Document:

Exhibit 10.10

OPERATING
AGREEMENT

This
Agreement dated as of the 5th
day of April, 1990, by and between
GREAT LAKES GAS TRANSMISSION LIMITED PARTNERSHIP, a Delaware limited
partnership (the “Partnership”),
and GREAT LAKES GAS TRANSMISSION COMPANY, a Delaware corporation (“GLGTC” or
the “Operator”).

WITNESSETH:

WHEREAS,
the Partnership was formed pursuant to a Limited Partnership Agreement
effective as of April 5, 1990 (“Partnership Agreement”); and the purpose of the
Partnership is to acquire, expand and operate an inter-state natural gas
pipeline, now beginning at a point on the international border near Emerson,
Manitoba and passing through the states of Minnesota, Wisconsin, and Michigan
to points on the international border near Sault Ste. Marie and St. Clair,
Michigan, to transport natural gas on behalf of various Shippers;

WHEREAS,
GLGTC has owned and operated the facilities for over twenty years and has the
experience and the staff required to efficiently carry on the operation of the
Facilities after the transfer thereof to the Partnership;

WHEREAS,
accordingly, pursuant to the Partnership Agreement, the Partnership has
designated GLGTC as

Operator
of the Facilities in accordance with and pursuant to the terms of this Agreement; and

WHEREAS, Operator is willing and able to assume such
responsibilities on the terms and conditions set forth below;

NOW THEREFORE, in consideration of the representations, covenants and premises hereinafter set
forth, the Parties agree as
follows:

1.             Definitions.

As used in this Agreement, the definitions used in the Partnership Agreement shall, except as specifically
provided herein, have the
same meanings in this Agreement. In addition, the following words and terms shall have the
meanings set forth herein:

1.1.          Accounting
Procedure. The accounting procedure set forth in Exhibit “A” hereto.

1.2.          Day. A period of
twenty-four (24) consecutive hours commencing at noon Eastern Standard Time.

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1.3.          Month. A period
of time beginning on the first Day of a calendar month and ending at the same
time on the first Day of the next succeeding calendar month.

1.4.          Year. Each twelve
(12)-Month period beginning on the first Day of a calendar year and ending at
the beginning of the first Day of the next calendar year; provided that the first
year hereunder shall begin on the formation date of the Partnership and shall
end at the beginning of the first Day of the following calendar year; and
further provided that the last contract year shall end at the termination of
this Agreement as provided for in Section 9.1 of this Agreement.

1.5.          Party. Partnership or
Operator, and “Parties” shall mean both Partnership and Operator.

1.6.          Partnership. The Great Lakes
Gas Transmission Limited Partnership and any successor entities thereto.

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1.7.          Required Accounting Practice. The accounting rules and regulations, if
any, at the time prescribed by the regulatory body or bodies under the
jurisdiction of which the Partnership is at the time operating and, to the
extent of matters not covered by
such rules and regulations, generally
accepted accounting principles as practiced in the United States at the time prevailing for companies engaged in a business similar to that of
the Partnership.

2.             Relationship of the Parties.

2.1.          Appointment as
Operator. Upon and subject to the terms and conditions of this Agreement, the
Partnership hereby appoints GLGTC as the Operator of the Facilities and GLGTC
hereby accepts such appointment and agrees to act pursuant to the provisions
hereof.

2.2.          Operator’s
Authority to Execute Contracts. Subject to the direction and prior approval of the
Management Committee and subject to any procedures established by the
Management

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Committee,
any contracts relating to Partnership business may be executed by the Operator
on behalf of the Partnership.

Copies
of all contracts entered into by the Operator which  affect the
Partnership or the Facilities shall be provided to the Partnership.

3.             Operator’s Design,
Construction, Operation, Maintenance, and Administration Responsibilities.

3.1.          Operator’s
Responsibilities. Subject to the provisions of the Partnership Agreement, and pursuant to
the direction and supervision of the Management Committee, and subject to its
prior approval, the Operator shall have the general responsibility for the
design, construction, operation, maintenance, and repair of the Facilities,
including any Incremental Expansion, and the administration of the business of
the Partnership, as set forth herein:

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3.1.1.       The Operator shall provide the labor,
materials, supplies and supervision required for the operation and maintenance
of the Facilities and shall provide administrative, management, liaison, and
related services to the Partnership, including but not limited to accounting,
administrative, construction, engineering, marketing, planning, public
relations, personnel, purchasing, legal, treasury, repair, replacement,
operational planning, budgeting, technical services, insurance administration,
tax services, and regulatory matters.

3.1.2.       The Operator shall prepare, file and
prosecute applications for regulatory and governmental authority required by
the Partnership, and make on behalf of the Partnership periodic filings 

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required of the Partnership by governmental or regulatory agencies having
jurisdiction.

3.1.3.       The Operator shall prepare financing plans
for the Partnership (but not for the individual Partners) and negotiate for
financing commitments, if any, to be entered into by the Partnership for the
financing of the operation or construction of any Facilities.

3.1.4.       The Operator shall
maintain accurate accounting records in
accordance with the Required Accounting Practice for the design, planning,
construction, operation and maintenance of the Facilities, together with any
information requested by the Partnership relating to such records.

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3.1.5.       The Operator shall prepare proposed budgets
and schedules for the review and approval of the Partnership pursuant to
Section 5.2 of this Agreement.

3.1.6.       The Operator shall prepare
financial statements as required and when directed by the Management Committee.

3.1.7.       The Operator shall cause
any proposed incremental Expansion to be designed and constructed in accordance
with the requirements of all federal, state, or other governmental agencies
having jurisdiction, including but not limited to the requirements of the
United States Department of Transportation set forth in 49 CFR Part 192, and in accordance
with sound and prudent natural gas pipeline industry practices and provide or

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cause
to be provided such appropriate supervisory, audit, administrative, technical
and other services as may be required.

3.1.8.       The Operator shall assist the Partnership in
the preparation of tax returns required of the Partnership and pay such taxes
as are required and approved to be paid by the Partnership.

3.1.9.       The Operator shall maintain custody of funds,
notes, drafts, acceptances, commercial paper and other securities belonging to
the Partnership; keep funds belonging to the Partnership on deposit in one or
more banking institutions selected by the Management Committee; and disburse
such funds; provided that the Partnership’s funds shall not be commingled with
funds belonging to the Operator.

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3.1.10.     The Operator shall negotiate service
agreements with counsel, Certified Public Accountants, and financial and other
consultants.

3.1.11.     The Operator shall supervise, negotiate and
administer contracts and the Partnership’s service agreements and tariffs,
including, but not limited to, preparation and collection of all bills for
services rendered thereunder and payment of all bills for services received.

3.1.12.     The Operator shall make reports to and
consult with the Management Committee regarding all duties, responsibilities
and actions of the Operator under this Agreement in the form and at the times
requested by the Management Committee.

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3.1.13.     The Operator shall prepare and negotiate in
the name of and on behalf of the Partnership rights-of-way, land in fee,
permits and contracts necessary for planning, construction, operation and
maintenance of the Facilities; resist the perfection of any involuntary liens
against Partnership property and, to the extent permitted by law, hold
Partnership property free of all involuntary liens.

3.1.14.     The Operator shall make reports to . the
Partnership of all non-routine occurrences that the Operator determines may
have a significant adverse impact upon the operation of the Facilities.

3.1.15.     The Operator shall promptly make any and all
repairs of a non-routine nature to the Facilities

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as may be required, provided that repairs requiring
unbudgeted expenditures in excess of $500,000 shall not be made without the
prior approval of the Management Committee except in emergencies, in which case
the Operator shall promptly take all required remedial action and shall notify
the Partnership as soon as practicable of the nature of the emergency and the
actions taken  and to be
taken.

3.1.16.     Except as otherwise provided by applicable
governmental regulations, or as directed by the Management Committee, the
Operator shall retain all charts, records, books of account, Partnership Tax
Returns, plans, designs, studies and reports and other documents related to the
design, construction, operation and maintenance of the Facilities for a period
of a

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least
three (3) years from the date of completion of the activity to which such
records relate.

3.1.17.     The Operator shall perform such other duties
as are requested by the Management Committee or as are necessary or appropriate
to discharge the Operator’s responsibilities under this Agreement.

3.2.          Operator’s Right To
Request Instructions From Management Committee. The Operator may
at any time, if it reasonably deems it to be necessary or appropriate, request
instructions from the Management Committee with respect to any matter contemplated
by this Agreement and may defer action thereon pending the receipt of such
instructions. The Operator shall be fully protected in acting in accordance
with the instructions of the Management Committee or in omitting to act pending
the receipt of such instructions, and shall have no liability for any act in

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good
faith in compliance therewith, or for its good faith failure to act pending
receipt thereof.

4.             Employees,
Consultants and Subcontractors.

4.1.          Operator’s
Employees, Consultants and Sub-contractors.

The
Operator shall employ or retain and have supervision over the Persons
(including consultants and professional service or other organizations)
required by the Operator to perform its duties and responsibilities hereunder
in an efficient and economically prudent manner. The Operator shall pay all
reasonable expenses in connection therewith, including compensation, salaries,
wages, overhead, administrative expense, and fees incurred by Operator and its
Affiliates, and, if applicable, social security taxes, workers’ compensation
insurance, retirement and insurance benefits and other such expenses. The
compensation to be paid to and other employee benefits (including without
limitation retirement plans, life,

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health, accident and other
insurance coverages and
insurance programs) provided to the Operator’s employees shall be determined by
the Operator. All necessary or appropriate expenses incurred by the Operator
pursuant to this Section shall be
reimbursed to the Operator by the Partnership as provided in the
Accounting Procedure.

4.2.          Affiliates of Operator or Partners. The Operator
shall be authorized to utilize, as it deems necessary, the services of
its corporate Affiliates, provided that such services are utilized under
contracts on terms materially no less favorable to the Partnership than those
prevailing at the time for comparable services of unaffiliated independent
parties.

4.3.          Standard for
Operator and its Employees. The Operator shall perform its services and carry
out its responsibilities hereunder and shall require all of its employees and
contractors, subcontractors, and materialmen

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furnishing labor, material or services for the construction, operation and
maintenance of the Facilities to carry out their responsibilities, in accordance
with sound, workmanlike and prudent practices of the gas pipeline industry and in compliance with all material laws, statutes, ordinances,
safety codes, regulations and rules
of governmental authorities
having jurisdiction.

4.4.          Equal Employment
Opportunity. The Operator will not
discriminate against any employee or
applicant for employment because of race, color,
religion, sex or national origin
or because he or she is a disabled veteran or veteran of the Vietnam era or because of
physical or mental handicaps in regard to any position for which he or she is
qualified and will comply with the provisions of 41 CFR §60-1.4(a)(l)-(7), 41
CFR §60-250.4(a)-(m) and 41 CFR §60-741.4(a)-(f), all of which are incorporated
herein by reference.

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5.             Financial and Accounting.

5.1.          Accounting and
Compensation.

5.1.1.       The Operator shall keep a full and
complete account of all costs, expenses and expenditures incurred by it in
connection with its obligations and performance hereunder in the manner set
forth in the Accounting Procedure.

5.1.2.       The Operator shall be reimbursed by the
Partnership for all necessary or appropriate costs, expenses and expenditures
paid by it pursuant to this Agreement and in connection with its duties and
obligations hereunder in the manner set forth in the Accounting Procedure.

5.2.          Budgets. Each December, the
Operator shall submit for approval of the Management Committee operating and
capital budgets which the Operator anticipates for the ensuing

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Year, including such
supporting documentation and data as
the Management Committee may
require. Except as the Management Committee may otherwise direct, the budgets
approved by the Partnership and then in effect shall constitute authorization
of the Operator to incur the expenditures
contained in any such budget and
to incur expenditures of
up to one million dollars in
excess of the amount set forth in any such
budget. The Operator shall inform the Management
Committee of any facts
that the Operator believes may increase
any such budget in excess of one million dollars.

5.3.          Disputed Charges. The
Partnership may, within the time
provided in the Accounting
Procedure, take written exception to
any bill or statement rendered by the Operator for any expenditure or any part
thereof, on the ground that the same was not a reasonable, authorized, and
proper cost incurred by the Operator in connection with the design, construction, operation,
maintenance, or administration of the Facilities or its

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other duties and responsibilities as Operator
hereunder. The Partnership shall nevertheless pay in full when due the amount
of all statements submitted by the Operator. Such payment shall not be deemed a waiver of the right of the
Partnership to recoup any
contested portion of any bill or statement. However, if the amount as to which such written exception is taken
or any part thereof is
ultimately determined not to be a reasonable, authorized, and proper
expense incurred by the Operator
hereunder, such amount or portion thereof (as the case may
be) shall be refunded by the
Operator to the Partnership together with interest thereon at
a rate (which in no event shall
be higher than the maximum rate permitted by applicable law)
equal to the rate designated by Citibank, N.A. from time to time as its prime
rate during the period from the date of payment by the Partnership to the date
of refund by the Operator.

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5.4.          Audit and
Examination. Any Partner(s), the Partnership or their designated
representatives (including in the case of the Partnership representatives from
each Partner), after fifteen (15) Days’ notice in writing to the Operator,
shall have the right during normal business hours to audit or examine, at the
expense of the Person (Partner(s) or Partnership) conducting the audit or
examination, all books and records of the Operator as well as the relevant
books of account of the Operator’s contractors relating to the design,
construction, operation, maintenance, and repair of the Facilities and the
administrative services provided under this Agreement; provided, however, that
the total number of full audits commenced in any Year shall not exceed one.
Such right shall include the right to meet with the Operator’s internal and
independent auditors to discuss matters relevant to the audit or examination.
The Partnership shall have two (2) Years after the close of a Year in which to
make an audit of the Operator’s records

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for such Year;
provided, however, that any audits relating to construction costs may be
made up to twenty-four (24) Months after the date of completion. Absent fraud
or intentional concealment or misrepresentation
by the Operator or its employees, and except for any
adjustments which may arise from FERC compliance audits, the Operator shall
neither be required nor permitted to adjust any item unless a
claim therefor is presented or adjustment is initiated within two (2) Years after the close of the Year in which the statement therefor
is rendered, and in the absence of such timely claims or adjustments, the bills and statements rendered
shall be conclusively established as correct; provided, however, this shall
not prevent adjustment resulting
from physical inventory of the Facilities and other Partnership property or
audit adjustments relating to construction costs incurred as set forth in this
Section 5.4.

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6.             Agent.

6.1.          Agent. In performing services pursuant to this Agreement, the Operator shall
be an agent of the Partnership.

7.             Intellectual Property and Confidentiality.

7.1.          Inventions and Copyrights. Any: (i) inventions, whether patentable or not, developed or invented, or (ii) copyrightable
material developed by the Operator or its employees while engaged exclusively
in the performance of services
under this Agreement shall,
unless otherwise directed, be assigned to the Partnership, which shall have the exclusive right to the exploitation thereof.

7.2.          Confidentiality. Because the
information and knowledge gained during the performance of services under this
Agreement may consist of valuable proprietary information, the misuse or
disclosure of which could cause substantial damage to the Partnership, any and
all information obtained by the Operator in performance of its obligations
under this

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Agreement
shall be held in strict confidence by the Operator, its employees or agents
except as needed to comply with the purposes of this Agreement. Where
appropriate, any contracts entered into by the Operator related to its
obligations under this Agreement shall contain a provision which similarly
restricts the use and disclosure of such information.

8.             Indemnification,
Litigation, Insurance and  Liability.

8.1.          Partnership’s
Indemnity.

8.1.1.       The Partnership shall indemnify and save
harmless the Operator and its directors, officers, agents and employees against
all litigation, actions, claims, demands, debts and liabilities, and any costs
including without limitation reasonable legal fees and expenses incurred in
connection therewith, (to the extent only that such litigation, actions,
claims, demands, debts and liabilities are

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not satisfied by insurance carried pursuant to Section
8.2.1 below) arising out of the acts (or failure to act) of the Operator, its
directors, officers, agents and employees
in good faith and reasonably believed
by the Operator, its directors, officers, agents and employees to be
within the scope of the Operator’s authority under this Agreement, including actions, claims, demands, costs and
liabilities resulting from the negligence (but not the gross negligence or
willful misconduct) of the Operator, its
directors, officers, agents and employees, and the Operator, its
directors, officers, agents, and employees shall not be liable for any
obligations, liabilities, or commitments incurred by  or on
behalf  of the Partnership as a result of any such acts (or
failure to act).

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8.1.2.       Any and all claims, damages or causes of action against the
Partnership in favor of anyone other than the Operator arising out of the
design, construction, operation, maintenance,
and repair of the
Facilities and the administrative services
provided under this Agreement that
are not covered by insurance as
per Section 8.2 of this Agreement shall be settled or
litigated and defended by the operator in accordance with its best judgment and discretion when (i) the amount involved is less than a ceiling
amount to be established by the Management Committee; (ii) no injunctive or similar relief is sought; and (iii) no criminal sanction is sought; otherwise, such decision shall be made by the Management Committee, and any
settlement or defense

 25
 

thereof shall be controlled
by the Management Committee.

8.2.          Insurance.

8.2.1.       The operator shall carry and maintain, as approved by the Management Committee, insurance which
it reasonably deems adequate to protect
the Operator, its directors, officers, agents and employees against all actions,
claims, demands, costs and liabilities arising out of the negligence of
the operator, its directors, officers, agents
and employees in connection with the duties and responsibilities of the
operator hereunder. The Operator shall, subject to the approval of the
Management Committee, carry and maintain such other insurance for the benefit
of the Partnership and the Operator and require contractors, subcontractors or
consultants to carry and

 26
 

to maintain insurance, as directed by the management Committee, (i) to protect
the Partnership and the Operator and (ii) to satisfy any other requirement of the law.

8.2.2.       Insurance maintained by the Operator pursuant to Section 8.2.1 of this Agreement shall be a reimbursable cost
pursuant to Section 5 of this Agreement.

8.2.3.       The Operator may carry and maintain such
other insurance for its own account as it may deem necessary.

8.2.4.       With respect to claims and losses for damage,
injury or destruction of property that is a part of the Facilities, which
property is covered by insurance other than insurance provided for in Section
8.2.1 of this Agreement, it is

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agreed that neither the Operator nor the Partnership
or any of its Partners shall have any rights of recovery against one another,
nor against Affiliates of either, nor the insurers of any of them, and their
rights of recovery are mutually waived. All such policies of insurance
purchased to cover the Facilities or any part thereof, or the operation (in any
respect) of the Facilities or any part thereof, or any gas transported or
handled therein, shall be endorsed properly to effectuate this waiver of
recovery; provided, however, that if the Partnership, any of the Partners, or
the Operator is unable, despite its best efforts, to obtain such an
endorsement, then the other Parties may waive or appropriately modify this
requirement.

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8.3.          Limitation  of  Liability. Any claim of the Operator against the
Partnership which may arise hereunder shall be made only against the assets of
the Partnership, and all rights
to proceed against the Partners and the assets
of the Partners, other than their interests in the Partnership, as a result of any such claim or any obligation arising therefrom, are hereby expressly waived. The
operator shall endeavor to include
a similar provision in all contracts entered into
by the Operator pursuant to this
Agreement.

9.             Term.

9.1.          Term. This Agreement
shall be effective as of April _,
1990 and shall continue until the
Partnership is dissolved in accordance with the Partnership Agreement; provided
that this Agreement may be terminated by the Management Committee by giving
24-month’s prior written notice to the Operator.

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10.           Accounting  and  Taxes.

10.1.        Consistent with  the  Partnership  Agreement. The accounting and tax service
provided by the Operator shall be consistent with the applicable provisions of
the Partnership Agreement. Matters of tax policy for the Partnership shall be
the responsibility of, and ultimately determined by, the Management Committee
in accordance with the Partnership Agreement.

11.           Law  of  the
Contract.

11.1.        Law  of  the  Contract. This
Agreement shall be construed and interpreted under the laws of the State of
Delaware, without regard to the principles of conflicts of laws.

12.           Force  Majeure.

12.1.        Effect  of  Force
Majeure. In the event that either the Partnership or the operator is
rendered unable, by reason of an event of force majeure, as defined herein, to
perform, wholly or in part, any obligation or commitment set forth in this
Agreement, then

 30
 

upon such Party’s giving notice and full particulars
of such event as soon as practicable after the occurrence thereof, the
obligations of both Parties, except for unpaid financial obligations arising
prior to such event of force majeure, shall be suspended to the extent and for
the period of such force majeure condition.

12.2.        Nature  of  Force  Majeure. The
term “force majeure” as employed in this Agreement shall mean acts of God,
strikes, lockouts or industrial disputes or disturbances, civil disturbances,
arrests and restraint of people, interruptions by government or court orders,
present and future valid orders, decisions or rulings of any government or
regulatory entity having proper jurisdiction, acts of the public enemy, wars,
riots, blockades, insurrections, inability to secure labor or inability to
secure materials, including  inability to secure
materials by reason of allocations promulgated by authorized governmental
agencies, epidemics,

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landslides, lightning, earthquakes, fire, storms, floods, washouts, inclement weather
which necessitates extraordinary measures and expense to construct facilities and/or maintain operations,
explosions, breakage or accident to machinery
or lines of pipe, freezing of pipelines,
inability to obtain or delays in obtaining easements or rights-of-way,
the making of repairs or alterations to pipelines or plants, or any other cause, whether of the kind
herein enumerated or otherwise,
not reasonably within the
control of the Party claiming force majeure.

12.3.        Resumption  of  Normal  Performance.
Should there be an event of force majeure affecting performance hereunder, the
Parties shall cooperate to take all reasonable steps to remedy such event with
all reasonable dispatch to insure resumption of normal performance.

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12.4.        Strikes  and  Lockouts. Settlement of strikes and
lockouts shall be entirely within the discretion of the party affected, and the
requirement in Section 12.3 of this Agreement that any event of force majeure
shall be remedied with all reasonable dispatch
shall not require the settlement of strikes or lockouts by acceding to the
demands of the parties directly or indirectly involved in such strikes or lockouts when such course is inadvisable in the
discretion of the Party having such
difficulty.

13.
General.

13.1.        Effect  of  Agreement. This Agreement
reflects the whole and entire agreement among the Parties with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
oral and written, among the Parties with respect to the subject matter hereof.
This Agreement can be amended, restated or supplemented only by the written
agreement of the Operator and the Partnership.

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13.2.        Notices. Any notice
or other communication required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given upon hand delivery or on
the first business day following delivery to a nationally recognized United States or Canadian overnight courier
service, fee prepaid, return receipt or other confirmation of delivery
requested, or on the third business
day following delivery to
the United States or Canadian Postal
Service as certified or registered
mail, return receipt requested, postage
prepaid, if addressed to the Partnership and the Operator as set forth
below, or when telecopied or sent by facsimile transmission to the numbers
designated in writing by the Partnership and the Operator to be followed within
three (3) business days by delivery of such communications:

13.2.1.     If to the Operator, to: Secretary, Great
Lakes Gas Transmission Company, 2100 Buhl Building,

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Detroit,
Michigan 48226, or such other person and/or address as may be designated from
time to time by written notice to the Partnership.

13.2.2.     If to the Partnership, to each of the
Partners as set forth in the Partnership Agreement or to such other Person
and/or address as may be designated from time to time by any Partner by written
notice to the Operator. Any Partner may request that additional copies of
notices be given to an Affiliate of such Partner at such address as is
designated by such Partner by written notice to the Operator; provided,
however, that any failure to give such notice shall not affect the validity of
any notice given to any Partner or the Partnership in accordance with this
Section 13.2. The Operator agrees

 35
 

to
give such notice to any such Affiliate.

13.3.        Counterparts. This Agreement may
be executed in counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.

13.4.        Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of this Agreement.

13.5.        Waiver.
No waiver by any Party of any default by any other Party in the performance of
any provision, condition or requirement herein shall be deemed to be a waiver
of, or in any manner  release the other
Party from, performance of any other provision, condition or requirement
herein, nor shall such waiver be deemed to be a waiver of, or in any manner a
release of, the other Party from future performance of the same provision, 

 36
 

condition
or requirement. Any delay or omission of any Party to exercise any right
hereunder shall not impair the exercise of any such right, or any like right,
accruing to it thereafter. No waiver of a right created by this Agreement by
one Party shall constitute a waiver of such right by the other Party except as
may otherwise be required by law with respect to Persons not parties hereto.
The failure of one Party to perform its obligations hereunder shall not release
the other Party from the performance of such obligations.

13.6.        Assignability. This Agreement
shall not be assigned by either the Partnership or the operator, without the
written consent of the other, which consent shall not be unreasonably withheld
by either Party. Any assignment hereunder shall be effective on the first Day
of the month following the month during which the assignment is
completed. This Agreement and all of the obligations and rights herein
established shall extend

 37
 

to and be binding upon and
shall inure to the benefit of the respective successors and assigns of the
respective Parties hereto.

13.7.        References to  Money. All
references in this Agreement to, and transactions
hereunder in, money shall be to or in Dollars of the United States of America.

13.8.        Severability. Should any
provision of this Agreement be deemed in contradiction with the laws
of any jurisdiction in which it is to be
performed or unenforceable for
any reason, such provision shall be
deemed null and void, but this Agreement
shall remain in force in all
other respects. Should any provision of this Agreement be or become ineffective
because of changes in applicable laws or interpretations thereof or should this
Agreement fail to include a provision that is required as a matter of law, the
validity of the other provisions of this Agreement shall not be affected
thereby. If such circumstances arise, the Parties hereto

 38
 

shall
negotiate in good faith appropriate modifications to this Agreement to reflect
those changes that are required by law.

13.9.        Third  Persons. Except as contemplated
herein, nothing herein expressed or implied is intended or shall be construed
to confer upon or to give any Person not a Party hereto any rights or remedies
under or by reason of this Agreement.

13.10.      Laws  and  Regulatory  Bodies.
This Agreement and the obligations of the Parties hereunder are subject to all
applicable laws, rules, orders and regulations of governmental authorities
having jurisdiction and, in the event of conflict, such laws, rules, orders and
regulations of governmental authorities having jurisdiction shall control.

13.11.      Remedies  Cumulative. Remedies provided under
the provisions of this Agreement shall be cumulative and shall be in addition
to the remedies provided by law or in equity.

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13.12.      Approval  of  Partnership.
Unless otherwise specified, when the approval or other action of the
Partnership is required under this Agreement
such requirement shall be deemed to require approval of the Management Committee.

13.13.      Operator’s Office. Operator may select the location of
its office or offices to perform its obligations hereunder.

13.14.      Section  Numbers. Unless otherwise indicated,
references to Section numbers are to Sections of this Agreement.

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IN WITNESS WHEREOF, the
Parties have caused this Agreement to be executed by their duly authorized
representatives as of this 5th day of April, 1990.

	
   

  	
  OPERATOR

  
	
   

  	
  GREAT LAKES GAS
  TRANSMISSION COMPANY

  
	
   

  	
   

  
	
   

  	
  /s/ John K.
  Archambault

  	
   

  
	
   

  	
  By: John K.
  Archambault.- its president

  
	
   

  	
            and
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GREAT LAKES GAS TRANSMISSION

  LIMITED PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  TRANSCANADA GL,
  INC., 

  GENERAL PARTNER

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mitchell T. G.
  Graye

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
  Vice President

  	
   

  
					

 

 41

EXHIBIT A

TO

OPERATING AGREEMENT

ACCOUNTING PROCEDURE

ARTICLE I

General Provisions

1.01 Statements and Billings. The Operator shall bill the
Partnership on the first day of each month or as soon as possible thereafter
for the estimated costs and expenses for the month and any adjustment which may
be necessary to correct prior estimated billings to actual. Such bills will be
summarized by appropriate classifications indicative of the nature thereof.

1.02 Payment by Partnership. The
Partnership shall pay all bills presented as provided in the Operating
Agreement on or before the 15th day after the billing date. If payment is
not made within such time, the unpaid
balance shall bear interest until paid at a rate (which in no event shall be higher than the maximum rate
or rates permitted by applicable law) equal to the rate designated by Citibank,
N.A. from time to time as its prime rate; provided, however, that if employees
of the Operator are responsible for writing the

Partnership’s checks and the
Partnership has sufficient funds to make payment, no interest charge shall be imposed for late payment.
Payment by or on behalf of the Partnership shall not be deemed a waiver of the
right to recoup any amount in question.

1.03 Adjustments. Payment of any bills shall not prejudice the
right of the Partnership to protest or question the correctness thereof;
provided, however, that, absent fraud or intentional concealment or
misrepresentation by the Operator or its employees, all bills and statements rendered to the Partnership by
the operator during any calendar year shall
conclusively be presumed to be
true and correct after 24 months following the end of any such calendar year, unless prior to the end of said 24-month period the Partnership
takes written exception thereto and makes claim on the Operator for adjustment;
provided, however, this shall not prevent adjustment resulting from FERC Compliance Audits or the physical inventory of the Facilities and other Partnership property, and
any adjustments relating to construction costs may be made up to 24 months
after the date of completion. No adjustment favorable to the

 2
 

Operator
shall be made unless it is made within the same prescribed period.

1.04 Financial Records. The Operator shall maintain accurate
books and records in accordance with the Required Accounting Practice covering
all of the Operator’s actions under this Operating Agreement.

ARTICLE II

Capital Items

Except for items included in a previously approved budget, prior to the
acquisition of any property, real or personal, costing more than a ceiling
amount to be established by the
Management Committee in the name
or on behalf of the Partnership which under the accounting rules and regulations, if any, at the time prescribed by the regulatory body or bodies under the jurisdiction
of which the Partnership is at the time operating, might be capitalized, the operator shall prepare and submit to
the Partnership a forecast of the cost of all such property. Upon approval of
such forecast by the Partnership (including approval of the proposed purchase),
the Operator shall have authority to purchase such property in the Partnership’s
name without further approval or action by the Partnership. To the extent the
Operator owns property necessary or desirable

 3
 

for
the operation and maintenance of the Facilities that: (i) under the accounting
rules and regulations, if any, prescribed by the regulatory body or bodies
under the jurisdiction of which the Partnership is at the time operating, might
be capitalized, (ii) the Operator in its sole discretion is willing to transfer
for consideration to the Partnership,
and (iii) can be transferred by
the Operator to the Partnership free
and clear of all prior liens and
encumbrances, the Operator, if approved by the management Committee, may so
transfer such property to the Partnership and charge the Partnership the net
book value thereof as reflected on the books of the Operator on the date of
transfer.

ARTICLE III

Costs, Expenses and Expenditures

Subject to the limitations hereinafter prescribed
and the provisions of the Operating Agreement to which this Accounting
Procedure is an exhibit, the Operator shall charge the Partnership for all
necessary or appropriate costs and expenses incurred by the Operator in
connection with the planning, design, construction, engineering, operation,
maintenance, or repair of the Facilities, including any Incremental Expansion,
and the administration of the services

 4
 

provided for under the
Operating Agreement, (hereinafter collectively referred to as “Operation of the
Facilities”), including but not limited to the following items:

3.01 Rentals. All rentals paid by the Operator.

3.02 Labor, Administrative and General Costs.

(a)             Salaries and wages
of employees of the operator directly engaged in connection with the Operation of the Facilities; amounts paid
as salaries and wages of others temporarily employed in connection with the operation of the Facilities; and
salaries and wages of the Operator’s personnel who render services with respect
to the Operation of the Facilities including, but not limited to, accounting, administrative, construction, engineering, marketing, planning, public
relations, personnel, purchasing, legal, treasury, repair, replacement,
operational planning, budgeting, technical services, insurance administration,
tax services and regulatory matters. Such salaries and wages shall be loaded to
include the Operator’s actual cost of holiday, vacation, sickness and jury
service benefits and other customary allowances for time not worked paid to
persons

 5
 

whose
salaries and wages are chargeable under this subsection 3.02(a).

(b)             Expenditures
or contributions made pursuant
to assessments imposed by governmental
authority which are applicable
to salaries, wages and costs chargeable under Subsection 3.02(a) above,
including but not limited to FICA taxes and federal and state unemployment
taxes.

(c)             Expenditures
made by the Operator for the cost of plans for employers, group life insurance, hospitalization,
disability, pension, retirement, savings and any other benefit plans, which are
applicable to the personnel whose salaries and wages are chargeable under
subsection 3.02(a) above.

3.03 Reimbursable Expenses of Employees.
Reasonable personal expenses of employees whose salaries and wages are chargeable
under Section 3.02(a) hereof. As used herein, the term “personal expenses”
shall mean the usual out-of-pocket expenditures incurred by employees in the
performance of their duties and for which such employees are reimbursed. The
Operator shall maintain documentation for such expenses in accordance with the
standards of the Internal Revenue Service.

 6
 

3.04 Material, Equipment and Supplies. It is contemplated that
all material, equipment and supplies will be owned by the Partnership and
purchased or furnished for its account. So far as is reasonably practical and
consistent with efficient and economical operation, only such material shall be
obtained for the Facilities as may be
required for immediate use,
and the accumulation of surplus
stock shall be avoided. To the extent reasonably
possible, the Operator shall take advantage of discounts available by early payments and pass such
benefits on to the Partnership. Material, equipment and supplies
furnished by the Operator, if
any, shall be priced at cost plus the operator’s actual carrying costs as approved by the Management Committee in its most
recent budget.

3.05 Transportation. Transportation of
employees, equipment and material and supplies necessary for the operation of
the Facilities. It is anticipated that transportation equipment used by the
Operator will be owned by the Partnership; provided, however, any automobiles,
airplanes and trucks owned or obtained by the Operator from the Operator’s
Affiliates or through contracts with others and approved for use for the
operation of the Facilities will be billed to the

 7
 

Partnership
at reasonable rates based on the Operator’s actual costs.

3.06 Services.

(a)             The cost of
contract services and utilities procured from outside sources.

(b)             Use and services
of vehicles, equipment and facilities furnished by the Operator as provided in
Section 3.05 hereof.

3.07 Legal Expenses and Claims. All costs and expenses of handling, investigating
and settling litigation or claims arising by reason of the Operation of the
Facilities or necessary to
protect or recover any Facilities’
property, including, but not limited to, attorney’s fees, court costs, costs of investigation or procuring evidence and any judgments paid
or amounts paid in settlement or
satisfaction of any such litigation or claims. The Operator shall credit the
Partnership for judgments received
or amounts received in
settlement of litigation, with respect
to any claim asserted on behalf of the Partnership.

 8
 

3.08 Taxes. All taxes (except those measured by income) of every
kind and nature assessed or levied upon or incurred in connection with the
Operation of the Facilities or on the Facilities or other property of the
Partnership and which taxes have been paid by the operator for the benefit of
the Partnership, including charges for late
payment arising from extensions of
the time for filing which is caused by the Partnership, or which results from
the operator’s good faith efforts to contest the amount or application of any tax.

3.09 Insurance. Net of any returns, refunds, or dividends, all premiums paid and expenses
incurred for insurance required to be carried under the operating
Agreement for the benefit of the Operator
and/or Partnership.

3.10 Permits, Licenses and
Bond. Cost of permits,
licenses and bond premiums necessary in the performance of the Operator’s
duties.

3.11 Filing Fees. All regulatory filing fees
(if any) paid by the Operator related to application(s) for authority to
construct and operate the Facilities, including any Incremental Expansions.

 9CC Filed by Filing Services Canada Inc. 403-717-3898

QSOUND LABS, INC.

2007

EQUITY COMPENSATION PLAN

FOR OFFICERS, EMPLOYEES AND CONSULTANTS

This Equity Compensation  Plan (“Plan”) provides for equity compensation awards which may be made to officers, employees and consultants of QSound Labs, Inc. (“Company”).  Awards may be in the form of options to acquire common shares and stock awards.

1.

Purpose and Prior Plans

1.1

Purpose  The purposes of the Plan are to attract and retain the services of persons of exceptional ability as officers, employees and consultants of the Company, to encourage such persons to acquire a greater proprietary interest in the Company, thereby strengthening their incentive to achieve the objectives of the shareholders of the Company, and to promote the long-term best interests of the Company.

1.2

Prior Plans  The Company’s 2006 Stock Option Plan for Outside Directors and 2006 Employee Stock Option Plan shall remain in effect and stock options may continue to be granted under the plans.

2.

Definitions

2.1

“Awards” means, individually and collectively as the case and context requires, Options and Stock Awards.

2.2

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

2.3

“Fair Market Value” of a Share means the per Share closing sales price (or the closing bid if no sales are reported) on the NASDAQ Stock Market on the date of the grant of the Award.

2.4

“Option” means an option to purchase Shares granted to Participant pursuant to Article 6 hereof.

2.5

“Option Agreement” means an agreement between the Company and a Participant evidencing the terms and conditions of an Option grant to the Participant.   Each Option Agreement shall be subject to the terms and conditions of the Plan.

2.6

“Participant” means an officer, employee or consultant who holds an Award granted or issued pursuant  to the Plan.

2.7

“Plan Administrator” means the Compensation Committee of the Board, or the Committee established under Section 4.2 hereof, as the context requires.

2.8

“Shares” means common shares of the Company.

2.9

“Stock Awards” means an award of Shares granted to a Participant pursuant to Article 7 hereof.

2.10

“Stock Award Agreement” means an agreement between the Company and a Participant evidencing the terms and conditions of a Stock Award grant to the Participant.   Each Stock Award Agreement shall be subject to the terms and conditions of the Plan.

3.

Shares Subject to the Plan

3.1

Maximum Number of Shares  The maximum aggregate number of Shares that may be issued under the Plan is 750,000, subject to adjustment as set out in Article 14 hereof. 

3.2

Shares Subject to the Plan  Shares subject to the Plan may be authorized but unissued, or reacquired, Shares.  Shares that are subject to Awards that terminate, lapse, fail to vest or are cancelled or forfeited shall be available again for grant under the Plan.   

4.

Administration

4.1

Compensation Committee  The Plan will be administered by the Compensation Committee of the Board.   The Compensation Committee shall have the authority and discretion to (i) construe and interpret the Plan; (ii) define the terms used in the Plan; (iii) prescribe, amend and rescind the rules and regulations relating to the Plan; (iv) correct any defect, supply any omission or reconcile any inconsistency in the Plan; (v) grant Awards under the Plan; (vi) determine the Participants to whom Awards will be granted under the Plan; (vii) determine the types of Awards and the number of Shares covered by the Awards; (viii) subject to the terms of the Plan, determine all other terms and conditions of the Awards, including cancellation or suspension of Awards; and (ix) make all other determinations and interpretations necessary and advisable for the administration of the Plan. All decisions, determinations and interpretations made by the Compensation Committee will be binding and conclusive on all Participants and on their legal representatives, heirs and beneficiaries.

4.2

Delegation   With respect to Awards to Participants that are not officers of the Company, the Compensation Committee may, in its discretion, establish a committee composed of one (1) or more other persons to administer the Plan (the “Committee”), which Committee will have all of the powers and authority vested in the Compensation Committee hereunder.  The member(s) of any such Committee will serve at the pleasure of the Compensation Committee.   

4.3

Plan Administrator  Any action may be taken by a written instrument signed by the sole member or by all of the members of the Plan Administrator and any action so taken will be fully effective as if it had been taken at a meeting. All decisions, determinations and interpretations made by the Plan Administrator will be binding and conclusive on all Participants in the Plan and on their legal representatives, heirs and beneficiaries.

5.

Eligibility

5.1

Eligibility  Awards may be granted to officers, employees and consultants (excluding consultants that perform capital-raising or investor relations services or that directly or indirectly promote or maintain a market for the Shares) of the Company and any parent or subsidiary of the Company as the Plan Administrator may select. 

6.

Options

6.1

Grant of Options  The Plan Administrator may in its sole discretion grant Options to a Participant subject to such terms and conditions as are set out in an Option Agreement evidencing such grant.

6.2

Option Agreement  Each  Option Agreement must state the date of grant, the number of Shares to which it pertains, the exercise price, vesting provisions (if any) and the expiration date of the Option (which date must not be lather than ten (10) years from the date of grant of the Option).

6.3

Exercise Price  The exercise price must be not less than Fair Market Value.

6.4

Termination of Vested Options  Vested Options will terminate, to the extent not previously exercised, upon the occurrence of the first of the following events: 

a.

the expiration of the Option;

 

b.

the date of a Participant’s termination of employment or contractual relationship with the Company or any affiliated company for cause (as determined in the sole discretion of the Plan Administrator);

c.

thirty (30) days after the date of notice given by either the Company or the Participant to the other party, of termination of employment or contractual relationship with the Company or any affiliated company for any reason whatsoever other than cause, death or Disability (as defined in subsection d. below) unless the exercise period is extended by the Plan Administrator until a date not later than the expiration date of the Option; or

d.

the expiration of one year from termination of a Participant’s employment or contractual relationship with the Company or any affiliated company by reason of death or Disability (as defined below) unless the exercise period is extended by the Plan Administrator until a date not later that the expiration date of the Option. Upon the death of a Participant, any vested Options held by the Participant will be exercisable only by the person or persons to whom such Participant’s rights under such Option will pass by the Participant’s will or by the laws of descent and distribution of the state or country of the Participant’s domicile at the time of death and only until such Options terminate as provided above.  For purposes of the Plan, unless otherwise defined in the Agreement, “Disability” means medically determinable physical or mental impairment which  has lasted or can be expected to last for a continuous period of not less than twelve (12) months or that can be expected to result in death.  The Plan Administrator will determine whether a Participant has incurred a Disability on the basis of medical evidence acceptable to the Plan Administrator.  Upon making a determination of Disability, the Plan Administrator will, for purpose of the Plan, determine the date of an Participant’s  termination of employment or contractual relationship. 

7.

Stock Awards

7.1

Grant of Stock Award  The Plan Administrator may in its sole discretion grant, or grant the right to purchase, Shares to a Participant subject to such terms and conditions as are set out in a Stock Award Agreement evidencing such grant.

7.2

Stock Award Agreement  Each  Stock Award Agreement must state the date of grant, the number of  Shares to which it pertains, the Share price and vesting provisions (if any).

7.3

Issuance of Shares  At the date of each vesting of a Stock Award or portion thereof, the Company shall issue to a Participant either a certificate or an electronic registration representing the number of Shares subject to each such vesting.

8.

Vesting of Awards

8.1

Vesting Schedule  At the time of the grant of an Award, the Plan Administrator may designate a vesting schedule for each Award.  The vesting schedule may be based on the achievement of performance objectives established by the Plan Administrator.  Performance objectives may be expressed in terms including but not limited to one or more of the following: return on equity, return on assets, share price, market share, sales, earnings per share, costs, net earnings, net worth, cash and cash equivalents, gross margin or the Company’s performance 

relative to its internal business plan.  Performance objectives may be in respect of the performance of the Company as a whole (whether on a consolidated or unconsolidated  basis), an affiliated company, or a subdivision, operating unit, product or product line of either of the foregoing.  Performance objectives may be absolute or relative and may be expressed in terms of a progression or a range. 

8.2

Acceleration of Vesting  The vesting of one or more outstanding Awards may be accelerated by the Plan Administrator at such time and in such amounts as it determines in its sole discretion.

8.3

Termination of Unvested Awards  Unless accelerated in accordance with Section 8.2 above, unvested Awards will terminate immediately upon termination of a Participant’s employment or contractual relationship with the Company or any affiliated company for any reason whatsoever including death or Disability.  For purposes of the Plan, transfer or employment between or among the Company and/or any affiliated company will not be deemed to constitute a termination of employment or contractual relationship with the Company or affiliated company.  For purposes of this section, employment will be deemed to continue while the Optionee is on military leave, sick leave or other bona fide leave of absence (as determined by the Plan Administrator).  The foregoing notwithstanding, employment will not be deemed to continue beyond the first ninety (90) days of such leave, unless the Optionee’s re-employment rights are guaranteed by statute or by contract.

9.

Consideration and Payment

9.1

Consideration  Awards may be granted for no cash consideration or for cash or other consideration as may be determined by the Plan Administrator or required by applicable law.

9.2

Purchase of Shares  Shares purchasable pursuant to Awards may be purchased by giving written notice to the Company, which notice will specify the Award under which the Shares are being purchased and the number of Shares to be purchased.

9.3

Payment for Shares  Participants may pay for all or any part of the cash portion of the aggregate exercise price or purchase price of Shares by complying with any payment mechanism approved by the Plan Administrator at the time of exercise.

10.

Rights as a Shareholder

 

10.1

No Rights as a Shareholder  A Participant will have no rights as a shareholder with respect to any Shares covered by an Award until the Participant becomes a record holder of such Shares.  Subject to the provisions in Article 14 hereof, no rights will accrue to a Participant and no adjustment will be made on account of dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights declared on, or created in, Shares for which the record date is prior to the date the Participant becomes a record holder of the Shares covered by the Award.

11.

Transfer of Award

11.1

Transfer  Awards granted under the Plan and the rights and privileges conferred by the Plan may not be transferred, assigned, pledged or hypothecated in any manner (whether by operation of law or otherwise) other than by will, by applicable laws of descent and distribution or pursuant to a qualified domestic relation order, and will not be subject  to execution, attachment or similar process; provided however, that any Agreement may provide or be amended to provide that an Award to which it relates is transferable without payment of consideration to trusts or partnerships or limited liability companies established exclusively for the benefit of the Participant.  Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of any Award or of any right or privilege conferred by the Plan contrary to 

the provisions hereof, or upon the sale, levy or any attachment or similar process upon the rights and privileges conferred by the Plan, such Award will thereupon terminate and become null and void.

12.

Securities Regulation

12.1

Compliance  Shares will not be issued with respect to an Award unless the purchase, issuance and delivery of such Shares comply with all relevant provisions of law, including, without limitation, any applicable Canadian provincial or U.S. state or federal securities laws, the rules and regulations thereunder and the requirements of the NASDAQ Stock Market, and such issuance will be further subject to the approval of counsel for the Company with respect to such compliance, including the availability of an exception from registration for the issuance and sale of such Shares. The inability of the Company to obtain from any regulatory body the authority deemed by the Company to be necessary for the lawful issuance and sale of any Shares under the Plan, or the unavailability of an exemption from registration for the issuance and sale of any Shares under the Plan, will relieve the Company of any liability with respect to the non-issuance of such Shares.

12.2

Participant Representations  As a condition to the purchase of Shares pursuant to an Award, the Plan Administrator may require the Participant to represent and warrant in writing at the time of such exercise that the Shares are being purchased only for investment and without any then-present intention to sell or distribute such Shares.  At the option of the Plan Administrator, a stop-transfer order against such Shares may be placed on the books and records of the Company and its transfer agent, and a legend indicating that the Shares may not be pledged, sold or otherwise transferred unless an opinion of counsel is provided stating that such transfer is not in violation of any applicable law or regulation, may be stamped on the certificates or attached to the electronic registration representing such Shares in order to assure an exemption from registration.  The Plan Administrator also may require such other documentation as may from time to time be necessary to comply with any applicable Canadian provincial or U.S. state or federal securities laws. THE COMPANY HAS NO OBLIGATION TO REGISTER THE SHARES PURCHASABLE PURSUANT TO AWARDS.

 

13.

Tax Withholding

13.1

Tax Withholding  The Participant must pay to the Company by certified or cashiers check, promptly upon the purchase of Shares or, if later, the date that the amount of such obligations becomes determinable, all applicable Canadian and US  federal, provincial, state, local and foreign withholding taxes (“Taxes”) that the Plan Administrator, in its discretion, determines to result upon the purchase of Shares or from a transfer or other disposition of Shares acquired pursuant to an Award or otherwise related to an Award or Shares acquired in connection with an Award. Upon approval of the Plan Administrator, a Participant may satisfy such obligation by complying with any other payment mechanism approved by the Plan Administrator from time to time.  The Company may take such action as it deems appropriate to withhold or collect from a Participant unpaid Taxes.

13.2

Delivery of Shares  The issuance, transfer or delivery of certificates or electronic registration of Shares may be delayed, at the discretion of the Plan Administrator, until the Plan Administrator is satisfied that the applicable requirements of the federal, provincial, and state securities laws and the withholding provisions of applicable tax laws have been met. 

14.

Reorganization and Stock Dividend

14.1

Reorganization and Stock Dividends If i) the Company is at any time involved in any merger, reorganization, consolidation or amalgamation; ii) the Company declares a dividend payable 

in, or subdivides or combines, its Shares; or iii) any other event with substantially the same effect occurs, the Plan Administrator will, subject to applicable law, with respect to each outstanding Award, proportionately adjust the number of shares of Shares subject to such Award and/or the exercise or purchase price per Share so as to preserve the rights of the Participant substantially proportionate to the rights of the Participant prior to such event, and to the extent that such action includes an increase or decrease in the number of Shares subject to outstanding Awards, the number of shares available under Section 3.1 of the Plan will be increased or decreased, as the case may be, proportionately, and all such adjustments determined by the Plan Administrator shall be final, binding and conclusive.

14.2

Adjustments  The foregoing adjustments will be made by the Plan Administrator, or by any successor administrator of the Plan, or by the applicable terms of any assumption or substitution document.

14.3

No Affect  The grant of an Award will not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge, consolidate or dissolve, to liquidate or to sell or transfer all or any part of its business or assets.

15.

Term of Plan

15.1

Term of Plan  Awards may be granted by the Plan Administrator from time to time on or after the date on which the Plan is effective and until the Plan is terminated by the Board in its sole discretion.  Termination of the Plan will not terminate any Award granted prior to such termination.

16.

No Obligation to Purchase Shares

16.1

No Obligation to Purchase  The grant of an Award will impose no obligation upon the Participant to purchase Shares.

17.

No Right to Awards or Employment

17.1

No Rights to Awards  The Plan Administrator will determine whether or not any Awards are to be granted under the Plan in its sole discretion, and nothing contained in the Plan will be construed as giving any person any right  to participate under the Plan.  The grant of an Award will no way constitute any form of agreement or understanding binding on the Company, express or implied, that the Company will employ or contract with a Participant for any length of time, nor will it interfere with the Company’s or any affiliated company’s right to terminate a Participant’s employment at or contractual relationship with the Company or any affiliated company at any time, which right is hereby reserved.

18.

Application of Funds

18.1

Use of Funds  The proceeds received by the Company from the sale of Shares issued pursuant to Awards will be used for general corporate purposes, unless otherwise directed by the Board.

19.

Indemnification of Plan Administrator

19.1

Indemnification  The Plan Administrator will be indemnified by the Company for all reasonable expenses and liabilities of any type or nature, including attorney’s fees, incurred in connection with any action, suit or proceeding to which they or any of them are a party by reason of, or in connection with, the Plan or any Award granted under the Plan, and against all amounts paid by them in settlement thereof (provided that such settlement is approved by independent legal counsel selected by the  Company), except to the extent that such expenses 

relate to matters for which it is adjudged that such Plan Administrator member is liable for willful misconduct; provided, that within fifteen (15) days after the institution of any such action, suit or proceeding, the Plan Administrator will, in writing, notify the Company of such action, suit or proceeding, so that the Company may have the opportunity to make appropriate arrangements to prosecute or defend the same.

20.

Amendment of Plan

20.1

Amendment  The Plan Administrator may, at any time, modify or amend the Plan or modify or amend Awards granted under the Plan, including, without limitation, such modifications or amendments as are necessary to maintain compliance with applicable statutes, rules or regulations; provided however, no amendment with respect to an outstanding Award which has the effect of reducing the benefits afforded to the Participant thereof will be made over the objection of such Participant, further provided, that the events triggering acceleration of vesting of outstanding Awards may be modified, expanded or eliminated without the consent of Participant.  The Plan Administrator may condition the effectiveness of any such amendment on the receipt of shareholder approval at such time and in such manner as the Plan Administrator may consider necessary for the Company to comply with or to avail the Company and/or the Participants of the benefits of any securities, tax, market listing or other administrative or regulatory requirements.  

21.

Miscellaneous

21.1

Governing Law and Arbitration  The internal law of the Province of Alberta shall govern all questions concerning the validity, construction and effect of the Plan or any Award or Award Agreement.   Any controversy arising out of or relating to this Plan or any Award or Award Agreement shall be finally resolved by arbitration pursuant to the Simplified Arbitration Rules of the ADR Institute of Canada.  The place of arbitration shall be Calgary, Alberta.

21.2

Severability  If any provision of the Plan or any Award or Award Agreement is wholly or partially invalid unenforceable, the Plan Administrator shall put in place a valid or enforceable provision that as nearly as possible reflects the terms of the invalid or unenforceable provision.

22.

Shareholder Approval

22.1

Shareholder Approval   The Plan is subject to the approval of shareholders of the Company.

Effective Date:                April 27, 2007.

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