
that if an Unrestricted Subsidiary merges, transfers or otherwise consolidates
all or part of its properties with or to the Borrower or any Subsidiary of the
Borrower, such Unrestricted Subsidiary shall cease to be designated as an
Unrestricted Subsidiary.

 

(b)                                 The Borrower shall not permit any
Subsidiary to consolidate or merge with or into or wind up into (whether or not
such Subsidiary is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, any Person
(including without limitation an Unrestricted Subsidiary) unless:

 

(i)                                     such Subsidiary is the surviving corporation
or the Person formed by or surviving any such consolidation or merger (if other
than such Subsidiary) or to which 

 

74

 

such sale, assignment,
transfer, lease, conveyance or other disposition will have been made is a
corporation, partnership or limited liability company organized or existing
under the laws of any state of the United States (such Subsidiary, being herein
called the “Successor Guarantor”);

 

(ii)                                  the Successor Guarantor (if other than
such Subsidiary) expressly assumes all the obligations of such Subsidiary under
this Agreement and such Guarantor’s Guarantee and related security pursuant to
a supplemental Security Documents and other documents or instruments in form
reasonably satisfactory to the Administrative Agent;

 

(iii)                               immediately after giving effect to such
transaction (and treating any Indebtedness which becomes an obligation of the
Successor Guarantor or any of its Subsidiaries as a result of such transaction
as having been Incurred by the Successor Guarantor or such Subsidiary at the
time of such transaction) no Default or Event of Default shall have occurred
and be continuing; and

 

(iv)                              the Subsidiary shall have delivered or
caused to be delivered to the Administrative Agent an Officers’ Certificate and  an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental Security Documents
comply with this Agreement and applicable requirements of Law.

 

The Successor Guarantor
shall succeed to, and be substituted for, such Guarantor under such Guarantor’s
Guarantee and Security Documents (if any).

 

7.08                        ERISA. 
Except where no Material Adverse Effect could reasonably be expected to
occur, the Borrower will not, and will not cause or permit any other Loan Party
to, permit any of the events or circumstances described in Section 5.12
to exist or occur.

 

7.09                        Change in Nature of
Business or Project Documents.  Engage in any
material line of business substantially different from any Similar Business or
those lines of business conducted by any of the Borrower or its Subsidiaries on
the date hereof or, if substantially different therefrom, not permitted by the
Borrower’s Organizational Documents. 
Consent or agree to any material amendment or modification to any
Project Document if such material amendment or modification could reasonably be
expected to have a Material Adverse Effect.

 

7.10                        Use of Proceeds. 
Use the proceeds of any Credit Extension, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase or
carry margin stock (within the meaning of Regulation U of the Board) or to
extend credit to others for the purpose of purchasing or carrying margin stock
or to refund indebtedness originally incurred for such purpose.

 

ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

 

8.01                        Events of Default. 
Any of the following shall constitute an Event of Default:

 

75

 

(a)                                  Non-Payment.  The Borrower
fails to pay (i) when and as required to be paid herein, any amount of
principal of any Loan or any L/C Obligation, or (ii) within five Business
Days after the same becomes due, any interest on any Loan or on any L/C
Obligation, or any facility, utilization  or other fee
due hereunder, or any other amount payable hereunder or under any other Loan
Document; or

 

(b)                                 Specific Covenants. 
The Borrower shall fail to comply with perform or observe any term,
covenant or agreement contained in any of Section 6.03(a) or 6.12 or Article VII;
or

 

(c)                                  Other Defaults.  Any Loan
Party fails or refuses to perform or observe any other covenant or agreement
(not specified in subsection (a) or (b) above) contained in any Loan
Document on its part to be performed or observed, and such failure or refusal
continues for 30 days after the earlier of (i) such Loan Party’s obtaining
knowledge of such failure or refusal and (ii) such Loan Party’s being
notified of such failure or refusal by the Administrative Agent, the L/C Issuer
or any Lender; or

 

(d)                                 Representations and Warranties. 
Any representation or warranty made or deemed made by the Borrower or
any other Loan Party herein, in any other Loan Document, or in any document
delivered by it in connection herewith or therewith proves to have been
incorrect in any material respect when made or deemed made; or

 

(e)                                  Cross-Default.  (i) The
Borrower, any Guarantor, or any Subsidiary (A) fails to make any payment
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise), inclusive of any grace, extension, forbearance or
similar period, in respect of any Indebtedness having an aggregate principal
amount (including undrawn or available amounts and including amounts owing to
all creditors under any combined or syndicated credit arrangement) of more than
U.S.$5,000,000, or (B) fails to observe or perform any other agreement or
condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event occurs,
for a period beyond the applicable grace, cure, extension, forbearance or other
similar period the effect of which default or other event is to cause, or to
permit the holder or holders of such Indebtedness (or the beneficiary or
beneficiaries of any applicable Guarantee Obligation (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause,
with the giving of notice if required, such Indebtedness to be demanded or to
become due or to be repurchased or redeemed (automatically or otherwise) prior
to its stated maturity, or such Guarantee Obligation to become payable or cash
collateral of more than U.S.$5,000,000 in respect thereof to be demanded; or (ii) there
occurs under any Swap Contract an Early Termination Date (as defined in such
Swap Contract) resulting from (A) any event of default under such Swap
Contract as to which the Borrower, any Guarantor, or any Subsidiary or
Unrestricted Subsidiary is the Defaulting Party (as defined in such Swap
Contract) or (B) any Termination Event (as so defined) under such Swap
Contract as to which the Borrower, any Guarantor, or any Subsidiary or
Unrestricted Subsidiary is an Affected Party (as so defined) and, in either
event, the Swap Termination Value owed by the Borrower, such Guarantor, or such
Subsidiary or Unrestricted Subsidiary as a result thereof is greater than U.S.$
5,000,000; or (iii) any Unrestricted Subsidiary (A) fails to make any
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise), inclusive of any grace, 

 

76

 

extension,
forbearance or similar period, in respect of any Indebtedness having an
aggregate principal amount (including undrawn or available amounts and
including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than U.S.$5,000,000 and
such failure results in recourse to the Borrower or any Subsidiary or any of
their respective assets; or (B) fails to observe or perform any other
agreement or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event occurs, for a period beyond the applicable grace, cure, extension,
forbearance or other similar period the effect of which default or other event
is to cause, or to permit the holder or holders of such Indebtedness to cause,
with the giving of notice if required, such Indebtedness to be demanded or to
become due or to be repurchased or redeemed (automatically or otherwise) prior
to its stated maturity and such failure
results in recourse to the Borrower or any Subsidiary or any of their
respective assets; provided, that any event described in the preceding
clauses (i) through (iii) that relates to a Subsidiary (including any
Subsidiary that is also a Guarantor) shall not constitute an Event of Default
unless such event constitutes a Specified Project Event; or

 

(f)                                    Insolvency Proceedings, Etc. 
Any Loan Party institutes or consents to the institution of any
proceeding under any Debtor Relief Law with respect to itself, or makes an
assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of its
Property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or
consent of such Person and the appointment continues undischarged or unstayed
for 60 calendar days; or any proceeding under any Debtor Relief Law relating to
any such Person or to all or any part of its Property is instituted without the
consent of such Person and continues undismissed or unstayed for 60 calendar
days, or an order for relief is entered in any such proceeding; provided,
that any event described in this subsection (f) that relates to a
Subsidiary (including any Subsidiary that is also a Guarantor) shall not
constitute an Event of Default unless such event constitutes a Specified
Project Event; or

 

(g)                                 Inability to Pay Debts. 
Any Loan Party becomes unable or admits in writing its inability or
fails generally to pay its debts as they become due as provided in Title 11 of
the United States Bankruptcy Code; provided, that any event described in
this subsection (g) that relates to a Subsidiary (including any Subsidiary
that is also a Guarantor) shall not constitute an Event of Default unless such
event constitutes a Specified Project Event; or

 

(h)                                 Judgments.  There is
entered against any Loan Party (i) a final judgment or order for the
payment of money in an aggregate amount exceeding U.S.$ 5,000,000 (to the
extent not covered by independent third-party insurance as to which the insurer
does not dispute coverage and third-party indemnity or similar agreements), and
either such Loan Party fails (A) to have discharged, within 60 days after
its commencement, any related attachment, sequestration or similar proceeding
against its material assets or (B) to pay any money judgment against it
within 10 days before the date on which any of its assets may be lawfully sold
to satisfy that judgment; or

 

77

 

(i)                                     ERISA.  (i) An
ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which
has resulted or could reasonably be expected to result in liability of a Loan
Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or
the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) the
Borrower or any ERISA Affiliate fails to pay when due, after the expiration of
any applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of the Threshold Amount; or

 

(j)                                     Invalidity of Loan Documents. 
Any Loan Document, at any time after its execution and delivery and for
any reason other than the agreement of all the Lenders or satisfaction in full
of all the Obligations, ceases to be in full force and effect, or is declared
by a court of competent jurisdiction to be null and void, invalid or
unenforceable in any respect; or any Loan Party denies that it has any or
further liability or obligation under any Loan Document, or purports to revoke,
terminate or rescind any Loan Document; or

 

(k)                                  Change of Control. 
There occurs any Change of Control; or

 

(l)                                     Default Under Project Document. 
The Borrower, any Guarantor or any of their Subsidiaries shall default
under or breach any Project Document if such default or breach could have a
Material Adverse Effect; provided, however, that if and only if (i) such
breaches or defaults do not in the aggregate constitute a Specified Project
Effect, then (ii) such breaches or defaults shall be deemed not to have a
Material Adverse Affect for purposes of this Section 8.01(l).

 

8.02                        Remedies Upon Event of
Default.  If any Event of Default occurs and is then
continuing, the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders,

 

(a)                                  declare the commitment of each Lender to
make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions
to be terminated, whereupon such commitments and obligation shall be
terminated;

 

(b)                                 declare the unpaid principal amount of
all outstanding Loans, all interest accrued and unpaid thereon, and all other
amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrower;

 

(c)                                  require that the Borrower Cash
Collateralize the L/C Obligations (in an amount equal to the then Outstanding
Amount thereof); and

 

(d)                                 exercise on behalf of itself and the
Lenders all rights and remedies available to it and the Lenders under the Loan
Documents or applicable law;

 

provided, however, that upon the occurrence of
any event specified in subsection (f) or (g) of Section 8.01
with respect to the Borrower, the obligation of each Lender to make Loans and
any obligation of the L/C Issuer to make L/C Credit Extensions shall
automatically terminate, the unpaid principal amount of all outstanding Loans
and all interest and other amounts as aforesaid 

 

78

 

shall automatically
become due and payable, and the obligation of the Borrower to Cash
Collateralize the L/C Obligations as aforesaid shall automatically become
effective, in each case without further act of the Administrative Agent, the
L/C Issuer or any Lender.

 

ARTICLE IX.

ADMINISTRATIVE AGENT

 

9.01                        Appointment and
Authorization of Administrative Agent.

 

(a)                                  Each Lender hereby irrevocably (subject
to Section 9.09)
appoints, designates and authorizes the Administrative Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary
contained elsewhere herein or in any other Loan Document, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, nor shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Lender or participant, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Loan Document or otherwise exist
against the Administrative Agent. 
Without limiting the generality of the foregoing sentence, the use of
the term “agent” herein and in the other Loan Documents with reference to the
Administrative Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable
law.  Instead, such term is used merely
as a matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties.

 

(b)                                 The L/C Issuer shall act on behalf of the
Lenders with respect to any Letters of Credit issued by it and the documents
associated therewith until such time (and except for so long) as the
Administrative Agent may agree at the request of the Required Lenders to act
for the L/C Issuer with respect thereto; provided, however,
that the L/C Issuer shall have all of the benefits and immunities (i) provided
to the Administrative Agent in this Article IX with respect to any
acts taken or omissions suffered by the L/C Issuer in connection with Letters
of Credit issued by it or proposed to be issued by it and the application and
agreements for letters of credit pertaining to the Letters of Credit as fully
as if the term “Administrative Agent” as used in this Article IX
included the L/C Issuer with respect to such acts or omissions, and (ii) as
additionally provided herein with respect to the L/C Issuer.

 

9.02                        Delegation of Duties. 
The Administrative Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties.  The Administrative Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects in the absence of gross negligence or willful misconduct.

 

9.03                        Liability of
Administrative Agent.  No
Agent-Related Person shall (a) be liable for any action taken or omitted
to be taken by any of them under or in connection with this Agreement or any
other Loan Document or the transactions contemplated hereby (except for its 

 

79

 

own gross
negligence or willful misconduct in connection with its duties expressly set
forth herein), or (b) be responsible in any manner to any Lender or
participant for any recital, statement, representation or warranty made by any
Loan Party or any officer thereof, contained herein or in any other Loan
Document, or in any certificate, report, statement or other document referred
to or provided for in, or received by the Administrative Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of any Loan Party or any other
party to any Loan Document to perform its obligations hereunder or thereunder.  No Agent-Related Person shall be under any
obligation to any Lender or participant to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party or any Affiliate thereof.

 

9.04                        Reliance by
Administrative Agent.

 

(a)                                  The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any writing,
communication, signature, resolution, representation, notice, consent,
certificate, affidavit, letter, telegram, facsimile or telex, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to any Loan Party),
independent accountants and other experts selected by the Administrative
Agent.  The Administrative Agent shall be
fully justified in failing or refusing to take any action under any Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action.  The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Required Lenders or all the Lenders, if required
hereunder, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and participants.  Where this Agreement expressly permits or
prohibits an action unless the Required Lenders otherwise determine, the
Administrative Agent shall, and in all other instances, the Administrative
Agent may, but shall not be required to, initiate any solicitation for the consent
or a vote of the Lenders.

 

(b)                                 For purposes of determining compliance
with the conditions specified in Section 4.01, each Lender that
has signed this Agreement shall be deemed to have consented to, approved or
accepted or to be satisfied with, each document or other matter either sent by
the Administrative Agent to such Lender for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or
acceptable or satisfactory to a Lender.

 

9.05                        Notice of Default. 
The Administrative Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default, except with respect to
defaults in the payment of principal, interest and fees required to be paid to
the Administrative Agent for the account of the Lenders, unless the
Administrative Agent shall have received written notice from a Lender or the
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a “notice of default.”  The 

 

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Administrative
Agent will notify the Lenders of its receipt of any such notice.  The Administrative Agent shall take such
action with respect to such Default or Event of Default as may be directed by the
Required Lenders in accordance with Article VIII; provided, however,
that unless and until the Administrative Agent has received any such direction,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Lenders.

 

9.06                        Credit Decision;
Disclosure of Information by Administrative Agent. 
Each Lender acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by the Administrative Agent
hereinafter taken, including any consent to and acceptance of any assignment or
review of the affairs of any Loan Party or any Affiliate thereof, shall be
deemed to constitute any representation or warranty by any Agent-Related Person
to any Lender as to any matter, including whether Agent-Related Persons have
disclosed material information in their possession.  Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
prospects, operations, Property, financial and other condition and
creditworthiness of the Loan Parties and their respective Subsidiaries and all
applicable bank or other regulatory Laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Borrower and the other Loan Parties  hereunder.  Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to
make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, Property, financial and other condition and
creditworthiness of the Borrower and the other Loan Parties.  Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent herein, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, Property, financial and other
condition or creditworthiness of any of the Loan Parties or any of their
respective Affiliates which may come into the possession of any Agent-Related
Person.

 

9.07                        Indemnification of
Administrative Agent.  Whether or
not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand each Agent-Related Person (to the extent not reimbursed
by or on behalf of any Loan Party and without limiting the obligation of any
Loan Party to do so), pro rata, and hold harmless each Agent-Related Person
from and against any and all Indemnified Liabilities incurred by it; provided, however,
that no Lender shall be liable for the payment to any Agent-Related Person of
any portion of such Indemnified Liabilities resulting from any such Person’s
gross negligence or willful misconduct; provided, however,
that no action taken in accordance with the directions of the Required Lenders
shall be deemed to constitute gross negligence or willful misconduct for
purposes of this Section.  Without
limitation of the foregoing, each Lender shall reimburse the Administrative
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Administrative Agent in connection
with the 

 

81

 

preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any
other Loan Document, or any document contemplated by or referred to herein, to
the extent that the Administrative Agent is not reimbursed for such expenses by
or on behalf of the Borrower.  The
undertaking in this Section shall survive termination of the Commitments,
the payment of all Obligations hereunder and the resignation or replacement of
the Administrative Agent.

 

9.08                        Administrative Agent in
its Individual Capacity.  Bank of
Montreal and its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with each of the Loan Parties and their respective Affiliates as
though Bank of Montreal were not the Administrative Agent or the L/C Issuer
hereunder and without notice to or consent of the Lenders.  The Lenders acknowledge that, pursuant to
such activities, Bank of Montreal or its Affiliates may receive information
regarding any Loan Party or its Affiliates (including information that may be
subject to confidentiality obligations in favor of such Loan Party or such
Affiliate) and acknowledge that the Administrative Agent shall be under no
obligation to provide such information to them. 
With respect to its Loans, Bank of Montreal shall have the same rights
and powers under this Agreement as any other Lender and may exercise such
rights and powers as though it were not the Administrative Agent or the L/C
Issuer, and the terms “Lender” and “Lenders” include Bank of Montreal in its
individual capacity.

 

9.09                        Successor Administrative
Agent.  The Administrative Agent may resign as
Administrative Agent upon 30 days’ notice to the Lenders.  If the Administrative Agent resigns under
this Agreement, the Required Lenders shall appoint from among the Lenders a
successor administrative agent for the Lenders which successor administrative
agent shall be consented to by the Borrower at all times other than during the
existence of an Event of Default (which consent of the Borrower shall not be
unreasonably withheld or delayed).  If no
successor administrative agent is appointed prior to the effective date of the
resignation of the Administrative Agent, the Administrative Agent may appoint,
after consulting with the Lenders and the Borrower, a successor administrative
agent from among the Lenders.  Upon the
acceptance of its appointment as successor administrative agent hereunder, such
successor administrative agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and the term “Administrative Agent”
shall mean such successor administrative agent and the retiring Administrative
Agent’s appointment, powers and duties as Administrative Agent shall be
terminated.  After any retiring
Administrative Agent’s resignation hereunder as Administrative Agent, the
provisions of this Article IX
and Sections 10.03
and 10.13
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement.  If no successor administrative agent has
accepted appointment as Administrative Agent by the date which is 30 days
following a retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent’s resignation shall nevertheless thereupon become
effective and the Lenders shall perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above.

 

82

 

9.10                        Other Agents; Arrangers,
Etc.  None of the Lenders identified on the facing page or
signature pages of this Agreement as a “syndication agent,” “documentation
agent,” “collateral agent,” “arranger,” “lead arranger” or “book manager” shall
have any right, power, obligation, liability, responsibility or duty under this
Agreement other than those applicable to all Lenders as such.  Without limiting the foregoing, none of the
Lenders so identified shall have or be deemed to have any fiduciary
relationship with any Lender.  Each Lender
acknowledges that it has not relied, and will not rely, on any of the Lenders
so identified in deciding to enter into this Agreement or in taking or not
taking action hereunder.

 

ARTICLE X.

MISCELLANEOUS

 

10.01                 Amendments, Etc. 
No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent to any departure by the Borrower or any other
Loan Party therefrom, shall be effective unless in writing signed by the
Required Lenders and the Borrower or the applicable Loan Party, as the case may
be, and acknowledged by the Administrative Agent, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however,
that no such amendment, waiver or consent shall, unless in writing and signed
by each of the Lenders directly affected thereby and by the Borrower, and
acknowledged by the Administrative Agent, do any of the following:

 

(a)                                  (extend or increase the Commitment of any
Lender (or reinstate any Commitment terminated pursuant to Section 8.02),
except for any such extension made in accordance with Section 2.15;

 

(b)                                 postpone any date fixed by this Agreement
or any other Loan Document for any payment of principal, interest, fees or
other amounts due to the Lenders (or any of them) hereunder or under any other
Loan Document;

 

(c)                                  reduce the principal of, or the rate of
interest specified herein on, any Loan or L/C Borrowing, or (subject to clause (iii) of
the proviso below) any fees or other amounts payable hereunder or under any
other Loan Document;

 

(d)                                 change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Loans and L/C Obligations
which is required for the Lenders or any of them to take any action hereunder;

 

(e)                                  change the Pro Rata Share or Voting
Percentage of any Lender;

 

(f)                                    amend this Section, or Section 2.14,
or any provision herein providing for consent or other action by all the
Lenders;

 

(g)                                 release any Guarantor from its Guarantee
except as expressly permitted pursuant to the terms of any Loan Document; or

 

83

 

(h)                                 except as expressly provided herein or in
the applicable Security Document, release all or any part of the Collateral
from the Liens of the Security Documents;

 

and, provided further, that
(i) no amendment, waiver or consent shall, unless in writing and signed by
the L/C Issuer in addition to the Required Lenders or all the Lenders, as the
case may be, affect the rights or duties of the L/C Issuer under this Agreement
or any Letter of Credit Application relating to any Letter of Credit issued or
to be issued by it; (ii) no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Required
Lenders or all the Lenders, as the case may be, affect the rights or duties of
the Administrative Agent under this Agreement or any other Loan Document; and
(iii) the Agent/Arranger Fee Letter may be amended, or rights or
privileges thereunder waived, in a writing executed only by the parties
thereto.  Notwithstanding anything to the
contrary herein, any Lender that has failed to fund any portion of the Loans or
participations in L/C Obligations required to be funded by it hereunder shall
not have any right to approve or disapprove any amendment, waiver or consent
hereunder, except that the Pro Rata Share of such Lender may not be increased
without the consent of such Lender.

 

10.02                 Notices and Other Communications;
Facsimile Copies.

 

(a)                                  General.  Unless
otherwise expressly provided herein, all notices and other communications
provided for hereunder shall be in writing (including by facsimile
transmission) and mailed, faxed or delivered, to the address, facsimile number
or (subject to subsection (c) below) electronic mail address specified for
notices on Schedule 10.02; or, in the case of the Borrower, the
Administrative Agent or the L/C Issuer, to such other address as shall be
designated by such party in a notice to the other parties, and in the case of
any other party, to such other address as shall be designated by such party in
a notice to the Borrower, the Administrative Agent, and the L/C Issuer.  All such notices and other communications
shall be deemed to be given or made upon the earlier to occur of
(i) actual receipt by the intended recipient and (ii) (A) if
delivered by hand or by courier, when signed for by the intended recipient;
(B) if delivered by mail, four Business Days after deposit in the mails,
postage prepaid; (C) if delivered by facsimile, when sent and receipt has
been confirmed by telephone; and (D) if delivered by electronic mail
(which form of delivery is subject to the provisions of subsection
(c) below), when delivered; provided, however, that
notices and other communications to the Administrative Agent, and the L/C
Issuer pursuant to Article II shall not be effective until actually
received by such Person.  Any notice or
other communication permitted to be given, made or confirmed by telephone
hereunder shall be given, made or confirmed by means of a telephone call to the
intended recipient at the number specified on Schedule 10.02, it being
understood and agreed that a voicemail message shall in no event be effective
as a notice, communication or confirmation hereunder.

 

(b)                                 Effectiveness of Facsimile Documents and
Signatures.  Loan Documents may be transmitted and/or
signed by facsimile.  The effectiveness
of any such documents and signatures shall, subject to applicable Law, have the
same force and effect as manually-signed originals and shall be binding on all
Loan Parties, the Administrative Agent and the Lenders.  The Administrative Agent may also require
that any such documents and signatures be confirmed by 

 

84

 

a manually-signed
original thereof; provided, however, that the failure to
request or deliver the same shall not limit the effectiveness of any facsimile
document or signature.

 

(c)                                  Limited Use of Electronic Mail. 
Electronic mail and internet and intranet websites may be used only to
distribute routine communications, such as financial statements and other
information, and to distribute Loan Documents for execution by the parties
thereto, and may not be used for any other purpose.

 

(d)                                 Reliance by Administrative Agent and
Lenders.  The Administrative Agent and the Lenders
shall be entitled to rely and act upon any notices (including telephonic Loan
Notices if immediately followed by a corresponding Loan Notice in writing)
purportedly given by or on behalf of the Borrower even if (i) such notices
were not made in a manner specified herein, were incomplete or were not
preceded or followed by any other form of notice specified herein, or
(ii) the terms thereof, as understood by the recipient, varied from any
confirmation thereof.  The Borrower shall
indemnify each Agent-Related Person and each Lender from all losses, costs,
expenses and liabilities resulting from the reliance by such Person on each
notice purportedly given by or on behalf of the Borrower.

 

10.03                 No Waiver; Cumulative Remedies.

 

No failure by any Lender
or the Administrative Agent or the L/C Issuer to exercise, and no delay by any
such Person in exercising, any right, remedy, power or privilege hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege.  The rights, remedies, powers
and privileges herein or therein provided are cumulative and not exclusive of
any rights, remedies, powers and privileges provided by law.

 

10.04                 Attorney Costs, Expenses and Taxes. 
The Borrower agrees (a) to pay or reimburse the Administrative
Agent and the L/C Issuer for all costs and expenses incurred in connection with
the development, preparation, syndication, negotiation and execution of this
Agreement and the other Loan Documents and any amendment, waiver, consent or
other modification of the provisions hereof and thereof (whether or not the
transactions contemplated hereby or thereby are consummated), and the
consummation and administration of the transactions contemplated hereby and
thereby, including all Attorney Costs, and (b) to pay or reimburse the
Administrative Agent, the L/C Issuer and each Lender for all costs and expenses
incurred in connection with the enforcement, attempted enforcement, or preservation
of any rights or remedies or collection of any amounts due and owing by any
Loan Party and not yet paid under this Agreement or the other Loan Documents
(including all such costs and expenses incurred during any “workout” or
restructuring in respect of the Obligations and during any legal proceeding,
including any proceeding under any Debtor Relief Law), including all Attorney
Costs.  The foregoing costs and expenses
shall include all search, filing, recording, title insurance and appraisal
charges and fees and taxes related thereto, and other out-of-pocket expenses
incurred by the Administrative Agent or the L/C Issuer, as the case may be, and
the cost of independent public accountants and other outside experts retained
by the Administrative Agent, the L/C Issuer or any Lender.  The agreements in this Section shall
survive the termination of the Commitments and repayment of all the other
Obligations.

 

85

 

10.05                 Indemnification by the Borrower. 
Whether or not the transactions contemplated hereby are consummated, the
Borrower agrees to indemnify, save and hold harmless each Agent-Related Person,
each Lender and their respective Affiliates, directors, officers, employees,
counsel, agents and attorneys-in-fact (collectively the “Indemnitees”)
from and against:  (a) any and all
claims, demands, actions or causes of action that are asserted against any
Indemnitee by any Person (other than the Administrative Agent, the L\C Issuer
or any Lender) relating directly or indirectly to a claim, demand, action or
cause of action that such Person asserts or may assert against any Loan Party,
any Affiliate of any Loan Party or any of their respective officers or
directors; (b) any and all claims, demands, actions or causes of action
that may at any time (including at any time following repayment of the
Obligations and the resignation or removal of the Administrative Agent or the
replacement of any Lender) be asserted or imposed against any Indemnitee,
arising out of or relating to, the Loan Documents, any predecessor loan
documents, the Commitments, the use or contemplated use of the proceeds of any
Credit Extension, or the relationship of any Loan Party, the Administrative
Agent and the Lenders under this Agreement or any other Loan Document;
(c) any administrative or investigative proceeding by any Governmental
Authority arising out of or related to a claim, demand, action or cause of
action described in subsection (a) or (b) above; and (d) any and
all liabilities (including liabilities under indemnities), losses, costs or
expenses (including Attorney Costs) that any Indemnitee suffers or incurs as a
result of the assertion of any foregoing claim, demand, action, cause of action
or proceeding, or as a result of the preparation of any defense in connection
with any foregoing claim, demand, action, cause of action or proceeding, in all
cases, whether or not arising out of the
negligence of an Indemnitee, and whether or not an Indemnitee is a
party to such claim, demand, action, cause of action or proceeding (all the
foregoing, collectively, the “Indemnified Liabilities”); provided
that no Indemnitee shall be entitled to indemnification for any claim caused by
its own gross negligence, violation of law, breach under any Loan Document or
willful misconduct or for any loss asserted against it by another
Indemnitee.  The agreements in this
Section shall survive the termination of the Commitments and repayment of
all the other Obligations.

 

10.06                 Payments Set Aside.

 

To the extent that the
Borrower makes a payment to the Administrative Agent, the L/C Issuer or any
Lender, or the Administrative Agent, the L/C Issuer or any Lender exercises its
right of set-off, and such payment or the proceeds of such set-off or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by the
Administrative Agent, the L/C Issuer or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each
Lender severally agrees to pay to the Administrative Agent or the L/C Issuer,
as the case may be, upon demand its applicable share of any amount so recovered
from or repaid by the Administrative Agent or the L/C Issuer, as the case may
be, plus interest thereon from the date of such demand to the date such payment
is made at a rate per annum equal to the Federal Funds Rate from time to time
in effect.

 

86

 

10.07                 Successors and Assigns.

 

(a)                                  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrower
may not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower without such consent shall be null and void).  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby and, to the
extent expressly contemplated hereby, the Indemnitees) any legal or equitable right,
remedy or claim under or by reason of this Agreement.

 

(b)                                 Except in any case in which any
assignment described in this Section 10.07(b) would result in
a nonexempt prohibited transaction under Section 4975 of the Code or
Section 406 of ERISA with respect to any Plan of the Borrower, any Lender
may assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans (including for purposes of this subsection (b), participations in
L/C Obligations) at the time owing to it); provided that (i) with
respect to each assignment made to any Person described at clause (c) in
the defined term “Eligible Assignee”, the Assignee Conditions shall be
satisfied, (ii) except in the case of an assignment of the entire
remaining amount of the assigning Lender’s Commitment and the Loans at the time
owing to it or in the case of an assignment to a Lender or an Affiliate of a
Lender or an Approved Fund with respect to a Lender, in each case which
constitutes an Eligible Assignee, the aggregate amount of the Commitment (which
for this purpose includes Loans outstanding thereunder) subject to each such
assignment, determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent, shall not be less
than U.S.$5,000,000 unless each of the Administrative Agent and the L/C Issuer
and, so long as no Event of Default has occurred and is continuing, the
Borrower, otherwise consent (each such consent not to be unreasonably withheld
or delayed), (iii) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender’s rights and obligations
under this Agreement with respect to the Loans or the Commitment assigned, and
(iv) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a processing
and recordation fee of U.S.$3,500. 
Subject to acceptance and recording thereof by the Administrative Agent
pursuant to subsection (c) of this Section and compliance with the
Assignee Conditions, from and after the effective date specified in each
Assignment and Acceptance, the Eligible Assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to
the benefits of Sections 3.07, 10.04 and 10.05).  Upon request, the Borrower (at its expense)
shall execute and deliver new or replacement Notes to the assigning Lender and
the assignee Lender.  Any assignment or
transfer (other than any assignment as security to a Federal Reserve Bank) by a
Lender of rights or obligations under this Agreement that does not comply with
this subsection shall be treated for purposes of this 

 

87

 

Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance
with subsection (d) of this Section.

 

(c)                                  The Administrative Agent, acting solely
for this purpose as an agent of the Borrower, shall maintain at the
Administrative Agent’s Office a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitments of, and principal amount of the Loans and
L/C Obligations owing to, each Lender pursuant to the terms hereof from time to
time (the “Register”).  The
entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent, the L/C Issuer and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary.  The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.

 

(d)                                 Any Lender may, without the consent of,
or prior notice to, the Borrower, the L/C Issuer or the Administrative Agent,
sell participations to one or more banks or other entities (a “Participant”)
in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans
(including such Lender’s participations in L/C Obligations owing to it); provided
that (i) such Lender’s obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the
Borrower, the Administrative Agent, the L/C Issuer and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement and (iv) such
transaction does not result in a nonexempt prohibited transaction under
Section 4975 of the Code or Section 406 of ERISA with respect to any
plan of the Borrower.  Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this Agreement;
provided that such agreement or instrument may provide that such Lender
will not, without the consent of the Participant, agree to any amendment,
waiver or other modification that would (i) postpone any date upon which
any payment of money is scheduled to be paid to such Participant,
(ii) reduce the principal, interest, fees or other amounts payable to such
Participant, or (iii) release any Guarantor from the Guarantee except as
permitted pursuant to the terms of any Loan Document.  Subject to subsection (e) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.01, 3.04 and 3.05 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to subsection (b) of this Section.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.09
as though it were a Lender, provided such Participant agrees to be
subject to Section 2.14 as though it were a Lender.

 

(e)                                  A Participant shall not be entitled to
receive any greater payment under Section 3.01, 3.04 or 3.05 than
the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 3.01
unless the Borrower is 

 

88

 

notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 10.15 as though it
were a Lender.

 

(f)                                    Any Lender may at any time assign, pledge
or grant a security interest in all or any portion of its rights under this
Agreement (including under its Notes, if any) to secure obligations of such
Lender to a Federal Reserve Bank; provided that no such pledge or
assignment shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto; and provided, further,
all costs, fees and expenses related to, or in connection with, any such pledge
or grant shall be for the sole account of such Lender.

 

(g)                                 Intentionally Blank.

 

(h)                                 Intentionally Blank.

 

(i)                                     Notwithstanding anything to the contrary
contained herein, if at any time Bank of Montreal assigns all of its Commitment
and Loans pursuant to subsection (b) above, Bank of Montreal may, upon 30
days’ notice to the Borrower and the Lenders, resign as L/C Issuer.  In the event of any such resignation as L/C
Issuer, the Borrower shall be entitled to appoint from among the Lenders a
successor L/C Issuer hereunder; provided, however, that no
failure by the Borrower to appoint any such successor shall affect the
resignation of Bank of Montreal as L/C Issuer. 
Bank of Montreal shall retain all the rights and obligations of the L/C
Issuer hereunder with respect to all Letters of Credit outstanding as of the
effective date of its resignation as L/C Issuer and all L/C Obligations with
respect thereto (including the right to require the Lenders to make Base Rate
Loans or fund participations in Unreimbursed Amounts pursuant to Section 2.04(c)).

 

10.08                 Confidentiality.

 

Each of the Administrative
Agent and the Lenders (on behalf of itself and each of its Affiliates, and each
of its and their directors, officers, agents, attorneys, employees and
representatives) agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and
its Affiliates’ directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to (and will agree to) keep such
Information confidential on the terms provided in this Section); (b) to
the extent requested by any regulatory authority; (c) to the extent required
by applicable laws or regulations or by any subpoena or similar legal process
(and each such case, such Person shall endeavor to notify the Borrower of such
occurrence as soon as reasonably possible following the service of any such
process on such Person); (d) to any other party to this Agreement;
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder; (f) subject to an agreement containing provisions substantially
the same as those of this Section, to (i) any Eligible Assignee of or
Participant in, or any prospective Eligible Assignee of or Participant in, any
of its rights or obligations under this Agreement or (ii) any direct or
indirect contractual counterparty or prospective counterparty (or such
contractual counterparty’s or prospective counterparty’s professional advisor)
to any credit 

 

89

 

derivative transaction relating to obligations of the
Borrower, in each case, provided that each such Person first agrees to
hold, and cause to be held, such Information in confidence on the terms
provided in this Section; (g) with the consent of the Borrower;
(h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section or (ii) becomes
available to the Administrative Agent or any Lender on a nonconfidential basis
from a source other than the Borrower; or (i) to the National Association
of Insurance Commissioners or any other similar organization or any nationally
recognized rating agency that requires access to information about a Lender’s
or its Affiliates’ investment portfolio in connection with ratings issued with
respect to such Lender or its Affiliates. 
For the purposes of this Section, “Information” means all
information received from the Borrower relating to the Borrower or its
business, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by the Borrower; provided that, in the case of information
received from the Borrower after the date hereof, such information is clearly
identified in writing at the time of delivery as confidential.  Any Person required to maintain the confidentiality
of Information as provided in this Section shall be considered to have
complied with its obligation to do so if such Person has exercised the same
degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

 

10.09                 Set-off. 
In addition to any rights and remedies of the Lenders provided by law,
upon the occurrence and during the continuance of any Event of Default, each
Lender is authorized at any time and from time to time, without prior notice to
the Borrower or any other Loan Party, any such notice being waived by the
Borrower (on its own behalf and on behalf of each Loan Party) to the fullest
extent permitted by law, to set-off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Lender to or for the credit or the
account of the respective Loan Parties against any and all Obligations then due
and owing to such Lender.  Each Lender
agrees promptly to notify the Borrower and the Administrative Agent after any
such set-off and application made by such Lender; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application.

 

10.10                 Interest Rate Limitation. 
Notwithstanding anything to the contrary contained in any Loan Document,
the interest paid or agreed to be paid under the Loan Documents shall not
exceed the maximum amount, or be computed at a rate that exceeds the maximum
rate, of non-usurious interest permitted by applicable Law (the “Maximum
Rate”).  If the Administrative Agent,
the L/C Issuer or any Lender shall contract for, charge, receive, reserve or
take interest in an amount or at a rate that exceeds the Maximum Rate, the
excess interest shall be applied to the principal of the Loans or, if it
exceeds such unpaid principal, refunded to the applicable Loan Party or Loan
Parties, and in no event shall any Loan Party or any other Person ever be
liable for unearned interest or ever be required to pay interest in excess of
the Maximum Rate.  In determining whether
the interest contracted for, charged, received, reserved or taken by the
Administrative Agent, the L/C Issuer or a Lender exceeds the Maximum Rate, such
Person may, to the extent permitted by applicable Law, (a) characterize
any payment that is not principal as an expense, fee, or premium rather than
interest, (b) exclude voluntary prepayments and the effects thereof, and
(c) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the contemplated term of the
Obligations.  If the Laws of the State 

 

90

 

of Texas are applicable
for purposes of determining the “Maximum Rate”, then that term means the
“indicated rate ceiling” from time to time in effect under Chapter 303 of
the Texas Finance Code.  The Borrower
agrees that Chapter 346 of the Texas Finance Code does not apply to any
Borrowing.

 

10.11                 Counterparts. 
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

 

10.12                 Integration. 
This Agreement, together with the other Loan Documents, comprises the
complete and integrated agreement of the parties on the subject matter hereof
and thereof and supersedes all prior agreements, written or oral, on such
subject matter.  In the event of any
conflict between the provisions of this Agreement and those of any other Loan
Document, the provisions of this Agreement shall control; provided that
the inclusion of supplemental rights or remedies in favor of the Administrative
Agent, the L/C Issuer or the Lenders in any other Loan Document shall not be
deemed a conflict with this Agreement. 
Each Loan Document was drafted with the joint participation of the
respective parties thereto and shall be construed neither against nor in favor
of any party, but rather in accordance with the fair meaning thereof.

 

10.13                 Survival of Representations and
Warranties.  All representations and warranties made
hereunder and in any other Loan Document or other document delivered pursuant
hereto or thereto or in connection herewith or therewith shall survive the
execution and delivery hereof and thereof. 
Such representations and warranties have been or will be relied upon by
the Administrative Agent, the L/C Issuer and each Lender, regardless of any
investigation made by the Administrative Agent, the L/C Issuer or any Lender or
on their behalf and notwithstanding that the Administrative Agent, the L/C
Issuer or any Lender may have had notice or knowledge of any Default or Event
of Default at the time of any Credit Extension.

 

10.14                 Severability. 
Any provision of this Agreement and the other Loan Documents to which
the Borrower is a party that is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
thereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.

 

10.15                 Foreign Lenders. 
Each Lender that is a “foreign corporation, partnership or trust” within
the meaning of the Code (a “Foreign Lender”) shall deliver to the
Administrative Agent, prior to becoming a Lender herein, two duly signed
completed copies of either IRS Form W-8BEN or any successor thereto
(relating to such Person and entitling it to an exemption from, or reduction
of, withholding tax on all payments to be made to such Person by the Borrower
pursuant to this Agreement) or IRS Form W-8ECI or any successor thereto
(relating to all payments to be made to such Person by the Borrower pursuant to
this Agreement) or such other evidence satisfactory to the Borrower and the
Administrative Agent that such Person is entitled to an exemption from, or
reduction of, U.S. withholding tax. 
Thereafter and from time to time, each such Person shall
(a) promptly submit to the Administrative Agent such additional duly
completed and signed copies of one of such forms (or such successor forms as
shall be adopted from time to time by the relevant United States taxing
authorities) as may then be available under 

 

91

 

then current United
States laws and regulations to avoid, or such evidence as is satisfactory to
the Borrower and the Administrative Agent of any available exemption from or
reduction of, United States withholding taxes in respect of all payments to be
made to such Person by the Borrower pursuant to this Agreement,
(b) promptly notify the Agent of any change in circumstances which would
modify or render invalid any claimed exemption or reduction, and (c) take
such steps as shall not be materially disadvantageous to it, in the reasonable
judgment of such Lender, and as may be reasonably necessary (including the
re-designation of its Lending Office) to avoid any requirement of applicable
Laws that the Borrower make any deduction or withholding for taxes from amounts
payable to such Person.  If such Person
fails to deliver the above forms or other documentation, then the
Administrative Agent may withhold from any interest payment to such Person an
amount equivalent to the applicable withholding tax imposed by Sections 1441
and 1442 of the Code, without reduction. 
If any Governmental Authority asserts that the Administrative Agent did
not properly withhold any tax or other amount from payments made in respect of
such Person, such Person shall indemnify the Administrative Agent therefor,
including all penalties and interest, any taxes imposed by any jurisdiction on
the amounts payable to the Agent under this Section, and costs and expenses
(including Attorney Costs) of the Administrative Agent.  The obligation of the Lenders under this
Section shall survive the payment of all Obligations and the resignation
or replacement of the Administrative Agent.

 

10.16                 Removal and Replacement of Lenders.

 

(a)                                  Under any circumstances set forth herein
providing that the Borrower shall have the right to remove or replace a Lender
as a party to this Agreement, the Borrower may, upon notice to such Lender and
the Administrative Agent, (i) remove such Lender by terminating such
Lender’s Commitment or (ii) replace such Lender by causing such Lender to
assign its Commitment (without payment of any assignment fee) pursuant to Section 10.07(b) to
one or more other Lenders or Eligible Assignees procured by the Borrower; provided, however,
that if the Borrower elects to exercise such right with respect to any Lender
pursuant to Section 3.06(b), they shall be obligated to remove or
replace, as the case may be, all Lenders that have made similar requests for
compensation pursuant to Section 3.01 or 3.04.  The Borrower shall (x) pay in full all
principal, interest, fees and other amounts owing to such Lender through the
date of termination or assignment (including any amounts payable pursuant to Section 3.05),
(y) provide appropriate assurances and indemnities (which may include
letters of credit) to the L/C Issuer as it may reasonably require with respect
to any continuing obligation to purchase participation interests in any L/C
Obligations then outstanding, and (z) release such Lender from its
obligations under the Loan Documents. 
Any Lender being replaced shall execute and deliver an Assignment and
Acceptance with respect to such Lender’s Commitment and outstanding Credit Extensions.  The Administrative Agent shall distribute an
amended Schedule 2.01, which shall be deemed incorporated into this
Agreement, to reflect changes in the identities of the Lenders and adjustments
of their respective Commitments and/or Pro Rata Shares resulting from any such
removal or replacement.

 

(b)                                 In order to make all the Lenders’
interests in any outstanding Credit Extensions ratable in accordance with any
revised Pro Rata Shares after giving effect to the removal or replacement of a
Lender, the Borrower shall pay or prepay, if necessary, on the effective date
thereof, all outstanding Loans of all Lenders, together with any amounts due
under Section 3.05.  

 

92

 

The Borrower may then
request Loans from the Lenders in accordance with their revised Pro Rata
Shares.  The Borrower may net any
payments required hereunder against any funds being provided by any Lender or
Eligible Assignee replacing a terminating Lender.  The effect for purposes of this Agreement
shall be the same as if separate transfers of funds had been made with respect
thereto.

 

(c)                                  This section shall supersede any
provision in Section 10.01 to the contrary.

 

10.17                 Governing Law.

 

(a)                                  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED
THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.

 

(b)                                 ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK SITTING IN MANHATTAN OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS.  THE BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO.  THE BORROWER, THE ADMINISTRATIVE AGENT AND
EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

 

10.18                 Waiver of Right to Trial by Jury. 
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN
DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

93

 

10.19                 ENTIRE AGREEMENT.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

94

 

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.

 

	
   

  	
  ATLANTIC POWER HOLDINGS, LLC

  
	
   

  	
   

  
	
   

  	
  By:  ATLANTIC POWER MANAGEMENT, LLC, its Manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Barry Welch

  
	
   

  	
  Name:

  	
  Barry Welch

  
	
   

  	
  Title:

  	
  President and Chief
  Executive Officer

  

 

1

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed as of the date
first above written.

 

	
   

  	
  BANK
  OF MONTREAL as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Bliss

  
	
   

  	
  Name:

  	
  Joseph A. Bliss

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK OF MONTREAL
  as a
  Lender and L/C Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Bliss

  
	
   

  	
  Name:

  	
  Joseph A. Bliss

  
	
   

  	
  Title:

  	
  Vice President

  

 

2

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date first above written.

 

	
   

  	
  BANK
  OF MONTREAL, as Collateral Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Bliss

  
	
   

  	
  Name:

  	
  Joseph A. Bliss

  
	
   

  	
  Title:

  	
  Vice President

  

 

3

 

Execution Copy

 

FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER

 

THIS FIRST
AMENDMENT TO CREDIT AGREEMENT AND WAIVER, dated as of April 29, 2005 (the “Amendment”), among Atlantic Power Holdings, LLC, a
Delaware limited liability company (the “Borrower”), Bank of Montreal in
its capacity as a lender under the Credit Agreement described below and Bank of
Montreal in its capacity as administrative agent (“Administrative Agent”)
under the Credit Agreement described below.

 

W I T N E S S E T H

 

WHEREAS, the Borrower, the Administrative Agent, and
the lenders from time to time party thereto (each a “Lender”), are
parties to that certain Credit Agreement, dated as of November 18, 2004
(the “Credit Agreement”); and

 

WHEREAS, the Borrower, the Administrative Agent, and
the Required Lenders desire to amend certain provisions of the Credit Agreement
and otherwise waive certain requirements thereunder.

 

NOW, THEREFORE, the parties hereto hereby agree as
follows:

 

1.                                      DEFINITIONS.  Unless otherwise defined herein or the context
otherwise requires, or except as the definition may be amended by this
Amendment, terms used in this Amendment, including its preamble and recitals,
shall have the meanings provided in the Credit Agreement, as hereby amended.

 

2.                                      AMENDMENTS TO CREDIT AGREEMENT.

 

2.1                               Section 6.01(a)(ii)(b) of the Credit Agreement is hereby amended by replacing
the phrase “90 days” with the phrase “120 days”.

 

2.2                               Section 6.01(b) of Credit Agreement is hereby
amended and restated in its entirety as follows:

 

“as
soon as available, but in any event within (i) 45 days after the end of
each of the first three fiscal quarters of each fiscal year of the Parent
Guarantor a consolidated balance sheet of the Parent Guarantor and its
consolidated Subsidiaries and (ii) 75 days after the end of each of the
first three fiscal quarters of each fiscal year of the Borrower, a consolidated
balance sheet of the Borrower and its consolidated Subsidiaries and
Unrestricted Subsidiaries, in each case, as at the end of such fiscal quarter,
and the related consolidated statements of income and cash flows for such
fiscal quarter and for the portion of the Parent Guarantor and the  Borrower’s fiscal year then ended, as applicable, setting
forth in each case in comparative form the figures for the corresponding fiscal
quarter of the previous applicable fiscal year and the corresponding portion of
the previous applicable fiscal year, all in reasonable detail and certified by
a Responsible Officer of the Borrower and the Parent Guarantor, as applicable  as fairly presenting the financial condition, results of
operations and cash flows of the Borrower and its Subsidiaries and Unrestricted
Subsidiaries in accordance with Cdn. GAAP (in the case of the balance sheet
referred to in clause (i)) and U.S. GAAP (in the case of the balance 

 

 

sheet
referred to in clause (ii)), subject only to normal year-end audit adjustments
and the absence of footnotes.”

 

3.                                      LIMITED WAIVER

 

3.1                               The Borrower has requested that the
Administrative Agent and the Required Lenders waive, and subject to the terms
and conditions of this Agreement, the Required Lenders and the Administrative
Agent hereby do waive, the requirement of Section 6.01(a)(ii)(b) of
the Credit Agreement (as amended by this Amendment) that the Borrower deliver
an unaudited consolidated balance sheet of the Borrower and its consolidated
Subsidiaries and the related consolidated statements of income and cash flows
within one hundred-twenty (120) days of the end of the Borrower’s fiscal year
ending December 31, 2004; provided, that the Borrower shall provide
the Administrative Agent and the Lenders with such unaudited consolidated
balance sheet and related consolidated statements of income and cash flows no
later than June 30, 2005.

 

3.2                               Limited Effect. 
The Administrative Agent’s and the Required Lenders’ agreement to the
waiver contained herein shall only apply as specified in this Section 3.
Nothing herein shall be construed as a waiver of or a consent to any other
provision of the Credit Agreement or any other matter or transaction, other
than as specifically set forth herein.

 

4.                                      REPRESENTATIONS AND WARRANTIES. In order
to induce the Required Lenders and the Administrative Agent to enter into this
Amendment, the Borrower hereby reaffirms, as of the date hereof, its
representations and warranties contained in Article V
of the Credit Agreement except (i) for representations and warranties made
in Sections 5.05(a) and 5.09 of the Credit Agreement shall relate to the
Closing Date and (ii) to the extent any other such representation and
warranty relates solely to an earlier date, and additionally represents and
warrants as follows:

 

4.1                               Existence
and Standing.  The Borrower is a limited liability company,
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has all requisite authority to conduct its
business and is duly qualified or licensed to transact business as a foreign
limited liability company and in good standing under the laws of each
jurisdiction in which the conduct of its operations or the ownership or leasing
of its properties requires such qualification or licensing, except where
failure to be so qualified or licensed could not reasonably be expected to have
a Material Adverse Effect.

 

4.2                               No Conflict;
Government Consent. No order, consent, adjudication,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, or other action in respect of any
governmental or public body or authority, or any subdivision thereof, which has
not been obtained by the Borrower or any of its Subsidiaries, is required to be
obtained in connection with the execution, delivery or performance of this
Amendment or the legality, validity, binding effect or enforceability of any of
the Loan Documents, except, in each case, to the extent that the failure to
obtain such order, consent, adjudication, approval, license, authorization,
validation, exemption or other action or to make such filing, recording or
registration could not reasonably be expected to have a Material Adverse
Effect.

 

4.3                               Due
Authorization, Non-Contravention, etc.  The
execution, delivery and performance by the Borrower of this Amendment and the
consummation of the transactions 

 

2

 

contemplated hereby and
by the Credit Agreement as so amended, are within the Borrower’s organizational
powers, have been duly authorized by all necessary organizational action, and
do not (a) contravene the Borrower’s organizational documents, including,
without limitation, its articles or certificate of incorporation, partnership
agreement, certificate of partnership, articles or certificate of organization,
by-laws, operating or other management agreement or other similar organic
documents (except as such, in the aggregate could not reasonably be expected to
have a Material Adverse Effect), (b) contravene any contractual
restriction, law or governmental regulation or court decree or order binding on
or affecting the Borrower (except as such, in the aggregate could not
reasonably be expected to have a Material Adverse Effect) or (c) result
in, or require the creation or imposition of, any Lien on any Properties (each
as defined in the Credit Agreement) of the Borrower or any Subsidiaries (except
as such, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect).

 

4.4                               Validity,
etc.  This Amendment and the Credit Agreement as
amended hereby constitute the legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their respective
terms except as such enforceability is subject to the effect of (i) any
applicable bankruptcy, insolvency, reorganization or similar law relating to or
affecting creditors’ rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law), including concepts of materiality, reasonableness, good
faith and fair dealing.

 

5.                                      EFFECT OF AMENDMENT. This Amendment shall
be deemed to be an amendment to the Credit Agreement, and the Credit Agreement,
as amended hereby, is hereby ratified, approved and confirmed in each and every
respect.  All references to the Credit
Agreement in any other document, instrument, agreement or writing shall
hereafter be deemed to refer to the Credit Agreement as amended hereby.

 

6.                                      GOVERNING LAW, SEVERABILITY, ETC.  THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER, GOVERNED
BY, AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND
THE LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF THE
CONFLICTS OF LAW.  Whenever
possible each provision of this Amendment shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Amendment shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Amendment.

 

THIS WRITTEN AMENDMENT AND THE CREDIT AGREEMENT AS
AMENDED BY THIS AMENDMENT REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT
BE CONTRADICTED BY PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

 

3

 

7.                                      MISCELLANEOUS.

 

7.1                               Successors
and Assigns.  This Amendment shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns.

 

7.2                               Counterparts. 
This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument.

 

7.3                               Effectiveness. 
This Amendment shall become effective when counterparts hereof executed
on behalf of the Borrower, Administrative Agent and the Required Lenders.

 

7.4                               NO ORAL AGREEMENTS. 
THIS AMENDMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

 

THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

 

[SIGNATURES
BEGIN ON FOLLOWING PAGE]

 

4

 

IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed by their respective officers thereunto duly
authorized as of the day and year first written above.

 

	
   

  	
  ATLANTIC
  POWER HOLDINGS, LLC, by its Manager ATLANTIC POWER MANAGEMENT,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Barry E. Welch

  
	
   

  	
   

  	
  Name:

  	
  Barry
  E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK OF MONTREAL,
  Individually as a Lender and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cahal B.
  Carmody

  
	
   

  	
  Name:

  	
  Cahal B. Carmody

  
	
   

  	
  Title:

  	
  Director

  
					

 

S-2

 

Execution Copy

 

SECOND AMENDMENT TO CREDIT AGREEMENT

 

THIS SECOND
AMENDMENT TO CREDIT AGREEMENT, dated as of November 18, 2005 (the “Amendment”), among Atlantic Power Holdings, LLC, a
Delaware limited liability company (the “Borrower”), Bank of Montreal in
its capacity as a lender under the Credit Agreement described below and Bank of
Montreal in its capacity as administrative agent (“Administrative Agent”)
under the Credit Agreement described below.

 

W I T N E S S E T H

 

WHEREAS, the Borrower, the Administrative Agent, and
the lenders from time to time party thereto (each a “Lender”), are
parties to that certain Credit Agreement (the “Credit
Agreement”), dated as of November 18, 2004, as amended by that
certain First Amendment to Credit Agreement, dated as of April 29, 2005
(as further amended, restated, supplemented or otherwise modified from time to
time); and

 

WHEREAS, the Borrower, the Administrative Agent, and
the Required Lenders desire to amend certain provisions of the Credit
Agreement.

 

NOW, THEREFORE, the parties hereto hereby agree as
follows:

 

1.                                      DEFINITIONS.  Unless otherwise defined herein or the
context otherwise requires, or except as the definition may be amended by this
Amendment, terms used in this Amendment, including its preamble and recitals,
shall have the meanings provided in the Credit Agreement, as hereby amended.

 

2.                                      AMENDMENTS TO CREDIT AGREEMENT

 

2.1                               Section 1.01 is hereby amended as follows:

 

(a)                                 Amended Definitions. 
The following definitions are hereby amended and restated in their
entirety:

 

(i)                                     ““Applicable Margin” means the
following percentages per annum:

 

Base Rate
Loans:  0.00 basis points;

 

Commitment
Fee:  37.5 basis points;

 

Eurodollar Rate
Loans:  150.0 basis points; and

 

Letters of
Credit:  150.0 basis points.”

 

(ii)                                  ““Maturity Date” means (a) November 18,
2008, or such later date to which the tenor of the Commitments may be extended
in accordance with the terms hereof, or (b) such earlier date upon which
the Commitments may be terminated in accordance with the terms hereof.”

 

 

(b)                                 New Definitions.  The following new definition
is hereby inserted into the Credit Agreement in the appropriate location.

 

(i)                                     ““Annual Budget” has the meaning
set forth in Section 6.01(c)(ii).”

 

(ii)                                  ““Annual Distributable Cash Forecast”
has the meaning set forth in Section 6.01(c)(i).”

 

(iii)                               ““Manager” means Atlantic Power Management,
LLC, in its capacity as Manager of the Borrower pursuant to the Management
Agreement among Atlantic Power Management, LLC, Atlantic Power Holdings, LLC,
and Atlantic Power Corporation, dated as November 10, 2004.”

 

(iv)                              ““Project Operating Entity” means
the operating partnerships, limited liability companies, corporations or other
entities that are the direct owners of the Projects.”

 

2.2                               Section 2.15(a) of the Credit Agreement is hereby amended and
restated in its entirety as follows:

 

“(a)                           Not earlier
than 60 days prior to, nor later than 30 days prior to, the date that is two
years prior to the Maturity Date, the Borrower may, upon notice to the
Administrative Agent (who shall promptly notify the Lenders), request a one
year extension of the Maturity Date. 
Within 15 days of delivery of such notice, each Lender shall notify the
Administrative Agent whether or not it consents to such extension (which
consent may be given or withheld in such Lender’s sole and absolute
discretion).  Any Lender not responding
within the above time period shall be deemed not to have consented to such
extension.  The Administrative Agent
shall promptly notify the Borrower and the Lenders of the Lenders’
responses.  If any Lender declines, or is
deemed to have declined, to consent to such extension, the Borrower may cause
any such Lender to be removed or replaced as a Lender pursuant to Section 10.16.”

 

2.3                               Section 4.02(a) of the Credit Agreement is hereby amended and restated
in its entirety as follows:

 

“(a)                           (i)  The
representations and warranties of the Borrower contained in Article V,
or which are contained in any Loan Document furnished by the Borrower at any
time under or in connection herewith, shall be true and correct on and as of
the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to a different date, in which
case they shall be true and correct as of such date; and (ii) the
representations and warranties of Borrower or any Guarantor a party thereto,
contained in the Subordinated Note Indenture shall be true and correct on and
as of the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to a different date, in which
case they shall be true and correct as of such date.”

 

2.4                               Section 4.02(b) of the Credit Agreement is hereby amended and restated
in its entirety as follows:

 

2

 

“(b)                           (i) No
Default or Event of Default shall exist, or would result from such proposed
Credit Extension and (ii) no “Event of Default” (as defined in the
Subordinated Note Indenture), or event or condition that with the giving of
notice or the lapse of time would become an “Event of Default” (as defined in
the Subordinated Note Indenture), shall exist under the Subordinated Note
Indenture, or in each case, would result from such proposed Credit Extension.”

 

2.5                               Section 5.09 of the Credit Agreement is hereby
amended and restated in its entirety as follows:

 

“5.09                  Environmental Compliance.  (i) To
the best knowledge of the Company, (ii) to the best knowledge of the Loan
Parties, and (iii) based on a review conducted by the Loan Parties prior
to the Closing Date of the effect of the then existing Environmental Laws and
any claims alleging potential liability or responsibility for violation of any
Environmental Law on their respective businesses, operations and properties,
except as specifically disclosed in Schedule 5.09, the Loan Parties have
concluded that:  (a) with respect to
the Property of any Loan Party or the operations conducted thereon, the Loan
Parties are in compliance with all applicable Environmental Laws, except to the
extent that any non-compliance would not reasonably be expected to have a
Material Adverse Effect; (b) the Loan Parties are not subject to any
judicial, administrative, government, regulatory or arbitration proceeding
alleging the violation of any applicable Environmental Laws or to the best of
their knowledge that may lead to claim for cleanup costs, contribution,
remedial work, reclamation, conservation, natural resources damages or personal
injury or to the issuance of a stop-work order, suspension order, control
order, prevention order or clean-up order, except to the extent that any such
proceeding would not reasonably be expected to have a Material Adverse Effect; (c) the
Loan Parties are not subject to any federal, state, local or foreign review,
audit or investigation which may lead to a proceeding referred to in (b) above;
(d) the Loan Parties have no knowledge that any of their predecessors in
title to any of their Property and assets are the subject of any currently
pending federal, state, local or foreign review, audit or investigation which
may lead to a proceeding referred to in (b) above; (e) the Loan
Parties have not filed any notice under any applicable Environmental Laws
indicating past or present treatment, storage or disposal of, or reporting a
release of Hazardous Materials into the environment where the circumstances
surrounding such notice would reasonably be expected to have a Material Adverse
Effect; and (f) the Loan Parties possess, and are in compliance with, all
approvals, licenses, permits, consents and other authorizations which are
necessary under any applicable Environmental Laws to conduct their business,
except to the extent that the failure to possess, or be in compliance with,
such authorizations would not reasonably be expected to have a Material Adverse
Effect.”

 

2.6                               Section 5.11 of the Credit Agreement is hereby
amended by adding the phrase “To the best knowledge of the Company,” to the
beginning of such Section.

 

2.7                               The first sentence of Section 5.15
of the Credit Agreement is hereby amended by adding the phrase “or in the IPS
Prospectus” in between the words “any Loan Document” and “, when so made”.

 

2.8                               Section 5.19 of the Credit Agreement is hereby
amended and restated in its entirety as follows:

 

3

 

“5.19                  Subordinated
Note Documents.   As of the
Closing Date, before and after giving effect to the initial Credit Extension,
all representations and warranties of the Borrower or any Guarantor contained
in the Subordinated Note Indenture and any documents delivered pursuant thereto
are true and correct in all material respects (except to the extent such
representations or warranties relate or refer to a specified, earlier
date).  Before and after giving effect to
the initial Credit Extension contemplated hereunder, there is no event of
default or event or condition that could become an event of default with notice
or lapse of time or both, under the Subordinated Note Indenture and any
documents related thereto and the Subordinated Note Indenture, the Subordinated
Notes and any other legally binding documents executed by the Loan Parties in
connection therewith are in full force and effect.”

 

2.9                               Subpart (ii) of Section 5.21
of the Credit Agreement is hereby amended by adding a comma after the word “Indebtedness”
and deleting the words “or any” immediately before the words “contingent
liabilities”.

 

2.10                        Section 6.01(a) of the Credit Agreement is herby
amended and restated as follows:

 

“(a)                           (i) as
soon as available, but in any event within 90 days after the end of the fiscal
year of the Parent Guarantor, an audited consolidated balance sheet of the
Parent Guarantor and its consolidated Subsidiaries, as at the end of such
fiscal year, and the related consolidated statements of income and cash flows
for such fiscal year, setting forth in comparative form the figures for the
previous fiscal year, all in reasonable detail, as audited and accompanied by a
report and opinion of an independent certified public accountant of nationally
recognized standing selected by the Borrower and reasonably acceptable to the
Required Lenders, which report and opinion shall be prepared in accordance with
Cdn. GAAP and shall not be subject to any qualifications or exceptions as to
the scope of the audit nor to any qualifications and exceptions not reasonably
acceptable to the Required Lenders,

 

(ii)                                  within 90 days
after the end of the fiscal year of the Borrower, an unaudited consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at the end
of such fiscal year, and the related consolidated statements of income and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and certified by
a Responsible Officer of the Borrower as fairly presenting the financial
condition, results of operations and cash flows of the Borrower and its
Subsidiaries and Unrestricted Subsidiaries in accordance with Cdn. GAAP subject
only to normal year-end audit adjustments and the absence of footnotes, and

 

(iii)                               promptly
following receipt thereof, any unaudited balance sheets and/or related
consolidated statements of income and cash flows it receives from a Project
Operating Entity or a Project Holding Entity for any fiscal year; and”

 

2.11                        Section 6.01(b) of the Credit Agreement is herby
amended and restated as follows:

 

“(b)                           (i)  as
soon as available, but in any event within (A) 45 days after the end of
each of the first three fiscal quarters of each fiscal year of the Parent Guarantor
a consolidated balance sheet of the Parent Guarantor and its consolidated
Subsidiaries and (B) 75 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, a consolidated balance 

 

4

 

sheet of the Borrower and its consolidated
Subsidiaries and Unrestricted Subsidiaries, in each case, as at the end of such
fiscal quarter, and the related consolidated statements of income and cash
flows for such fiscal quarter and for the portion of the Parent Guarantor and
the  Borrower’s fiscal year then ended, as
applicable, setting forth in each case in comparative form the figures for the
corresponding fiscal quarter of the previous applicable fiscal year and the
corresponding portion of the previous applicable fiscal year, all in reasonable
detail and certified by a Responsible Officer of the Borrower and the Parent
Guarantor, as applicable,  as fairly
presenting the financial condition, results of operations and cash flows of the
Borrower and its Subsidiaries and Unrestricted Subsidiaries in accordance with
Cdn. GAAP for each of the balance sheets referred to in clauses (A) and (B) above,
subject only to normal year-end audit adjustments and the absence of footnotes;
and

 

(ii)                                  as soon as
available, but in any event within 45 days after the end of each fiscal quarter
of the Borrower an unaudited statement of distributable cash of each of the
Project Operating Entities and the Projects setting forth in reasonable detail
the amounts paid, received, or actually incurred by the Borrower, Parent
Guarantor, the Project Operating Entities or Projects, as applicable, during
such fiscal quarter with respect to clauses (A), (B), (C) and (D) of Section 6.01(c)(i) and
clauses (A), (B), (C), (D) of Section 6.01(c)(ii) and an
updated calculation of the Cash Flow Coverage Ratio of the Borrower for such
fiscal quarter, each as certified by a Responsible Officer of the Borrower
stating that such quarterly statements are true and complete copies thereof as
presented to the board of managers of the Borrower for such quarter.”

 

2.12                        Section 6.01(c) of the Credit Agreement is hereby
amended and restated in its entirety as follows:

 

“(c)                            (i) at
least 15 days prior to the commencement of each fiscal year of the Borrower, a
forecast for the Parent Guarantor’s and the Borrower’s distributable cash (the “Annual
Distributable Cash Forecast”) prepared by the Manager for such fiscal year,
broken down on a monthly basis and setting forth in reasonable detail: (A) the
projected cash distributions from each Project or Project Operating Entity to
the Borrower or to an intermediary holding Subsidiary or Unrestricted
Subsidiary of the Borrower; (B) the projected payments of fees and
expenses of the Borrower and the Parent Guarantor, including fees and expenses
payable pursuant to this Agreement; (C) all projected Restricted Payments;
and (D) the projected distributions from the Parent Guarantor to the
holders of the IPS’s; (ii) at least 15 days prior to the commencement of
each fiscal year of the Borrower, an annual budget of the Borrower for such
fiscal year (the “Annual Budget”) setting forth in reasonable detail: (A) the
projected cash distributions from each Project and Project Operating Entity to
the Borrower or to an intermediary holding Subsidiary or Unrestricted
Subsidiary of the Borrower; (B) the Indebtedness, if any, of each Project
Operating Entity, Project Holding Entity or Project and, if applicable, a
comparison of the amortization schedule to the expiration of the applicable
power purchase agreement associated with such Project; (C) the management
and administration expenses of the Manager, the Borrower and the Parent
Guarantor; (D) the projected monthly cash flow for Borrower and Parent
Guarantor (which shall incorporate (ii)(A) through (ii)(C)); (iii) at
least 15 days prior to the commencement of each fiscal year of the Borrower, a
schedule setting forth the Cash Flow Coverage Ratio and related calculations; (iv) at
least 15 days prior to the commencement of each fiscal year of the Borrower a
certificate of a Responsible Officer stating that the Annual Distributable Cash
Forecast and the Annual Budget attached to such certificate are true and
complete copies thereof as presented to the board of managers of the 

 

5

 

Borrower for such fiscal year; and (v) upon the
earlier to occur of (A) 5 Business Days after the approval of the Annual
Distributable Cash Forecast and the Annual Budget by the board of managers of
the Borrower or (B) the last Business Day of January, a certificate of a
Responsible Officer of the Borrower stating that the Annual Distributable Cash
Forecast and the Annual Budget attached to such certificate are true and
complete copies thereof as approved by the board of managers of the Borrower
for such fiscal year; and”

 

2.13                        Section 6.02(a) of the Credit Agreement is herby
amended by deleting the reference to “Section 6.01(a)” and
replacing it with a reference to “Section 6.01(a)(i)”.

 

2.14                        Schedule 2.01 of the Credit Agreement is hereby
amended and restated in it entirety by replacing it with a new Schedule 2.01
attached as Exhibit A hereto.

 

3.                                      REPRESENTATIONS AND WARRANTIES. In order
to induce the Required Lenders and the Administrative Agent to enter into this
Amendment, including without limitation, the extension of the Maturity Date to November 18,
2008, the Borrower hereby reaffirms, as of the date hereof, its representations
and warranties contained in Article V
of the Credit Agreement (as amended by this Amendment), except to the extent
any such representation and warranty relates solely to an earlier date, and
additionally represents and warrants as follows:

 

3.1                               Existence
and Standing.  The Borrower is a limited liability company,
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has all requisite authority to conduct its
business and is duly qualified or licensed to transact business as a foreign
limited liability company and in good standing under the laws of each
jurisdiction in which the conduct of its operations or the ownership or leasing
of its properties requires such qualification or licensing, except where
failure to be so qualified or licensed could not reasonably be expected to have
a Material Adverse Effect.

 

3.2                               No Conflict;
Government Consent. No order, consent, adjudication,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, or other action in respect of any governmental
or public body or authority, or any subdivision thereof, which has not been
obtained by the Borrower or any of its Subsidiaries, is required to be obtained
in connection with the execution, delivery or performance of this Amendment or
the legality, validity, binding effect or enforceability of any of the Loan
Documents, except, in each case, to the extent that the failure to obtain such
order, consent, adjudication, approval, license, authorization, validation,
exemption or other action or to make such filing, recording or registration
could not reasonably be expected to have a Material Adverse Effect.

 

3.3                               Due
Authorization, Non-Contravention, etc.  The
execution, delivery and performance by the Borrower of this Amendment and the
consummation of the transactions contemplated hereby and by the Credit
Agreement as so amended, are within the Borrower’s organizational powers, have
been duly authorized by all necessary organizational action, and do not (a) contravene
the Borrower’s organizational documents, including, without limitation, its
articles or certificate of incorporation, partnership agreement, certificate of
partnership, articles or certificate of organization, by-laws, operating or
other management agreement or other similar organic documents (except as such,
in the aggregate could not reasonably be expected to have a Material Adverse
Effect), (b) contravene any contractual restriction, law or governmental
regulation or court decree or order binding on or affecting the Borrower
(except as such, in the 

 

6

 

aggregate could not
reasonably be expected to have a Material Adverse Effect) or (c) result
in, or require the creation or imposition of, any Lien on any Properties (each
as defined in the Credit Agreement) of the Borrower or any Subsidiaries (except
as such, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect).

 

3.4                               Validity,
etc.  This Amendment and the Credit Agreement as
amended hereby constitute the legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their respective
terms except as such enforceability is subject to the effect of (i) any
applicable bankruptcy, insolvency, reorganization or similar law relating to or
affecting creditors’ rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law), including concepts of materiality, reasonableness, good
faith and fair dealing.

 

4.                                      CONDITIONS PRECEDENT TO
EFFECTIVENESS.  This Amendment shall
become effective upon the satisfaction of the following conditions precedent:

 

4.1                               counterparts of this Amendment have been
executed and delivered on behalf of the Borrower, Administrative Agent and the
Required Lenders;

 

4.2                               a certificate of each of the Borrower and
the Parent Guarantor, dated as of the date hereof, signed by a Responsible
Officer of each such party and delivered to the Administrative Agent certifying
that such party approves and consents to the extension of the Maturity Date to November 18,
2008 and the increase of the Aggregate Commitment from $50,000,000 to
$75,000,000 and (i) attaching resolutions adopted by such party approving
and consenting to such extension of the Maturity Date and such increase in the
Aggregate Commitment, or (ii) if the resolutions delivered pursuant to Section 4.01(a)(iii) or
4(a)(iv) of the Credit Agreement, as applicable,  provided for such extension of the Maturity
Date and such increase of the Aggregate Commitment, certifying that such
resolutions of the applicable party provide for the same and that such
resolutions have not been amended, modified or rescinded and remain in full
force and effect.

 

4.3                               a certificate of the Borrower, dated as
of the date hereof, certifying that no Default or Event of Default exists on
the date hereof, has been executed and delivered to the Administrative Agent.

 

5.                                      COVENANTS.  Promptly, but in any event within 30 days of
the date hereof, the Borrower hereby covenants to cause each Loan Party (other
than the Borrower and the Parent Guarantor) to deliver to the Administrative
Agent a certificate of each such Loan Party, dated as of the date hereof,
signed by a Responsible Officer of each such Loan Party and delivered to the
Administrative Agent certifying that such Loan Party approves and consents to
the extension of the Maturity Date to November 18, 2008 and the increase
of the Aggregate Commitment from $50,000,000 to $75,000,000 and (i) attaching
resolutions adopted by such Loan Party effective as of the date hereof
approving, ratifying and consenting to such extension of the Maturity Date and
such increase in the Aggregate Commitment, or (ii) if the resolutions
delivered pursuant to Section 4(a)(iv) of the Credit Agreement,
as applicable, provided for such extension of the Maturity Date and such
increase of the Aggregate Commitment, certifying that such resolutions 

 

7

 

of the applicable party
provide for the same and that such resolutions have not been amended, modified
or rescinded and remain in full force and effect.

 

6.                                      EFFECT OF AMENDMENT. This Amendment shall
be deemed to be an amendment to the Credit Agreement, and the Credit Agreement,
as amended hereby, is hereby ratified, approved and confirmed in each and every
respect.  All references to the Credit
Agreement in any other document, instrument, agreement or writing shall
hereafter be deemed to refer to the Credit Agreement as amended hereby.

 

7.                                      GOVERNING LAW, SEVERABILITY, ETC.  THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER, GOVERNED
BY, AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND
THE LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF THE
CONFLICTS OF LAW.  Whenever
possible each provision of this Amendment shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Amendment shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Amendment.

 

THIS WRITTEN AMENDMENT AND THE CREDIT AGREEMENT AS
AMENDED BY THIS AMENDMENT REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT
BE CONTRADICTED BY PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

 

8.                                      MISCELLANEOUS.

 

8.1                               Successors
and Assigns.  This Amendment shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns.

 

8.2                               Counterparts. 
This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument.

 

8.3                               NO ORAL AGREEMENTS. 
THIS AMENDMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

 

THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

 

[SIGNATURES
BEGIN ON FOLLOWING PAGE]

 

8

 

IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed by their respective officers thereunto duly
authorized as of the day and year first written above.

 

	
   

  	
  ATLANTIC
  POWER HOLDINGS, LLC, by its Manager ATLANTIC POWER MANAGEMENT,
  LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mark Byskov

  
	
   

  	
   

  	
  Name:

  	
  Mark
  Byskov

  
	
   

  	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steve Chwiecko

  
	
   

  	
   

  	
  Name:

  	
  Steve Chwiecko

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK OF MONTREAL,
  Individually as a Lender and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cahal B. Carmody

  
	
   

  	
  Name:

  	
  Cahal B. Carmody

  
	
   

  	
  Title:

  	
  Vice President

  

 

S-2

 

EXHIBIT
A

 

SCHEDULE 2.1

 

COMMITMENTS

AND PERCENTAGE SHARES

 

	
  Lender

  	
   

  	
  Commitment

  	
   

  	
  Percentage Share

  	
   

  
	
  BANK OF MONTREAL

  	
   

  	
  $

  	
  75,000,000

  	
   

  	
  100.00000000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  75,000,000

  	
   

  	
  100.00000000

  	
  %

  

 

S-2

 

Execution Copy

 

THIRD AMENDMENT TO CREDIT AGREEMENT

 

THIS THIRD
AMENDMENT TO CREDIT AGREEMENT, dated as of September 15, 2006 (the “Amendment”), among Atlantic Power Holdings, LLC, a
Delaware limited liability company (the “Borrower”), the Lenders signatory
hereto and Bank of Montreal in its capacity as administrative agent (“Administrative
Agent”) under the Credit Agreement described below.

 

W I T N E S S E T H

 

WHEREAS, the Borrower, the Administrative Agent, and
the lenders from time to time party thereto (each a “Lender”), are
parties to that certain Credit Agreement (the “Credit
Agreement”), dated as of November 18, 2004, as amended by that
certain First Amendment to Credit Agreement, dated as of April 29, 2005,
and as further amended by that certain Second Amendment to Credit Agreement,
dated as of November 18, 2005 (as may be further amended, restated,
supplemented or otherwise modified from time to time); and

 

WHEREAS, the Borrower, the Administrative Agent, and
the Required Lenders desire to amend certain provisions of the Credit
Agreement.

 

NOW, THEREFORE, the parties hereto hereby agree as
follows:

 

1.             DEFINITIONS. 
Unless otherwise defined herein or the context otherwise requires, or
except as the definition may be amended by this Amendment, terms used in this
Amendment, including its preamble and recitals, shall have the meanings
provided in the Credit Agreement, as hereby amended.

 

2.             AMENDMENTS TO CREDIT AGREEMENT

 

2.1           Omnibus Amendment.  All
references to “Harris Nesbitt Corp.” in the Credit Agreement are hereinafter
amended to refer to “BMO Capital Markets Corp. formerly known as Harris Nesbitt
Corp.”.

 

2.2           Section 1.01 is hereby amended as follows:

 

(a)           Amended Definitions. 
The following definitions are hereby amended as follows:

 

(i)            The definition of “Collateral Agency
and Intercreditor Agreement” is hereby amended and restated
in its entirety as follows:

 

“Collateral Agency and Intercreditor Agreement” means the
Amended and Restated Collateral Agency and Intercreditor Agreement, dated as of
September 15, 2006, by and among the Lenders, the Administrative Agent,
the Acquisition Term Loan Lenders, the Acquisition Term Loan Agent, the Trustee
and the Collateral Agent (as the same may be amended, restated, supplemented or
otherwise modified from time to time).

 

(ii)           The definition of “Deposit and
Disbursement Agreement” is hereby amended and restated in its entirety as
follows:

 

 

“Deposit and Disbursement Agreement” means the Amended and
Restated Deposit and Disbursement Agreement, dated as of September 15,
2006, by and among the Loan Parties party thereto, the Collateral Agent, the
Trustee and Harris Bank as the depositary bank (as the same may be amended,
restated, supplemented or otherwise modified from time to time).

 

(iii)          The definition of “Permitted
Investments” is hereby amended by deleting the word “and” immediately
before clause (xviii) and adding the following as new clauses (xix), (xx) and
(xxi):

 

“;
(xix)  Investments made by the Borrower
in Acquisition Holdco consisting of intercompany loans made pursuant to and in
accordance with the Acquisition Term Loan Facility and made solely in
connection with the consummation of the Acquisition or any Refinancing
Indebtedness thereof; provided that such intercompany loans shall be
repaid, prepaid, or otherwise terminated on or prior to the termination of the
Acquisition Term Loan  Facility and such
intercompany loans shall otherwise be made on terms and conditions satisfactory
to the Administrative Agent in its reasonable discretion and do not otherwise
violate the restrictions and limitations of Article VII; (xx)
Investments made by the Borrower consisting of equity contributions in or
distributions to Harbor Capital in connection with the repayment or prepayment
of the intercompany loans described in clause (xix) above and the
prepayment of the Acquisition Term Loan Facility; provided, that upon
receipt of any such contribution or distribution, Harbor Capital shall make a
contribution in or distribution to Acquisition Holdco in an amount equal to
such amount received by Harbor Capital; provided, further, that
Acquisition Holdco shall apply all such amounts received to repay or prepay the
intercompany loans described in clause (xix) above; and (xxi)
Investments made by an Unrestricted Subsidiary consisting of a guarantee by
such Unrestricted Subsidiary of Acquisition Holdco’s obligations under any
Refinancing Indebtedness incurred in respect of the Acquisition Term Loan
Facility subject to the terms, conditions and limitations of Section
7.02(b)(ix); provided, that such guarantees are made on terms and
conditions satisfactory to the Administrative Agent in its reasonable
discretion and do not otherwise violate the restrictions and limitations of Article
VII.”

 

(iv)          The definition of “Onondaga Swap”
is hereby amended and restated in its entirety as follows:

 

“Onondaga Swap” means that certain swap
agreement between Niagara Mohawk Power Corporation and the mortgagor identified
therein dated as of June 30, 1998 and expiring on June 30, 2008.

 

(v)           The definition of “Parent Guarantor”
is hereby amended and restated in its entirety as follows:

 

“Parent Guarantor”
means Atlantic Power Corporation, a corporation established under the laws of
the Province of British Columbia, Canada.

 

(vi)          Clause (vi) of the definition of “Permitted
Liens” is hereby amended and restated in its entirety as
follows:

 

2

 

“(vi) subject
to any restrictions or limitations set forth in Sections 7.01 and 7.02 hereof,
Liens securing Indebtedness permitted to be incurred pursuant to this
Agreement, including without limitation, Liens incurred with respect to the
Subordinated Note Indenture and the Acquisition Term Loan Facility, in each
case, subject to the Collateral Agency and Intercreditor Agreement and the
Deposit and Disbursement Agreement;”

 

(vii)         Clause
(ix) of the definition of “Permitted Liens” is hereby amended by
deleting the word “other” immediately after the phrase “Liens on property at
the time the Borrower or a Subsidiary”.

 

(viii)        Clause
(xi) of the definition of “Permitted Liens” is hereby amended and restated
in its entirety as follows:

 

“(xi) Liens
securing Hedging Obligations of the Borrower so long as the related
Indebtedness is, and is permitted to be under this Agreement, secured by a Lien
on the same property securing such Hedging Obligations of the Borrower; provided
that any such Liens securing the Hedging Obligation of the Borrower and a
counterparty that is not a Lender or Bank of Montreal or an Affiliate of a Lender
or Bank of Montreal, under certain circumstances shall be subordinated to the
Secured Obligations as provided in the Collateral Agency and Intercreditor
Agreement and shall be subordinated in right of payment to the Secured
Obligations as provided in the Deposit and Disbursement Agreement; and provided further  that in order to have the benefits of such collateral
and to be a “Secured Party” for purposes of the Deposit and Disbursement
Agreement and the Collateral Agency and Intercreditor Agreement, such
counterparty to such Hedging Obligations that is not a Lender (A) shall
have been approved as a “Revolving Secured Hedge Counterparty” (as defined in
the Deposit Agreement) pursuant to the prior written consent of the
Administrative Agent, such consent to be granted or withheld in the sole
discretion of the Administrative Agent and (B) shall have become a party
to the Collateral Agency and Intercreditor Agreement by executing and
delivering to the Collateral Agent a Joinder Agreement substantially in the form
of Exhibit A to the Collateral Agency and Intercreditor Agreement;”

 

(ix)           Clause (xvii) of the definition of “Permitted
Liens” is hereby amended and restated in its entirety as
follows:

 

“(xvii) Liens
created or Incurred by an Unrestricted Subsidiary; provided, however,
that any such Liens permitted pursuant to this clause (xvii) shall not
encumber, restrict or in any other way affect the Property of the Borrower or
any other Subsidiary of the Borrower other than Property directly owned by such
Unrestricted Subsidiary.”

 

(x)            The definition of “Pledge Agreement”
is hereby amended and restated in its entirety as follows:

 

“Pledge Agreements” means each Amended and
Restated Pledge and Security Agreement made by the applicable Loan Party in
favor of the Administrative Agent on behalf of the Lenders, as may be required
by the Administrative Agent from time to time and substantially in the form of Exhibit G,
as amended and in effect from time to time.

 

3

 

(xi)           The definition of “Subsidiary” is
hereby amended by inserting “(y)” immediately after the words “otherwise and”
and immediately before the words “ and such Person”.

 

(b)           New Definitions.  The following new definitions
are hereby inserted into the Credit Agreement in the appropriate locations.

 

(i)            “Acquired Subsidiary” means
Trans-Elect NTD Holdings Path 15, LLC, a Delaware limited liability company.

 

(ii)           “Acquisition”  means the acquisition of the Acquired
Subsidiary, the Acquisition Intermediary Holdco Subsidiaries and the
Acquisition Operating Subsidiary by Acquisition Holdco pursuant to that certain
Purchase Agreement dated as of June 28, 2006 among New Transmission
Development Company, United States Power Fund, L.P., Cardinal Power Funding,
LLC and KB TransValley LLC, as sellers, and Borrower, as buyer; which agreement
shall be assigned by Borrower to Acquisition Holdco prior to the Third
Amendment Effective Date.

 

(iii)          “Acquisition Holdco” means Harbor
Transmission, LLC, a Delaware limited liability company, and a Wholly-Owned
Subsidiary of Harbor Capital and an Unrestricted Subsidiary.

 

(iv)          “Acquisition Intermediary Holdco
Subsidiaries” means (i) TransValley LLC, a Delaware limited liability
company (“TransValley”), and a Wholly-Owned Subsidiary of Acquisition
Holdco; (ii) KB Transmission LLC, a Delaware limited liability company,
and a Wholly-Owned Subsidiary of TransValley; and (iii) EIF Path 15
Funding, LLC, a Delaware limited liability company, and a Wholly-Owned
Subsidiary of Acquisition Holdco.

 

(v)           “Acquisition Operating Subsidiary”
means, Trans-Elect NTD Path 15, LLC, a Delaware limited liability company and a
Wholly-Owned Subsidiary of the Acquired Subsidiary.

 

(vi)          “Acquisition Term Loan Agent”  means Bank of Montreal in its capacity as
administrative agent for the lenders from time to time party to the Acquisition
Term Loan Facility.

 

(vii)         “Acquisition Term Loan Facility”
means that certain Term Loan Credit Agreement, in an aggregate amount not to
exceed $100,000,000, dated as of September 15, 2006 among the Borrower,
the lenders from time to time party thereto and Bank of Montreal in its
capacity as the Acquisition Term Loan Agent and any promissory notes, security
documents, collateral agreements, or other similar contracts or certificates executed
and delivered in connection therewith.

 

(viii)        “Acquisition Term Loan Lenders”  means the lenders from time to time party to
the Acquisition Term Loan Facility.

 

4

 

(ix)           “Harbor Capital” means Harbor Capital
Holdings, LLC, a Delaware limited liability company and a Wholly-Owned
Subsidiary of the Borrower and an Unrestricted Subsidiary.

 

(x)            “Third Amendment Effective Date”
means the “Effective Date” as set forth in the Third Amendment to Credit
Agreement, among the Borrower, the Lenders party thereto and the Administrative
Agent, dated as of September 15, 2006.

 

2.3           Section 5.13(c) of the Credit Agreement is hereby amended by
deleting the words “equity investments” replacing it with the words “Equity Interests”.

 

2.4           The
first sentence of Section 7.02(b) of the Credit Agreement is hereby amended and
restated in its entirety as follows:

 

“The limitations set out in Section 7.02(a) will not
apply to the following, provided that, except with respect to any Refinancing
Indebtedness Incurred in connection with the refinancing of Indebtedness
permitted pursuant to Section 7.02(b)(xiv), at the time any such
Indebtedness is Incurred or any Disqualified Stock or Preferred Stock is
issued, the Cash Flow Coverage Ratio of the Parent Guarantor for the previous
four-quarter period is 1.5 to 1.0 on a pro
forma basis, after giving effect to the Incurrence of such
Indebtedness or the issuance of such Disqualified Stock or Preferred Stock and
the application of the proceeds therefrom:”

 

2.5           Section 7.02(b)(iii) of the Credit Agreement is hereby amended and restated
in its entirety as follows:

 

“(iii)        Indebtedness to
be issued in the form of Additional Securities forming part of the IPSs, issued
by the Parent Guarantor (A) to finance the redemption by Borrower of any
Existing Investor Interests (as defined in the Subordinated Note Indenture) and
related issuance of Class A preferred membership interests of Borrower in
connection with such issuance or (B) used to prepay the Indebtedness
represented by the Acquisition Term Loan Facility.”

 

2.6           Section 7.02(b)(ix) of the Credit Agreement is hereby amended and restated
in its entirety as follows:

 

(ix)           the Incurrence by the Borrower or any of its
Subsidiaries or Unrestricted Subsidiaries of Indebtedness which serves to
refund or refinance any Indebtedness Incurred as permitted under this Section 7.02
and clauses (i), (ii), (v) and (vi), above, and (xiii) and (xiv) below, or
any Indebtedness issued to so refund or refinance such Indebtedness (subject to
the following proviso, “Refinancing
Indebtedness”) prior to its respective maturity; provided, however,
that such Refinancing Indebtedness:

 

(A)  has a
Weighted Average Life to Maturity at the time such Refinancing Indebtedness is
Incurred which is not less than the remaining Weighted Average Life to Maturity
of the Indebtedness being refunded or refinanced;

 

5

 

(B)  has a
Stated Maturity which is no earlier than the Stated Maturity of the
Indebtedness being refunded or refinanced;

 

(C)  to the
extent such Refinancing Indebtedness refinances Indebtedness pari passu with the Obligations and the
other Secured Obligations of the Subsidiaries that are Guarantors, is pari passu with or subordinated to the
Obligations and the other Secured Obligations of such Subsidiaries under such
guarantee, as applicable;

 

(D)  is
Incurred in an aggregate amount (or if issued with original issue discount, an
aggregate issue price) that is equal to or less than the aggregate principal
amount (or if issued with original issue discount, the aggregate accreted
value) then outstanding of the Indebtedness being refinanced plus premium and
fees Incurred in connection with such refinancing; and

 

(E)  to the
extent such Refinancing Indebtedness refinances Indebtedness incurred pursuant
to Section 7.02(b)(xiv), such refinancing Indebtedness shall not be
incurred by the Borrower or a Subsidiary of the Borrower and such Refinancing
Indebtedness shall not be secured by a Lien on the Collateral or any other
Property of a Loan Party pledged to the Collateral Agent for the benefit of the
Lenders, the Acquisition Term Loan Lenders or the holders of the Subordinated
Notes;”

 

2.7           Section 7.02(b) of the Credit Agreement is hereby amended by adding
the following new clause (xiv) in the applicable location:

 

“(xiv) the Incurrence (A) by the Borrower of
Indebtedness in connection with Acquisition Term Loan Credit Facility; provided
that (1) the principal amount of such Indebtedness is not greater than
$100,000,000, (2) such Indebtedness is used solely with respect to the
consummation of the Acquisition, (3) any Collateral or other Property of a
Loan Party securing such Indebtedness is subject to the terms and conditions of
the Collateral Agency and Intercreditor Agreement and the Deposit and
Disbursement Agreement, and (4) the terms and conditions of the
Acquisition Term Loan Facility, or any Refinancing
Indebtedness thereof, are otherwise acceptable to the
Administrative Agent in its reasonable discretion, and (B) by the
Guarantors of Indebtedness in connection with the guarantee of the Borrower’s
obligations under the Acquisition Term Loan Credit Facility; provided,
that the terms and conditions of each such guaranty agreement are acceptable to
the Administrative Agent in its reasonable discretion.”

 

2.8           Section 7.02(c)(i) of the Credit Agreement is hereby amended and restated
in its entirety as follows:

 

“(i)  Indebtedness of any Unrestricted Subsidiary or the issuance
of any shares of Disqualified Stock or Preferred Stock by an Unrestricted
Subsidiary; provided, that neither (A) such Indebtedness or the
Incurrence thereof, nor (B) the issuance of such shares of Disqualified
Stock or Preferred Stock, shall (1) encumber, restrict or in any other way
affect or provide recourse to or against any asset or Property of the Borrower 

 

6

 

or
any Subsidiary, or any income or profits therefrom (other than with respect to
Liens on Property directly owned by such Unrestricted Subsidiary), or (2) assign
or convey any right to receive income therefrom (other than with respect to
Liens on Property directly owned by such Unrestricted Subsidiary).”

 

2.9           Section 7.04(c)(B) of of the Credit Agreement is hereby amended and
restated in its entirety as follows:

 

“(B) 
the Subordinated Note Indenture or the Acquisition Term Loan Facility;”

 

2.10         Section 7.05(b) of the Credit Agreement is hereby amended and
restated in its entirety as follows:

 

“(b) The Borrower shall apply the Net Proceeds of
any Asset Sales permitted under Section 7.05(a) in the
following manner:

 

(i) prior to the payment in cash in full of the
obligations of the Borrower under the Acquisition Term Loan Facility, then
within 150 days after the Borrower’s or any Subsidiary’s receipt of the Net
Proceeds of any such Asset Sale, the Borrower or such Subsidiary shall apply
the Net Proceeds from such Asset Sale, at its option:

 

(A) to permanently reduce the obligations of the
Borrower under the Acquisition Term Loan Facility pursuant to the terms
thereof; and/or

 

(B) to make an investment in any one or more
businesses, capital expenditures or acquisitions of other assets in each case
used or useful in a Similar Business; provided that any such investment
is made in or for the direct benefit of a Subsidiary; and/or

 

(C) to make an investment in properties or assets
that replace the properties and assets that are the subject of such Asset Sale;
provided that any such investment is made in or for the direct benefit
of a Subsidiary.

 

provided,  that if the Borrower does not apply the Net
Proceeds of such Asset Sale in accordance with this Section 7.05(b)(i) within
150 days, the Borrower shall be deemed to have elected to apply the Net
Proceeds pursuant to Section 7.05(b)(i)(A).

 

(ii) following the payment in cash in full of the
obligations of the Borrower under the Acquisition Term Loan Facility, then
within 365 days after the Borrower’s or any Subsidiary’s receipt of the Net
Proceeds of any such Asset Sale, the Borrower or such Subsidiary shall apply
the Net Proceeds from such Asset Sale, at its option:

 

(A) to permanently reduce Obligations under the
Credit Facilities and to correspondingly reduce commitments with respect
thereto pursuant to Section 2.07; and/or

 

(B) to make an investment in any one or more
businesses, capital expenditures or acquisitions of other assets in each case
used or useful in a 

 

7

 

Similar Business; provided that any such
investment is made in or for the direct benefit of a Subsidiary; and/or

 

(C) to make an investment in properties or assets
that replace the properties and assets that are the subject of such Asset Sale;
provided that any such investment is made in or for the direct benefit of
a Subsidiary; and/or

 

(D)  to make a disbursement from the Borrower to
the Parent Guarantor pursuant to Section 7.03(b)(iv) or (v) in
accordance with the restrictions and limitations of Section 7.03; provided,
at the time such disbursement is made the Cash Flow Coverage Ratio of the
Parent Guarantor for the previous four-quarter period is 1.5 to 1.0 on a pro forma basis, after giving effect to the making of such
disbursement; provided, further, no Default or Event of Default
shall have occurred and be continuing or would occur as a consequence  thereof.

 

provided,  that if the Borrower does not apply the Net
Proceeds of such Asset Sale in accordance with this Section 7.05(b)(ii) within
365 days, the Borrower shall be deemed to have elected to apply the Net Proceeds
pursuant to Section 7.05(b)(ii)(A).

 

(iii) pending the final
application of any Net Proceeds in accordance with Sections 7.05(b)(i) and
(ii) above, the Borrower or such Subsidiary holding such Net
Proceeds may temporarily reduce Indebtedness hereunder or otherwise invest such
Net Proceeds in Cash Equivalents or Investment Grade Securities.

 

provided, that notwithstanding the
foregoing Sections 7.05(a) and 7.05(b), the Borrower will
not, and will not permit any of its Subsidiaries or Unrestricted Subsidiaries
in which it directly or indirectly owns more than 50% of the total voting or
equity interests and will not permit (to the extent that the Borrower has any
direct or indirect contractual or other approval rights over the actions of
such Subsidiary or Unrestricted Subsidiary) any of its other Subsidiaries or
Unrestricted Subsidiaries to, sell, transfer, lease or otherwise dispose of any
of the Property of Onondaga Cogeneration Limited Partnership to any Person
other than any reasonable sales, transfers, leases or other dispositions of any
Property by Onondaga Cogeneration Limited Partnership in the ordinary course of
its business and in accordance with its commercially reasonable past business
practices and otherwise permitted under this Agreement.”

 

2.11         Section 8.01(e) of the Credit Agreement is hereby amended by
adding the following proviso at the end of such section:

 

“; provided, further, however,
that for the avoidance of doubt, and notwithstanding anything in the preceding
to the contrary, any event described in the preceding clauses (i) through (iii) in
connection with or related to a default or breach under the Acquisition Term
Loan Facility (but not any Refinancing Indebtedness thereof),
shall constitute an Event of Default regardless of whether such event
constitutes a Specified Project Event.”

 

2.12         Schedule 5.13 of the Credit Agreement is hereby amended and
restated in it entirety by replacing it with a new Schedule 5.13 attached as Exhibit A
hereto.

 

8

 

2.13         Exhibit G to the Credit Agreement is hereby amended and
restated in it entirety by replacing it with a new Exhibit G attached as Exhibit B
hereto.

 

2.14         Exhibit J to the Credit Agreement is hereby amended and
restated in it entirety by replacing it with a new Exhibit J attached as Exhibit C
hereto.

 

3.             REPRESENTATIONS AND WARRANTIES. In order to induce the
Required Lenders and the Administrative Agent to enter into this Amendment, the
Borrower hereby reaffirms, as of the date hereof, its representations and
warranties contained in Article V
of the Credit Agreement (as amended by this Amendment), except to the extent
any such representation and warranty relates solely to an earlier date, and
additionally represents and warrants as follows:

 

3.1           Existence
and Standing.  The Borrower is a limited liability company,
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has all requisite authority to conduct its
business and is duly qualified or licensed to transact business as a foreign
limited liability company and in good standing under the laws of each
jurisdiction in which the conduct of its operations or the ownership or leasing
of its properties requires such qualification or licensing, except where
failure to be so qualified or licensed could not reasonably be expected to have
a Material Adverse Effect.

 

3.2           No Conflict;
Government Consent. No order, consent, adjudication,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, or other action in respect of any
governmental or public body or authority, or any subdivision thereof, which has
not been obtained by the Borrower or any of its Subsidiaries, is required to be
obtained in connection with the execution, delivery or performance of this
Amendment or the legality, validity, binding effect or enforceability of any of
the Loan Documents, except, in each case, to the extent that the failure to
obtain such order, consent, adjudication, approval, license, authorization,
validation, exemption or other action or to make such filing, recording or
registration could not reasonably be expected to have a Material Adverse
Effect.

 

3.3           Due
Authorization, Non-Contravention, etc.  The execution,
delivery and performance by the Borrower of this Amendment and the consummation
of the transactions contemplated hereby and by the Credit Agreement as so
amended, are within the Borrower’s organizational powers, have been duly
authorized by all necessary organizational action, and do not (a) contravene
the Borrower’s organizational documents, including, without limitation, its
articles or certificate of incorporation, partnership agreement, certificate of
partnership, articles or certificate of organization, by-laws, operating or
other management agreement or other similar organic documents (except as such,
in the aggregate could not reasonably be expected to have a Material Adverse
Effect), (b) contravene any contractual restriction, law or governmental regulation
or court decree or order binding on or affecting the Borrower (except as such,
in the aggregate could not reasonably be expected to have a Material Adverse
Effect), (c) result in, or require the creation or imposition of, any Lien
on any Properties (each as defined in the Credit Agreement) of the Borrower or
any Subsidiaries (except as such, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect), or (d) contravene, result in
or cause a breach of, or a default under, any material contract, promissory
note, indenture or other similar agreement or instrument to which the Parent,
the Borrower or any other Loan Party is a party or an obligor, including
without limitation the Subordinated Note Indenture and the Subordinated 

 

9

 

Notes (except as such, in
the aggregate could not reasonably be expected to have a Material Adverse
Effect).

 

3.4           Validity,
etc.  This Amendment and the Credit Agreement as
amended hereby constitute the legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their respective
terms except as such enforceability is subject to the effect of (i) any
applicable bankruptcy, insolvency, reorganization or similar law relating to or
affecting creditors’ rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law), including concepts of materiality, reasonableness, good
faith and fair dealing.

 

4.             CONDITIONS PRECEDENT TO EFFECTIVENESS.  This Amendment shall become effective (the “Effective
Date”) upon the satisfaction of the following conditions precedent:

 

4.1           the Administrative Agent shall have received
counterparts of this Amendment have been executed and delivered on behalf of
the Borrower, Administrative Agent and the Required Lenders;

 

4.2           the Administrative Agent shall have received an
opinion of counsel to the Borrower in form and substance reasonably acceptable
to the Administrative Agent shall have been delivered to the Administrative
Agent for the benefit of the Lenders;

 

4.3           the Administrative Agent shall have received
reasonably satisfactory evidence that the Acquisition has been consummated on
terms and conditions satisfactory to the Administrative Agent and that the
Acquisition Term Loan Facility is, or upon the effectiveness of this Amendment
will be, in full force and effect;

 

4.4           the Administrative Agent shall have received
counterparts of the Amended and Restated Collateral Agency and Intercreditor
Agreement (as defined in the Credit Agreement as amended by this Amendment) and
the Amended and Restated Deposit and Disbursement Agreement (as defined in the
Credit Agreement as amended by this Amendment), each of which shall have been
executed and delivered on behalf of the each of the parties thereto.

 

4.5           a certificate of the Borrower, dated as of the date
hereof, has been executed and delivered to the Administrative Agent certifying,
inter alia, (a) true and correct copies
of resolutions adopted by the board of managers or other appropriate body of
the Borrower authorizing the negotiation, execution and delivery of this
Amendment and the performance of the Credit Agreement as amended hereby and the
consummation of the Acquisition and the Acquisition Term Loan Facility,
including without limitation, the negotiation, execution, delivery and
performance of the related agreements, (b) that all necessary approvals,
permits and other similar authorizations necessary for the consummation of the
Acquisition and the Acquisition Term Loan Facility have been obtained,
including without limitation the receipt of any approvals from the Federal
Energy Regulatory Commission, (c) the Cash Flow Coverage Ratio of the
Parent Guarantor after giving pro forma
effect to the Acquisition and Indebtedness of the Borrower and the applicable
Unrestricted Subsidiaries under the Acquisition Term Loan Facility is at least
1.5 to 1.0, (d) that no Default or Event of Default exists on the date
hereof, and

 

10

 

(e) that since the
Closing Date no event or events have occurred that, in the aggregate, could
reasonably be expected to have a Material Adverse Effect;

 

4.6           any fees required to be paid on or before the date
hereof, including any fees payable pursuant to the fee letter dated as of May 16,
2006 between the Borrower and the Administrative Agent and the Arranger shall
have been paid; and

 

4.7           unless waived by the Administrative Agent, the
Borrower shall have paid all Attorney Costs of the Administrative Agent to the
extent invoiced prior to or on the Effective Date, plus such additional amounts
of Attorney Costs as shall constitute its reasonable estimate of Attorney Costs
incurred or to be incurred by it through the closing proceedings (provided that
such estimate shall not thereafter preclude a final settling of accounts
between the Borrower and the Administrative Agent).

 

5.             EFFECT OF AMENDMENT. This Amendment shall be deemed to
be an amendment to the Credit Agreement, and the Credit Agreement, as amended hereby,
is hereby ratified, approved and confirmed in each and every respect.  All references to the Credit Agreement in any
other document, instrument, agreement or writing shall hereafter be deemed to
refer to the Credit Agreement as amended hereby.

 

6.             GOVERNING LAW, SEVERABILITY, ETC.  THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER, GOVERNED
BY, AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND
THE LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF THE
CONFLICTS OF LAW.  Whenever
possible each provision of this Amendment shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Amendment shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Amendment.

 

THIS WRITTEN AMENDMENT AND THE CREDIT AGREEMENT AS
AMENDED BY THIS AMENDMENT REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT
BE CONTRADICTED BY PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

 

7.             MISCELLANEOUS.

 

7.1           Successors
and Assigns.  This Amendment shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns.

 

7.2           Counterparts. 
This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument.

 

7.3           NO ORAL AGREEMENTS.  THIS
AMENDMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY 

 

11

 

EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

 

THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

 

[SIGNATURES BEGIN ON FOLLOWING PAGE]

 

12

 

IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed by their respective officers thereunto duly
authorized as of the day and year first written above.

 

	
   

  	
  ATLANTIC
  POWER HOLDINGS, LLC,

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  Atlantic Power Management, LLC, its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Barry E. Welch

  
	
   

  	
  Name: 

  	
  Barry
  E. Welch

  
	
   

  	
  Title:

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK OF MONTREAL, Individually as a Lender 

  and as Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Joseph A. Bliss

  
	
   

  	
  Name:
  

  	
  Joseph
  A. Bliss

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  UNION BANK OF CALIFORNIA, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jonathan Bigelow

  
	
   

  	
  Name:
  

  	
  Jonathan
  Bigelow

  
	
   

  	
  Title:

  	
  Vice President

  
				

 

Signature
Page to Third Amendment to Credit Agreement

 

 

EXHIBIT A

to Third Amended and Restated 

Credit Agreement

 

Schedule 5.13

 

Subsidiaries

 

(a)                                  Subsidiaries and
Unrestricted Subsidiaries of Borrower

 

Subsidiaries

 

Teton Power Funding, LLC

Epsilon Power Funding, LLC

Umatilla Power Funding, LLC

MP Power LLC

Teton East Coast Generation LLC

Teton Fuels Mid-Georgia LLC

Teton Selkirk LLC

Badger Power Associates, L.P.

Badger Power Generation I LLC

Badger Power Generation II LLC

Baker Lake Hydro LLC

Concrete Hydro Partners Limited Partnership

Dade Investment, L.P.

Geddes II Company LLC

Geddes Cogeneration Company LLC

Onondaga Cogeneration Limited Partnership

Lake Cogen, Ltd.

Lake Investment, L.P.

MEP Rumford, LLC

NCP Dade Power LLC

NCP Gem LLC

NCP Houston Power LLC

NCP Lake Power LLC

NCP Pasco LLC

NCP Perry LLC

Olympia Hydro LLC

Orlando Power Generation I LLC

Orlando Power Generation II LLC

Rockfort Power (Belize), Inc.

Rockfort Power — Cayman Island, L.L.C.

Stockton CoGen (II) LLC

Teton New Lake, LLC

Teton Operating Services, LLC

Onondaga Power Swap Holdings, LLC

MP Cogen LLC

 

 

Unrestricted
Subsidiaries

 

Harbor
Capital Holdings, LLC

Harbor Transmission, LLC

TransValley LLC

KB Transmission LLC

EIF Path 15 Funding, LLC

Trans-Elect NTD Holdings Path 15, LLC

Trans-Elect NTD Path 15, LLC

Epsilon Power Partners, LLC

 

(b)           Subsidiaries Delivering
Guaranties

 

Teton
Power Funding, LLC

Epsilon
Power Funding, LLC

MP
Power LLC

Teton
East Cost Generation LLC

Teton
Fuels Mid-Georgia LLC

Teton
Selkirk LLC

Badger
Power Generation I LLC

Badger
Power Generation II LLC

Baker
Lake Hydro LLC

Dade
Investment, L.P.

Geddes
II Company LLC

Geddes
Cogeneration Company LLC

MEP
Rumford, LLC

NCP
Dade Power LLC

NCP
Houston Power LLC

NCP
Pasco LLC

NCP
Perry LLC

Olympia
Hydro LLC

Onondaga
Cogeneration Limited Partnership

Orlando
Power Generation I LLC

Orlando
Power Generation II LLC

Stockton
CoGen (II) LLC

Teton
Operating Services, LLC

Teton
New Lake, LLC

 

(c)           Borrower’s Equity Interests in Other Entities

 

Koma
Kulshan Associates

Badger
Creek Limited, L.P.

Stockton
CoGen Company

Orlando
CoGen Limited, L.P.

Jamaica
Private Power Company Limited

Rumford
Cogeneration Company, L.P.

Mid-Georgia
Cogen, L.P.

Pasco
Cogen, Ltd.

Selkirk
Cogen Partners, L.P.

 

 

Delta
Person, LLC

Delta
Person GP, LLC

BHB
Power, LLC

Javelin
Holding, LLC

Javelin
Gregory Remington Corporation

Gregory
Holding #2, LLC

Gregory
Power, LLC

Javelin
Gregory General Corporation

Gregory
Holdings #1, LLC

Javelin
Rumford Limited, LLC

Javelin
Energy, LLC

Chambers
Cogeneration Limited Partnership

 

 

EXHIBIT B

to Third Amended and Restated 

Credit Agreement

 

Exhibit G 

Form of Amended and Restated Pledge Agreement

[Attached hereto]

 

 

EXHIBIT C

to Third Amended and Restated
  Credit Agreement

 

 

Exhibit J 

Form of Amended and Restated Security Agreement

[Attached hereto]

 

 

Execution Copy

 

FOURTH AMENDMENT TO
CREDIT AGREEMENT

 

THIS FOURTH AMENDMENT TO CREDIT AGREEMENT, dated as of October 11, 2006
(the “Amendment”), among Atlantic Power Holdings, LLC, a
Delaware limited liability company (the “Borrower”), the Lenders signatory
hereto and Bank of Montreal, in its capacity as administrative agent (“Administrative
Agent”) under the Credit Agreement described below.

 

W I T N E S S E T H

 

WHEREAS, the Borrower,
the Administrative Agent, and the lenders from time to time party thereto (each
a “Lender”), are parties to that certain Credit Agreement, dated as of November 18,
2004, as amended by that certain First Amendment to Credit Agreement, dated as
of April 29, 2005, as further amended by that certain Second Amendment to
Credit Agreement, dated as of November 18, 2005, as further amended by
that certain Third Amendment to Credit Agreement, dated as of September 15,
2006 (as so amended, the “Credit Agreement”);
and

 

WHEREAS, Atlantic Power
Corporation, a corporation continued under the laws of British Columbia, Canada
(“Atlantic Power Corporation”), has filed a certain Final Prospectus
dated as of October 11, 2006 (the “2006 IPS Prospectus”), pursuant
to which Atlantic Power Corporation will issue certain income participating
securities as described therein (the “2006 IPS Issuance”); and

 

WHEREAS, Atlantic Power
Corporation is entering into that certain Trust Indenture, dated as of October 11,
2006 (the “Convertible Note Indenture”) among Atlantic Power Corporation
and Computershare Trust Company of Canada as Debenture Trustee, pursuant to
which Atlantic Power Corporation will issue Cdn. $60,000,000 of “6.25%
Convertible Secured Debentures” as described therein (the “Convertible Note
Issuance” and collectively with the 2006 IPS Issuance, the “2006 IPS
Transaction”); and

 

WHEREAS, the Borrower and
the other Guarantors intend to guarantee the obligations of Atlantic Power
Corporation pursuant to the Convertible Note Issuance; and

 

WHEREAS, the Borrower,
the Administrative Agent and the Required Lenders desire to amend certain
provisions of the Credit Agreement.

 

NOW, THEREFORE, the
parties hereto hereby agree as follows:

 

1.             DEFINITIONS.  Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment, including its
preamble and recitals, shall have the meanings provided in the Credit
Agreement, as hereby amended.

 

2.             AMENDMENTS TO CREDIT AGREEMENT

 

2.1           Section 1.01 is hereby amended as follows:

 

(a)           Amended Definitions.  The
following definitions are hereby amended and restated as follows:

 

 

(i)            The definition of “Collateral Agency and
Intercreditor Agreement” is hereby amended and restated in its entirety as
follows:

 

“Collateral Agency and Intercreditor Agreement” means the Second
Amended and Restated Collateral Agency and Intercreditor Agreement, dated as of
October 11, 2006, by and among the Lenders, the Administrative Agent,
the Acquisition Term Loan Lenders, the Acquisition Term Loan Agent, the
Subordinated Trustee, the Convertible Trustee and the Collateral Agent (as the
same may be amended, restated, supplemented or otherwise modified from time to
time).

 

(ii)           The definition of “Deposit and Disbursement
Agreement” is hereby amended and restated in its entirety as
follows:

 

“Deposit and Disbursement Agreement” means the Second Amended
and Restated Deposit and Disbursement Agreement, dated as of October 11, 2006,
by and among the Loan Parties party thereto, the Collateral Agent, the
Subordinated Trustee, the Convertible Trustee and Harris Bank as the depositary
bank (as the same may be amended, restated, supplemented or otherwise modified
from time to time).

 

(iii)          The definition of “IPSs” is hereby amended and restated
in its entirety as follows:

 

“IPSs” means, as the context may require, the
Income Participating Securities as defined in and contemplated by the IPS
Prospectus or the 2006 IPS Prospectus.

 

(iv)          The definition of “Issuer” is hereby amended and restated
in its entirety as follows:

 

“Issuer” means Atlantic Power Corporation, a
corporation continued under the laws of the Province of British Columbia,
Canada, in its capacity as the issuer of any of the IPSs, the Subordinated
Notes or the Convertible Debentures, as applicable.

 

(v)           Clause (vi) of the definition of “Permitted
Liens” is hereby amended and restated in its entirety as
follows:

 

“(vi) subject to any restrictions or limitations set forth in
Sections 7.01 and 7.02 hereof, Liens securing Indebtedness permitted to be
incurred pursuant to this Agreement, including without limitation, Liens incurred
with respect to the Subordinated Note Indenture, the Convertible Note Indenture
or the Acquisition Term Loan Facility, in each case, subject to the Collateral
Agency and Intercreditor Agreement and the Deposit and Disbursement Agreement;”

 

(vi)          The definition of “Pledge Agreements” is hereby amended and restated
in its entirety as follows:

 

“Pledge Agreements” means each Second Amended
and Restated Pledge and Security Agreement made by the applicable Loan Party in
favor of the Bank of Montreal in its capacity as “Collateral Agent” pursuant to
the Collateral Agency and Intercreditor 

 

2

 

Agreement on behalf of the Lenders or such other secured party as
directed by the Administrative Agent on behalf of the Lenders, as may be
required by the Administrative Agent from time to time and substantially in the
form of Exhibit G, as amended and in effect from
time to time.

 

(vii)         The definition of “Projects” is hereby amended and restated
in its entirety as follows:

 

“Projects” means the projects described in the
IPS Prospectus and the 2006 IPS Prospectus.

 

(viii)        The definition of “Security Agreement” is hereby amended and restated
in its entirety as follows:

 

“Security Agreement” means each Second Amended
and Restated Security Agreement made by the applicable Loan Party in favor of
Bank of Montreal in its capacity as “Collateral Agent” pursuant to the
Collateral Agency and Intercreditor Agreement on behalf of the Lenders or such
other secured party as directed by the Administrative Agent, as may be required
by the Administrative Agent from time to time and substantially in the form of Exhibit J,
as amended and in effect from time to time.

 

(ix)           The definition of “Subordinated Note Indenture”
is hereby amended and restated in its entirety as follows:

 

“Subordinated
Note Indenture” means that certain 11% Subordinated Notes Indenture dated November 18,
2004 among the Issuer, the guarantors a party thereto and Computershare Trust
Company of Canada, in its capacity as trustee to the 11% Subordinated Notes
Indenture.

 

(x)            The definition of “Subordinated Notes” is
hereby amended and restated in its entirety as follows:

 

“Subordinated Notes” means the 11%
Subordinated Notes of the Issuer issued pursuant to the Subordinated Note
Indenture.

 

(xi)           The definition of “Trustee” is hereby deleted in its entirety.

 

(b)           New Definitions.  The
following new definitions are hereby inserted into the Credit Agreement in the
appropriate locations.

 

(i)            “2006 IPS Prospectus” means that certain Final
Prospectus, dated as of October 11, 2006 filed by  the Issuer.

 

(ii)           “Convertible Debentures” means the
“Initial Debentures” (as defined in the Convertible Note Indenture) issued
pursuant to the Convertible Note Indenture.

 

3

 

(iii)          “Convertible
Note Indenture” means that certain Trust Indenture providing for the issue
of Convertible Secured Debentures dated October 11, 2006 among the
Issuer, the guarantors a party thereto and Computershare Trust Company of
Canada, in its capacity as trustee thereunder.

 

(iv)          “Convertible Trustee” means the “Debenture
Trustee” as defined in the Convertible Note Indenture.

 

(v)           “Fourth Amendment Effective Date”
means the “Effective Date” as set forth in the Fourth Amendment to Credit
Agreement, among the Borrower, the Lenders party thereto and the Administrative
Agent, dated as of October 11, 2006.

 

(vi)          “Permitted Additional Debentures”
means “Debentures” (as defined in the Convertible Note Indenture) issued by the
Issuer pursuant to the Convertible Indenture other than the Convertible
Debentures and permitted pursuant to the terms and conditions of Section 7.02(b)(xv).

 

(vii)         “Subordinated
Trustee” means the “Trustee” as defined in the Subordinated Note Indenture.

 

2.2           Section 4.02(a) of the Credit Agreement is hereby amended and restated
in its entirety as follows:

 

“(a)         (i)  The representations and
warranties of the Borrower contained in Article V, or which are
contained in any Loan Document furnished by the Borrower at any time under or
in connection herewith, shall be true and correct on and as of the date of such
Credit Extension, except to the extent that such representations and warranties
specifically refer to a different date, in which case they shall be true and
correct as of such date; (ii) the representations and warranties of
Borrower or any Guarantor a party thereto, contained in the Subordinated Note
Indenture shall be true and correct on and as of the date of such Credit
Extension, except to the extent that such representations and warranties
specifically refer to a different date, in which case they shall be true and
correct as of such date, and (iii) the representations and warranties of
Borrower or any Guarantor a party thereto, contained in the Convertible Note
Indenture shall be true and correct on and as of the date of such Credit
Extension, except to the extent that such representations and warranties
specifically refer to a different date, in which case they shall be true and
correct as of such date.”

 

2.3           Section 4.02(b) of the Credit Agreement is hereby amended and restated
in its entirety as follows:

 

“(b)         (i) No Default or Event of Default shall exist,
or would result from such proposed Credit Extension, (ii) no “Event of
Default” (as defined in the Subordinated Note Indenture), or event or condition
that with the giving of notice or the lapse of time would become an “Event of
Default” (as defined in the Subordinated Note Indenture), shall exist under the
Subordinated Note Indenture, or in each case, would result from such proposed
Credit Extension, and (iii) no “Event of Default” (as defined in the
Convertible Note Indenture), or event or condition that with the giving of
notice or the lapse of time would become an “Event of Default” (as defined in
the 

 

4

 

Convertible Note
Indenture), shall exist under the Convertible Note Indenture, or in each case,
would result from such proposed Credit Extension.”

 

2.4           Section 5.15 of the Credit Agreement is hereby amended by
inserting the words “or the 2006 IPS Prospectus” immediately following the
words “IPS Prospectus” therein.

 

2.5           Section 5.19 of the Credit Agreement is hereby
amended and restated in its entirety as follows:

 

“5.19      Subordinated Note Documents and Convertible Note Documents.   As of the Closing Date, before and after giving effect
to the initial Credit Extension, all representations and warranties of the
Borrower or any Guarantor contained in the Subordinated Note Indenture and any
documents delivered pursuant  thereto are
true and correct in all material respects (except to the extent such
representations or warranties relate or refer to a specified, earlier
date).  As of the Fourth Amendment
Effective Date, all representations and warranties of the Borrower or any
Guarantor contained in the Convertible Note Indenture and any documents
delivered pursuant thereto or the Subordinated Note Indenture and any documents
delivered pursuant thereto are true and correct in all material respects
(except to the extent such representations or warranties relate or refer to a
specified, earlier date).  Before and
after giving effect to the initial Credit Extension contemplated hereunder,
there is no event of default or event or condition that could become an event
of default with notice or lapse of time or both, under the Subordinated Note
Indenture and any documents related thereto and the Subordinated Note
Indenture, the Subordinated Notes and any other legally binding documents
executed by the Loan Parties in connection therewith are in full force and
effect.  Before and after giving effect
to the Fourth Amendment Effective Date, there is no event of default or event
or condition that could become an event of default with notice or lapse of time
or both, under either the Subordinated Note Indenture and any documents related
thereto or the Convertible Note Indenture or any document related thereto and
the Subordinated Note Indenture, the Subordinated Notes, the Convertible Note
Indenture, the Convertible Debentures and any other legally binding documents
executed by the Loan Parties in connection with any thereof are each in full
force and effect.”

 

2.6           Section 6.01(c)(i)(D) of the Credit Agreement is hereby
amended and restated in its entirety as follows:

 

“and (D) the projected distributions and interest
payments from the Parent Guarantor to the holders of the IPS’s and the holders
of the Convertible Debentures;”

 

2.7           Section 7.02(b) of the Credit Agreement is hereby amended and restated
in its entirety as follows

 

“(b)         The limitations set out in Section 7.02(a) will
not apply to the following, provided that, except with respect to (x) any
Refinancing Indebtedness Incurred in connection with the refinancing of
Indebtedness permitted pursuant to Section 7.02(b)(xiv) and (y) any
Indebtedness Incurred with respect to the guaranty of Additional Securities (as
defined in the Subordinated Note Indenture) issued in connection with the
conversion of Convertible Debentures or Permitted Additional Debentures
permitted pursuant to Section 7.02(b)(iii)(B)(4), at the time any
such Indebtedness is Incurred or any Disqualified Stock or Preferred Stock is
issued, the Cash Flow Coverage Ratio of the Parent Guarantor for the previous
four-quarter period is 1.5 to 1.0 on a pro 

 

5

 

forma basis, after giving effect to the
Incurrence of such Indebtedness or the issuance of such Disqualified Stock or
Preferred Stock and the application of the proceeds therefrom:”

 

2.8           Section 7.02(b)(iii) of the Credit Agreement is hereby amended and restated
in its entirety as follows:

 

“(iii)  the Incurrence by the Borrower and the
Guarantors of (A) Indebtedness Incurred on the Closing Date in connection
with the guarantee of the Parent Guarantor’s obligations with respect to the
Subordinated Notes in an amount not to exceed the amount of Indebtedness
outstanding under the Subordinated Note Indenture on the Closing Date and (B) Indebtedness
Incurred in connection with the guarantee of the Parent Guarantor’s obligations
with respect to any Additional Securities (as defined in the Subordinated Note
Indenture) forming part of the IPSs or issued concurrently therewith, issued by
the Parent Guarantor (1) to finance the redemption by Borrower of any
Existing Investor Interests (as defined in the Subordinated Note Indenture) and
related issuance of Class A preferred membership interests of Borrower in
connection with such issuance, (2) used to prepay the Indebtedness
represented by the Acquisition Term Loan Facility, (3) used to finance the
payment of interest on the Convertible Debentures pursuant to Article 11
of the Convertible Note Indenture, (4) in connection with the conversion
of any of the Convertible Debentures or Permitted Additional Debentures
pursuant to the Convertible Indenture, or (5) as otherwise consented to in
writing by the Administrative Agent, which consent shall not be unreasonably
withheld.”

 

2.9           The
introductory clause of Section 7.02(b)(ix) of the Credit Agreement is hereby amended and restated
in its entirety as follows:

 

“(ix)         the
Incurrence by the Borrower or any of its Subsidiaries or Unrestricted
Subsidiaries of Indebtedness which serves to refund or refinance any
Indebtedness Incurred as permitted under this Section 7.02 and
clauses (i), (ii), (v) or (vi), above, or (xiii), (xiv) or (xv) below, or
any Indebtedness issued to so refund or refinance such Indebtedness (subject to
the following proviso, “Refinancing
Indebtedness”) prior to its respective maturity; provided, however,
that such Refinancing Indebtedness:”

 

2.10         Section 7.02(b)(ix)(E) of the Credit Agreement is hereby amended and restated
in its entirety as follows:

 

“(E)  to the extent such Refinancing Indebtedness
refinances Indebtedness incurred pursuant to Section 7.02(b)(xiv),
such refinancing Indebtedness shall not be incurred by the Borrower or a
Subsidiary of the Borrower and such Refinancing Indebtedness shall not be
secured by a Lien on the Collateral or any other Property of a Loan Party
pledged to the Collateral Agent for the benefit of the Lenders, the Acquisition
Term Loan Lenders, the holders of the Subordinated Notes or the holder of the
Convertible Debentures;”

 

2.11         Section 7.02(b) of the Credit Agreement is hereby amended by adding
the following new clause (xv) in the applicable location:

 

“(xv) the
Incurrence by the Borrower and the Guarantors of Indebtedness Incurred in
connection with the guarantee of the Parent Guarantor’s obligations under the
Convertible Note Indenture with respect to the issuance of Convertible
Debentures or Permitted Additional 

 

6

 

Debentures; provided,
that, (A) the principal amount of such Indebtedness is not greater than
Cdn. $60,000,000 in the aggregate or such other amount as is consented to in
writing by the Administrative Agent, which consent shall not be unreasonably
withheld, (B) not less than $37,000,000 of the proceeds of such
Indebtedness Incurred in connection with the issuance of the Convertible
Debentures is used to repay Indebtedness outstanding under the Acquisition Term
Loan Credit Facility within five (5) Business Days of its Incurrence, (C) the
proceeds of any such Indebtedness are used solely in connection with (1) the
payment of any fees, costs or other expenses in connection with the
consummation of the issuance of the Convertible Debentures and any other IPSs
issued by the Parent Guarantor pursuant to the 2006 IPS Prospectus, (2) the
redemption of the Existing Investor Interests (as defined in the Subordinated
Note Indenture), (3) the repayment of Indebtedness outstanding under the
Acquisition Term Loan Facility or (4) such other purposes as may be
consented to in writing by the Administrative Agent, which consent shall not be
unreasonably withheld, (D) such Indebtedness and any Liens on any
Collateral or other Property of a Loan Party securing such Indebtedness is
subordinated to the Secured Obligations and is otherwise subject to the terms
and conditions of the Collateral Agency and Intercreditor Agreement and the
Deposit and Disbursement Agreement, and (E) the terms and conditions of
the Convertible Note Indenture, any supplements or amendments thereto and any
guarantee thereof by the Borrower or a Guarantor, or any related Refinancing
Indebtedness thereof, are otherwise acceptable to the
Administrative Agent in its reasonable discretion.”

 

2.12         Section 7.04(c)(B) of the Credit Agreement is hereby
amended and restated in its entirety as follows:

 

“(B)  the
Subordinated Note Indenture, the Convertible Note Indenture or the Acquisition
Term Loan Facility;”

 

2.13         Exhibit G to the Credit Agreement is hereby
amended and restated in it entirety by replacing it with a new Exhibit G
attached as Exhibit A hereto.

 

2.14         Exhibit H to the Credit Agreement is hereby
amended and restated in it entirety by replacing it with a new Exhibit H
attached as Exhibit B hereto.

 

2.15         Exhibit I to the Credit Agreement is hereby
amended and restated in it entirety by replacing it with a new Exhibit I
attached as Exhibit C hereto.

 

2.16         Exhibit J to the Credit Agreement is hereby
amended and restated in it entirety by replacing it with a new Exhibit J
attached as Exhibit D hereto.

 

3.             REPRESENTATIONS AND WARRANTIES. In order
to induce the Required Lenders and the Administrative Agent to enter into this
Amendment, the Borrower hereby reaffirms, as of the date hereof, its
representations and warranties contained in Article V
of the Credit Agreement (as amended by this Amendment), except to the extent
any such representation and warranty relates solely to an earlier date, and
additionally represents and warrants as follows:

 

3.1           Existence
and Standing.  The Borrower is a limited liability company,
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has all requisite authority to conduct its
business and is duly qualified or licensed to transact business as a foreign
limited liability company and in good standing under the laws of each 

 

7

 

jurisdiction in which
the conduct of its operations or the ownership or leasing of its properties
requires such qualification or licensing, except where failure to be so
qualified or licensed could not reasonably be expected to have a Material
Adverse Effect.

 

3.2           No Conflict;
Government Consent. No order, consent, adjudication,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, or other action in respect of any
governmental or public body or authority, or any subdivision thereof, which has
not been obtained by the Issuer, the Borrower or any of its Subsidiaries, is
required to be obtained in connection with the execution, delivery or
performance of this Amendment or the Convertible Note Indenture, the 2006 IPS Prospectus
or any other agreement or document delivered in connection with the 2006 IPS
Transaction (collectively, the  “2006
IPS Transaction Documents”), or the legality, validity, binding effect or
enforceability of any of the Loan Documents, except, in each case, to the
extent that the failure to obtain such order, consent, adjudication, approval,
license, authorization, validation, exemption or other action or to make such
filing, recording or registration could not reasonably be expected to have a
Material Adverse Effect.

 

3.3           Due
Authorization, Non-Contravention, etc.  The
execution, delivery and performance by the Borrower of this Amendment and the
2006 IPS Transaction Documents and the consummation of the transactions
contemplated hereby and by the Credit Agreement as so amended, and by the 2006
IPS Transaction are within the Borrower’s organizational powers, have been duly
authorized by all necessary organizational action, and do not (a) contravene
the Borrower’s organizational documents, including, without limitation, its
articles or certificate of incorporation, partnership agreement, certificate of
partnership, articles or certificate of organization, by-laws, operating or
other management agreement or other similar Organization Documents (except as such,
in the aggregate could not reasonably be expected to have a Material Adverse
Effect), (b) contravene any contractual restriction, law or governmental
regulation or court decree or order binding on or affecting the Borrower
(except as such, in the aggregate could not reasonably be expected to have a
Material Adverse Effect), (c) result in, or require the creation or
imposition of, any Lien (other than Permitted Liens) on any Properties (each as
defined in the Credit Agreement as amended by this Amendment) of the Borrower
or any Subsidiaries (except as such, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect), or (d) contravene, result in
or cause a breach of, or a default under, any material contract, promissory
note, indenture or other similar agreement or instrument to which the Parent,
the Borrower or any other Loan Party is a party or an obligor, including
without limitation the Subordinated Note Indenture and the Subordinated Notes
(except as such, in the aggregate could not reasonably be expected to have a
Material Adverse Effect).

 

3.4           Validity,
etc.  This Amendment and the Credit Agreement as
amended hereby constitute the legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their respective
terms except as such enforceability is subject to the effect of (i) any
applicable bankruptcy, insolvency, reorganization or similar law relating to or
affecting creditors’ rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law), including concepts of materiality, reasonableness, good
faith and fair dealing.

 

8

 

4.             CONDITIONS PRECEDENT TO EFFECTIVENESS.  This Amendment shall become effective (the “Effective
Date”) upon the satisfaction of the following conditions precedent:

 

4.1           the Administrative Agent shall have
received counterparts of this Amendment executed and delivered on behalf of the
Borrower, Administrative Agent and the Required Lenders;

 

4.2           the Administrative Agent, for the benefit
of the Administrative Agent and the Lenders, shall have received an opinion of
counsel to the Borrower in form and substance reasonably acceptable to the
Administrative Agent;

 

4.3           the Administrative Agent shall have
received counterparts of (a) the Amended and Restated Collateral Agency
and Intercreditor Agreement (as defined in the Credit Agreement as amended by
this Amendment), (b) the Amended and Restated Deposit and Disbursement
Agreement (as defined in the Credit Agreement as amended by this Amendment),
and (c) each other Security Document reasonably requested by the
Administrative Agent, each of which shall have been executed and delivered on
behalf of the each of the parties thereto.

 

4.4           a certificate of the Borrower, dated as
of the date hereof, has been executed and delivered to the Administrative Agent
certifying, inter alia, (a) true and correct
copies of resolutions adopted by the board of managers or other appropriate
body of the Borrower authorizing the negotiation, execution and delivery of
this Amendment and the performance of the Credit Agreement as amended hereby
and the negotiation, execution, delivery and performance of each of the applicable
Security Documents and 2006 IPS Transaction Documents to which it is a party, (b) true
and correct copies of the Organization Documents of the Borrower or a
certification that there has been no change to the Organization Documents of
the Borrower since September 15, 2006, (c) that the Cash Flow
Coverage Ratio of the Parent Guarantor after giving pro forma
effect to the 2006 IPS Transaction and Indebtedness of the Borrower and the
applicable Subsidiaries as guarantors of the Convertible Note Indenture is at
least 1.5 to 1.0, (d) that no Default or Event of Default exists on the
date hereof, (e) that since the Closing Date no event or events have
occurred that, in the aggregate, could reasonably be expected to have a
Material Adverse Effect and (f) that immediately prior to and after giving
effect to the 2006 IPS Transaction, the Borrower and each Guarantor shall be
Solvent;

 

4.5           a certificate of each Guarantor, dated as
of the date hereof, has been executed and delivered to the Administrative Agent
certifying, inter alia, (a) true and correct
copies of resolutions adopted by the general partner, managing member or other
appropriate body of such Guarantor authorizing the negotiation, execution,
delivery and performance of each of the applicable Security Documents and 2006
IPS Transaction Documents to which it is a party and (b) true and correct
copies of the Organization Documents of such Guarantor or a certification that
there has been no change to the Organization Documents of such Guarantor since September 15,
2006;

 

4.6           a certificate of the Parent Guarantor,
dated as of the date hereof, has been executed and delivered to the
Administrative Agent certifying, inter alia, (a) that
each of the 2006 IPS Issuance and the Convertible Note Issuance have been, or
upon the effectiveness of this 

 

9

 

Amendment will be,
consummated (b) that the Convertible Note Indenture and each of the other
2006 IPS Transaction Documents are, or upon the effectiveness of this Amendment
will be, in full force and effect, (c) that the Cash Flow Coverage Ratio
of the Parent Guarantor after giving pro forma
effect to the 2006 IPS Transaction and Indebtedness of the Borrower and the
applicable Subsidiaries as guarantors of the Convertible Note Indenture is at
least 1.5 to 1.0; (d) that the Acquisition Term Loan Agent shall have
received or, within five (5) Business Days of the consummation of the IPS
Transaction, shall receive not less than $37,000,000 for the account of the
Acquisition Term Loan Lenders as a prepayment of Indebtedness outstanding under
the Acquisition Term Loan Facility, (e) that the proceeds of the 2006 IPS
Transaction that have not been applied to the repayment of Indebtedness
outstanding under the Acquisition Term Loan Facility have been, or upon the
effectiveness of this Amendment shall be, applied (i) to the redemption by
the Borrower of any Existing Investor Interests (as defined in the Subordinated
Note Indenture) or (ii) to the payment of any fees, costs or other expenses
incurred in connection with the consummation of the 2006 IPS Transaction; (f) true
and correct copies of the final Convertible Note Indenture (which shall be in
form and substance reasonably satisfactory to the Administrative Agent); (g) true
and correct copies of the final 2006 IPS Prospectus (which shall be in form and
substance reasonably satisfactory to the Administrative Agent); and (h) true
and correct copies of the Guaranty, dated as of October 11, 2006 and
delivered by each of the Guarantors party thereto in connection with the
Convertible Note Indenture (which shall be in form and substance reasonably
satisfactory to the Administrative Agent);

 

4.7           any fees required to be paid on or before
the date hereof shall have been paid; and

 

4.8           unless waived by the Administrative
Agent, the Borrower shall have paid all Attorney Costs of the Administrative
Agent to the extent invoiced prior to or on the Effective Date, plus such
additional amounts of Attorney Costs as shall constitute its reasonable estimate
of Attorney Costs incurred or to be incurred by it through the closing
proceedings (provided that such estimate shall not thereafter preclude a final
settling of accounts between the Borrower and the Administrative Agent).

 

5.             EFFECT OF AMENDMENT. This Amendment shall
be deemed to be an amendment to the Credit Agreement, and the Credit Agreement,
as amended hereby, is hereby ratified, approved and confirmed in each and every
respect.  All references to the Credit
Agreement in any other document, instrument, agreement or writing shall
hereafter be deemed to refer to the Credit Agreement as amended hereby.

 

6.             GOVERNING LAW, SEVERABILITY, ETC.  THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER, GOVERNED
BY, AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND
THE LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF THE
CONFLICTS OF LAW.  Whenever
possible each provision of this Amendment shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Amendment shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Amendment.

 

10

 

THIS WRITTEN AMENDMENT
AND THE CREDIT AGREEMENT AS AMENDED BY THIS AMENDMENT REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.

 

7.             MISCELLANEOUS.

 

7.1           Successors and Assigns.  This Amendment shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns.

 

7.2           Counterparts. 
This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument.

 

7.3           NO ORAL
AGREEMENTS.  THIS AMENDMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

 

[SIGNATURES
BEGIN ON FOLLOWING PAGE]

 

11

 

IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be executed by their respective
officers thereunto duly authorized as of the day and year first written above.

 

	
   

  	
  ATLANTIC
  POWER HOLDINGS, LLC,

  
	
   

  	
   

  
	
   

  	
  By: Atlantic
  Power Management, LLC, its Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Barry E.
  Welch

  
	
   

  	
  Name: 

  	
  Barry E. Welch

  
	
   

  	
  Title: 

  	
  President and Chief Executive Officer

  
				

 

Signature
Page to Fourth Amendment to Credit Agreement

 

 

IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed by their respective officers thereunto duly
authorized as of the day and year first written above.

 

	
   

  	
  BANK OF MONTREAL, Individually as a Lender 

  and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Joseph A. Bliss

  
	
   

  	
  Name: 

  	
  Joseph A. Bliss

  
	
   

  	
  Title:

  	
  Director

  

 

Signature
Page to Fourth Amendment to Credit Agreement

 

 

IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed by their respective officers thereunto duly
authorized as of the day and year first written above.

 

	
   

  	
  UNION BANK OF CALIFORNIA, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jonathan Bigelow

  
	
   

  	
  Name:
  

  	
  Jonathan
  Bigelow

  
	
   

  	
  Title:

  	
  Vice President

  

 

Signature
Page to Fourth Amendment to Credit Agreement

 

 

EXHIBIT A

to Fourth Amended and Restated 

Credit Agreement

 

Exhibit G 

Form of Second Amended and Restated Pledge Agreement

[Attached]

 

 

Exhibit G

 

SECOND AMENDED AND
RESTATED PLEDGE AGREEMENT

AND IRREVOCABLE PROXY

 

THIS SECOND AMENDED AND
RESTATED PLEDGE AGREEMENT AND IRREVOCABLE PROXY (this “Agreement”) dated
as of October 11, 2006, made by [Name of
Pledgor], a [State and Type of
Entity] (the “Pledgor”), in favor of BANK OF MONTREAL, as
collateral agent (in such capacity, together with its successors in such
capacity, the “Collateral Agent”) for the Secured Parties (as defined
below).

 

W I T N E S S E T H:

 

WHEREAS, [Pledgor](1) [Atlantic
Power Holdings, LLC (“Holdings”)](2) is a party to that certain
Credit Agreement, dated as of November 18, 2004, (as amended by that
certain First Amendment to Credit Agreement, dated as of April 29, 2005,
as further amended by that certain Second Amendment to Credit Agreement, dated
as of November 18, 2005, as further amended by that certain Third
Amendment to Credit Agreement, dated as of September 15, 2006, as further
amended by that certain Fourth Amendment to Credit Agreement, dated as of the
date of this Agreement, and as may be further amended, restated, supplemented
or otherwise modified, the “Revolving Credit Agreement”) by and among
[Pledgor](3) [Holdings](4) (in its capacity as borrower under the
Revolving Credit Agreement, the “Revolving Borrower”), the various
financial institutions as are or may become parties thereto (collectively, the “Revolving
Lenders”) and Bank of Montreal, as administrative agent (the “Revolving
Administrative Agent”) for the Revolving Lenders, as issuer of letters of
credit (the “L/C Issuer”) and as collateral agent;

 

WHEREAS, [Pledgor](5) [Holdings](6) has
entered into or may enter into certain hedge agreements (“Revolving Secured
Hedge Agreements”) with respect to foreign exchange, commodity or interest
rate exposure with various Revolving Secured Hedge Counterparties (as defined
below);

 

WHEREAS, [Pledgor](7) [Holdings](8) has
entered into or may enter into certain agreements with respect to cash
management exposure and funds transfer and deposit account liability (the “Cash
Management Agreements”) with various Revolving Secured Parties (as defined
below);

 

WHEREAS, [Pledgor](9) [Holdings](10) is
a party to that certain Term Loan Credit Agreement, dated as of September 15,
2006 (as amended by that certain First Amendment to Term Loan Credit Agreement,
dated as of the date of this Agreement and as may be further

 

(1) Borrower Pledge

(2) Guarantor Pledge

(3) Borrower Pledge

(4) Guarantor Pledge

(5) Borrower Pledge

(6) Guarantor Pledge

(7) Borrower Pledge

(8) Guarantor Pledge

(9) Borrower Pledge

(10) Guarantor Pledge

 

 

amended, restated, supplemented or otherwise modified
from time to time, the “Term Loan Credit Agreement”) by and among
[Pledgor](11) [Holdings](12) (in its capacity as borrower under the Term Loan
Credit Agreement, the “Term Loan Borrower”), the various financial
institutions as are or may become parties thereto (collectively, the “Term
Loan Lenders”) and Bank of Montreal, as administrative agent (the “Term
Loan Administrative Agent”) for the Term Loan Lenders;

 

WHEREAS, on November 18,
2004 and from time to time thereafter [Pledgor](13) [Atlantic Power Corporation
(“Atlantic Power”)](14) issued (i) 11% Subordinated Notes (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, the “Subordinated Notes”) and (ii) income participating
securities (“IPSs”), pursuant to that certain 11% Subordinated
Notes Indenture, dated as of November 18, 2004 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the “Subordinated
Indenture”) among [Pledgor](15) [Atlantic Power](16), the guarantors a
party thereto and Computershare Trust Company of Canada, in its capacity as
trustee to the Subordinated Indenture;

 

WHEREAS, [Pledgor](17)
[Atlantic Power](18) is entering into that certain Trust Indenture dated as of October 11,
2006 (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the “Convertible Indenture”), between [Pledgor](19)
[Atlantic Power](20) and Computershare Trust Company of Canada, in its capacity
as trustee to the Convertible Indenture, pursuant to which [Pledgor](21)
[Atlantic Power](22) will issue certain “6.25% Convertible Secured Debentures”
(as described in the Convertible Indenture, the “Convertible Debentures”);

 

WHEREAS, in connection
with (i) [the Revolving Credit Agreement, Pledgor has executed and
delivered a certain Guaranty dated as of November 18, 2004 (as may be
amended, restated, supplemented or otherwise modified from time to time, the “Revolving
Guaranty”) in order to guaranty the obligations of the Revolving Borrower
under the Revolving Credit Agreement and the other Loan Documents (as defined
in the Revolving Credit Agreement); (ii) the Term Loan Credit Agreement,
Pledgor has executed and delivered a certain Guaranty dated as of September 15,
2006 (as may be amended, restated, supplemented or otherwise modified from time
to time, the “Term Loan Guaranty”) in order to guaranty the obligations
of the Term Loan Borrower under the Term Loan Credit Agreement and the other
Loan Documents (as

 

(11) Borrower Pledge

(12) Guarantor Pledge

(13) Atlantic Power Corp Pledge

(14) Borrower and Subsidiary Pledge

(15) Atlantic Power Corp Pledge

(16) Borrower and Subsidiary Pledge

(17) Atlantic Power Corp Pledge

(18) Borrower and Subsidiary Pledge

(19) Atlantic Power Corp Pledge

(20) Borrower and Subsidiary Pledge

(21) Atlantic Power Corp Pledge

(22) Borrower and Subsidiary Pledge

 

2

 

defined in the Term Loan Agreement)](23); (iii) [the
Subordinated Indenture, Pledgor has executed and delivered a certain Guaranty
dated as of November 18, 2004 (as may be amended, restated, supplemented
or otherwise modified from time to time, the “Subordinated Indenture
Guaranty”) in order to guaranty the obligations of Atlantic Power under the
Subordinated Indenture and the other “Security Documents” (as defined in the
Subordinated Indenture); and (iv) the Convertible Indenture, Pledgor has
executed and delivered a certain Guaranty dated as of October 11, 2006 (as
may be amended, restated, supplemented or otherwise modified from time to time,
the “Convertible Indenture Guaranty”) in order to guaranty the
obligations of Atlantic Power under the Convertible Indenture and the other “Security
Documents” (as defined in the Convertible Indenture)](24);

 

WHEREAS, to secure its
obligations under the [Revolving Guaranty, Term Loan Guaranty](25) [, the
Subordinated Indenture Guaranty](26) and the other “Secured Obligations”
described therein, Pledgor entered into a certain Amended and Restated Pledge
Agreement and Irrevocable Proxy, dated as of September 15, 2006 (the “Prior
Pledge Agreement”), which amended and restated in its entirety that certain
Pledge Agreement and Irrevocable Proxy, dated as of November 18, 2004  (the “Original Pledge Agreement”),
pursuant to which the Pledgor pledged its interests in the Pledged Interest
Issuers described therein;

 

WHEREAS, the obligations
of [Pledgor](27) [Atlantic Power](28) under the Subordinated Indenture and the
Subordinated Indenture Guarantors are secured in part by a pledge of membership
interests, partnership interests and other similar interests in certain of
[Pledgor’s](29) [Atlantic Power’s](30) direct and indirect subsidiaries, such
pledged interests being junior and expressly subordinate to (i) the rights
of the Revolving Secured Parties, (ii) the rights of the Term Loan Secured
Parties (as defined below), (iii) the Revolving Secured Hedge
Counterparties and (iv) the Convertible Secured Parties (as defined
below);

 

WHEREAS, the obligations
of [Pledgor](31) [Atlantic Power](32) under the Convertible Indenture and the
Convertible Debenture and the Convertible Guarantors under the Convertible
Guarantees are secured in part by a pledge of membership interests, partnership
interests and other similar interests in certain of [Pledgor’s](33) [Atlantic
Power’s](34) direct and indirect subsidiaries, such pledged interests being
junior and expressly subordinate to (i) the rights of the Revolving
Secured Parties, (ii) the rights of the Term Loan Secured Parties, and (iii) the
Revolving Secured Hedge Counterparties, but expressly senior to the
Subordinated Secured Parties (as defined below);

 

(23) Guarantor Pledge

(24) Borrower and Subsidiary Pledge

(25) Guarantor Pledge

(26) Borrower and Subsidiary Pledge

(27) Atlantic Power Corp Pledge

(28) Borrower and Subsidiary Pledge

(29) Atlantic Power Corp Pledge

(30) Borrower and Subsidiary Pledge

(31) Atlantic Power Corp Pledge

(32) Borrower and Subsidiary Pledge

(33) Atlantic Power Corp Pledge

(34) Borrower and Subsidiary Pledge

 

3

 

WHEREAS, the respective
rights of the Secured Parties (as defined below), are set forth in that certain
Second Amended and Restated Collateral Agency and Intercreditor Agreement,
dated as of October 11, 2006 (the “Collateral Agency and Intercreditor
Agreement”), by and among the Secured Parties, the Subordinated Trustee,
the Convertible Trustee, the Administrative Agent and Bank of Montreal as
collateral agent, (in such capacity, the “Collateral Agent”);

 

WHEREAS, the respective
rights of the Secured Parties are further set forth in that certain Second
Amended and Restated Deposit and Disbursement Agreement, dated as of October 11,
2006 (the “Deposit Agreement”), among the Borrower, the “Guarantors”
party thereto, the Collateral Agent, the Subordinated Trustee, the Convertible
Trustee and Harris Bank, as Depositary Bank;

 

WHEREAS, the Pledgor has
duly authorized the execution delivery and performance of this Agreement;

 

WHEREAS, it is in the
best interests of the Pledgor to execute this Agreement inasmuch as the Pledgor
will derive substantial direct and indirect benefits from (i) the
Revolving Loans made from time to time to, and the Revolving Letters of Credit
issued on behalf of, the Revolving Borrower by the Revolving Lenders and/or the
L/C Issuer pursuant to the Revolving Credit Agreement and the financial
accommodations made from time to time to [Pledgor](35) [Holdings](36) by the
Revolving Secured Hedge Counterparties pursuant to the Revolving Secured Hedge
Agreements and the Cash Management Agreement; (ii) the Term Loan Loans
made from time to time to the Term Loan Borrower by the Term Loan Lenders
pursuant to the Term Loan Credit Agreement; (iii) the issuance of the “Securities”,
as that term is defined in the Subordinated Indenture, pursuant to the terms of
the Subordinated Indenture; and (iv) the issuance of the “Debentures”, as
that term is defined in the Convertible Indenture, pursuant to the terms of the
Convertible Indenture; and

 

NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and in order to (i) induce the Revolving Lenders and the L/C
Issuer to make Revolving Loans to, and/or issue or participate in Revolving
Letters of Credit for the account of, the Revolving Borrower pursuant to the
Revolving Credit Agreement and to induce the Revolving Secured Hedge
Counterparties to extend financial accommodations pursuant to the Revolving
Secured Hedge Agreements, (ii) induce the Term Loan Lenders to make Term
Loan Loans for the account of the Term Loan Borrower pursuant to the Term Loan
Credit Agreement, (iii) induce the Subordinated Trustee to enter into the
Subordinated Indenture and induce the holders from time to time of the
Subordinated Notes to acquire the Subordinated Notes, and (iv) induce the
Convertible Trustee to enter into the Convertible Indenture and induce the
holders from time to time of the Convertible Debentures to acquire the
Convertible Debentures, the Pledgor hereby agrees, for the benefit of each
Secured Party, as follows:

 

(35) Borrower Pledge

(36) Guarantor Pledge

 

4

 

SECTION 1.1                 Certain Terms.  The following
terms (whether or not underscored) when used in this Agreement, including its
preamble and recitals, shall have the following meanings (such definitions to
be equally applicable to the singular and plural forms thereof):

 

“Agreement” is
defined in the preamble.

 

“Atlantic Power”
is defined in the recitals.

 

“Borrower” means,
[Pledgor](37) [Holdings](38) in its collective capacity the Revolving Borrower
and the Term Loan Borrower.

 

“Cash Management
Agreement” is defined in the recitals.

 

“Collateral” is
defined in Section 2.1.

 

“Collateral Agency and
Intercreditor Agreement” is defined in the recitals.

 

“Collateral Agent”
is defined in the preamble.

 

“Convertible
Debentures” is defined in the recitals.

 

“Convertible Indenture”
is defined in the recitals.

 

“Convertible Indenture
Guarantees” means the “Guarantees” as defined in the Convertible Indenture
and includes the Convertible Indenture Guaranty.

 

“Convertible Indenture
Guarantors” means the “Guarantors” as defined in the Convertible Indenture.

 

“Convertible Indenture
Guaranty” is defined in the recitals.

 

“Convertible Secured
Obligations” means all present and future indebtedness, liabilities and
obligations of any and every nature, kind and description whatsoever and
however incurred (whether direct or indirect, joint or several, absolute or
contingent, matured or unmatured and whether as principal debtor, guarantor,
surety or otherwise) of [Pledgor](39) [Atlantic Power](40) and each “Guarantor”
(as defined in the Convertible Indenture) to the Convertible Trustee and each
present and future holder of Convertible Debentures under, in connection with
or with respect to the Convertible Indenture, each of the Convertible
Debentures, the Convertible Indenture Guarantees and any security, documents or
agreements delivered from time to time under or in connection with any of the
foregoing (including, without limitation, principal, premium, interest,
indemnities, fees, costs and expenses) and any ultimate unpaid balance thereof.

 

(37) Borrower Pledge

(38) Guarantor Pledge

(39) Atlantic Power Corp Pledge

(40) Borrower and Subsidiary Pledge

 

5

 

“Convertible Secured
Parties” means the Convertible Trustee and those holders from time to time
of the Convertible Debentures.

 

“Convertible Trustee”
means Computershare Trust Company of Canada, in its capacity as trustee to the
Convertible Indenture, or any successors and assigns as provided under the
Convertible Indenture.

 

“Deposit Agreement”
is defined in the recitals.

 

“Distributions”
means all stock dividends, liquidating dividends, shares of stock resulting
from (or in connection with the exercise of) stock splits, reclassifications,
warrants, options, non-cash dividends, mergers, consolidations and all cash
distributions made in respect of the Pledged Interests or other shares of
capital stock, member interest or other ownership interests or security
entitlements, whether or not income, return of capital or otherwise, and all
other distributions (whether similar or dissimilar to the foregoing) on or with
respect to any Pledged Interests or other rights or interests constituting Collateral.

 

[“Holdings” is
defined in the recitals.](41)

 

[“Levelization Account”
means that certain levelization account established by and described in the
Deposit Agreement.](42)

 

“L/C Issuer” is
defined in the recitals.

 

“Loan Document”
means, as the context may require, each “Loan Document” as defined in the
Revolving Credit Agreement and the Term Loan Credit Agreement.

 

“Loan Party”
means, as the context may require, each “Loan Party” as defined in the
Revolving Credit Agreement and the Term Loan Credit Agreement.

 

“Original Pledge
Agreement”  is defined in the recitals.

 

“Pledged Interests”
means all member interests, general or limited partnership interests, stock or
other ownership interests of any Pledged Interests Issuer, each as described in
Attachment 1 hereto; all registrations, certificates, articles or
agreements governing or representing any such interests; all options and other
rights, contractual or otherwise, at any time existing with respect to such
interests; and all distributions, cash, instruments and other property now or
hereafter received, receivable or otherwise distributed in respect of or in
exchange for any or all of such interests; all advances or loans made by, or
other indebtedness owed to, the Pledgor and all interests therein[; all of
Pledgor’s right, title and interest in and to the Revenue Account and the
Levelization Account of the Pledgor as governed by the Deposit Agreement and
any or all cash, principal, interest or other amount on deposit in or to be
deposited in the Revenue

 

(41) Guarantor Pledge

(42) Borrower Pledge

 

6

 

Account and the Levelization Account, including,
without limitation, any and all proceeds on such amounts, pursuant to the
Deposit Agreement](43).

 

“Pledged Interests
Issuer” means the direct wholly-owned subsidiaries of the Pledgor described
in Item A of Attachment 1 hereto.

 

[“Pledged Note Issuer”
means each Person identified in Item B of Attachment 1 hereto as
the issuer of the Pledged Notes identified opposite the name of such
Person.](44)

 

[“Pledged Notes”
means all promissory notes of any Pledged Note Issuer identified in Item B
of Attachment 1 hereto or otherwise in the form or substantially in the
form of Attachment 5 hereto or in form and substance reasonably
satisfactory to the Collateral Agent which are delivered by the Pledgor to the
Collateral Agent as Pledged Property hereunder, as such promissory notes, in
accordance with Section 7.2, are amended, modified or supplemented
from time to time and together with any promissory note of any Pledged Note
Issuer taken in extension or renewal thereof or substitution therefor.](45)

 

“Pledged Obligations”
is defined in Section 2.2.

 

“Pledged Property”
means all [Pledged Notes,](46) Pledged Interests and all other pledged shares
of capital stock, member interests, general or limited partnership interests,
other ownership interests [or promissory notes](47), all other securities, all
assignments of any amounts due or to become due, all other instruments which
are now being delivered by the Pledgor to the Collateral Agent or may from time
to time hereafter be delivered by the Pledgor to the Collateral Agent for the
purpose of pledge under this Agreement, any Loan Document, Revolver Secured
Hedge Agreement, Cash Management Agreement, the Subordinate Indenture, the
Convertible  Indenture or any other
Transaction Document, and all proceeds of any of the foregoing.

 

“Pledgor” is
defined in the preamble.

 

“Prior Pledge
Agreement”  is defined in the recitals.

 

“Revenue Account”
means that certain revenue account established by and described in the Deposit
Agreement.

 

“Revolving
Administrative Agent” is defined in the recitals.

 

“Revolving Borrower”
is defined in the recitals.

 

“Revolving Commitments”
means the “Commitments” as defined in the Revolving Credit Agreement.

 

(43) Borrower Pledge

(44) Borrower Pledge

(45) Borrower Pledge

(46) Borrower Pledge

(47) Borrower Pledge

 

7

 

“Revolving Credit
Agreement” is defined in the recitals

 

“Revolving Guaranty”
is defined in the recitals.

 

“Revolving Hedging
Obligation” means “Hedging Obligations” as defined in the Revolving Credit
Agreement of Holdings or the other “Loan Parties” as defined in the Revolving
Credit Agreement to a Revolving Secured Hedge Counterparty.

 

“Revolving Lenders”
is defined in the recitals.

 

“Revolving Letters of
Credit” means the “Letters of Credit” as defined in the Revolving Credit
Agreement issued by the L/C Issuer.

 

“Revolving Loan”
means the “Loans” as defined in the Revolving Credit Agreement.

 

“Revolving Secured
Hedge Agreements” is defined in the recitals.

 

“Revolving Secured
Hedge Counterparties” means the counterparties to the Revolving Secured
Hedge Agreements as described in clause (xi) of the definition of “Permitted
Liens” contained in the Revolving Credit Agreement.

 

“Revolving Secured
Obligations”  means, any or all of (i) the
“Obligations” (as defined in the Revolving Credit Agreement), (ii) any
Revolving Hedging Obligation, (iii) any obligation of the Borrower to any
of the Revolving Lenders, Bank of Montreal or their respective Affiliates with
respect to a Cash Management Agreement as permitted under the Revolving Credit
Agreement.

 

“Revolving Secured
Parties” means, as the context may require, any and all of Bank of Montreal
as collateral agent under the Revolving Credit Agreement, the L/C Issuer, any
Revolving Lender, Bank of Montreal, and each of their respective successors,
transferees and assigns and any Affiliate of any of the foregoing from time to
time party to any of the Transaction Documents.

 

“Secured Obligations”
means, collectively, the Revolving Secured Obligations, the Term Loan Secured
Obligations, the Subordinated Secured Obligations and the Convertible Secured
Obligations, in each case with the relative rights and priorities as set forth
in the Collateral Agency and Intercreditor Agreement and the Deposit Agreement.

 

“Secured Parties”
means, collectively (i) the Revolving Secured Parties, (ii) the Term
Loan Secured Parties, (iii) the Subordinated Secured Parties, (iv) the
Revolving Secured Hedge Counterparties and (v) the Convertible Secured
Parties.

 

“Securities Act”
is defined in Section 6.2.

 

“Subordinated
Indenture” is defined in the recitals.

 

8

 

“Subordinated
Indenture Guarantees” means the “Guarantees” as defined in the Subordinated
Indenture and includes the Subordinated Indenture Guaranty.

 

“Subordinated
Indenture Guarantors” means the “Guarantors” as defined in the Subordinated
Indenture.

 

“Subordinated
Indenture Guaranty” is defined in the recitals.

 

“Subordinated Notes”
is defined in the recitals

 

“Subordinated Secured
Obligations” means all present and future indebtedness, liabilities and
obligations of any and every nature, kind and description whatsoever and
however incurred (whether direct or indirect, joint or several, absolute or
contingent, matured or unmatured and whether as principal debtor, guarantor,
surety or otherwise) of [Pledgor](48) [Atlantic Power](49)and each “Guarantor”
(as defined in the Subordinated Indenture) to the Subordinated Trustee and each
present and future holder of the Subordinated Notes under, in connection with
or with respect to the Subordinated Indenture, each of the Subordinated Notes,
the Subordinated Indenture Guarantees and any security, documents or agreements
delivered from time to time under or in connection with any of the foregoing
(including, without limitation, principal, premium, interest, indemnities,
fees, costs and expenses) and any ultimate unpaid balance thereof.

 

“Subordinated Secured
Parties” means the Subordinated Trustee and those holders from time to time
of the Subordinated Notes.

 

“Subordinated Trustee”
means Computershare Trust Company of Canada, in its capacity as trustee to the
Subordinated Indenture, or any successors and assigns as provided under the
Subordinated Indenture.

 

“Term Loan
Administrative Agent” is defined in the recitals.

 

“Term Loan Borrower”
is defined in the recitals.

 

“Term Loan Credit
Agreement” is defined in the recitals.

 

“Term Loan Guaranty”
is defined in the recitals.

 

“Term Loan Lenders”
is defined in the recitals.

 

“Term Loan Loans”
means the “Loans” as defined in the Term Loan Credit Agreement.

 

“Term Loan Secured
Obligations”  means, any or all of
the “Obligations” as defined in the Term Loan Credit Agreement.

 

(48) Atlantic Power Corp Pledge

(49) Borrower and Subsidiary Pledge

 

9

 

“Term Loan Secured
Parties” means, as the context may require, any and all of Bank of Montreal
as Term Loan Administrative Agent, any Term Loan Lender, Bank of Montreal, and
each of their respective successors, transferees and assigns and any Affiliate
of any of the foregoing from time to time party to any of the Transaction
Documents.

 

“Transaction Documents”
means, as the context may require, the Subordinated Indenture, the Subordinated
Notes, the Convertible Indenture, the Convertible Debentures, the Revolving
Credit Agreement, the Term Loan Credit Agreement, each promissory note
delivered pursuant to the Revolving Credit Agreement or the Term Loan Credit
Agreement, the Collateral Agency and Intercreditor Agreement, the Deposit
Agreement, the “Security Documents” (as defined in the Subordinated Indenture),
the “Security Documents” (as defined in the Convertible Indenture), the Loan
Documents, as applicable, the agreements, contracts and documents creating or
evidencing each of the Secured Obligations, the other agreements, documents,
certificates and instruments now or hereafter executed or delivered by
[Pledgor](50) [Atlantic Power](51), [Pledgor](52) [Holdings](53) or any
Subsidiary or Affiliate of [Pledgor](54) [Holdings](55) in connection with the
Subordinated Indenture, the Subordinated Notes, the Revolving Credit Agreement,
the Term Loan Credit Agreement, the Convertible Indenture, the Convertible
Debentures or the Secured Obligations.

 

“Trigger Event”
means any “Event of Default” as defined in any Transaction Document or
Termination Event, as defined in any Revolving Secured Hedge Agreement, or any
other “Hedge Agreement”, as defined in the Revolving Credit Agreement.

 

“U.C.C.” means the Uniform Commercial Code, as
in effect in the State of New York, as the same may be amended from time to
time.

 

SECTION 1.2                 Collateral
Agency and Intercreditor Agreement Definitions. 
Unless otherwise defined herein or the context otherwise requires, terms
used in this Agreement, including its preamble and recitals, have the meanings
provided in the Collateral Agency and Intercreditor Agreement.

 

SECTION 1.3                 U.C.C.
Definitions.  Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Agreement, including its preamble and recitals, with such
meanings.

 

ARTICLE II

PLEDGE

 

SECTION 2.1                 Grant of
Security Interest.  The Pledgor hereby pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to the
Collateral Agent, for its benefit and the ratable benefit of each of the
Secured Parties, and hereby grants to the Collateral Agent, for its 

 

(50) Atlantic
Power Corp Pledge

(51) Borrower and
Subsidiary Pledge

(52) Borrower
Pledge

(53) Guarantor
Pledge

(54) Borrower
Pledge

(55) Guarantor
Pledge

 

10

 

benefit and the
ratable benefit of each of the Secured Parties, a continuing security interest
in all of the Pledgor’s right, title and interest, whether now owned or
hereafter arising or acquired, in and to the following property (the “Collateral”): 
(a) all Pledged Interests; (b) all other Pledged Interests
issued from time to time; (c) [all promissory notes of each Pledged Note
Issuer identified in Item B of Attachment 1
hereto; (d) all other Pledged Notes issued from time to time;](56) (e) all
other Pledged Property, whether now or hereafter delivered to the Collateral
Agent in connection with this Agreement, including, without limitation, all
rights in any organic documents of the Pledged Interests Issuers (including,
without limitation, any voting and management rights arising thereunder or at
law), all rights to profits, income, surplus, compensation, return of capital,
distributions and other reimbursements and payments from the Pledged Interests
Issuers (including upon dissolution) in respect of all stock, membership or
other equity interests now owned or hereafter acquired by the Pledgor in the
Pledged Interests Issuers and in respect of the Pledgor’s accounts, general
intangibles and other rights to payment or reimbursement now existing or
hereafter acquired from the Pledged Interests Issuers; (f) all
Distributions, interest, and other payments and rights with respect to any
Pledged Property; (g) all books and records (in whatever form or media,
including without limitation computerized records, software and disks) relating
to any of the foregoing; (h) all General Intangibles relating to or
arising out of any of the foregoing; and (i) all proceeds of any of the
foregoing.

 

SECTION 2.2                 Security for
Obligations.  This Agreement secures the
indefeasible payment and performance in full of all Secured Obligations now or
hereafter existing under the Revolving Credit Agreement, the Term Loan Credit
Agreement, the Subordinated Notes, the Convertible Debentures, the Revolving
Secured Hedge Agreements, the Cash Management Agreements, the Subordinated
Indenture, the Subordinated Indenture Guarantees, the Convertible Indenture,
the Convertible Indenture Guarantees, and each other Transaction Document,
whether for principal, interest, costs, fees, expenses, or otherwise, and all
other obligations of the Pledgor[, the Borrower](57) or any other Loan Party,
or [Atlantic Power](58)or any Subordinated Indenture Guarantor or any
Convertible Indenture Guarantor to any Secured Party pursuant to any of the
Transaction Documents, now or hereafter owing, howsoever created, arising or
evidenced, whether direct or indirect, primary or secondary, fixed or absolute
or contingent, joint or several, regardless of how evidenced or arising,
howsoever created, arising or evidenced, whether direct or indirect, absolute
or contingent or now or hereafter existing or due or to become due (all such
Secured Obligations and such other obligations of such persons being collectively
referred to as the “Pledged Obligations”).

 

SECTION 2.3                 Delivery of
Pledged Property.

 

(a)           All certificates or instruments representing or
evidencing any Collateral, including any Pledged Interests [and any Pledged
Notes,](59) shall be delivered to and held by or on behalf of [(or in the case
of any Pledged Notes, endorsed to the order of)](60) the Collateral Agent
pursuant 

 

(56) Borrower
Pledge

(57) Guarantor
Pledge

(58) Borrower and
Subsidiary Pledge

(59) Borrower Pledge

(60) Borrower Pledge

 

11

 

hereto, shall be in
suitable form for transfer by delivery, and shall be accompanied by all
necessary endorsements or instruments of transfer or assignment, duly executed
in blank.

 

(b)           To the extent any of the Collateral constitutes a “certificated
security” (as defined in Section 8-102(a)(4) of the U.C.C.), an “uncertificated
security” (as defined in Section 8-102(a)(18) of the U.C.C.) or a “security
entitlement” (as defined in Section 8-102(a)(17) of the U.C.C.), the
Pledgor shall cause the issuer thereof or the securities intermediary thereof
to take all actions necessary, or as requested by the Collateral Agent, to
grant “control” (as defined in Section 8-106 of the U.C.C.) of such
Collateral to the Collateral Agent over such Collateral.

 

SECTION 2.4                 Distributions
on Pledged Interests.  In the event
that any Distribution is to be paid on any Pledged Interests at a time when no
Trigger Event has occurred and is continuing, such Distribution or payment may
be paid directly to the Pledgor or to any Person designated by the Pledgor and
such Distribution or payment shall be released from the security interest
granted herein upon the making thereof; provided that such Distribution
is otherwise specifically permitted under the Revolving Credit Agreement, the
Term Loan Credit Agreement, the Subordinated Indenture, the Convertible
Indenture and each other Transaction Document. 
If any such Trigger Event has occurred and is continuing, then any such
Distribution or payment shall be paid directly to the Collateral Agent, for its
benefit and the ratable benefit of each of the Secured Parties.

 

SECTION 2.5                 Continuing
Security Interest.  This Agreement shall create a
continuing security interest in the Collateral and shall: (a) remain in
full force and effect until indefeasible payment in full in cash of all Pledged
Obligations and the termination or expiration of all Revolving Commitments and
all other commitments of the Secured Parties to the Borrower or any other Loan
Party, or Atlantic Power or any of the Subordinated Indenture Guarantors or the
Convertible Indenture Guarantors under the Transaction Documents and the
termination or expiration of all Revolving Letters of Credit; (b) be
binding upon the Pledgor and its successors, transferees and assigns; and (c) inure,
together with the rights and remedies of the Collateral Agent hereunder, to the
benefit of the Collateral Agent and each other Secured Party and their
respective successors, transferees, and assigns.  Without limiting the generality of the
foregoing clause (c), any Secured Party
may assign or otherwise transfer (in whole or in part) any Subordinated Note,
any Convertible Debenture, any Revolving Loan, any Term Loan Loan or any L/C
Advance (as defined in the Revolving Credit Agreement) held by it to any other
Person or entity, and any Secured Party may assign or otherwise transfer (in
whole or in part) its interest pursuant to any Revolving Secured Hedge
Agreement or Cash Management Agreement, and any successor or assignee thereof
shall thereupon become vested with all of the rights and benefits in respect
thereof granted to such Secured Party under any such Transaction Document
(including this Agreement), or otherwise, subject, however, to any contrary
provisions in such assignment or transfer, and as applicable to the provisions
of Section 10.07 and Article IX of the Revolving Credit
Agreement, Section 10.07 and Article IX of the Term Loan Credit
Agreement or any other similar provisions in any other applicable Transaction
Document.  Upon the indefeasible payment
in full of all Pledged Obligations and the termination or expiration of all
Revolving Commitments and any other commitments of any Secured Party to the
Borrower or any other Loan Party, or Atlantic Power or any of the Subordinated
Indenture Guarantors or the Convertible Indenture Guarantors under the
Transaction Documents and the termination or 

 

12

 

expiration of all
Revolving Letters of Credit, the security interest granted herein shall
terminate and all rights to the Collateral shall revert to the Pledgor.  Upon any such payment and termination or
expiration, the Collateral Agent will, at the Pledgor’s sole expense, deliver
to the Pledgor, without any representations, warranties or recourse of any kind
whatsoever, all certificates and instruments representing or evidencing all
Pledged Interests together with all other Collateral held by the Collateral
Agent hereunder, and execute and deliver to the Pledgor, at Pledgor’s expense,
such documents as the Pledgor shall reasonably request to evidence such
termination.

 

SECTION 2.6                 Security
Interest Absolute.  All rights
of the Collateral Agent and the other Secured Parties and the
security interests granted to the Collateral Agent and the other Secured
Parties hereunder, and all obligations of the Pledgor hereunder, shall be
absolute and unconditional, irrespective of (a) any lack of validity or
enforceability of the Revolving Credit Agreement, the Term Loan Credit Agreement,
the Subordinated Indenture, the Convertible Indenture or any other Transaction
Document; (b) the failure of any Secured Party or any other holder of any
Subordinated Note or any Convertible Debenture, (i) to assert any claim or
demand or to enforce any right or remedy against the Borrower or any other Loan
Party, or Atlantic Power or any of the Subordinated Indenture Guarantors or the
Convertible Indenture Guarantors or any other Person under the provisions of
the Revolving Credit Agreement, the Term Loan Credit Agreement, the
Subordinated Indenture, the Convertible Indenture, any other Transaction
Document or otherwise, or (ii) to exercise any right or remedy against any
other guarantor of, or collateral securing, any Pledged Obligations; (c) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Pledged Obligations or any other extension, compromise or renewal
of any Pledged Obligation; (d) any reduction, limitation, impairment or
termination of any Pledged Obligations for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be subject
to (and the Pledgor hereby waives any right to or claim of) any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, any Pledged
Obligations; (e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of the
Revolving Credit Agreement, the Term Loan Credit Agreement, the Subordinated
Indenture, the Convertible Indenture or any other Transaction Document; (f) any
addition, exchange, release, surrender, or non-perfection of any collateral
(including the Collateral), or any amendment to or waiver or release of or
addition to or consent to departure from any guaranty, for any of the Pledged
Obligations; or (g) any other circumstances which might otherwise constitute
a defense available to, or a legal or equitable discharge of, the Borrower or
any other Loan Party, or Atlantic Power or any of the Subordinated Indenture
Guarantors or the Convertible Indenture Guarantors, any surety or any other
guarantor.

 

SECTION 2.7                 Waiver of
Subrogation.  Until one year and one day following the
indefeasible payment in full in cash of all Pledged Obligations and the
expiration or termination of all Revolving Commitments and the expiration or
termination of all other commitments by any Secured Party to the Borrower or
any other Loan Party, or Atlantic Power or any of the Subordinated Indenture
Guarantors or the Convertible Indenture Guarantors under the Transaction
Documents and the expiration or termination of all Revolving Letters of Credit,
the Pledgor hereby irrevocably waives any claim or other rights which it may
now or hereafter 

 

13

 

acquire against
the Borrower or any other Loan Party, or Atlantic Power or any of the Subordinated
Indenture Guarantors or the Convertible Indenture Guarantors that arise from
the existence, payment, performance or enforcement of the Pledgor’s obligations
under this Agreement or any other Transaction Document including any right of
subrogation, reimbursement, exoneration or indemnification, any right to
participate in any claim or remedy of any Secured Party against the Borrower or
any other Loan Party, or Atlantic Power or any of the Subordinated Indenture
Guarantors or the Convertible Indenture Guarantors or any collateral which the
Collateral Agent now has or hereafter acquires, whether or not such claim,
remedy or right arises in equity, or under contract, statute or common law,
including the right to take or receive from the Borrower or any other Loan
Party, or Atlantic Power or any of the Subordinated Indenture Guarantors or the
Convertible Indenture Guarantors, directly or indirectly, in cash or other
property or by set-off or in any manner, payment or security on account of such
claim or other rights.  If any amount
shall be paid to the Pledgor in violation of the preceding sentence and the
Pledged Obligations shall not have been indefeasibly paid in full in cash and
all Revolving Commitments and all other commitments by any Secured Party to the
Borrower or Atlantic Power under the Transaction Documents have not expired or
terminated and all Revolving Letters of Credit have not expired or terminated,
then such amount shall be deemed to have been paid to the Pledgor for the
benefit of, and held in trust for, the Collateral Agent (on behalf of the
Secured Parties), and shall forthwith be paid to the Collateral Agent to be
credited and applied upon the Pledged Obligations, whether matured or
unmatured.  The Pledgor acknowledges that
it will receive direct and indirect benefits from the financing arrangements
contemplated by the Revolving Credit Agreement, the Term Loan Credit Agreement,
the Subordinated Indenture and the Convertible Indenture and that the waiver
set forth in this Section is knowingly made in contemplation of such
benefits.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

SECTION 3.1                 Warranties,
etc.  The Pledgor represents and warrants unto
each Secured Party, as at the date of each pledge and delivery hereunder
(including each pledge and delivery of Pledged Interests) by the Pledgor to the
Collateral Agent of any Collateral, as set forth in this Article III.

 

SECTION 3.2                 Ownership,
No Liens, etc.  The Pledgor is the legal and beneficial owner
of, and has good and valid title to (and has full right and authority to
pledge and assign) the Collateral, free and clear of all Liens, security
interests, options, or other charges or encumbrances, except any Lien or
security interest granted pursuant hereto in favor of the Collateral Agent and
except as permitted by the Revolving Credit Agreement, the Term Loan Credit
Agreement, the Subordinated Indenture and the Convertible Indenture.

 

SECTION 3.3                 Valid
Security Interest.

 

(a)           With respect to any Pledged Interests that are “securities”
(as such term is defined in Section 8-102 of the U.C.C.), the “delivery”
(as such term is defined in  Section 8-301
of the U.C.C.) of such Collateral (constituting a “security interest” under the
U.C.C.) to the Collateral Agent is effective to perfect the security interest
in such Collateral, and all proceeds thereof, and securing the Pledged
Obligations and such security interest shall be a first priority security 

 

14

 

interest in the
Collateral.  No filing or other action
will be necessary to perfect or protect such security interest.

 

(b)           With respect to all other Pledged Interests, upon the
completion of the filing of a UCC-1
Financing Statement with respect to such Collateral with the Secretary of State
of the state of organization or formation of the Pledgor,
the security interest granted pursuant to this Pledge Agreement shall
constitute a valid perfected security interest in all of such Collateral in
favor of the Administrative Agent, for the ratable benefit of the Secured
Parties, as collateral security for the Pledged Obligations, enforceable in
accordance with the terms hereof against all creditors of the Pledgor and any
Persons purporting to purchase any Collateral from such Pledgor and such
security interest shall be a first priority security interest in the
Collateral.  No other filing or other
action will be necessary to perfect or protect such security interest.

 

(c)           The Pledgor owns no real property.

 

SECTION 3.4                 [As to
Pledged Notes.  In the case of each Pledged Note, all of such
Pledged Notes have been duly authorized, executed, endorsed, issued and
delivered, and are the legal, valid and binding obligation of the issuers
thereof, and are not in default.](61)

 

SECTION 3.5                 As to
Pledged Interests. The Pledged Interests constitute one hundred percent (100%) of the
Pledgor’s interest in each of the Pledged Interests Issuers.  All Pledged Interests have been duly
authorized and validly issued and, to the extent the Pledged Interests are
evidenced by or constitute “securities” under the U.C.C., registered (and such
registration continues valid and genuine and has not been altered), are fully
paid and non-assessable, and were not issued in violation of the preemptive
rights, if any, of any Person or of any agreement by which the Pledgor or any
Pledged Interests Issuer is bound.  All
documentary, stamp or other taxes or fees owing in connection with the
registration, issuance, transfer or pledge of Collateral have been paid.  No restrictions or conditions exist with respect
to the registration, transfer, voting or capital of any Pledged Interests.  The Pledgor has no outstanding rights, rights
to subscribe, options, warrants or convertible securities outstanding or any
other rights outstanding whereby any Person would be entitled to acquire any
member interests or other equity interests of any Pledged Interests
Issuer.  All requisite formalities for
the granting of a security interest in the Pledged Interests required pursuant
to the organic documents of the Pledgor or the Pledged Interests Issuers have
been complied with on or prior to the execution and delivery of this Agreement.

 

SECTION 3.6                 General.

 

(a)           Existence, Qualification and Power; Compliance with
Laws.  The Pledgor is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and is qualified and is in good standing as a foreign Person for
the transaction of business in each jurisdiction where its ownership, lease or
operation of Property or the conduct of its business requires such
qualification and in which the failure so to qualify could not reasonably be
expected to have a Material Adverse Effect. 
As of the date hereof, the Pledgor 

 

(61) Borrower
Pledge

 

15

 

does not have any
Subsidiaries or own any equity interests in any Person other than those
Subsidiaries and equity interests of the type listed in Attachment 1 hereto.

 

(b)           Authorization; No Contravention. 
The execution, delivery and performance by the Pledgor of this Agreement
has been duly authorized by all necessary corporate or other organizational
action, and does not and will not (a) violate the terms of any of such
Person’s Organization Documents (except as such, in the aggregate, could not
reasonably be expected to have a material adverse effect), (b) violate or
result in any breach or contravention of, constitute a default under, or
creation of any Lien on the properties of the Pledgor under, any contractual
obligation to which Pledgor is a party or any order, injunction, writ or decree
of any governmental authority to which such Person or its Property is subject
(except as such, in the aggregate, could not reasonably be expected to have a
material adverse effect), or (c) violate any law, rule or regulation.

 

(c)           Binding Effect.  This
Agreement has been duly executed and delivered by the Pledgor.  This Agreement constitutes a legal, valid and
binding obligation of the Pledgor, enforceable against the Pledgor in
accordance with its terms, subject as to enforcement to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors’ rights and to general equity principles.  Upon making the initial “Credit Extensions”
under the Revolving Credit Agreement and the Term Loan Credit Agreement and
recording an appropriately completed U.C.C. financing statement or financing
statement amendment in the appropriate filing office, the Liens created by this
Agreement will be “Acceptable Security Interests” (as defined in each of the
Revolving Credit Agreement and the Term Loan Credit Agreement), constituting
valid and perfected first and prior Liens on any Property described herein
subject to no other Liens other than those Liens specifically permitted by Section 7.01
of the Revolving Credit Agreement and the Term Loan Credit Agreement or Section 4.08
of the Subordinated Indenture.

 

(d)           No Trigger Event.  No Trigger
Event has occurred and is continuing or would result from the consummation of
the transactions contemplated by this Agreement.

 

SECTION 3.7                 Authorization,
Approval, etc.  No authorization, approval, or other action
by, and no notice to or filing with, any governmental authority, regulatory
body or any other Person is required (a) for the pledge by the Pledgor of
any Collateral pursuant to this Agreement or for the execution, delivery, and
performance of this Agreement by the Pledgor; or (b) for the perfection of
or for the exercise by the Collateral Agent of the voting or other rights
provided for in this Agreement, or for the remedies in respect of the
Collateral pursuant to this Agreement, except as may be required in connection
with a disposition of such Pledged Interests by laws and regulations affecting
the offering and sale of securities generally and the preparation and the
filing of any applicable U.C.C. financing statements or other required U.C.C.
forms.

 

SECTION 3.8                 Delivery
of Certificates.  All membership or
other equity interests in each Pledged Interests Issuer that are represented by
certificates have been delivered to the Collateral Agent, together with
transfer documents as required in this Agreement, and the Pledgor hereby
covenants and agrees that any certificates or instruments evidencing any
membership or other equity interests in each Pledged Interests Issuer hereafter
received by the 

 

16

 

Pledgor will be
held in trust for the Collateral Agent and promptly delivered to the Collateral
Agent.

 

SECTION 3.9                 State of
Organization, Formation or Incorporation; Location, Name.  (a) The
first paragraph of this Agreement lists the true legal name of the Pledgor as
registered in the jurisdiction in which the Pledgor is formed, (b) the
Pledgor’s state of formation, incorporation or organization, its identification
number as designated by the state of its formation, incorporation or
organization, and its principal place of business (or, if it has more than one
place of business, its chief executive office) are as set forth on Attachment 2 hereto, and (c) the Pledgor
is not now and has not been known by any trade name.

 

ARTICLE IV

COVENANTS

 

SECTION 4.1                 Certain Covenants. 
The Pledgor hereby covenants and agrees that, so long as any portion of
the Pledged Obligations shall remain unpaid or any Secured Party shall have any
outstanding Revolving Commitment or any other commitment to the Borrower or
Atlantic Power under any Transaction Document or any Letter of Credit shall
remain outstanding, the Pledgor will perform the obligations set forth in this Article IV.

 

SECTION 4.2                 Protect
Collateral; Further Assurances, etc.  Except as
permitted by Sections 7.05 and 7.07 of the Revolving Credit Agreement and the
Term Loan Credit Agreement and Section 4.08 of the Subordinated Indenture
as in effect on date hereof, the Pledgor will not sell, assign (by operation of
law or otherwise), transfer, pledge, or encumber in any other manner or
otherwise dispose of the Collateral.  The
Pledgor will warrant and defend the right and title herein granted to the
Collateral Agent in and to the Collateral (and all right, title, and interest
represented by the Collateral) against the claims and demands of all Persons
whomsoever.  The Pledgor agrees that at
any time, and from time to time, at the expense of the Pledgor, the Pledgor
will promptly execute and deliver all further instruments, and take all further
action, that may be necessary or desirable, or that the Collateral Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Collateral Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral.  The Pledgor agrees that
without the prior written consent of the Collateral Agent, in its sole and
absolute discretion, it will not permit the Pledged Interests Issuer, or vote
its interest in the Pledged Interests in a way that (a) allows any Pledged
Interests Issuer to make any amendments to the articles of organization,
certificate of formation, operating agreement, limited liability company
agreement or other organic agreement of any Pledged Interests Issuer, or (b) enter
into any other agreements which, in the case of either clauses (a) or (b) could
reasonably be expected to materially reduce the value of the Collateral or
result in a Material Adverse Effect.  The
Pledgor agrees that, upon the acquisition after the date hereof by the Pledgor
of any Collateral, with respect to which the security interest granted hereunder
is not perfected automatically upon such acquisition, the Pledgor will take
such actions with respect to such Collateral or any part thereof as required by
the respective Loan Documents.

 

17

 

SECTION 4.3                 Certificates, etc.

 

(a)           The Pledgor agrees that all certificates or other
instruments evidencing Pledged Interests delivered by the Pledgor pursuant to
this Agreement will be accompanied by duly executed undated blank transfer
powers, in substantially the form attached hereto as Attachment
3, or other equivalent instruments of transfer acceptable to the
Collateral Agent.  The Pledgor will, from
time to time upon the request of the Collateral Agent, promptly deliver to the
Collateral Agent duly executed undated blank transfer powers in substantially
the form attached hereto as Attachment 3,
and other instruments or similar documents reasonably satisfactory in form and
substance to the Collateral Agent, with respect to the Collateral and will,
from time to time upon the request of the Collateral Agent pursuant to the
terms of the Collateral Agency and Intercreditor Agreement, promptly transfer
any Pledged Interests into the name of any nominee designated by the Collateral
Agent.

 

(b)           The Pledgor agrees that (i) the Collateral Agent
may notify any Pledged Interests Issuer of the existence of this Agreement by
having such Pledged Interests Issuer acknowledge the Notice of Pledge Agreement
attached hereto as Attachment 4
immediately after the execution and delivery of this Agreement and (ii) it
will keep, at its address so indicated below its signature hereto, all of its
records concerning the Collateral, which records will be of such character as
will enable the Collateral Agent or its designees to determine at any time the
status thereof.

 

(c)           [The Pledgor will, from time to time upon the request
of the Collateral Agent, promptly deliver to the Collateral Agent duly executed
control agreements or other equivalent instruments of transfer or control
reasonably acceptable to the Collateral Agent, and other instruments or similar
documents reasonably satisfactory in form and substance to the Collateral
Agent, with respect to the Revenue Account and the Levelization Account and
will, from time to time upon the request of the Collateral Agent after the
occurrence and during the continuance of a Trigger Event, promptly transfer any
Pledged Interests with respect to such Revenue Account and the Levelization
Account into the name of any nominee designated by the Collateral Agent.](62)

 

SECTION 4.4                 Continuous
Pledge.  Subject to Section 2.4
and 4.2, the Pledgor will, at all
times, keep pledged to the Collateral Agent pursuant hereto all Pledged
Interests and all other Collateral, all Distributions with respect thereto, and
all other Collateral and other securities, instruments, proceeds, and rights
from time to time received by or distributable to the Pledgor in respect of any
Collateral, free and clear of all Liens, security interests, options, or other
charges or encumbrances, except any Lien or security interest granted pursuant
hereto in favor of the Collateral Agent and except as expressly permitted by
the Revolving Credit Agreement, Term Loan Credit Agreement or the Subordinated
Indenture.

 

SECTION 4.5                 Voting
Rights; Distributions, etc.  The Pledgor
agrees:

 

(a)           if any Trigger Event shall have occurred and be
continuing, promptly upon receipt thereof by the Pledgor and without any
request therefor by the Collateral Agent, to deliver (properly endorsed where
required hereby or requested by the Collateral Agent) 

 

(62) Borrower
Pledge

 

18

 

to the Collateral Agent
all Distributions, all interest, all principal, all other cash payments, and
all proceeds of the Collateral, all of which shall be held by the Collateral
Agent as additional Collateral for use in accordance with Section 6.4; and

 

(b)           if any Trigger Event shall have occurred and be
continuing and the Collateral Agent has notified the Pledgor of the Collateral
Agent’s intention to exercise its voting power under this Section 4.5, (i) the Collateral
Agent may exercise (to the exclusion of the Pledgor) the voting power and all
other incidental rights of ownership with respect to any Pledged Interests or
other shares of capital stock, membership interests or other equity or
ownership interests constituting Collateral, and THE PLEDGOR HEREBY GRANTS THE COLLATERAL
AGENT AN IRREVOCABLE PROXY, EXERCISABLE UNDER SUCH CIRCUMSTANCES, TO VOTE THE
PLEDGED INTERESTS AND SUCH OTHER COLLATERAL, WITH SUCH PROXY TO REMAIN VALID UNTIL
THE EARLIER OF (A) SUCH TIME AS SUCH TRIGGER EVENT IS NO LONGER
CONTINUING; AND(B) THE INDEFEASIBLE PAYMENT IN FULL IN CASH OF ALL PLEDGED
OBLIGATIONS, THE TERMINATION OR EXPIRATION OF ALL REVOLVING COMMITMENTS AND THE
TERMINATION OR EXPIRATION OF ALL REVOLVING LETTERS OF CREDIT, and (ii) promptly
to deliver to the Collateral Agent such additional proxies and other documents
as may be necessary to allow the Collateral Agent to exercise such voting power
and other incidental rights.

 

All Distributions, interest,
principal, cash payments, and proceeds which may at any time and from time to
time be held by the Pledgor but which the Pledgor is then obligated to deliver
to the Collateral Agent, shall, until delivery to the Collateral Agent, be held
by the Pledgor separate and apart from its other property in trust for the
Collateral Agent.  The Collateral Agent
agrees that unless a Trigger Event shall have occurred and be continuing and
the Collateral Agent shall have given the notice referred to in Section 4.5(b), the Pledgor shall have
the exclusive voting power with respect to any shares of capital stock,
membership interests or other equity or ownership interests constituting
Collateral and the exclusive right to vote and exercise all other incidental
rights of ownership with respect to all of the Pledged Interests, and the
Collateral Agent shall, upon the written request of the Pledgor, promptly
deliver such proxies and other documents, if any, as shall be reasonably
requested by the Pledgor which are necessary to allow the Pledgor to exercise
such voting power and incidental rights; provided,
however, that no vote shall be cast, or
consent, waiver, or ratification given, or action taken by the Pledgor that
would cause a Trigger Event, impair any Collateral or be inconsistent with or
violate any provision of the Revolving Credit Agreement, Term Loan Credit
Agreement, the Subordinated Indenture or the Convertible Indenture or any other
Transaction Document (including this Agreement).

 

SECTION 4.6                 Status of
Pledged Interests.  The registration of the
Pledged Interests on the permanent ownership records of the Pledged Interests
Issuers shall at all times be valid and genuine and shall not be altered.  The Pledged Interests at all times shall be
duly authorized, validly registered, fully paid, and non-assessable, and shall
not be registered in violation of the organic documents of the Pledgor or the
preemptive rights of any Person, if any, or of any agreement by which Pledgor
or any Pledged Interests Issuer is bound.

 

19

 

SECTION 4.7                 Additional Undertakings.  The Pledgor will not, without the prior
written consent of the Collateral Agent:

 

(a)           Intentionally Blank.

 

(b)           take or omit to take any action the
taking or the omission of which would result in any impairment or alteration of
any obligation of the Borrower or Atlantic Power in respect of any Pledged
Interests constituting Collateral or other instrument constituting Collateral;

 

(c)           cause or permit any change to be made
in its name, identity, corporate structure or state of incorporation or
formation, or cause or permit any change in the location of (i) any
Collateral, (ii) any records concerning any Collateral or (iii) the
Pledgor’s place of business (or, if it has more than one place of business, its
chief executive office), to a different jurisdiction from the jurisdiction
represented herein, unless Pledgor shall have notified the Collateral Agent of
such change at least thirty (30) days prior to the effective date of such
change, and shall have first taken all action, if any, reasonably required by
the Collateral Agent for the purpose of further perfecting or protecting the
security interest in favor of the Collateral Agent in the Collateral;

 

(d)           permit the issuance of (i) any
additional membership or other equity interests or units of any class of member
interests or units of any Pledged Interests Issuer (unless immediately upon
such issuance the same are pledged and delivered to the Collateral Agent
pursuant to the terms hereof), (ii) any securities or other ownership
interests convertible voluntarily by the holder thereof or automatically upon
the occurrence or non-occurrence of any event or condition into, or
exchangeable for, any membership or other ownership or equity interests or
units of any Pledged Interests Issuer (unless immediately upon such issuance
the same are pledged and delivered to the Collateral Agent pursuant to the
terms hereof), or (iii) any warrants, options, contracts or other
commitments entitling any Person to purchase or otherwise acquire any such
interests or units; or

 

(e)           enter into any agreement creating, or
otherwise permit to exist, any restriction or condition upon the transfer,
voting or control of any Pledged Interests, except restrictions on transfers
imposed by Federal and state securities laws and as expressly provided in the
Revolving Credit Agreement, Term Loan Credit Agreement, the Subordinated
Indenture and the Convertible Indenture.

 

The Pledgor shall
provide, or cause the relevant Pledged Interests Issuer to provide, the Collateral
Agent with a copy of any amendment or supplement to, or modification or waiver
of, any term or provision of any of the by-laws and other organic documents of
the Pledged Interests Issuers, provided
that the Pledgor shall not enter into any such amendment, supplement,
modification or waiver which could reasonably be expected to be adverse to the
interests of the Collateral Agent and the other Secured Parties.  The Pledgor covenants and agrees that it
shall not consent to or permit (a) any Pledged Interest to be dealt with
or traded on any securities exchanges or in any securities market or (b) any
Pledge Interest Issuer to elect to have its 

 

20

 

Pledged Interests treated
as a “security” under Article 8 of the U.C.C. unless the Collateral Agent
has a perfected security interest in such “security,” as contemplated by this
Agreement.

 

SECTION 4.8                 Filings. 
The Pledgor hereby authorizes the Collateral Agent to file U.C.C.
financing statements, continuations and amendments with respect to the
Collateral, and to file U.C.C. financing statements, and continuations and
amendments thereto, and other similar documents with respect to the Collateral.

 

ARTICLE V

THE ADMINISTRATIVE AGENT

 

SECTION 5.1                 Collateral Agent Appointed Attorney-in-Fact.  The Pledgor hereby irrevocably appoints the
Collateral Agent as the Pledgor’s attorney-in-fact, with full authority in the
place and stead of the Pledgor and in the name of the Pledgor or otherwise,
from time to time in the Collateral Agent’s discretion, to take any action and
to execute any instrument which the Collateral Agent acting reasonably may deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation: (a) to ask, demand, collect, sue for, recover,
compromise, receive and give acquittance and receipts for moneys due and to
become due under or in respect of any of the Collateral; (b) to receive,
endorse, and collect any drafts or other instruments and documents in
connection with clause (a) above;
(c) to file any claims or take any action or institute any proceedings
which the Collateral Agent acting reasonably may deem necessary or advisable
for the collection of any of the Collateral or otherwise to enforce the rights
of the Collateral Agent with respect to any of the Collateral; and (d) to
perform the affirmative obligations of the Pledgor hereunder (including all
obligations of the Pledgor under Section 4.7);
provided, however, that the Collateral Agent agrees not to
exercise the power of attorney granted pursuant to this Section 5.1 unless
and until a Trigger Event has occurred and is continuing.  THE PLEDGOR
HEREBY ACKNOWLEDGES, CONSENTS AND AGREES THAT THE POWER OF ATTORNEY GRANTED
PURSUANT TO THIS SECTION 5.1 IS
IRREVOCABLE AND COUPLED WITH AN INTEREST AND SHALL BE EFFECTIVE UNTIL SUCH TIME
THAT ALL SECURED OBLIGATIONS ARE REPAID IN FULL IN CASH.

 

SECTION 5.2                 Collateral Agent May Perform.  If the Pledgor fails to perform any agreement
contained herein and such failure could reasonably be expected to adversely
affect the maintenance, preservation or protection of any of the Collateral or
the Collateral Agent’s security interest therein or result in a Material
Adverse Effect, then the Collateral Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Collateral
Agent incurred in connection therewith shall be payable by the Pledgor pursuant
to Section 6.5, and the Collateral
Agent may from time to time take any other action which the Collateral Agent
reasonably deems necessary for the maintenance, preservation or protection of
any of the Collateral or of its security interest therein.

 

SECTION 5.3                 Collateral Agent Has No Duty.  The powers conferred on the Collateral Agent
hereunder are solely to protect its interest (on behalf of the Secured Parties)
in the Collateral and shall not impose any duty on it to exercise any such
powers.  Except for the exercise of
reasonable care over any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Collateral Agent shall have no duty as
to any Collateral or 

 

21

 

responsibility for
(a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Pledged
Property, whether or not the Collateral Agent has or is deemed to have
knowledge of such matters, or (b) taking any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.

 

SECTION 5.4                 Reasonable Care.  The Collateral Agent is required to exercise
reasonable care in the custody and preservation of any of the Collateral in its
possession; provided, however, that the Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
of the Collateral if it takes such action for that purpose as the Pledgor
reasonably requests in writing at times other than upon the occurrence and
during the continuation of any Trigger Event, but failure of the Collateral
Agent to comply with any such request at any time shall not in itself be deemed
a failure to exercise reasonable care.

 

ARTICLE VI

REMEDIES

 

SECTION 6.1                 Certain Remedies.  If any Trigger Event shall have occurred and
be continuing:

 

(a)           The Collateral Agent may exercise in
respect of the Collateral, in addition to other rights and remedies provided
for herein, in the Collateral Agency and Intercreditor Agreement or otherwise
available to it, all of the rights and remedies of a secured party on default
under the U.C.C. (whether or not the U.C.C. applies to the affected Collateral)
and also may, without notice except as specified below or, as required to be
provided by the U.C.C., sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any of the Collateral Agent’s offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Collateral Agent may deem commercially reasonable.  The Pledgor agrees that, to the extent notice
of sale shall be required by law, at least ten (10) days’ prior notice to
the Pledgor of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification.  The Collateral Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been
given.  The Collateral Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.

 

(b)           The Collateral Agent may (i) transfer
all or any part of the Collateral into the name of the Collateral Agent or its
nominee, with or without disclosing that such Collateral is subject to the lien
and security interest hereunder, (ii) notify the parties obligated on any
of the Collateral to make payment to the Collateral Agent of any amount due or
to become due thereunder, (iii) enforce collection of any of the
Collateral by suit or otherwise, and surrender, release or exchange all or
any part thereof, or compromise or extend or renew for any period (whether or
not longer than the original period) any obligations of any nature of any party
with respect thereto, (iv) endorse any checks, drafts, or other writings
in the Pledgor’s name to allow collection of the Collateral, (v) take
control of any proceeds of the Collateral, and (vi) execute (in the name,
place and 

 

22

 

stead of the Pledgor)
endorsements, assignments, stock powers and other instruments of conveyance or
transfer with respect to all or any of the Collateral.

 

SECTION 6.2                 Securities Laws.  (a) If the Collateral Agent shall
determine to exercise its right to sell all or any of the Collateral pursuant
to Section 6.1, then the Pledgor
agrees that, upon the reasonable request of the Collateral Agent, the Pledgor
will, at its own expense:

 

(i)            execute and deliver, and cause each
issuer of the Collateral contemplated to be sold and the directors, members,
partners, officers and shareholders thereof to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts and
things, as may be necessary or, in the opinion of the Collateral Agent,
advisable to register such Collateral under the provisions of the Securities
Act of 1933, as from time to time amended (the “Securities
Act”), and to cause the registration statement relating thereto to
become effective and to remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and supplements
thereto and to the related prospectus which, in the opinion of the Collateral
Agent, are necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto; and

 

(ii)           use its best efforts to qualify the
Collateral under the state securities or “Blue Sky” laws and to obtain all
necessary governmental approvals for the sale of the Collateral, as requested
by the Collateral Agent;

 

(b)           cause each such issuer to make
available to its security holders, as soon as practicable, an earnings
statement that will satisfy the provisions of Section 11(a) of the
Securities Act; and

 

(c)           do or cause to be done all such other
acts and things as may be necessary to make such sale of the Collateral or any
part thereof valid and binding and in compliance with applicable law.

 

The Pledgor further acknowledges
the impossibility of ascertaining the amount of damages that would be suffered
by the Collateral Agent or any Secured Party by reason of the failure by the
Pledgor to perform any of the covenants contained in this Section 6.2 and, consequently, agrees
that, if the Pledgor shall fail to perform any of such covenants, then it shall
pay, as liquidated damages and not as a penalty, an amount equal to the value
(as determined by the Collateral Agent) of the Collateral on the date the
Collateral Agent shall demand compliance with this Section.

 

SECTION 6.3                 Compliance with Restrictions.  The Pledgor agrees that in any sale of any of
the Collateral whenever a Trigger Event shall have occurred and be continuing,
the Collateral Agent is hereby authorized to comply with any limitation or
restriction in connection with such sale as it may be advised by counsel is
necessary in order to avoid any violation of applicable law (including
compliance with such procedures as may restrict the number of prospective bidders
and purchasers, require that such prospective bidders and purchasers have 

 

23

 

certain
qualifications, and restrict such prospective bidders and purchasers to Persons
who will represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or resale of such
Collateral), or in order to obtain any required approval of the sale or of the
purchaser by any Governmental Authority, and the Pledgor further agrees that
such compliance shall not result in such sale being considered or deemed not to
have been made in a commercially reasonable manner, nor shall the Collateral
Agent be liable nor accountable to the Pledgor for any discount allowed by the
reason of the fact that such Collateral is sold in compliance with any such
limitation or restriction.

 

SECTION 6.4                 Application of Proceeds.  All cash proceeds received by the Collateral
Agent in respect of any sale of, collection from, or other realization upon,
all or any part of the Collateral shall be distributed by the Collateral Agent
as set forth in the Collateral Agency and Intercreditor Agreement and the
Deposit and Disbursement Agreement.

 

Any surplus of such cash
or cash proceeds held by the Collateral Agent remaining after payment in full
of all of the Pledged Obligations, and the termination or expiration of all
Revolving Commitments and all other commitments of any Secured Party to the
Borrower under any Loan Document, including, without limitation, any Secured
Hedge Agreement, or Atlantic Power under the Subordinated Indenture or the
Convertible Indenture or any Transaction Documents and the termination or
expiration of all Revolving Letters of Credit, shall be distributed by the
Collateral Agent as set forth in the Collateral Agency and Intercreditor
Agreement and the Deposit and Disbursement Agreement.

 

SECTION 6.5                 Indemnity and Expenses.  The Pledgor hereby indemnifies and holds
harmless the Collateral Agent from and against any and all claims, losses, and
liabilities arising out of or resulting from this Agreement (including
enforcement of this Agreement), except claims, losses, or liabilities resulting
from the Collateral Agent’s gross negligence or willful misconduct. Upon
demand, the Pledgor will pay to the Collateral Agent the amount of any and all
reasonable expenses, including the reasonable fees and disbursements of its
counsel and of any experts and agents, which the Collateral Agent and any
counsel may incur in connection herewith, including, without limitation, (i) the
administration of this Agreement, the Collateral Agency and Intercreditor
Agreement, the Credit Agreement and each other Transaction Document; (ii) the
custody, preservation, use, or operation of, or sale of, collection from, or
other realization upon, any of the Collateral; (iii) the exercise or
enforcement of any of the rights of the Collateral Agent or any other Secured
Party hereunder; or (iv) the failure by the Pledgor to perform or observe
any of the provisions hereof as contemplated by Section 5.2.

 

SECTION 6.6                 Warranties. 
In any sale conducted pursuant hereto, the Collateral Agent may sell the
Collateral without giving any warranties or representations as to the
Collateral.  The Collateral Agent may
disclaim any warranties of title or the like. 
This procedure will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral.

 

24

 

ARTICLE VII

MISCELLANEOUS PROVISIONS

 

SECTION 7.1                 Loan Document.  This Agreement is a Loan Document executed
pursuant to the Revolving Credit Agreement and Term Loan Credit Agreement,
respectively, and a “Security Document” delivered pursuant to the Subordinated
Indenture and the Convertible Indenture, respectively, and shall (unless
otherwise expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.

 

SECTION 7.2                 Amendments, etc.  Any amendment to or waiver of
any provision of this Agreement or consent to any departure by the Pledgor
herefrom shall be performed in accordance with and subject to the requirements
of the Collateral Agency and Intercreditor Agreement with respect to
amendments.

 

SECTION 7.3                 Notices.  All
notices and other communications provided for hereunder shall be in writing
and, if to the Pledgor, mailed or delivered to it at the address set forth
below its signature hereto, if to the Collateral Agent, mailed or delivered to
it at the address of the Collateral Agent specified in the Collateral Agency
and Intercreditor Agreement or, as to either party, at such other address as
shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section.

 

SECTION 7.4                 Headings.  The various
headings of this Agreement are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement or any provisions
hereof.

 

SECTION 7.5                 Severability.  Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such provision and such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.

 

SECTION 7.6                 Amendment
and Restatement.  This Agreement is given in
amendment and restatement of, and continuation, extension and renewal of, but
not in extinguishment of, the obligations under the Prior Pledge Agreement or
the Original Pledge Agreement.

 

SECTION 7.7                 Execution in Counterparts, Effectiveness, etc.  This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be executed by the Pledgor
and the Collateral Agent and be deemed to be an original and all of which shall
constitute together but one and the same agreement.  This Agreement shall become effective when
counterparts hereof executed on behalf of the Pledgor and the Collateral Agent
shall have been received by the Collateral Agent.

 

SECTION 7.8                 Intentionally
Blank.

 

SECTION 7.9                 GOVERNING LAW.  THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES 

 

25

 

THEREOF
RELATING TO CONFLICT OF LAW EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW); PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH
SECURED PARTY SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

SECTION 7.10               FORUM SELECTION AND CONSENT TO JURISDICTION.  ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT OR THE PLEDGOR MAY BE
BROUGHT AND MAINTAINED IN THE COURTS OF THE STATE OF NEW YORK IN THE BOROUGH OF
MANHATTAN, CITY AND STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY
SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE ADMINISTRATIVE AGENT’S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  THE PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN THE
BOROUGH OF MANHATTAN, CITY AND STATE OF NEW YORK AND OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY
SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.  THE PLEDGOR FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK.  THE PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE
OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT
IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. 
TO THE EXTENT THAT THE PLEDGOR HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE PLEDGOR
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER
THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS.

 

SECTION 7.11               WAIVER OF
JURY TRIAL.  EACH SECURED PARTY BY
ACCEPTING THE BENEFITS OF THIS AGREEMENT AND THE PLEDGOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN 

 

26

 

CONNECTION
WITH, THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF THE SECURED PARTIES OR THE PLEDGOR. 
THE PLEDGOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH
OTHER TRANSACTION DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE SECURED PARTIES ENTERING INTO THIS AGREEMENT AND
EACH OTHER TRANSACTION DOCUMENT.

 

SECTION 7.12               NO ORAL AGREEMENTS.  THIS WRITTEN
PLEDGE AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES HERETO.

 

THERE ARE NO UNWRITTEN
ORAL AGREEMENTS AMONG THE PARTIES HERETO.

 

SECTION 7.13               Filing as a Financing Statement.  At the option of the Collateral Agent, this
Agreement, or a carbon, photographic or other reproduction of this Agreement or
of any U.C.C. financing statement, continuation statement or amendments
thereto, covering all of the Collateral or any portion thereof shall be
sufficient as a U.C.C. financing statement and may be filed as such without the
signature of the Pledgor where and to the full extent permitted by applicable
law.  The Pledgor hereby expressly
authorizes the Collateral Agent to file U.C.C. financing statements,
continuation statements and amendments with respect to the Collateral and to
file such U.C.C. financing statements, continuation statements and amendments
thereto, and similar documents with respect to the Collateral without the
Pledgor’s signature (to the extent permitted by applicable law).

 

[SIGNATURES BEGIN ON FOLLOWING PAGE]

 

27

 

IN WITNESS WHEREOF, each
of the parties hereto have caused this Agreement to be duly executed and
delivered by its officers thereunto duly authorized as of the date first above
written.

 

	
   

  	
  PLEDGOR:

  
	
   

  	
   

  
	
   

  	
  [Name of Pledgor]

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  200 Clarendon Street, 55th Floor

  
	
   

  	
  Boston, MA 02117

  
	
   

  	
  Facsimile No.  617-531-6369

  
	
   

  	
  Attention: Barry Welch

  
				

 

[Signature
Page to Second Amended and Restated Pledge Agreement]

 

S-1

 

	
   

  	
  COLLATERAL AGENT:

  
	
   

  	
   

  
	
   

  	
  BANK OF MONTREAL

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  700 Louisiana,
  Suite 4400

  
	
   

  	
  Houston, Texas 77002

  
	
   

  	
  Facsimile: 713-223-4007

  
	
   

  	
  Attention:  Joseph A. Bliss

  
				

 

[Signature
Page to Second Amended and Restated Pledge Agreement]

 

S-2

 

 

ATTACHMENT 1

to

Second Amended and Restated

Pledge Agreement

 

Item
A.  Pledged
Interests

 

	
   

  	
   

  	
  Interests

  	
   

  	
  % of Interests

  	
   

  
	
  Pledged Interests Issuer

  	
   

  	
  Type of Interest

  	
   

  	
  Interests Owned

  by Pledgor

  	
   

  	
  of Pledgor

  Pledged

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

[Item B.  Pledged Notes

 

Pledged
Note Issuer Description:](63)

 

(63) Borrower
Pledge

 

1-1

 

Attachment 2

to

Second Amended and
Restated

Pledge Agreement

 

State of Organization,
Formation or Incorporation, Etc.

 

PLEDGOR:

 

STATE OF
FORMATION:

 

STATE
IDENTIFICATION NUMBER:

 

	
  CHIEF EXECUTIVE OFFICE:

  	
  Atlantic Power Management, LLC

  
	
   

  	
  200 Clarendon Street, 55th Floor

  
	
   

  	
  Boston, MA  02117

  

 

2-1

 

Attachment 3

to

Second Amended and Restated

Pledge Agreement

 

FORM OF TRANSFER
POWER

 

FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto                                                                 
(                          )
membership interests in [                          ],
a [State of Organization and Type of Entity] (the “Issuer”),
represented by the attached Certificate No.                                       
herewith and do hereby irrevocably constitute and appoint                                                  
as attorney to transfer the said membership interests on the books of the
Issuer with full power of substitution in the premises.

 

	
  DATED:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  IN PRESENCE OF:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

3-1

 

Attachment 4

to

Second Amended and Restated 

Pledge Agreement

 

FORM OF NOTICE OF
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT

 

TO:

 

Notice is hereby given
that, pursuant to a Second Amended and Restated Pledge Agreement, dated as of October 11,
2006 (the “Pledge Agreement”), between [Name of Pledgor], a [State of Organization
and Type of Entity] (the “Pledgor”), in
favor of BANK OF MONTREAL,
as Collateral Agent (in such capacity, together with its successors in such
capacity, the “Collateral Agent”) for
the Secured Parties (as defined in the Pledge Agreement), the Pledgor has
pledged and assigned to the Collateral Agent, and granted to the Collateral
Agent a continuing security interest in, all right, title and interest of the
Pledgor, whether now existing or hereafter arising or acquired, in, to and
under that certain
                                                  ,
dated as of
                              ,
         (the “Operating Agreement”), of
                                                    ,
a [State of Organization and Type of Entity] (the “Pledged
Interests Issuer”), including, without limitation:

 

The Pledgor’s rights, now existing or hereafter arising or acquired, to
receive from time to time its share of profits, income, surplus, compensation,
return of capital, distributions and other reimbursements and payments from the
Pledged Interests Issuer
(including, without limitation, specific properties of the Pledged Interests Issuer
upon dissolution and otherwise), in respect of any and all of the following:

 

(1)           All
[membership] [partnership interests] or other equity interests now owned or
hereafter acquired by the Pledgor in the Pledged Interests Issuer as a result of exchange
offers, direct investments or contributions or otherwise;

 

(2)           The
Pledgor’s accounts, general intangibles and other rights to payment or
reimbursement, now existing or hereafter arising or acquired, from the Pledged Interests Issuer,
existing or arising from loans, advances or other extensions of credit by the
Pledgor from time to time to or for the account of the Pledged Interests Issuer, or from services rendered by
the Pledgor from time to time to or for the account of the Pledged Interests Issuer;
and

 

(3)           The
proceeds of and from any and all of the foregoing.

 

Pursuant to and subject
to the terms of the Pledge Agreement, the Pledged Interests Issuer is hereby authorized and
directed to (a) register the Pledgor’s pledge to the Collateral Agent of 

 

4-1

 

the Pledgor’s
membership and other equity interests on the Pledged Interests Issuer’s books, (b) to make
direct payment to the Collateral Agent of any amounts due or to become due the
Pledgor under the Operating Agreement, if so notified by the Collateral Agent,
and (c) permit the Collateral Agent to exercise (to the exclusion of the
Pledgor) the voting power and all other incidental rights of ownership with
respect to such membership or other equity interests in accordance with the
terms of the Pledge Agreement.

 

4-2

 

The Collateral Agent
hereby requests the Pledged Interests Issuer
to indicate the Pledged Interests Issuer’s
acceptance of this Notice and consent to and confirmation of its terms and
provisions by signing a copy hereof and returning the same to the Collateral
Agent.

 

 

	
  Dated:
                                  ,
  200

  	
  [
                                                                                            ]

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  
	
   

  	
  Telephone:

  	
   

  
	
   

  	
  Facsimile:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  
	
   

  	
  Telephone:

  	
   

  
	
   

  	
  Facsimile:

  	
   

  
					

 

4-3

 

ACKNOWLEDGMENT

 

[NAME OF PLEDGED INTERESTS ISSUER], a [State of Organization and Type of
Entity] (the “Pledged Interests Issuer”),
hereby (a) acknowledges and consents to the assignment by [NAME OF
PLEDGOR], a [State of Organization and Type of Entity] (the “Pledgor”), of its right, title and interest
in, to and under that certain
                                                  ,
dated as of
                              ,
         (the “Operating Agreement”), of the Company
pursuant to the terms of the Second Amended and Restated Pledge Agreement,
dated as of October 11, 2006 (the “Pledge
Agreement”), made by the Pledgor for BANK OF MONTREAL as Collateral Agent (in such capacity,
together with its successors in such capacity, the “Collateral
Agent”) for the Secured Parties (as defined in the Pledge
Agreement), (b) confirms that the Pledged Interests Issuer has reviewed
the Pledge Agreement and this notice of assignment (c) upon notice from
the Collateral Agent, the Pledged Interests Issuer agrees to make direct
payment to the Collateral Agent of any amounts due or to become due the Pledgor
under the Operating Agreement, (d) agrees to recognize the Collateral
Agent (to the exclusion of the Pledgor) as the sole Person entitled to exercise
the voting power and all other incidental rights of ownership with respect to
such membership or other equity interests in accordance with the terms of the
Pledge Agreement, and (e) agrees to comply with instructions provided by
the Collateral Agent without further consent by the Pledgor.

 

	
   

  	
  Dated:
                                  ,
  200

  
	
   

  	
   

  
	
   

  	
  [NAME OF PLEDGED INTERESTS
  ISSUER]

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  
	
   

  	
  Telephone:

  	
   

  
	
   

  	
  Telecopy:

  	
   

  
					

 

4-4

 

Attachment 5

to

Pledge Agreement

 

FORM OF PROMISSORY NOTE(64)

 

	
  $           

  	
  , 200    

  

 

FOR VALUE RECEIVED, the
undersigned, [Name], a [State of organization and type of entity] (the “Maker”), promises to pay to the order of
[Name], a [State of organization and type of entity] (the “Payee”), the principal sum of
                                    
UNITED STATES DOLLARS
(U.S.$                                  )
without interest, on or prior to the earlier of (a) [                      ],
200     or (b) the termination of the Term Loan Credit
Agreement (as defined below), such amount representing the aggregate principal
amount of an intercompany loan made by the Payee to the Maker.  The Maker shall make payments to the Payee
with respect to the indebtedness evidenced by this Note in accordance with the
terms hereof and the Term Loan Credit Agreement.

 

All payments of principal
on this Note shall be payable in lawful currency of the United States of
America.  All such payments shall be made
by the Maker to “Account No. 180-072-1  
Atlantic Power Holdings, LLC - Revenue Account”  established by the Payee at Harris Direct
(the “Revenue Account”) and shall be recorded on the grid attached
hereto by the holder hereof (including the Administrative Agent as
pledgee).  Prior to making each payment
to the Revenue Account, the Maker shall deliver written notice to the Payee
with a copy to Bank of Montreal in its capacity as collateral agent (the “Collateral
Agent”) under that certain Amended and Restated Collateral Agency and
Intercreditor Agreement, dated as of the date hereof, among the “Revolving
Lenders” described therein and from time to time party thereto, the “Revolving
Administrative Agent” described therein and a party thereto, the “Term Loan
Lenders” described therein and from time to time party thereto, the “Term Loan
Administrative Agent” described therein and a party thereto, the “Subordinated
Trustee” described therein and a party thereto, the “Convertible Trustee”
described therein and a party thereto, the other secured parties from time to
time party thereto and the Collateral Agent (as amended, restated, supplemented
or otherwise modified from time to time, the “Collateral Agency and
Intercreditor Agreement”).

 

This Note is one of the “Intercompany
Loan Documents” referred to in, and evidences indebtedness incurred pursuant to
Section 7.02(b)(vi) of that certain Term Loan Credit Agreement, dated
as of the date hereof, by and among the Payee, the lenders from time to time
party thereto (the “Term Loan Lenders”) and Bank of Montreal in its
capacity as administrative agent (the “Term Loan Administrative Agent”)
(as amended, restated, supplemented or otherwise modified from time to time,
the “Term Loan Credit Agreement”). 
Maker and Payee hereby covenant, consent and agree that at any time on
and after the date hereof, any and all amounts paid to the Revenue Account in
repayment of this Note shall be applied to prepay the indebtedness of the Payee
to the Term Loan Lenders pursuant to and in accordance with terms and
conditions of the Term Loan Credit Agreement. Maker and Payee further covenant,
consent and agree that any and all distributions, dividends, return of capital,
or any other similar payments made by Maker for the benefit of Payee, shall be
deemed to be a repayment of this Note and shall be applied to prepay the
outstanding indebtedness of Payee to the Term Loan 

 

(64) Borrower Pledge

 

5-1

 

Lenders pursuant
to and in accordance with Term Loan Credit Agreement.  Upon the occurrence and continuance of a “Default”
or an “Event of Default” under the Term Loan Credit Agreement, and notice
thereof by the Collateral Agent to the Maker, the Collateral Agent shall have
all rights of the Payee to collect and accelerate, and enforce all rights with
respect to, the indebtedness evidenced by this Note.  Unless otherwise defined herein or the
context otherwise requires, terms used herein have the meanings provided in the
Term Loan Credit Agreement.

 

Reference is made to the
Term Loan Credit Agreement for a description of the Pledge Agreement pursuant
to which this Note has been pledged to the Collateral Agent as security for the
obligations outstanding from time to time under the Term Loan Credit Agreement
and each other Loan Document and as security for the “Secured Parties” as
defined in the Collateral Agency and Intercreditor Agreement.

 

In addition to, but not
in limitation of, the foregoing, the Maker further agrees to pay all reasonable
expenses, including reasonable attorneys’ fees and legal expenses, incurred by
the holder (including the Term Loan Administrative Agent as pledgee) of this
Note endeavoring to collect any amounts payable hereunder which are not paid
when due, whether by acceleration or otherwise.

 

THIS
NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF
RELATING TO CONFLICT OF LAW EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW); PROVIDED THAT THE COLLATERAL AGENT AND EACH SECURED
PARTY SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

THE MAKER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS NOTE.  THE MAKER ACKNOWLEDGES AND AGREES THAT IT HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PAYEE TO ACCEPT THIS NOTE.

 

5-2

 

	
   

  	
   

  	
  [Name
  of Maker]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Pay
  to the order of:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Name
  of Collateral Agent]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Consented
  and Agreed to by:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [Name
  of Payee]:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

5-3

 

GRID

 

Intercompany Loans made
by                               
to
              
and payments of principal of such Loans.

 

	
  Date

  	
   

  	
  Amount of

  Intercompany Loan

  	
   

  	
  Amount of

  Principal

  Payment

  	
   

  	
  Outstanding

  Principal

  Balance

  	
   

  	
  Notation Made

  By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

5-1

 

 

EXHIBIT B

to Fourth Amended and Restated 

Credit Agreement

 

Exhibit H 

Form of Second Amended and Restated Deposit and Disbursement Agreement

[Attached]

 

 

Exhibit H

 

SECOND
AMENDED AND RESTATED DEPOSIT AND DISBURSEMENT

AGREEMENT

 

among

 

ATLANTIC
POWER CORPORATION

ATLANTIC
POWER HOLDINGS LLC

TETON
POWER FUNDING, LLC

TETON
OPERATING SERVICES, LLC

BAKER
LAKE HYDRO LLC

BADGER
POWER GENERATION I LLC

BADGER
POWER GENERATION II LLC

STOCKTON
COGEN (II) LLC

ORLANDO
POWER GENERATION I LLC

ORLANDO
POWER GENERATION II LLC

MEP
RUMFORD, LLC

TETON
EAST COAST GENERATION LLC

TETON
FUELS MID-GEORGIA LLC

EPSILON
POWER FUNDING, LLC

MP POWER
LLC

OLYMPIA
HYDRO LLC

NCP
HOUSTON POWER LLC

NCP PERRY
LLC

NCP DADE
POWER LLC

NCP PASCO
LLC

DADE
INVESTMENT, L.P.

GEDDES II
COMPANY LLC

GEDDES
COGENERATION COMPANY LLC

TETON
SELKIRK LLC

TETON NEW
LAKE, LLC

ONONDAGA
COGENERATION LIMITED PARTNERSHIP,

 

BANK OF
MONTREAL

as
Collateral Agent,

 

COMPUTERSHARE
TRUST COMPANY OF CANADA,

as
Trustee for the Holders of the Convertible Debentures,

 

COMPUTERSHARE
TRUST COMPANY OF CANADA,

as
Trustee for the Holders of the Subordinated Notes

and

 

HARRIS
BANK

as
Depositary Bank

 

Dated
as of October 11, 2006

 

 

THIS  SECOND AMENDED AMD
RESTATED DEPOSIT AND
DISBURSEMENT AGREEMENT (this “Agreement”)
dated as of October 11, 2006, is made by and among (i) Atlantic Power
Holdings LLC, a Delaware limited liability company (“Holdings” or the “Company”), (ii) Atlantic Power Corporation, a
corporation continued under the laws of British Columbia (“Atlantic
Power Corporation”), Teton Power Funding, LLC, Teton Operating
Services, LLC, Baker Lake Hydro LLC, Badger Power Generation I LLC, Badger
Power Generation II LLC, Stockton Cogen (II) LLC, Orlando Power Generation
I LLC, Orlando Power Generation II LLC, MEP Rumford, LLC, Teton East Coast
Generation LLC, Teton Fuels Mid-Georgia LLC, Epsilon Power Funding, LLC, MP
Power, LLC, Olympia Hydro LLC, NCP Houston Power LLC, NCP Perry LLC, NCP Dade
Power LLC, NCP Pasco LLC, Dade Investment, L.P., Geddes II Company LLC, Geddes
Cogeneration Company LLC, Teton New Lake, LLC, Teton Selkirk LLC and Onondaga
Cogeneration Limited Partnership (each entity referred to in this clause (ii) herein
as a “Guarantor” or collectively,
the “Guarantors”), (iii) Bank
of Montreal, in its capacity as collateral agent under the Collateral Agency
and Intercreditor Agreement described below (together with its successors and
permitted assigns, the “Collateral Agent”), (iv) Computershare
Trust Company of Canada, as Subordinated Trustee (together with its successors
and permitted assigns, the “Subordinated Trustee”),
(v) Computershare Trust Company of Canada, as Convertible Trustee
(together with its successors and permitted assigns, the “Convertible
Trustee”) and (vi) Harris Bank, in its capacity as depositary
bank (together with its successors and permitted assigns, the “Depositary
Bank”).

 

W I T N E S S E T H:

 

WHEREAS, in order to finance certain
indebtedness of the Company, the Company entered into the Credit Agreement,
dated as of November 18, 2004 (as amended by that certain First Amendment
to Credit Agreement, dated as of April 29, 2005, as further amended by
that certain Second Amendment to Credit Agreement, dated as of November 18,
2005, as further amended by that certain Third Amendment to Credit Agreement,
dated as of September 15, 2006, as further amended by that certain
Fourth Amendment to Credit Agreement, dated as of the date of this Agreement,
and as may be further amended, restated, supplemented or otherwise modified,
the “Revolving
Credit Agreement”), among the Company, the lenders from time
to time party thereto (the “Revolving Lenders”),
and Bank of Montreal as administrative agent for the Revolving Lenders (the “Revolving Administrative Agent”), issuer of letters of
credit and collateral agent;

 

WHEREAS, Atlantic Power Corporation issued
certain notes (the “Subordinated Notes”)
under its 11% Subordinated Notes Indenture, dated as of November 18, 2004
(as the same may be amended, restated, supplemented or otherwise modified from
time to time, the “Subordinated Indenture”),
among Atlantic Power Corporation, the Guarantors and the Subordinated Trustee;

 

WHEREAS, in order to finance certain additional
indebtedness of the Company, the Company entered into the Term Loan Credit
Agreement, dated as of September 15, 2006 (as amended by that certain
First Amendment to Credit Agreement, dated as of the date of this Agreement as
the same may be further amended, restated, supplemented or otherwise modified,

 

 

the “Term Loan Credit Agreement”), among
the Company, the lenders from time to time party thereto (the “Term Loan Lenders”), and Bank of Montreal as administrative
agent for the Term Loan Lenders (the “Term Loan Administrative
Agent”);

 

WHEREAS, Atlantic Power Corporation is entering
into that certain Trust Indenture dated as of October 11, 2006 (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, the “Convertible Indenture”), between
Atlantic Power Corporation and Computershare Trust Company of Canada, in its
capacity as Convertible Trustee, pursuant to which Atlantic Power Corporation
will issue certain “Debentures” (as described in the Convertible Indenture and
hereinafter the “Convertible Debentures”);

 

WHEREAS, the Revolving Secured Obligations, the
Term Loan Secured Obligations, the Subordinated Notes and the other
Subordinated Secured Obligations, the Convertible Debentures and the other
Convertible Secured Obligations and the Other Secured Obligations of the
Company, Atlantic Power Corporation and the other Guarantors will be secured by
the Collateral pursuant to the Transaction Documents;

 

WHEREAS, pursuant to the Second Amended and
Restated Collateral Agency and Intercreditor Agreement, dated as of the date of
this Agreement (the “Collateral Agency and
Intercreditor Agreement”), by and among the Revolving Lenders, the
Revolving Administrative Agent, the Term Loan Lenders, the Term Loan
Administrative Agent, the Convertible Trustee, the Subordinated Trustee, the
Other Secured Parties and the Collateral Agent, the Collateral Agent has been
appointed to act as agent and representative for the Secured Parties in
connection with the Collateral, including, without limitation, the Accounts
established pursuant to this Agreement; and

 

WHEREAS, the Company and the Guarantors intend
to grant to the Collateral Agent, for the benefit of the Secured Parties, a
lien on and security interest in the Accounts (other than the US Disbursement
Account and the Canadian Disbursement Account) established pursuant to this
Agreement.

 

NOW
THEREFORE, in
consideration of the premises and the covenants and agreements as set forth in
this Agreement and for other good and valuable consideration, the receipt and
adequacy of which are acknowledged, the parties to this Agreement agree as
follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1            Defined Terms. 
Capitalized terms used and not otherwise defined in this Agreement shall
have the meanings assigned to them in Section 1.01 of the Revolving Credit
Agreement (as in existence on the date hereof), which Section 1.01 is
incorporated by reference herein as though set forth fully herein.  In addition to terms elsewhere defined in
this Agreement, the following words and terms as used in this Agreement shall
have the following meanings unless the context or use clearly indicates another
or different intent or meaning:

 

“Account Collateral” shall have the meaning given in Section 2.3.

 

2

 

“Accounts” shall have the meaning given in Section 2.2.

 

“Canadian
Disbursement Transfer Amount” means in respect of any date the
amount transferred to the Canadian Disbursement Account pursuant to Section 3.3(b) on
such date.

 

“Canadian
Levelization Reserve Payment Amount” means the amount certified by
the Company to the Collateral Agent and the Depositary Bank in the relevant
notice delivered pursuant to Section 3.2(b).

 

“Canadian
Levelization Reserve Transfer Amount” means in respect of any date
the amount, if any, notified by the Company to the Collateral Agent and the
Depositary Bank as the Canadian Levelization Reserve Transfer Amount in respect
of such date.

 

“Collateral” means the Property of the Company, the Guarantors or
any other any Revolving Loan Party or Term Loan Party upon which Liens in favor
of the Secured Parties have been granted or have been purported to have been
granted by the terms of the applicable Transaction Documents.

 

“Convertible
Secured Obligations” means all present and future indebtedness,
liabilities and obligations of any and every nature, kind and description
whatsoever and however incurred (whether direct or indirect, joint or several,
absolute or contingent, matured or unmatured and whether as principal debtor,
guarantor, surety or otherwise) of Atlantic Power Corporation and each “Guarantor”
(as defined in the Convertible Indenture) to the Convertible Trustee and each
present and future holder of Convertible Debentures under, in connection with
or with respect to the Convertible Indenture, each of the Convertible
Debentures, each “Guarantee” (as defined in the Convertible Indenture) and any
security, documents or agreements delivered from time to time under or in
connection with any of the foregoing (including, without limitation, principal,
premium, interest, indemnities, fees, costs and expenses) and any ultimate
unpaid balance thereof.

 

“Indemnified Depositary Bank Party” shall have the meaning given in Section 5.2.

 

“Investment Accounts”  shall have the meaning given in Section 3.10(c).

 

“Majority Secured Parties” has the meaning provided in the
Collateral Agency and Intercreditor Agreement.

 

“Monies” shall mean all cash, payments, Permitted Investments
and other amounts (including instruments evidencing such amounts) on deposit in
or credited to any Account.

 

“Monthly Date” shall mean the last day of each calendar month, or if
such day is not a Business Day, the next succeeding Business Day.

 

“Other Secured Obligations” means the
obligations of the Revolving Loan Parties in respect of Revolving Hedging
Obligations to the Revolving Secured Parties described in clause (iv) of
the definition of Secured Parties.

 

3

 

“Permitted Investments” means:

 

(i)            obligations, maturing (subject to
the second sentence of Section 3.10) within five years from the date
of acquisition, of or fully guaranteed by the United States of America or
Canada or an agency thereof;

 

(ii)           state or municipal securities having
an effective maturity (subject to the second sentence of Section 3.10)
within five years from the date of acquisition that are, at the time of
acquisition, rated AA— or better by Standard & Poors Rating Service;

 

(iii)          certificates of deposit or banker’s
acceptances, maturing (subject to the second sentence of Section 3.10)
within five years from the date of acquisition of or issued by the Depositary
Bank or other commercial banks whose long-term unsecured debt obligations (or
the long-term unsecured debt obligations of the bank holding company owning all
of the capital stock of such bank) are, at the time of acquisition, rated AA—
or better by Standard & Poors Rating Service;

 

(iv)          commercial paper, maturing (subject to
the second sentence of Section 3.10) within 270 days from the date
of issuance which, at the time of acquisition, is rated A-2 or better by Standard &
Poors Rating Service;

 

(v)           repurchase agreements fully
collateralized with securities meeting the criteria described in clause (i) above;

 

(vi)          money market instrument programs that
are properly classified as current assets in accordance with generally accepted
accounting principles; and

 

(vii)         mutual funds that invest solely in the
types of assets described in (i) - (vi) above.

 

“Revolving
Commitments” means the “Commitments” as defined in the Revolving
Credit Agreement.

 

“Revolving
Credit Agreement Secured Parties” means, as the context may require,
any and all of Bank of Montreal as collateral agent under the Revolving Credit
Agreement, the “L/C Issuer” under the Revolving Credit Agreement, any
Revolving Lender, Bank of Montreal, and each of their respective successors,
transferees and assigns and any Affiliate of any of the foregoing from time to
time party to any of the Transaction Documents.

 

“Revolving
Credit Indebtedness Payment Amount” means on any date all amounts
due and payable in respect of the Revolving Secured Obligations.

 

“Revolving
Hedging Obligation” means “Hedging Obligations” as defined in the
Revolving Credit Agreement between a Revolving Loan Party and a Revolving
Secured Hedge Counterparty.

 

“Revolving
Letters of Credit” means, collectively, any “Letter of Credit” as
defined in the Revolving Credit Agreement.

 

4

 

“Revolving
Loan Documents” means the “Loan Documents” as defined in the
Revolving Credit Agreement.

 

“Revolving
Loan Parties” means the “Loan Parties” as defined in the Revolving
Credit Agreement.

 

“Revolving
Obligations” means the “Obligations” as defined in the Revolving
Credit Agreement.

 

“Revolving
Secured Hedge Counterparties” means the counterparties of the Loan
Parties to the Revolving Hedging Obligations described in clause (xi) of
the definition of “Permitted Liens” contained in the Revolving Credit
Agreement.

 

“Revolving
Secured Obligations”  means,
any or all of (i) the Revolving Obligations, (ii) any Revolving Hedging
Obligation of the Company or the other Loan Parties to any of the Revolving
Lenders, Bank of Montreal or their respective Affiliates pursuant to or as
permitted under the Revolving Credit Agreement, (iii) any obligation of
the Borrower to any of the Revolving Lenders, Bank of Montreal or their
respective Affiliates with respect to cash management exposure and funds
transfer and deposit account liabilities pursuant to or as permitted under the
Revolving Credit Agreement.

 

“Secured
Parties” means collectively (i) the Revolving Credit Agreement
Secured Parties, (ii) the Term Loan Credit Agreement Secured Parties, (iii) the
Convertible Trustee and the holders from time to time of the Convertible
Debentures, (iv) the Subordinated Trustee and the holders from time to
time of the Subordinated Notes and (v) the Revolving Secured Hedge
Counterparties.

 

“Subordinated
Secured Obligations” means all present and future indebtedness,
liabilities and obligations of any and every nature, kind and description
whatsoever and however incurred (whether direct or indirect, joint or several,
absolute or contingent, matured or unmatured and whether as principal debtor,
guarantor, surety or otherwise) of Atlantic Power Corporation and each
Guarantor (as defined in the Subordinated Indenture) to the Subordinated
Trustee and each present and future holder of Subordinated Notes under, in
connection with or with respect to the Subordinated Indenture, each of the
Subordinated Notes, each “Guarantee” (as defined in the Subordinated Indenture)
and any security, documents or agreements delivered from time to time under or
in connection with any of the foregoing (including, without limitation,
principal, premium, interest, indemnities, fees, costs and expenses) and any
ultimate unpaid balance thereof.

 

“Tax”  shall
mean any tax, levy, imposition, impost, fee, assessment, deduction, charge or
withholding imposed by a Governmental Authority as well as any interest,
penalty or assessment payable or imposed with respect to any of the foregoing.

 

“Term Loan
Credit Agreement Secured Parties” means, as the context may require,
any and all of Bank of Montreal as Term Loan Administrative Agent, any Term
Loan Lender, Bank of Montreal, and each of their respective successors,
transferees and assigns and any Affiliate of any of the foregoing from time to
time party to any of the Transaction Documents.

 

5

 

“Term Loan
Credit Indebtedness Payment Amount” means on any date all amounts
due and payable in respect of the Term Loan Secured Obligations.

 

“Term Loan
Documents” means the “Loan Documents” as defined in the Term Loan
Credit Agreement.

 

“Term Loan
Parties” means the “Loan Parties” as defined in the Term Loan Credit
Agreement.

 

“Term Loan
Obligations” means the “Obligations” as defined in the Term Loan
Credit Agreement.

 

“Term Loan
Secured Obligations”  means,
any or all of the Term Loan Obligations.

 

“Transaction Documents” shall mean the Subordinated Indenture,
the Subordinated Notes, the Convertible Indenture, the Convertible Debentures,
the Revolving Credit Agreement, the Term Loan Credit Agreement, each promissory
note delivered pursuant to the Revolving Credit Agreement or the Term Loan
Credit Agreement, the Collateral Agency and Intercreditor Agreement, this
Agreement, the Security Documents (as defined in the Subordinated Indenture),
the Security Documents (as defined in the Convertible Indenture), the Revolving
Loan Documents, the Term Loan Documents, the agreements, contracts and
documents creating or evidencing each of the Revolving Secured Obligations, the
Term Loan Secured Obligations, the Other Secured Obligations, the Convertible
Secured Obligations and the Subordinated Secured Obligations, the other
agreements, documents, certificates and instruments now or hereafter executed
or delivered by Atlantic Power Corporation, the Company or any Subsidiary or
Affiliate of the Company in connection with the Subordinated Indenture, the
Subordinated Notes, the Convertible Indenture, the Convertible Debentures, the
Revolving Credit Agreement, the Term Loan Credit Agreement, the Revolving
Secured Obligations, the Term Loan Secured Obligations, the Other Secured
Obligations, the Convertible Secured Obligations or the Subordinated Secured
Obligations.

 

“Trigger Event”
means any “Event of Default” (as defined in the Revolving Credit Agreement, the
Term Loan Credit Agreement, the Subordinated Indenture, the Convertible
Indenture or any other agreement evidencing or creating or documenting any
Revolving Secured Obligation, Term Loan Secured Obligation, Other Secured
Obligation, the Convertible Secured Obligations or Subordinated Secured
Obligation, as the case may be) or “Termination Event” (as defined in any
agreement evidencing or creating or documenting any Revolving Hedging
Obligation or other Revolving Secured Obligation, Term Loan Secured Obligation,
Other Secured Obligation, Convertible Secured Obligation or Subordinated
Secured Obligation, as the case may be); provided, that notwithstanding
the foregoing, at any time that the Revolving Credit Agreement or the Term Loan
Credit Agreement shall be in effect or Other Secured Obligations are
outstanding, it shall not be a Trigger Event if the event causing such Trigger
Event is solely an Event of Default under (i) either the Convertible
Indenture or the Subordinated Indenture or (ii) both the Convertible
Indenture and the Subordinated Indenture.

 

“US
Disbursement Transfer Amount” means in respect of any date the
amount transferred to the US Disbursement Account pursuant to Section 3.1(b) on
such date.

 

6

 

“US
Levelization Reserve Payment Amount” means the amount certified by
the Company to the Collateral Agent and the Depositary Bank in the relevant
notice delivered pursuant to Section 3.2(b).

 

“US
Levelization Reserve Transfer Amount” means in respect of any date
the amount, if any, notified by the Company to the Collateral Agent and the
Depositary Bank as the US Levelization Reserve Transfer Amount in respect of
such date.

 

Section 1.2            Principles of
Construction.  For all purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise
requires:

 

(a)           all references in
this Agreement to designated “Articles,” “Sections,” “Exhibits,” “Schedules”
and other subdivisions are to the designated Articles, Sections, Exhibits,
Schedules and other subdivisions of this Agreement;

 

(b)           the words “herein,” “hereof”
and “hereunder” and other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section, Exhibit, Schedule or other
subdivision;

 

(c)           unless otherwise
expressly specified, any agreement, contract or document defined or referred to
in this Agreement shall mean such agreement, contract or document as in effect
as of the date of this Agreement, as the same may thereafter be amended,
restated, supplemented or otherwise modified from time to time in accordance
with its terms and the Transaction Documents and shall include any agreement,
contract or document in substitution or replacement of any of the foregoing;
and

 

(d)           any reference to any
Person shall include its successors and assigns.

 

Section 1.3            UCC Terms.  Unless otherwise defined in this Agreement, the
Convertible Indenture, the Subordinated Indenture, the Revolving Credit
Agreement or in the Term Loan Credit Agreement, all terms defined in the
Uniform Commercial Code as in effect from time to time in the State of New York
(the “UCC”)
which are used in this Agreement shall have the respective meanings given to
those terms in the UCC as in effect from time to time in the State of New York.

 

ARTICLE II

 

PROCEDURES,
GOVERNMENT AND ESTABLISHMENT OF ACCOUNTS

 

Section 2.1            Procedures Governing
Accounts.  (a)  The Depositary Bank is appointed to act
as a depositary bank and agrees to act as such and to accept all Monies to be
delivered to or held by the Depositary Bank pursuant to the terms of this
Agreement, the Revolving Credit Agreement, the Term Loan Credit Agreement and
the other Transaction Documents and to promptly deposit all such Monies into
the Accounts established under this Agreement. 
The Depositary Bank shall hold and safeguard the Accounts (other than
the US Disbursement Account and the Canadian Disbursement Account) during the
term of this Agreement and shall treat the Monies and any other property, and
all rights related to the Monies and such other 

 

7

 

property, now or
hereafter deposited in or credited to the Accounts (other than such property or
Monies in the US Disbursement Account or the Canadian Disbursement Account) as “financial
assets” (as defined in Section 8-102(a)(9) of the UCC), to be held by
the Depositary Bank, acting as a “securities intermediary” (as defined in Section 8-102(a)(14)
of the UCC).  The Depositary Bank
represents and agrees that each Account (other than the US Disbursement Account
and the Canadian Disbursement Account) will be maintained, to the extent that
financial assets are deposited herein or credited thereto as a “securities
account” (as defined in Section 8-501 of the UCC), and, to the extent that
credit balances not constituting financial assets are credited thereto, as a “deposit
account” (as defined in Section 9-102(a)(29) of the UCC).

 

(b)           Each
of the Accounts and sub-Accounts established pursuant to Section 2.2
shall be made in the name of the Company or the Collateral Agent for the
benefit of the Secured Parties.  All such
Monies and other property held in or credited to each Account or sub-Account,
other than such Monies or other property held in the US Disbursement Account or
the Canadian Disbursement Account, shall constitute a part of the Collateral
and shall not constitute payment of any Indebtedness or any other obligation of
the Company until applied as provided in this Agreement.

 

(c)           Each of the Company
and the Guarantors agree that their rights to Monies and any other property
held in or credited to the Accounts (other than the US Disbursement Account and
the Canadian Disbursement Account), including any Permitted Investments held in
or credited to an Investment Account established pursuant to Section 3.10
are subject to and controlled by the terms of this Agreement.  In no case will any Monies deposited in or
credited to any Account (other than the US Disbursement Account or the Canadian
Disbursement Account) be registered in the name of any of the Guarantors,
payable to the order of any of the Guarantors or specially endorsed to any of
the Guarantors, except to the extent the foregoing have been specially endorsed
to the Depositary Bank or in blank.

 

(d)           The Depositary Bank
represents and agrees that the Collateral Agent is the “entitlement holder”
(within the meaning of Section 8-102(a)(7) of the UCC) of the “security
entitlements” (within the meaning of Section 8-102(a)(17) of the UCC) with
respect to all  “financial assets”
(within the meaning of Section 8-102(a)(9) of the UCC) standing to
the credit of the Revenue Account.  The
Depositary Bank agrees that it will comply with “entitlement orders” (within
the meaning of Section 8-102(a)(8) of the UCC), including, without
limitation, any notification to the Depositary Bank directing transfer or
redemption of any securities or other financial assets in any Account (other
than the US Disbursement Account and the Canadian Disbursement Account) issued
by the Collateral Agent and relating to any Account (other than the US
Disbursement Account and the Canadian Disbursement Account) without the
requirement of further consent by the Company, Atlantic Power Corporation, any
of the other Guarantors or any other Person. 
The Depositary Bank represents that, except for this Agreement, it has
not entered into, and, agrees that until the indefeasible payment in full of
the Revolving Secured Obligations, the Term Loan Secured Obligations, the
Subordinated Secured Obligations, the Convertible Secured Obligations and the
Other Secured Obligations, it will not enter into, any agreement with any other
Person relating to the Accounts (or the Monies deposited in or credited to the
Accounts) pursuant to which it has agreed to comply with entitlement orders
made by such Person.  The Depositary Bank
represents that it has not entered

 

8

 

into any agreement
with the Company, Atlantic Power Corporation, any of the other Guarantors or
the Collateral Agent, other than this Agreement, purporting to limit or
condition the obligation of the Depositary Bank to comply with entitlement
orders as set forth in this Section 2.1(d).  The Depositary Bank acknowledges and consents
to the security interest in the Accounts granted pursuant to Section 2.3.

 

(e)           The Depositary Bank
agrees that (i) all property delivered to the Depositary Bank pursuant to
the Revolving Credit Agreement, the Term Loan Credit Agreement, any of the
Transaction Documents, the Revolving Loan Documents, the Term Loan Documents or
the Project Documents will be promptly credited to the Accounts and (ii) each
of the Accounts is an account to which financial assets are or may be credited.

 

(f)            All amounts
transferred to the Depositary Bank under this Agreement by the Collateral Agent
shall be accompanied by a written direction of the Collateral Agent pursuant to
the Collateral Agency and Intercreditor Agreement specifying in reasonable
detail the source of such amounts and the Account or Accounts or Sub-Accounts
(including the number of such Account, Accounts or Sub-Accounts) into which
such amounts are to be deposited.

 

(g)           All amounts transferred
to the Depositary Bank under this Agreement shall be made by check delivered to
the Depositary Bank at the following address:

 

(i)            For check deposits: Harris Bank
Operation Center - Attn: Bank by Mail, P.O. Box 88840, Carol Stream, IL
60188-8840

 

(ii)           For overnight courier deliveries:
Harris Bank Operation Center - Attn: Bank by Mail, 2000 S. Finley Road,
Lombard, IL 60148

 

(iii)          For wire transfer:  Harris Bank, SWIFT address:  HATRUS44 Account # 180-072-1 — Reference:
Atlantic Power Holdings, LLC Revenue Account.

 

(h)           The amount of any
deposit made into any Account or Sub-Account, plus any investment earnings on
such deposit, shall be held by the Depositary Bank and applied, invested and
transferred solely as provided in this Agreement and the Collateral Agency and
Intercreditor Agreement.

 

(i)            The Company and the
Guarantors shall, and shall irrevocably direct all Persons making periodic
payments to the Company or any of the Guarantors to make all payments of any
dividends or distributions or proceeds from the sale of any Capital Stock or
other ownership interests in any Person directly to the Depositary Bank and to
specify the nature of the payment.  The
Depositary Bank shall deposit amounts received by it to the Revenue Account.

 

(j)            [Intentionally
Blank]

 

(k)           The Company agrees
that it shall not make, attempt to make or consent to the making of any
withdrawal or transfer from the Revenue Account, the US Levelization Reserve
Account, the Canadian Levelization Reserve Account, the US Disbursement Account
or the Canadian Disbursement Account except in strict adherence to the terms
and conditions of this 

 

9

 

Agreement.  None of the Company, Atlantic Power
Corporation or any of the other Guarantors shall have any rights or powers with
respect to the remittance of amounts credited to, the disbursement of credited
amounts out of, or the investment of credited amounts in, the Accounts (other
than the US Disbursement Account and the Canadian Disbursement Account), except
to have amounts credited thereto or withdrawn therefrom applied in accordance
with the terms of this Agreement.

 

Section 2.2            Establishment of Account
and Sub-Accounts.  The Depositary Bank agrees to establish
and maintain on its books and records the following accounts and sub-accounts
(the “Accounts”)
in the form of non-interest bearing accounts and sub-accounts of such account,
which shall be maintained at all times in accordance with Section 2.1
until the termination of this Agreement:

 

(a)           Revenue Account;

 

(b)           US Levelization
Reserve Account;

 

(c)           Canadian
Levelization Reserve Account;

 

(d)           US Disbursement
Account; and

 

(e)           Canadian
Disbursement Account.

 

The names and account
numbers of the foregoing Accounts will be as set forth in Annex I hereto.  The Depositary Bank shall not change the name
or account number of the foregoing Accounts without the prior written consent
of the Collateral Agent, the Convertible Trustee (which consent shall only be  given in accordance with the terms of the
Convertible Indenture), the Subordinated Trustee (which consent shall only
be  given in accordance with the terms of
the Subordinated Indenture) and the Company. 
Certain sub-accounts within certain of the Accounts may be established
and created from time to time in accordance with this Agreement.

 

Section 2.3            Security Interest.  As
collateral security for the prompt and complete payment and performance when
due of all of the Revolving Secured Obligations, Term Loan Secured Obligations,
Subordinated Secured Obligations, the Convertible Secured Obligations and Other
Secured Obligations, the Company, Atlantic Power Corporation and each of the
other Guarantors hereby pledges, assigns, hypothecates and transfers to the
Collateral Agent for the benefit of the Secured Parties, and grants to the
Collateral Agent for the benefit of the Secured Parties a Lien on and security
interest in and to, the Company’s and the Guarantors’ right, title and interest
in and to each Account (other than the US Disbursement Account and the Canadian
Disbursement Account), each Investment Account and all Monies and any other
property (including, but not limited to, securities, financial assets,
investment property, security entitlements and instruments) at any time
deposited in or credited to any Account (other than the US Disbursement Account
or the Canadian Disbursement Account) or Investment Account, including all
income or gain earned on such Monies and other property and any proceeds of
such property (collectively, the “Account Collateral”).

 

10

 

Section 2.4            Termination.  The rights and powers granted in this Agreement to the
Collateral Agent have been granted in order to perfect its security interests
in the Accounts (other than the US Disbursement Account and the Canadian
Disbursement Account), are powers coupled with an interest and are not intended
to be affected by the bankruptcy of the Company or any Guarantor or by the
lapse of time.  The obligations of the
Depositary Bank under this Agreement shall continue in effect until the
indefeasible payment in full in cash or cash equivalents of the Revolving
Secured Obligations, the Term Loan Secured Obligations, the Subordinated
Secured Obligations, the Convertible Secured Obligations and the Other Secured
Obligations.

 

ARTICLE III

 

THE ACCOUNTS

 

Section 3.1            Revenue Account.

 

(a)           (i)            The
following amounts shall be deposited into the Revenue Account directly, or if
received by the Company or any of the Guarantors, as soon as practicable upon
receipt, in either case in accordance with this Section 3.1(a):

 

(1)           any dividends or distributions on, or
proceeds from the sale of, any Capital Stock or other ownership interest in any
Person;

 

(2)           any income from the investment of
Monies on deposit in any of the Accounts required to be transferred to the
Revenue Account pursuant to Section 3.9; and

 

(3)           all other Monies required to be
transferred to the Revenue Account from any other Account as contemplated under
this Agreement.

 

(ii)           If any of the foregoing amounts
required to be deposited with the Depositary Bank in accordance with the terms
of this Agreement are received by the Company or any of the Guarantors, the
Company or any such Guarantor shall hold such payments in trust for the
Collateral Agent and promptly shall remit such payments to the Depositary Bank
for deposit in the Revenue Account, in the form received, with any necessary
endorsements.

 

(b)           Unless (i) otherwise
instructed by the Collateral Agent, (ii) a Trigger Event shall have occurred
and be continuing or the Collateral Agent has notified the Depositary Bank that
a Trigger Event shall have occurred and be continuing or (iii) the Company
shall not have delivered to the Collateral Agent and the Depositary Bank on or
before the tenth (10th) Business Day of each month a
certificate of a Responsible Officer to the effect that as of the last day of
the preceding month no Event of Default has occurred and is continuing and
there has been no event or circumstance that since November 18, 2004 in
the aggregate has or could reasonably be expected to have a Material Adverse
Effect, then on each business day, the Depositary Bank shall transfer Monies
(via wire transfer otherwise in the discretion of the Depositary Bank) in the
Revenue Account in the following order of priority:

 

11

 

FIRST: 
transfer to the US Levelization Reserve Account the US Levelization
Reserve Transfer Amount, if any, as of such date;

 

SECOND: 
transfer to the Canadian Levelization Reserve Account the Canadian
Levelization Reserve Transfer Amount, if any, as of such date;

 

THIRD: 
transfer to the US Disbursement Account (after making all of the
applicable withdrawals and transfers specified in clauses FIRST and SECOND
above) the balance of all U.S. Dollars in the Revenue Account as of such date;
and

 

FOURTH: 
transfer to the Canadian Disbursement Account the balance of all Cdn.
dollars in the Revenue Account as of such date;

 

provided that notwithstanding the foregoing, (i) at
any time that the Cash Flow Coverage Ratio for Atlantic Power Corporation is
less than 1.15 to 1.0 or the Collateral Agent shall have notified the
Depositary Bank that the Cash Flow Coverage Ratio for Atlantic Power
Corporation is less than 1.15 to 1.0, the Depositary Bank shall not make the
transfers specified in this Section 3.1 without the prior written
consent of the Collateral Agent (pursuant to the Collateral Agency and
Intercreditor Agreement) such consent not to be unreasonably withheld or
delayed if such ratio is greater than 1.0 to 1.0 and such consent to be granted
or withheld in the sole discretion of the Collateral Agent (pursuant to the
Collateral Agency and Intercreditor Agreement) if such ratio is less than or
equal to 1.0 to 1.0; or (ii) at any time that the Cash Flow Coverage Ratio
is less than or equal to 1.25 to 1.0, but greater than 1.15 to 1.0 or the
Collateral Agent shall have notified the Depositary Bank that the Cash Flow
Coverage Ratio for Atlantic Power Corporation is less than or equal to 1.25 to
1.0, but greater than 1.15 to 1.0, the Depositary Bank shall not make the
transfers specified in this Section 3.1 (A) more than two
times in any calendar month and (B) unless concurrently with such transfer
the Company shall have delivered to the Collateral Agent and the Depositary
Bank a certificate from a Responsible Officer to the effect that as of the date
of such transfer (x) no Trigger Event shall have occurred and be
continuing and (y) that since November 18, 2004, there has been
no event or circumstance that in the aggregate has, or could reasonably be
expected to have, a Material Adverse Effect.

 

Section 3.2            US Levelization Reserve Account.

 

(a)           The following amounts shall be
deposited into the US Levelization Reserve Account directly, in accordance with
this Section 3.2:

 

(1)           if as a result of the transfer on any
date pursuant to Section 3.1(b), the US Levelization Reserve
Transfer Amount;

 

(b)           The Depositary Bank
shall, transfer Monies (via wire transfer otherwise in the discretion of the
Depositary Bank), in the US Levelization Reserve Account in the following order
of priority:

 

FIRST: 
The Depositary Bank shall on the business day specified in a notice from
the Company, withdraw from the US Levelization Reserve Account and remit to 

 

12

 

the payees identified by
the Company in such notice delivered to Collateral Agent and the Depositary
Bank, the US Levelization Reserve Payment Amount;

 

SECOND: 
Any amounts remaining in the US Levelization Reserve Account (after
making the transfers specified in clause FIRST above) will be held in the US
Levelization Reserve Account.

 

Section 3.3            Canadian Levelization Reserve
Account.

 

(a)           The following amounts shall be
deposited into the Canadian Levelization Reserve Account directly, in
accordance with this Section 3.3:

 

(1)           if as a result of the transfer on any
date pursuant to Section 3.1(b), the Canadian Levelization Reserve
Transfer Amount;

 

(b)           The Depositary Bank
shall, transfer Monies (via wire transfer otherwise in the discretion of the
Depositary Bank), in the Canadian Levelization Reserve Account in the following
order of priority:

 

FIRST: 
The Depositary Bank shall on the business day specified in a notice from
the Company, withdraw from the Canadian Levelization Reserve Account and remit
to the payees identified by the Company in such notice delivered to Collateral
Agent and the Depositary Bank, the Canadian Levelization Reserve Payment
Amount;

 

SECOND: 
Any amounts remaining in the Canadian Levelization Reserve Account
(after making the transfers specified in clause FIRST above) will be held in
the Canadian Levelization Reserve Account.

 

Section 3.4            US Disbursement Account.

 

(a)           The following amounts shall be
deposited into the US Disbursement Account:

 

(1)           the US Disbursement Transfer Amount.

 

(b)           The Depositary Bank
shall on each business day, transfer Monies (via wire transfer otherwise in the
discretion of the Depositary Bank), in the US Disbursement Account in the
following order of priority:

 

FIRST: 
to the payees identified by the Company the amounts identified by the
Company in a notice delivered to Collateral Agent and the Depositary Bank with
respect to such day;

 

SECOND: 
Any amounts remaining in the US Disbursement Account after making the
transfers and withdrawals specified in clause FIRST above will be held in the
US Disbursement Account.

 

13

 

Section 3.5            Canadian Disbursement
Account.

 

(a)           The following amounts shall be
deposited into the Canadian Disbursement Account:

 

(1)           the Canadian Disbursement Transfer
Amount;

 

(b)           The Depositary Bank
shall on each business day, transfer Monies (via wire transfer otherwise in the
discretion of the Depositary Bank), in the Canadian Disbursement Account in the
following order of priority:

 

FIRST: 
to the payees identified by the Company the amounts identified by the
Company in a notice delivered to Collateral Agent and the Depositary Bank with
respect to such day;

 

SECOND: 
Any amounts remaining in the Canadian Disbursement Account after making
the transfers and withdrawals specified in clause FIRST above will be held in
the Canadian Disbursement Account.

 

Section 3.6            Trigger
Event.  Notwithstanding anything herein to the
contrary (including, Section 3.1, 3.2 or 3.3) and
irrespective of any statement to the contrary in any other Transaction Document
or any other agreement, the time or order or method of attachment or perfection
of Liens, or the time or order of the filing of financing statements, if a Trigger
Event shall have occurred and be continuing or if the Collateral Agent has
notified the Depositary Bank that a Trigger Event shall have occurred and be
continuing:

 

FIRST: 
The Collateral Agent shall instruct the Depositary Bank to, and upon
receipt of such instructions the Depositary Bank shall withdraw from the
Revenue Account, the US Levelization Reserve Account and the Canadian
Levelization Reserve Account and remit to the Revolving Administrative Agent,
the Bank of Montreal, or their Affiliate, as the case may be, the Revolving
Credit Indebtedness Payment Amount then due and payable, if any, until such
amount is paid in full or such Trigger Event is no longer continuing;

 

SECOND: 
The Collateral Agent shall instruct the Depositary Bank to, and upon
receipt of such instructions the Depositary Bank shall, withdraw from the
Revenue Account, the US Levelization Reserve Account and the Canadian
Levelization Reserve Account (after making all of the applicable withdrawals
and transfers specified in clause FIRST immediately above) and remit to the
payees identified in a notice delivered by the Collateral Agent to the
Depositary Bank the amount in respect of the Other Secured Obligations then due
and payable until such amount is paid in full or such Trigger Event is no
longer continuing;

 

THIRD: 
The Collateral Agent shall instruct the Depositary Bank to, and upon
receipt of such instructions the Depositary Bank shall withdraw from the
Revenue Account, the US Levelization Reserve Account and the Canadian Levelization
Reserve Account (after making all of the applicable withdrawals and transfers 

 

14

 

specified in clause FIRST
and SECOND immediately above) and remit to the Term Loan Administrative Agent,
the Bank of Montreal, or their Affiliate, as the case may be, the Term Loan
Credit Indebtedness Payment Amount then due and payable, if any, until such
amount is paid in full or such Trigger Event is no longer continuing;

 

FOURTH: 
The Collateral Agent shall instruct the Depositary Bank to, and upon
receipt of such instructions the Depositary Bank shall, withdraw from the
Revenue Account, the US Levelization Reserve Account and the Canadian
Levelization Reserve Account (after making all of the applicable withdrawals
and transfers specified in clauses FIRST, SECOND and THIRD immediately above)
and remit to the payees identified in a notice delivered by the Collateral
Agent to the Depositary Bank the amount then due and payable in respect of the
Convertible Secured Obligations until such amount is paid in full or such
Trigger Event is no longer continuing;

 

FIFTH: 
The Collateral Agent shall instruct the Depositary Bank to, and upon
receipt of such instructions the Depositary Bank shall, withdraw from the
Revenue Account, the US Levelization Reserve Account and the Canadian
Levelization Reserve Account (after making all of the applicable withdrawals
and transfers specified in clauses FIRST, SECOND, THIRD and FOURTH immediately
above) and remit to the payees identified in a notice delivered by the
Collateral Agent to the Depositary Bank the amount then due and payable in
respect of the Subordinated Secured Obligations until such amount is paid in
full or such Trigger Event is no longer continuing;

 

SIXTH: 
Any amounts remaining in the Revenue Account, the US Levelization
Reserve Account or the Canadian Levelization Reserve Account after making the
withdrawals and transfers specified in clauses FIRST, SECOND, THIRD, FOURTH and
FIFTH immediately above will be held in the Revenue Account, the US
Levelization Reserve Account or the Canadian Levelization Reserve Account, as
the case may be.

 

Section 3.7            [Intentionally Blank]

 

Section 3.8            Other
Account Procedures.  Without limiting any of the other provisions
of this Agreement, the Depositary Bank hereby agrees to:

 

(a)           follow its usual
operating procedures for the handling of any remittance received in any of the
Accounts that contains restrictive endorsements or irregularities such as a
variance between the written and numerical amounts, undated or postdated items,
missing signature, incorrect payee, etc.;

 

(b)           endorse and process,
in accordance with its customary collection procedures, all eligible checks and
other remittance items it receives for deposit into the Accounts from third-party
remitters and deposit such checks and other remittance items in the Revenue
Account;

 

15

 

(c)           maintain a record of
all checks, deposits and any and all other remittance items deposited into the
Accounts and, in addition, to provide the Company, upon request therefore and
at the Company’s cost, with photostats of such checks and other remittance
items and deposits received, as well as a monthly statement, and furnish to the
Company the Depositary Bank’s regular bank statement with respect to the
Accounts, subject to the Depositary Bank’s standard charges for such services;
and

 

(d)           identify the
Accounts and all Monies, instruments and other property (including financial
assets) on deposit in each of the Accounts, by book entry or otherwise, as
being subject to a security interest in favor of the Collateral Agent.

 

Section 3.9            Bankruptcy
Proceedings, etc.  Notwithstanding any of the other provisions
in this Agreement, in the event of the commencement of a case pursuant to Title
11, United States Code, filed by or against any Revolving Loan Party or Term
Loan Party, or in the event of the commencement of any similar case under
applicable federal or state law providing for the relief of debtors or the protection
of creditors by or against any Revolving Loan Party or Term Loan Party, the
Depositary Bank may act as it deems necessary to comply with all provisions of
governing statutes.

 

Section 3.10         Investment of Monies.

 

(a)           Monies held in any
Account created by and held under this Agreement may be invested and reinvested
in Permitted Investments; provided, that such Permitted Investments
shall be invested, (i) if no Trigger Event shall have occurred and be
continuing, at the specific written direction (which may be in the form of
standing instructions) of the Company, subject to and pursuant to Section 3.10(c) below
or (ii) if a Trigger Event shall have occurred and be continuing, at the
written direction of the Collateral Agent (pursuant to the Collateral Agency
and Intercreditor Agreement).

 

(b)           All Permitted
Investments shall mature in such amounts and have maturity dates or be subject
to redemption at the option of the holder of such investments on or prior to
maturity as needed for the purpose of such Accounts, but in no event shall at
any time more than 50% of the value of all such Permitted Investments mature
more than one (1) year after the date acquired.  All Permitted Investments shall remain
subject to this Agreement and the security interest granted hereunder.

 

(c)           The Company is
permitted to open accounts other than the Accounts for the purpose of making
Permitted Investments, provided, that (i) any such accounts (“Investment Accounts”) together with all cash, securities,
entitlements, investment property and investments associated with such
Investment Accounts, shall be subject (A) to a control agreement
reasonably satisfactory to the Collateral Agent in all respects and legally
sufficient for the Collateral Agent to maintain “control” of such accounts and
such amounts under Article 8 and 9 of the UCC or (B) to a control
agreement, or other similar agreement, document, filing or financing charge
statement as may be necessary under Canadian law to maintain the Collateral
Agent’s floating charge, lien, security interest or other similar interest in
such Investment Account and the Collateral Agent’s perfection in or relative
priority related to such Investment Account; (ii) prior to the transfer of
any monies from an Account to an Investment Account, the 

 

16

 

Company shall
deliver a direction letter and certificate substantially in the form attached
hereto as Exhibit A; and (iii) the Company, at its sole cost
and expense, shall execute, file, perform under or deliver any additional
documents or agreements as requested by the Collateral Agent and reasonably
necessary to continue and maintain the Collateral Agent’s security interest in
such accounts and amounts and its perfection related thereto, including without
limitation any such documents or filings as may be required under Canadian law,
if applicable; provided further, the Company, at its sole cost and
expense, upon the transfer of Monies from an Account to an Investment Account
shall deliver any legal opinions reasonably requested by the Collateral Agent
with regard to the maintenance and continuation of such security interest,
lien, floating charge or other similar interest and such priority or
perfection.

 

(d)           The Company shall
deliver or cause any bank at which any Investment Account is held to deliver to
the Depositary Bank and the Collateral Agent a monthly statement showing all
activity with respect to each Investment Account.

 

(e)           The Collateral Agent
or the Depositary Bank, as applicable, shall at any time and from time to time
liquidate any or all of such Permitted Investments prior to maturity as needed
in order to effect the transfers and withdrawals contemplated by this Agreement
in accordance with an Officer’s Certificate of the Company; provided
that, in the absence of timely receipt of such Officers’ Certificate, the
Depositary Bank or the Collateral Agent, as applicable shall liquidate any or
all such investments as so needed; provided further, that at any time, including without
limitation following a Trigger Event, the Collateral Agent shall be permitted
to deliver an entitlement order or notice of exclusive control, or other
similar notice to any deposit bank or securities intermediary maintaining an
Investment Account directing such party to liquidate any such Investment
Accounts and transfer any amounts and all amounts in such Investment Accounts,
including any and all interest thereon, to the Account from which such amounts
were transferred pursuant to the written direction of the Company under Section 3.10(c) for
further application in accordance with Section 3.6.  In the event any such investments are
redeemed prior to the maturity thereof, neither the Collateral Agent nor the
Depositary Bank shall be liable for any losses, penalties or other amounts
relating thereto in the absence of gross negligence or willful misconduct.

 

(f)            Any income or gain
realized from such Permitted Investments shall be deposited into the Revenue
Account; provided that if no Trigger Event has occurred or is occurring (i) such
amounts may be deposited by the Company into the Account from which such
amounts were transferred pursuant to the written direction of the Company under
Section 3.10(a) or (ii) reinvested in such Permitted
Investment.  Any loss shall be charged to
the applicable Account.  Neither the
Collateral Agent nor the Depositary Bank shall be liable for any loss, fee,
tax, charge or any other amount in connection with any investment, reinvestment
or liquidation of an investment hereunder other than by reason of its willful
misconduct or gross negligence.

 

Section 3.11         Value.  Cash and securities on deposit from time to time in
the Accounts shall be valued by the Depositary Bank, as follows:

 

(a)           cash shall be valued
at the face amount thereof; and

 

(b)           securities shall be
valued at the market value thereof.

 

17

 

Section 3.12         Taxes.  It is acknowledged by the parties hereto that all
interest and other investment income earned on amounts on deposit in the
Accounts for federal, state and local income tax purposes shall be attributed
to the Company and the Guarantors.  The
Company and the Guarantors shall be jointly and severally responsible for
determining any requirements for paying taxes or reporting or withholding any
payments for tax purposes hereunder.  The
Company and the Guarantors shall prepare and file all tax information required
with respect to the Accounts.  The
Company and the Guarantors, jointly and severally, agree to indemnify and hold
the Collateral Agent, the Revolving Administrative Agent, the Term Loan Administrative
Agent, and the Depositary Bank harmless against all liability for tax
withholding and/or reporting for any payments. 
Such indemnities shall survive the termination or discharge of this
Agreement or resignation of the Collateral Agent, the Revolving Administrative
Agent, the Term Loan Administrative Agent or the Depositary Bank.  Neither the Collateral Agent, the Revolving
Administrative Agent, the Term Loan Administrative Agent nor the Depositary
Bank shall have any obligation with respect to the making of or the reporting
of any payments for tax purposes other than to the extent it is provided with
monies and/or the reports and written instructions in respect thereof.

 

Section 3.13         Disposition of Monies
Upon Repayment of the Revolving Secured Obligations, Term Loan Secured
Obligations, Convertible Secured Obligations, Subordinated Secured Obligations
and Other Secured Obligations.  Upon termination of the Revolving Credit
Agreement and the Term Loan Credit Agreement and after the indefeasible payment
in full in cash or cash equivalents of the principal of interest on and all
other amounts due in respect of all Revolving Secured Obligations, Term Loan
Secured Obligations, Subordinated Secured Obligations, Convertible Secured Obligations and Other Secured Obligations and
all other amounts required to be paid under this Agreement, all Monies
remaining in any Account established in Section 2.2 and any Monies
remaining in any Investment Account established in accordance with Section 3.10
shall at the written direction of the Company be paid by the Depositary Bank to
the Company or as a court of competent jurisdiction shall otherwise direct.

 

Section 3.14         Account Balance
Statements; Inspection of Books of Account.

 

(a)           The Depositary Bank
shall, on a monthly basis and at such other times as the Collateral Agent, the
Company, the Convertible Trustee or the Subordinated Trustee may from time to
time reasonably request, provide to the Collateral Agent, the Company, the
Revolving Administrative Agent, the Term Loan Administrative Agent, the
Convertible Trustee and the Subordinated Trustee, account balance statements in
respect of each of the Accounts, sub-Accounts and amounts segregated in any of
the Accounts or sub-Accounts.  Such
balance statements shall also include deposits and transfers to, withdrawals
from, and the net investment income or gain received and collected for, each
Account, sub-Account and segregated amount. Nothing in the foregoing paragraph
shall be deemed to require any action on the part of the Convertible Trustee or
the Subordinated Trustee.

 

(b)           The Depositary Bank
shall maintain books of account on a cash basis and record therein all deposits
into and transfers to, from and between its respective Accounts and all
investment transactions effected by the Depositary Bank, pursuant to Section 3.9
hereof.  The 

 

18

 

Depositary Bank
shall make such books of account available during normal business hours for
inspection and audit by the Collateral Agent, the Company, the Convertible Trustee
and the Subordinated Trustee and their respective representatives upon
reasonable prior notice.

 

(c)           In addition to the
books of account maintained pursuant to subsection (b) above, the
Depositary Bank shall maintain a list of the Permitted Investments (i) in
the Investment Accounts maintained pursuant to Section 3.10, based
on the account statements to be provided pursuant to Section 3.10(d),
or (ii) in the Accounts, based on account statements from the Deposit
Bank, as applicable, for the purpose of evidencing the Depositary Bank’s or the
Collateral Agent’s security interest in such Permitted Investments pursuant to Section 8-313(1)(h) of
the UCC.

 

Section 3.15         Events of Default;
Trigger Events.

 

(a)           Notwithstanding
anything in this Agreement to the contrary, on and after any date on which the
Depositary Bank receives written notice from the Collateral Agent, the
Revolving Administrative Agent, the Term Loan Administrative Agent, the
Convertible Trustee (which notice shall only be given in accordance with the
terms of the Convertible Indenture) or the Subordinated Trustee (which notice
shall only be given in accordance with the terms of the Subordinated Indenture)
or any holder of any of the Revolving Secured Obligations, Term Loan Secured
Obligations, Convertible Secured Obligations, Subordinated Secured Obligations
or Other Secured Obligations that a Trigger Event has occurred and is
continuing, the Depositary Bank shall thereafter accept all notices and
instructions required to be given to the Depositary Bank pursuant to the terms
of this Agreement (and notwithstanding the provisions of Section 3.1,
3.2, 3.3, 3.4 and 3.5) only from the Collateral
Agent and not from the Company or any other Person and the Depositary Bank
shall not withdraw, transfer, pay or otherwise distribute any Monies in any of
the Accounts, including the US Disbursement Account and the Canadian
Disbursement Account except pursuant to such notices and instructions from the
Collateral Agent.

 

(b)           Promptly, but no
later than three (3) Business Days after the date the Depositary Bank
receives notice of a Trigger Event as described in Section 3.15(a),
the Depositary Bank shall provide a statement of all Monies in the Accounts as
of such date to the Collateral Agent and the Company.

 

(c)           On and after the
Depositary Bank receives notice of a Trigger Event, as described in Section 3.15(a),
until the Depositary Bank has received notice from the Collateral Agent that
such Trigger Event has been cured or waived, the Depositary Bank shall distribute
all Monies then held in any Account, including the US Disbursement Account and
the Canadian Disbursement Account in accordance with the directions of the
Collateral Agent and Section 3.6 hereof.

 

19

 

ARTICLE IV

 

DEPOSITARY BANK

 

Section 4.1            Appointment of
Depositary Bank, Powers and Immunities.

 

(a)           The Depositary Bank
may delegate any of its responsibilities or duties under this Agreement to one
or more agents and the Depositary Bank shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder.

 

(b)           The Collateral Agent
on behalf of the Secured Parties under the Collateral Agency and Intercreditor
Agreement appoints the Depositary Bank to act as depositary bank and “securities
intermediary” (within the meaning of Article 8 of the UCC) hereunder, with
such powers as are expressly delegated to the Depositary Bank by the terms of
this Agreement.  The Depositary Bank
shall not have any duties or responsibilities, except those expressly set forth
in this Agreement.  Without limiting the
generality of the foregoing, the Depositary Bank shall take all actions as the
Collateral Agent, the Revolving Administrative Agent or the Term Loan Administrative
Agent shall direct it to perform in accordance with the express provisions of
this Agreement or as the Collateral Agent, the Revolving Administrative Agent
or the Term Loan Administrative Agent may otherwise direct it to perform in
accordance with the provisions of this Agreement, the Revolving Credit
Agreement, the Term Loan Credit Agreement or any agreement evidencing, creating
or documenting any Revolving Hedging Obligation or other Revolving Secured
Obligation, Term Loan Secured Obligation, Subordinated Secured Obligation, Convertible Secured Obligations or
Other Secured Obligation. 
Notwithstanding anything to the contrary contained in this Agreement,
the Depositary Bank shall not be required to take any action which is contrary
to this Agreement, the Revolving Credit Agreement, the Term Loan Credit
Agreement or any agreement evidencing, creating or documenting any Revolving
Hedging Obligation or other Revolving Secured Obligation, Term Loan Secured
Obligation, Subordinated Secured Obligation, Convertible Secured Obligation or Other Secured Obligation or
applicable Law.  Neither the Depositary
Bank nor any of its Affiliates shall be responsible to any Secured Party for
any recitals, statements, representations or warranties made by Atlantic Power
Corporation, the Company or the Guarantors contained in this Agreement, the
Revolving Credit Agreement, the Term Loan Credit Agreement or any agreement
evidencing, creating or documenting any Revolving Hedging Obligation or other
Revolving Secured Obligation, Term Loan Secured Obligation, Subordinated
Secured Obligation, Convertible Secured
Obligation or Other Secured Obligation or any other Transaction Document
or in any certificate or other document referred to or provided for in, or
received by any Secured Party under, this Agreement, the Revolving Credit
Agreement, the Term Loan Credit Agreement or any agreement evidencing, creating
or documenting any Revolving Hedging Obligation or other Revolving Secured
Obligation, Term Loan Secured Obligation, Subordinated Secured Obligation, Convertible Secured Obligation or
Other Secured Obligation or any other Transaction Document, for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement (other than with respect to its obligations) or any Lien or any other
document referred to or provided for in this Agreement, the Revolving Credit
Agreement, the Term Loan Credit Agreement, or any agreement evidencing,
creating or documenting any 

 

20

 

Revolving Hedging
Obligation or other Revolving Secured Obligation, Term Loan Secured Obligation,
Subordinated Secured Obligation, Convertible
Secured Obligation or Other Secured Obligation or in any other
Transaction Document, or for any failure by the Company or any Guarantor to
perform its obligations under this Agreement, the Revolving Credit Agreement,
the Term Loan Credit Agreement or any agreement evidencing, creating or
documenting any Revolving Hedging Obligation or other Revolving Secured
Obligation, Term Loan Secured Obligation, Subordinated Secured Obligation, Convertible Secured Obligation or
Other Secured Obligation or any other Transaction Document or for the
perfection or priority of any Lien on or the value of or existence of, or the
perfection of any Lien on, the Collateral (including the Account
Collateral).  The Depositary Bank shall
not be required to ascertain or inquire as to the performance by the Company or
any Guarantor of any of their obligations under this Agreement, the Revolving
Credit Agreement, the Term Loan Credit Agreement or any agreement evidencing,
creating or documenting any Revolving Hedging Obligation or other Revolving
Secured Obligation, Term Loan Secured Obligation, Subordinated Secured
Obligation, Convertible Secured
Obligation or Other Secured Obligation or any other Transaction Document
or any other document or agreement contemplated by this Agreement, the
Revolving Credit Agreement, the Term Loan Credit Agreement or any agreement
evidencing, creating or documenting any Revolving Hedging Obligation or other
Revolving Secured Obligation, Term Loan Secured Obligation, Subordinated
Secured Obligation, Convertible Secured
Obligation or Other Secured Obligation or by any other Transaction
Document.  The Depositary Bank shall not (a) be
required to initiate or conduct any litigation or collection proceeding under
this Agreement or under any other Transaction Document or (b) be
responsible for any action taken or omitted to be taken by it under this
Agreement (except for its own bad faith, gross negligence or willful
misconduct) or in connection with the Revolving Credit Agreement, the Term Loan
Credit Agreement or any agreement evidencing, creating or documenting any
Revolving Hedging Obligation or other Revolving Secured Obligation, Term Loan
Secured Obligation, Subordinated Secured Obligation, Convertible Secured Obligation or Other Secured Obligation or any
other Transaction Document.  Except as
otherwise provided under this Agreement, the Depositary Bank shall take action
under this Agreement only as it shall be directed in writing by the Collateral
Agent.  Whenever in the administration of
this Agreement the Depositary Bank shall deem it necessary or desirable that a
factual matter be proved or established in connection with the Depositary Bank
taking, suffering or omitting to take any action under this Agreement, such
matter (unless other evidence in respect of such matter is specifically
prescribed in this Agreement) may be deemed to be conclusively proved or established
by an Officer’s Certificate of the Company or any of the Guarantors or a
Certificate of the Collateral Agent, as appropriate.  The Depositary Bank shall have the right at
any time to seek instructions concerning the administration of this Agreement
from the Collateral Agent or any court of competent jurisdiction.  The Depositary Bank shall have no obligation
to expend or risk its own funds or otherwise incur any liability, financial or
otherwise, in the performance of any of its duties under this Agreement.

 

Section 4.2            Reliance by Depositary
Bank.  The Depositary Bank shall be entitled to rely upon and
shall not be bound to make any investigation into the facts or matters stated
in any notice from the Revolving Administrative Agent, the Term Loan
Administrative Agent, the Collateral Agent or any holder of any of the
Revolving Secured Obligations, Term Loan Secured Obligations, Subordinated
Secured Obligations, Convertible
Secured Obligations or the Other 

 

21

 

Secured
Obligations, Officer’s Certificate of any of the Company or Guarantors,
Collateral Agent’s certificate or any other notice or other document (including
any cable, telegram, telecopy or telex) believed by it to be genuine and to
have been signed or sent by or on behalf of the proper Person or Persons, and
upon advice or statement of legal counsel, independent accountants and other
experts selected by the Depositary Bank and shall have no liability for its
actions taken thereupon, unless due to the Depositary Bank’s willful misconduct
or gross negligence.  Without limiting
the foregoing, the Depositary Bank shall be required to make payments to the
Secured Parties only as set forth in this Agreement.  The Depositary Bank shall be fully justified
in failing or refusing to take any action under this Agreement (i) if such
action would, in the reasonable opinion of the Depositary Bank, be contrary to
applicable Law or the terms of this Agreement, (ii) if such action is not
specifically provided for in this Agreement, it shall not have received any
such advice or concurrence of the Collateral Agent as it deems appropriate or (iii) if
the taking of any such action could expose it to potential liability (whether
such action is or is intended to be an action of the Depositary Bank or the
Collateral Agent), it shall not first be indemnified to its satisfaction by the
Secured Parties (other the Collateral Agent (in its individual capacity) or any
other agent or trustee under any of the Transaction Documents (in their
respective individual capacities)), against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action.  The Depositary Bank shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement in accordance with a request of the Collateral Agent, and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all the Secured Parties. 
Upon request by the Depositary Bank, the Collateral Agent agrees to
provide to the extent available, or to request from any Secured Party, (i) notice
of the amount of outstanding Indebtedness owed by the Company or any of the
Guarantors to any Secured Party under the Revolving Credit Agreement, the Term
Loan Credit Agreement or any agreement evidencing, creating or documenting any
Revolving Hedging Obligation or other Revolving Secured Obligation, Term Loan
Secured Obligation, Subordinated Secured Obligation, Convertible Secured Obligation or Other Secured Obligation or the
Transaction Documents and (ii) any other information that the Depositary
Bank may reasonably request in connection with the performance of its
responsibilities hereunder.

 

Section 4.3            Court Orders.  The Depositary Bank is authorized, in its exclusive
discretion, to obey and comply with all writs, orders, judgments or decrees
issued by any court or administrative agency affecting any money, documents or
things held by the Depositary Bank.  The
Depositary Bank shall not be liable to any of the parties to this Agreement or
any other Secured Party, their successors, heirs or personal representatives by
reason of the Depositary Bank’s compliance with such writs, orders, judgments
or decrees, notwithstanding that such writ, order, judgment or decree is later
reversed, modified, set aside or vacated.

 

Section 4.4            Resignation or
Removal.  Subject to the appointment and acceptance of a
successor Depositary Bank as provided below, the Depositary Bank may resign at
any time by giving thirty (30) days’ written notice of such resignation to the
Collateral Agent, the Convertible Trustee, the Subordinated Trustee and the
Company, provided that in the event the Depositary Bank is also the
Collateral Agent, it must also at the same time resign as Collateral
Agent.  The Depositary Bank may be
removed at any time with or without cause by the Majority Secured Parties,
effective upon the appointment of a successor Depositary Bank under this Section 4.4.  So long as no Trigger Event is in existence,
the Company shall have the right to 

 

22

 

remove the
Depositary Bank upon thirty (30) days’ notice to the Secured Parties with or
without cause, effective upon the appointment of a successor Depositary Bank under
this Section 4.4.  Upon any
such resignation or removal, the Majority Secured Parties shall have the right
to appoint a successor Depositary Bank, which Depositary Bank shall be
reasonably acceptable to the Secured Parties and, so long as no Trigger Event
shall have occurred, the Company.  If no
successor Depositary Bank shall have been appointed by the Majority Secured
Parties and shall have accepted such appointment within thirty (30) days after
the retiring Depositary Bank’s giving of notice of resignation or the removal
of the retiring Depositary Bank, then the retiring Depositary Bank may
petition, at the expense of the Company, a court of competent jurisdiction for
the appointment of a successor Depositary Bank. 
Upon the acceptance of any appointment as Depositary Bank under this
Agreement by the successor Depositary Bank, (a) such successor Depositary
Bank shall, upon payment of its reasonable and customary charges, upon such
acceptance succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Depositary Bank, and the retiring Depositary Bank
shall be discharged from any further duties and obligations under this
Agreement and (b) the retiring Depositary Bank shall promptly transfer all
Accounts within its possession or control to the possession or control of the
successor Depositary Bank and shall execute and deliver such notices,
instructions and assignments as may be necessary or desirable to transfer the
rights of the Depositary Bank with respect to the Accounts to the successor
Depositary Bank.  After the retiring
Depositary Bank’s resignation or removal hereunder as Depositary Bank, the
provisions of this Article IV and of Article V shall
continue in effect for its benefit in respect of any actions taken or omitted
to be taken by it while it was acting as the Depositary Bank.

 

Section 4.5            The Depositary Bank represents to the
Company and the Collateral Agent that:

 

(a)           Status.  It is duly organized and validly existing
under the laws of the jurisdiction of its organization or incorporation and, if
relevant under such laws, in good standing.

 

(b)           Powers.  It has the power to execute this Agreement
and any other documentation relating to this Agreement to which it is a party,
to deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to perform its
obligations under this Agreement and has taken all necessary action to
authorize such execution, delivery and performance; and this Agreement has
been, and each other such document will be, duly executed and delivered by it.

 

ARTICLE V

EXPENSES;
INDEMNIFICATION; FEES

 

Section 5.1            Expenses.  Each of the Company and the Guarantors jointly and
severally agree to pay or reimburse all reasonable out-of-pocket expenses of
the Depositary Bank (including reasonable fees and expenses for legal services)
in respect of, or incident to, the execution, administration or enforcement of
any of the provisions of this Agreement or in connection with any amendment,
waiver or consent relating to this Agreement. 
The obligations contained in this Section 5.1 shall survive
the termination of this Agreement or the resignation or removal of the
Depositary Bank.

 

23

 

Section 5.2            Indemnification.  Each of the Company and the Guarantors jointly and
severally agree to indemnify the Depositary Bank in its capacity as such, and,
in their capacity as such, its officers, directors, shareholders, controlling
persons, employees, agents and servants (each an “Indemnified Depositary Bank Party”),
from and against any and all claims, losses, liabilities and expenses
(including the reasonable fees and expenses of counsel) arising out of or
resulting from this Agreement (including, without limitation, performance under
or enforcement of this Agreement, but excluding any such claims, losses or
liabilities resulting from the Indemnified Depositary Bank Party’s bad faith,
gross negligence or willful misconduct). 
This indemnity shall survive the termination of this Agreement, and the
resignation or removal of the Depositary Bank.

 

Section 5.3            Fees.  The Company shall pay the Depositary Bank from time to
time its customary and reasonable fees and charges in respect of the Accounts.

 

ARTICLE VI

MISCELLANEOUS

 

Section 6.1            Amendments, Etc.  No amendment or waiver of any provision of this
Agreement nor consent to any departure by the Company or any of the Guarantors
herefrom shall in any event be effective unless (i) the same shall be in
writing and signed by the Collateral Agent on behalf of the Revolving Lenders
and the Term Loan Lenders, as applicable, the Depositary Bank, the Convertible
Trustee, the Subordinated Trustee and the Company and each Guarantor, (ii) the
procedures with respect to any such amendment, waiver or consent set forth in Article 9
of the Subordinated Indenture are complied with (until the indefeasible payment
in full in cash or cash equivalents of the Subordinated Secured Obligations),
such procedures being incorporated by reference to this Section 6.1
to the same extent as if such procedures were set forth in their entirety
herein, (iii) the procedures with respect to any such amendment, waiver or
consent set forth in Section 10.01 of the Revolving Credit Agreement are
complied with (until the indefeasible payment in full in cash or cash
equivalents of the Revolving Secured Obligations and any Other Secured
Obligation and the termination of the Revolving Commitments and the termination
or expiration of any Revolving Letters of Credit and the termination of all
Other Secured Obligations), such procedures being incorporated by reference to
this Section 6.1 to the same extent as if such procedures were set
forth in their entirety herein, (iv) the procedures with respect to any
such amendment, waiver or consent set forth in Section 10.01 of the Term
Loan Credit Agreement are complied with (until the indefeasible payment in full
in cash or cash equivalents of the Term Loan Secured Obligations), such
procedures being incorporated by reference to this Section 6.1 to
the same extent as if such procedures were set forth in their entirety herein,
and (v) the procedures with respect to any such amendment, waiver or
consent set forth in Article 17 of the Convertible Indenture are complied
with (until the indefeasible payment in full in cash or cash equivalents of the
Convertible Secured Obligations), such procedures being incorporated by
reference to this Section 6.1 to the same extent as if such
procedures were set forth in their entirety herein.  Any such amendment, waiver or consent shall
be effective only in the specific instance and for the specified purpose for
which given.

 

24

 

Section 6.2            Addresses for
Notices.  All notices, requests and other communications
provided for under this Agreement shall be in writing and, except as otherwise
required by the provisions of this Agreement, shall be sufficiently given and
shall be deemed given when delivered or mailed by registered or certified mail,
postage prepaid, or sent by overnight delivery, telecopy, telegram or telex,
addressed to the parties as follows (or to such other address as such party may
hereafter provide in accordance with this Section 6.2):

 

	
  If to the Company

  or any Guarantor,

  addressed to such 

  Company or Guarantor:

  	
   

  	
  c/o Atlantic Power Management, LLC

  
	
   

  	
  200 Clarendon Street

  
	
   

  	
  Boston, MA 02117

  
	
   

  	
  Attn: Barry Welch

  
	
   

  	
   

  	
  Fax:  (617) 531-6369

  
	
   

  	
   

  	
   

  
	
  Collateral Agent:

  	
   

  	
  Bank of Montreal

  700 Louisiana, Suite 4400

  
	
   

  	
   

  	
  Houston, TX 77002

  
	
   

  	
   

  	
  Attn: Cahal Carmody

  
	
   

  	
   

  	
  Fax:  (713) 223-4007

  
	
   

  	
   

  	
   

  
	
  Depositary Bank:

  	
   

  	
  Harris Bank

  
	
   

  	
   

  	
  1111 West Monroe, 9th Floor

  
	
   

  	
   

  	
  Chicago, IL 60603

  
	
   

  	
   

  	
  Attention: Loan Documentation Unit

  
	
   

  	
   

  	
  Phone:

  	
  312.765.1778

  
	
   

  	
   

  	
  Fax:

  	
  312.293.4105

  
	
   

  	
   

  	
   

  
	
  Subordinated Trustee:

  	
   

  	
  Computershare Trust Company of Canada

  
	
   

  	
   

  	
  100 University Avenue

  
	
   

  	
   

  	
  9th Floor, North Tower

  
	
   

  	
   

  	
  Toronto, Ontario M5J 2Y1

  
	
   

  	
   

  	
  Attention: Manager, Corporate Trust

  
	
   

  	
   

  	
  Fax:  416-981-9777

  
	
   

  	
   

  	
   

  
	
  Convertible Trustee

  	
   

  	
  Computershare Trust Company of Canada

  
	
   

  	
   

  	
  100 University Avenue

  
	
   

  	
   

  	
  9th Floor, North Tower

  
	
   

  	
   

  	
  Toronto, Ontario M5J 2Y1

  
	
   

  	
   

  	
  Attention: Manager, Corporate Trust

  
	
   

  	
   

  	
  Fax:  416-981-9777

  

 

Section 6.3            Governing Law.  THIS AGREEMENT AND THE ACCOUNTS ESTABLISHED HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAW PROVISIONS THAT MIGHT
CAUSE THIS AGREEMENT OR THE ACCOUNTS ESTABLISHED HEREUNDER TO BE GOVERNED BY OR
CONSTRUED OR ENFORCED IN ACCORDANCE WITH THE LAWS OF ANY 

 

25

 

OTHER
JURISDICTION.  REGARDLESS  OF ANY PROVISION IN ANY OTHER AGREEMENT,
EACH OF THE PARTIES AGREES THAT FOR PURPOSES OF THE UCC, THE STATE OF NEW YORK
SHALL BE DEEMED TO BE THE DEPOSITARY BANK’S JURISDICTION AND THE SECURITIES ACCOUNT
(AS WELL AS THE SECURITIES ENTITLEMENTS RELATED THERETO) SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK.

 

Section 6.4            Waiver of Jury Trial;
Submission to Jurisdiction; Waiver of Immunities.  (a)  EACH OF THE COMPANY, THE GUARANTORS, THE
COLLATERAL AGENT, THE CONVERTIBLE TRUSTEE, THE SUBORDINATED TRUSTEE AND THE
DEPOSITARY BANK HEREBY AGREES TO WAIVE ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE
SUBORDINATED NOTES, THE CONVERTIBLE DEBENTURES, THE REVOLVING SECURED
OBLIGATIONS, THE TERM LOAN SECURED OBLIGATIONS, THE OTHER SECURED OBLIGATIONS,
THE CONVERTIBLE SECURED OBLIGATIONS, THE SUBORDINATED SECURED OBLIGATIONS, THE
REVOLVING LOAN DOCUMENTS, THE TERM LOAN DOCUMENTS, AND DOCUMENTS CREATING OR
EVIDENCING THE REVOLVING SECURED OBLIGATIONS, THE TERM LOAN SECURED
OBLIGATIONS, THE OTHER SECURED OBLIGATIONS, THE CONVERTIBLE SECURED OBLIGATIONS
OR THE SUBORDINATED SECURED OBLIGATIONS OR ANY DEALINGS RELATING TO THE SUBJECT
MATTER OF THIS TRANSACTION.  THE SCOPE OF
THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  EACH OF THE COMPANY AND THE GUARANTORS
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE PARTIES TO ENTER
INTO THIS BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN
ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER
IN THEIR RELATED FUTURE DEALINGS.  EACH
OF THE COMPANY AND THE GUARANTORS FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.  IN THE EVENT OF LITIGATION,
THIS SECTION 6.4 MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.

 

(b)           ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE SUBORDINATED NOTES, THE
CONVERTIBLE DEBENTURES OR THE OTHER REVOLVING LOAN DOCUMENTS, TERM LOAN
DOCUMENTS OR DOCUMENTS CREATING OR EVIDENCING THE REVOLVING SECURED
OBLIGATIONS, THE TERM LOAN SECURED OBLIGATIONS, THE OTHER SECURED OBLIGATIONS,
THE CONVERTIBLE SECURED OBLIGATIONS OR THE SUBORDINATED SECURED OBLIGATIONS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN COOK COUNTY, OR OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY 

 

26

 

APPELLATE COURT
THEREFROM AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY
AND THE GUARANTORS HEREBY IRREVOCABLY ACCEPTS, UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS WITH RESPECT TO ANY SUCH ACTION OR
PROCEEDING.  EACH OF THE COMPANY AND THE
GUARANTORS FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS
ADDRESS PROVIDED IN SECTION 6.2, SUCH SERVICE TO BECOME EFFECTIVE
UPON RECEIPT.  NOTHING HEREIN SHALL
AFFECT THE RIGHT OF ANY HOLDER OF ANY REVOLVING SECURED OBLIGATION, TERM LOAN
SECURED OBLIGATION, SUBORDINATED SECURED OBLIGATION, CONVERTIBLE SECURED
OBLIGATION OR OTHER SECURED OBLIGATION TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY OR ANY OF THE GUARANTORS IN ANY OTHER JURISDICTION.  EACH OF THE COMPANY AND THE GUARANTORS HEREBY
IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF
OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER REVOLVING LOAN DOCUMENTS OR
TERM LOAN DOCUMENTS BROUGHT IN ANY OF THE COURTS DESCRIBED IN THE FIRST
SENTENCE OF THIS SECTION 6.4(b), AND HEREBY FURTHER IRREVOCABLY
WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.

 

(c)           TO THE EXTENT THAT
ANY OF THE COMPANY AND THE GUARANTORS HAS OR HEREAFTER MAY ACQUIRE
IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OF NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH
OF THE COMPANY AND THE GUARANTORS HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT.

 

Section 6.5            Headings.  Headings used in this Agreement are for  convenience of reference only and do not
constitute part of this Agreement for any purpose.

 

Section 6.6            No Third Party
Beneficiaries.  The agreements of the parties to this
Agreement are solely for the benefit of the Company, the Guarantors, the
Collateral Agent, the Convertible Trustee, the Subordinated Trustee, the
Depositary Bank and the Secured Parties and their respective successors and
assigns and no Person (other than the parties hereto and such Secured Parties)
shall have any rights under this Agreement.

 

Section 6.7            No Waiver.  No failure on the part of any party hereto or any
Secured Party or any of their respective nominees or representatives to
exercise, and no course of dealing 

 

27

 

with respect to,
and no delay in exercising, any right, power or remedy under this Agreement
shall operate as a waiver of such right, power or remedy; nor shall any single
or partial exercise by the party hereto or any Secured Party or any of their
respective nominees or representatives of any right, power or remedy operate as
a waiver of such right, power or remedy.

 

Section 6.8            Severability.  If any provision of this Agreement or the application
of this Agreement shall be invalid or unenforceable to any extent, (a) the
remainder of this Agreement and the application of such remaining provisions
shall not be affected by such invalidity or unenforceability and (b) each
such remaining provision shall be enforced to the greatest extent permitted by
law.

 

Section 6.9            Successors and
Assigns.  All covenants, agreements, representations and
warranties in this Agreement by the Depositary Bank, the Collateral Agent, the
Convertible Trustee, the Subordinated Trustee, the Company and the Guarantors
shall bind and, to the extent permitted by this Agreement, shall inure to the
benefit of and be enforceable by their respective successors and assigns,
whether so expressed or not, provided that neither the Company nor any
of the Guarantors may assign any of its rights or obligations under this
Agreement and provided further that, except as provided in Section 4.4,
the Depositary Bank may not assign any of its rights or obligations under this
Agreement without the prior written consent of the Majority Secured Parties.

 

Section 6.10         Execution in
Counterparts.  This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.

 

Section 6.11         Consequential
Damages.  In no event (other than with respect to its own gross
negligence or willful misconduct) shall the Depositary Bank be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Depositary Bank has
been advised of the likelihood of such loss or damage and regardless of the
form of action.

 

Section 6.12         Conflict with other
Agreements.  There are no other agreements entered
into between the Depositary Bank and the Company or any of the Guarantors with
respect to the Accounts.  In the event of
any conflict between this Agreement (or any portion thereof) and any other
agreement now existing or hereafter entered into, the terms of this Agreement
shall prevail.

 

Section 6.13         Notice of Adverse
Claims.  Except for the claims and interest of the Collateral
Agent and any of the Company or Guarantors in the Accounts, no officer of the
Depositary Bank with direct responsibility for administering this Agreement has
actual knowledge of any claim to, or interest in, the Accounts or any Monies or
any other property deposited in or credited to the Accounts.  If an officer of the Depositary Bank with
direct responsibility for administering this Agreement obtains actual knowledge
that any Person has asserted any lien, encumbrance or adverse claim against the
Accounts or in any Monies or any other property deposited in or credited to the
Accounts, the Depositary Bank will promptly notify the Collateral Agent and
each of the Company and Guarantors thereof.

 

28

 

Section 6.14         Recourse.  There shall be full recourse to the Company and the
Guarantors and all of their assets and properties for the liabilities of the
Company and the Guarantors under this Agreement, the Subordinated Notes, the
Convertible Debentures, the Revolving Credit Agreement, the Term Loan Credit
Agreement and the other Transaction Documents.

 

Section 6.15         Force Majeure.  In no event shall either the Collateral Agent or
Depositary Bank be responsible or liable for any failure or delay in the
performance of its obligations hereunder arising out of or caused by, directly
or indirectly, forces beyond its control, including, without limitation
strikes, work stoppages, accidents, acts of war or terrorism, civil or military
disturbances, nuclear or natural catastrophes or acts of God, and
interruptions, loss or malfunctions of utilities, communications or computer (software
and hardware) services; it being understood that each of the Collateral Agent
and the Depositary Bank shall use reasonable efforts which are consistent with
accepted practices in the banking industry to resume performance as soon as
practicable under the circumstances.

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS]

 

29

 

 

IN
WITNESS WHEREOF,
the parties to this Agreement have caused this Agreement to be duly executed as
of the day and year first above written.

 

	
   

  	
  ATLANTIC
  POWER CORPORATION

  By: Atlantic Power Management, LLC, its Manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President and
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ATLANTIC
  POWER HOLDINGS, LLC,

  By: Atlantic Power Management, LLC, its Manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:  Barry E. Welch

  
	
   

  	
   

  	
  Title:  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TETON
  OPERATING SERVICES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BAKER
  LAKE HYDRO LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BADGER
  POWER GENERATION I LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BADGER
  POWER GENERATION II LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  

 

Deposit and Disbursement
Agreement Signature Pages

 

1

 

	
   

  	
  STOCKTON
  COGEN (II) LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ORLANDO
  POWER GENERATION I LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ORLANDO
  POWER GENERATION II LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MEP
  RUMFORD, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TETON
  EAST COAST GENERATION LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TETON
  FUELS MID-GEORGIA LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EPSILON
  POWER FUNDING, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  

 

Deposit and Disbursement
Agreement Signature Pages

 

2

 

	
   

  	
  MP
  POWER LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  OLYMPIA
  HYDRO LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NCP
  HOUSTON POWER LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NCP
  PERRY LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NCP
  DADE POWER LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NCP
  PASCO LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TETON
  SELKIRK LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  

 

Deposit and Disbursement
Agreement Signature Pages

 

3

 

	
   

  	
  DADE
  INVESTMENT, L.P.

  
	
   

  	
  by its general
  partner, NCP DADE POWER, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GEDDES
  II COMPANY LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GEDDES
  COGENERATION COMPANY LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TETON
  POWER FUNDING, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ONONDAGA
  COGENERATION LIMITED PARTNERSHIP,

  
	
   

  	
  by its general
  partner, GEDDES COGENERATION COMPANY LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TETON
  NEW LAKE, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  

 

Deposit and Disbursement
Agreement Signature Pages

 

4

 

IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed as of the day and year first above written.

 

 

	
   

  	
  HARRIS
  BANK,

  
	
   

  	
  as Depositary
  Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Ilona Nicholls

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK OF
  MONTREAL,

  
	
   

  	
  as Collateral
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Joseph A. Bliss

  
	
   

  	
   

  	
  Title:

  	
  Director

  

 

Deposit and Disbursement
Agreement Signature Pages

 

5

 

IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed as of the day and year first above written.

 

 

	
   

  	
  COMPUTERSHARE
  TRUST COMPANY OF CANADA,

  
	
   

  	
  as Subordinated
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Deposit and Disbursement
Agreement Signature Pages

 

6

 

IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed as of the day and year first above written.

 

 

	
   

  	
  COMPUTERSHARE
  TRUST COMPANY OF CANADA,

  
	
   

  	
  as Convertible
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Deposit and Disbursement
Agreement Signature Pages

 

7

 

Annex I

 

	
  Account Number

  	
   

  	
  Account Designation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  Account 180-072-1

  	
   

  	
  Atlantic Power Holdings, LLC - Revenue Account

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Account 179-868-5

  	
   

  	
  Atlantic Power Holdings, LLC - US Levelization Reserve Account

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Account 44422-179-868-5

  	
   

  	
  Atlantic Power Holdings, LLC - Canadian Levelization Reserve Account

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  Account 180-071-3

  	
   

  	
  Atlantic Power Holdings, LLC - US Disbursement Account

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  Account 44422-180-072-1

  	
   

  	
  Atlantic Power
  Holdings, LLC - Canadian Disbursement Account

  

 

1

 

EXHIBIT A 

TO DEPOSIT AND DISBURSEMENT AGREEMENT

 

ATLANTIC POWER HOLDINGS,
LLC

 

Deposit
Agreement 

Direction Letter and Officer’s Certificate

 

Bank of Montreal

700 Louisiana, Suite 4400

Houston, TX 77002

Attention:  Cahal Carmody

 

Harris Bank 

1111 West Monroe 9th Floor 

East Chicago, IL 60188-8840

Attention:  Legal Documentation Unit

 

Re:  The Second
Amended and Restated Deposit and Disbursement Agreement (the “Deposit
Agreement”), dated as of October 11, 2006 among Atlantic Power
Holdings, LLC (the “Company”), Atlantic Power Corporation, Teton Power
Funding, LLC, Teton Operating Services, LLC, Baker Lake Hydro LLC, Badger Power
Generation I LLC, Badger Power Generation II LLC, Stockton Cogen (II), LLC,
Orlando Power Generation I LLC, Orlando Power Generation II LLC, MEP Rumford,
LLC, Teton East Coast Generation, LLC, Teton Fuels Mid-Georgia, LLC, Umatilla
Groves, LLC, Epsilon Power Funding, LLC, MP Power, LLC, Olympia Hydro LLC, NCP
Houston Power LLC, NCP Perry LLC, NCP Dade Power LLC, NCP Pasco, LLC, Dade
Investment, L.P., Geddes II Company LLC, Geddes Cogeneration Company LLC, Teton
Selkirk LLC, Teton New Lake, LLC and Onondaga Cogeneration, L.P., Bank of
Montreal, as collateral agent (the “Collateral Agent”), Computershare
Trust Company of Canada, as Subordinated Trustee, Computershare Trust Company
of Canada, as Convertible Trustee and Harris Bank, as depositary bank (“Harris
Bank”).

 

To Whom It May Concern:

 

Pursuant to Section 3.10 of the Deposit
Agreement, the Company directs Harris Bank, in its capacity as the Depositary
Bank under the Deposit Agreement, to transfer
$                                
(the “Transferred Amount”) from the [name of Deposit Agreement Account]
(as defined in the Deposit Agreement) to the Borrower’s account with [name of
institution managing Permitted Investment] (the “Securities Account
Intermediary”), Account
#                                      
(the “Securities Account”).

 

1.                                       The Company represents and warrants that:

 

(a)                                  the Transferred Amount and any interest,
premiums or other amounts that accrue with respect to the Transferred Amounts
(collectively the “Permitted Investment Amounts”) shall be invested
solely in Permitted Investments (as defined in the Deposit Agreement);

 

(b)                                 if no Trigger Event has occurred or is
occurring, the Permitted Investment Amounts shall either be reinvested in the
Securities Account or transferred to the 

 

2

 

[Account named above], or (ii) if a Trigger Event has occurred or
is occurring, all Permitted Investment Amounts shall be transferred to the
Revenue Account; provided that in no event shall any such Permitted
Investment Amounts be otherwise transferred from or withdrawn from the
Securities Account without the prior written consent of the Collateral Agent,
in its sole discretion;

 

(c)                                  the Permitted Investment Amounts shall be
subject to the security interest granted to the Collateral Agent for the
benefit of the Secured Parties (as defined in the Deposit Agreement) and shall
be subject to the control of the Collateral Agent for the benefit of the
Secured Parties subject to the terms and conditions of the Deposit Agreement.

 

2.                                       The Company hereby covenants and agrees
that:

 

(a)                                  it shall execute, deliver and perform
under the [describe account control agreement between Borrower, Collateral
Agent and Securities Intermediary] (the “Control Agreement”) between the
Borrower, the Collateral Agent and the Securities Account Intermediary in the
form attached hereto;

 

(b)                                 the Company shall, in accordance with or
to give effect to the provisions of the Control Agreement, the Deposit
Agreement or any other document evidencing the Company’s grant of a security
interest in the Permitted Investment Amounts, the Securities Account, the
[Account named above] or any and all proceeds therefrom, provide any notices or
other directions requested by the Collateral Agent, including without
limitation any entitlement orders, or other similar notices or directives to
the Securities Account Intermediary; and

 

(c)                                  the Company shall not, without the prior
written consent of the Collateral Agent, in its sole discretion transfer or
withdraw any Permitted Investment Amounts from the Securities Account; provided
that the Company shall be permitted to transfer all or any portion of the
Permitted Investment Amounts to the Revenue Account at any time without the
consent of the Collateral Agent, or if no Trigger Event has occurred or is
occurring, to the [Account named above] without the consent of the Collateral
Agent.

 

3.                                       The undersigned, the President of
Atlantic Power Management, the Manager of Company, does hereby certify that as
of the date hereof no Trigger Event has occurred or is continuing and after
giving effect to the transfer of the Transferred Amounts to the Securities
Account, no Trigger Event would result from such transfer.

 

All capitalized terms used herein and not otherwise
defined shall have the meaning assigned to such terms in the Deposit Agreement.

 

3

 

	
   

  	
  Dated and effective
  this          day of
                          ,
  200

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ATLANTIC
  POWER HOLDINGS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  Atlantic Power Management, LLC, its Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  
				

 

4

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS

  	
  2

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Defined Terms

  	
  2

  
	
   

  	
   

  	
   

  
	
  Section 1.2

  	
  Principles of Construction

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 1.3

  	
  UCC Terms

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  PROCEDURES, GOVERNMENT AND ESTABLISHMENT OF ACCOUNTS

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Procedures Governing Accounts

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 2.2

  	
  Establishment of Account
  and Sub-Accounts

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 2.3

  	
  Security Interest

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 2.4

  	
  Termination

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  THE ACCOUNTS

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Revenue Account

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 3.2

  	
  US Levelization Reserve
  Account

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 3.3

  	
  Canadian Levelization
  Reserve Account

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 3.4

  	
  US Disbursement Account

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 3.5

  	
  Canadian Disbursement
  Account

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 3.6

  	
  Trigger Event

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 3.7

  	
  [Intentionally Blank]

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 3.8

  	
  Other Account Procedures

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 3.9

  	
  Bankruptcy Proceedings,
  etc.

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 3.10

  	
  Investment of Monies

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 3.11

  	
  Value

  	
  17

  
	
   

  	
   

  	
   

  
	
  Section 3.12

  	
  Taxes

  	
  18

  
	
   

  	
   

  	
   

  
	
  Section 3.13

  	
  Disposition of Monies Upon Repayment of the
  Revolving Secured Obligations, Term Loan Secured Obligations, Subordinated Secured Obligations and Other
  Secured Obligations

  	
  18

  
	
   

  	
   

  	
   

  
	
  Section 3.14

  	
  Account Balance
  Statements; Inspection of Books of Account

  	
  18

  
	
   

  	
   

  	
   

  
	
  Section 3.15

  	
  Events of Default; Trigger
  Events

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  DEPOSITARY BANK

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Appointment of Depositary Bank, Powers and
  Immunities

  	
  20

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 4.2

  	
  Reliance by Depositary
  Bank

  	
  21

  
	
   

  	
   

  	
   

  
	
  Section 4.3

  	
  Court Orders

  	
  22

  
	
   

  	
   

  	
   

  
	
  Section 4.4

  	
  Resignation or Removal

  	
  22

  
	
   

  	
   

  	
   

  
	
  Section 4.5

  	
  The Depositary Bank
  represents to the Company and the Collateral Agent that:

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  EXPENSES; INDEMNIFICATION; FEES

  	
  23

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Expenses

  	
  23

  
	
   

  	
   

  	
   

  
	
  Section 5.2

  	
  Indemnification

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 5.3

  	
  Fees

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  MISCELLANEOUS

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Amendments, Etc.

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 6.2

  	
  Addresses for Notices

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 6.3

  	
  Governing Law

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 6.4

  	
  Waiver of Jury Trial;
  Submission to Jurisdiction; Waiver of Immunities

  	
  26

  
	
   

  	
   

  	
   

  
	
  Section 6.5

  	
  Headings

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section 6.6

  	
  No Third Party
  Beneficiaries

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section 6.7

  	
  No Waiver

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section 6.8

  	
  Severability

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 6.9

  	
  Successors and Assigns

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 6.10

  	
  Execution in Counterparts

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 6.11

  	
  Consequential Damages

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 6.12

  	
  Conflict with other
  Agreements

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 6.13

  	
  Notice of Adverse Claims

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 6.14

  	
  Recourse

  	
  29

  
	
   

  	
   

  	
   

  
	
  Section 6.15

  	
  Force Majeure

  	
  29

  

 

ii

 

EXHIBIT C

to Fourth Amended and Restated 

Credit Agreement

 

Exhibit I

Form of Second Amended and Restated Collateral Agency and Intercreditor
Agreement

[Attached]

 

 

Exhibit I

 

SECOND AMENDED AND RESTATED

COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT

 

among

 

THE REVOLVING LENDERS PARTY

TO THE REVOLVING CREDIT AGREEMENT, AND

BANK OF MONTREAL,

AS REVOLVING ADMINISTRATIVE AGENT TO THE REVOLVING LENDERS,

 

THE TERM LOAN LENDERS PARTY

TO THE TERM LOAN CREDIT AGREEMENT, AND

BANK OF MONTREAL,

AS TERM LOAN ADMINISTRATIVE AGENT TO THE TERM LOAN LENDERS,

 

BANK OF MONTREAL

AS COLLATERAL AGENT,

 

COMPUTERSHARE TRUST COMPANY OF CANADA,

AS CONVERTIBLE TRUSTEE 

FOR THE HOLDERS OF THE CONVERTIBLE DEBENTURES

 

COMPUTERSHARE TRUST COMPANY OF CANADA,

AS SUBORDINATED TRUSTEE 

FOR THE HOLDERS OF THE SUBORDINATED NOTES

 

and

 

OTHER SECURED PARTIES

 

Dated as of October 11, 2006

 

 

SECOND AMENDED AND RESTATED

COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT

 

THIS SECOND AMENDED AND RESTATED COLLATERAL AGENCY
AND INTERCREDITOR AGREEMENT  (this “Agreement”),
dated as of October 11, 2006, is made by and between each of Computershare
Trust Company of Canada, as “Trustee” for the holders of the Subordinated Notes
issued under the Subordinated Indenture described below (the “Subordinated Trustee”), Computershare Trust Company Of
Canada, as “Trustee” for the holders of the Convertible Debentures issued under
the Convertible Indenture described below (the “Convertible
Trustee”), each of the lenders that is a party to the Revolving
Credit Agreement described below (together with its respective successors and
assigns and any other Person who becomes a lender under such Revolving Credit
Agreement, the “Revolving Lenders”),
Bank of Montreal, as administrative agent for the Revolving Lenders (together with
its successors and assigns in such capacity, the “Revolving Administrative Agent”), each of the lenders that is
a party to the Term Loan Credit Agreement described below (together with its
respective successors and assigns and any other Person who becomes a lender
under such Term Loan Credit Agreement, the “Term Loan Lenders”),
Bank of Montreal, as administrative agent for the Term Loan Lenders (together
with its successors and assigns in such capacity, the “Term Loan Administrative Agent”), Bank of
Montreal, acting in its capacity as the collateral agent appointed hereunder
for the holders of the Subordinated Notes, the holders of the Convertible
Debentures, the Revolving Lenders, the Revolving Administrative Agent, the Term
Loan Lenders and the Term Loan Administrative Agent (together with its
successors and assigns, the “Collateral Agent”)
and other Secured Parties that from time to time become parties hereto pursuant
to Section 29 hereof.

 

WITNESSETH

 

WHEREAS, Atlantic Power Holdings, LLC, a
Delaware limited liability company (the “Company”)
together with Atlantic Power Corporation (“Atlantic Power Corporation”), Badger
Power Generation I LLC (“Badger I”), Badger Power Generation II LLC (“Badger
II”), Baker Lake Hydro LLC (“Baker Lake”), Dade Investment, L.P. (“Dade”),
Epsilon Power Funding LLC (“Epsilon Funding”), Geddes II Company LLC (“Geddes
II”), Geddes Cogeneration Company LLC (“Geddes Cogeneration”), MEP Rumford, LLC
(“MEP”), MP Power LLC (“MP Power”), NCP Dade Power LLC (“NCP Dade”), NCP Pasco
LLC (“NCP Pasco”), NCP Houston Power LLC (“NCP Houston Power”), NCP Perry LLC (“NCP
Perry”), Olympia Hydro LLC (“Olympia”), Onondaga Cogeneration Limited
Partnership (“Onondaga”), Orlando Power Generation I LLC (“Orlando I”),
Orlando Power Generation II LLC (“Orlando II”), Stockton CoGen (II) LLC (“Stockton”),
Teton Power Funding LLC (“Teton Funding”), Teton East Coast Generation LLC
(“Teton East Coast”), Teton Fuels Mid-Georgia LLC (“Teton Fuels”), Teton
Operating Services, LLC (“Teton Operating”), Teton New Lake, LLC (“Teton
New Lake”) and Teton Selkirk LLC (“Teton Selkirk”), (each referred to
herein as a “Guarantor” or collectively, the “Guarantors”), own, operate and maintain power plants and
related assets;

 

WHEREAS, Atlantic Power Corporation issued certain notes (the
“Subordinated Notes”) under its 11%
Subordinated Notes Indenture, dated as of November 18, 2004 (as the same
may be amended, restated, supplemented or otherwise modified from time to time,
the 

 

 

“Subordinated Indenture”),
among Atlantic Power Corporation, the Guarantors and the Subordinated Trustee;

 

WHEREAS, in order to finance certain indebtedness
of the Company, the Company entered into that certain Credit Agreement, dated
as of November 18, 2004 (as amended by that certain First Amendment to
Credit Agreement, dated as of April 29, 2005, as further amended by that
certain Second Amendment to Credit Agreement, dated as of November 18,
2005, as further amended by that certain Third Amendment to Credit Agreement,
dated as of September 15, 2006, as further amended by that certain Fourth
Amendment to Credit Agreement dated as of the date of this agreement, and as
may be further amended, restated, supplemented or otherwise modified, the “Revolving
Credit Agreement”), among the Company, the Revolving Lenders,
the Revolving Administrative Agent, and Bank of Montreal as issuer of letters
of credit and collateral agent; and

 

WHEREAS, in order to finance certain additional
indebtedness of the Company, the Company entered into that certain Term Loan Credit
Agreement, dated as of September 15, 2006 (as amended by that certain
First Amendment to Term Loan Credit Agreement, dated as of the date of this
Agreement, and as may be further amended, restated, supplemented or otherwise
modified, the “Term Loan Credit Agreement”), among
the Company, the Term Loan Lenders and the Term Loan Administrative Agent;

 

WHEREAS, Atlantic Power Corporation is entering
into that certain Trust Indenture dated as of October 11, 2006 (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, the “Convertible Indenture”), between
Atlantic Power Corporation and Computershare Trust Company of Canada, in its
capacity as Convertible Trustee, pursuant to which Atlantic Power Corporation
will issue certain “Debentures” (as described in the Convertible Indenture and
hereinafter the “Convertible Debentures”);

 

WHEREAS, certain obligations of the Company,
Atlantic Power Corporation and the Guarantors are secured by the Collateral
pursuant to the Transaction Documents; and

 

WHEREAS, in furtherance of such purposes, the
Company, the Guarantors, Harris Bank, as Depositary Bank (the “Depositary Bank”), the Subordinated
Trustee, the Convertible Trustee and the Collateral Agent have entered into the
Second Amended and Restated Deposit and Disbursement Agreement, dated as of the
date of this Agreement (the “Depositary
Agreement”), in order to, among other things, appoint the Depositary
Bank to hold and administer certain revenues received by or on behalf of the Company
or any of the Guarantors, and certain other amounts received by the Company or
any of the Guarantors; and

 

WHEREAS, the parties hereto desire to enter into
this Agreement to set forth their mutual understanding with respect to (a) the
exercise of certain rights, remedies and options by the respective parties
hereto under the Revolving Security Documents, the Term Loan Security
Documents, the Subordinated Indenture Security Documents and the Convertible
Indenture Security Documents and the Depositary Agreement and the other
Transaction Documents and (b) the appointment of the Collateral Agent.

 

2

 

NOW, THEREFORE, for and in consideration of the
premises and mutual covenants herein contained, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto, intending to be legally bound, do hereby covenant and agree as
follows:

 

Section 1.                                          Definitions; Rules of
Construction.  (a) Capitalized terms used but not
defined herein shall have the meanings given to such terms in the Depositary
Agreement or the Revolving Credit Agreement (each as in existence on the date
hereof), as the case may be, which definitions are incorporated by reference
herein as though set forth fully herein. 
Unless otherwise defined herein or in the Depositary Agreement or the
Revolving Credit Agreement, as the case may be, all terms defined in Article 9
of the UCC as in effect from time to time in the State of New York that are
used herein shall have the respective meanings given to those terms in the
Uniform Commercial Code as in effect from time to time in the State of New
York.  In addition to terms elsewhere
defined in this Agreement, the following capitalized words and terms used in
this Agreement shall have the following meanings unless the context or use
clearly indicates another or different intent or meaning:

 

“Collateral” means the Property of the Company, the
Guarantors or any other any Revolving Loan Party or Term Loan Party upon which
Liens in favor of the Secured Parties have been granted or have been purported
to have been granted by the terms of the applicable Transaction Documents.

 

“Convertible Indenture
Security Documents” means the “Security Documents” as defined in the
Convertible Indenture, including without limitation each “Pledge Agreement” as
amended and restated by the respective Second Amended and Restated Pledge
Agreement, dated as of the date of this Agreement, of each Guarantor delivering
a “Pledge Agreement” pursuant to the Convertible Indenture and the Second
Amended and Restated Security Agreement of Onondaga Cogeneration Limited
Partnership, dated as of the date of this Agreement.

 

“Majority Secured Parties” shall mean at any time Secured Parties holding,
in the aggregate, in excess of 50% of the aggregate outstanding amount of the
Revolving Secured Obligations, the Term Loan Secured Obligations, the Other
Secured Obligations, the Convertible Secured Obligations and the Subordinated
Secured Obligations.

 

“Revolving Security
Documents” means the “Security Documents” as defined in the
Revolving Credit Agreement, including without limitation each “Pledge Agreement”
as amended and restated by the respective Second Amended and Restated Pledge
Agreement, dated as of the date of this Agreement, of each Guarantor delivering
a “Pledge Agreement” pursuant to the Revolving Credit Agreement and the Second
Amended and Restated Security Agreement of Onondaga Cogeneration Limited
Partnership, dated as of the date of this Agreement.

 

“Subordinated Indenture
Security Documents” means the “Security Documents” as defined in the
Subordinated Indenture, including without limitation each “Pledge Agreement” as
amended and restated by the respective Second Amended and Restated Pledge
Agreement, dated as of the date of this Agreement, of each Guarantor delivering
a “Pledge Agreement” pursuant to the Subordinated Indenture and the Second
Amended and Restated Security Agreement of Onondaga Cogeneration Limited
Partnership, dated as of the date of this Agreement.

 

3

 

“Term Loan Security
Documents” means the “Security Documents” as defined in the Term
Loan Credit Agreement, including without limitation each “Pledge Agreement” as
amended and restated by the respective Second Amended and Restated Pledge
Agreement, dated as of the date of this Agreement, of each Guarantor delivering
a “Pledge Agreement” pursuant to the Term Loan Credit Agreement and the Second
Amended and Restated Security Agreement of Onondaga Cogeneration Limited
Partnership, dated as of the date of this Agreement.

 

(b)                                 Unless otherwise stated, any agreement,
contract or document defined or referred to herein shall mean such agreement,
contract or document and all schedules, exhibits and attachments thereto as in
effect as of the date hereof, as the same may thereafter be amended, extended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and of the Transaction Documents.

 

(c)                                  The words “hereof,” “herein” and “hereunder”
and words of similar import when used in this Agreement shall, unless otherwise
expressly specified, refer to this Agreement as a whole and not to any
particular provision of this Agreement and all references to Sections or
Schedules shall be references to Sections or Schedules of this Agreement unless
otherwise expressly specified.

 

(d)                                 Any reference to any Person shall include
its permitted successors and assigns, and in the case of any Governmental
Authority, any Person succeeding to its functions and capacities.

 

(e)                                  Defined terms in this Agreement shall
include in the singular number the plural and in the plural number the
singular.

 

Section 2.                                          Authorization and Action of
Collateral Agent.  (a) Each Secured Party hereby
appoints and authorizes the Collateral Agent to take such action as Collateral
Agent on such Secured Party’s behalf and to exercise such powers under this
Agreement and the other Transaction Documents as are specifically delegated to
the Collateral Agent by the terms hereof and thereof together with such rights
and powers as are incidental thereto, together with such other powers as the
Collateral Agent and the Majority Secured Parties may agree.  The Collateral Agent will have no duties,
responsibilities, obligations or liabilities other than those expressly set
forth in this Agreement and the other Transaction Documents (and consented to
by the Collateral Agent), and no additional duties, responsibilities,
obligations or liabilities will be inferred from the provisions of the
Transaction Documents or imposed on the Collateral Agent.  As to actions that the Collateral Agent is
not expressly required to take pursuant to the provisions of this Agreement or
the other Transaction Documents (including enforcement or collection), the
Collateral Agent will not exercise any discretion or take any action, but will
be required to act or to refrain from acting (and will be fully protected in so
acting or refraining from acting) solely upon the instructions:

 

(i)                                     of the Revolving Administrative Agent, so
long as the Revolving Obligations remain outstanding, the Revolving Commitments
have not been terminated, and any Revolving Letters of Credit have not expired
or otherwise terminated;  and then

 

4

 

(ii)                                  following the indefeasible payment in
cash in full of the Revolving Obligations, the termination of the Revolving
Commitments and the termination or expiration of the Revolving Letters of
Credit, of the Term Loan Administrative Agent, so long as the Term Loan Secured
Obligations remain outstanding; and then

 

(iii)                               following the indefeasible payment in cash in full of
the Revolving Obligations and the Term Loan Secured Obligations, the
termination of the Revolving Commitments and the termination or expiration of
the Revolving Letters of Credit, of the Convertible Trustee (acting pursuant to
the Convertible Indenture), so long as the Convertible Secured Obligations
remain outstanding; and

 

(iv)                              otherwise, of the Majority Secured
Parties.

 

All such instructions will be binding upon all of the
Secured Parties.

 

(b)                                 Notwithstanding anything to the contrary
in Section 2(a) above, (i) without the consent of the
Subordinated Trustee (which consent shall only be given in accordance with the
terms of the Subordinated Indenture) and the Convertible Trustee (which consent
shall only be given in accordance with the terms of the Convertible Indenture),
neither the Revolving Administrative Agent (until the Revolving Obligations
have been paid in full, the Revolving Commitments have been terminated and any
Revolving Letters of Credit have expired or been terminated), the Term Loan
Administrative Agent (until the Term Loan Secured Obligations have been paid in
full), nor the Collateral Agent shall release its lien or security interest in
any Collateral unless (A) such release is in connection with a transfer of
such Collateral permitted by the Subordinated Indenture, the Convertible
Indenture, the Revolving Credit Agreement and the Term Loan Credit Agreement, (B) such
release is in connection with the sale of such Collateral where the net
proceeds of such sale will be applied to pay the Revolving Secured Obligations,
the Term Loan Secured Obligations, the Other Secured Obligations, the Convertible
Secured Obligations and the Subordinated Secured Obligations in accordance with
Section 7 hereof, or (C) such release is in connection with
the sale of Collateral, other than Collateral subject to a Pledge Agreement,
and such release is consented to (1) by the Revolving Administrative
Agent, so long as the Revolving Obligations remain outstanding, the Revolving
Commitments have not been terminated, and any Revolving Letters of Credit have
not expired or otherwise terminated, and then (2) following the indefeasible
payment in cash in full of the Revolving Obligations, the termination of the
Revolving Commitments and the termination or expiration of the Revolving
Letters of Credit, by the Term Loan Administrative Agent, so long as the Term
Loan Secured Obligations remain outstanding, and then (3) following the
indefeasible payment in cash in full of the Revolving Obligations and the Term
Loan Secured Obligations, the termination of the Revolving Commitments and the
termination or expiration of the Revolving Letters of Credit, of the
Convertible Trustee (acting pursuant to the Convertible Indenture), so long as
the Convertible Secured Obligations remain outstanding; and (4) otherwise,
by the Majority Secured Parties, or (ii) the Collateral Agent shall not amend
the Depositary Agreement without the consent of the Revolving Administrative
Agent (until the Revolving Obligations have been paid in full, the Revolving
Commitments have been terminated and any Revolving Letters of Credit have
expired or been terminated), the Term Loan Administrative Agent (until the Term
Loan Secured Obligations have been paid in full) or the Convertible Trustee
(acting pursuant to the Convertible Indenture) (until the Convertible Secured
Obligations have been paid in full).

 

5

 

(c)                                  Notwithstanding anything in this
Agreement or the Depositary Agreement or any other Transaction Document to the
contrary, the Collateral Agent will not, in any event, be required to take any
action that exposes the Collateral Agent to personal liability, that is
contrary to the other Transaction Documents or Law or with respect to which the
Collateral Agent does not receive adequate instructions or full indemnification
to its satisfaction from the Secured Parties. 
The Collateral Agent has no duties or relationship of trust or agency
with or to the Company, the Guarantors or any of their respective Affiliates.

 

(d)                                 The Secured Parties hereby authorize the
Collateral Agent to appoint Harris Bank to act as the Depositary Bank under the
Depositary Agreement.  The Secured
Parties hereby authorize and empower the Collateral Agent, upon the direction (i) of
the Revolving Administrative Agent, so long as the Revolving Obligations remain
outstanding, the Revolving Commitments have not been terminated, and any
Revolving Letters of Credit have not expired or otherwise terminated, and then (ii) following
the indefeasible payment in cash in full of the Revolving Obligations, the
termination of the Revolving Commitments and the termination or expiration of
the Revolving Letters of Credit, of the Term Loan Administrative Agent, so long
as the Term Loan Secured Obligations remain outstanding, and then (iii) following
the indefeasible payment in cash in full of the Revolving Obligations and the
Term Loan Secured Obligations, the termination of the Revolving Commitments and
the termination or expiration of the Revolving Letters of Credit, of the
Convertible Trustee (acting pursuant to the Convertible Indenture), so long as
the Convertible Secured Obligations remain outstanding; and (iv) otherwise,
of the Majority Secured Parties, to remove and replace the Depositary Bank
pursuant to the terms and conditions of Article IV of the Depositary
Agreement and to direct the Depositary Bank according to the terms of this
Agreement.

 

(e)                                  Notwithstanding anything to the contrary
in this Agreement or any other Transaction Document (except as provided in Section 4
hereof), the Collateral Agent shall not (i) exercise any rights or
remedies under this Agreement or any other Transaction Document or give any
consent under this Agreement or any other Transaction Document unless it shall
have been directed to do so in writing, (A) by the Revolving
Administrative Agent, so long as the Revolving Obligations remain outstanding,
the Revolving Commitments have not been terminated, and any Revolving Letters
of Credit have not expired or otherwise terminated, and then (B) following
the indefeasible payment in cash in full of the Revolving Obligations, the
termination of the Revolving Commitments and the termination or expiration of
the Revolving Letters of Credit, by the Term Loan Administrative Agent, so long
as the Term Loan Secured Obligations remain outstanding, and then (C) following
the indefeasible payment in cash in full of the Revolving Obligations and the
Term Loan Secured Obligations, the termination of the Revolving Commitments and
the termination or expiration of the Revolving Letters of Credit, by the
Convertible Trustee (acting pursuant to the Convertible Indenture), so long as
the Convertible Secured Obligations remain outstanding; and (D) otherwise,
by the Majority Secured Parties, or (ii) enter into any agreement
amending, modifying, supplementing or waiving any provision of this Agreement
or any other Transaction Document unless it shall have been directed to do so
in writing (A) by the Revolving Administrative Agent, the Term Loan
Administrative Agent, the Convertible Trustee (which direction shall only be
given in accordance with the terms of the Convertible Indenture) and the
Subordinated Trustee (which direction shall only be given in accordance with
the terms of the Subordinated Indenture), so long as the Revolving Obligations
remain outstanding, the Revolving Commitments have not been terminated, and any
Revolving 

 

6

 

Letters of Credit have not expired or otherwise
terminated, and then (B) following the indefeasible payment in cash in
full of the Revolving Obligations, the termination of the Revolving Commitments
and the termination or expiration of the Revolving Letters of Credit, by the
Term Loan Administrative Agent, the Convertible Trustee (which direction shall
only be given in accordance with the terms of the Convertible Indenture) and the
Subordinated Trustee (which direction shall only be given in accordance with
the terms of the Subordinated Indenture), so long as the Term Loan Secured
Obligations remain outstanding, and then (C) following the indefeasible
payment in cash in full of the Revolving Obligations and the Term Loan Secured
Obligations, the termination of the Revolving Commitments and the termination
or expiration of the Revolving Letters of Credit, by the Convertible Trustee
(which direction shall only be given in accordance with the terms of the
Convertible Indenture) and the Subordinated Trustee (which direction shall only
be given in accordance with the terms of the Subordinated Indenture), so long
as the Convertible Secured Obligations remain outstanding; and (D) otherwise,
by the Majority Secured Parties.

 

Section 3.                                          Priority of Security
Interests.  The parties hereto agree and acknowledge (a) that
each of the Revolving Secured Obligations, the Term Loan Secured Obligations
and the Convertible Secured Obligations are “Senior Indebtedness” as defined in
the Subordinated Indenture and the Subordinated Secured Obligations shall be
subordinated thereto pursuant to the terms and conditions of this Agreement and
the Subordinated Indenture, including without limitation Articles 11, 12 and 13
of the Subordinated Indenture and (b) that each of the Revolving Secured
Obligations and the Term Loan Secured Obligations are “Senior Secured
Indebtedness” as defined in the Convertible Indenture and the Convertible
Secured Obligations shall be subordinated thereto pursuant to the terms and
conditions of this Agreement and the Convertible Indenture, including without
limitation Article 6 of the Convertible Indenture and each guaranty
delivered in connection therewith.   The
priorities specified in this Agreement and in the Depositary Agreement
(including, without limitation, in Section 3.6 thereof) with respect to (i) the
Collateral, (ii) all proceeds of the Collateral and (iii) all amounts
and funds retained in accordance with the Depositary Agreement, in each case
are applicable irrespective of any statement to the contrary in any other
Transaction Document or any other agreement, the time or order or method of
attachment or perfection of Liens, the time or order of the filing of financing
statements, or the giving or failure to give notice of the acquisition or
expected acquisition of purchase money or other security interests, and to the
extent not provided for in this Agreement, the Depositary Agreement, the
Subordinated Indenture, the Convertible Indenture and the Guarantees (as
defined in each of the Subordinated Indenture and the Convertible Indenture)
the rights and priorities of the Secured Parties shall be determined in
accordance with applicable law.

 

Section 4.                                          Application of Monies. 
Subject to Section 3.13 of the Depositary Agreement and the
limitations and conditions, if any, set forth or referred to in each of the
Sections of the Depositary Agreement referred to below or in the Subordinated
Indenture or the Convertible Indenture, and, without the need for direction
from any Secured Party, the Collateral Agent shall instruct the Depositary Bank
to apply Monies on deposit in (i) the Revenue Account as provided in Section 3.1
or 3.6, as the case may be, of the Depositary Agreement; (ii) in the US
Levelization Reserve Account as provided in Section 3.2 or 3.6, as the
case may be, of the Depositary Agreement; (iii) in the Canadian
Levelization Reserve Account as provided in Section 3.3 or 3.6, as the
case may be, of the Depositary Agreement; (iv) in the US Disbursement 

 

7

 

Account as provided in Section 3.4
or 3.6, as the case may be, of the Depositary Agreement and (v) in the
Canadian Disbursement Account as provided in Section 3.5 or 3.6, as the
case may be, of the Depositary Agreement.

 

Section 5.                                          Exercise of Rights. 
So long as any Revolving Secured Obligations, Term Loan Secured
Obligations, Other Secured Obligations, Convertible Secured Obligations or
Subordinated Secured Obligations remain outstanding, each of the Secured
Parties hereby acknowledges and agrees as follows:

 

(a)                                 The Collateral Agent shall administer the
Collateral in the manner contemplated by the Transaction Documents, the
Depositary Agreement and this Agreement, and exercise, except as otherwise
provided in Section 4 hereof, only upon the written instruction (i) of
the Revolving Administrative Agent, so long as the Revolving Obligations remain
outstanding, the Revolving Commitments have not been terminated, and any
Revolving Letters of Credit have not expired or otherwise terminated, and then (ii) following
the indefeasible payment in cash in full of the Revolving Obligations, the
termination of the Revolving Commitments and the termination or expiration of
the Revolving Letters of Credit, of the Term Loan Administrative Agent, so long
as the Term Loan Secured Obligations remain outstanding, and then (iii) following
the indefeasible payment in cash in full of the Revolving Obligations and the
Term Loan Secured Obligations, the termination of the Revolving Commitments and
the termination or expiration of the Revolving Letters of Credit, of the
Convertible Trustee (acting pursuant to the Convertible Indenture), so long as
the Convertible Secured Obligations remain outstanding; and (iv) otherwise,
upon the written instruction of, and on behalf of the Majority Secured Parties
in accordance with Sections 4, 5, 6
and 7 hereof (or, when required under Section 2 hereof, the
Convertible Trustee, the Subordinated Trustee, the Revolving Administrative
Agent or the Term Loan Administrative Agents, as applicable) such rights and
remedies with respect to the Collateral as are granted to it under this
Agreement, the other Transaction Documents and applicable law.

 

(b)                                 Upon the request of the Collateral Agent,
such Secured Party will provide the Collateral Agent (i) notice of the
amount of outstanding Revolving Secured Obligations, Term Loan Secured
Obligations, Other Secured Obligations, Convertible Secured Obligations and
Subordinated Secured Obligations owed by the Company and the Guarantors to such
Secured Party under the Transaction Documents and (ii) any other
information that the Collateral Agent may reasonably request.

 

Section 6.                                          Actions Upon a Trigger
Event.  So long as any Revolving Secured Obligations,
Term Loan Secured Obligations, Other Secured Obligations, Convertible Secured
Obligations or Subordinated Secured Obligations remain outstanding, the
following provisions shall apply:

 

(a)                                 By its consent hereto each of the Company
and the Guarantors hereby agree that if a Trigger Event shall have occurred and
be continuing, the Collateral Agent is hereby irrevocably authorized and
empowered to act as the attorney-in-fact for such Company or Guarantor with
respect to the giving of any instructions or notices under the Depositary
Agreement and that such Company’s or Guarantor’s right to give such
instructions and notices itself shall terminate until such time as such Trigger
Event is no longer continuing.

 

8

 

(b)                                 The Collateral Agent hereby agrees that,
upon the written request (i) of the Revolving Administrative Agent, so
long as the Revolving Obligations remain outstanding, the Revolving Commitments
have not been terminated, and any Revolving Letters of Credit have not expired
or otherwise terminated, and then (ii) following the indefeasible payment
in cash in full of the Revolving Obligations, the termination of the Revolving
Commitments and the termination or expiration of the Revolving Letters of
Credit, of the Term Loan Administrative Agent, so long as the Term Loan Secured
Obligations remain outstanding, and then (iii) following the indefeasible
payment in cash in full of the Revolving Obligations and the Term Loan Secured
Obligations, the termination of the Revolving Commitments and the termination
or expiration of the Revolving Letters of Credit, of the Convertible Trustee
(acting pursuant to the Convertible Indenture), so long as the Convertible
Secured Obligations remain outstanding; and (iv) otherwise, of the
Majority Secured Parties, but only upon such request, it shall until such time
as such Trigger Event is no longer continuing, give such notices and
instructions which, but for the occurrence and continuance of such Trigger
Event, any of the Company or Guarantors would be entitled to give to the
Depositary Bank under the Depositary Agreement.

 

(c)                                  By its consent hereto each of the Company
and the Guarantors hereby acknowledges that if a Trigger Event shall have
occurred and be continuing, the Collateral Agent shall instruct the Depositary
Bank to distribute Monies in the Accounts in accordance with and upon the
written request (i) of the Revolving Administrative Agent, so long as the
Revolving Obligations remain outstanding, the Revolving Commitments have not
been terminated, and any Revolving Letters of Credit have not expired or
otherwise terminated, and then (ii) following the indefeasible payment in
cash in full of the Revolving Obligations, the termination of the Revolving
Commitments and the termination or expiration of the Revolving Letters of
Credit, of the Term Loan Administrative Agent, so long as the Term Loan Secured
Obligations remain outstanding, and then (iii) following the indefeasible
payment in cash in full of the Revolving Obligations and the Term Loan Secured
Obligations, the termination of the Revolving Commitments and the termination
or expiration of the Revolving Letters of Credit, of the Convertible Trustee
(acting pursuant to the Convertible Indenture), so long as the Convertible
Secured Obligations remain outstanding; and (iv) otherwise, of the
Majority Secured Parties and consistent with (x) the provisions of
Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6 and 3.15 of the Depositary
Agreement, (y) the subordination provisions of the Convertible Indenture
and the “Guarantees” (as defined in the Convertible Indenture) and (z) the
subordination provisions of the Subordinated Indenture and the “Guarantees” (as
defined in the Subordinated Indenture).

 

Section 7.                                          Exercise of Remedies and
Application of Proceeds.  So long as any of the Revolving
Secured Obligations, Term Loan Secured Obligations, the Other Secured
Obligations, the Convertible Secured Obligations and the Subordinated Secured
Obligations remain outstanding, the following provisions shall apply:

 

(a)                                 [Intentionally Blank.]

 

(b)                                 Upon the written request (i) of the
Revolving Administrative Agent, so long as the Revolving Obligations remain
outstanding, the Revolving Commitments have not been terminated, and any
Revolving Letters of Credit have not expired or otherwise terminated, and then (ii) following
the indefeasible payment in cash in full of the Revolving Obligations, the 

 

9

 

termination of the
Revolving Commitments and the termination or expiration of the Revolving
Letters of Credit, of the Term Loan Administrative Agent, so long as the Term
Loan Secured Obligations remain outstanding, and then (iii) following the
indefeasible payment in cash in full of the Revolving Obligations and the Term
Loan Secured Obligations, the termination of the Revolving Commitments and the
termination or expiration of the Revolving Letters of Credit, of the
Convertible Trustee (acting pursuant to the Convertible Indenture), so long as
the Convertible Secured Obligations remain outstanding; and (iv) otherwise,
of the Majority Secured Parties, the Collateral Agent shall be authorized to
take any and all actions and to exercise any and all rights, remedies and
options which it may have hereunder, under the Transaction Documents or the
Depositary Agreement and which, (w) the Revolving Administrative Agent, so
long as the Revolving Obligations remain outstanding, the Revolving Commitments
have not been terminated, and any Revolving Letters of Credit have not expired
or otherwise terminated, and then (x) following the indefeasible payment
in cash in full of the Revolving Obligations, the termination of the Revolving
Commitments and the termination or expiration of the Revolving Letters of
Credit, of the Term Loan Administrative Agent, so long as the Term Loan Secured
Obligations remain outstanding, and then (y) following the indefeasible
payment in cash in full of the Revolving Obligations and the Term Loan Secured
Obligations, the termination of the Revolving Commitments and the termination
or expiration of the Revolving Letters of Credit, of the Convertible Trustee
(acting pursuant to the Convertible Indenture), so long as the Convertible
Secured Obligations remain outstanding; and (z) otherwise, of the Majority
Secured Parties, direct it to take under this Agreement, including realization
and foreclosure on the Collateral.

 

(c)                                  The proceeds of any sale, disposition or
other realization or foreclosure by the Collateral Agent upon the Collateral or
any portion thereof pursuant to the Transaction Documents shall be governed by
this Section 7(c).  Any
non-cash proceeds resulting from such liquidation of the Collateral shall be
held by the Collateral Agent for the benefit of the Secured Parties until later
sold or otherwise converted into cash, at which time the Collateral Agent shall
apply such cash in accordance with the next sentence of this Section 7(c).  The Collateral Agent shall distribute any
cash proceeds net of expenses resulting from liquidation of the Collateral,
together with any Monies remaining in any of the Accounts, in the order of
priority set forth in Section 3.6 of the Depositary Agreement and in
accordance with the subordination provisions of the Convertible Indenture and
the “Guarantees” (as defined in the Convertible Indenture) and the Subordinated
Indenture and the “Guarantees” (as defined in the Subordinated Indenture) to
the Secured Parties on a pro rata basis in accordance with the respective
outstanding amounts of the Revolving Secured Obligations, the Term Loan Secured
Obligations, the Other Secured Obligations, the Convertible Secured Obligations
and the Subordinated Secured Obligations owed to each holder thereof.

 

(d)                                 Any payments made to the Revolving
Lenders under this Agreement will be made to the Revolving Administrative Agent
for the benefit of the Revolving Lenders.

 

(e)                                  Any payments made to the Term Loan
Lenders under this Agreement will be made to the Term Loan Administrative Agent
for the benefit of the Term Loan Lenders.

 

(f)                                   Any payments made to holders of the
Convertible Debentures under this Agreement will be made to the Convertible
Trustee for the benefit of such holders.

 

10

 

(g)                                  Any payments made to holders of the
Subordinated Notes under this Agreement will be made to the Subordinated
Trustee for the benefit of such holders.

 

Section 8.                                          Receipt of Money or
Proceeds.  The Secured Parties and the Collateral Agent
hereby agree that if, at any time during the term of this Agreement, any
Secured Party or the Collateral Agent receives any payment or distribution of
assets of any of Atlantic Power Corporation, the Company or the Guarantors of
any kind or character, whether Monies or cash proceeds resulting from
liquidation of the Collateral, other than in accordance with the terms of this
Agreement and the Depositary Agreement, such Secured Party or the Collateral
Agent shall hold such payment or distribution in trust for the benefit of the
Secured Parties and shall immediately remit such payment or distribution to the
Depositary Bank for application or distribution, as the case may be, in
accordance with the terms of this Agreement and the Depositary Agreement.

 

Section 9.                                          Rights of Collateral
Agent.  (a) The Collateral Agent may delegate
any of its responsibilities or duties under the Transaction Documents to one or
more agents and the Collateral Agent shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder.

 

(b)                                 None of the Collateral Agent, its agents
or any of their respective Affiliates will be liable for any action taken or
omitted to be taken by any of them under or in connection with the Transaction
Documents, except that each will be liable for its own gross negligence or
willful misconduct.  Without limiting the
generality of the foregoing, the Collateral Agent:  (i) may treat the Subordinated Trustee
as payee of any Subordinated Note and may treat the Convertible Trustee as
payee of any Convertible Debenture and may treat the Revolving Administrative
Agent as the “Administrative Agent” under the Revolving Credit Agreement until
the receipt of notice of the Revolving Administrative Agent’s resignation or
removal and may treat the Term Loan Administrative Agent as the “Administrative
Agent” under the Term Loan Credit Agreement until the receipt of notice of the
Term Loan Administrative Agent’s resignation or removal; (ii) may consult
with legal counsel of its selection (including counsel for the Company or any
Guarantor), independent public accountants and other experts selected by it and
will not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (iii) makes
no representation or warranty to any Secured Party (other than as set forth in Section 10(b))
and will not be responsible to any Secured Party for any statements,
representations or warranties made in or in connection with the Transaction
Documents; (iv) will not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
the Transaction Documents or to inspect the books and records or any other
property of Atlantic Power Corporation, the Company or the Guarantors; (v) will
not be responsible to any of the Secured Parties for the due execution,
legality, validity, enforceability, genuineness, sufficiency, existence of,
perfection or value of any Transaction Document or Lien or Collateral or any
other document or instrument furnished pursuant thereto, or for the failure of
any Person (other than the Collateral Agent) to perform its obligations under
any Transaction Document; and (vi) will incur no liability under or in
respect of this Agreement or any other Transaction Document or otherwise by
acting upon any notice, consent, waiver, certificate or other writing or
instrument (including facsimiles, telexes, telegrams and cables) believed by it
to be genuine and signed or sent by the proper Person or Persons.

 

11

 

(c)                                  The Collateral Agent will not be deemed
to have knowledge or notice of any Trigger Event unless and until it has
received written notice from the Revolving Administrative Agent, the Term Loan Administrative
Agent, the Subordinated Trustee, the Convertible Trustee or any other Secured
Party, in each case as applicable, referring to this Agreement, describing the
Trigger Event and stating that such notice is a “notice of trigger event.”  Nothing in this Section 9(c) shall
require the Subordinated Trustee or the Convertible Trustee to take any action
or to give any notice which is not required under the Subordinated Indenture or
the Convertible Indenture, as applicable.

 

(d)                                 The Company and the Guarantors, jointly
and severally, agree to pay the Collateral Agent upon demand the amount of any
and all reasonable out-of-pocket expenses, including the reasonable fees and
expenses of its counsel (and any local counsel) and of any experts and agents,
which the Collateral Agent may incur in connection with (i) the
administration of this Agreement and the other Transaction Documents, (ii) the
custody or preservation of, or the sale of, collection from or other
realization upon, any of the Collateral, (iii) the exercise or enforcement
(whether through negotiations, legal proceedings or otherwise) of any of the
rights of the Collateral Agent or the Secured Parties hereunder or under the
other Transaction Documents or (iv) the failure by any of the Company or
the Guarantors to perform or observe any of the provisions hereof or of any of
the other Transaction Documents.

 

(e)                                  No provision of this Agreement shall
require the Collateral Agent to expend or risk its own funds or otherwise incur
any liability, financial or otherwise, in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.

 

(f)                                   The Collateral Agent shall be provided
executed or true and correct copies of each amendment, notice, waiver, consent
or certificate made or delivered with respect to this Agreement or any of the
other Transaction Documents sufficiently far in advance of the Collateral Agent
being required to take action under this Agreement or any other Transaction
Document or in respect of any such notice, waiver, consent or other certificate
delivered in connection therewith so as to allow the Collateral Agent to take
any such action.

 

Section 10.                                   Lack of Reliance on the
Collateral Agent and other Secured Parties; Representations and Warranties of
Collateral Agent.

 

(a)                                 Each Secured Party acknowledges that
(other than as set forth in clause (b) of this Section 10)
none of the Collateral Agent, the Subordinated Trustee, the Convertible
Trustee, the Depositary Bank, the Revolving Administrative Agent, the Term Loan
Administrative Agent, any other Secured Party or any of its respective
Affiliates has made any representations or warranties with respect to Atlantic
Power Corporation, the Company, the Guarantors, any of their respective assets
or any other matter, and agrees that no review or other action by the
Collateral Agent, the Subordinated Trustee, the Convertible Trustee, the
Depositary Bank, the Revolving Administrative Agent, the Term Loan
Administrative Agent, any other Secured Party or any of their respective
Affiliates will be deemed to constitute any such representation or warranty.  Each Secured Party acknowledges that it has,
independently and without reliance upon the Collateral Agent, the Subordinated
Trustee, the Convertible Trustee, the Depositary 

 

12

 

Bank, the Revolving
Administrative Agent, the Term Loan Administrative Agent, or any other Secured
Party, and based on the financial statements referred to in the Subordinated
Indenture, the Convertible Indenture, the Revolving Credit Agreement, or the
Term Loan Credit Agreement, as applicable, and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Transaction Documents to
which it is party.  Each Secured Party
also acknowledges and agrees that it will, independently and without reliance
upon the Collateral Agent, the Subordinated Trustee, the Convertible Trustee,
the Depositary Bank, the Revolving Administrative Agent, the Term Loan
Administrative Agent or any other Secured Party, and based on such documents
and information as it will deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Transaction
Documents.

 

(b)                                 The Collateral
Agent represents,
covenants and warrants as follows:

 

(i)                                     The Collateral Agent is a bank organized
and existing in good standing under the laws of the United States or the state
of its organization and is qualified to do business and in good standing in
every jurisdiction where the ownership of its property or the nature of the
business conducted by it makes such qualification necessary.

 

(ii)                                  The Collateral Agent has all requisite
power to conduct its business as currently conducted.  The Collateral Agent has all requisite power
to execute, deliver and perform its obligations under this Agreement and each
other Transaction Document to which the Collateral Agent is a party.  The execution, delivery and performance of
this Agreement and each other Transaction Document to which the Collateral
Agent is a party have been duly authorized by all requisite action and this
Agreement and each other Transaction Document to which the Collateral Agent is
a party have been duly executed and delivered by authorized officers or agents
of the Collateral Agent and are valid obligations of the Collateral Agent,
legally binding upon and enforceable against the Collateral Agent in accordance
with their terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors’ rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

 

Section 11.                                   Indemnification;
Bankruptcy.  (a) Each of the Company and the Guarantors,
by each such party’s consent hereto, hereby, jointly and severally, agrees to
indemnify the Collateral Agent and each Secured Party and, in their capacity as
such, their officers, directors, shareholders, controlling persons, employees,
agents and servants (each “Indemnified Party”)
from and against any and all claims, damages, losses, liabilities, obligations,
penalties, actions, causes of action, judgments, suits, costs, expenses or
disbursements (including, without limitation, reasonable attorneys’ and
consultants’ fees and expenses) (collectively “Damages”)
of any kind or nature whatsoever which may at any time be imposed on, incurred
by or asserted against any Indemnified Party (or which may be claimed against
any Indemnified Party by any Person) by reason of, in connection with or in any
way relating to or arising out of, (a) any Transaction Document, (b) any
action taken or omitted by the Collateral Agent in compliance with the
provisions of this Agreement, (c) any claim for brokerage fees or
commissions in connection with any transaction contemplated by the Transaction
Documents, (d) any claim based on any misstatement or inaccuracy in or
omission 

 

13

 

from any
disclosure provided by any of Atlantic Power Corporation, the Company, any
Guarantor or any of their respective representatives in connection with the
Subordinated Notes, the Convertible Debentures or the Loans, (e) any
costs, losses, expenses or damages in connection with the presence, release or
threatened release or disposal of hazardous material provided that the Company
and the Guarantors will not be liable to any Indemnified Party for any portion
of such claims, liabilities, obligations, losses, damages, penalties,
judgments, costs, expenses or disbursements resulting from such Indemnified
Party’s gross negligence or willful misconduct as finally determined by a court
of competent jurisdiction.  The Company
and the Guarantors further shall, upon demand by any Indemnified Party, pay to
such Indemnified Party all reasonable costs and expenses incurred by such
Indemnified Party in enforcing any rights under the Transaction Documents,
including reasonable fees and expenses of counsel.  The agreements in this Section 11(a) shall
survive the payment or satisfaction in full of the Revolving Secured
Obligations, the Term Loan Secured Obligations, the Subordinated Secured
Obligations, the Convertible Secured Obligations and the Other Secured
Obligations and the resignation or removal of the Collateral Agent or the
termination of this Agreement.

 

(b)                                 Nothing contained herein shall limit or
restrict the independent right of any Secured Party to initiate an action or
actions in any bankruptcy, reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar proceeding in its
individual capacity and to appear or be heard on any matter before the
bankruptcy or other applicable court in any such proceeding, including, without
limitation, with respect to any question concerning post-petition financing
arrangements.   The Collateral Agent is
not entitled to initiate such actions on behalf of any Secured Party or to
appear and be heard on any matter before the bankruptcy or other applicable
court in any such proceeding as the representative of any Secured Party.  The Collateral Agent is not authorized in any
such proceeding to enter into any agreement for, or give any authorization or
consent with respect to, the post-petition usage of Collateral, unless such agreement,
authorization or consent has been approved in writing (i) by the Revolving
Administrative Agent, so long as the Revolving Obligations remain outstanding,
the Revolving Commitments have not been terminated, and any Revolving Letters
of Credit have not expired or otherwise terminated, and then (ii) following
the indefeasible payment in cash in full of the Revolving Obligations, the
termination of the Revolving Commitments and the termination or expiration of
the Revolving Letters of Credit, by the Term Loan Administrative Agent, so long
as the Term Loan Secured Obligations remain outstanding, and then (iii) following
the indefeasible payment in cash in full of the Revolving Obligations and the
Term Loan Secured Obligations, the termination of the Revolving Commitments and
the termination or expiration of the Revolving Letters of Credit, by the
Convertible Trustee (acting pursuant to the Convertible Indenture), so long as
the Convertible Secured Obligations remain outstanding; and (iv) otherwise,
by the Majority Secured Parties.  This
Agreement shall survive the commencement of any such bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar proceeding.

 

Section 12.                                   Resignation and Removal
of the Collateral Agent.  The Collateral Agent may resign
at any time by giving at least 30 days’ prior written notice thereof to the
Revolving Administrative Agent, the Term Loan Administrative Agent, the
Subordinated Trustee, the Convertible Trustee and the Company and may be
removed at any time (a) by the Revolving Administrative Agent, so long as
the Revolving Obligations remain outstanding, the Revolving Commitments have
not been terminated, and any Revolving Letters of Credit have not 

 

14

 

expired or
otherwise terminated, and then (b) following the indefeasible payment in
cash in full of the Revolving Obligations, the termination of the Revolving
Commitments and the termination or expiration of the Revolving Letters of
Credit, by the Term Loan Administrative Agent, so long as the Term Loan Secured
Obligations remain outstanding, and then (c) following the indefeasible
payment in cash in full of the Revolving Obligations and the Term Loan Secured
Obligations, the termination of the Revolving Commitments and the termination
or expiration of the Revolving Letters of Credit, by the Convertible Trustee
(acting pursuant to the Convertible Indenture), so long as the Convertible
Secured Obligations remain outstanding; and (d) otherwise, by the Majority
Secured Parties.  Upon any such
resignation or removal, (x) the right to appoint successor Collateral
Agent shall be vested (1) in the Revolving Administrative Agent, so long
as the Revolving Obligations remain outstanding, the Revolving Commitments have
not been terminated, and any Revolving Letters of Credit have not expired or
otherwise terminated, and then (2) following the indefeasible payment in
cash in full of the Revolving Obligations, the termination of the Revolving
Commitments and the termination or expiration of the Revolving Letters of
Credit, in the Term Loan Administrative Agent, so long as the Term Loan Secured
Obligations remain outstanding, and then (3) following the indefeasible
payment in cash in full of the Revolving Obligations and the Term Loan Secured
Obligations, the termination of the Revolving Commitments and the termination
or expiration of the Revolving Letters of Credit, in the Convertible Trustee
(acting pursuant to the Convertible Indenture), so long as the Convertible
Secured Obligations remain outstanding; and (4) otherwise, in the Majority
Secured Parties, and (y) unless a Trigger Event shall have occurred and be
continuing, the Company shall have the right to approve such appointed
successor Collateral Agent, such approval not to be unreasonably withheld.  If no successor Collateral Agent will have
been so appointed and will have accepted its appointment within 30 days after
the resignation or removal of the retiring Collateral Agent, the retiring
Collateral Agent may, at the expense of the Company and the Guarantors,
petition a court of competent jurisdiction for the appointment of a successor
Collateral Agent.  Upon the acceptance of
its appointment as Collateral Agent, the successor Collateral Agent will
thereupon succeed to and be vested with all the rights, powers, privileges and
duties of the retiring Collateral Agent, and the retiring Collateral Agent will
be discharged from its duties and obligations under the Transaction Documents.  After any retiring Collateral Agent’s
resignation or removal, the provisions of this Agreement will inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Collateral Agent.

 

Section 13.                                   Agreement for Benefit of
Parties Hereto.  Nothing in this Agreement, express or
implied, is intended or shall be construed to confer upon, or to give to, any
Person other than the parties hereto and their respective successors and
assigns and Persons for whom the parties hereto are acting as agents or
representatives, any right, remedy or claim under or by reason of this
Agreement or any covenant, condition or stipulation hereof, and the covenants,
stipulations and agreements contained in this Agreement are and shall be for
the sole and exclusive benefit of the parties hereto and their respective
successors and assigns and Persons for whom the parties hereto are acting as
agents, trustees or representatives.

 

Section 14.                                   Severability. 
In case any one or more of the provisions contained in this Agreement
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected and/or impaired thereby.

 

15

 

Section 15.                                   Notices. 
All notices, demands, certificates or other communications hereunder
shall be in writing and shall be deemed sufficiently given or served for all
purposes when delivered personally, when sent by certified or registered mail,
postage prepaid, return receipt requested, or by private courier service, or,
if followed and confirmed by mail or courier service notice, when telecopied,
in each case, with the proper address as indicated below.  Each party may, by written notice given to
the other parties, designate any other address or addresses to which notices,
certificates or other communications to them shall be sent as contemplated by
this Agreement.  Notices shall be deemed
to have been given if and when received by an officer, manager or supervisor in
the department of the addressee specified for attention (unless the addressee
refuses to accept delivery, in which case such notices shall be deemed to have
been given when first presented to the addressee for acceptance), and notices
so delivered to the Collateral Agent shall be deemed received by an officer of
the Collateral Agent responsible for administering this Agreement. Until
otherwise so provided by the respective parties, all notices, certificates and
communications to each of them shall be addressed as follows:

 

	
  Revolving Lenders or Revolving Administrative Agent:

  	
  Bank of Montreal

  700 Louisiana, Suite 4400

  Houston, TX 77002

  Attn: Cahal Carmody

  Fax:   (713) 223-4007

  
	
  Term Loan Lenders or Term Loan Administrative Agent:

  	
  Bank of Montreal

  700 Louisiana, Suite 4400

  Houston, TX 77002

  Attn: Cahal Carmody

  Fax:   (713) 223-4007

  
	
  Collateral Agent:

  	
  Bank of Montreal

  700 Louisiana, Suite 4400

  Houston, TX 77002

  Attn: Cahal Carmody

  Fax:   (713) 223-4007

  
	
  Subordinated Trustee:

  	
  Computershare Trust Company of Canada

  100 University Avenue

  9th Floor, North Tower

  Toronto, Ontario M5J 2Y1

  Attention:  Manager, Corporate Trust

  Fax:  416-981-9777

  

 

16

 

	
  Convertible Trustee

  	
  Computershare Trust Company of Canada

  100 University Avenue

  9th Floor, North Tower

  Toronto, Ontario M5J 2Y1

  Attention:  Manager, Corporate Trust

  Fax:  416-981-9777

  
	
  The Company:

  	
  c/o Atlantic Power Management, LLC

  200 Clarendon Street

  Boston, MA 02117

  Fax:  (617) 531-6369

  

 

Section 16.                                   Successors and Assigns. 
Whenever in this Agreement any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included and all covenants, promises and agreements in this Agreement by or on
behalf of the respective parties hereto shall bind and inure to the benefit of
the respective successors and assigns of such parties, whether so expressed or
not.  In the event that any party hereto
shall transfer any interest in any Revolving Secured Obligation, Term Loan
Secured Obligation, Other Secured Obligation, Convertible Secured Obligation or
Subordinated Secured Obligation, the transferring party or the Revolving
Administrative Agent or the Term Revolving Administrative Agent, in the case of
a Person becoming party to the Revolving Credit Agreement or the Term Loan
Credit Agreement, as applicable, as a lender, shall cause such Person to
execute and deliver to the Collateral Agent a joinder to this Agreement in the
form of Exhibit A hereto with appropriate insertions and upon
delivery of such joinder, such transfer shall become a Secured Party entitled
to the benefits accruing to a Secured Party pursuant to this Agreement and the
other Transaction Documents.

 

Section 17.                                   Counterparts. 
This Agreement may be executed in any number of counterparts, each
executed counterpart constituting an original but all counterparts together
constituting only one instrument.

 

Section 18.                                   Governing Law. 
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY
CONFLICTS OF LAW PROVISIONS THAT MIGHT CAUSE THIS AGREEMENT TO BE GOVERNED BY
OR CONSTRUED OR ENFORCED IN ACCORDANCE WITH THE LAWS OF ANY OTHER JURISDICTION.

 

Section 19.                                   Consent To Jurisdiction. 
ALL LEGAL ACTIONS OR PROCEEDINGS BROUGHT AGAINST THE COMPANY OR ANY
GUARANTOR WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE CITY OF NEW YORK IN THE STATE OF
NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT THE COMPANY AND EACH
GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, THE
JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.  THE COMPANY AND EACH 

 

17

 

GUARANTOR HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH ACTION OR
PROCEEDING BASED ON ANY ALLEGED LACK OF PERSONAL JURISDICTION, IMPROPER VENUE
OR FORUM NON CONVENIENS OR ANY SIMILAR BASIS. 
THE COMPANY AND EACH GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF ANY COMPLAINT, SUMMONS, NOTICE OR OTHER PROCESS RELATING TO ANY
LEGAL ACTION OR PROCEEDING BY DELIVERY THEREOF TO IT BY HAND OR BY MAIL TO THE
ADDRESS SET FORTH IN SECTION 15 HEREOF.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
SECURED PARTIES OR THE COLLATERAL AGENT TO BRING PROCEEDINGS AGAINST THE
COMPANY AND EACH GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION OR TO SERVE
PROCESS IN ANY MANNER PERMITTED BY LAW.

 

Section 20.                                   Waiver of Jury Trial. 
EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM
ARISING IN CONNECTION WITH THIS AGREEMENT.

 

Section 21.                                   No Impairments of Other
Rights.  Nothing in this Agreement is intended or
shall be construed to impair, diminish or otherwise adversely affect any other
rights the Secured Parties may have or may obtain against the Company or any of
the Guarantors or Atlantic Power Corporation.

 

Section 22.                                   Amendment; Waiver. 
No consent, amendment or waiver of any provision of this Agreement shall
be effective unless (i) the same shall be in writing and signed by the
Subordinated Trustee (until the Subordinated Secured Obligations have been
terminated), the Convertible Trustee (until the Convertible Secured Obligations
have been terminated), the Revolving Administrative Agent (until the Revolving
Obligations have been paid in full, the Revolving Commitments have terminated
and any Revolving Letters of Credit have expired or have been terminated), the
Term Loan Administrative Agent (until the Term Loan Obligations have been paid
in full) and the Collateral Agent, and, in the case of (x) an amendment to
Sections 6(a), 9(d), 11(a) or 12
(solely with respect to any amendment to the rights of the Company to approve a
substitute Collateral Agent if there is no Trigger Event) or (y) an
amendment or waiver that has the effect of imposing an obligation on the
Company or any Guarantor that is not already contained in this Agreement, an
amendment or waiver that has the effect of increasing an obligation of the
Company or any Guarantor contained in this Agreement, or an amendment or waiver
that has the effect of reducing any right of the Company or any Guarantor
contained in this Agreement, also signed by the Company, (ii) the
procedures with respect to any such amendment, waiver or consent set forth in Article 9
of the Subordinated Indenture are complied with, such procedures being
incorporated by reference to this Section 22 to the same extent as
if such procedures were set forth in their entirety herein, (iii) the
procedures with respect to any such amendment, waiver or consent set forth in Section 10.01
of the Revolving Credit Agreement are complied with, such procedures being
incorporated by reference to this Section 22 to the same extent as
if such procedures were set forth in their entirety herein, (iv) the
procedures with respect to any such amendment, waiver or consent set forth in Section 10.01
of the Term Loan Credit Agreement are complied with, such procedures being
incorporated by reference to this Section 22 to the same extent as
if such procedures were set forth in their entirety herein and (v) the
procedures with respect to any such amendment,

 

18

 

waiver or consent
set forth in Article 17 of the Convertible Indenture are complied with,
such procedures being incorporated by reference to this Section 22
to the same extent as if such procedures were set forth in their entirety
herein.  Any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.  Any amendment not made in
compliance with this section shall be void. 
For the avoidance of doubt, each of the parties hereto consents and
agrees to the amendments and amendments and restatements to the Subordinated
Indenture Security Documents, the Convertible Indenture Security Documents, the
Revolving Security Documents and  the
Term Loan Security Documents executed and delivered in connection with this
Agreement and the other Transaction Documents. 
No delay on the part of any Secured Party in the exercise of any right,
power or remedy shall operate as a waiver thereof, nor shall any single or
partial waiver by such Secured Party of any right, power or remedy preclude any
further exercise thereof, or the exercise of any other right, power or remedy.

 

Section 23.            Headings. 
Headings herein are for convenience only and shall not be relied upon in
interpreting or enforcing this Agreement.

 

Section 24.            Termination. 
This Agreement shall remain in full force and effect until indefeasible
payment in full of all of the Revolving Secured Obligations, the Term Loan
Secured Obligations, the Other Obligations, the Convertible Secured Obligations
and the Subordinated Secured Obligations. 
Following such date, Section 11(a) of this Agreement
shall continue in full force and effect.

 

Section 25.            Entire Agreement. 
This Agreement, including the documents referred to herein, embodies the
entire agreement and understanding of the parties hereto, and supersedes all
prior agreements and understandings of the parties hereto, relating to the
subject matter herein contained.

 

Section 26.            Conflicts With Other
Transaction Documents.  Notwithstanding any other
provision hereof, in the event of any conflict between the terms of Section 4
or Section 7(c) of this Agreement and the other Transaction
Documents, the provisions of Section 4 or Section 7(c),
as of the case may be, of this Agreement shall control.

 

Section 27.            Consequential Damages. 
In no event (other than in respect of its gross negligence or willful
misconduct) shall the Collateral Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Collateral Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action.

 

Section 28.            Force Majeure. 
In no event shall the Collateral Agent be responsible or liable for any
failure or delay in the performance of its obligations hereunder arising out of
or caused by, directly or indirectly, forces beyond its control, including,
without limitation strikes, work stoppages, accidents, acts of war or
terrorism, civil or military disturbances, nuclear or natural catastrophes or
acts of God, and interruptions, loss or malfunctions of utilities,
communications or computer (software and hardware) services; it being
understood that the Collateral Agent shall use reasonable efforts which are
consistent with accepted practices in the banking industry to resume
performance as soon as practicable under the circumstances.

 

19

 

Section 29.            Joinder. 
In order for any Person which is the holder of an obligation which it
would like to be an Other Secured Obligation and which would like to be a
Secured Party for purposes hereof and for purposes of the other Transaction
Documents, such Person must duly execute and deliver to the Collateral Agent a
joinder to this Agreement in the form of Exhibit A hereto with
appropriate insertions, and upon such delivery of such duly executed joinder,
such Person shall become a Secured Party entitled to the benefits accruing to a
Secured Party pursuant to this Agreement and the other Transaction Documents.

 

20

 

IN WITNESS WHEREOF, the undersigned have caused this
Agreement to be duly executed by their duly authorized officers, all as of the
date first written above.

 

 

	
   

  	
  BANK OF
  MONTREAL, as
  Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Joseph A. Bliss

  
	
   

  	
   

  	
  Title:

  	
  Director

  

 

 

Collateral Agency and
Intercreditor Agreement Signature Page

 

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their duly authorized officers, all as of the date first
written above.

 

	
   

  	
  BANK OF
  MONTREAL, as a
  Revolving Lender and Revolving Administrative Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Joseph A. Bliss

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BANK OF
  MONTREAL, as
  Term Loan Administrative Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Joseph A. Bliss

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BMO
  CAPITAL MARKETS FINANCING, INC., as Term Loan Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Cahal B. Carmody

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

 

Collateral Agency and
Intercreditor Agreement Signature Page

 

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their duly authorized officers, all as of the date first
written above.

 

	
   

  	
  UNION
  BANK OF CALIFORNIA,
  as a Revolving Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jonathan Bigelow

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

 

Collateral Agency and
Intercreditor Agreement Signature Page

 

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their duly authorized officers, all as of the date first
written above.

 

	
   

  	
  COMPUTERSHARE
  TRUST COMPANY OF CANADA, as Subordinated Trustee

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

Collateral Agency and
Intercreditor Agreement Signature Page

 

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their duly authorized officers, all as of the date first
written above.

 

	
   

  	
  COMPUTERSHARE
  TRUST COMPANY OF CANADA, as Convertible Trustee

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

Collateral Agency and
Intercreditor Agreement Signature Page

 

 

ACKNOWLEDGMENT OF AND
CONSENT AND AGREEMENT

TO THE COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT

 

The undersigned, being
one of the Company or Guarantors described in the Collateral Agency and
Intercreditor Agreement set forth above, acknowledges and, to the extent
required, consents to the terms and conditions thereof.  The undersigned does hereby further
acknowledge and agree to its agreements under Sections 6(a), 6(c), 9(d) and
11(a) of the Collateral Agency and Intercreditor Agreement and
acknowledges and agrees that it is not a third-party beneficiary of, and has no
rights under, the Collateral Agency and Intercreditor Agreement.

 

IN
WITNESS WHEREOF,
the undersigned has caused this Acknowledgment of and Consent and Agreement to
the Collateral Agency and Intercreditor Agreement to be executed by its duly
authorized officer as of October 11, 2006.

 

	
   

  	
  ATLANTIC
  POWER CORPORATION

  
	
   

  	
  By: Atlantic
  Power Management, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Barry E.
  Welch

  
	
   

  	
   

  	
  Title: President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ATLANTIC
  POWER HOLDINGS, LLC,

  
	
   

  	
  By: Atlantic
  Power Management, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Barry E.
  Welch

  
	
   

  	
   

  	
  Title: President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BADGER
  POWER GENERATION I LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BADGER
  POWER GENERATION II LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
					

 

 

Collateral Agency and
Intercreditor Agreement Signature Page

 

 

	
   

  	
  BAKER
  LAKE HYDRO LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DADE
  INVESTMENT, L.P.,

  
	
   

  	
  by its general
  partner, NCP DADE POWER, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GEDDES
  II COMPANY LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GEDDES
  COGENERATION COMPANY LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MEP
  RUMFORD, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MP
  POWER LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NCP
  DADE POWER LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  

 

Collateral Agency and
Intercreditor Agreement Signature Page

 

 

	
   

  	
  NCP
  PASCO LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NCP
  HOUSTON POWER LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NCP
  PERRY LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  OLYMPIA
  HYDRO LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ONONDAGA
  COGENERATION LIMITED PARTNERSHIP

  
	
   

  	
  by its general
  partner, GEDDES COGENERATION COMPANY LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TETON
  POWER FUNDING, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  

 

 

Collateral Agency and
Intercreditor Agreement Signature Page

 

 

	
   

  	
  EPSILON
  POWER FUNDING, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ORLANDO
  POWER GENERATION I LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ORLANDO
  POWER GENERATION II LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  STOCKTON
  COGEN (II) LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TETON
  EAST COAST GENERATION LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TETON
  FUELS MID-GEORGIA LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TETON
  OPERATING SERVICES, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  

 

 

Collateral Agency and
Intercreditor Agreement Signature Page

 

 

	
   

  	
  TETON
  SELKIRK LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TETON
  NEW LAKE, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  

 

 

Collateral Agency and
Intercreditor Agreement Signature Page

 

 

EXHIBIT A

 

Joinder Agreement

 

The undersigned
                    ,
a
                    ,
hereby agrees to be and become a party to the Second Amended and Restated
Collateral Agency and Intercreditor Agreement among the Revolving Lenders, Bank
of Montreal, in its capacity as Revolving Administrative Agent to the Revolving
Lenders, the Term Loan Lenders, Bank of Montreal, in its capacity as Term Loan
Administrative Agent to the Term Loan Lenders, Bank of Montreal in its capacity
as Collateral Agent, Computershare Trust Company of Canada, as Subordinated
Trustee, Computershare Trust Company of Canada, as Convertible Trustee and
other Secured Parties dated as of October 11, 2006 (as from time to
time amended, modified, supplemented, amended or restated, the “Collateral Agency and Intercreditor Agreement”).  The undersigned hereby agrees to be bound by
all of the terms of the Collateral Agency and Intercreditor Agreement and
hereby makes all agreements, acknowledgements, authorizations, representations
and warranties, and grants all consents, and makes all appointments as if it
were originally a signatory to such Collateral Agency and Intercreditor
Agreement, without the necessity of any further action.

 

This Joinder Agreement is executed on this
       day of                                       ,
200    .

 

	
   

  	
  [NAME]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

 

Consented and Agreed to by

Bank of Montreal as Revolving Administrative Agent

 

 

	
  BANK OF MONTREAL, as Revolving Administrative Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

This Joinder
Agreement is made effective as of this        day
of
                            ,
200    .

 

A-1

 

CONTENTS

 

	
  Clause

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
  DEFINITIONS; RULES OF CONSTRUCTION

  	
  2

  
	
  SECTION 2.

  	
  AUTHORIZATION AND ACTION OF COLLATERAL AGENT

  	
  3

  
	
  SECTION 3.

  	
  PRIORITY OF SECURITY INTERESTS

  	
  4

  
	
  SECTION 4.

  	
  APPLICATION OF MONIES

  	
  4

  
	
  SECTION 5.

  	
  EXERCISE OF RIGHTS

  	
  5

  
	
  SECTION 6.

  	
  ACTIONS UPON A TRIGGER EVENT

  	
  5

  
	
  SECTION 7.

  	
  EXERCISE OF REMEDIES AND APPLICATION OF PROCEEDS

  	
  6

  
	
  SECTION 8.

  	
  RECEIPT OF MONEY OR PROCEEDS

  	
  6

  
	
  SECTION 9.

  	
  RIGHTS OF COLLATERAL AGENT

  	
  7

  
	
  SECTION 10.

  	
  LACK OF RELIANCE ON THE COLLATERAL AGENT AND OTHER SECURED PARTIES;
  REPRESENTATIONS AND WARRANTIES OF COLLATERAL AGENT

  	
  8

  
	
  SECTION 11.

  	
  INDEMNIFICATION; BANKRUPTCY

  	
  9

  
	
  SECTION 12.

  	
  RESIGNATION AND REMOVAL OF THE COLLATERAL AGENT

  	
  10

  
	
  SECTION 13.

  	
  AGREEMENT FOR BENEFIT OF PARTIES HERETO

  	
  10

  
	
  SECTION 14.

  	
  SEVERABILITY

  	
  10

  
	
  SECTION 15.

  	
  NOTICES

  	
  10

  
	
  SECTION 16.

  	
  SUCCESSORS AND ASSIGNS

  	
  11

  
	
  SECTION 17.

  	
  COUNTERPARTS

  	
  12

  
	
  SECTION 18.

  	
  GOVERNING LAW

  	
  12

  
	
  SECTION 19.

  	
  CONSENT TO JURISDICTION

  	
  12

  
	
  SECTION 20.

  	
  WAIVER OF JURY TRIAL

  	
  12

  
	
  SECTION 21.

  	
  NO IMPAIRMENTS OF OTHER RIGHTS

  	
  12

  
	
  SECTION 22.

  	
  AMENDMENT; WAIVER

  	
  13

  
	
  SECTION 23.

  	
  HEADINGS

  	
  13

  
	
  SECTION 24.

  	
  TERMINATION

  	
  13

  
	
  SECTION 25.

  	
  ENTIRE AGREEMENT

  	
  13

  
	
  SECTION 26.

  	
  CONFLICTS WITH OTHER TRANSACTION DOCUMENTS

  	
  13

  
	
  SECTION 27.

  	
  CONSEQUENTIAL DAMAGES

  	
  13

  
	
  SECTION 28.

  	
  FORCE MAJEURE

  	
  14

  
	
  SECTION 29.

  	
  JOINDER

  	
  14

  

 

i

 

CONTENTS

 

	
  Clause

  	
   

  	
  Page

  

 

ii

 

EXHIBIT D

to Fourth Amended and Restated

Credit Agreement

 

Exhibit I

Form of Second Amended and Restated

Security Agreement

[Attached]

 

 

Exhibit I

 

SECOND AMENDED AND
RESTATED 

SECURITY AGREEMENT

 

THIS SECOND AMENDED AND
RESTATED SECURITY AGREEMENT (this “Security Agreement”), dated as of October 11, 2006, made
by ONONDAGA COGENERATION LIMITED PARTNERSHIP,
a New York limited partnership (the “Grantor”), in favor of BANK OF MONTREAL, as Collateral Agent
(together with its successor(s) and assigns thereto, the “Collateral
Agent”) for the Secured Parties (as defined below).

 

W I
T N E S S E T H:

 

WHEREAS, Atlantic Power Holdings, LLC (“Holdings”)
is a party to that certain Credit Agreement, dated as of November 18,
2004, (as amended by that certain First Amendment to Credit Agreement, dated as
of April 29, 2005, as further amended by that certain Second Amendment to
Credit Agreement, dated as of November 18, 2005, as further amended by
that certain Third Amendment to Credit Agreement, dated as of
September 15, 2006, as further amended by that certain Fourth Amendment to
Credit Agreement, dated as of the date of this Agreement, and as may be further
amended, restated, supplemented or otherwise modified, the “Revolving Credit
Agreement”) by and among Holdings (in its capacity as borrower under the
Revolving Credit Agreement, the “Revolving Borrower”), the various
financial institutions as are or may become parties thereto (collectively, the
“Revolving Lenders”) and Bank of Montreal, as administrative agent (the
“Revolving Administrative Agent”) for the Revolving Lenders, as issuer
of letters of credit (the “L/C Issuer”) and as collateral agent;

 

WHEREAS, Holdings has entered into or may
enter into certain hedge agreements (“Revolving Secured Hedge Agreements”)
with respect to foreign exchange, commodity or interest rate exposure with
various Revolving Secured Hedge Counterparties (as defined below);

 

WHEREAS, Holdings has entered into or may
enter into certain agreements with respect to cash management exposure and
funds transfer and deposit account liability (the “Cash Management
Agreements”) with various Revolving Secured Parties (as defined below);

 

WHEREAS, Holdings is a party to that
certain Term Loan Credit Agreement, dated as of September 15, 2006 (as
amended by that certain First Amendment to Term Loan Credit Agreement, dated as
of the date of this Agreement and as may be further amended, restated,
supplemented or otherwise modified from time to time, the “Term Loan Credit Agreement”)
by and among Holdings (in its capacity as borrower under the Term Loan Credit
Agreement, the “Term Loan Borrower” ), the various financial
institutions as are or may become parties thereto (collectively, the “Term
Loan Lenders”) and Bank of Montreal, as administrative agent (the “Term
Loan Administrative Agent”) for the Term Loan Lenders;

 

WHEREAS, on November 18, 2004 and
from time to time thereafter Atlantic Power Corporation (“Atlantic Power”)
issued (i) 11% Subordinated Notes (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the “Subordinated
Notes”) and (ii) income participating securities (“IPSs”), pursuant
to that certain 11% 

 

 

Subordinated Notes Indenture, dated as of November 18, 2004 (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, the “Subordinated Indenture”) among Atlantic Power, the guarantors
a party thereto and Computershare Trust Company of Canada, in its capacity as
trustee to the Subordinated Indenture;

 

WHEREAS, Atlantic Power is entering into
that certain Trust Indenture dated as of October 11, 2006 (as the same may
be amended, restated, supplemented or otherwise modified from time to time, the
“Convertible Indenture”), between Atlantic Power and Computershare Trust
Company of Canada, in its capacity as trustee to the Convertible Indenture,
pursuant to which Atlantic Power will issue certain “6.25% Convertible Secured
Debentures” (as described in the Convertible Indenture, the “Convertible Debentures”);

 

WHEREAS, in connection with (i) the
Revolving Credit Agreement, Grantor has executed and delivered a certain
Guaranty dated as of November 18, 2004 (as may be amended, restated,
supplemented or otherwise modified from time to time, the “Revolving
Guaranty”) in order to guaranty the obligations of the Revolving Borrower
under the Revolving Credit Agreement and the other Loan Documents (as defined
in the Revolving Credit Agreement); (ii) the Term Loan Credit Agreement,
Grantor has executed and delivered a certain Guaranty dated as of
September 15, 2006 (as may be amended, restated, supplemented or otherwise
modified from time to time, the “Term Loan Guaranty”) in order to
guaranty the obligations of the Term Loan Borrower under the Term Loan Credit
Agreement and the other Loan Documents (as defined in the Term Loan Agreement);
(iii) the Subordinated Indenture, Grantor has executed and delivered a
certain Guaranty dated as of November 18, 2004 (as may be amended,
restated, supplemented or otherwise modified from time to time, the “Subordinated
Indenture Guaranty”) in order to guaranty the obligations of Atlantic Power
under the Subordinated Indenture; and (iv) the Convertible Indenture,
Grantor has executed and delivered a certain Guaranty dated as of
October 11, 2006 (as may be amended, restated, supplemented or otherwise
modified from time to time, the “Convertible Indenture Guaranty”) in
order to guaranty the obligations of Atlantic Power under the Convertible
Indenture and the other “Security Documents” (as defined in the Convertible
Indenture);

 

WHEREAS, to secure its obligations under
the Revolving Guaranty, the Term Loan Guaranty and the Subordinated Indenture
Guaranty, Grantor entered into a certain Amended and Restated Security
Agreement, dated as of September 15, 2006 (the “Prior Security
Agreement”), which amended and restated in its entirety that certain
Security Agreement, dated as of November 18, 2004, (the “Original
Security  Agreement”), pursuant to which the Grantor granted a
security interest in the “Collateral” described therein;

 

WHEREAS, (i) the Revolving Secured
Parties (as defined below) are willing to make the credit extensions and other
financial accommodations to the Revolving Borrower in accordance with the
Revolving Credit Agreement and the other Transaction Documents providing for
the Revolving Secured Obligations, (ii) the Term Loan Secured Parties (as
defined below) are willing to make the credit extensions and other financial
accommodations to the Term Loan Borrower in accordance with the Term Loan
Credit Agreement and the other Transaction Documents providing for the Term
Loan Secured Obligations, (iii) Atlantic Power and the Subordinated
Trustee are willing to issue the Subordinated Notes and the holders from time to
time of the Subordinated Notes are willing to acquire the Subordinated Notes in
accordance with 

 

2

 

the Subordinated Indenture; and (iv) Atlantic Power and the
Convertible Trustee are willing to issue the Convertible Debentures and the
holders from time to time of the Convertible Debentures are willing to acquire
the Convertible Debentures in accordance with the Convertible Indenture, but in
each case only upon the condition, among others, that (a) the Grantor
secure its obligations under the Guaranties (defined below), the other
Transaction Documents to which it is a party and the other Transaction
Documents providing for the Secured Obligations to which it is a party, with
various items of personal property owned by the Grantor and (ii) the
Grantor agrees to restrict the use and disposition of its assets subject to and
in accordance with the terms of this Security Agreement;

 

WHEREAS, the Borrower indirectly owns 100%
of the economic interests of the Grantor;

 

WHEREAS, the respective rights of the
Secured Parties (defined below), are set forth in that certain Second Amended
and Restated Collateral Agency and Intercreditor Agreement, dated as of
October 11, 2006 (the “Collateral Agency and Intercreditor Agreement”),
by and among the Secured Parties, the Subordinated Trustee, the Convertible
Trustee, the Administrative Agent and Bank of Montreal as collateral agent, (in
such capacity, the “Collateral Agent”);

 

WHEREAS, the respective rights of the
Secured Parties are further set forth in that certain Second Amended and
Restated Deposit and Disbursement Agreement, dated as of October 11, 2006
(the “Deposit Agreement”), among the Borrower, the “Guarantors” party
thereto, the Collateral Agent, the Subordinated Trustee, the Convertible
Trustee and Harris Bank, as Depositary Bank;

 

WHEREAS, it is in the best interests of
the Grantor to execute this Security Agreement inasmuch as the Grantor will
derive substantial direct and indirect benefits from (i) the Revolving
Loans made from time to time to, and the Revolving Letters of Credit issued on
behalf of, the Revolving Borrower by the Revolving Lenders and/or the L/C
Issuer pursuant to the Revolving Credit Agreement and the financial
accommodations made from time to time to Holdings by the Revolving Secured
Hedge Counterparties pursuant to the Revolving Secured Hedge Agreements and the
Cash Management Agreement; (ii) the Term Loan Loans made from time to time
to the Term Loan Borrower by the Term Loan Lenders pursuant to the Term Loan
Credit Agreement; and (iii) the issuance of the “Securities as that term
is defined in the Subordinated Indenture, pursuant to the terms of the
Subordinated Indenture; and (iv) the issuance of the “Debentures”, as that
term is defined in the Convertible Indenture, pursuant to the terms of the
Convertible Indenture; and

 

WHEREAS, the Grantor has duly authorized
the execution, delivery and performance of this Security Agreement.

 

NOW THEREFORE, for good and valuable
consideration the receipt of which is hereby acknowledged, Grantor agrees that
to secure the payment of all of the obligations and liabilities of the Grantor
to the Collateral Agent and the other Secured Parties arising out of or in
connection with (i) the Revolving Guaranty and the other Loan Documents
(as defined in the Revolving Credit Agreement) to which the Grantor is a party,
(ii) the Term Loan Guaranty and 

 

3

 

the other Loan Documents (as defined in the Term Loan Credit Agreement) to
which the Grantor is a party, (iii) the Subordinated Indenture Guaranty,
the Subordinated Indenture and the other related Transaction Documents to which
the Grantor is a party, (iv) the Convertible Indenture Guaranty, the
Convertible Indenture and the other related Transaction Documents to which the
Grantor is a party; (v) any Other Credit Support Document to which the
Grantor is a party and any other related Transaction Documents to which the
Grantor is a party, (vi) any other Transaction Documents to which the
Grantor is a party, and (vii) the other obligations of the Grantor set
forth herein, in each case whether on account of guarantee obligations,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Collateral Agent or to any Secured Party that are required to be paid by the
Grantor pursuant to the terms of this Security Agreement or any other
Transaction Document) (collectively, the “Obligations”), the Grantor
agrees, for the benefit of each Secured Party, as follows:

 

ARTICLE
I

DEFINITIONS

 

SECTION 1.1                 Certain Terms.  The following terms (whether or not
underscored) when used in this Security Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):

 

“Atlantic Power” is defined in the recitals.

 

“Borrower” means, Holdings in its
collective capacity the Revolving Borrower and the Term Loan Borrower.

 

“Cash Management Agreement” is
defined in the recitals.

 

“Collateral” is defined in Section 2.1.

 

“Collateral Agency and Intercreditor
Agreement” is defined in the recitals.

 

“Collateral Agent” is defined in
the preamble.

 

“Computer Hardware and Software
Collateral” means: (a) all computer and other electronic data
processing hardware, integrated computer systems, central processing units,
memory units, display terminals, printers, features, computer elements, card
readers, tape drives, hard and soft disk drives, cables, electrical supply
hardware, generators, power equalizers, accessories and all peripheral devices
and other related computer hardware; (b) all software programs (including
both source code, object code and all related applications and data files),
whether now owned, licensed or leased or hereafter acquired by the Grantor,
designed for use on the computers and electronic data processing hardware
described in clause (a) above; (c) all firmware associated
therewith; (d) all documentation (including flow charts, logic diagrams,
manuals, guides and specifications) with respect to such hardware, software and
firmware described in the preceding clauses (a) through (c);
and (e) all rights with respect to all of the foregoing, including,
without limitation, any and all copyrights, licenses, options, warranties,
service contracts, program services, test rights, maintenance rights, support
rights, improvement 

 

4

 

rights, renewal rights and indemnifications and any substitutions,
replacements, additions or model conversions of any of the foregoing.

 

“Convertible Debentures” is defined
in the recitals.

 

“Convertible Indenture” is defined
in the recitals.

 

“Convertible Indenture Guarantees” means the “Guarantees” as defined in the Convertible
Indenture and includes the Convertible Indenture Guaranty.

 

“Convertible Indenture Guarantors”
means the “Guarantors” as defined in the Convertible Indenture.

 

“Convertible Indenture Guaranty” is
defined in the recitals.

 

“Convertible Secured Obligations”
means all present and future indebtedness, liabilities and obligations of any
and every nature, kind and description whatsoever and however incurred (whether
direct or indirect, joint or several, absolute or contingent, matured or
unmatured and whether as principal debtor, guarantor, surety or otherwise) of
Grantor and each “Guarantor” (as defined in the Convertible Indenture) to the
Convertible Trustee and each present and future holder of Convertible
Debentures under, in connection with or with respect to the Convertible
Indenture, each of the Convertible Debentures, the Convertible Indenture
Guarantees and any security, documents or agreements delivered from time to
time under or in connection with any of the foregoing (including, without
limitation, principal, premium, interest, indemnities, fees, costs and
expenses) and any ultimate unpaid balance thereof.

 

“Convertible Secured Parties” means
the Convertible Trustee and those holders from time to time of the Convertible Debentures.

 

“Convertible Trustee” means
Computershare Trust Company of Canada, in its capacity as trustee to the
Convertible Indenture, or any successors and assigns as provided under the
Convertible Indenture.

 

“Copyright Collateral” means all
copyrights and all semi-conductor chip product mask works of the Grantor,
whether statutory or common law, registered or unregistered, now or hereafter
in force throughout the world including, without limitation, all of the
Grantor’s right, title and interest in and to all copyrights and mask works
registered in the United States Library of Congress or anywhere else in the
world, and all applications for registration thereof, whether pending or in
preparation, all copyright and mask work licenses, the right to sue for past,
present and future infringements of any thereof, all rights corresponding
thereto throughout the world, all extensions and renewals of any thereof and
all proceeds of the foregoing, including, without limitation, licenses,
royalties, income, payments, claims, damages and proceeds of suit.

 

“Deposit Agreement” is defined in
the recitals.

 

“Equipment” is defined in clause (a) of Section 2.1.

 

5

 

“Event of Default” means any Event
of Default as defined in the Revolving Credit Agreement, the Term Loan Credit
Agreement, the Subordinated Indenture, the Convertible Indenture or any other
Transaction Document.

 

“Grantor” is defined in the preamble.

 

“Grantor Hedging Agreement” is
defined in the Section 2.1(g).

 

“Guaranties” means, collectively,
the Revolving Guaranty, the Term Loan Guaranty, the Subordinated Indenture
Guaranty and the Convertible Indenture Guaranty.

 

“Holdings” is defined in the recitals.

 

“Indemnified Parties” is defined in
Section 6.2(a).

 

“Intellectual Property Collateral”
means, collectively, the Computer Hardware and Software Collateral, the
Copyright Collateral, the Patent Collateral, the Trademark Collateral and the
Trade Secrets Collateral.

 

“Inventory” is defined in clause
(b) of Section 2.1.

 

“L/C Issuer” is defined in the recitals.

 

“Loan Document” means as the
context may require, each “Loan Document” as defined in the Revolving Credit
Agreement and the Term Loan Credit Agreement.

 

“Loan Party” means as the context
may require, each “Loan Party” as defined in the Revolving Credit Agreement and
the Term Loan Credit Agreement.

 

“Obligations” is defined in the recitals.

 

“Obligor” means the Grantor or any
other Person (other than the Collateral Agent, the L/C Issuer or any Secured
Party) obligated under any Transaction Document (including under a Guaranty),
including their permitted successors and assigns.

 

“Onondaga Swap” means that certain
swap agreement between Niagara Mohawk Power Corporation and the Grantor dated
as of June 30, 1998 and expiring on June 30, 2008.

 

“Original Security Agreement” is
defined in the recitals.

 

“Other Credit Support Document”
means any guaranty or other similar credit support document between the Grantor
and a Revolving Secured Hedge Counterparty that guaranties or otherwise
provides credit support for an Revolving Hedge Obligation.

 

“Patent Collateral” means:
(a) all letters patent and applications for letters patent throughout the
world, including all patent applications in preparation for filing anywhere in
the world and; (b) all patent licenses; (c) all reissues, divisions,
continuations, continuations-in-part, extensions, renewals and reexaminations
of any of the items described in clauses (a) and (b); and
(d) all proceeds of, and rights associated with, the foregoing (including
license royalties and 

 

6

 

proceeds of infringement suits), the right to sue third parties for past,
present or future infringements of any patent or patent application, and for
breach or enforcement of any patent license, and all rights corresponding
thereto throughout the world.

 

“Prior Security Agreement” is
defined in the recitals.

 

“Receivables” is defined in clause
(c) of Section 2.1.

 

“Related Contracts” is defined in clause
(c) of Section 2.1.

 

“Revolving Administrative Agent” is
defined in the recitals.

 

“Revolving Borrower” is defined in
the recitals.

 

“Revolving Commitments” means the
“Commitments” as defined in the Revolving Credit Agreement.

 

“Revolving Credit Agreement” is
defined in the recitals

 

“Revolving Guaranty” is defined in
the recitals.

 

“Revolving Hedging Obligation”
means “Hedging Obligations” as defined in the Revolving Credit Agreement of
Holdings or the other “Loan Parties” as defined in the Revolving Credit
Agreement to a Revolving Secured Hedge Counterparty.

 

“Revolving Lenders” is defined in
the recitals.

 

“Revolving Letters of Credit” means
the “Letters of Credit” as defined in the Revolving Credit Agreement issued by
the L/C Issuer.

 

“Revolving Loan” means the “Loans”
as defined in the Revolving Credit Agreement.

 

“Revolving Secured Hedge Agreements”
is defined in the recitals.

 

“Revolving Secured Hedge Counterparties”
means the counterparties to the Revolving Secured Hedge Agreements as described
in clause (xi) of the definition of “Permitted Liens” contained in the
Revolving Credit Agreement.

 

“Revolving Secured Obligations”  means, any or all of (i) the
“Obligations” (as defined in the Revolving Credit Agreement), (ii) any
Revolving Hedging Obligation, (iii) any obligation of the Borrower to any
of the Revolving Lenders, Bank of Montreal or their respective Affiliates with
respect to a Cash Management Agreement as permitted under the Revolving Credit
Agreement.

 

“Revolving Secured Parties” means,
as the context may require, any and all of Bank of Montreal as collateral agent
under the Revolving Credit Agreement, the L/C Issuer, any Revolving Lender,
Bank of Montreal, and each of their respective successors, transferees and
assigns and any Affiliate of any of the foregoing from time to time party to
any of the Transaction Documents.

 

7

 

“Secured Documents” means,
collectively, (i) the Revolving Guaranty and each of the other Loan
Documents (as defined in the Revolving Credit Agreement), (ii) the Term
Loan Guaranty and each of the other Loan Documents (as defined in the Term Loan
Credit Agreement), (ii) each Transaction Document related to the Revolving
Secured Obligations and the Term Loan Secured Obligations, (iii) the
Convertible Indenture and each of the Transaction Documents related to the
Convertible Secured Obligations; (iv) the Subordinated Indenture and each
of the Transaction Documents related to the Subordinated Secured Obligations;
(v) the Revolving Secured Hedge Agreements and each of the Transaction
Documents related to the Revolving Secured Hedge Obligations; and
(vi) each other Transaction Document related to the Secured Obligations.

 

“Secured Obligations” is defined in
Section 2.2.

 

“Secured Parties” means,
collectively (i) the Revolving Secured Parties, (ii) the Term Loan
Secured Parties, (iii) the Subordinated Secured Parties, (iv) the
Convertible Secured Parties and (v) the Revolving Secured Hedge
Counterparties.

 

“Security Agreement” is defined in
the preamble.

 

“Subordinated Indenture” is defined
in the recitals.

 

“Subordinated Indenture Guaranty”
is defined in the recitals.

 

“Subordinated Notes” is defined in
the recitals.

 

“Subordinated Secured Obligations”
means all present and future indebtedness, liabilities and obligations of any
and every nature, kind and description whatsoever and however incurred (whether
direct or indirect, joint or several, absolute or contingent, matured or unmatured
and whether as principal debtor, guarantor, surety or otherwise) of Atlantic
Power and each Guarantor (as defined in the Subordinated Indenture) to the
Subordinated Trustee and each present and future holder of Subordinated Notes
under, in connection with or with respect to the Subordinated Indenture, each
of the Subordinated Notes, the Subordinated Indenture Guarantees and any
security, documents or agreements delivered from time to time under or in
connection with any of the foregoing (including, without limitation, principal,
premium, interest, indemnities, fees, costs and expenses) and any ultimate
unpaid balance thereof.

 

“Subordinated Secured Parties”
means the Subordinated Trustee and those holders from time to time of the
Subordinated Notes.

 

“Subordinated Trustee” means
Computershare Trust Company of Canada, in its capacity as trustee to the
Subordinated Indenture, or any successors and assigns as provided under the
Subordinated Indenture.

 

“Term Loan Administrative Agent” is
defined in the recitals.

 

“Term Loan Borrower” is defined in
the recitals.

 

“Term Loan Credit Agreement” is
defined in the recitals.

 

8

 

“Term Loan Guaranty” is defined in
the recitals.

 

“Term Loan Lenders” is defined in the
recitals.

 

“Term Loan Loans” means the “Loans”
as defined in the Term Loan Credit Agreement.

 

“Term Loan Secured Obligations”  means, any or all of the “Obligations” as
defined in the Term Loan Credit Agreement.

 

“Term Loan Secured Parties” means,
as the context may require, any and all of Bank of Montreal as Term Loan
Administrative Agent, any Term Loan Lender, Bank of Montreal, and each of their
respective successors, transferees and assigns and any Affiliate of any of the
foregoing from time to time party to any of the Transaction Documents.

 

“Trademark Collateral” means:
(a) all trademarks, trade names, corporate names, company names, business
names, fictitious business names, trade styles, service marks, certification
marks, collective marks, logos, other source of business identifiers, prints
and labels on which any of the foregoing have appeared or appear, designs and
general intangibles of a like nature (all of the foregoing items in this clause
(a) being collectively called a “Trademark”), now existing
anywhere in the world or hereafter adopted or acquired, whether currently in
use or not, all registrations and recordings thereof and all applications in
connection therewith, whether pending or in preparation for filing, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any office or agency of the United States of America or
any State thereof or any foreign country; (b) all Trademark licenses;
(c) all reissues, extensions or renewals of any of the items described in clauses
(a) and (b); (d) all of the goodwill of the business
connected with the use of, and symbolized by the items described in, clauses
(a) and (b); and (e) all proceeds of, and rights
associated with, the foregoing, including any claim by the Grantor against
third parties for past, present or future infringement or dilution of any
Trademark, Trademark registration or Trademark license, or for any injury to
the goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license.

 

“Trade Secrets Collateral” means
common law and statutory trade secrets and all other confidential or
proprietary or useful information and all know-how obtained by or used in or
contemplated at any time for use in the business of the Grantor (all of the
foregoing being collectively called a “Trade Secret”), whether or not
such Trade Secret has been reduced to a writing or other tangible form,
including all documents and things embodying, incorporating or referring in any
way to such Trade Secret, all Trade Secret licenses, and including the right to
sue for and to enjoin and to collect damages for the actual or threatened
misappropriation of any Trade Secret and for the breach or enforcement of any
such Trade Secret license.

 

“Transaction Documents” means, as
the context may require, the Subordinated Indenture, the Subordinated Notes,
the Convertible Indenture, the Convertible Debentures, the Revolving Credit
Agreement, the Term Loan Credit Agreement, each promissory note delivered
pursuant to the Revolving Credit Agreement or the Term Loan Credit Agreement,
the Collateral Agency and Intercreditor Agreement, the Deposit Agreement, the
“Security Documents” (as defined in the Subordinated Indenture), the “Security
Documents” (as defined in the Convertible Indenture), 

 

9

 

the Loan Documents, as applicable, the agreements, contracts and documents
creating or evidencing each of the Secured Obligations, the other agreements,
documents, certificates and instruments now or hereafter executed or delivered
by Atlantic Power, Holdings or any Subsidiary or Affiliate of Holdings in
connection with the Subordinated Indenture, the Subordinated Notes, the
Convertible Indenture, the Convertible Debentures, the Revolving Credit
Agreement, the Term Loan Credit Agreement or the Secured Obligations.

 

“Trigger Event” means any “Event of
Default” as defined in any Transaction Document or “Termination Event”, as
defined in any Revolving Secured Hedge Agreement, or any other “Hedge
Agreement”, as defined in the Revolving Credit Agreement.

 

“U.C.C.” means the Uniform
Commercial Code, as in effect in the State of New York, as the same shall be
amended from time to time.

 

SECTION 1.2                                                  Collateral Agency and Intercreditor Agreement
Definitions.  Unless otherwise defined herein or the
context otherwise requires, terms used in this Security Agreement, including
its preamble and recitals, have the meanings provided in the Collateral Agency
and Intercreditor Agreement.

 

SECTION 1.3                                                  U.C.C. Definitions.  Unless otherwise defined herein or
the context otherwise requires, terms for which meanings are provided in the
U.C.C. are used in this Security Agreement, including its preamble and
recitals, with such meanings.

 

ARTICLE
II

SECURITY INTEREST

 

SECTION 2.1                                                  Grant of Security.  The Grantor hereby pledges,
hypothecates, assigns, charges, mortgages, delivers and transfers to the
Collateral Agent for its benefit and the ratable benefit of each of the Secured
Parties, and hereby grants to the Collateral Agent for its benefit and the
ratable benefit of each of the Secured Parties, a continuing security interest
in all of the Grantor’s right, title and interest, whether now existing or
hereafter arising or acquired, in and to the following property (the “Collateral”):

 

(a)                                  all equipment in all of its forms of the Grantor,
wherever located, and all machinery, apparatus, installation facilities and
other tangible personal property including without limitation all turbines
generators and other related equipment used in the production, generation or
distribution of electric power by the Grantor, and all parts thereof and all
accessions, additions, attachments, improvements, substitutions, replacements
and proceeds thereto and therefore (any and all of the foregoing being the “Equipment”);

 

(b)                                 all inventory in all of its forms of the Grantor,
wherever located, including (i) all oil, gas, or other hydrocarbons or
fuels and all products and substances derived therefrom, all raw materials and
work in process therefore, finished goods thereof, and materials used or
consumed in the manufacture or production thereof, (ii) all goods in which
the Grantor has an interest in mass or a joint or other interest or right of
any kind (including goods in which the Grantor has an interest or right as
consignee), and (iii) all goods which are returned to or repossessed by
the Grantor, and all accessions thereto, 

 

10

 

products thereof and documents therefore
(any and all such inventory, materials, goods, accessions, products and
documents being the “Inventory”);

 

(c)                                  all accounts, money, payment intangibles, deposit
accounts (including all amounts on deposit therein and all cash equivalent
investments carried in the Revenue Account (as defined in the Deposit
Agreement, hereinafter the “Revenue Account”) and all proceeds thereof),
contracts, contract rights, all rights constituting a right to the payment of
money, chattel paper, documents, documents of title, instruments, letters of
credit, letter-of-credit rights and general intangibles of the Grantor, whether
or not earned by performance or arising out of or in connection with the sale
or lease of goods or the rendering of services, including all moneys due or to
become due in repayment of any loans or advances, and all rights of the Grantor
now or hereafter existing in and to all security agreements, guaranties,
leases, agreements and other contracts securing or otherwise relating to any
such accounts, money, payment intangibles, deposit accounts, contracts,
contract rights, rights to the payment of money, chattel paper, documents,
documents of title, instruments, letters of credit, letter-of-credit rights and
general intangibles (any and all such accounts, money, payment intangibles,
deposit accounts, contracts, contract rights, rights to the payment of money,
chattel paper, documents, documents of title, instruments, letters of credit,
letter-of-credit rights and general intangibles being the “Receivables”,
and any and all such security agreements, guaranties, leases, agreements and
other contracts being the “Related Contracts”);

 

(d)                                 all Intellectual Property Collateral of the Grantor;

 

(e)                                  all books, correspondence, credit files, records,
invoices, tapes, cards, computer runs, writings, data bases, information in all
forms, paper and documents and other property relating to, used or useful in
connection with, evidencing, embodying, incorporating or referring to, any of
the foregoing in this Section 2.1;

 

(f)                                    all governmental approvals, permits, licenses,
authorizations, consents, rulings, tariffs, rates, certifications, waivers,
exemptions, filings, claims, orders, judgments and decrees (each a “Governmental
Approval”), to the extent a security interest may be granted therein;
provided that any Governmental Approval that by its terms or by operation of
law would be void, voidable, terminable or revocable if mortgaged, pledged or
assigned hereunder is expressly excepted and excluded from the Liens and terms
of this Security Agreement, including the grant of security interest in this Section 2.1;

 

(g)                                 all interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect Grantor against fluctuations in interest rates
or currency exchange rates and all commodity hedge, commodity swap, exchange,
forward, future, floor, collar or cap agreements, fixed price agreements and
all other agreements or arrangements designed to protect Grantor against
fluctuations in commodity prices (collectively “Grantor Hedging Agreements”);
provided, however, that the definition of Grantor Hedging
Agreement and none of the foregoing shall include the Onondaga Swap.

 

11

 

(h)                                 to the extent not included in the foregoing, all bank
accounts, investment property, fixtures and supporting obligations;

 

(i)                                     all accessions, substitutions, replacements, products,
offspring, rents, issues, profits, returns, income and proceeds of and from any
and all of the foregoing Collateral (including proceeds which constitute
property of the types described in clauses (a), (b), (c), (d),
(e), (f), (g), and (h) and proceeds deposited
from time to time in any lock boxes of the Grantor, and, to the extent not
otherwise included, all payments and proceeds under insurance (whether or not
the Collateral Agent is the loss payee thereof), or any condemnation award,
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the Collateral); and

 

(j)                                     all of the Grantor’s other property and rights of
every kind and description and interests therein, including without limitation,
all other “Accounts”, “Certificated Securities”, “Chattel Paper”, “Commercial
Tort Claims”, “Commodity Accounts”, “Commodity Contracts”, “Deposit Accounts”,
“Documents”, “Equipment”, “Fixtures”, “General Intangibles”, “Goods”,
“Instruments”, “Inventory”, “Investment Property”, “Letters of Credit”,
“Money”, “Proceeds”, “Securities”, “Securities Account”, “Security
Entitlements” and “Uncertificated Securities” as such terms are defined in the
U.C.C.

 

SECTION 2.2                                                  Security for Obligations. This Security Agreement secures the indefeasible
payment in full and performance of all Obligations now or hereafter existing
under the Revolving Credit Agreement, the Term Loan Credit Agreement, the
Subordinated Indenture, the Convertible Indenture and each other Transaction
Document, whether for principal, interest, costs, fees, expenses or otherwise,
and all other obligations of the Grantor to any Secured Party, howsoever
created, arising or evidenced, whether direct or indirect, primary or
secondary, fixed or absolute or contingent, joint or several, or now or
hereinafter existing or due or to become due, and all obligations of the
Grantor and each other Obligor, howsoever created, arising or evidenced,
whether direct or indirect, primary or secondary, fixed or absolute or
contingent, joint or several, or now or hereafter existing under this Security
Agreement and each other Transaction Document to which it is or may become a
party (all such Obligations and other obligations of the Borrower and the
Grantor being the “Secured Obligations”).

 

SECTION 2.3                                                  Continuing Security Interest.  This Security
Agreement shall create a continuing security interest in the Collateral and
shall: (a) remain in full force and effect until indefeasible payment in
full in cash of all Secured Obligations and the termination of all Revolving
Commitments and any other commitments of a Secured Party to the Borrower or the
Grantor or any other Obligor pursuant to any Transaction Document and the
termination or expiration of all Letters of Credit; (b) be binding upon
the Grantor and its successors, transferees and assigns; and (c) inure,
together with the rights and remedies of the Collateral Agent hereunder, to the
benefit of the Collateral Agent and each other Secured Party and its respective
successors, transferees and assigns. 
Without limiting the generality of the foregoing clause (c), any
Secured Party may assign or otherwise transfer (in whole or in part) any of the
Subordinated Notes, the Convertible Debentures, any other promissory notes
related to any of the Transaction Documents, any Revolving Hedging Obligation
or any Revolving Loan or Term Loan Loan held by it as provided in the
applicable Transaction Document and any Secured Party may assign or otherwise
transfer (in whole or in part) its interest pursuant to any Grantor Hedging
Agreement 

 

12

 

to which it is a party or Revolving
Secured Hedge Agreement, and any successor or assignee thereof shall thereupon
become vested with all the rights and benefits in respect thereof granted to
such Secured Party under any Transaction Document (including this Security
Agreement), or otherwise, subject, however, to any contrary provisions in such
assignment or transfer, and as applicable to the provisions of the Collateral
Agency and Intercreditor Agreement, Section 10.7 and Article IX
of the Revolving Credit Agreement or Section 10.7 and Article IX
of the Term Loan Credit Agreement, and, with respect to the Grantor Hedging
Agreements, the limitation on rights in collateral pursuant to the applicable
Secured Documents.  Upon the indefeasible
payment in full in cash of all Secured Obligations and the termination or
expiration of all Revolving Commitments and any other commitments of any
Secured Party to the Borrower or the Grantor or any other Obligor and the
termination or expiration of all Letters of Credit, the security interest
granted herein shall terminate and all rights to the Collateral shall revert to
the Grantor.  If at any time all or any
part of any payment theretofore applied by the Collateral Agent or any Secured
Party to any of the Secured Obligations is or must be rescinded or returned by
the Collateral Agent or any such Secured Party for any reason whatsoever
(including, without limitation, the insolvency, bankruptcy, reorganization or
other similar proceeding of the Grantor or any other Person), such Secured
Obligations shall, for purposes of this Security Agreement, to the extent that
such payment is or must be rescinded or returned, be deemed to have continued
to be in existence, notwithstanding any application by the Collateral Agent or
such Secured Party or any termination agreement or release provided to the
Grantor, and this Security Agreement shall continue to be effective or
reinstated, as the case may be, as to such Secured Obligations, all as though such
application by the Collateral Agent or such Secured Party had not been made.

 

SECTION 2.4                                                  Grantor Remains Liable.  Anything herein to the contrary
notwithstanding (a) the Grantor shall remain liable under the contracts
and agreements included in the Collateral to the extent set forth therein, and
shall perform all of its duties and obligations under such contracts and
agreements, to the same extent as if this Security Agreement had not been
executed; (b) the exercise by the Collateral Agent of any of its rights
hereunder shall not release the Grantor from any of its duties or obligations
under any contracts and agreements included in the Collateral; and
(c) neither the Collateral Agent nor any other Secured Party shall have
any obligation or liability under any such contracts or agreements included in
the Collateral by reason of this Security Agreement, nor shall the Collateral
Agent or any other Secured Party be obligated to perform any of the obligations
or duties of the Grantor thereunder or to take any action to collect or enforce
any claim for payment assigned hereunder.

 

ARTICLE
III

REPRESENTATIONS AND WARRANTIES

 

SECTION 3.1                                                  Representations and Warranties.  The Grantor
represents and warrants unto each Secured Party as set forth in this Article.

 

SECTION 3.1.1                 Location of Collateral, etc.  All of the
Equipment, Inventory and any lock boxes of the Grantor are located at the
places specified in Item A, Item B and Item C,
respectively, of Schedule I hereto. 
The place of business of the Grantor or, if the Grantor has more than
one place of business, the chief executive office of the Grantor and the office
where the Grantor keeps its records concerning the Receivables, and all
originals of all chattel paper which evidence Receivables, is located at: Onondaga
Cogeneration Limited Partnership, 300 

 

13

 

Bridge Street, Syracuse, NY 13209.  The Grantor has not been known by any legal
name different from the one set forth on the signature page hereto, nor
has the Grantor been the subject of any merger or other corporate
reorganization.  None of the Receivables
is evidenced by a promissory note or other instrument (other than a promissory
note or instrument that has been delivered to the Collateral Agent (with appropriate
endorsements).

 

SECTION 3.1.2                 Ownership, No Liens, Validity, etc.  The Grantor
owns the Collateral free and clear of any Lien, security interest, charge or
encumbrance except for the security interest created by this Security Agreement
and except as permitted by the Revolving Credit Agreement, the Term Loan Credit
Agreement, the Subordinated Indenture or the Convertible Indenture.  No effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on file
in any recording office, except such as may have been filed in favor of the
Collateral Agent relating to this Security Agreement and except for any filings
permitted by Section 7.01 of the Revolving Credit Agreement, Section 7.01
the Term Loan Credit Agreement or Section 4.08 of the Subordinated
Indenture.  This Security Agreement
creates a valid security interest in the Collateral, securing the payment of
the Secured Obligations, and, except for the proper filing of a Uniform
Commercial Code Financing Statement with the Secretary of State of the State of
New York, all filings and other actions necessary to perfect and protect such
security interest have been duly taken and such security interest shall be a
first priority security interest.

 

SECTION 3.1.3                 Possession and Control.  The Grantor has exclusive
possession and control of the Equipment and Inventory.

 

SECTION 3.1.4                 Negotiable Documents, Instruments and Chattel Paper.  The Grantor
has, contemporaneously herewith, delivered to the Collateral Agent possession
of all originals of all negotiable documents and instruments and chattel paper
currently owned or held by the Grantor (duly endorsed in blank, if requested by
the Collateral Agent).

 

SECTION 3.1.5                 Intellectual Property Collateral.  The Grantor represents
that it owns and has no interests in any Intellectual Property Collateral as of
the Effective Date, other than the Computer Hardware and Software
Collateral.  With respect to any
Intellectual Property Collateral the loss, impairment or infringement of which
might have a materially adverse effect on the business, properties, operations,
prospects or financial condition of the Grantor: (a) such Intellectual
Property Collateral is subsisting and has not been adjudged invalid or
unenforceable, in whole or in part; (b) such Intellectual Property
Collateral is valid and enforceable; (c) the Grantor has made all
necessary filings and recordations to protect its interest in such Intellectual
Property Collateral, including, without limitation, recordations of all of its
interest in the Patent Collateral and Trademark Collateral in the United States
Patent and Trademark Office and in corresponding offices throughout the world
and its claims to the Copyright Collateral in the United States Copyright
Office and in corresponding offices throughout the world; (d) the Grantor
is the exclusive owner of the entire and unencumbered right, title and interest
in and to such Intellectual Property Collateral and no claim has been made that
the use of such Intellectual Property Collateral does or may violate the
asserted rights of any third party; and (e) the Grantor has performed and
will continue to perform all acts and has paid and will continue to pay all
required fees and taxes to maintain each and every item of Intellectual
Property Collateral in full force and effect throughout the world, as
applicable.  The Grantor owns directly or
is entitled to 

 

14

 

use by license or otherwise, all patents,
Trademarks, Trade Secrets, copyrights, mask works, licenses, technology,
know-how, processes and rights with respect to any of the foregoing used in,
necessary for or of material importance to the conduct of the Grantor’s
business.

 

SECTION 3.1.6                 State of Incorporation, Organization or Formation;
Name. 
(a) The first paragraph of this Security Agreement lists the true
legal name of the Grantor as registered in the jurisdiction in which the
Grantor is organized, formed or incorporated; (b) the Grantor’s state of
incorporation, formation or organization, its organization identification
number as designated by the state of its incorporation, formation or
organization, and its principal place of business (or, if it has more than one
place of business, its chief executive office) are as set forth on Schedule
II to this Security Agreement delivered by the Grantor; and (c) the
Grantor is not now and has not been known by any trade name.

 

ARTICLE
IV

COVENANTS

 

SECTION 4.1                                                  Certain Covenants.  The Grantor covenants and agrees
that, so long as any portion of the Secured Obligations shall remain unpaid or
any Revolving Secured Party shall have any outstanding Revolving Commitment or
any Secured Party shall have outstanding any other commitment to the Borrower
or the Grantor or any other Obligor under any Transaction Document or any
Letter of Credit shall remain outstanding, the Grantor will, unless all of the
Secured Parties shall otherwise consent in writing, perform the obligations set
forth in this Section.

 

SECTION 4.1.1                 As to Equipment and Inventory and Goods.  The Grantor
hereby agrees that it shall

 

(a)                                  keep all of the Equipment and Inventory (other than
Inventory sold in the ordinary course of business) and Goods located at the
places therefore specified in Section 3.1.1 or, upon thirty (30)
days’ prior written notice to the Collateral Agent, at such other places in a
jurisdiction within the United States of America where all representations and
warranties set forth in Article III shall be true and correct, and
all action required pursuant to the first sentence of Section 4.1.7
shall have been taken with respect to the Equipment and Inventory and Goods;
and

 

(b)                                 pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Equipment and
Inventory and Goods, except to the extent the validity thereof is being
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with U.S. GAAP have been set aside.

 

SECTION 4.1.2                 As to Receivables.

 

(a)                                  The Grantor shall (i) keep its place(s) of
business and chief executive office and the office(s) where it keeps its
records concerning the Receivables, located at the address set forth in Section 3.1.1,
or, upon thirty (30) days’ prior written notice to the Collateral Agent, at
such other locations in a jurisdiction where all actions required by the first
sentence of Section 4.1.7 shall have been taken with respect to
the Receivables; (ii)

 

15

 

hold and preserve such
records; and (iv) and permit representatives of the Collateral Agent at
any time during normal business hours to inspect and make abstracts from such
records.

 

(b)           Upon written notice by the Collateral
Agent to the Grantor pursuant to this Section 4.1.2(b) (i) during
the occurrence and continuance of a Trigger Event, all cash, checks, drafts and
other instruments or writings for the payment of money constituting proceeds of
Collateral received by the Grantor during such Trigger Event shall be delivered
to the Collateral Agent in the form received (properly endorsed, where
required, so that such proceeds may be collected by the Collateral Agent) for
deposit into the Revenue Account and all Deposit Accounts and bank accounts of
the Grantor not then maintained at the Collateral Agent and all amounts on
deposit therein or cash equivalent investments carried therein will be
transferred into the Revenue Account to be disbursed pursuant to the Deposit
Agreement, and in each case the Grantor shall not commingle any such proceeds,
and shall hold separate and apart from all other property, all such proceeds in
express trust for the  benefit of the
Secured Parties until delivery thereof is made to the Collateral Agent.  The Collateral Agent shall not give the
notice referred to in this Section 4.1.2(b) unless a Trigger
Event shall have occurred and be continuing.

 

(c)           During the occurrence and continuance
of a Trigger Event, the Collateral Agent shall have the right to apply any
amount in the Revenue Account to the payment of any Secured Obligations which
are due and payable pursuant to the Deposit Agreement and the Collateral Agency
and Intercreditor Agreement.

 

(d)           Notwithstanding anything in this Section 4.1.2
to the contrary, unless requested to do so by the Collateral Agent during the
occurrence and continuation of a Trigger Event, the Grantor shall not be
required to note the lien of the Collateral Agent on the certificate of title
to any vehicle.

 

SECTION 4.1.3      As to Collateral.

 

(a)           Until such time as a Trigger Event
shall have occurred and be continuing and the Collateral Agent shall have
notified the Grantor of the revocation of such power and authority, the Grantor
(i) may in the ordinary course of its business, at its own expense, sell,
lease or furnish under the contracts of service any of the Inventory normally
held by the Grantor for such purpose, and use and consume, in the ordinary
course of its business, any raw materials, work in process or materials
normally held by the Grantor for such purpose, (ii) will, at its own
expense, endeavor to collect in a reasonable manner, as and when due, all
amounts due with respect to any of the Collateral, including the taking of such
action with respect to such collection as the Collateral Agent may reasonably
request or, in the absence of such request, as the Grantor may deem advisable,
and (iii) may grant, in the ordinary course of business, to any party
obligated on any of the Collateral, any rebate, refund or allowance to which
such party may be lawfully entitled, and may accept, in connection therewith,
the return of goods, the sale or lease of which shall have given rise to such
Collateral.  The Collateral Agent may, at
any time after a Trigger Event has occurred and is continuing, (i) notify
any parties obligated on any of the Collateral to make payment to the
Collateral 

 

16

 

Agent for deposit to the
Revenue Account of any amounts due or to become due thereunder and (ii) enforce
collection of any of the Collateral by suit or otherwise and surrender,
release, or exchange all or any part thereof, or compromise or extend or renew
for any period (whether or not longer than the original period) any
indebtedness thereunder or evidenced thereby. 
The Grantor will, at its own expense, notify any parties obligated on
any of the Collateral to make payment to the Collateral Agent for deposit to
the Revenue Account of any amounts due or to become due thereunder.

 

(b)           After the occurrence and during the
continuation of a Trigger Event, the Collateral Agent is authorized to endorse,
in the name of the Grantor, any item, howsoever received by the Collateral
Agent, representing any payment on or other proceeds of any of the Collateral.

 

SECTION 4.1.4      As to Intellectual Property Collateral.

 

(a)           The Grantor shall not take any
actions, omit to take any actions or permit any such action or omission to act
that could reasonably be expected to materially harm or otherwise adversely
affect any of the Intellectual Property Collateral.

 

(b)           The Grantor shall notify the
Collateral Agent immediately if it knows, or has reason to know, that any
application or registration relating to any material item of the Intellectual
Property Collateral may become abandoned or dedicated to the public or placed
in the public domain or invalid or unenforceable, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any foreign counterpart
thereof  or any court) regarding the
Grantor’s ownership of any of the Intellectual Property Collateral, its right
to register the same or to keep and maintain and enforce the same.

 

(c)           In no event shall the Grantor or any
of its agents, employees, designees or licensees file an application for the
registration of any Intellectual Property Collateral with the United States
Patent and Trademark Office, the United States Copyright Office or any similar
office or agency in any other country or any political subdivision thereof,
unless it promptly informs the Collateral Agent, and upon request of the
Collateral Agent executes and delivers any and all agreements, instruments,
documents and papers as the Collateral Agent may reasonably request to evidence
the Collateral Agent’s security interest in such Intellectual Property
Collateral and the goodwill and general intangibles of the Grantor relating
thereto or represented thereby.

 

(d)           The Grantor shall take all reasonable
and necessary steps, including in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any similar
office or agency in any other country or any political subdivision thereof, to
maintain and pursue any application (and to obtain the relevant registration)
filed with respect to, and to maintain any registration of, the Intellectual
Property Collateral, including the filing of applications for renewal,
affidavits of use, affidavits of incontestability and opposition, interference
and cancellation proceedings and the payment of fees and taxes.

 

17

 

(e)           The Grantor shall, (i) contemporaneously
herewith, execute and deliver to the Collateral Agent any document reasonably
required to acknowledge or register or perfect the Collateral Agent’s interest
in any part of the Grantor’s existing Intellectual Property Collateral, (ii) provide
written notice to the Collateral Agent within three (3) days after
acquiring ownership or other rights with respect to any new Intellectual
Property Collateral, and (iii) within thirty (30) days after request by
the Collateral Agent, provide any document reasonably required to acknowledge
or register or perfect the Collateral Agent’s interest in any part of such new
Intellectual Property Collateral.

 

SECTION 4.1.5      Insurance. 
The Grantor will maintain or cause to be maintained with financially
sound and reputable insurance companies insurance with respect to the
Collateral (including Equipment and Inventory) against loss or damage of the
kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons.

 

SECTION 4.1.6      Transfers and Other Liens.  The Grantor shall not:

 

(a)           directly or indirectly, create, Incur
or suffer to exist any Lien on any of the Collateral, the real property owned,
leased or otherwise occupied by Grantor (the “Real Property”), or any
other asset or Property of Grantor except for (i) Permitted Liens and (ii) Liens
reasonably incurred by Grantor in the ordinary course of its business and in
accordance with commercially reasonable past business practices and otherwise
permitted under the Revolving Credit Agreement, the Term Loan Credit Agreement,
the Subordinated Indenture and the Convertible Indenture;

 

(b)           directly or indirectly, incur or
suffer to exist any indebtedness on any of the Collateral, the Real Property or
any other asset of Grantor or issue any shares of Disqualified Stock or
Preferred Stock with respect to Grantor, except for Indebtedness Incurred with
respect to the Onondaga Swap and Indebtedness reasonably incurred by Grantor in
the ordinary course of its business and in accordance with commercially
reasonable past business practices and otherwise permitted under the Revolving
Credit Agreement, the Term Loan Credit Agreement, the Subordinated Indenture
and the Convertible Indenture; or

 

(c)           sell, transfer, lease or otherwise
dispose of any of the Collateral, Real Property or any other asset of Grantor
to any Person other than any reasonable sales, transfers, leases or other
dispositions of Collateral, Real Property or other assets by Grantor in the ordinary
course of its business and in accordance with commercially reasonable past
business practices and otherwise permitted under the Revolving Credit
Agreement, the Term Loan Credit Agreement, the Subordinated Indenture and the
Convertible Indenture.

 

SECTION 4.1.7      Further Assurances, etc.  The Grantor agrees that, from time to time at
its own expense, the Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary
or prudent, or that the Collateral Agent may reasonably request, in order to
perfect, preserve and protect any security interest granted or purported to be
granted hereby or to enable the Collateral Agent to exercise 

 

18

 

and enforce its
rights and remedies hereunder with respect to any Collateral.  Without limiting the generality of the
foregoing, the Grantor will: (a) at the request of the Collateral Agent
during a Trigger Event, mark conspicuously each chattel paper included in the
Receivables and each Related Contract and, at the request of the Collateral
Agent, each of its records pertaining to the Collateral with a legend, in form
and substance satisfactory to the Collateral Agent, indicating that such
document, chattel paper, Related Contract or Collateral is subject to the
security interest granted hereby; (b) if any Receivable shall be evidenced
by a promissory note or other instrument, negotiable document or chattel paper,
deliver and pledge to the Collateral Agent hereunder such promissory note,
instrument, negotiable document or chattel paper duly endorsed or accompanied
by duly executed instruments of transfer or assignment, all in form and
substance satisfactory to the Collateral Agent; (c) file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices (including without limitation, any assignment of claim form under or
pursuant to the federal assignment of claims statute, 31 U.S.C. §3726, any
successor or amended version thereof or any regulation promulgated under or
pursuant to any version thereof), as may be necessary or prudent, or as the
Collateral Agent may reasonably request, in order to perfect and preserve the
security interests and other rights granted or purported to be granted hereby; (d) furnish
to the Collateral Agent, from time to time at the Collateral Agent’s reasonable
request, statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Collateral Agent may reasonably request, all in reasonable detail; (e) warrant
and defend the right and title herein granted to the Collateral Agent in and to
the Collateral (and all right, title and interest represented by the
Collateral) against the claims and demands of all Persons whomsoever; (f) keep
all of its tangible Collateral, Deposit Accounts and Investment Property in the
continental United States; and (g) upon the acquisition after the date
hereof by the Grantor of any Collateral, with respect to which the security
interest granted hereunder is not perfected automatically upon such
acquisition, take such actions with respect to such Collateral or any part
thereof as required by the Transaction Documents.  With respect to the foregoing and the grant
of the security interest hereunder, the Grantor hereby authorizes the
Collateral Agent to file one or more financing or continuation statements, and
amendments thereto, relative to all or any part of the Collateral without the
signature of the Grantor where permitted by law.

 

SECTION 4.1.8      Compliance with Secured Documents.  The Grantor shall promptly
comply with the terms, conditions and covenants set forth in the Revolving
Credit Agreement, the Term Loan Credit Agreement, the Subordinated Indenture
and the Convertible Indenture and any other Transaction Documents relating to
the Grantor.

 

SECTION 4.1.9      State of Incorporation, Formation or Organization.  The Grantor shall
not change its state of incorporation, formation or organization or its name,
identity, organizational identification number as designated by the state of
its incorporation or corporate structure unless the Grantor shall have (a) given
the Collateral Agent at least thirty (30) days’ prior notice of such change and
(b) obtained the consent of the Secured Parties.

 

SECTION 4.1.10    Filings.  The Grantor hereby authorizes the Collateral
Agent to file U.C.C. financing statements with respect to the Collateral
describing the collateral pursuant to this Security Agreement and to file
U.C.C. financing statements, and continuation statements and amendments
thereto, and other similar documents, with respect to the Collateral without
its signature (to the extent permitted by applicable law).

 

19

 

ARTICLE V

THE COLLATERAL AGENT

 

SECTION 5.1                 Collateral Agent Appointed Attorney-in-Fact.  The Grantor hereby irrevocably appoints the
Collateral Agent as the Grantor’s attorney-in-fact, with full authority in the
place and stead of the Grantor and in the name of the Grantor or otherwise,
from time to time in the Collateral Agent’s discretion, to take any action and
to execute any instrument which the Collateral Agent acting reasonably may deem
necessary or advisable to accomplish the purposes of this Security Agreement,
including, without limitation: (a) to ask, demand, collect, sue for,
recover, compromise, receive and give acquittance and receipts for moneys due
and to become due under or in respect of any of the Collateral; (b) to
receive, endorse, and collect any drafts or other instruments and documents in
connection with clause (a) above;
(c) to file any claims or take any action or institute any proceedings
which the Collateral Agent acting reasonably may deem necessary or advisable
for the collection of any of the Collateral or otherwise to enforce the rights
of the Collateral Agent with respect to any of the Collateral; and (d) to
perform the affirmative obligations of the Grantor hereunder (including all
obligations of the Grantor under Section 4.1.7);
provided, however, that the Collateral Agent agrees not to
exercise the power of attorney granted pursuant to this Section 5.1
unless and until a Trigger Event has occurred and is continuing.  The Grantor hereby acknowledges, consents and
agrees that the power of attorney granted pursuant to this Section 5.1 is irrevocable and coupled
with an interest.

 

SECTION 5.2                 Collateral Agent May Perform.  If the Grantor fails to perform any agreement
contained herein, the Collateral Agent may itself perform, or cause performance
of, such agreement, and the reasonable expenses of the Collateral Agent
incurred in connection therewith shall be payable by the Grantor pursuant to Section 6.2, and the Collateral Agent
may from time to time take any other action which the Collateral Agent
reasonably deems necessary for the maintenance, preservation or protection of
any of the Collateral or of its security interest therein.

 

SECTION 5.3                 Collateral Agent Has No Duty.  In addition to, and not in limitation of, Section 2.4, the powers conferred on the
Collateral Agent hereunder are solely to protect its interest (on behalf of the
Secured Parties) in the Collateral and shall not impose any duty on it to
exercise any such powers.  Except for the
exercise of reasonable care over any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Collateral Agent
shall have no duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against prior parties or any other rights pertaining
to any Collateral.

 

SECTION 5.4                 Reasonable Care.  The Collateral Agent is required to exercise
reasonable care in the custody and preservation of any of the Collateral in its
possession; provided, however, the Collateral Agent shall be deemed
to have exercised reasonable care in the custody and preservation of any of the
Collateral if it takes such action for that purpose as the Grantor reasonably
requests in writing at times other than upon the occurrence and during the
continuation of any Trigger Event, but failure of the Collateral Agent to
comply with any such request at any time shall not in itself be deemed a
failure to exercise reasonable care.

 

20

 

ARTICLE VI

REMEDIES

 

SECTION 6.1                 Certain Remedies.  If any Trigger Event shall have occurred and
be continuing:

 

(a)           The Collateral Agent may exercise in
respect of the Collateral, in addition to other rights and remedies provided
for herein or otherwise available to it, all the rights and remedies of a
secured party on default under the U.C.C. and also may (i) require the
Grantor to, and the Grantor hereby agrees that it will, at its expense and upon
reasonable request of the Collateral Agent forthwith, assemble all or part of
the Collateral as directed by the Collateral Agent and make it available to the
Collateral Agent at a place to be designated by the Collateral Agent which is
reasonably convenient to both parties and (ii) without notice except as
specified below or, if notice cannot be waived under the U.C.C., as required to
be provided by the U.C.C., sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Collateral Agent’s
offices or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Collateral Agent may deem commercially reasonable.  The Grantor agrees that, to the extent notice
of sale or disposition shall be required by law, at least ten (10) days’
prior notice to the Grantor of the time and place of any public sale or
disposition or the time after which any private sale or disposition is to be
made shall constitute reasonable notification; provided, however,
that with respect to Collateral that is (A) perishable or threatens to
decline speedily in value, or (B) is of a type customarily sold on a
recognized market (including but not limited to, Investment Property), no
notice of sale or disposition need be given. 
For purposes of this Article VI, notice of any intended sale or
disposition of any Collateral may be given by first-class mail, hand-delivery
(through a delivery service of otherwise), facsimile or email, and shall be
deemed to have been “sent” upon deposit in the U.S. Mails with adequate postage
properly affixed, upon delivery to an express delivery service or upon
electronic submission through telephonic or internet services, as
applicable.  The Collateral Agent shall
not be obligated to make any sale of Collateral regardless of notice of sale or
disposition having been given.  The
Collateral Agent may adjourn any public or private sale or disposition from
time to time by announcement at the time and place fixed therefore, and such
sale or disposition may, without further notice, be made at the time and place
to which it was so adjourned.

 

(b)           The Grantor agrees and acknowledges
that a commercially reasonable disposition of Inventory, Equipment, Computer
Hardware and Software Collateral, or Intellectual Property may be by lease or
license of, in addition to the sale of, such Collateral.  The Grantor further agrees and acknowledges
that the following shall be deemed a reasonable commercial disposition:  (i) a disposition made in the usual
manner on any recognized market, (ii) a disposition at the price current
in any recognized market at the time of disposition, and (iii) a
disposition in conformity with reasonable commercial practices among dealers in
the type of property subject to the disposition.

 

(c)           All cash proceeds received by the
Collateral Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of
the Collateral Agent, be held by the Collateral Agent as additional collateral 

 

21

 

security for, or then or
at any time thereafter be applied (after payment of any amounts payable to the
Collateral Agent pursuant to the Collateral Agency and Intercreditor Agreement
and Section 6.2 hereof) in whole
or in part by the Collateral Agent for the ratable benefit of the Secured Parties
against all or any part of the Secured Obligations in such order as the
Collateral Agent shall elect, subject to applicable law.  Any surplus of such cash payments held by the
Collateral Agent and remaining after payment in full in cash of all the Secured
Obligations shall be paid over to the Grantor or to whomsoever may be lawfully
entitled to receive such surplus.  The
Collateral Agent shall not be obligated to apply or pay over for application
noncash proceeds of collection or enforcement unless (i) the failure to do
so would be commercially unreasonable and (ii) the affected party has
provided the Collateral Agent with a written demand to apply or pay over such
noncash proceeds on such basis.

 

SECTION 6.2                 Indemnity and Expenses.

 

(a)           Without limiting the generality of
the provisions of Section 10.5 of
the Revolving Credit Agreement or Section 10.5
of the Term Loan Credit Agreement, the Grantor agrees to indemnify the
Collateral Agent, each Secured Party and each of their respective officers,
directors, employees and agents (the “Indemnified
Parties”) from and against any and all claims, losses and
liabilities arising out of or resulting from this Security Agreement or any
other Transaction Document (including, without limitation, enforcement of this
Security Agreement), except claims, losses or liabilities resulting from any
Indemnified Party’s gross negligence, willful misconduct or unlawful acts; PROVIDED, HOWEVER, THAT IT IS THE
INTENTION OF THE PARTIES HERETO THAT EACH INDEMNIFIED PARTY BE INDEMNIFIED IN
THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF
WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED,
JOINT OR TECHNICAL.  If and to
the extent that the foregoing undertaking may be unenforceable for any reason,
the Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the foregoing which is permissible under applicable
law.

 

(b)           The Grantor will upon demand pay to
the Collateral Agent and any local counsel the amount of any and all reasonable
expenses, including the reasonable fees and disbursements of its counsel and of
any experts and agents, which the Collateral Agent and any local counsel may
incur in connection herewith, including without limitation in connection with (i) the
administration of this Security Agreement, (ii) the custody, preservation,
use or operation of, or the sale of, collection from, or other realization
upon, any of the Collateral, (iii) the exercise or enforcement of any of
the rights of the Collateral Agent and any local counsel or any of the Secured
Parties hereunder or (iv) the failure by the Grantor to perform or observe
any of the provisions hereof.

 

SECTION 6.3                 Warranties. 
The Collateral Agent may sell the Collateral without giving any
warranties or representations as to the Collateral.  The Collateral Agent may disclaim any
warranties of title or the like.  This
procedure will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral.

 

22

 

ARTICLE VII

MISCELLANEOUS PROVISIONS

 

SECTION 7.1                 Transaction Document.  This Security Agreement is a Transaction
Document executed pursuant to the Revolving Credit Agreement, the Term Loan
Credit Agreement, the Subordinated Indenture and the Convertible Indenture and
shall (unless otherwise expressly indicated herein) be construed, administered
and applied in accordance with the terms and provisions thereof.

 

SECTION 7.2                 Amendments; etc.  No amendment to or waiver of any provision of
this Security Agreement nor consent to any departure by the Grantor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Collateral Agent, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.

 

SECTION 7.3                 Addresses for Notices.  All notices and other communications provided
for hereunder shall be in writing (including by facsimile transmission) and
mailed, faxed or delivered, to the address, facsimile number or electronic mail
address specified for notices in the Collateral Agency and Intercreditor
Agreement or as may be designated by such party in a notice to the other
parties.  All such notices and other
communications shall be deemed to be given or made upon the earlier to occur of
(a) actual receipt by the intended recipient and (b) (i) if
delivered by hand or by courier, when signed for by the intended recipient; (ii) if
delivered by mail, four Business Days after deposit in the mails, postage
prepaid; (iii) if delivered by facsimile, when sent and receipt has been
confirmed by telephone; and (iv) if delivered by electronic mail (which
form of delivery is subject to the provisions of the Collateral Agency and Intercreditor
Agreement), when delivered.  Any notice
or other communication permitted to be given, made or confirmed by telephone
hereunder shall be given, made or confirmed by means of a telephone call to the
intended recipient at the number specified in the Collateral Agency and
Intercreditor Agreement, it being understood and agreed that a voicemail
message shall in no event be effective as a notice, communication or
confirmation hereunder.

 

SECTION 7.4                 Headings. 
Article and Section headings used herein are for convenience
of reference only, are not part of this Security Agreement and shall not affect
the construction of, or be taken into consideration in interpreting, this
Security Agreement.

 

SECTION 7.5                 Severability. Any provision of this Security
Agreement to which the Grantor is a party that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions thereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.

 

SECTION 7.6                 Execution in Counterparts, Effectiveness, etc.  This Security Agreement may be transmitted
and/or signed by facsimile.  The
effectiveness of any such documents and signatures shall, subject to applicable
Law, have the same force and effect as manually-signed originals and shall be
binding on all Loan Parties, the Collateral Agent and the Secured Parties.  The Collateral Agent may also require that
any such documents and signatures 

 

23

 

be confirmed by a
manually-signed original thereof; provided,
however, that the failure to request or
deliver the same shall not limit the effectiveness of any facsimile document or
signature.  This Security Agreement may
be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.  This Security Agreement
shall become effective when counterparts hereof executed on behalf of the
Grantor and the Collateral Agent shall have been received by the Collateral
Agent or its representative.

 

SECTION 7.7                 Collateral Agent; Exculpation.  By accepting the benefits of this Security
Agreement, each Secured Party hereby appoints Bank of Montreal as its
Collateral agent under and for purposes of this Security Agreement and each
other Secured Document.  Each Secured
Party authorizes Bank of Montreal to act on behalf of such Secured Party under
this Security Agreement and each other Secured Document, to exercise such
powers hereunder and thereunder as are specifically delegated to or required of
the Collateral Agent by the terms hereof, together with such powers as may be
reasonably incidental thereto.  Without
limiting the provisions of Article IX
of the Revolving Credit Agreement, Article IX
of the Term Loan Credit Agreement or the Collateral Agency and Intercreditor
Agreement, neither the Collateral Agent nor the directors, officers, employees
or agents thereof shall be liable to any Secured Party (and each Secured Party
will hold the Collateral Agent harmless) for any action taken or omitted to be
taken by it under this Security Agreement or any other Secured Document, or in
connection herewith or therewith, except for the willful misconduct or gross
negligence of the Collateral Agent, or responsible for any recitals or
warranties herein or therein, or for the effectiveness, enforceability,
validity or due execution of this Security Agreement or any other Secured
Document, or for the creation, perfection or priority of any Liens purported to
be created by this Security Agreement, or the validity, genuineness,
enforceability, existence, value or sufficiency of any collateral security, or
to make any inquiry respecting the performance by the Grantor of its
obligations hereunder.

 

SECTION 7.8                 Amendment and Restatement.  This Security Agreement is given in amendment
and restatement of, and continuation, extension and renewal of, but not in
extinguishment of, the obligations under the Prior Security Agreement or the
Original Security Agreement.

 

SECTION 7.9                 Governing Law.  THIS
SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF
RELATING TO CONFLICT OF LAW EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW); PROVIDED THAT THE
COLLATERAL AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL
LAW.

 

SECTION 7.10               Forum Selection and Consent to Jurisdiction.  ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS SECURITY AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN MANHATTAN OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND
DELIVERY OF THIS SECURITY 

 

24

 

AGREEMENT,
EACH OF THE BORROWER, THE COLLATERAL AGENT AND EACH SECURED PARTY CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS.  EACH OF THE BORROWER, THE
COLLATERAL AGENT AND EACH SECURED PARTY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM  NON CONVENIENS, WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF ANY TRANSACTION DOCUMENT OR OTHER DOCUMENT RELATED
THERETO.  EACH OF THE BORROWER, THE
COLLATERAL AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED
BY THE LAW OF SUCH STATE.

 

SECTION 7.11               Waiver of Jury Trial.  EACH PARTY
TO THIS SECURITY AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY TRANSACTION
DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY TRANSACTION DOCUMENT,
OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND
EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS SECURITY AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

SECTION 7.12               No Oral
Agreements.  This Security Agreement, together with the
other Transaction Documents, comprises the complete and integrated agreement of
the parties on the subject matter hereof and thereof and supersedes all prior
agreements, written or oral, on such subject matter.  THIS SECURITY AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.

 

THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES.

 

SECTION 7.13               Filing as a Financing Statement.  At the option of the Collateral Agent, this
Security Agreement, or a carbon, photographic or other reproduction of this
Security Agreement or of any Uniform Commercial Code financing statement,
continuations and amendments thereto, covering all of the Collateral or any
portion thereof shall be sufficient as a 

 

25

 

Uniform Commercial
Code financing statement and may be filed as such where and to the full extent
permitted by applicable law.

 

[SIGNATURES BEGIN ON
FOLLOWING PAGE]

 

26

 

IN WITNESS WHEREOF, the parties hereto have caused this
Security Agreement to be duly executed and delivered by its officer thereunto
duly authorized as of the date first above written.

 

	
   

  	
  GRANTOR:

  
	
   

  	
   

  
	
   

  	
  ONONDAGA COGENERATION
  LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Geddes Cogeneration
  Corporation, it General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
  c/o
  Atlantic Power Holdings, LLC

  
	
   

  	
   

  	
  c/o
  Atlantic Power Management, LLC

  
	
   

  	
   

  	
  200
  Clarendon Street

  
	
   

  	
   

  	
  Boston,
  MA 02117

  
	
   

  	
   

  	
  Facsimile
  No.

  
	
   

  	
   

  	
  Attention: Barry Welch

  

 

 

[Signature Page to Second Amended and Restated Security

Agreement – Onondaga Cogeneration Limited Partnership]

 

 

IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

 

	
   

  	
  COLLATERAL AGENT:

  
	
   

  	
   

  
	
   

  	
  BANK OF MONTREAL

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Joseph A. Bliss

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Bank of Montreal

  
	
   

  	
   

  	
  700 Louisiana,
  Suite 4400

  
	
   

  	
   

  	
  Houston, Texas 77002

  
	
   

  	
  Facsimile:

  	
  713-223-4007

  
	
   

  	
  Attention:

  	
  Joseph A. Bliss

  
					

 

 

[Signature Page to Second Amended and Restated Security

Agreement – Onondaga Cogeneration Limited Partnership]

 

 

Schedule I

to

Security Agreement

 

	
  Item A.  Location of Equipment

  	
   

  
	
  1.          Equipment
  of the Grantor is located.

  	
  300 Bridge Street, Syracuse, NY 13209

  
	
   

  	
   

  
	
  Item B.  Location of Inventory

  	
   

  
	
  1.          Inventory
  of the Grantor is located.

  	
  300 Bridge Street, Syracuse, NY 13209

  
	
   

  	
   

  
	
  Item C.  Location of Lock Boxes

  	
   

  

 

	
  Bank Name and Address

  	
   

  	
  Account Number

  	
   

  	
  Contact Person

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. None

  	
   

  	
   

  	
   

  	
   

  

 

 

Schedule II

to

Security Agreement

 

State of Incorporation, Etc.

 

State of
Incorporation:  New York

 

State
Identification Number:  None

 

Principal
place of business:         c/o Atlantic Power Holdings, LLC

c/o
Atlantic Power Management, LLC

200 Clarendon
Street

Boston,
MA 02117

 

 

Execution Copy

 

FIFTH AMENDMENT TO CREDIT
AGREEMENT

 

THIS FIFTH AMENDMENT TO CREDIT AGREEMENT, dated as of August 13, 2007
(the “Amendment”), among Atlantic Power Holdings, LLC, a
Delaware limited liability company (the “Borrower”), the Lenders
signatory hereto and Bank of Montreal, in its capacity as administrative agent
(“Administrative Agent”) under the Credit Agreement described below.

 

W I T N E S S E T H

 

WHEREAS, the Borrower,
the Administrative Agent, and the lenders from time to time party thereto (each
a “Lender”), are parties to that certain Credit Agreement, dated as of November 18,
2004, as amended by that certain First Amendment to Credit Agreement, dated as
of April 29, 2005, as further amended by that certain Second Amendment to
Credit Agreement, dated as of November 18, 2005, as further amended by
that certain Third Amendment to Credit Agreement (the “Third Amendment”),
dated as of September 15, 2006 and as further amended by that certain
Fourth Amendment to Credit Agreement (the “Fourth Amendment”), dated as
of October 11, 2006 (as so amended, the “Credit
Agreement”); and

 

WHEREAS, the Borrower,
the Administrative Agent and each of the Lenders desire to amend certain
provisions of the Credit Agreement.

 

NOW, THEREFORE, the
parties hereto hereby agree as follows:

 

1.                                       DEFINITIONS.  Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment, including its
preamble and recitals, shall have the meanings provided in the Credit
Agreement, as hereby amended.

 

2.                                       AMENDMENTS TO CREDIT AGREEMENT

 

2.1                                 Section 1.01 is hereby amended as follows:

 

(a)                                  Amended
Definitions.  The following definitions are hereby amended
and restated as follows:

 

(i)                                     ““Applicable Margin” means the
following percentages per annum, based upon the Cash Flow Coverage Ratio as set
forth in the most recent Compliance Certificate received by the Administrative
Agent pursuant to Section 6.02(b):

 

Applicable Margin

 

	
  Pricing

  Level

  	
   

  	
  Cash Flow

  Coverage Ratio

  	
   

  	
  Commitment

  Fee

  	
   

  	
  Eurodollar Rate

  Loans

  	
   

  	
  Base Rate

  Loans

  	
   

  
	
  I

  	
   

  	
  > 2.00x

  	
   

  	
  18.75 bps

  	
   

  	
  87.5 bps

  	
   

  	
  0 bps

  	
   

  
	
  II

  	
   

  	
  > 1.75x

  	
   

  	
  20.0 bps

  	
   

  	
  112.5 bps

  	
   

  	
  0 bps

  	
   

  
	
  III

  	
   

  	
  > 1.50x

  	
   

  	
  32.5 bps

  	
   

  	
  137.5 bps

  	
   

  	
  0 bps

  	
   

  
	
  IV

  	
   

  	
  < 1.50x

  	
   

  	
  45.0 bps

  	
   

  	
  162.5 bps

  	
   

  	
  12.5 bps

  	
   

  

 

 

Any increase or
decrease in the Applicable Margin resulting from a change in the Cash Flow
Coverage Ratio shall become effective as of the first Business Day immediately
following the date a Compliance Certificate is delivered pursuant to Section 6.02(b);
provided, however, that if a Compliance Certificate is not
delivered when due in accordance with such Section, then Pricing Level IV shall
apply as of the first Business Day after the date on which such Compliance
Certificate was required to have been delivered.”

 

(ii)                                  ““Letter of Credit Sublimit” means
an amount equal to the lesser of the Commitments and U.S.$50,000,000.  The Letter of Credit Sublimit is part of, and
not in addition to, the Commitments.”

 

(iii)                               ““Maturity Date” means (a) August 12,
2012, or such later date to which the tenor of the Commitments may be extended
in accordance with the terms hereof, or (b) such earlier date upon which
the Commitments may be terminated in accordance with the terms hereof.”

 

2.2                                 Section 2.04(a)(ii)(B) of the Credit Agreement is hereby
amended by replacing the words “twelve months” with the words “twenty-four
months”.

 

2.3                                 Section 2.15(a) of the Credit Agreement is hereby amended by
replacing the words “two years prior to the Maturity Date” with the words “four
years prior to the Maturity Date” in the first sentence.

 

2.4                                 Section 2.16 of the Credit Agreement is hereby
amended and restated in its entirety as follows:

 

“Intentionally Blank.”

 

2.5                                 Schedule 2.01 of the Credit Agreement is hereby
amended and restated in it entirety by replacing it with a new Schedule 2.01
attached as Exhibit A hereto.

 

2.6                                 Following (i) the execution and
delivery of the First Amendment to Pledge Agreement, between Teton Power
Funding, LLC and the Bank of Montreal, in its capacity as collateral agent, and
acknowledged by Union Bank of California and Computershare Trust Company of
Canada, as Convertible Trustee and Computershare Trust Company of Canada, as
Subordinated Trustee, and (ii) the sale of Rockfort Power-Cayman Islands,
L.L.C. by the Borrower in accordance with the terms and conditions of the
Credit Agreement, Schedule 5.13 of the Credit Agreement shall be amended and
restated in its entirety by replacing it with a new Schedule 5.13 attached as Exhibit B
hereto.

 

3.                                       REPRESENTATIONS AND WARRANTIES. In order
to induce each of the Lenders and the Administrative Agent to enter into this
Amendment, the Borrower hereby reaffirms, as of the date hereof, its
representations and warranties contained in Article V
of the Credit Agreement (as amended by this Amendment), except to the extent
any such representation and warranty relates solely to an earlier date, and
additionally represents and warrants as follows:

 

2

 

3.1                                 Existence
and Standing.  The Borrower is a limited liability company,
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has all requisite authority to conduct its
business and is duly qualified or licensed to transact business as a foreign
limited liability company and in good standing under the laws of each
jurisdiction in which the conduct of its operations or the ownership or leasing
of its properties requires such qualification or licensing, except where
failure to be so qualified or licensed could not reasonably be expected to have
a Material Adverse Effect.

 

3.2                                 No Conflict;
Government Consent. No order, consent, adjudication,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, or other action in respect of any
governmental or public body or authority, or any subdivision thereof, which has
not been obtained by the Borrower or any of its Subsidiaries, is required to be
obtained in connection with the execution, delivery or performance of this
Amendment, or the legality, validity, binding effect or enforceability of any
of the Loan Documents, except, in each case, to the extent that the failure to
obtain such order, consent, adjudication, approval, license, authorization,
validation, exemption or other action or to make such filing, recording or
registration could not reasonably be expected to have a Material Adverse
Effect.

 

3.3                                 Due
Authorization, Non-Contravention, etc.  The
execution, delivery and performance by the Borrower of this Amendment and the
consummation of the transactions contemplated hereby and by the Credit
Agreement as so amended, are within the Borrower’s organizational powers, have
been duly authorized by all necessary organizational action, and do not (a) contravene
the Borrower’s organizational documents, including, without limitation, its
articles or certificate of incorporation, partnership agreement, certificate of
partnership, articles or certificate of organization, by-laws, operating or
other management agreement or other similar Organization Documents (except as
such, in the aggregate could not reasonably be expected to have a Material
Adverse Effect), (b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on or affecting the
Borrower (except as such, in the aggregate could not reasonably be expected to
have a Material Adverse Effect), (c) result in, or require the creation or
imposition of, any Lien (other than Permitted Liens) on any Properties (each as
defined in the Credit Agreement as amended by this Amendment) of the Borrower
or any Subsidiaries (except as such, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect), or (d) contravene, result in
or cause a breach of, or a default under, any material contract, promissory note,
indenture or other similar agreement or instrument to which the Parent, the
Borrower or any other Loan Party is a party or an obligor, including without
limitation the Subordinated Note Indenture, the Subordinated Notes, the
Convertible Note Indenture and the Convertible Notes (except as such, in the
aggregate could not reasonably be expected to have a Material Adverse Effect).

 

3.4                                 Validity,
etc.  This Amendment and the Credit Agreement as
amended hereby constitute the legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their respective
terms except as such enforceability is subject to the effect of (i) any
applicable bankruptcy, insolvency, reorganization or similar law relating to or
affecting creditors’ rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law), including concepts of materiality, reasonableness, good
faith and fair dealing.

 

3

 

4.                                       CONDITIONS PRECEDENT TO
EFFECTIVENESS.  This Amendment shall
become effective (the “Effective Date”) upon the satisfaction of the
following conditions precedent:

 

4.1                                 the Administrative Agent shall have
received counterparts of this Amendment executed and delivered on behalf of the
Borrower, Administrative Agent and each of the Lenders and acknowledged by each
of the Guarantors;

 

4.2                                 the Administrative Agent shall have
received Notes executed by the Borrower in favor of each Lender requesting such
a Note, each in a principal amount equal to such Lender’s Commitment after
giving effect to this Amendment;

 

4.3                                 the Administrative Agent, for the benefit
of the Administrative Agent and the Lenders, shall have received an opinion of
counsel to the Borrower in form and substance reasonably acceptable to the
Administrative Agent;

 

4.4                                 a certificate of the Borrower, dated as
of the date hereof, signed by a Responsible Officer of the Borrower and
delivered to the Administrative Agent (i) certifying that the Borrower
approves and consents to the extension of the Maturity Date to August 12,
2012 and the increase of the Aggregate Commitment from $75,000,000 to
$100,000,000, (ii) certifying that there has been no change to the
Organization Documents of the Borrower since the delivery of the Borrower’s
Organization Documents on October 11, 2006 in connection with the Fourth
Amendment, (iii) attaching true and correct copies of resolutions adopted
by the Borrower (a) approving and authorizing the execution of this Fifth
Amendment and (b) approving and consenting to such extension of the
Maturity Date and such increase in the Aggregate Commitment, (iv) certifying
that the Borrower is duly organized or formed, validly existing, in good
standing and qualified to engage in business in each jurisdiction in which it
is required to be qualified to engage in business and (v) certifying that (a) immediately
prior to and after giving effect to this Amendment, no Default or Event of
Default exists or is continuing and (b) since the Closing Date, no event
or events have occurred that, in the aggregate, could reasonably be expected to
have a Material Adverse Effect; and

 

4.5                                 any fees required to be paid on or before
the date hereof shall have been paid.

 

5.                                       EFFECT OF AMENDMENT. This Amendment shall
be deemed to be an amendment to the Credit Agreement, and the Credit Agreement,
as amended hereby, is hereby ratified, approved and confirmed in each and every
respect.  All references to the Credit
Agreement in any other document, instrument, agreement or writing shall
hereafter be deemed to refer to the Credit Agreement as amended hereby.

 

6.                                       GOVERNING LAW, SEVERABILITY, ETC.  THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER, GOVERNED
BY, AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND
THE LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF THE
CONFLICTS OF LAW.  Whenever
possible each provision of this Amendment shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Amendment shall be prohibited by or invalid

 

4

 

under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Amendment.

 

7.                                       MISCELLANEOUS.

 

7.1                                 Successors
and Assigns.  This Amendment shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns.

 

7.2                                 Counterparts. 
This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument.

 

7.3                                 NO ORAL AGREEMENTS. 
THIS WRITTEN AMENDMENT AND THE CREDIT AGREEMENT REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

 

[SIGNATURES
BEGIN ON FOLLOWING PAGE]

 

5

 

IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be executed by their respective
officers thereunto duly authorized as of the day and year first written above.

 

	
   

  	
  ATLANTIC
  POWER HOLDINGS, LLC,

  
	
   

  	
   

  
	
   

  	
  By: Atlantic
  Power Management, LLC, its Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patrick
  Welch

  
	
   

  	
  Name: Patrick Welch

  
	
   

  	
  Title: CFO

  

 

Signature
Page to Fifth Amendment to Credit Agreement

 

 

IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed by their respective officers thereunto duly
authorized as of the day and year first written above.

 

	
   

  	
  BANK OF MONTREAL, Individually as a Lender and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cahal Carmody

  
	
   

  	
  Name:
  Cahal Carmody

  
	
   

  	
  Title: Vice President

  

 

Signature
Page to Fifth Amendment to Credit Agreement

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed by their respective officers thereunto duly
authorized as of the day and year first written above.

 

	
   

  	
  UNION BANK OF CALIFORNIA, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jonathan Bigelow

  
	
   

  	
  Name:
  Jonathan Bigelow

  
	
   

  	
  Title: Vice President

  

 

Signature
Page to Fifth Amendment to Credit Agreement

 

 

ACKNOWLEDGMENT BY
GUARANTORS

 

Each of the undersigned
Guarantors hereby (i) consents to the terms and conditions of that certain
Fifth Amendment to Credit Agreement, dated as of August 13, 2007 (the
“Fifth Amendment”), including without limitation the extension of the
Maturity Date to August 12, 2012 and the increase of the Aggregate
Commitment from $75,000,000 to $100,000,000, (ii) acknowledges and agrees
that its consent is not required for the effectiveness of the Fifth Amendment, (iii) ratifies
and acknowledges its respective Obligations under each Loan Document to which
it is a party immediately prior to and immediately after giving effect to the Fifth
Amendment, (iv) acknowledges and agrees that immediately prior to and
immediately following the execution and delivery of the Credit Agreement, its
respective Guaranty is and shall be in full force and effect and its
obligations thereunder shall continue in all respects in connection with the
Credit Agreement as amended by the Fifth Amendment, including without
limitation, all Obligations of the Borrower or any Obligor now or hereafter
existing to the Administrative Agent or Lenders under the Credit Agreement as
amended by the Fifth Amendment or any other Loan Document, (v) certifies
that there has been no change to the Organization Documents of such Guarantor
since the delivery of such Guarantor’s Organization Documents on October 11,
2006 in connection with the Fourth Amendment, (vi) certifies that (a) other
than with respect to the Parent, the resolutions of such Guarantor delivered on
September 15, 2006 in connection with the Third Amendment approve and
provide for the consent to the extension of the Maturity Date to August 12,
2012 and the increase of the Aggregate Commitment from $75,000,000 to
$100,000,000 and such resolutions have not been amended, modified or rescinded
and remain in full force and effect, and (b) with respect to the Parent,
attached hereto as Exhibit C are true and correct copies of
resolutions of the Parent that approve and provide for the consent to the
extension of the Maturity Date to August 12, 2012 and the increase of the
Aggregate Commitment from $75,000,000 to $100,000,000, (vii) certifies
that such Guarantor is duly organized or formed, validly existing, in good
standing and qualified to engage in business in each jurisdiction in which it
is required to be qualified to engage in business, and (viii) represents
and warrants that (a) to its knowledge, no Default or Unmatured Default
has occurred and is continuing, (b) it is in full compliance with all
covenants and agreements pertaining to it in the Loan Documents, (c) the
execution, delivery and performance by each such Guarantor of this
acknowledgement and the consummation of the transactions contemplated by the
Fifth Amendment and the Credit Agreement as amended thereby, are within each
such Guarantor’s organizational powers and have been duly authorized by all
necessary organizational action, and (d) it has reviewed a copy of the
Fifth Amendment.

 

	
   

  	
  PARENT GUARANTOR

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ATLANTIC POWER CORPORATION,

  
	
   

  	
   

  	
  a
  Corporation existing pursuant to the
  laws of

  
	
   

  	
   

  	
  British
  Columbia, Canada

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
       By:
  Atlantic Power Management, LLC, its Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SUBSIDIARY GUARANTORS

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TETON POWER FUNDING LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EPSILON POWER FUNDING LLC, a Delaware limited liability company

  
							

 

Signature
Page to Fifth Amendment to Credit Agreement

 

 

 

	
   

  	
   

  	
  MP POWER, LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TETON EAST COAST GENERATION LLC, a Delaware limited
  liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TETON FUELS MID-GEORGIA, LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TETON SELKIRK, LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BADGER POWER GENERATION I LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BADGER POWER GENERATION II LLC, a Delaware limited
  liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BAKER LAKE HYDRO LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DADE INVESTMENT, LP, a Delaware limited partnership

  
	
   

  	
   

  	
       By:  NCP Dade Power, LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GEDDES II COMPANY LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GEDDES COGENERATION COMPANY LLC, a New York limited
  liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MEP RUMFORD, LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NCP DADE POWER LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NCP HOUSTON POWER LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NCP PASCO, LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NCP PERRY LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OLYMPIA HYDRO LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ORLANDO POWER GENERATION I LLC, a Delaware limited
  liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ORLANDO POWER GENERATION II LLC, a Delaware limited
  liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  STOCKTON COGEN (II), LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TETON OPERATING SERVICES LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TETON
  NEW LAKE, LLC, a Delaware limited liability
  company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ONONDAGA COGENERATION L.P., a New
  York limited partnership

  
	
   

  	
   

  	
       By:  Geddes Cogeneration Company, LLC, its
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

Signature
Page to Fifth Amendment to Credit Agreement

 

 

EXHIBIT A

to Fifth Amendment to Revolving

Credit Agreement

 

SCHEDULE
2.01

 

COMMITMENTS

AND PERCENTAGE SHARES

 

 

	
  Lender

  	
   

  	
  Commitment

  	
   

  	
  Percentage Share

  	
   

  
	
  BANK OF MONTREAL

  	
   

  	
  $

  	
  50,000,000

  	
   

  	
  50.000000000

  	
  %

  
	
  UNION BANK OF CALIFORNIA

  	
   

  	
  $

  	
  50,000,000

  	
   

  	
  50.000000000

  	
  %

  
	
  Total

  	
   

  	
  $

  	
  100,000,000

  	
   

  	
  100.00000000

  	
  %

  

 

A-1

 

EXHIBIT B

to Fifth Amendment to Revolving

Credit Agreement

 

SCHEDULE
5.13

 

Subsidiaries;
Guarantors; Equity Investments

 

(a)                                  Subsidiaries and Unrestricted
Subsidiaries of Borrower

 

Subsidiaries

Teton Power Funding, LLC

Epsilon Power Funding, LLC

Umatilla Power Funding, LLC

MP Power LLC

Teton East Coast Generation LLC

Teton Fuels Mid-Georgia LLC

Teton Selkirk LLC

Badger Power Associates, L.P.

Badger Power Generation I LLC

Badger Power Generation II LLC

Baker Lake Hydro LLC

Concrete Hydro Partners Limited Partnership

Dade Investment, L.P.

Geddes II Company LLC

Geddes Cogeneration Company LLC

Onondaga Cogeneration Limited Partnership

Lake Cogen, Ltd.

Lake Investment, L.P.

MEP Rumford, LLC

NCP Dade Power LLC

NCP Gem LLC

NCP Houston Power LLC

NCP Lake Power LLC

NCP Pasco LLC

NCP Perry LLC

Olympia Hydro LLC

Orlando Power Generation I LLC

Orlando Power Generation II LLC

Stockton CoGen (II, LLC

Teton New Lake, LLC

Teton Operating Services, LLC

Onondaga Power Swap Holdings, LLC

MP Cogen LLC

 

B-1

 

Unrestricted Subsidiaries

Harbor Capital
Holdings, LLC

Harbor
Transmission, LLC

TransValley LLC

KB Transmission
LLC

EIF Path 15
Funding, LLC

Trans-Elect NTD
Holdings Path 15, LLC

Trans-Elect NTD
Path 15, LLC

Epsilon Power
Partners, LLC

 

(b)                                 Subsidiaries Delivering Guaranties

Teton Power
Funding, LLC

Epsilon Power
Funding, LLC

MP Power LLC

Teton East Cost
Generation LLC

Teton Fuels
Mid-Georgia LLC

Teton Selkirk LLC

Badger Power Generation
I LLC

Badger Power
Generation II LLC

Baker Lake Hydro
LLC

Dade Investment,
L.P.

Geddes II Company
LLC

Geddes
Cogeneration Company LLC

MEP Rumford, LLC

NCP Dade Power LLC

NCP Houston Power
LLC

NCP Pasco LLC

NCP Perry LLC

Olympia Hydro LLC

Onondaga Cogeneration
Limited Partnership

Orlando Power
Generation I LLC

Orlando Power
Generation II LLC

Stockton CoGen (II) LLC

Teton Operating
Services, LLC

Teton New Lake,
LLC

 

(c)                                  Borrower’s Equity Interests in Other
Entities

 

Koma
Kulshan Associates

Badger
Creek Limited, L.P.

Stockton
CoGen Company

Orlando
CoGen Limited, L.P.

Rumford
Cogeneration Company, L.P.

Mid-Georgia
Cogen, L.P.

Pasco
Cogen, Ltd.

Selkirk
Cogen Partners, L.P.

 

B-2

 

Delta
Person, LLC

Delta
Person GP, LLC

BHB
Power, LLC

Javelin
Holding, LLC

Javelin
Gregory Remington Corporation

Gregory
Holding #2, LLC

Gregory
Power, LLC

Javelin
Gregory General Corporation

Gregory
Holdings #1, LLC

Javelin
Rumford Limited, LLC

Javelin
Energy, LLC

Chambers
Cogeneration Limited Partnership

 

B-3

 

EXHIBIT C

to Fifth Amendment to Revolving

Credit Agreement

 

Resolutions of Atlantic Power Corporation

 

 

 

SIXTH AMENDMENT TO CREDIT AGREEMENT

 

THIS SIXTH AMENDMENT TO
CREDIT AGREEMENT, dated as of August 13, 2007 (the “Amendment”), among Atlantic Power Holdings, LLC, a
Delaware limited liability company (the “Borrower”), the Lenders
signatory hereto and Bank of Montreal, in its capacity as administrative agent
(“Administrative Agent”) under the Credit Agreement described below.

 

W I T N E S S E T H

 

WHEREAS, the Borrower, the Administrative Agent, and
the lenders from time to time party thereto (each a “Lender”), are
parties to that certain Credit Agreement, dated as of November 18, 2004,
as amended by that certain First Amendment to Credit Agreement, dated as of April 29,
2005, as further amended by that certain Second Amendment to Credit Agreement,
dated as of November 18, 2005, as further amended by that certain Third
Amendment to Credit Agreement, dated as of September 15, 2006, as further
amended by that certain Fourth Amendment to Credit Agreement, dated as of October 11,
2006 and as further amended by that certain Fifth Amendment to Credit Agreement
, dated as of August 13, 2007 (as so amended, the “Credit Agreement”); and

 

WHEREAS, the Borrower, the Administrative Agent and
each of the Lenders desire to amend certain provisions of the Credit Agreement.

 

NOW, THEREFORE, the parties hereto hereby agree as
follows:

 

1.                                       DEFINITIONS.  Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment, including its
preamble and recitals, shall have the meanings provided in the Credit
Agreement, as hereby amended.

 

2.                                       AMENDMENTS TO CREDIT AGREEMENT

 

(a)                                  Section 1.01  The following
definition is hereby amended and restated as follows:

 

(i)                                     ““Applicable Margin” means the
following percentages per annum, based upon the Cash Flow Coverage Ratio as set
forth in the most recent Compliance Certificate received by the Administrative
Agent pursuant to Section 6.02(b):

 

	
  Pricing

  Level

  	
   

  	
  Cash Flow

  Coverage Ratio

  	
   

  	
  Commitment

  Fee

  	
   

  	
  Eurodollar

  Rate Loans

  	
   

  	
  Letters
  of

  Credit

  	
   

  	
  Base
  Rate

  Loans

  
	
  I

  	
   

  	
  > 2.00x

  	
   

  	
  18.75 bps

  	
   

  	
  87.5 bps

  	
   

  	
  87.5 bps

  	
   

  	
  0 bps

  
	
  II

  	
   

  	
  > 1.75x

  	
   

  	
  20.0 bps

  	
   

  	
  112.5 bps

  	
   

  	
  112.5 bps

  	
   

  	
  0 bps

  
	
  III

  	
   

  	
  > 1.50x

  	
   

  	
  32.5 bps

  	
   

  	
  137.5 bps

  	
   

  	
  137.5 bps

  	
   

  	
  0 bps

  
	
  IV

  	
   

  	
  < 1.50x

  	
   

  	
  45.0 bps

  	
   

  	
  162.5 bps

  	
   

  	
  162.5 bps

  	
   

  	
  12.5 bps

  

 

Any
increase or decrease in the Applicable Margin resulting from a change in the
Cash Flow Coverage Ratio shall become effective as of the first Business Day
immediately following the date a Compliance Certificate is delivered pursuant
to Section 6.02(b); provided, however, that if

 

 

a
Compliance Certificate is not delivered when due in accordance with such
Section, then Pricing Level IV shall apply as of the first Business Day after
the date on which such Compliance Certificate was required to have been
delivered.”

 

(b)                                 Schedule 10.02 of the Credit Agreement is hereby
amended and restated in it entirety by replacing it with a new Schedule 10.02
attached as Exhibit A hereto.

 

3.                                       REPRESENTATIONS AND WARRANTIES. In order
to induce each of the Lenders and the Administrative Agent to enter into this
Amendment, the Borrower hereby reaffirms, as of the date hereof, its
representations and warranties contained in Article V
of the Credit Agreement (as amended by this Amendment), except to the extent
any such representation and warranty relates solely to an earlier date, and
additionally represents and warrants as follows:

 

3.1                                 Existence
and Standing.  The Borrower is a limited liability company,
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has all requisite authority to conduct its
business and is duly qualified or licensed to transact business as a foreign
limited liability company and in good standing under the laws of each
jurisdiction in which the conduct of its operations or the ownership or leasing
of its properties requires such qualification or licensing, except where
failure to be so qualified or licensed could not reasonably be expected to have
a Material Adverse Effect.

 

3.2                                 No Conflict;
Government Consent. No order, consent, adjudication,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, or other action in respect of any
governmental or public body or authority, or any subdivision thereof, which has
not been obtained by the Borrower or any of its Subsidiaries, is required to be
obtained in connection with the execution, delivery or performance of this
Amendment, or the legality, validity, binding effect or enforceability of any
of the Loan Documents, except, in each case, to the extent that the failure to
obtain such order, consent, adjudication, approval, license, authorization,
validation, exemption or other action or to make such filing, recording or
registration could not reasonably be expected to have a Material Adverse
Effect.

 

3.3                                 Due
Authorization, Non-Contravention, etc.  The
execution, delivery and performance by the Borrower of this Amendment and the
consummation of the transactions contemplated hereby and by the Credit
Agreement as so amended, are within the Borrower’s organizational powers, have
been duly authorized by all necessary organizational action, and do not (a) contravene
the Borrower’s organizational documents, including, without limitation, its
articles or certificate of incorporation, partnership agreement, certificate of
partnership, articles or certificate of organization, by-laws, operating or
other management agreement or other similar Organization Documents (except as
such, in the aggregate could not reasonably be expected to have a Material
Adverse Effect), (b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on or affecting the
Borrower (except as such, in the aggregate could not reasonably be expected to
have a Material Adverse Effect), (c) result in, or require the creation or
imposition of, any Lien (other than Permitted Liens) on any Properties (each as
defined in the Credit Agreement as amended by this Amendment) of the Borrower
or any Subsidiaries (except as such, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect), or (d) contravene, result in
or cause a breach of, or a default under, any material contract, promissory
note, indenture or other similar agreement or instrument to which

 

2

 

the Parent, the Borrower
or any other Loan Party is a party or an obligor, including without limitation
the Subordinated Note Indenture, the Subordinated Notes, the Convertible Note
Indenture and the Convertible Notes (except as such, in the aggregate could not
reasonably be expected to have a Material Adverse Effect).

 

3.4                                 Validity,
etc.  This Amendment and the Credit Agreement as
amended hereby constitute the legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their respective
terms except as such enforceability is subject to the effect of (i) any
applicable bankruptcy, insolvency, reorganization or similar law relating to or
affecting creditors’ rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law), including concepts of materiality, reasonableness, good
faith and fair dealing.

 

4.                                       CONDITIONS PRECEDENT TO
EFFECTIVENESS.  This Amendment shall become
effective as of August 13, 2007 after the Administrative Agent shall have
received counterparts of this Amendment executed and delivered on behalf of the
Borrower, Administrative Agent and each of the Lenders and acknowledged by each
of the Guarantors.

 

5.                                       EFFECT OF AMENDMENT. This Amendment shall
be deemed to be an amendment to the Credit Agreement, and the Credit Agreement,
as amended hereby, is hereby ratified, approved and confirmed in each and every
respect.  All references to the Credit
Agreement in any other document, instrument, agreement or writing shall
hereafter be deemed to refer to the Credit Agreement as amended hereby.

 

6.                                       GOVERNING LAW, SEVERABILITY, ETC.  THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER, GOVERNED
BY, AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND
THE LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF THE
CONFLICTS OF LAW.  Whenever
possible each provision of this Amendment shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Amendment shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Amendment.

 

7.                                       MISCELLANEOUS.

 

7.1                                 Successors
and Assigns.  This Amendment shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns.

 

7.2                                 Counterparts. 
This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument.

 

7.3                                 NO ORAL AGREEMENTS. 
THIS WRITTEN AMENDMENT AND THE CREDIT AGREEMENT REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

 

3

 

THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

 

[SIGNATURES
BEGIN ON FOLLOWING PAGE]

 

4

 

IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed by their respective officers thereunto duly
authorized as of the day and year first written above.

 

	
   

  	
  ATLANTIC
  POWER HOLDINGS, LLC,

  
	
   

  	
   

  
	
   

  	
  By:
   Atlantic Power Management, LLC, its Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Patrick Welch

  
	
   

  	
  Name:
  Patrick Welch

  
	
   

  	
  Title: CFO

  

 

Signature
Page to Sixth Amendment to Credit Agreement

 

 

IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be executed by their respective
officers thereunto duly authorized as of the day and year first written above.

 

	
   

  	
  BANK OF MONTREAL,
  Individually as a Lender and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Cahal Carmody

  
	
   

  	
  Name: Cahal Carmody

  
	
   

  	
  Title: Vice President

  

 

Signature
Page to Sixth Amendment to Credit Agreement

 

 

IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be executed by their respective
officers thereunto duly authorized as of the day and year first written above.

 

	
   

  	
  UNION BANK OF CALIFORNIA, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan Bigelow

  
	
   

  	
  Name: Jonathan Bigelow

  
	
   

  	
  Title: Vice President

  

 

Signature
Page to Sixth Amendment to Credit Agreement

 

 

Exhibit
A

 

SCHEDULE 10.02

 

EURODOLLAR AND DOMESTIC LENDING OFFICES,

ADDRESSES FOR NOTICES

 

ATLANTIC POWER HOLDINGS,
LLC

c/o Atlantic Power
Management, LLC

200 Clarendon Street

25th Floor

Boston, MA  02116

	
  Attention:

  	
  Barry
  E. Welch

  
	
  Facsimile:

  	
  (617)
  977-2410

  
	
  Telephone:

  	
  (617) 977-2401

  

 

BANK OF MONTREAL

 

Administrative
Agent’s Office for Notices:  

Bank of Montreal

700 Louisiana, Suite 4400

Houston, TX  77002

	
  Attention:

  	
  Cahal Carmody

  
	
  Telephone:

  	
  (713) 546-9750

  
	
  Facsimile:

  	
  (713) 223-4007

  

Electronic
Mail:  cahal.carmody@bmo.com

 

Lender’s Lending
Office For Requests of Credit Extensions and Payments:

Bank of Montreal

115 South LaSalle,
17th Floor

Chicago, IL  60304

	
  Attention:

  	
  Nancy Surla

  
	
  Telephone:

  	
  (312)
  461-2290

  
	
  Facsimile:

  	
  (312)
  461-5955

  

Harris Trust &
Savings Bank

Chicago Branch

ABA#:  071 000288

For Further Credit
to Bank of Montreal

Chicago Branch

A/C# 1833201

Reference:       Atlantic
Holdings

 

Issuing Bank:

Bank of Montreal

Attention: Ani Deveci

	
  Telephone:

  	
  (416) 598-6124

  

 

 

 

Execution Copy

 

CONSENT AND SEVENTH AMENDMENT TO CREDIT AGREEMENT

 

THIS
SEVENTH AMENDMENT TO CREDIT AGREEMENT, dated as of April 21, 2008 (the “Amendment”),
among Atlantic Power Holdings, LLC, a Delaware limited liability company (the “Borrower”),
the Lenders signatory hereto and Bank of Montreal, in its capacity as
administrative agent (“Administrative Agent”) under the Credit Agreement
described below.

 

WITNESSETH

 

WHEREAS,
the Borrower, the Administrative Agent, and the lenders from time to time party
thereto (each a “Lender”), are parties to that certain Credit Agreement,
dated as of November 18, 2004, as amended by that certain First Amendment
to Credit Agreement, dated as of April 29, 2005, as further amended by
that certain Second Amendment to Credit Agreement, dated as of November 18,
2005, as further amended by that certain Third Amendment to Credit Agreement,
dated as of September 15, 2006, as further amended by that certain Fourth
Amendment to Credit Agreement, dated as of October 11, 2006, as further
amended by that certain Fifth Amendment to Credit Agreement, dated as of August 13,
2007 and as further amended by that certain Sixth Amendment to Credit
Agreement, dated as of August 13, 2007 (as so amended, the “Credit
Agreement”);

 

WHEREAS,
Onondaga Cogeneration Limited Partnership (“Onondaga”) and the
Collateral Agent for the Secured Parties described therein, are parties to that
certain Second Amended and Restated Security Agreement, dated as of October 11,
2006 (the “Onondaga Security Agreement”) pursuant to which, Onondaga has
pledged to the Collateral Agent for the benefit of itself and the other Secured
Parties, among other things, all of Onondaga’s right, title and interest in and
to those certain turbines and other related equipment, as described in Exhibit A
(collectively, the “Turbine Assets”);

 

WHEREAS,
Onondaga proposes to assign, transfer and convey (collectively, the “Transaction”)
the Turbine Assets pursuant to one or more purchase agreements between Onondaga
and one or more third parties (collectively, the “Purchase Agreements”);

 

WHEREAS,
in connection with the Transaction, the Borrower has requested that the
Administrative Agent grant a partial release under the Onondaga Security
Agreement to release the Turbine Assets (the “Partial Release,” and
together with the Transaction, the “Subject Transaction”);

 

WHEREAS,
the Borrower is or may be prohibited under Section 7.05 of the Credit
Agreement from undertaking the Subject Transaction;

 

WHEREAS,
the Borrower has requested that the Administrative Agent and the Lenders
consent to the Subject Transaction, and the Administrative Agent and the
Lenders desire to permit the Borrower to undertake the Subject Transaction,
subject to the terms of this Amendment; and

 

WHEREAS, the Borrower, the Administrative Agent and each of the Lenders
desire to amend certain provisions of the Credit Agreement in connection with
the Subject Transaction.

 

 

NOW,
THEREFORE, the parties hereto hereby agree as follows:

 

1.
DEFINITIONS. Unless otherwise defined herein or the context otherwise requires,
terms used in this Amendment, including its preamble and recitals, shall have
the meanings provided in the Credit Agreement, as hereby amended.

 

2.
CONSENT.

 

2.1
Subject to the other terms and provisions of this Amendment, the Administrative
Agent and the Lenders hereby consent to Onondaga’s consummation of the Subject
Transactions and agree that Onondaga’s undertaking of the Transaction shall not
constitute a Default or Event of Default as a result of a violation of Section 7.05
or any other applicable provisions of the Credit Agreement.

 

2.2
The express consent set forth in this Section 2 is limited to the
extent described herein and shall not be construed to be a consent to or a
permanent waiver of any terms, provisions, covenants, warranties or agreements
contained in the Credit Agreement or in any of the other Loan Documents, unless
expressly provided so herein. The Lenders reserve the right to exercise any
rights and remedies available to them in connection with any present or future
defaults with respect to the Credit Agreement or any other provision of any
Loan Document.

 

3.
AMENDMENTS TO CREDIT AGREEMENT.

 

3.1
Section 7.01 of the Credit Agreement is hereby amended by deleting
the words “provided, that, notwithstanding the foregoing, the Borrower
will not, and will not permit any of its Subsidiaries or Unrestricted
Subsidiaries in which it directly or indirectly owns more than 50% of the total
voting or equity interests and will not permit (to the extent that the Borrower
has any direct or indirect contractual or other approval rights over the
actions of such Subsidiary) any of its other Subsidiaries or Unrestricted
Subsidiaries to, directly or indirectly, create, Incur or suffer to exist any
Lien on any asset or Property of Onondaga Cogeneration Limited Partnership
except for Permitted Liens and Liens reasonably Incurred by Onondaga
Cogeneration Limited Partnership in the ordinary course of its business and in
accordance with its commercially reasonable past business practices and
otherwise permitted under this Agreement” at the end of such Section 7.01.

 

3.2
Section 7.02 of the Credit Agreement is hereby amended by deleting
the words “provided, that notwithstanding anything to the contrary in
this Section 7.02, the Borrower will not, and will not permit any of its
Subsidiaries or Unrestricted Subsidiaries in which it directly or indirectly
owns more than 50% of the total voting or equity interests and will not permit
(to the extent that the Borrower has any direct or indirect contractual or
other approval rights over the actions of such Subsidiary or Unrestricted
Subsidiary) any of its other Subsidiaries or Unrestricted Subsidiaries to,
directly or indirectly, Incur or suffer to exist any Indebtedness of or by
Onondaga Cogeneration Limited Partnership or issue any shares of Disqualified
Stock or Preferred Stock with respect to Onondaga Cogeneration Limited
Partnership, except for Indebtedness Incurred with respect to the Onondaga Swap
and Indebtedness reasonably Incurred by Onondaga Cogeneration Limited
Partnership in the ordinary course of its business and in accordance with its
commercially reasonable past business practices and otherwise permitted under
this Agreement” at the end of such Section 7.02.

 

 

3.3
Section 7.05 of the Credit Agreement is hereby amended by deleting
the words “provided, that notwithstanding the foregoing Sections 7.05(a) and
7.05(b), the Borrower will not, and will not permit any of its Subsidiaries or
Unrestricted Subsidiaries in which it directly or indirectly owns more than 50%
of the total voting or equity interests and will not permit (to the extent that
the Borrower has any direct or indirect contractual or other approval rights
over the actions of such Subsidiary or Unrestricted Subsidiary) any of its
other Subsidiaries or Unrestricted Subsidiaries to, sell, transfer, lease or
otherwise dispose of any of the Property of Onondaga Cogeneration Limited
Partnership to any Person other than any reasonable sales, transfers, leases or
other dispositions of any Property by Onondaga Cogeneration Limited Partnership
in the ordinary course of its business and in accordance with its commercially
reasonable past business practices and otherwise permitted under this Agreement”
at the end of such Section 7.05.

 

3.4 Schedule 7.02(b)(ii) of the Credit Agreement
is hereby amended by deleting paragraph 3 in its entirety and replacing it with
the word “[Reserved.]”.

 

4. REPRESENTATIONS AND WARRANTIES. In order to induce each of
the Lenders and the Administrative Agent to enter into this Amendment, the
Borrower hereby reaffirms, as of the date hereof, its representations and
warranties contained in Article V of the Credit Agreement (as
amended by this Amendment), except to the extent any such representation and warranty
relates solely to an earlier date, and additionally represents and warrants as
follows:

 

4.1
Existence and Standing. The Borrower is a limited liability company,
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has all requisite authority to conduct its
business and is duly qualified or licensed to transact business as a foreign
limited liability company and in good standing under the laws of each
jurisdiction in which the conduct of its operations or the ownership or leasing
of its properties requires such qualification or licensing, except where
failure to be so qualified or licensed could not reasonably be expected to have
a Material Adverse Effect.

 

4.2
No Conflict; Government Consent. No order, consent, adjudication,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, or other action in respect of any
governmental or public body or authority, or any subdivision thereof, which has
not been obtained by the Borrower or any of its Subsidiaries, is required to be
obtained in connection with the consummation of the Subject Transaction, the
execution, delivery or performance of this Amendment, or the legality,
validity, binding effect or enforceability of any of the Loan Documents,
except, in each case, to the extent that the failure to obtain such order,
consent, adjudication, approval, license, authorization, validation, exemption
or other action or to make such filing, recording or registration could not
reasonably be expected to have a Material Adverse Effect.

 

4.3
Due Authorization, Non-Contravention, etc. The execution, delivery and
performance by the Borrower of this Amendment and the consummation of the
Subject Transaction, the transactions contemplated hereby and by the Credit
Agreement as so amended, are within the Borrower’s organizational powers, have
been duly authorized by all necessary organizational action, and do not (a) contravene
the Borrower’s organizational documents, including, without limitation, its
articles or certificate of incorporation, partnership agreement, certificate of
partnership, articles or certificate of organization, by-laws, operating or
other management agreement or other similar Organization Documents (except as
such, in the aggregate could not reasonably be expected to have a Material
Adverse Effect), (b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on or affecting the
Borrower (except as such, in the aggregate could not reasonably be expected to
have a Material Adverse Effect), (c) result in, or require the creation or
imposition of, any Lien (other than Permitted Liens) on any Properties (each as
defined in the Credit Agreement as amended by this Amendment) of the Borrower
or any Subsidiaries (except as such, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect), or (d) contravene, result in
or cause a breach of, or a default under, any material contract, promissory
note, indenture or other similar agreement or instrument to which the Parent,
the Borrower or any other Loan Party is a party or an obligor, including
without limitation the Subordinated Note Indenture, the Subordinated 

 

 

Notes, the Convertible Note
Indenture and the Convertible Debentures (except as such, in the aggregate
could not reasonably be expected to have a Material Adverse Effect).

 

 

4.4 Validity, etc. This Amendment and the Credit
Agreement as amended hereby constitute the legal, valid and binding obligations
of the Borrower enforceable against the Borrower in accordance with their
respective terms except as such enforceability is subject to the effect of (i) any
applicable bankruptcy, insolvency, reorganization or similar law relating to or
affecting creditors’ rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law), including concepts of materiality, reasonableness, good
faith and fair dealing.

 

5. CONDITIONS PRECEDENT TO EFFECTIVENESS. This Amendment
shall become effective (the “Effective Date”) upon the satisfaction of
the following conditions precedent:

 

5.1
the Administrative Agent shall have received counterparts of this Amendment
executed and delivered on behalf of the Borrower, Administrative Agent and each
of the Lenders and acknowledged by each of the Guarantors;

 

5.2
the Administrative Agent shall have received an executed copy of all applicable
Purchase Agreements and such Purchase Agreements shall be in full force and
effect;

 

5.3
the Administrative Agent shall have received an executed copy of the Partial
Release;

 

5.4
the Administrative Agent shall have received a certificate of the Borrower,
dated as of the date hereof, signed by a Responsible Officer of the Borrower
certifying that (a) simultaneously with the consent by the Administrative
Agent and the Lenders in Section 2 above, the Transaction is a
permitted Asset Sale under the terms of Section 7.05(a) of the
Credit Agreement (as amended by this Amendment), (b) the Borrower will
apply the Net Proceeds of the Transaction (or to cause such Net Proceeds to be
applied) in accordance with Section 7.05(b) of the Credit
Agreement, (c) the execution delivery and performance of this Amendment
are within the Borrower’s organizational powers, have been duly authorized by
all necessary organizational action, and do not (i) contravene the
Borrower’s organizational documents, including, without limitation, its
certificate of organization, limited liability company agreement or other
similar Organization Documents (except as such, in the aggregate could not
reasonably be expected to have a Material Adverse Effect), (ii) contravene
any contractual restriction, law or governmental regulation or court decree or
order binding on or affecting the Borrower (except as such, in the aggregate
could not reasonably be expected to have a Material Adverse Effect), (iii) result
in, or require the creation or imposition of, any Lien (other than Permitted
Liens) on any Properties (each as defined in the Credit Agreement) of the
Borrower or any Subsidiaries (except as such, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect), or (iv) contravene,
result in or cause a breach of, or a default under, any material contract,
promissory note, indenture or other similar agreement or instrument to which
the Parent, the Borrower or any other Loan Party is a party or an obligor,
including without limitation the Subordinated Note Indenture and the
Subordinated Notes and the Convertible Indenture and the Convertible Debentures
(except as such, in the aggregate could not reasonably be expected to have a
Material Adverse Effect), and (d) immediately prior to and after giving
effect to this Amendment and the consummation of the Transaction, no Default or
Event of Default exists or is continuing.

 

 

5.5
any fees required to be paid on or before the date hereof shall have been paid.

 

6. EFFECT OF AMENDMENT. This Amendment shall be deemed to be
an amendment to the Credit Agreement, and the Credit Agreement, as amended
hereby, is hereby ratified, approved and confirmed in each and every respect.
All references to the Credit Agreement in any other document, instrument,
agreement or writing shall hereafter be deemed to refer to the Credit Agreement
as amended hereby.

7. GOVERNING LAW, SEVERABILITY, ETC. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER, GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK AND THE LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO
PRINCIPLES OF THE CONFLICTS OF LAW. Whenever possible each provision
of this Amendment shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Amendment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Amendment.

 

8. MISCELLANEOUS.

 

8.1 Successors and Assigns. This Amendment shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.

 

8.2 Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

 

 

8.3
NO ORAL AGREEMENTS. THIS WRITTEN AMENDMENT AND THE CREDIT AGREEMENT
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

[SIGNATURES
BEGIN ON FOLLOWING PAGE]

 

 

 

IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be executed by their respective
officers thereunto duly authorized as of the day and year first written above.

 

	
   

  	
  ATLANTIC
  POWER HOLDINGS, LLC,

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  Atlantic Power Management, LLC, its Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Barry E. Welch

  
	
   

  	
  Name:

  	
  Barry E. Welch

  
	
   

  	
  Title:

  	
  President and CEO

  
	
   

  	
   

  	
  Atlantic Power Management, LLC

  
				

 

Signature Page to Seventh Amendment to
Credit Agreement

 

 

IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be executed by their respective
officers thereunto duly authorized as of the day and year first written above.

 

	
   

  	
  BANK OF MONTREAL, Individually as a Lender
  and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ian M. Plester

  
	
   

  	
  Name:

  	
  Ian M. Plester

  
	
   

  	
  Title:

  	
  Director

  

 

Signature Page to Seventh Amendment to
Credit Agreement

 

 

IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be executed by their respective
officers thereunto duly authorized as of the day and year first written above.

 

	
   

  	
  UNION BANK OF CALIFORNIA, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan L. Bigelow

  
	
   

  	
  Name:

  	
  Jonathan L. Bigelow

  
	
   

  	
  Title:

  	
  Vice President

  

 

Signature Page to Seventh Amendment to
Credit Agreement

 

 

ACKNOWLEDGMENT BY GUARANTORS

 

Each of the undersigned Guarantors hereby (i) consents to the
terms and conditions of that certain Seventh Amendment to Credit Agreement,
dated as of April    , 2008 (the “Seventh Amendment”),
(ii) acknowledges and agrees that its consent is not required for the
effectiveness of the Seventh Amendment, (iii) ratifies and acknowledges its
respective Obligations under each Loan Document to which it is a party
immediately prior to and immediately after giving effect to the Seventh
Amendment, (iv) acknowledges and agrees that immediately prior to and immediately
following the execution and delivery of the Credit Agreement, its respective
Guaranty is and shall be in full force and effect and its obligations
thereunder shall continue in all respects in connection with the Credit
Agreement as amended by the Seventh Amendment, including without limitation,
all Obligations of the Borrower or any Obligor now or hereafter existing to the
Administrative Agent or Lenders under the Credit Agreement as amended by the
Seventh Amendment or any other Loan Document, (v) certifies that there has
been no change to the Organization Documents of such Guarantor since the
delivery of such Guarantor’s Organization Documents on October 11, 2006 in
connection with the Fourth Amendment, (vi) certifies that such Guarantor is
duly organized or formed, validly existing, in good standing and qualified to
engage in business in each jurisdiction in which it is required to be qualified
to engage in business, and (vii) represents and warrants that (a) to
its knowledge, no Default or Unmatured Default has occurred and is continuing, (b) it
is in full compliance with all covenants and agreements pertaining to it in the
Loan Documents, (c) the execution, delivery and performance by each such
Guarantor of this acknowledgement and the consummation of the transactions
contemplated by the Seventh Amendment and the Credit Agreement as amended
thereby, are within each such Guarantor’s organizational powers and have been
duly authorized by all necessary organizational action, and (d) it has
reviewed a copy of the Seventh Amendment.

 

PARENT GUARANTOR

 

ATLANTIC POWER CORPORATION,

a Corporation existing pursuant to the laws of

British Columbia, Canada

 

	
   

  	
  By:

  	
  Atlantic Power
  Management, LLC, its Manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Barry Welch

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry Welch

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President

  	
   

  

 

SUBSIDIARY GUARANTORS

 

TETON POWER FUNDING LLC, a Delaware limited
liability company

 

EPSILON POWER FUNDING LLC, a Delaware limited
liability company

 

MP POWER, LLC, a Delaware limited liability company

 

TETON EAST COAST GENERATION LLC, a Delaware limited
liability company

 

TETON FUELS MID-GEORGIA, LLC, a Delaware limited
liability company

 

TETON SELKIRK, LLC, a Delaware limited liability
company

 

Signature Page to Seventh Amendment to
Credit Agreement

 

 

BADGER POWER GENERATION I LLC, a Delaware limited
liability company

 

BADGER POWER GENERATION II LLC, a Delaware limited
liability company

 

BAKER LAKE HYDRO LLC, a Delaware limited liability
company

 

DADE INVESTMENT, LP, a
Delaware limited partnership

By: NCP Dade Power, LLC, its
general partner

 

GEDDES II COMPANY LLC, a Delaware limited liability
company

 

GEDDES COGENERATION COMPANY LLC, a New York limited
liability company

 

MEP RUMFORD, LLC, a Delaware limited liability
company

 

NCP DADE POWER LLC, a Delaware limited liability
company

 

NCP HOUSTON POWER LLC, a Delaware limited liability
company

 

NCP PASCO, LLC, a Delaware limited liability company

 

NCP PERRY LLC, a Delaware limited liability company

 

OLYMPIA HYDRO LLC, a Delaware limited liability
company

 

ORLANDO POWER GENERATION I LLC, a Delaware limited
liability company

 

ORLANDO POWER GENERATION II LLC, a Delaware limited
liability company

 

STOCKTON COGEN (II), LLC, a Delaware limited
liability company

 

TETON OPERATING SERVICES LLC, a Delaware limited
liability company

 

TETON NEW LAKE, LLC, a Delaware limited liability
company

 

ONONDAGA COGENERATION L.P.,
a New York limited partnership

By: Geddes Cogeneration
Company, LLC, its general partner

 

	
   

  	
  By:
  

  	
  /s/ Barry Welch

  	
   

  
	
   

  	
  Name:

  	
  Barry Welch

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  

 

Signature Page to Seventh Amendment to
Credit Agreement

 

 

Execution Copy

 

EXHIBIT A to Seventh Amendment to
Revolving Credit Agreement

 

Description
of Turbines

 

 

LM5000
Equipment Description

 

The LM5000 Combustion
Turbine Generator, manufactured by General Electric, model number 7LM5000-GD-NDBG07,
serial number 474-179, is a dual fuel steam injected, water injected gas
turbine packaged by Stewart & Stevenson. The LM5000 CTG system
consists of the combustion turbine, the generator and the following subsystems:

 

AC
Generator Turbine Lube Oil System Turbine Hydraulic System Generator Lube Oil
System Dual-Fuel Water Injection System CDP Steam System Exhaust Collector
Drain System Combustion and Ventilation Air Filtration Hydraulic Start System
Turbine Water Wash System Fire & Gas Protection System Electronic
Control System Generator Excitation System Vibration Monitoring System

 

LM2500
Equipment Description

 

The LM2500 Combustion
Turbine Generator, manufactured by General Electric, model number
7LM2500-PE-MDW04, serial number 481-665, is a dual fuel, water injected, gas
turbine packaged by Stewart & Stevenson. The LM2500 CTG system
consists of the combustion turbine, the generator and the following subsystems:

 

AC Generator Turbine Lube Oil System Turbine Hydraulic System Generator
Lube Oil System Dual-Fuel Water Injection System Exhaust Collector Drain System
Combustion and Ventilation Air Filtration Hydraulic Start System Turbine Water
Wash System Fire & Gas Protection System Electronic Control System
Generator Excitation System Vibration Monitoring System

 

 

Steam
Turbine Equipment Description

 

The Steam Turbine Generator,
manufactured by General Electric, Turbine Number 155340, is designed to
generate 3 phase, 60 Hz power at 13.8 kV and has a nominal output of 22.5 MW.
The Steam Turbine equipment consists of the steam turbine and the following
subsystems:

 

Condenser
operating over a normal turbine back pressure of 1.0 to 3.0 HgA Lube Oil System
Gland Seal System Inlet Steam Tip Valve Pipe from Trip Valve to Turbine
Circulating Water Pumps with Motor Condensate Water Pumps with Motor Extraction
Non-Return Valve Admission Non-Return Valve All Piping Associated with Turbine
Generator Turbine Control Panel Generator Breaker with Protection and Control
Panel (excluding interconnect equipment and associated protection)

 

Heat
Recovery Steam Generator Equipment

 

The
Heat Recovery Steam Generator (HRSG) Equipment consists of two (2) HRSGs
rated at 170,000 lbs/hr of high pressure steam, equipped with supplementary
natural gas duct firing, with three pressure levels, manufactured by Nooter
Eriksen. Each HRSG includes a feedwater heater.

 

 

CONSENT AND
EIGHTH AMENDMENT TO CREDIT AGREEMENT

 

THIS CONSENT AND EIGHTH
AMENDMENT TO CREDIT AGREEMENT, dated as of November 20, 2008 (this “Eighth
Amendment”), among Atlantic Power Holdings, LLC, a Delaware limited
liability company (the “Borrower”), the Lenders signatory hereto and
Bank of Montreal, in its capacity as administrative agent (“Administrative
Agent”) under the Credit Agreement described below.

 

W I T N E S S E T H

 

WHEREAS, the Borrower, the
Administrative Agent, and the lenders from time to time party thereto (each a “Lender”),
are parties to that certain Credit Agreement, dated as of November 18,
2004, as amended by that certain First Amendment to Credit Agreement, dated as
of April 29, 2005, as further amended by that certain Second Amendment to
Credit Agreement, dated as of November 18, 2005, as further amended by
that certain Third Amendment to Credit Agreement, dated as of September 15,
2006, as further amended by that certain Fourth Amendment to Credit Agreement,
dated as of October 11, 2006, as further amended by that certain Fifth
Amendment to Credit Agreement, dated as of August 13, 2007, as further
amended by that certain Sixth Amendment to Credit Agreement, dated as of August 13,
2007 and as further amended by that certain Consent and Seventh Amendment to
Credit Agreement, dated as of April 21, 2008 (as so amended, the “Credit
Agreement”);

 

WHEREAS, the Borrower
desires to form Atlantic Auburndale, LLC, a Delaware limited liability company
(“Atlantic Auburndale “) and designate Atlantic Auburndale as an
Unrestricted Subsidiary and to make an Investment in Atlantic Auburndale as a
capital contribution with the proceeds of Loans borrowed under the Credit
Agreement and other cash on hand in connection with Atlantic Auburndale’s
acquisition (the “Auburndale Acquisition”) of 100% of the membership
interests in Auburndale Holdings, LLC, a Delaware limited liability company (“Auburndale
LLC”) which in turn owns 100% of the membership interests in Auburndale LP,
LLC, a Delaware limited liability company (“Auburndale LP”) which owns (a) 100%
of the limited partner interests of Auburndale Power Partners, L.P., a Delaware
limited partnership (“Auburndale Power Partners”) and (b) 100% of
the membership interests in Auburndale GP, LLC, a Delaware limited liability
company (“Auburndale GP”) which owns 100% of the general partner
interests of Auburndale Power Partners;

 

WHEREAS, certain provisions
of the Credit Agreement may restrict the Borrower from consummating certain
aspects of the Auburndale Acquisition; and

 

WHEREAS, the Borrower
requests that the Administrative Agent and the Lenders consent to the
Investment by the Borrower in Auburndale Holdings and the consummation of the
Auburndale Acquisition and the Borrower, the Administrative Agent and each of
the Lenders further desire to amend certain provisions of the Credit Agreement.

 

NOW, THEREFORE, the parties hereto hereby agree as
follows:

 

 

1.                                        DEFINITIONS. Unless
otherwise defined herein or the context otherwise requires, terms used in this
Eighth Amendment, including its preamble and recitals, shall have the meanings
provided in the Credit Agreement, as hereby amended.

 

2.                                        CONSENT. Subject to the
satisfaction of the conditions set forth in Section 5 of this Eighth
Amendment, each of the Lenders hereby consents (the “Consent”) as
follows:

 

2.1.                               subject to the
other terms and provisions of this Eighth Amendment, the Administrative Agent
and the Lenders hereby consent to (a) the formation of Atlantic Auburndale
and the designation of each of Atlantic Auburndale, Auburndale LLC, Auburndale
GP, Auburndale LP, Auburndale Power Partners, Pasco Cogen, Ltd. (a Florida
limited partnership), Pasco Cogen Realty, Ltd. (a Florida limited partnership)
and Teton Pasco Realty, LLC (a Delaware limited liability company) as
Unrestricted Subsidiaries, (b) the Investment by the Borrower in Atlantic
Auburndale and the subsequent Investment by Atlantic Auburndale in Auburndale
LLC, Auburndale GP and Auburndale LP in connection with the Auburndale
Acquisition, (c) the use of the proceeds of the Loans by the Borrower and
Atlantic Auburndale in connection with the Auburndale Acquisition and (d) the
Incurrence by Auburndale Power Partners of up to $35,000,000 of secured
Indebtedness in connection with the Auburndale Acquisition (the “Permitted
Auburndale Indebtedness”); provided such Permitted Auburndale
Indebtedness is not secured by any assets of the Borrower, any Guarantor or any
other Subsidiary of the Borrower;

 

2.2.                               neither the
consummation of the Auburndale Acquisition, the use of Loan proceeds in
connection therewith nor the Incurrence by Auburndale of the Permitted
Auburndale Indebtedness shall constitute a Default or Event of Default as a
result of a violation of Section 6.12, 7.02, 7.03, 7.06 or any other
applicable provisions of the Credit Agreement or any other Loan Document; and

 

2.3.                               the Consent as
set forth in this Section 2 is limited to the extent described
herein and shall not be construed to be a consent to or a permanent waiver of
any terms, provisions, covenants, warranties or agreements contained in the
Credit Agreement or in any of the other Loan Documents, unless expressly
provided so herein. The Lenders reserve the right to exercise any rights and
remedies available to them in connection with any present or future defaults
with respect to the Credit Agreement or any other provision of any Loan
Document.

 

3.                                        AMENDMENTS TO CREDIT
AGREEMENT. Subject to the satisfaction of the conditions set forth in Section 5
of this Eighth Amendment, the Credit Agreement shall be amended as follows:

 

3.1.                              Section 1.01
of the Credit Agreement is hereby amended as follows:

 

(a)                                  “Acquired
Subsidiary”. The definition of Acquired Subsidiary in the Credit Agreement is
hereby amended to read in its entirety as follows:

 

2

 

“Acquired
Subsidiary” means Atlantic Holdings Path 15, LLC (formerly known as
Trans-Elect NTD Holdings Path 15, LLC), a Delaware limited liability company.

 

(b)                                  “Acquisition
Holdco”. The definition of Acquisition Holdco in the Credit Agreement is hereby
amended to read in its entirety as follows:

 

“Acquisition
Holdco” means Atlantic Path 15 Transmission, LLC (formerly known as Harbor
Transmission, LLC), a Delaware limited liability company, and a Wholly-Owned
Subsidiary of Harbor Capital and an Unrestricted Subsidiary.

 

(c)                                   “Acquisition
Intermediary Holdco Subsidiaries”. The definition of Acquisition Intermediary
Holdco Subsidiaries in the Credit Agreement is hereby amended to read in its
entirety as follows:

 

“Acquisition
Intermediary Holdco Subsidiaries” means (i) Path 15 Fundmg TV, LLC
(formerly known as TransValley LLC), a Delaware limited liability company (“TV”),
and a Wholly-Owned Subsidiary of Acquisition Holdco; (ii) Path 15 Funding
KBT, LLC (formerly known as KB Transmission LLC), a Delaware limited liability
company, and a Wholly-Owned Subsidiary of TV; and (iii) Path 15 Funding, LLC
(formerly known as EIF Path 15 Funding, LLC), a Delaware limited liability
company, and a Wholly-Owned Subsidiary of Acquisition Holdco.

 

(d)                                  “Acquisition
Operating Subsidiary”. The definition of Acquisition Operating Subsidiary in
the Credit Agreement is hereby amended to read in its entirety as follows:

 

“Acquisition
Operating Subsidiary” means Atlantic Path 15, LLC (formerly known as
Trans-Elect NTD Path 15, LLC), a Delaware limited liability company and a
Wholly-Owned Subsidiary of the Acquired Subsidiary

 

(e)                                   “Permitted
Investment”. The definition of Permitted Investments in the Credit Agreement is
hereby amended by deleting the word “and” immediately before clause (xxi) and
adding the following clause (xxii) at the end of the definition:

 

“;
and (xxii) any “Permitted Investments” as such term is defined in the Deposit
and Disbursement Agreement made by the Borrower in accordance with Section 3.10
of the Deposit and Disbursement Agreement.”

 

3.2.                                  Schedule 5.13 of the Credit
Agreement is hereby amended and restated in its entirety by replacing it with a
new Schedule 5.13 attached as Exhibit A hereto.

 

3.3.                                  Schedule 10.02 of the Credit
Agreement is hereby amended and restated in its entirety by replacing it with a
new Schedule 10.02 attached as Exhibit B hereto.

 

3

 

4.                                        REPRESENTATIONS AND
WARRANTIES. In order to induce each of the Lenders and the Administrative Agent
to enter into this Eighth Amendment, the Borrower hereby reaffirms, as of the
date hereof, its representations and warranties contained in Article V
of the Credit Agreement (as amended by this Eighth Amendment), except to the
extent any such representation and warranty relates solely to an earlier date,
and additionally represents and warrants as follows:

 

4.1.                               Existence and
Standing. The Borrower is a limited liability company, duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has all requisite authority to conduct its
business and is duly qualified or licensed to transact business as a foreign
limited liability company and in good standing under the laws of each
jurisdiction in which the conduct of its operations or the ownership or leasing
of its properties requires such qualification or licensing, except where
failure to be so qualified or licensed could not reasonably be expected to have
a Material Adverse Effect.

 

4.2.                               No Conflict;
Government Consent. No order, consent, adjudication, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, or other action in respect of any governmental or public
body or authority, or any subdivision thereof, which has not been obtained by
the Borrower or any of its Subsidiaries, is required to be obtained in
connection with the execution, delivery or performance of this Eighth
Amendment, or the legality, validity, binding effect or enforceability of any
of the Loan Documents, except, in each case, to the extent that the failure to
obtain such order, consent, adjudication, approval, license, authorization,
validation, exemption or other action or to make such filing, recording or
registration could not reasonably be expected to have a Material Adverse
Effect.

 

4.3.                               Due
Authorization, Non-Contravention, etc. The execution, delivery
and performance by the Borrower of this Eighth Amendment and the consummation
of the Auburndale Acquisition, the Incurrence of the Auburndale Permitted
Indebtedness and the consummation of the other transactions contemplated hereby
and by the Credit Agreement as so amended, are within the Borrower’s
organizational powers, have been duly authorized by all necessary
organizational action, and do not (a) contravene the Borrower’s
organizational documents, including, without limitation, its articles or
certificate of incorporation, partnership agreement, certificate of
partnership, articles or certificate of organization, by laws, operating or
other management agreement or other similar Organization Documents (except as
such, in the aggregate could not reasonably be expected to have a Material
Adverse Effect), (b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on or affecting the
Borrower (except as such, in the aggregate could not reasonably be expected to
have a Material Adverse Effect), (c) result in, or require the creation or
imposition of, any Lien (other than Permitted Liens) on any Properties (each as
defined in the Credit Agreement as amended by this Eighth Amendment) of the
Borrower or any Subsidiaries (except as such, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect), or (d) contravene,
result in or cause a breach of, or a default under, any material contract,
promissory note, indenture or other similar agreement or instrument to which
the Parent, the Borrower or any other Loan Party is a party or an obligor,
including

 

4

 

without limitation the Subordinated Note Indenture, the Subordinated
Notes, the Convertible Note Indenture and the Convertible Notes (except as
such, in the aggregate could not reasonably be expected to have a Material
Adverse Effect).

 

4.4.                               Validity, etc. This Eighth
Amendment and the Credit Agreement as amended hereby constitute the legal,
valid and binding obligations of the Borrower enforceable against the Borrower
in accordance with their respective terms except as such enforceability is
subject to the effect of (i) any applicable bankruptcy, insolvency,
reorganization or similar law relating to or affecting creditors’ rights
generally and (ii) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law),
including concepts of materiality, reasonableness, good faith and fair dealing.

 

5.                                        CONDITIONS PRECEDENT TO
EFFECTIVENESS OF THE EIGHTH AMENDMENT. This Eighth Amendment and the Consent
shall become effective (the “Effective Date”) upon the satisfaction of
the following conditions precedent:

 

5.1.                              the
Administrative Agent shall have received counterparts of this Eighth Amendment
executed and delivered on behalf of the Borrower, Administrative Agent and each
of the Lenders;

 

5.2.                              the
Administrative Agent, for the benefit of the Administrative Agent and the
Lenders, shall have received a certificate of the Borrower, dated as of the
date hereof, signed by a Responsible Officer of the Borrower (a) attaching
true and correct copies of the executed purchase agreement and all related
schedules delivered in connection with the Auburndale Acquisition (the “Auburndale
Acquisition Documents”) and certifying that the Auburndale Acquisition has
been or, substantially simultaneously with the effectiveness of this Eighth
Amendment will be, consummated, (b) attaching true and correct copies of
resolutions adopted by the Borrower approving and authorizing the execution of
this Eighth Amendment and the performance of the Credit Agreement as amended
hereby, (c) attaching true and correct copies of resolutions adopted by
the Borrower and, if any, the applicable Unrestricted Subsidiaries approving
and authorizing (i) the execution, delivery and performance of the
Auburndale Acquisition Documents and (ii) the Incurrence of the Auburndale
Permitted Indebtedness, (d) certifying that after giving pro forma effect to the Auburndale
Acquisition and the transactions contemplated thereunder and the Incurrence of the
Auburndale Permitted Indebtedness, the Cash Flow Coverage Ratio of the Parent
Guarantor, the Borrower and the applicable Subsidiaries as guarantors of the
Parent Guarantor is at least 1.5 to 1.0, (e) certifying that any consents
required under the Convertible Note Indenture or the Subordinated Note
Indenture in connection with the Auburndale Acquisition and the transactions
contemplated thereunder and the Incurrence of the Auburndale Permitted
Indebtedness have been or simultaneously upon the Effective Date, will be
obtained, (f) certifying that immediately prior to and after giving effect
to this Eighth Amendment, no Default or Event of Default exists or is
continuing; and

 

5.3.                              any fees
required to be paid on or before the date hereof shall have been paid.

 

5

 

6.                                        EFFECT OF AMENDMENT. This
Eighth Amendment shall be deemed to be an amendment to the Credit Agreement,
and the Credit Agreement, as amended hereby, is hereby ratified, approved and
confirmed in each and every respect. All references to the Credit Agreement in
any other document, instrument, agreement or writing shall hereafter be deemed
to refer to the Credit Agreement as amended hereby.

 

7.                                        GOVERNING LAW, SEVERABILITY,
ETC. THIS EIGHTH AMENDMENT SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER, GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK AND THE LAWS OF THE UNITED STATES OF AMERICA,
WITHOUT REGARD TO PRINCIPLES OF THE CONFLICTS OF LAW. Whenever
possible each provision of this Eighth Amendment shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Eighth Amendment shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Eighth Amendment.

 

8.                                        MISCELLANEOUS.

 

8.1.                                Successors and
Assigns. This Eighth Amendment shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.

 

8.2.                                Counterparts. This Eighth
Amendment may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.

 

8.3.                                NO ORAL
AGREEMENTS. THIS WRITTEN EIGHTH AMENDMENT AND THE CREDIT
AGREEMENT REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

6

 

IN WITNESS WHEREOF, the parties hereto have caused
this Eighth Amendment to be executed by their respective officers thereunto
duly authorized as of the day and year first written above.

 

 

	
   

  	
  ATLANTIC
  POWER HOLDINGS, LLC,

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  Atlantic Power Management, LLC, its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Barry E. Welch

  
	
   

  	
  Name:

  	
  Barry
  E. Welch

  
	
   

  	
  Title:

  	
  President and CEO

  
	
   

  	
   

  	
  Atlantic Power
  Management, LLC

  
				

 

[Signature Page to Eighth Amendment to Credit Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have caused
this Eighth Amendment to be executed by their respective officers thereunto
duly authorized as of the day and year first written above.

 

	
   

  	
  BANK
  OF MONTREAL, Individually as a Lender and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ian Plester

  
	
   

  	
  Name:

  	
  Ian Plester

  
	
   

  	
  Title:

  	
  Director

  

 

[Signature Page to Eighth Amendment to Credit Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have caused
this Eighth Amendment to be executed by their respective officers thereunto
duly authorized as of the day and year first written above.

 

	
   

  	
  UNION
  BANK OF CALIFORNIA, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan L.
  Bigelow

  
	
   

  	
  Name:

  	
  Jonathan L.
  Bigelow

  
	
   

  	
  Title:

  	
  Vice President

  

 

[Signature Page to Eighth Amendment to Credit Agreement]

 

 

EXHIBIT A

to Eighth Amendment to Revolving Credit
Agreement

 

SCHEDULE
5.13

 

SUBSIDIARIES; GUARANTORS;
EQUITY INVESTMENTS

 

(a)                                  Subsidiaries
and Unrestricted Subsidiaries of Borrower

 

Subsidiaries

 

Teton Power Funding, LLC

Epsilon Power Funding, LLC

Umatilla Power Funding, LLC

MP Power LLC

Teton East Coast Generation LLC

Teton Fuels Mid-Georgia LLC

Teton Selkirk LLC

Badger Power Associates, L.P.

Badger Power Generation I LLC

Badger Power Generation II LLC

Baker Lake Hydro LLC

Concrete Hydro Partners Limited Partnership

Dade Investment, L.P.

Geddes II Company LLC

Geddes Cogeneration Company LLC

Onondaga Cogeneration Limited Partnership

Lake Cogen, Ltd.

Lake Investment, L.P.

MEP Rumford, LLC

NCP Dade Power LLC

NCP Gem LLC

NCP Houston Power LLC

NCP Lake Power LLC

NCP Pasco LLC

NCP Perry LLC

Olympia Hydro LLC

Orlando Power Generation I LLC

Orlando Power Generation II LLC

Stockton CoGen (II), LLC

Teton New Lake, LLC

Teton Operating Services, LLC

Onondaga Power Swap Holdings, LLC

MP Cogen LLC

 

 

Unrestricted Subsidiaries

 

Harbor Capital Holdings, LLC

Atlantic Path 15 Transmission (formerly Harbor Transmission, LLC)

Path 15 Funding TV, LLC (formerly TransValley LLC)

Path 15 Funding KBT, LLC (formerly KB Transmission LLC)

Path 15 Funding, LLC (formerly EIF Path 15 Funding, LLC)

Atlantic Holdings Path 15, LLC (formerly Trans-Elect NTD Holdings Path
15, LLC)

Atlantic Path 15, LLC (formerly Trans-Elect NTD Path 15, LLC)

Epsilon Power Partners, LLC

AP Onondaga, LLC

Onondaga Renewables, LLC

Atlantic Auburndale, LLC

Auburndale Holdings, LLC

Auburndale GP, LLC

Auburndale LP, LLC

Auburndale Power Partners, L.P.

Pasco Cogen, Ltd.

Pasco Cogen Realty, Ltd.

Teton Pasco Realty, LLC

 

(b)                                 Subsidiaries
Delivering Guaranties

 

Teton Power Funding, LLC

Epsilon Power Funding, LLC

MP Power LLC

Teton East Cost Generation LLC

Teton Fuels Mid-Georgia LLC

Teton Selkirk LLC

Badger Power Generation I LLC

Badger Power Generation II LLC

Baker Lake Hydro LLC

Dade Investment, L.P.

Geddes II Company LLC

Geddes Cogeneration Company LLC

MEP Rumford, LLC

NCP Dade Power LLC

NCP Houston Power LLC

NCP Pasco LLC

NCP Perry LLC

Olympia Hydro LLC

Onondaga Cogeneration Limited Partnership

Orlando Power Generation I LLC

Orlando Power Generation II LLC

Stockton CoGen (II) LLC

Teton Operating Services, LLC

Teton New Lake, LLC

 

[Signature Page to Eighth Amendment to Credit Agreement]

 

 

(c)                                  Borrower’s
Equity Interests in Other Entities

 

Koma Kulshan Associates

Badger Creek Limited, L.P.

Stockton CoGen Company

Orlando CoGen Limited, L.P.

Rumford Cogeneration Company, L.P.

Mid-Georgia Cogen, L.P.

Selkirk Cogen Partners, L.P.

Delta Person, LLC

Delta Person GP, LLC

BHB Power, LLC

Javelin Holding, LLC

Javelin Gregory Remington Corporation

Gregory Holding #2, LLC

Gregory Power, LLC

Javelin Gregory General Corporation

Gregory Holdings #1, LLC

Javelin Rumford Limited, LLC

Javelin Energy, LLC

Chambers Cogeneration Limited Partnership

 

[Signature Page to Eighth Amendment to Credit Agreement]

 

 

EXHIBIT B

to Eighth Amendment to Revolving Credit
Agreement

 

SCHEDULE
10.02

 

EURODOLLAR AND DOMESTIC LENDING OFFICES,

ADDRESSES FOR NOTICES

 

ATLANTIC POWER HOLDINGS, LLC

c/o
Atlantic Power Management, LLC

200
Clarendon Street

 

25th
Floor

Boston,
MA 02116

 

	
  Attention:

  	
  Barry
  E. Welch

  
	
  Facsimile:

  	
  (617)
  977-2410

  
	
  Telephone:

  	
  (617)
  977-2401

  

 

BANK OF MONTREAL

 

Administrative Agent’s Office for Notices:

Ian
Plester

Bank
of Montreal

3
Times Square, 27th floor

New
York, NY 10036

Phone:
212 605-1417

Fax:
212 605-1451

E-mail:
Ian.plester@bmo.com

 

Lender’s Lending Office For Requests of

Credit Extensions and Payments:

Bank
of Montreal

115
South LaSalle, 17th Floor

Chicago,
IL 60304

	
  Attention:

  	
  Terri
  Mikula

  
	
  Telephone:

  	
  (312)
  750-5947

  
	
  Facsimile:

  	
  (312)
  750-4345

  

Harris
Trust & Savings Bank

Chicago
Branch

ABA#:
071 000288

For
Further Credit to Bank of Montreal Chicago Branch

A/C#
1833201

Reference:   Atlantic Holdings

 

Issuing Bank:

Bank
of Montreal

700
Louisiana, Suite 4400

 

 

	
  Houston, Texas 77002

  
	
  Attention:

  	
  Joe
  Bliss

  
	
  Telephone:

  	
  (713)
  546-9735

  
	
  Facsimile:

  	
  (713)
  223-4007

  
	
  Electronic Mail: joe.bliss@bmo.com

  

 

 

Execution Copy

 

CONSENT
AND NINTH AMENDMENT TO CREDIT AGREEMENT

 

THIS CONSENT AND NINTH AMENDMENT TO CREDIT AGREEMENT,
dated as of  November 27, 2009 (this
“Ninth Amendment”), among Atlantic Power Holdings, LLC, a Delaware
limited liability company (the “Borrower”), the Lenders signatory hereto
and Bank of Montreal, in its capacity as administrative agent (“Administrative
Agent”) under the Credit Agreement described below.

 

W I T N E S S E T H

 

WHEREAS, the Borrower, the Administrative Agent, and
the lenders from time to time party thereto (each a “Lender”), are
parties to that certain Credit Agreement, dated as of November 18, 2004,
as amended by that certain First Amendment to Credit Agreement, dated as of April 29,
2005, as further amended by that certain Second Amendment to Credit Agreement,
dated as of November 18, 2005, as further amended by that certain Third
Amendment to Credit Agreement, dated as of September 15, 2006, as further
amended by that certain Fourth Amendment to Credit Agreement, dated as of October 11,
2006, as further amended by that certain Fifth Amendment to Credit Agreement,
dated as of August 13, 2007, as further amended by that certain Sixth
Amendment to Credit Agreement, dated as of August 13, 2007, as further
amended by that certain Consent and Seventh Amendment to Credit Agreement,
dated as of April 21, 2008 and as further amended by that certain Consent
and Eighth Amendment to Credit Agreement, dated as of November 20, 2008
(as so amended, the “Credit Agreement”);

 

WHEREAS, Atlantic Power Corporation, a corporation
organized under the laws of British Columbia, Canada (the “Parent Guarantor”),
desires to exchange all of its current common shares, including those
represented by IPSs, for new common shares of the Parent Guarantor (the “Exchange”)
in accordance with the terms and conditions of the 2009 Information Circular
(as hereinafter defined) and applicable Law (the “IPS
Conversion”);

 

WHEREAS, in connection with the IPS Conversion, the
Parent Guarantor desires to create two direct Wholly-Owned Subsidiaries,
Atlantic Power Transmission, Inc., a Delaware corporation (“Atlantic
Transmission”) and Atlantic Power Generation, Inc., a Delaware
corporation (“Atlantic Generation” and together with Atlantic
Transmission, the “U.S. Holding Companies”);

 

WHEREAS, in connection with the IPS Conversion, the
Parent Guarantor desires to direct the Borrower to cause Harbor Capital
Holdings, LLC (“Harbor Capital”) to transfer 100% of the equity
interests in Acquisition Holdco, the Acquisition Intermediary Holdco
Subsidiaries, the Acquisition Operating Subsidiary, and the Acquired Subsidiary
(collectively, the “Path 15 Subsidiaries”) to Atlantic Transmission (the
“Path 15 Equity Transfer”) through a transfer by Harbor Capital up to
the Borrower, then from the Borrower up to the Parent Guarantor pursuant to
those certain Assignments of Membership Interests of even date herewith by
Harbor Capital to the Borrower and by the Borrower to the Parent Guarantor
(collectively the “Assignments of Membership Interest”) and then from
the Parent Guarantor down to Atlantic Transmission pursuant to that certain
Contribution Agreement of even date herewith between the Parent 

 

 

Guarantor and Atlantic
Transmission (the “Contribution Agreement” and , with the Assignment of
Membership Interests, the “Path 15 Equity Transfer Agreements”);

 

WHEREAS, in connection with the IPS Conversion,
Atlantic Generation desires to issue an intercompany note to the Parent
Guarantor in the principal amount of $400,000,000 (the “Atlantic Generation
Intercompany Note”) as consideration for the transfer of 100% of the Parent
Guarantor’s equity interests in the Borrower (the “Atlantic Generation
Transfer”);

 

WHEREAS, the Atlantic Generation Intercompany Note
will contain terms and conditions satisfactory to the Parent Guarantor and will
be subordinated in right of payment to Atlantic Generation’s guaranty of the
Obligations and the other Secured Obligations, on terms reasonably satisfactory
to the Administrative Agent and the Required Lenders;

 

WHEREAS, in connection with the IPS Conversion, the
Parent Guarantor and Atlantic Generation desire to convert the Borrower from a
Delaware limited liability company to a Delaware corporation pursuant to that
certain Certificate of Conversion with attached Certificate of Incorporation
(the “Borrower Conversion Documents”) on terms and conditions reasonably
satisfactory to the Agent (the “Borrower Conversion”);

 

WHEREAS, certain provisions of the Credit Agreement
and the other Loan Documents may restrict the Borrower and the Parent Guarantor
from consummating certain aspects of the IPS Conversion, the Path 15 Equity
Transfer, the Atlantic Generation Transfer, the issuance of the Atlantic
Generation Intercompany Note and the Borrower Conversion; and

 

WHEREAS, the Borrower requests that the Administrative
Agent and the Lenders consent to the IPS Conversion, the Path 15 Equity
Transfer, the issuance of the Atlantic Generation Intercompany Note, the
Atlantic Generation Transfer and the Borrower Conversion, and the Borrower, the
Administrative Agent and each of the Lenders further desire to amend certain
provisions of the Credit Agreement and certain other Loan Documents in
connection therewith.

 

NOW, THEREFORE, the parties hereto hereby agree as
follows:

 

1.             DEFINITIONS.  Unless otherwise defined herein or the
context otherwise requires, terms used in this Ninth Amendment, including its
preamble and recitals, shall have the meanings provided in the Credit
Agreement, as hereby amended.

 

2.             CONSENT. 
Subject to the satisfaction of the conditions set forth in Section 5
of this Ninth Amendment, each of the Lenders hereby consents and agrees (the “Consent”)
as follows:

 

2.1.          subject to the other terms and provisions of this
Ninth Amendment, the Administrative Agent and the Lenders hereby consent to (a) the
IPS Conversion, (b) the formation of Atlantic Transmission and Atlantic
Generation, (c) the Path 15 Transfer, (d) the Atlantic Generation
Transfer, (e) the Borrower Conversion, (f) issuing the Atlantic
Generation Intercompany Note (g) the execution and delivery of the Seventh
Supplemental Indenture to the 11% Subordinated Notes Indenture in the form
attached hereto as Exhibit A (the “Sub Note Indenture Supplement”)
and (h) the execution and 

 

2

 

delivery of the
First Supplemental Indenture to the 6.25% Convertible Notes Indenture in the
form attached hereto as Exhibit B (the “Convertible Indenture
Supplement” and together with the Sub Note Indenture Supplement, the “Indenture
Supplements”) (collectively, items (a) through (h) the “Consent
Transactions”);

 

2.2.          the consummation of the Consent Transactions shall not
constitute a Default or Event of Default under the Credit Agreement, or a
default under any Loan Document, including as a result of a violation of Section 8.01(k),
or otherwise; and

 

2.3.          the Consent as set
forth in this Section 2 is limited to the extent described herein
and shall not be construed to be a consent to or a permanent waiver of any
terms, provisions, covenants, warranties or agreements contained in the Credit
Agreement or in any of the other Loan Documents, unless expressly provided so
herein.  The Lenders reserve the right to
exercise any rights and remedies available to them in connection with any present
or future defaults with respect to the Credit Agreement or any other provision
of any Loan Document which do not relate to or result from the consummation of
the Consent Transactions.

 

3.             AMENDMENTS TO CREDIT AGREEMENT.  Subject to the satisfaction of the conditions
set forth in Section 5 of this Ninth Amendment, the Credit Agreement shall
be amended as follows:

 

3.1.          Section 1.01 of the Credit Agreement is hereby
amended by amending the following existing defined terms:

 

(a)           “Applicable Margin”. 
The definition of Applicable Margin in the Credit Agreement is hereby
amended to read in its entirety as follows:

 

““Applicable Margin” means the following
percentages per annum, based upon (a) the Cash Flow Coverage Ratio as set
forth in the most recent Compliance Certificate received by the Administrative
Agent pursuant to Section 6.02(b) if the Cash Flow Coverage
Ratio for such period is less than or equal to 2.50 to 1.00 or (b) the APH
Leverage Ratio as set forth in the most recent Compliance Certificate received
by the Administrative Agent pursuant to Section 6.02(b) if the
Cash Flow Coverage Ratio for such period is greater than 2.50 to 1.00:

 

	
  Pricing

  Level

  	
   

  	
  Cash Flow

  Coverage

  Ratio

  	
   

  	
  APH

  Leverage

  Ratio

  	
   

  	
  Commitment

  Fee

  	
   

  	
  Eurodollar

  Rate Loans

  	
   

  	
  Letters of

  Credit

  	
   

  	
  Base Rate

  Loans

  	
   

  
	
  I

  	
   

  	
  >2.25x

  	
   

  	
  <0.50x

  	
   

  	
  37.5 bps

  	
   

  	
  150.0 bps

  	
   

  	
  150.0 bps

  	
   

  	
  0.0 bps

  	
   

  
	
  II

  	
   

  	
  > 2.00x

  	
   

  	
  >0.50x

  	
   

  	
  50.0 bps

  	
   

  	
  187.5 bps

  	
   

  	
  187.5 bps

  	
   

  	
  37.5 bps

  	
   

  
	
  III

  	
   

  	
  > 1.75x

  	
   

  	
  >1.00x

  	
   

  	
  50.0 bps

  	
   

  	
  212.5 bps

  	
   

  	
  212.5 bps

  	
   

  	
  62.5 bps

  	
   

  
	
  IV

  	
   

  	
  > 1.50x

  	
   

  	
  >1.50x

  	
   

  	
  75.0 bps

  	
   

  	
  275.0 bps

  	
   

  	
  275.0 bps

  	
   

  	
  125.0 bps

  	
   

  
	
  V

  	
   

  	
  < 1.50x

  	
   

  	
  >2.00x

  	
   

  	
  100.0 Bps

  	
   

  	
  325.0 bps

  	
   

  	
  325.0 bps

  	
   

  	
  150.0 bps

  	
   

  

 

3

 

Any increase or decrease in the Applicable Margin
resulting from a change in the Cash Flow Coverage Ratio or the APH Leverage
Ratio, as applicable, shall become effective as of the first Business Day
immediately following the date a Compliance Certificate is delivered pursuant
to Section 6.02(b); provided, however, that if a
Compliance Certificate is not delivered when due in accordance with such
Section, then Pricing Level IV shall apply as of the first Business Day after
the date on which such Compliance Certificate was required to have been
delivered.”

 

(b)           “Change of Control”. 
The definition of Change of Control in the Credit Agreement is hereby
amended to read in its entirety as follows

 

““Change of 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
Parent Guarantor’s, Atlantic Generation’s or the Borrowers’ assets generating
more than 66 2/3% of the Parent Guarantor’s Cash Flow for the 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
relating to the liquidation or dissolution of the Borrower, Atlantic Generation
or the Parent Guarantor;

 

(iii)          the acquisition by any Person
or group of a direct or indirect interest in more than 50% of: (A) the
Common Shares or other Equity Interests of the Borrower, the Equity Interests
of Atlantic Generation, or the Equity Interests of the Parent Guarantor; or (B) the
voting power or Voting Stock of the Borrower, Atlantic Generation or the Parent
Guarantor; by way of purchase, 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 Borrower as a result of such transaction); or

 

(iv)          the merger or consolidation
of the Borrower, Atlantic Generation or the Parent Guarantor with or into
another Person or the merger of another Person into the Borrower, Atlantic
Generation or the Parent Guarantor with the effect that immediately after such
transaction the shareholders of the Parent Guarantor or the holders of the
Equity Interests of Atlantic Generation or the Equity Interests of the Borrower
immediately prior to such transaction hold, directly or indirectly, less than
50% of the total Voting Stock of the Person surviving such merger or 

 

4

 

consolidation,
in each case other than the creation of a holding company that does not involve
a change in the beneficial ownership of the Borrower, Atlantic Generation or
the Parent Guarantor as a result of such transaction.”

 

(c)           “Convertible Note Indenture”.  The definition of Convertible Note Indenture
in the Credit Agreement is hereby amended to read in its entirety as follows:

 

“Convertible Note Indenture” means that certain
Trust Indenture providing for the issue of Convertible Secured Debentures dated
October 11, 2006 among the Issuer and Computershare Trust Company of
Canada, in its capacity as trustee thereunder, as supplemented by that certain
First Supplemental Indenture to the 6.25% Convertible Note Indenture dated as
of the Ninth Amendment Effective Date, and as amended, supplemented or
otherwise modified from time to time in accordance with the terms of the
Collateral Agency and Intercreditor Agreement.

 

(d)           “Guarantors”. 
The definition of Guarantors in the Credit Agreement is hereby amended
to read in its entirety as follows:

 

““Guarantors” means, collectively, the Parent
Guarantor, Atlantic Generation and each Subsidiary that executes and delivers
to the Administrative Agent a Guarantee, so long as such Guarantee shall not
have been expressly terminated by the Administrative Agent and the Lenders or
shall not have been terminated in accordance with its express terms, in each
case with respect to such Person.”

 

(e)           “Interest Expense”. 
The definition of Interest Expense in the Credit Agreement is hereby
amended to read in its entirety as follows:

 

““Interest Expense” means, in respect of any
Person, for any period, the total cash interest expense (including that
attributable to Capitalized Lease Obligations) of such Person for such period
with respect to all outstanding Indebtedness of such Person (including, without
limitation, all commissions, discounts and other fees and charges owed by such
Person with respect to letters of credit and bankers’ acceptance financing and
net costs of such Person under hedge agreements in respect of interest rates to
the extent such net costs are allocable to such period in accordance with
GAAP); provided that with respect to the calculation of the Cash Flow
Coverage Ratio, “Interest Expense” shall not include any interest payable by
Atlantic Generation to the Parent Guarantor on account of the Atlantic
Generation Intercompany Note as in effect on the Effective Date.”

 

5

 

(f)            “Material Adverse Effect”.  Subclause (i) of the definition of
Material Adverse Effect in the Credit Agreement is hereby amended by adding the
words “or Atlantic Generation” immediately after the words “the Parent
Guarantor”.

 

(g)           “Permitted Lien”. 
Subclause (xi) of the definition of Permitted Liens in the Credit
Agreement is hereby amended and restated in its entirety as follows:

 

“(xi) Liens securing Hedging Obligations of the
Borrower or the Parent Guarantor so long as the related Indebtedness is, and is
permitted to be under this Agreement, secured by a Lien on the same property
securing such Hedging Obligations; provided that any such Liens securing
the Hedging Obligation of the Borrower and a counterparty that is not a Lender
or Bank of Montreal or an Affiliate of a Lender or Bank of Montreal, under
certain circumstances shall be subordinated to the Secured Obligations as
provided in the Collateral Agency and Intercreditor Agreement and shall be
subordinated in right of payment to the Secured Obligations as provided in the
Deposit and Disbursement Agreement; and provided further
that in order to have the benefits of such collateral and to be a “Secured
Party” for purposes of the Deposit and Disbursement Agreement and the
Collateral Agency and Intercreditor Agreement, such counterparty to such
Hedging Obligations that is not a Lender (A) shall have been approved as a
“Revolving Secured Hedge Counterparty” (as defined in the Deposit Agreement)
pursuant to the prior written consent of the Administrative Agent, such consent
to be granted or withheld in the sole discretion of the Administrative Agent
and (B) shall have become a party to the Collateral Agency and
Intercreditor Agreement by executing and delivering to the Collateral Agent a
Joinder Agreement substantially in the form of Exhibit A to the Collateral
Agency and Intercreditor Agreement.”

 

(h)           “Subordinated Note Indenture”.  The definition of Subordinated Note Indenture
in the Credit Agreement is hereby amended to read in its entirety as follows:

 

“Subordinated Note Indenture” means that
certain 11% Subordinated Notes Indenture dated November 18, 2004 among the
Issuer, the guarantors a party thereto and Computershare Trust Company of
Canada, in its capacity as trustee to the 11% Subordinated Notes Indenture as
supplemented from time to time prior to the Ninth Amendment Effective Date,
including as supplemented by that certain Seventh Supplemental Indenture to the
11% Subordinated Notes Indenture dated as of the Ninth Amendment Effective
Date, and as amended, supplemented or otherwise modified from time to time in
accordance with the terms of the Collateral Agency and Intercreditor Agreement.”

 

6

 

(i)            “Unrestricted Subsidiary”.  The definition of Unrestricted Subsidiary in
the Credit Agreement is hereby amended to read in its entirety as follows:

 

““Unrestricted Subsidiary” means (a) any
Subsidiary of the Borrower that is designated as such to the Administrative
Agent pursuant to Section 6.14 after the date hereof and (b) Atlantic
Generation, Atlantic  Transmission, each
of the Path 15 Subsidiaries and each additional direct or indirect Subsidiary
of Atlantic Transmission; provided, however, that no Guarantor,
Project Holding Entity, or other Subsidiary of the Borrower as of the Closing
Date shall be designated as an Unrestricted Subsidiary without the prior
written consent of the Administrative Agent and the Required Lenders, such
consent to be granted in the sole discretion of the Administrative Agent and
the Required Lenders.”

 

3.2.          Section 1.01 of the Credit Agreement is hereby
amended by adding the following new defined terms in the applicable
alphabetical order:

 

(a)           “2009 Information Circular” means collectively, (a) the Notice of Special
Meeting of Holders of Income Participating Securities and Common Shares and
Management Information Circular dated October 16, 2009 and (b) the
Notice of Special Meeting of Holders of 6.25% Convertible Debentures and
Information Circular dated October 16, 2009.

 

(b)           “APH Leverage Ratio” means for the most
recently ended four fiscal quarters of the Parent Guarantor for which financial
statements are available, the ratio of Total Borrower Indebtedness for such
period to Cash Flow, for the four fiscal quarters ended on such date, in each case
determined for said period on a consolidated basis in accordance with GAAP.

 

(c)           “Atlantic Generation” means Atlantic Power
Generation, Inc., a Delaware corporation.

 

(d)           “Atlantic Generation Intercompany Note” means
that certain unsecured intercompany note in the principal amount of
$400,000,000, subordinated in right of payment to Atlantic Generation’s
guaranty of the Obligations and the other Secured Obligations, in form and
substance reasonably satisfactory to the Administrative Agent and the Required
Lenders, from Atlantic Generation to the Parent Guarantor with respect to the
obligations of Atlantic Generation to the Parent Guarantor in connection with
the transfer of 100% of the Parent Guarantor’s equity interests in the Borrower
and each of the Borrower’s Subsidiaries and Unrestricted Subsidiaries (other
than the Path 15 Subsidiaries).

 

(e)           “Atlantic Transmission” means Atlantic Power
Transmission, Inc., a Delaware corporation.

 

(f)            “Ninth Amendment Effective Date” means the “Effective
Date” as set forth in the Ninth Amendment to Credit Agreement, among the
Borrower, the 

 

7

 

Lenders party thereto and
the Administrative Agent, dated as of November 27, 2009.

 

(g)           “Path 15 Subsidiaries” means collectively,
Acquisition Holdco, the Acquisition Intermediary Holdco Subsidiaries, the
Acquisition Operating Subsidiary, and the Acquired Subsidiary.

 

(h)           “Total Borrower Indebtedness” means, at the
applicable time of any determination, without duplication the sum of (a) all
Indebtedness for borrowed money under this Credit Agreement and (b) the
aggregate amount of all other Indebtedness of the Borrower, including all
Capital Lease Obligations, all guarantees by the Borrower and all issued and
outstanding Letters of Credit, but excluding (x) any guaranties by
Borrower of the obligations of the Parent Guarantor and (y) any
obligations of the Borrower with respect to letters of credit issued on behalf
of the Borrower or guarantees issued by the Borrower on account of performance
guaranties, surety arrangements or similar supporting obligations of the
Borrower in connection with the commercial obligations of its Subsidiaries or
Unrestricted Subsidiaries incurred in the ordinary course of business.

 

(i)            “U.S. Holding Companies” means collectively,
Atlantic Generation and Atlantic Transmission.

 

3.3.          Section 5.01(b) of the
Credit Agreement is hereby amended and restated in its entirety as follows:

 

“(b)         The Borrower is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and is duly qualified and in good standing as
a foreign Person in each jurisdiction where its ownership, lease or operation
of Property or the conduct of its business requires such qualification and in which
the failure to so qualify could not reasonably be expected to have a Material
Adverse Effect.  As of the Ninth
Amendment Effective Date, the Parent Guarantor owns 100% of the Equity
Interests in Atlantic Generation and Atlantic Generation owns 100% of the
Equity Interests in the Borrower.  As of
the Ninth Amendment Effective Date, neither the Borrower nor Atlantic
Generation has any Subsidiaries or Unrestricted Subsidiaries or owns any Equity
Interests in any Person other than those Subsidiaries and Unrestricted
Subsidiaries and Equity Interests of the type listed in Schedule 5.13
hereto.

 

3.4.          Section 5.11 of the Credit
Agreement is hereby amended and restated in its entirety as follows:

 

“5.11      Taxes.  To the best knowledge of the Company, each of
the Parent Guarantor, the U.S. Holding Companies and the Borrower and its
Subsidiaries and Unrestricted Subsidiaries have filed all Federal, state and
other material tax returns and reports required to be filed, and have paid all
Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon any of the Parent Guarantor, the
U.S. Holding Companies, the 

 

8

 

Borrower or its Subsidiaries or Unrestricted Subsidiaries or their
properties, income or assets otherwise due and payable, except those which are
being contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP.  There is no proposed tax assessment against
any of the Parent Guarantor, the U.S. Holding Companies, or the Borrower or any
Subsidiary or Unrestricted Subsidiary that would, if made, have a Material
Adverse Effect.”

 

3.5.          Section 5.13 of the Credit Agreement is hereby amended by
replacing each instance of the words “Closing Date” with the words “Ninth
Amendment Effective Date”.

 

3.6.          The first sentence of Section 5.15 of the
Credit Agreement is hereby amended and restated in its entirety as follows:

 

“No statement,
information, report, representation, or warranty (other than projections) made
by any Loan Party in any Loan Document or in the IPS Prospectus, the 2006 IPS
Prospectus or the 2009 Information Circular, when so made (or if dated or
otherwise specified therein, as of such date), or furnished to the
Administrative Agent, the L/C Issuer or any Lender by or at the direction of
any Loan Party in connection with any Loan Document, when so furnished (or if
dated or otherwise specified therein, as of such date), contains any untrue
statement of a material fact or omits any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.”

 

3.7.          Section 6.01 of the Credit Agreement is hereby amended by
replacing each instance of words “in accordance with Cdn. GAAP” with the words “in
accordance with Cdn. GAAP or U.S. GAAP, as applicable, with respect to
reporting during the fiscal year ending December 31, 2010, and thereafter
in accordance with U.S. GAAP”.

 

3.8.          Section 6.01(b)(ii) of the Credit Agreement is hereby
amended by replacing the words “an updated calculation of the Cash Flow
Coverage Ratio of the Borrower” with the words “an updated calculation of the
Cash Flow Coverage Ratio and the APH Leverage Ratio”.

 

3.9.          Section 6.01(c)(i)(D) of the Credit Agreement is hereby
amended and restated in its entirety as follows:

 

“(D) the
projected distributions and interest payments from the Parent Guarantor to the
holders of the Subordinated Notes and the holders of the Convertible Debentures
and the projected distributions, principal payments and interest payments from
Atlantic Generation to the Parent Guarantor,”

 

3.10.        Section 6.01(c)(iii) of the Credit Agreement is hereby
amended by adding the words “and the APH Leverage Ratio” immediately after the
words “a schedule setting forth the Cash Flow Coverage Ratio”.

 

9

 

3.11.        The first sentence of Section 6.02(c) of
the Credit Agreement is hereby amended by replacing the words “or the unit
holders of the Borrower” with the words “, the shareholder of Atlantic
Generation or the holders of the common stock and other Equity Interests of the
Borrower”.

 

3.12.        Section 7.02(b) of the Credit Agreement is hereby amended and
restated in its entirety as follows:

 

“(b)         The limitations set out in Section 7.02(a) will
not apply to the following, provided that, except with respect to (x) any
Refinancing Indebtedness Incurred in connection with the refinancing of
Indebtedness permitted pursuant to Section 7.02(b)(xiv) and (y) any
Indebtedness Incurred with respect to the guaranty of Additional Securities (as
defined in the Subordinated Note Indenture) issued in connection with the
conversion of Convertible Debentures or Permitted Additional Debentures
permitted pursuant to Section 7.02(b)(iii)(B)(4), at the time any
such Indebtedness is Incurred or any Disqualified Stock or Preferred Stock is
issued, (A) the Cash Flow Coverage Ratio for the previous four-quarter
period is at least 1.5 to 1.0 on a pro forma
basis, after giving effect to the Incurrence of such Indebtedness or
the issuance of such Disqualified Stock or Preferred Stock and the application
of the proceeds therefrom and (B) the APH Leverage Ratio for the previous
four-quarter period is less than 2.5 to 1.0 on a pro forma basis, after giving effect to the Incurrence of
such Indebtedness or the issuance of such Disqualified Stock or Preferred Stock
and the application of the proceeds therefrom.”

 

3.13.        Section 7.02(b)(x) of the Credit Agreement is hereby amended and
restated in its entirety as follows:

 

“(x)          Indebtedness of Persons that are acquired
by the Borrower or any of its Subsidiaries or merged into a Subsidiary in
accordance with the terms of this Agreement; provided, however,
that such Indebtedness is not Incurred in contemplation of such acquisition or
to provide all or a portion of the funds or credit support required to consummate
such acquisition or merger; provided, further, however,
that (A) the Cash Flow Coverage Ratio for the previous four-quarter period
is at least 1.5 to 1.0 on a pro forma
basis, after giving effect to such acquisition and the Incurrence of such Indebtedness,
would be greater than the actual Cash Flow Coverage Ratio for such period
without giving effect to such acquisition and (B) that the APH Leverage
Ratio for the previous four-quarter period is less than 2.5 to 1.0 on a pro forma basis, after giving effect to such acquisition;”

 

3.14.        Section 7.02(c) of the Credit Agreement is hereby amended and
restated in its entirety as follows:

 

“(c)         The Project Level Subsidiaries and
Unrestricted Subsidiaries may incur Indebtedness and issue Disqualified Stock
or Preferred Stock as follows; provided that at the time any such
Indebtedness is Incurred or any such 

 

10

 

Disqualified Stock or
Preferred Stock is issued, (A) the Cash Flow Coverage Ratio for the previous
four-quarter period is at least 1.5 to 1.0 on a pro forma
basis, after giving effect to the Incurrence of such Indebtedness or the
issuance of such Disqualified Stock or Preferred Stock and the application of
the proceeds therefrom and (B) the APH Leverage Ratio for the previous
four-quarter period is less than 2.5 to 1.0 on a pro forma
basis, after giving effect to the Incurrence of such Indebtedness or the
issuance of such Disqualified Stock or Preferred Stock and the application of
the proceeds therefrom.”

 

3.15.        Section 7.03(a)(iii)(B) of the Credit Agreement is hereby
amended and restated in its entirety as follows:

 

“(B)         the Cash Flow Coverage Ratio for the
previous four-quarter period is at least 1.5 to 1.0 on a pro forma
basis, after giving effect to the making of such Restricted Payment and the APH
Leverage Ratio for the previous four-quarter period is less than 2.5 to 1.0 on
a pro forma basis, after giving effect to
the making of such Restricted Payment; and”

 

3.16.        Section 7.03(b)(v) of the Credit Agreement is hereby amended and
restated in its entirety as follows:

 

“(v)         the payment of dividends on the Common
Shares of the Borrower up to an aggregate amount in any fiscal quarter not to
exceed the Quarterly Base Dividend Level, provided that the Cash Flow
Coverage Ratio is at least 1.25 to 1.0 and the APH Leverage Ratio is less than
2.5 to 1.0;”

 

3.17.        The last section of Section 7.03(b) of
the Credit Agreement is hereby amended and restated in its entirety as follows:

 

“provided, that at the time of and after giving
effect to, any Restricted Payment permitted by clauses (i), (iii), (v), (vi), (vii) and
(viii), no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; provided, further, that with respect to
clause (viii), unless the Cash Flow Coverage Ratio for the previous
four-quarter period is at least 1.25 to 1.0 on a pro forma basis,
after giving effect to the making of such Restricted Payment and the APH
Leverage Ratio for the previous four-quarter period is less than 2.5 to 1.0 on
a pro forma basis, after giving effect to
the making of such Restricted Payment (X) no Unrestricted Subsidiary shall
be permitted to declare or pay dividends or distributions except for dividends
and distributions made to such Unrestricted Subsidiary’s immediate parent
entity which entity is a Subsidiary of the Borrower and (Y) no
Unrestricted Subsidiary shall be permitted to make any Restricted Investments; provided,
further, that unless the Cash Flow Coverage Ratio for the previous
four-quarter period is at least 1.25 to 1.0 on a pro forma
basis after giving effect to the making of such Restricted Payment and the APH
Leverage Ratio for the previous four-quarter period is less than 2.50 to 1.0 on
a pro forma basis after giving effect to the making of such Restricted Payment,
any such Restricted Payment may be made only out of, and to the extent of funds

 

11

 

in, the US Levelization
Reserve Account (as defined in the Depositary Agreement) or the Canadian
Levelization Reserve Account (as defined in the Depositary Agreement), and in
accordance with the terms of the Depositary Agreement.”

 

3.18.        Section 7.05(b)(ii)(D) of the Credit Agreement is hereby
amended and restated in its entirety as follows:

 

“(D)        to make a disbursement from the Borrower
to Atlantic Generation pursuant to Section 7.03(b)(iv) or (v) in
accordance with the restrictions and limitations of Section 7.03; provided,
at the time such disbursement is made the Cash Flow Coverage Ratio for the
previous four-quarter period is at least 1.5 to 1.0 on a pro forma
basis, after giving effect to the making of such disbursement and
the APH Leverage Ratio for the previous four-quarter period is less than 2.5 to
1.0 on a pro forma basis, after giving effect to
the making of such disbursement; provided, further, no Default or
Event of Default shall have occurred and be continuing or would occur as a
consequence thereof.”

 

3.19.        The final proviso of Section 8.01(e) of
the Credit Agreement is hereby amended and restated in its entirety as follows:

 

“; provided, further, however,
that for the avoidance of doubt, and notwithstanding anything herein to the
contrary, any event described in the preceding clauses (i) through (iii) in
connection with or related to a default or breach under the Atlantic Generation
Intercompany Note, shall constitute an Event of Default immediately upon the
Indebtedness evidenced by such Atlantic Generation Intercompany Note being
declared due and payable by the Parent Guarantor following such event, or
otherwise being accelerated in connection with such event, or immediately
following the Parent Guarantor exercising any other rights or remedies under
such Atlantic Generation Intercompany Note in connection with such event.”

 

3.20.        Schedule 5.13 of the Credit Agreement is hereby amended and
restated in its entirety by replacing it with a new Schedule 5.13 attached as Exhibit B
hereto.

 

3.21.        Exhibit C of the Credit Agreement is hereby amended and
restated in its entirety by replacing it with a new Exhibit C attached as Exhibit C
hereto.

 

4.             REPRESENTATIONS AND WARRANTIES. In order
to induce each of the Lenders and the Administrative Agent to enter into this
Ninth Amendment, the Borrower hereby reaffirms, as of the date hereof, its
representations and warranties contained in Article V of the Credit
Agreement (as amended by this Ninth Amendment), except to the extent any such
representation and warranty relates solely to an earlier date, and additionally
represents and warrants as follows:

 

4.1.          Existence and Standing.  The Borrower
is a limited liability company, duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and has all
requisite authority to conduct its business and is duly qualified 

 

12

 

or licensed to
transact business as a foreign limited liability company and in good standing
under the laws of each jurisdiction in which the conduct of its operations or
the ownership or leasing of its properties requires such qualification or
licensing, except where failure to be so qualified or licensed could not
reasonably be expected to have a Material Adverse Effect.

 

4.2.          No Conflict; Government Consent. 
No order, consent, adjudication, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, or
other action in respect of any governmental or public body or authority, or any
subdivision thereof, which has not been obtained by the Borrower or any of its
Subsidiaries, is required to be obtained in connection with the execution,
delivery or performance of this Ninth Amendment, or the legality, validity,
binding effect or enforceability of any of the Loan Documents, except, in each
case, to the extent that the failure to obtain such order, consent,
adjudication, approval, license, authorization, validation, exemption or other
action or to make such filing, recording or registration could not reasonably
be expected to have a Material Adverse Effect.

 

4.3.          Due Authorization, Non-Contravention, etc. 
The execution, delivery and performance by the Borrower of this Ninth
Amendment and the consummation of each of the Consent Transactions and the
consummation of the other transactions contemplated hereby and by the Credit
Agreement as so amended, are within the Borrower’s organizational powers, have
been duly authorized by all necessary organizational action, and do not (a) contravene
the Borrower’s Organization Documents, including, without limitation, its
articles or certificate of incorporation, partnership agreement, certificate of
partnership, articles or certificate of organization, by laws, operating or
other management agreement or other similar Organization Documents (except as
such, in the aggregate could not reasonably be expected to have a Material
Adverse Effect), (b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on or affecting the
Borrower (except as such, in the aggregate could not reasonably be expected to
have a Material Adverse Effect), (c) result in, or require the creation or
imposition of, any Lien (other than Permitted Liens) on any Properties (each as
defined in the Credit Agreement as amended by this Ninth Amendment) of the
Borrower or any Subsidiaries (except as such, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect), or (d) contravene,
result in or cause a breach of, or a default under, any material contract,
promissory note, indenture or other similar agreement or instrument to which
the Parent Guarantor, the Borrower or any other Loan Party is a party or an
obligor, including without limitation the Subordinated Note Indenture, the
Subordinated Notes, the Convertible Note Indenture and the Convertible Notes
(except as such, in the aggregate could not reasonably be expected to have a
Material Adverse Effect).

 

4.4.          Validity, etc.  This Ninth
Amendment and the Credit Agreement as amended hereby constitute the legal,
valid and binding obligations of the Borrower enforceable against the Borrower
in accordance with their respective terms except as such enforceability is
subject to the effect of (i) any applicable bankruptcy, insolvency,
reorganization or similar law relating to or affecting creditors’ rights
generally and (ii) general principles of equity (regardless of whether
such enforceability is considered in a 

 

13

 

proceeding in
equity or at law), including concepts of materiality, reasonableness, good
faith and fair dealing.

 

5.             CONDITIONS PRECEDENT TO EFFECTIVENESS OF
THE NINTH AMENDMENT.  This Ninth
Amendment and the Consent set forth in Section 2 shall become effective
(the “Effective Date”) upon the satisfaction of the following conditions
precedent.

 

5.1.          The Administrative Agent shall have received
counterparts of this Ninth Amendment executed and delivered on behalf of the
Borrower, Administrative Agent and each of the Lenders.

 

5.2.          The Administrative Agent, for the benefit of the
Administrative Agent and the Lenders, shall have received an opinion of counsel
to the Parent Guarantor in form and substance reasonably acceptable to the
Administrative Agent.

 

5.3.          The Administrative Agent shall have received executed
counterparts of (a) an amendment to the Deposit and Disbursement
Agreement, to incorporate the APH Leverage Ratio as an additional trigger to
the Cash Flow Coverage Ratio, in form and substance reasonably satisfactory to
the Administrative Agent, (b) a Guarantee from Atlantic Generation, (c) a
Pledge Agreement from Atlantic Generation pledging 100% of the Equity Interests
in the Borrower to the Administrative Agent for the benefit of the Lenders, (d) a
Pledge Agreement from the Parent Guarantor pledging 100% of the Equity
Interests in Atlantic Generation to the Administrative Agent for the benefit of
the Lenders, and (e) a joinder to the Deposit and Disbursement Agreement
from Atlantic Transmission and Atlantic Generation in form and substance
reasonably satisfactory to the Administrative Agent; which joinder shall
exclude from the payments required to be made to the Revenue Account by
Atlantic Transmission and Atlantic Generation their respective operating
expenses, including taxes, and any distributions received by Atlantic
Generation from the Disbursement Account, each of which shall have been
executed and delivered on behalf of each of the parties thereto.

 

5.4.          the Administrative Agent, for the benefit of the
Administrative Agent and the Lenders, shall have received a certificate of the
Borrower, dated as of the date hereof, signed by a Responsible Officer of the
Borrower:

 

(a)           attaching true and correct copies of the Indenture
Supplements, the 2009 Information Circular and all other documents related to
the IPS Conversion and delivered in connection with the IPS Conversion (the “IPS
Conversion Documents”) and certifying that the IPS Conversion has been or,
substantially simultaneously with the effectiveness of this Ninth Amendment
will be, consummated in accordance with all applicable Laws;

 

(b)           attaching true and correct copies of (i) the
material documents and agreements delivered in connection with each of the
Consent Transactions, including without limitation, the Path 15 Equity Transfer
Agreements, the Borrower Conversion Documents, the Atlantic Generation
Intercompany Note and the Organization Documents of each of the U.S. Holding
Companies and (ii) 

 

14

 

the Organization
Documents of the Borrower in effect immediately following the Borrower
Conversion;

 

(c)           attaching true and correct copies of resolutions
adopted by (i) each of the Parent Guarantor, the U.S. Holding Companies
and the Borrower approving and authorizing each of the Consent Transactions to
which it is a party and the execution, delivery and performance of the
documents and agreements delivered by such Person in connection therewith, and (ii) the
Borrower approving and authorizing the execution of this Ninth Amendment and
the performance of the Credit Agreement as amended hereby;

 

(d)           certifying that after giving pro forma
effect to each of the Consent Transactions and any transactions contemplated in
connection therewith, that the Cash Flow Coverage Ratio is at least at least
1.5 to 1.0 and the APH Leverage Ratio is less than 2.5 to 1.0;

 

(e)           certifying that any consents, authorizations or
approvals required in connection with the IPS Conversion and each of the other
Consent Transactions and the transactions contemplated thereunder, whether
required by applicable Law or under the Convertible Note Indenture, the
Subordinated Note Indenture or any other material agreement to which the Parent
Guarantor, the Borrower or any Subsidiary is a party, have been or
simultaneously upon the Effective Date, will be obtained; and

 

(f)            certifying that (i) immediately prior to and
after giving effect to this Ninth Amendment, no Default or Event of Default
exists or is continuing, (ii) that since the Closing Date no event or
events have occurred that, in the aggregate, could reasonably be expected to
have a Material Adverse Effect, and (iii) that immediately prior to and
after giving effect to the IPS Conversion and the other Consent Transactions,
the Borrower and each Guarantor shall be Solvent.

 

5.5.          Any fees required to be paid on or before the date
hereof shall have been paid, including the payment by the Borrower to each
Lender of an amendment fee equal to twenty-five (25.0) basis points on such
Lender’s Commitment.

 

5.6.          Unless waived by the Administrative Agent, the
Borrower shall have paid all Attorney Costs of the Administrative Agent to the
extent invoiced prior to or on the Effective Date, plus such additional amounts
of Attorney Costs as shall constitute its reasonable estimate of Attorney Costs
incurred or to be incurred by it through the closing proceedings (provided that
such estimate shall not thereafter preclude a final settling of accounts
between the Borrower and the Administrative Agent).

 

6.             EFFECT OF AMENDMENT. This Ninth Amendment
shall be deemed to be an amendment to the Credit Agreement, and the Credit
Agreement, as amended hereby, is hereby ratified, approved and confirmed in
each and every respect.  All references
to the Credit 

 

15

 

Agreement in any other document, instrument, agreement or writing shall
hereafter be deemed to refer to the Credit Agreement as amended hereby.

 

7.             GOVERNING LAW, SEVERABILITY, ETC.  THIS NINTH AMENDMENT SHALL
BE DEEMED TO BE A CONTRACT MADE UNDER, GOVERNED BY, AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE LAWS OF THE UNITED
STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF THE CONFLICTS OF LAW.  Whenever possible each provision of this
Ninth Amendment shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Ninth Amendment shall
be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating
the remainder of such provision or the remaining provisions of this Ninth
Amendment.

 

8.             MISCELLANEOUS.

 

8.1.          Successors and Assigns.  This Ninth
Amendment shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.

 

8.2.          Counterparts.  This Ninth
Amendment may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.

 

8.3.          NO ORAL AGREEMENTS.  THIS WRITTEN
NINTH AMENDMENT AND THE CREDIT AGREEMENT REPRESENT THE FINAL AGREEMENT AMONG
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

16

 

IN WITNESS WHEREOF, the parties hereto have caused
this Ninth Amendment to be executed by their respective officers thereunto duly
authorized as of the day and year first written above.

 

	
   

  	
  ATLANTIC POWER
  HOLDINGS, LLC,

  
	
   

  	
   

  
	
   

  	
  By: Atlantic
  Power Management, LLC, its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Barry Welch

  
	
   

  	
   

  	
  Name:

  	
  Barry Welch

  
	
   

  	
   

  	
  Title:

  	
  President

  

 

[Signature Page to Ninth
Amendment to Credit Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have caused
this Ninth Amendment to be executed by their respective officers thereunto duly
authorized as of the day and year first written above.

 

	
   

  	
  BANK OF
  MONTREAL, Individually as a Lender and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James Whitmore

  
	
   

  	
  Name:

  	
  James Whitmore

  
	
   

  	
  Title:

  	
  Managing Director

  

 

[Signature Page to Ninth
Amendment to Credit Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have caused
this Ninth Amendment to be executed by their respective officers thereunto duly
authorized as of the day and year first written above.

 

	
   

  	
  UNION BANK,
  N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan L.
  Bigelow

  
	
   

  	
  Name:

  	
  Jonathan L.
  Bigelow

  
	
   

  	
  Title:

  	
  Vice President

  

 

[Signature Page to Ninth
Amendment to Credit Agreement]

 

 

EXHIBIT A

to Ninth Amendment to Revolving Credit Agreement

 

Seventh Supplemental
Indenture to the 11% Subordinated Notes Indenture

 

 

EXHIBIT B

to Ninth Amendment to Revolving Credit Agreement

 

First Supplemental
Indenture to the 6.25% Convertible Notes Indenture

 

 

EXHIBIT C

to Ninth Amendment to Revolving Credit Agreement

 

SCHEDULE 5.13

 

SUBSIDIARIES; GUARANTORS;
EQUITY INVESTMENTS

 

(a)           Subsidiaries and Unrestricted
Subsidiaries of Borrower

 

Subsidiaries

 

Teton Power
Funding, LLC

Epsilon Power
Funding, LLC

Umatilla Power
Funding, LLC

MP Power LLC

Teton East Coast
Generation LLC

Teton Selkirk LLC

Badger Power
Associates, L.P.

Badger Power
Generation I LLC

Badger Power
Generation II LLC

Baker Lake Hydro
LLC

Concrete Hydro
Partners Limited Partnership

Dade Investment,
L.P.

Lake Cogen, Ltd.

Lake Investment,
L.P.

MEP Rumford, LLC

NCP Dade Power LLC

NCP Gem LLC

NCP Lake Power LLC

NCP Pasco LLC

Olympia Hydro LLC

Orlando Power
Generation I LLC

Orlando Power
Generation II LLC

Stockton CoGen
(II), LLC

Teton New Lake,
LLC

Teton Operating
Services, LLC

MP Cogen LLC

 

Unrestricted
Subsidiaries

 

Harbor Capital
Holdings, LLC

Atlantic Path 15
Transmission, LLC (formerly Harbor Transmission, LLC)

Path 15 Funding
TV, LLC (formerly TransValley LLC)

Path 15 Funding
KBT, LLC (formerly KB Transmission LLC)

Path 15 Funding,
LLC (formerly EIF Path 15 Funding, LLC)

Atlantic Holdings
Path 15, LLC (formerly Trans-Elect NTD Holdings Path 15, LLC)

 

 

Atlantic Path 15,
LLC (formerly Trans-Elect NTD Path 15, LLC)

Epsilon Power
Partners, LLC

AP Onondaga, LLC

Onondaga
Renewables, LLC

Atlantic
Auburndale, LLC

Auburndale
Holdings, LLC

Auburndale GP, LLC

Auburndale LP, LLC

Auburndale Power
Partners, L.P.

Pasco Cogen, Ltd.

Pasco Cogen
Realty, Ltd.

Teton Pasco
Realty, LLC

Atlantic
Renewables Holdings, LLC

Rollcast Energy, Inc.

 

(b)           Subsidiaries Delivering Guaranties

 

Teton Power
Funding, LLC

Epsilon Power
Funding, LLC

MP Power LLC

Teton East Cost
Generation LLC

Teton Selkirk LLC

Badger Power
Generation I LLC

Badger Power
Generation II LLC

Baker Lake Hydro
LLC

Dade Investment,
L.P.

MEP Rumford, LLC

NCP Dade Power LLC

NCP Pasco LLC

Olympia Hydro LLC

Orlando Power
Generation I LLC

Orlando Power
Generation II LLC

Stockton CoGen (II) LLC

Teton Operating
Services, LLC

Teton New Lake,
LLC

 

(c)           Borrower’s Equity Interests in Other
Entities

 

Koma Kulshan
Associates

Badger Creek
Limited, L.P.

Stockton CoGen
Company

Orlando CoGen
Limited, L.P.

Rumford
Cogeneration Company, L.P.

Selkirk Cogen
Partners, L.P.

Delta Person, LLC

Delta Person GP,
LLC

 

 

BHB Power, LLC

Javelin Holding,
LLC

Javelin Gregory
Remington Corporation

Gregory Holding
#2, LLC

Gregory Power, LLC

Javelin Gregory
General Corporation

Gregory Holdings
#1, LLC

Javelin Rumford
Limited, LLC

Javelin Energy,
LLC

Chambers
Cogeneration Limited Partnership

 

 

EXHIBIT C

to Ninth Amendment to Revolving Credit Agreement

 

EXHIBIT C

 

FORM OF BORROWER
COMPLIANCE CERTIFICATE

 

Financial Statement Date:
                    ,      

 

To:          Bank of Montreal, as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that
certain Credit Agreement, dated as of November 18, 2004 (as amended,
restated, extended, supplemented or otherwise modified in writing from time to
time, the “Agreement;” the terms
defined therein being used herein as therein defined), among Atlantic Power
Holdings, LLC (the “Borrower”), the
Lenders from time to time party thereto, and Bank of Montreal, as
Administrative Agent, L/C Issuer and Collateral Agent.

 

The undersigned
Responsible Officer hereby certifies as of the date hereof that he/she is the
                               
of the [Borrower] [Parent Guarantor], and that, as such, he/she is authorized
to execute and deliver this Certificate to the Administrative Agent on the
behalf of the [Borrower] [Parent Guarantor], and that:

 

Use following for fiscal  year-end  financial statements

 

1.             Attached hereto as Schedule 1 are year-end financial
statements for the [Borrower] [Parent Guarantor] and its Subsidiaries required
by Section 6.01(a) which financial statements fairly present
the financial conditions, results of operations and cash flows of the
[Borrower] [Parent Guarantor] and its Subsidiaries in accordance with GAAP as
at such date for such period, subject only to the absence of footnotes.

 

Use following for fiscal quarter-end financial statements

 

(a)           Attached hereto as Schedule 1 are the unaudited
financial statements required by Section 6.01(b) for
the fiscal quarter of
                      
ended as of the above date and attached hereto as Schedule 1a are the unaudited
financial statements for the fiscal quarter of
                    
ended as of the above date.  Such
financial statements fairly present the financial condition, results of
operations and cash flows of the [Borrower and its Subsidiaries] [Parent
Guarantor] in accordance with GAAP as at such date and for such period, subject
only to normal year-end audit adjustments and the absence of footnotes.

 

(b)           The undersigned has reviewed and is familiar with the
terms of the Agreement and has made, or has caused to be made under his/her
supervision, a reasonable review of the transactions and condition (financial
or otherwise) of the Borrower and its Subsidiaries and Unrestricted
Subsidiaries during the accounting period covered by the attached financial
statements.

 

 

(c)           A review of the activities of [the Borrower and its
Subsidiaries] [each Loan Party]  during
such fiscal period has been made under the supervision of the undersigned with
a view to determining whether during such fiscal period [the Borrower and its
Subsidiaries] [each Loan Party] performed and observed all its Obligations
under the Loan Documents, and to the best knowledge of the undersigned during
such fiscal period, [the Borrower and its Subsidiaries] [each Loan Party]  performed and observed each covenant and
condition of the Loan Documents applicable to it.

 

(d)           [The Cash Flow Coverage Ratio and APH Leverage Ratio
analysis set forth on Schedule 2
attached hereto is true and accurate on and as of the date of this
Certificate.] [To be included in Certificate delivered by Parent Guarantor.]

 

IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of
                                      ,
              .

 

	
   

  	
  [BORROWER] [PARENT
  GUARANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

For the Quarter/Year ended
                                      
(“Statement Date”)

 

SCHEDULE 2

to the Compliance Certificate

($ in 000’s)

 

1.                                       Cash Flow Coverage Ratio of Parent
Guarantor:

 

	
  Cash Flow Coverage Ratio

  	
   

  	
  Qtr. End

  	
   

  	
  Qtr. End

  	
   

  	
  Qtr. End

  	
   

  	
  Qtr. End

  	
   

  	
  Rolling 4 Qtrs.

  Ended

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (A)

  	
   

  	
  Cash
  Distributions received or receivable by the Parent Guarantor from the
  Borrower, any Subsidiary or Unrestricted Subsidiary of the Borrower or any
  other source

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (B) 

  	
   

  	
  Parent
  Guarantor’s pro rata share (based on its common membership ownership in the
  Borrower) of any cash distributions received by the Borrower in respect of
  such period and retained by the Borrower, in each case exclusive of any
  distribution attributable to any net proceeds realized by the Parent
  Guarantor or any Subsidiary of the Parent Guarantor, including without
  limitation, the Borrower, any Subsidiary of the Borrower and any Unrestricted
  Subsidiary of the Borrower upon the sale or disposition of plant property and
  equipment, which is not disposed in the ordinary course of business and any
  other extraordinary items.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
  Cash Flow Coverage Ratio

  	
   

  	
  Qtr. End

  	
   

  	
  Qtr. End

  	
   

  	
  Qtr. End

  	
   

  	
  Qtr. End

  	
   

  	
  Rolling 4
  Qtrs.

  Ended

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (C)

  	
   

  	
  Amounts paid by
  the Parent Guarantor in respect of expenses (other than Interest Expense),
  including taxes determined on a pro forma, annual basis for a full tax year

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (D)

  	
   

  	
  Subtotal

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (E)

  	
   

  	
  Interest Expense

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (F)

  	
   

  	
  Mandatory
  Principal Repayments

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (G)

  	
   

  	
  Subtotal

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (D)/(G)

  	
   

  	
  Cash
  Flow Coverage Ratio

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  APH Leverage Ratio

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Ended

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (A)

  	
   

  	
  Cash
  Distributions received or receivable by the Parent Guarantor from the
  Borrower, any Subsidiary or Unrestricted Subsidiary of the Borrower or any
  other source

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (B) 

  	
   

  	
  Parent
  Guarantor’s pro rata share (based on its common membership ownership in the
  Borrower) of any cash distributions received by the Borrower in respect of such
  period and retained by the Borrower, in each case exclusive of any
  distribution attributable to any net proceeds realized by the Parent
  Guarantor or any Subsidiary of the Parent Guarantor, including without
  limitation, the Borrower, any 

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
   

  	
   

  	
  Subsidiary of
  the Borrower and any Unrestricted Subsidiary of the Borrower upon the sale or
  disposition of plant property and equipment, which is not disposed in the
  ordinary course of business and any other extraordinary items.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  APH Leverage Ratio

  	
   

  	
  Qtr. End

  	
   

  	
  Qtr. End

  	
   

  	
  Qtr. End

  	
   

  	
  Qtr. End

  	
   

  	
  Rolling 4
  Qtrs.

  Ended

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (C)

  	
   

  	
  Amounts paid by
  the Parent Guarantor in respect of expenses (other than Interest Expense),
  including taxes determined on a proforma, annual basis for a full tax year

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (D)

  	
   

  	
  Subtotal

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (E)

  	
   

  	
  Total Borrower
  Indebtedness

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (F)

  	
   

  	
  Subtotal

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (D)/(F)

  	
   

  	
  APH
  Leverage Ratio

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Schedule
5.06

 

Litigation

 

None.

 

 

Schedule
5.09

 

Exceptions to Compliance
with Environmental Laws

 

None.

 

 

Schedule 5.13

 

Subsidiaries;
Guarantors; Equity Investments

 

(a)           Subsidiaries of
Borrower

 

Restricted Subsidiaries:

 

Teton Power Funding, LLC

Epsilon Power Funding, LLC

Umatilla Power Funding, LLC

MP Power, LLC

Teton East Coast Generation,
LLC

Teton Fuels Mid-Georgia, LLC

Teton Lake Land Company, LLC

Teton Selkirk, LLC

Badger Power Associates,
L.P.

Badger Power Generation, I
LLC

Badger Power Generation, II
LLC

Baker Lake Hydro, LLC

Concrete Hydro Partners, LP

Dade Investment, LP

Geddes II Company, LLC

Geddes Cogeneration, LLC

Onondaga Cogeneration, L.P.

Lake Cogen, Ltd.

Lake Interest Holdings, LLC

Lake Investment, LP

MEP Rumford, LLC

NCP Dade Power, LLC

NCP Gem, LLC

NCP Houston Power, LLC

NCP Lake Power, LLC

NCP Pasco, LLC

NCP Perry, LLC

Olympia Hydro, LLC

Orlando Power Generation, I
LLC

Orlando Power Generation, II
LLC

Rockfort Power (Belize), LLC

Rockfort Power — Cayman
Island, LLC

Stockton CoGen (II), LLC

Umatilla Groves, LLC

Teton New Lake, LLC

Teton Operating Services,
LLC

Teton Lake Distillation
Company, LLC

 

 

Onondaga Power Swap
Holdings, LLC

 

Unrestricted Subsidiaries:  NONE

 

(b)           Subsidiaries
Delivering Guaranties

 

Teton Power Funding, LLC

Epsilon Power Funding, LLC

MP Power, LLC

Teton East Cost Generation, LLC

Teton Fuels Mid-Georgia, LLC

Teton Selkirk, LLC

Badger Power Generation I LLC

Badger Power Generation II LLC

Baker Lake Hydro LLC

Dade Investment, L.P.

Geddes II, LLC

Geddes Cogeneration Company, LLC

MEP Rumford, LLC

NCP Dade Power, LLC

NCP Houston Power, LLC

NCP Pasco, LLC

NCP Perry, LLC

Olympia Hydro, LLC

Onondaga Cogeneration, L.P.

Orlando Power Generation, I LLC

Orlando Power Generation, II LLC

Stockton CoGen (II), LLC

Umatilla Groves, LLC

Teton Operating Services, LLC

 

(c)           Borrower’s
Equity Investments in Other Entities

 

Borrower has no Equity Investments other than
Equity Investments in those entities listed in Part (a) of this
Schedule 5.13

 

 

Schedule
7.02(b)(ii)

 

Indebtedness, Disqualified
Stock, Preferred Stock

 

Indebtedness

 

1.             Pursuant to the Amended and Restated Front Load Letter
of Credit Maintenance Agreement dated April 15, 1996 among GPU
International, Inc. (n/k/a Teton East Coast Generation, LLC), Sonat Energy
Services Company, Mid-Georgia Cogen L.P., and The Bank of Nova Scotia, as
Security Agent, Teton East Coast Generation, LLC and Sonat Energy Services
Company agree (i) to maintain a letter of credit in favor of Bank of Nova
Scotia in accordance with the terms of the Power Purchase Agreement dated as of
August 7, 1995 (the Mid-Georgia
PPA) between Mid-Georgia Cogen L.P. and Georgia Power Company in
an amount equal to the lesser of (i) the Capacity Account Balance (as
defined in the Mid-Georgia PPA) from time to time and (ii) $9,000,000, and
(ii) to pay $9,000,000 in liquidated damages upon a failure to maintain
such letter of credit in accordance with the terms of the Mid-Georgia PPA.  The maximum liability of Teton East Coast
Generation, LLC to The Bank of Nova Scotia, as Security Agent under such
obligations is $4,500,000.

 

2.             Pursuant to the Guaranty by Energy Initiatives, Inc.
(n/k/a Aquila East Coast Generation, LLC) dated November 30, 1995  in favor of the City of Warner Robins (the Warner Robbins Guarantee),
relating to the Mid-Georgia Natural Gas Facilities Agreement, Teton East Coast
Generation, LLC guarantees the payment by EI Fuels Corp. (n/k/a Aquila Fuels
Mid-Georgia, LLC) under the Natural Gas Facilities Agreement dated as of November 30,
1995 between Warner Robbins, EI Fuels Corp. and the Municipal Gas Authority of
Georgia of the Fixed Monthly Lease Charges (as defined therein).  Pursuant to the Assumption Agreement dated as
of February 25, 1998 between GPU International, Inc. (n/k/a Teton
East Coast Generation, LLC) and SONAT Energy Services Company (Sonat), Sonat assumed
50% of Teton East Coast Generation, LLC’s liability under the Warner Robbins
Guarantee.  The Fixed Monthly Lease
Charge is $24,000 per month.

 

3.             Letter of Credit issued by Citibank, N.A. in favor of
Niagara Mohawk Power Corporation for the account of Onondaga Cogeneration
Limited Partnership in an amount equal to the price of 90 days of the maximum
daily delivery quantity of gas under the Gas Transportation Agreement dated as
of April 15, 1991 between Onondaga Cogeneration Limited Partnership and
Niagara Mohawk Power Corporation (which amount is currently $554,113).

 

4.             Pursuant to the Guaranty made as of August 1,
1997 (the Orlando
Guaranty) by Air Products and Chemicals, Inc. (and subsequently
assumed by the Borrower) for the benefit of ABB Power Generation, Inc., (ABB) Teton Power
Funding, LLC guarantees payment by Orlando CoGen Limited, L.P. (Orlando CoGen) of 50%
of the Termination Amount (as defined in the Gas Turbine Hot Gas Path Protection
Plan dated as of August 1, 1997 (the Orlando  Maintenance Agreement) between ABB and
Orlando CoGen) upon termination of the Orlando Maintenance Agreement by Orlando
CoGen pursuant to 

 

 

Section 13.1 of the
Orlando Maintenance Agreement.  The Termination
Amount is an amount equal to the sum of (i) a cancellation fee (not to
exceed $250,000) and (ii) certain outstanding fees under the Orlando
Maintenance Agreement.

 

5.             Pursuant to the Consent and Agreement entered into as
of March, 2004 by and among Orlando Power Generation I Inc., Orlando Power
Generation II Inc, Orlando Power Holdings, L.L.C., Orlando CoGen (I), Inc.,
Orlando CoGen Limited, L.P., the Management Committee of the Partnership,
Aquila, Inc., UtilCo Group Inc., Teton Power Funding, LLC, El Paso Power
Operations Company, El Paso Merchant Energy, L.P. (EPMELP), El Paso
Corporation (El Paso),
Orlando Cogen Fuel, LLC, Orlando Cogen II, LLC and Northern Star Generation
LLC, Teton Power Funding, LLC agreed to replace the credit support currently
being provided by El Paso to BP Amoco in respect of the Gas Purchase and Sales
Agreement dated December 3, 1991, between BP Amoco and EPMELP and related
contracts.  Teton Power Funding LLC’s
maximum liability with respect to such credit support is $2,500,000.

 

6.             Pursuant to the Credit Support Annex to the ISDA
Master Agreement between Constellation Power Source, Inc. (Constellation) and
Onondaga Power Swap Holdings, LLC (OPSH), dated May 7, 2004, OPSH provides
$2,000,000 of credit support to Constellation.

 

7.             Pursuant to the Guarantee dated as of May 3, 2004
by OCLP in favor of Niagara Mohawk Power Corporation (NiMo), OCLP
guarantees the obligations of Onondaga Power Swap Holdings, LLC (OPSH) under the ISDA
Master Agreement and Schedule to ISDA Master Agreement between OPSH and NiMo
dated June 30, 1998.

 

8.             Pursuant to the Mortgage, Assignment of Leases and
Rents, and Security Agreement dated May 25, 2004 (Mortgage) with Boeing
Capital Corporation, Teton Lake Land Company, LLC issued secured debt in the amount
of $871,854.56 to Boeing Capital Corporation.  As of November 1,
2004, $817,688.56 remains outstanding.

 

9.             Pursuant to a Guaranty dated as of May 25, 2004
by Lake Cogen, Ltd. in favor of Boeing Capital Corporation, Lake Cogen, Ltd.
guaranteed the payment of Teton Lake Land’s obligations under the Mortgage.

 

10.           Pursuant to a Guaranty dated as of November 17,
2004 by Atlantic Power Holdings, LLC in favor of ArcLight Energy Partners Fund
I, L.P. (“ArcLight”), Atlantic Power Holdings, LLC guaranteed certain
obligations of ArcLight related to Delta Person Limited Partnership and Javelin
Energy, LLC.  The total potential
liability of Atlantic Power Holdings, LLC under the guaranty is $7,300,000.

 

 

Disqualified Stock

 

None.

 

Preferred Stock

 

Borrower’s
Class A Preferred Membership Interest

Borrower’s
Class B Preferred Membership Interest

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