Document:

Exhibit 10.1

 

FORM
OF

NISKA
GAS STORAGE PARTNERS LLC

2010 LONG TERM INCENTIVE PLAN

 

SECTION 1.                                Purpose of the Plan.

 

The Niska Gas Storage
Partners LLC 2010 Long Term Incentive Plan (the “Plan”)
has been adopted by Niska Gas Storage Partners LLC (the “Company”).
The Plan is intended to promote the interests of the Company by providing to
Employees, Consultants and Directors incentive compensation awards based on
Units to encourage superior performance. The Plan is also contemplated to
enhance the ability of the Company and its Affiliates to attract and retain the
services of individuals who are essential for the growth and profitability of
the Company and its Affiliates and to encourage them to devote their best
efforts to advancing the business of the Company and its Affiliates.

 

SECTION 2.                                Definitions.

 

As used in the Plan, the
following terms shall have the meanings set forth below:

 

“Affiliate”
means, with respect to any Person, any other Person that directly or indirectly
through one or more intermediaries controls, is controlled by or is under
common control with, the Person in question. As used herein, the term “control”
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise; provided, however, that with
respect to any Option granted to a Canadian Grantee, an Affiliate shall only
include a corporation that deals at non-arm’s length, within the meaning of the
ITA, with the Company.

 

“Award”
means an Option, Unit Appreciation Right, Restricted Unit, Phantom Unit, an
Other Unit-Based Award, a Unit Award granted under the Plan, or a Performance
Award or Incentive Award, and includes any tandem DERs granted with respect to
a Phantom Unit.

 

“Award
Agreement” means the written or electronic agreement by which an
Award shall be evidenced.

 

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

 

“Canadian
Grantee” means a Participant who is a resident of Canada for the
purposes of the ITA, or who is granted an Award under the Plan in respect of
services performed in Canada for the Company or any of its Affiliates.

 

“Cessation
Date” means, subject to an alternative definition within any
Award Agreement, the date of the Participant’s termination of, or resignation
from, active employment or consulting services with the Company, or cessation
of active membership as a Director with the Company, regardless of whether
adequate or proper notice of termination or resignation shall have been
provided in respect of such cessation. 
For greater clarity, subject to an alternative treatment within any
Award Agreement, a transfer of employment, consulting or services as Director
between the Company and any of its Affiliates, or between any of the Company’s
Affiliates, shall not be considered an interruption or cessation of employment,
consulting or services as Director for any purpose of this Plan.

 

 

“Change of
Control” means, and shall be deemed to have occurred upon,
one or more of the following events:

 

(i)            A “change in the ownership
of the Company” which shall occur on the date that any one Person, or more than
one Person acting as a group, acquires ownership of Units in the Company that,
together with Units held by such Person or group, constitutes more than 50% of
the total fair market value or total voting power of the Units of the Company;
however, if any one Person, or more than one Person acting as a group, is
considered to own more than 50% of the total fair market value or total voting
power of the Units of the Company, the acquisition of additional Units by the
same Person or Persons will not be considered a “change in the ownership of the
Company” (or to cause a “change in the effective control of the Company” within
the meaning of clause (ii) below) and an increase of the effective
percentage of Units owned by any one Person, or more than one Person acting as
a group, as a result of a transaction in which the Company acquires its Units
in exchange for property will be treated as an acquisition of Units for
purposes of this paragraph; provided, further, however, that for purposes of
this clause (i), the following acquisitions shall not constitute a Change of
Control:  (A) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any entity controlled by the Company, or (B) any acquisition by
investors (immediately prior to such acquisition) in the Company for financing
purposes, as determined by the Board or the Committee in its sole
discretion.  This clause (i) applies
only when there is a transfer of the Units of the Company (or issuance of Units)
and Units in the Company remains outstanding after the transaction.

 

(ii)           A “change in the effective
control of the Company” which shall occur on the date that either (A) any
one Person, or more than one Person acting as a group, acquires (or has
acquired during the twelve month period ending on the date of the most recent
acquisition by such Person or Persons) ownership of Units of the Company
possessing 35% or more of the total voting power of the Units of the Company,
except for (1) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any entity controlled by the
Company, or (2) any acquisition by investors (immediately prior to such
acquisition) in the Company for financing purposes, as determined by the Board
or the Committee in its sole discretion; or (B) a majority of the members
of the Board are replaced during any twelve-month period by directors whose
appointment or election is not endorsed by a majority of the members of the
Board prior to the date of the appointment or election.  For purposes of a “change in the effective
control of the Company,” if any one Person, or more than one Person acting as a
group, is considered to effectively control the Company within the meaning of
this clause (ii), the acquisition of additional control of the Company by the
same Person or Persons is not considered a “change in the effective control of
the Company,” or to cause a “change in the ownership of the Company” within the
meaning of clause (i) above.

 

(iii)          A “change in the ownership
of a substantial portion of the Company’s assets” which shall occur on the date
that any one Person, or more than one Person acting as a group, acquires (or
has acquired during the twelve month period ending on the date of the most
recent acquisition by such Person or Persons) assets of the Company that have a
total gross fair market value equal to or more than 40% of the total gross fair
market value of all the assets of the Company immediately prior to such
acquisition or acquisitions.  For this
purpose, gross fair market value means the value of the assets of the Company,
or the value of the assets being 

 

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disposed of, determined without regard to any
liabilities associated with such assets. 
Any transfer of assets to an entity that is controlled by the
unitholders of the Company immediately after the transfer, as provided in
guidance issued pursuant to Section 409A of the Code and the regulations
promulgated thereunder, shall not constitute a Change of Control.

 

Notwithstanding the
foregoing, the Committee may elect in an Award Agreement to specify a different
definition of “Change of Control” for purposes deemed appropriate by the
Committee.

 

“Code”
means the Internal Revenue Code of 1986, as amended.

 

“Committee”
means the entity appointed to administer the Plan, which may be the Board, any compensation
committee of the Board or such other committee as may be appointed by the Board
from time to time.

 

“Consultant”
means an individual who renders consulting services to the Company or its
Affiliates.

 

“DER”
means a contingent right, granted in tandem with a specific Phantom Unit, to
receive with respect to each Phantom Unit subject to the Award an amount in
cash, Units and/or Phantom Units, as determined by the Committee in its sole
discretion, equal in value to the distributions made by the Company with
respect to a Unit during the period such Award is outstanding.

 

“Director”
means a member of the Board who is not an Employee or a Consultant (other than
in that individual’s capacity as a Director).

 

“Employee”
means an employee of the Company or an Affiliate of the Company.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

“Fair
Market Value” means the closing sales price of a Unit on the
principal national securities exchange or other market in which trading in
Units occurs as reported in The Wall Street
Journal (or other reporting service approved by the Committee) on
the most recent date on which Units were publicly traded preceding the date
with respect to which the Fair Market Value determination is made. If Units are
not traded on a national securities exchange or other market at the time a
determination of fair market value is required to be made hereunder, the
determination of fair market value shall be made in good faith by the
Committee.

 

“Incentive
Award” means a conditional right granted to an Eligible Person
under Section 6(e) of the Plan to receive a cash payment, Unit or
other Award, unless otherwise determined by the Committee, after the end of a
specified period of time.

 

“ITA”
means the Income Tax Act (Canada) and the regulations thereto, as amended.

 

“Option”
means an option to purchase Units granted under the Plan.

 

“Other
Unit-Based Award” means an award granted pursuant to Section 6(d) of
the Plan.

 

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“Participant”
means an Employee, Consultant or Director granted an Award under the Plan.

 

“Performance
Award” means a right, granted to a Participant under Section 6(e) of
the Plan, to receive an Award based upon performance criteria specified by the
Committee, which may be settled in cash or Units, as determined by the
Committee in its sole discretion.

 

“Person”
means an individual or a corporation, limited liability company, partnership,
joint venture, trust, unincorporated organization, association, governmental
agency or political subdivision thereof or other entity.

 

“Phantom
Unit” means a notional unit granted under the Plan that entitles
the Participant to receive, at the time of settlement, a Unit or an amount of
cash equal to the Fair Market Value of a Unit, or a combination of cash and
Units, as determined by the Committee in its sole discretion.

 

“Restricted
Period” means the period established by the Committee with
respect to an Award during which the Award remains subject to forfeiture and is
not either exercisable by or payable to the Participant, as the case may be.

 

“Restricted
Unit” means a Unit granted under the Plan that is subject to a
Restricted Period.

 

“Rule 16b-3”
means Rule 16b-3 promulgated by the SEC under the Exchange Act or any
successor rule or regulation thereto as in effect from time to time.

 

“SEC”
means the Securities and Exchange Commission or any successor thereto.

 

“UDR”
means a distribution made by the Company with respect to a Restricted Unit.

 

“Unit”
means a common unit of the Company.

 

“Unit
Appreciation Right” or “UAR” means
a contingent right that entitles the holder to receive, in cash or Units, as
determined by the Committee in its sole discretion, an amount equal to the
excess of the Fair Market Value of a Unit on the exercise date of the UAR over
the exercise price of the UAR.

 

“Unit
Award” means a grant of a Unit that is not subject to a
Restricted Period.

 

SECTION 3.                                Administration.

 

Subject to the terms of the
Plan and applicable law, and in addition to other express powers and authorizations
conferred on the Committee by the Plan, the Committee shall have full power and
authority to: (i) designate Participants; (ii) determine the type or
types of Awards to be granted to a Participant; (iii) determine the number
of Units to be covered by Awards; (iv) determine the terms and conditions
of any Award; (v) determine whether, to what extent, and under what
circumstances Awards may be vested, settled, exercised, canceled, or forfeited;
(vi) interpret and administer the Plan and any instrument or agreement
relating to an Award 

 

4

 

made under the Plan; (vii) establish,
amend, suspend, or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (viii) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or an Award Agreement in such manner and to such
extent as the Committee deems necessary or appropriate. Unless otherwise
expressly provided in the Plan, all designations, determinations,
interpretations, and other decisions under or with respect to the Plan or any
Award shall be within the sole discretion of the Committee, may be made at any
time and shall be final, conclusive, and binding upon all Persons, including
the Company, any Affiliate, any Participant, and any beneficiary of any Award.

 

SECTION 4.                                Units.

 

(a)           Limits on
Units Deliverable.  Subject to adjustment as provided in Section 4(c),
the number of Units that may be delivered with respect to Awards under the Plan
will not exceed     Units.  Units withheld from an Award to either satisfy
the Participant’s, the Company’s or an Affiliate’s tax withholding obligations
with respect to the Award or pay the exercise price of an Award shall not be
considered to be Units delivered under the Plan for this purpose. If any Award
is forfeited, cancelled, exercised, paid, or otherwise terminates or expires
without the actual delivery of Units pursuant to such Award (the grant of
Restricted Units is not a delivery of Units for this purpose), the Units
subject to such Award shall again be available for Awards under the Plan. There
shall not be any limitation on the number of Awards that may be paid in cash.

 

(b)           Sources of
Units Deliverable Under Awards.  Any Units
delivered pursuant to an Award shall consist, in whole or in part, of Units held
by the Company, or acquired in the open market from any Affiliate, or any other
Person, or any combination of the foregoing, as determined by the Committee in
its discretion; provided, however, that any Units delivered upon the exercise
of an Option granted to a Canadian Grantee shall be previously unissued Units.

 

(c)           Anti-dilution
Adjustments.  With respect to any “equity
restructuring” event that could result in an additional compensation expense to
the Company pursuant to the provisions of Statement of Financial Accounting
Standards Accounting Standards Codification Topic 718, Stock Compensation (“ASC  Topic
718”) if adjustments to Awards with respect to such event were
discretionary, the Committee shall equitably adjust the number and type of
Units covered by each outstanding Award and the terms and conditions, including
the exercise price and performance criteria (if any), of such Award to
equitably reflect such restructuring event and shall adjust the number and type
of Units (or other securities or property) with respect to which Awards may be
granted after such event. With respect to any other similar event that would
not result in an ASC Topic 718 accounting charge if the adjustment to Awards
with respect to such event were subject to discretionary action, the Committee
shall have complete discretion to adjust Awards in such manner as it deems
appropriate with respect to such other event. 
In the event the Committee makes any adjustment pursuant to the
foregoing provisions of this Section 4(c), the Committee shall make a
corresponding and proportionate adjustment with respect to the maximum number
of Units that may be delivered with respect to Awards under the Plan as 

 

5

 

provided in Section 4(a) and the
kind of Units or other securities available for grant under the Plan.  All adjustments under this Section 4(c) shall
be made, to the extent possible, in such manner so as to nor cause any adverse
tax consequences under the ITA

 

SECTION 5.                                Eligibility.

 

Any Employee, Consultant or
Director shall be eligible to be designated a Participant by the Committee and receive
an Award under the Plan.

 

SECTION 6.                                Awards.

 

(a)           Options
and UARs.  The Committee shall have the authority
to determine the Employees, Consultants and Directors to whom Options and/or
UARs shall be granted, the number of Units to be covered by each Option or UAR,
the exercise price therefor, the Restricted Period and other conditions and
limitations applicable to the exercise of the Option or UAR, including the
following terms and conditions and such additional terms and conditions, as the
Committee shall determine, that are not inconsistent with the provisions of the
Plan.

 

(i)            Exercise Price.  The
exercise price per Unit purchasable under an Option or subject to a UAR shall
be determined by the Committee at the time the Option or UAR is granted but may
not be less than the Fair Market Value of a Unit as of the date of grant of the
Option or UAR.

 

(ii)           Time and Method of Exercise.  The
Committee shall determine the exercise terms and the Restricted Period with
respect to an Option or UAR grant, which may include, without limitation, a
provision for accelerated vesting upon the achievement of specified performance
goals or other events, and the method or methods by which payment of the
exercise price with respect to an Option may be made or deemed to have been
made, which may include, without limitation, cash, check acceptable to the
Company, withholding Units from the Award (except with respect to an Option
granted to a Canadian Grantee), a “cashless-broker” exercise through procedures
approved by the Company, or any combination of the above methods, having a Fair
Market Value on the exercise date equal to the relevant exercise price.

 

(iii)          Forfeitures.  Except
as otherwise provided in the terms of the Option or UAR grant, upon a
Participant’s Cessation Date, for any reason during the applicable Restricted
Period, all unvested Options and UARs shall be forfeited by the Participant.
The Committee may, in its discretion, waive in whole or in part such forfeiture
with respect to a Participant’s Options or UARs.

 

(iv)          Awards Granted to Canadian
Grantees.  All Options granted to a Canadian Grantee who is an Employee or a
Director shall have such terms and conditions as are necessary or desirable to
ensure that the Options are governed by Section 7 of the ITA and, unless
otherwise determined by the Committee, that the Units covered by any such
Option constitute “prescribed shares” within the meaning of Section 6204
of the regulations to the ITA.  All UARs
granted to a Canadian Grantee who is an Employee or a Director shall be
structured so as to not constitute a “salary deferral arrangement” within the
meaning of Section 248(1) of the ITA.

 

6

 

(b)           Restricted
Units and Phantom Units.  The Committee shall have the
authority to determine the Employees, Consultants and Directors to whom
Restricted Units and Phantom Units shall be granted, the number of Restricted
Units or Phantom Units to be granted to each such Participant, the Restricted
Period, the conditions under which the Restricted Units or Phantom Units may
become vested or forfeited and such other terms and conditions as the Committee
may establish with respect to such Awards.

 

(i)            DERs.  To
the extent provided by the Committee, in its discretion, a grant of Phantom
Units may include a tandem DER grant, which may provide that such DERs shall be
paid directly to the Participant, be credited to a bookkeeping account (with or
without interest in the discretion of the Committee), be “reinvested” in
Restricted Units or additional Phantom Units and be subject to the same or
different vesting restrictions as the tandem Phantom Unit Award, or be subject
to such other provisions or restrictions as determined by the Committee in its
discretion. Absent a contrary provision in the Award Agreement, upon a
distribution with respect to a Unit, DERs equal in value to such distribution
shall be paid promptly to the Participant in cash without vesting restrictions.

 

(ii)           UDRs.  To
the extent provided by the Committee, in its discretion, a grant of Restricted
Units may provide that the distributions made by the Company with respect to
the Restricted Units shall be subject to the same forfeiture and other
restrictions as the Restricted Unit and, if restricted, such distributions
shall be held, without interest, until the Restricted Unit vests or is
forfeited with the UDR being paid or forfeited at the same time, as the case
may be. In addition, the Committee may provide that such distributions be used
to acquire additional Restricted Units for the Participant. Such additional
Restricted Units may be subject to such vesting and other terms as the
Committee may prescribe. Absent such a restriction on the UDRs in the Award
Agreement, UDRs shall be paid promptly to the holder of the Restricted Unit
without vesting restrictions.

 

(iii)          Forfeitures.  Except
as otherwise provided in the terms of the applicable Award Agreement, upon a
Participant’s Cessation Date, for any reason during the applicable Restricted
Period, all outstanding, unvested Restricted Units and Phantom Units awarded
the Participant shall be automatically forfeited on such Cessation Date. The
Committee may, in its discretion, waive in whole or in part such forfeiture
with respect to a Participant’s Restricted Units and/or Phantom Units.

 

(iv)          Lapse of Restrictions.

 

(A)          Phantom Units.  Upon
or as soon as reasonably practical following the vesting of each Phantom Unit,
subject to the provisions of Section 8(b), the Participant shall be
entitled to settlement of such Phantom Unit and shall receive from the Company
either one Unit or an amount in cash equal to the Fair Market Value of a Unit, or
a combination of cash and Units, as determined by the Committee in its
discretion.

 

(B)           Restricted Units.  Upon
or as soon as reasonably practical following the vesting of each Restricted
Unit, subject to satisfying the tax withholding obligations of Section 8(b),
the Participant shall be entitled to have 

 

7

 

the restrictions removed from his or her Award so that the Participant
then holds an unrestricted Unit.

 

(v)           Awards Granted to Canadian Grantees.  All Phantom Units granted to a Canadian Grantee
who is an Employee or a Director shall have such terms and conditions as are
necessary or desirable to ensure that such Phantom Units are excluded from the
definition of “salary deferral arrangement” under Section 248(1) of
the ITA by virtue of falling within either paragraph (k) or paragraph (l) of
that definition.

 

(c)           Unit
Awards.  Unit Awards may be granted under the Plan to such
Employees, Consultants and/or Directors and in such amounts as the Committee,
in its discretion, may select.

 

(d)           Other Unit-Based
Awards.  Other Unit-Based Awards may be granted under the Plan to
such Employees, Consultants and/or Directors as the Committee, in its
discretion, may select. An Other Unit-Based Award shall be an award denominated
or payable in, valued in or otherwise based on or related to Units, in whole or
in part. The Committee shall determine the terms and conditions of any such
Other Unit-Based Award. Upon or as soon as reasonably practical following vesting,
an Other Unit-Based Award may be settled, as determined by the Committee in its
sole discretion, in cash, Units (including Restricted Units) or any combination
thereof as provided in the applicable Award Agreement.

 

(e)           Performance Awards and Incentive
Awards.  The right of an Employee,
Consultant and/or Director to receive a grant, and the right of a Participant
to exercise or receive a grant or settlement of any Award, and the timing
thereof, may be subject to such performance conditions as may be specified by
the Committee.  The Committee may use such
business criteria and other measures of performance as it may deem appropriate
in establishing any performance conditions, and may exercise its discretion to
reduce or increase the amounts payable under any Award subject to performance
conditions.

 

(i)            Performance Goals Generally.  The performance goals for Performance Awards
or Incentive Awards shall consist of one or more business criteria or
individual performance criteria and a targeted level or levels of performance
with respect to each of such criteria, as specified by the Committee in its
sole discretion.  The Committee may
determine that such Performance Awards or Incentive Awards shall be granted,
exercised, and/or settled upon achievement of any one performance goal or that
two or more of the performance goals must be achieved as a condition to grant,
exercise and/or settlement of such Performance Awards or Incentive Awards.  Performance goals may differ for Performance
Awards or Incentive Awards granted to any one Participant or to different Participants.

 

(ii)           Performance Periods.  Achievement of performance goals in respect
of Performance Awards or Incentive Awards shall, subject to other provisions of
this Plan, be measured over a performance period of up to ten years, as
specified by the Committee.

 

(iii)          Performance Award or Incentive Award  Pool.  The Committee
may, but is not required to, establish a Performance Award pool or an Incentive
Award pool which shall be an unfunded pool, for purposes of measuring
performance of the Company in 

 

8

 

connection with Performance Awards or Incentive Awards.  The amount of such pools, if any, shall be
based upon the achievement of a performance goal or goals based on one or more
criteria during the given performance period, as specified by the
Committee.  The Committee may specify the
amount of the applicable pool as a percentage of any of such criteria, a
percentage thereof in excess of a threshold amount, or as another amount which
need not bear a strictly mathematical relationship to such criteria.

 

(iv)          Settlement of Performance Awards and  Incentive Awards. 
After the end of each applicable performance period, the Committee shall
determine the amount, if any, of (A) the Performance Award or Incentive
Award pool, and the maximum amount of the potential Award payable to each
Participant in the Performance Award or Incentive Award pool, or (B) the
amount of the potential Performance Award or Incentive Award otherwise payable
to each Participant.  Settlement of such
Performance Awards or Incentive Awards shall be in cash, Units, other Awards or
other property, in the discretion of the Committee.

 

(f)            General.

 

(i)            Awards May Be Granted
Separately, Together or as a Substitution.    Awards
may, in the discretion of the Committee, be granted either alone or in addition
to, in tandem with, or in substitution or exchange for any other Award granted
under the Plan or any award granted under any other plan of the Company or any
Affiliate, or of any business entity to be acquired by the Company or any of
its Affiliates, or any other right of an Eligible Person to receive payment
from the Company or any of its Affiliates.  Awards granted in addition to or in tandem
with other Awards or awards granted under any other plan of the Company or any
Affiliate may be granted either at the same time as or at a different time from
the grant of such other Awards or awards. 
If an Award is granted in substitution or exchange for another Award,
the Committee shall require the surrender of such other Award in consideration
for the grant of the new Award.

 

(ii)           Limits on Transfer of Awards.

 

(A)          Except as provided in Paragraph (C) below,
each Option and Unit Appreciation Right shall be exercisable only by the
Participant during the Participant’s lifetime, or by the Person to whom the
Participant’s rights shall pass by will or the laws of descent and
distribution.

 

(B)           Except as provided in Paragraph (C) below,
no Award and no right under any such Award may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a Participant and any
such purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company or any
Affiliate.

 

(C)           To the extent specifically provided by the Committee
with respect to an Option or Unit Appreciation Right, an Option or Unit
Appreciation Right may be transferred by a Participant without consideration to
immediate family 

 

9

 

members or related family trusts, limited partnerships or similar
entities or on such terms and conditions as the Committee may from time to time
establish.

 

(iii)          Term of Awards.  Subject
to the other provisions of this Plan or restrictions within any Award
agreement, the term of each Award shall be for such period as may be determined
by the Committee.

 

(iv)          Issuance of Units.  The
Units purchased or delivered pursuant to an Award may be evidenced in any
manner deemed appropriate by the Committee in its sole discretion, including
but not limited to, in the form of a certificate issued in the name of the
Participant or by book entry, electronic or otherwise, subject to such stop
transfer orders and other restrictions as the Committee may deem advisable
under the Plan or the rules, regulations, and other requirements of the SEC,
any stock exchange upon which such Units or other securities are then listed,
and any applicable federal or state laws, and the Committee may cause a legend
or legends to be inscribed on any certificates to make appropriate reference to
such restrictions.

 

(v)           Consideration for Grants.  Awards
may be granted for such consideration, including services, as the Committee
shall determine.

 

(vi)          Delivery of Units or other
Securities and Payment by Participant of Consideration.  Notwithstanding anything in the Plan or any Award
Agreement to the contrary, delivery of Units pursuant to the exercise, vesting
and/or settlement of an Award may be deferred for any period during which, in
the good faith determination of the Committee, the Company (or any Affiliate)
is not reasonably able to obtain Units to deliver pursuant to such Award
without violating applicable law or the applicable rules or regulations of
any governmental agency or authority or securities exchange. No Units or other
securities shall be delivered pursuant to any Award until payment in full of
any amount required to be paid pursuant to the Plan or the applicable Award Agreement
(including, without limitation, any exercise price or tax withholding) is
received by the Company.

 

SECTION 7.                                Amendment and Termination.

 

Except to the extent
prohibited by applicable law:

 

(a)           Amendments
to the Plan and Awards.  Except as otherwise required by
the rules of the principal securities exchange on which the Units are
traded, by the Code, by the ITA, or by the Exchange Act, the Board or the
Committee may amend, alter, suspend, discontinue, or terminate the Plan in any
manner, including increasing the number of Units available for Awards under the
Plan, without the consent of any member of the Company, Participant, other
holder or beneficiary of an Award, or any other Person.  Notwithstanding the foregoing, the Committee
may waive any conditions or rights under, amend any terms of, or alter any
Award theretofore granted, provided no change, other than pursuant to Section 7(b) below,
in any Award shall materially reduce the rights or benefits of a Participant
with respect to an Award without the consent of such Participant.

 

10

 

(b)           Actions
Upon the Occurrence of Certain Events.  Upon the occurrence
of a Change of Control; a recapitalization, reorganization, merger,
consolidation, combination, exchange or other relevant change in capitalization
of or involving the Company; any change in applicable law or regulation
affecting the Plan or Awards thereunder; or any change in accounting principles
affecting the financial statements of the Company, the Committee, in its sole
discretion, without the consent of any Participant or holder of the Award, and
on such terms and conditions as it deems appropriate, may, but is not required
to, take any one or more of the following actions in order to prevent dilution
or enlargement of the benefits or potential benefits intended to be made
available under the Plan or an outstanding Award:

 

(i)            provide for either (A) the cancellation and termination
of any Award in exchange for an amount of cash, other property, or securities,
if any, equal to the amount that would have been attained upon the exercise of
such Award or realization of the Participant’s rights or if Participant were a unitholder
as of the date of the occurrence of such event (and, for the avoidance of
doubt, if as of the date of the occurrence of such transaction or event the
Committee determines in good faith that no amount would have been attained upon
the exercise of such Award or realization of the Participant’s rights, then
such Award may be terminated by the Company without payment) or (B) the
replacement of such Award with or the conversion of such Award into cash or
other securities, rights or property selected by the Committee in its sole
discretion; provided, that the Committee will not take any action that would
result in a Participant becoming subject to the adverse tax consequences
imposed by a violation of Section 409A of the Code or Section 7(1.4)
of the ITA as a result of such action;

 

(ii)           provide that such Award be assumed by the successor
or survivor entity, or a parent or subsidiary thereof, or be exchanged for
similar options, rights or awards covering the equity of the successor or
survivor, or a parent or subsidiary thereof, or cash or other property with
appropriate adjustments as to the number and kind of equity interests or cash
or other property and prices, provided, however, in the discretion of the
Committee, the vesting schedule applicable to such Award may be retained;
provided, that the Committee will not take any action that would result in a
Participant becoming subject to the adverse tax consequences imposed by a
violation of Section 409A of the Code or Section 7(1.4) of the ITA as
a result of such action;

 

(iii)          make adjustments in the number and type of Units (or
other securities or property) subject to outstanding Awards, and in the number
and kind of outstanding Awards or in the terms and conditions of (including the
exercise price), and the vesting and performance criteria included in,
outstanding Awards, or both;

 

(iv)          provide that, such Award shall be exercisable or
payable, notwithstanding anything to the contrary in the Plan or the applicable
Award Agreement;

 

(v)           provide that, such Award shall be fully vested
and/or nonforfeitable; and

 

(vi)          provide that the Award cannot be exercised or become
payable after such event, i.e.,
shall terminate upon such event.

 

11

 

Notwithstanding the
foregoing, with respect to an above event that is an “equity restructuring”
event that would be subject to a compensation expense pursuant ASC Topic 718,
the provisions in Section 4(c) shall control to the extent they are
in conflict with the discretionary provisions of this Section 7.

 

SECTION 8.                                General Provisions.

 

(a)           No Rights
to Award.  No Person shall have any claim to be
granted any Award under the Plan, and there is no obligation for uniformity of
treatment of Participants. The terms and conditions of Awards need not be the
same with respect to each recipient.

 

(b)           Tax
Withholding.  Unless other arrangements have been
made that are acceptable to the Company, the Company or any Affiliate is
authorized to withhold from any Award, from any payment due or transfer made
under any Award or from any compensation or other amount owing to a Participant
the amount (in cash, Units, Units that would otherwise be issued pursuant to
such Award or other property) of any applicable taxes payable in respect of the
grant or settlement of an Award, its exercise, the lapse of restrictions
thereon, or any other payment or transfer under an Award or under the Plan and
to take such other action as may be necessary in the opinion of the Company to
satisfy its or the Affiliate’s withholding obligations for the payment of such
taxes.

 

(c)           No Right
to Employment or Services.  The grant of an Award shall not
be construed as giving a Participant the right to be retained in the employ of
the Company or any Affiliate, to continue consulting services or to remain as a
Director, as applicable. Furthermore, the Company or an Affiliate may at any
time dismiss a Participant from employment or consulting free from any
liability or any claim under the Plan, unless otherwise expressly provided in
the Plan, any Award Agreement or other agreement.

 

(d)           Governing
Law.  The validity, construction, and effect of the Plan and any
rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of            without regard to its conflicts of laws principles.

 

(e)           Severability.  If
any provision of the Plan or any Award is or becomes or is deemed to be invalid,
illegal, or unenforceable in any jurisdiction or as to any Person or Award, or
would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
the applicable law or, if it cannot be construed or deemed amended without, in
the determination of the Committee, materially altering the intent of the Plan
or the Award, such provision shall be stricken as to such jurisdiction, Person
or Award and the remainder of the Plan and any such Award shall remain in full
force and effect.

 

(f)            Other Laws.  The
Committee may refuse to issue or transfer any Units or other consideration
under an Award if, in its sole discretion, it determines that the issuance or
transfer of such Units or such other consideration might violate any applicable
law or regulation, the rules of the principal securities exchange on which
the Units are then traded, or entitle the Company or an Affiliate to recover
the same under Section 16(b) of the Exchange Act, and any payment
tendered to the Company by a Participant, other holder or beneficiary in
connection 

 

12

 

with the exercise of such Award shall be
promptly refunded to the relevant Participant, holder or beneficiary.

 

(g)           No Trust
or Fund Created.  Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any participating Affiliate and a
Participant or any other Person. To the extent that any Person acquires a right
to receive payments from the Company or any participating Affiliate pursuant to
an Award, such right shall be no greater than the right of any general
unsecured creditor of the Company or any participating Affiliate.

 

(h)           No
Fractional Units.  No fractional Units shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine in
its sole discretion whether cash, other securities, or other property shall be
paid or transferred in lieu of any fractional Units or whether such fractional
Units or any rights thereto shall be terminated or otherwise eliminated with or
without consideration.

 

(i)            Headings.  Headings
are given to the Sections and subsections of the Plan solely as a convenience
to facilitate reference. Such headings shall not be deemed in any way material
or relevant to the construction or interpretation of the Plan or any provision
thereof.

 

(j)            Facility
of Payment.  Any amounts payable hereunder to any individual
under legal disability or who, in the judgment of the Committee, is unable to
manage properly his financial affairs, may be paid to the legal representative
of such individual, or may be applied for the benefit of such individual in any
manner that the Committee may select, and the Company shall be relieved of any
further liability for payment of such amounts.

 

(k)           Gender and
Number.  Words in the masculine gender shall include the feminine
gender, the plural shall include the singular and the singular shall include
the plural.

 

(l)            Compliance
with Section 409A.  Nothing in the Plan or any Award
Agreement shall operate or be construed to cause the Plan or an Award to fail
to comply with the requirements of Section 409A of the Code. The applicable
provisions of Section 409A the Code and the regulations thereunder are
hereby incorporated by reference and shall control over any Plan or Award
Agreement provision in conflict therewith.

 

SECTION 9.                                Term of the Plan.

 

The Plan shall be effective
on the date immediately preceding the close of the initial public offering of
Units and shall continue until the earliest of (i) the date terminated by
the Board, (ii) all Units available under the Plan have been paid to
Participants, or (iii) the tenth year anniversary of the date the Plan is
approved by the Company.  However, any
Award granted prior to such termination, and the authority of the Board or the
Committee to amend, alter, adjust, suspend, discontinue, or terminate any such
Award or to waive any conditions or rights under such Award, shall extend
beyond such termination date.

 

13Exhibit 10.2

 

 

 

FORM OF

 

CONTRIBUTION,
ASSIGNMENT AND ASSUMPTION AGREEMENT

 

NISKA
GAS STORAGE PARTNERS LLC

 

Dated as of
                      ,
2010

 

 

TABLE
OF CONTENTS

 

ARTICLE I

DEFINITIONS

 

ARTICLE II

LEVERAGED DISTRIBUTION

 

	
  Section 2.1

  	
  Canadian
  Distribution

  	
  7

  
	
  Section 2.2

  	
  US
  Distribution

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

   

  CONTRIBUTIONS AND DISTRIBUTIONS ON EFFECTIVE DATE

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Execution
  of LLC Agreement

  	
  7

  
	
  Section 3.2

  	
  US
  Asset Contribution

  	
  7

  
	
  Section 3.3

  	
  Conveyance
  of Company Interests to DutchCo

  	
  8

  
	
  Section 3.4

  	
  Transfer
  of Niska II Interests to DutchCo

  	
  8

  
	
  Section 3.5

  	
  Conveyance
  of Equity to Holdco

  	
  8

  
	
  Section 3.6

  	
  Conveyance
  of Equity to GP ULC

  	
  8

  
	
  Section 3.7

  	
  Conveyance
  of Equity to GP Canada LLC

  	
  8

  
	
  Section 3.8

  	
  Contribution
  of Equity to Niska II Holdings

  	
  8

  
	
  Section 3.9

  	
  Conveyance
  of Equity to Gas Storage Canada GP

  	
  8

  
	
  Section 3.10

  	
  Distribution
  of Equity to Niska II Holdings

  	
  9

  
	
  Section 3.11

  	
  Contribution
  of Niska II Interests to Holdco

  	
  9

  
	
  Section
  3.12

  	
  Contribution
  of Niska II Indebtedness to Niska II

  	
  9

  
	
  Section 3.13

  	
  US
  Contribution to Sponsor Holdings

  	
  9

  
	
  Section 3.14

  	
  Canadian
  Contribution to Sponsor Holdings

  	
  9

  
	
  Section 3.15

  	
  Contribution
  of Manager Contribution Interest to the Manager

  	
  9

  
	
  Section 3.16

  	
  Distribution
  of Equity in Sponsor Holdings to Niska Canada

  	
  9

  
	
  Section 3.17

  	
  Execution
  of Registration Rights Agreement

  	
  9

  
	
  Section 3.18

  	
  Underwriters’
  Cash Contribution

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

   

  DEFERRED ISSUANCE AND DISTRIBUTION

  
	
   

  	
   

  
	
  Section 4.1

  	
  Deferred
  Issuance and Distribution

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

   

  MISCELLANEOUS PROVISIONS

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Effective
  Time

  	
  10

  
	
  Section 5.2

  	
  Further
  Assurances

  	
  10

  

 

i

 

	
  Section 5.3

  	
  Headings;
  References, Interpretation

  	
  10

  
	
  Section 5.4

  	
  Successors
  and Assigns

  	
  11

  
	
  Section 5.5

  	
  No
  Third Party Rights

  	
  11

  
	
  Section 5.6

  	
  Counterparts

  	
  11

  
	
  Section 5.7

  	
  Applicable
  Law; Forum, Venue and Jurisdiction

  	
  11

  
	
  Section 5.8

  	
  Severability

  	
  12

  
	
  Section 5.9

  	
  Amendment or Modification

  	
  12

  
	
  Section 5.10

  	
  Integration

  	
  12

  
	
  Section 5.11

  	
  Deed; Bill of Sale; Assignment

  	
  12

  

 

ii

 

CONTRIBUTION,
ASSIGNMENT AND ASSUMPTION AGREEMENT

 

This CONTRIBUTION, ASSIGNMENT AND ASSUMPTION AGREEMENT
(this “Agreement”), dated as of               ,
2010 is made by and among Niska GS Holdings US, L.P., a Delaware limited partnership
(“Niska US”), Niska Gas Storage Partners LLC, a Delaware limited
liability company (the “Company”), Niska Partners Coöperatief U.A., a coöpertief formed in the Netherlands (“DutchCo”),
Niska II Holdings, L.P., a Delaware limited partnership (“Niska II Holdings”),
Niska HoldCo ULC, an Alberta unlimited liability corporation (“Holdco”),
Niska GP ULC, an Alberta unlimited liability corporation (“GP ULC”),
Niska II GP LLC, a Delaware limited liability company (“GP Canada LLC”),
Niska Gas Storage Canada GP, LLC, a Delaware limited liability company (“Gas
Storage Canada GP”), Niska GS Holdings II, L.P. a Delaware limited
partnership (“Niska II”), Niska Sponsor Holdings Coopertief U.A., a coöpertief formed in the Netherlands (“Sponsor Holdings”),
Niska GS Holdings Canada, L.P., a Delaware limited partnership (“Niska
Canada”),  Niska Gas Storage
Management LLC, a Delaware limited liability company (the “Manager”)
AECO Gas Storage Partnership, an Alberta general partnership (“AECO”),
Niska Gas Storage US LLC (“Gas Storage US”) a Delaware limited liability
company, Niska Gas Storage Canada, ULC (“Gas Storage Canada”) an Alberta
unlimited liability corporation, and Niska Gas Storage Canada, L.P., a Delaware
limited partnership (“NGSC”).  The above-named
entities are sometimes referred to in this Agreement each as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, the Manager has formed the Company pursuant to the
Delaware Limited Liability Company Act (“Delaware LLC Act”) for the
purposes set forth in the Operating Agreement of the Company, dated as of January 26,
2010 (the “Original LLC Agreement”);

 

WHEREAS, each of the following actions has been
taken prior to the date hereof:

 

1.                                       Carlyle Riverstone Energy Partners III,
L.P., a Delaware limited partnership (“GP3”) has formed the Manager to
which it has contributed US $1,000 in exchange for all of the membership
interests in the Manager;

 

2.                                       The Manager has formed the Company to
which it has contributed US $1,000 in exchange for all of the membership
interests in the Company;

 

3.                                       GP3 and Thomas Walker have collectively
formed Niska US and Niska Canada;

 

4.                                       (i) Niska US has formed Niska US GP
LLC, a Delaware limited liability company, and (ii)  Niska Canada has
formed GP Canada LLC;

 

5.                                       Thomas Walker has withdrawn from Niska
US, and the limited partners of Niska GS Holdings I, L.P., a Delaware limited
partnership (“Niska I”), have received all of the limited partner
interests of Niska US in exchange for the contribution of their Class A, B
and C limited partner interests in Niska I to Niska US;

 

1

 

6.                                       GP3 has received a non-economic (0%)
general partner interest in Niska US in exchange for the contribution of the
general partner interest of Niska I to Niska US GP LLC, a Delaware limited
liability company (“GP US LLC”);

 

7.                                       Thomas Walker has withdrawn from Niska
Canada, and the limited partners of Niska II have received all of the limited
partner interests in Niska Canada in exchange for the contribution of their Class A,
B, and C limited partner interests of Niska II to Niska Canada;

 

8.                                       GP3 has received a non-economic (0%)
general partner interest in Niska Canada in exchange for the contribution of
the general partner interest in Niska II to GP Canada LLC;

 

9.                                       Niska US has formed a Delaware limited
liability company named Niska GS Venture Holdings LLC (“Upper Co-op Holdings”);

 

10.                                 Niska US and Upper Co-op Holdings have
formed Sponsor Holdings to which they have contributed US$999.99 and US$0.01,
respectively, in exchange for 99.999% and 0.001%, respectively, of the
membership interests in Sponsor Holdings;

 

11.                                 The Company has formed Niska Gas Storage
Operations LLC, a Delaware limited liability company (“Lower Co-op Holdings”);

 

12.                                 The Company and Lower Co-Op Holdings have
formed DutchCo to which they have contributed
US$         and
US$        , respectively, in exchange
for       %
and         %, respectively, of the
membership interests in DutchCo;

 

13.                                 DutchCo has formed Holdco to which it has
contributed CN$        in exchange for debt
and equity in Holdco;

 

14.                                 Holdco has formed GP ULC to which it has
contributed CN$        in exchange for all
of the equity in GP ULC;

 

15.                                 Niska Canada and GP Canada LLC have
formed Niska II Holdings to which they have contributed US$999.99 and US$0.01,
respectively, in exchange for a 99.999% limited partner interest in Niska II
Holdings and a .001% general partner interest in Niska II Holdings, respectively;
and

 

16.                                 Sponsor Holdings has paid GP3 US $1000 in
exchange for all of the membership interests in the Manager.

 

WHEREAS, pursuant hereto, each of the following
will occur at the times specified hereinafter:

 

1.                                       AECO will loan Gas Storage Canada an
amount equal to 65% of the Leveraged Distribution; Gas Storage Canada will loan
NGSC an amount equal to 65% of the Leveraged Distribution; NGSC will loan Niska
II an amount equal to 65% of the Leveraged Distribution;  Niska II will use the loan proceeds to repay
a portion of the note owed to Niska II Holdings in an amount equal to 65% of
the Leveraged Distribution; Niska II Holdings will distribute an amount equal
to 65% of the Leveraged Distribution to Niska Canada;

 

2

 

2.                                       Gas Storage US will loan an amount equal
to 35% of the Leveraged Distribution to Niska I;

 

3.                                       Niska I will make a distribution in an
amount equal to 35% of the Leveraged Distribution to Niska US;

 

4.                                       Niska US will transfer its membership
interests in Niska I and GP US LLC to the Company in exchange for (a) 35%
of the Sponsor Common Units, (b) 35% of the Sponsor Subordinated Units, (c) 35%
of the Manager Contribution Interest, (d) 35% of the IDRs, and (e) the
right to receive 35% of the Deferred Issuance and Distribution (collectively,
the “US Consideration”).

 

5.                                       The Company will transfer (a) 65% of
the Sponsor Common Units, (b) 65% of the Sponsor Subordinated Units, (c) 65%
of the Manager Contribution Interest, (d) 65% of the IDRs and (e) the
right to receive 65% of the Deferred Issuance and Distribution to DutchCo
(collectively, the “Canadian Consideration”) in exchange for a
US$         million note with an
interest rate of        %,
a US$         million note with an
interest rate of          % and
equity interests of DutchCo.

 

6.                                       Niska II Holdings will transfer a note in
the amount of            
owed to it by Niska II and 100% of the limited partner interest in Niska II to
DutchCo in exchange for all of the Canadian Consideration other than       Common Units and       Subordinated Units (the “Residual
Units”).

 

7.                                       DutchCo will convey the Residual Units to
Holdco as a capital contribution and Holdco will add the fair market value of
the Residual Units to the stated capital account of Holdco’s issued and
outstanding shares;

 

8.                                       Holdco will convey the Residual Units to
GP ULC as a capital contribution and GP ULC will add the fair market value of
the Residual Units to the stated capital account of GP ULC’s issued and
outstanding shares;

 

9.                                       GP ULC will convey      
Common Units and      
Subordinated Units (a portion of the Residual Units) to GP Canada LLC in
exchange for GP Canada LLC’s general partner interest in Niska II;

 

10.                                 GP Canada LLC will contribute the
Residual Units it received to Niska II Holdings;

 

11.                                 GP ULC will convey     
Common Units and      
Subordinated Units (a portion of the Residual Units) to Gas Storage Canada GP
in exchange for Gas Storage Canada GP’s general partner interest in NGSC;

 

12.                                 Gas Storage Canada GP will distribute the
Residual Units it received to Niska II Holdings;

 

3

 

13.                                 DutchCo will contribute the limited
partner interests in Niska II and Niska II’s
US$         outstanding indebtedness to
Holdco in exchange for Holdco equity with a value of
US$        and indebtedness of
US$         with an interest rate of
      %;

 

14.                                 Holdco will contribute Niska II’s US
$      outstanding indebtedness to Niska II in
exchange for additional limited partner interests in Niska II;

 

15.                                 Niska US and Niska II Holdings will
collectively contribute: (a) the Sponsor Common Units, (b) the
Sponsor Subordinated Units, (c) 100% of the IDRs, (d) 100% of the
right to receive the Deferred Issuance and Distribution and (e) the 2.0%
membership interest, to Sponsor Holdings in exchange for 100% of the equity of
Sponsor Holdings;

 

16.                                 Sponsor Holdings will contribute the
Manager Contribution Interest to the Manager; and

 

17.                                 In connection with the Offering, the
public, through the underwriters, will contribute an amount agreed upon by the
Underwriters and the Company pursuant to the Underwriting Agreement, less the
Underwriters’ Spread in exchange for the Firm Units.

 

WHEREAS, the Company may adjust upward or downward the number
of Firm Units to be offered to the public through the Underwriters.

 

NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

The following defined terms
will have the meanings given below:

 

“AECO” has the meaning set forth in the opening
paragraph of this Agreement.

 

“Agreement” means this Contribution, Assignment and
Assumption Agreement.

 

“Commission” means the Securities and Exchange
Commission.

 

“Common Unit” means a common unit representing
a member interest in the Company having the rights set forth in the LLC
Agreement.

 

“Company” has the meaning set forth in the
opening paragraph of this Agreement.

 

“Deferred Issuance and Distribution” has the
meaning set forth in the LLC Agreement.

 

“Delaware LLC Act” has the meaning set forth in the
Recitals of this Agreement.

 

“DutchCo” has the meaning set forth in the
opening paragraph of this Agreement.

 

4

 

“Effective Time” means 8:00 a.m.
prevailing Eastern Time on the date of the closing of the Offering.

 

“Firm Units” means the Common Units to be sold
to the Underwriters pursuant to the terms of the Underwriting Agreement, but
does not include any Option Units.

 

“Gas Storage Canada” has the meaning set forth
in the opening paragraph of this Agreement.

 

“Gas Storage Canada GP” has the meaning set
forth in the opening paragraph of this Agreement.

 

“Gas Storage US” has the meaning set forth in
the opening paragraph of this Agreement.

 

“GP3” has the meaning set forth in the Recitals
of this Agreement.

 

“GP Canada LLC” has the meaning set forth in
the opening paragraph of this Agreement.

 

“GP ULC” has the meaning set forth in the
opening paragraph of this Agreement.

 

“GP US LLC” has the meaning set forth in the
Recitals of the Agreement.

 

“Holdco” has the meaning set forth in the
opening paragraph of this Agreement.

 

“IDRs” means the incentive distribution rights
of the Company having the rights set forth in the LLC Agreement.

 

“Leveraged Distribution” means the borrowing by
AECO and Gas Storage US and the distribution, directly or indirectly (and
including by means of inter-company loans), of an amount equal to the proceeds
of the Offering, less the Underwriters’ Spread on the Firm Units, Offering
Expenses, and Retained Cash.

 

“LLC Agreement” means the First Amended and
Restated Operating Agreement of the Company, substantially in the form attached
as Appendix A to the Registration Statement.

 

“Lower Co-op Holdings” has the meaning set
forth in the Recitals of this Agreement.

 

“Manager” has the meaning set forth in the
opening paragraph of this Agreement.

 

“Manager Contribution Interest” means a
membership interest in the Company that, when contributed to the Manager
pursuant to Section 3.15 will be the Managing Member Interest (as defined
in, and having the rights set forth in, the LLC Agreement), which Managing
Member Interest will result in the Manager having a Percentage Interest of 2%
after giving effect to any exercise of the Over-Allotment Option and the
Deferred Issuance and Distribution.

 

“NGSC” has the meaning set forth in the opening
paragraph of this Agreement.

 

“Niska Canada” has the meaning set forth in the
opening paragraph of this Agreement.

 

5

 

“Niska I” has the meaning set forth in the
Recitals of this Agreement.

 

“Niska II” has the meaning set forth in the
opening paragraph of this Agreement.

 

“Niska II Holdings” has the meaning set forth
in the opening paragraph of this Agreement.

 

“Niska US” has the meaning set forth in the
opening paragraph of this Agreement.

 

“Offering” means the initial public offering of the
Company.

 

“Offering Expenses” shall mean the retention by
the Company of $4.0 million to pay estimated expenses incurred by the Company
in connection with the Offering.

 

“Option Units” means the Common Units the Company agrees
to issue upon exercise of the Over-Allotment Option.

 

“Original LLC Agreement” has the meaning set
forth in the Recitals of this Agreement.

 

“Over-Allotment Option” means a number of Common Units
equal to 15% of the Firm Units, which the Company will agree to sell to the
Underwriters, at their option, to cover over-allotments in connection with the
Offering.

 

“Party” or “Parties” has the meaning set forth in
the opening paragraph of this Agreement.

 

“Registration Statement” means the Registration Statement on Form S-1
filed with the Commission (Registration No. 333-165007), as amended.

 

“Residual Units” has the meaning set forth in
the Recitals of this Agreement.

 

“Retained Cash” means $60.0 million of proceeds of the Offering to
be retained by the Company for general company purposes.

 

“Sponsor Common Units” means 16,304,745 Common
Units, provided that if the Company increases the number of Firm Units, the
Sponsor Common Units will be decreased by a number of Common Units equal to
115% (to accommodate the corresponding increase in the number of Option Units
and Deferred Issuance and Distribution) of such increase and if the Company
decreases the number of Common Units offered to the public through the
Underwriters, the Sponsor Common Units will be increased by a number of Common
Units equal to 115% of such decrease.

 

“Sponsor Holdings” has the meaning set forth in
the opening paragraph of this Agreement.

 

“Sponsor Subordinated Units” means 33,804,745
Subordinated Units.

 

“Subordinated Unit” means a subordinated unit
representing a member interest in the Company having the rights set forth in
the LLC Agreement.

 

6

 

“Underwriters” the underwriting syndicate listed in the
Underwriting Agreement.

 

“Underwriting Agreement” means a firm
commitment underwriting agreement to be entered into between the Company and
the underwriters named in the Registration Statement.

 

“Underwriters’ Spread” shall mean the total
amount of the Underwriters’ discount and structuring fee.

 

“Upper Co-op Holdings” has the meaning set
forth in the Recitals of this Agreement.

 

“US Consideration” has the meaning set forth in
the Recitals of this Agreement.

 

Capitalized terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the LLC Agreement.

 

ARTICLE
II

 

LEVERAGED
DISTRIBUTION

 

After execution of the Underwriting Agreement, but
prior to the Effective Time, the following borrowings, loans and distributions
shall occur:

 

Section 2.1             Canadian Distribution. 
AECO will borrow an amount equal to 65% of the Leveraged Distribution
under its revolving credit facility and loan such funds to Gas Storage Canada;
Gas Storage Canada will loan such funds to NGSC; NGSC will loan such funds to
Niska II; Niska II use such funds to repay a portion of the note owed to Niska
II Holdings; Niska II Holdings will distribute such funds to Niska Canada.

 

Section 2.2             US Distribution.  Gas Storage US will borrow an amount equal to
35% of the Leveraged Distribution under its revolving credit facility and loan
such amount to Niska I; Niska I will distribute such funds to Niska US.

 

ARTICLE III

 

CONTRIBUTIONS AND DISTRIBUTIONS
ON EFFECTIVE DATE

 

The following shall be
completed immediately following the Effective Time in the order set forth
herein.

 

Section 3.1             Execution of LLC Agreement. 
The Manager shall amend and restate the Original LLC Agreement by
executing the LLC Agreement in substantially the form included as Appendix A to
the Registration Statement, with such changes as are necessary to reflect any
adjustment to the number of Firm Units and Option Units as the Company may
agree with the Underwriters and such other changes as the Company, Niska Canada
and Niska US may agree.

 

Section 3.2             US Asset Contribution. 
Niska US hereby grants, contributes, bargains, conveys, assigns,
transfers, sets over and delivers to the Company, its successors and assigns,
for its and their own use forever, and the Company hereby accepts such grant,
contribution, bargain, 

 

7

 

conveyance, assignment, transfer, set over and
delivery, all of its interests in Niska I and GP US LLC in exchange for the US
Consideration.

 

Section 3.3             Conveyance of Company Interests
to DutchCo.  The Company hereby grants, contributes,
bargains, conveys, assigns, transfers, sets over and delivers the Canadian
Consideration to DutchCo, its successors and assigns, for its and their own use
forever, and DutchCo hereby accepts such grant, contribution, bargain,
conveyance, assignment, transfer, set over and delivery in exchange for a
US$         million note with an
interest rate of       %, US$        
million note with an interest rate of
       % of DutchCo.

 

Section 3.4             Transfer of Niska II Interests to
DutchCo.  Niska II Holdings hereby grants, contributes,
bargains, conveys, assigns, transfers, sets over and delivers a note in the
amount of US$         owed to it by
Niska II and 100% of the limited partner interest in Niska II to DutchCo, it
successors and assigns, for its and their own use forever, and DutchCo hereby
accepts such grant, contribution, bargain, conveyance, assignment, transfer,
set over and delivery in exchange for all of the Canadian Consideration other
than the Residual Units.

 

Section 3.5             Conveyance of Equity to Holdco. 
DutchCo hereby grants, contributes, bargains, conveys, assigns,
transfers, sets over and delivers the Residual Units to Holdco, its successors
and assigns, for its and their own use forever, and Holdco hereby accepts such
grant, contribution, bargain, conveyance, assignment, transfer, set over and
delivery as a capital contribution, and Holdco will add the fair market value
of the Residual Units to the stated capital account of Holdco’s issued and
outstanding shares.

 

Section 3.6             Conveyance of Equity to GP ULC. 
Holdco hereby grants, contributes, bargains, conveys, assigns,
transfers, sets over and delivers the Residual Units to GP ULC, its successors
and assigns, for its and their own use forever, and GP ULC hereby accepts such
grant, contribution, bargain, conveyance, assignment, transfer, set over and
delivery as a capital contribution, and GP ULC will add the fair market value
of the Residual Units to the stated capital account of GP ULC’s issued and
outstanding shares.

 

Section 3.7             Conveyance of Equity to GP Canada
LLC.  GP ULC hereby grants, contributes, bargains,
conveys, assigns, transfers, sets over and delivers      
Common Units and      
Subordinated Units to GP Canada LLC, its successors and assigns, for its and
their own use forever and GP Canada LLC hereby accepts such grant,
contribution, bargain, conveyance, assignment, transfer, set over and delivery
in exchange for GP Canada LLC’s 0.001% general partner interest in Niska II.

 

Section 3.8             Contribution of Equity to Niska
II Holdings.  GP Canada LLC hereby grants, contributes,
bargains, conveys, assigns, transfers, sets over and delivers       Common Units and       Subordinated Units to Niska
II Holdings, its successors and assigns, for its and their own use forever, and
Niska II Holdings hereby accepts such grant, contribution, bargain, conveyance,
assignment, transfer, set over and delivery.

 

Section 3.9             Conveyance of Equity to Gas
Storage Canada GP.  GP ULC hereby grants, contributes, bargains,
conveys, assigns, transfers, sets over and delivers      
Common Units and      
Subordinated Units to Gas Storage Canada GP, its successors and assigns, for
its 

 

8

 

and their own use forever in exchange for Gas Storage
Canada GP’s 0.001% general partner interest in NGSC.

 

Section 3.10           Distribution of Equity to Niska
II Holdings.  Gas Storage Canada GP hereby grants,
contributes, bargains, conveys, assigns, transfers, sets over and delivers       Common Units and       Subordinated Units to Niska
II Holdings, its successors and assigns, for its and their own use forever.

 

Section 3.11           Contribution of Niska II
Interests to Holdco.  DutchCo hereby grants, contributes, bargains,
conveys, assigns, transfers, sets over and delivers the note in the amount of $                 
owed to it by Niska II and 100% of the limited partner interest in Niska II to
Holdco, its successors and assigns, for its and their own use forever, and
Holdco hereby accepts such grant, contribution, bargain, conveyance,
assignment, transfer, set over and delivery in exchange for Holdco equity with
a value of US$         and indebtedness
of US$         with an interest rate of
     %.

 

Section 3.12           Contribution of
Niska II Indebtedness to Niska II.  Holdco hereby
grants, contributes, bargains, conveys, assigns, transfers, sets over and
delivers the note of Niska II in the amount
of $                 
to Niska II and Niska II hereby accepts such grant, contribution, bargain,
conveyance, assignment, transfer, set over and delivery of such note and issues
to Holdco limited partner interests in Niska II in exchange for such note.

 

Section 3.13           US Contribution to Sponsor
Holdings.  Niska US hereby grants, contributes,
bargains, conveys, assigns, transfers, sets over and delivers the US
Consideration to Sponsor Holdings, its successors and assigns, for its and
their own use forever in exchange for 35% of the equity interests in Sponsor
Holdings.

 

Section 3.14           Canadian Contribution to Sponsor
Holdings.  Niska II Holdings hereby grants, contributes,
bargains, conveys, assigns, transfers, sets over and delivers the Canadian
Consideration to Sponsor Holdings, its successors and assigns, for its and
their own use forever in exchange for 65% of the equity interests in Sponsor
Holdings.

 

Section 3.15           Contribution of Manager
Contribution Interest to the Manager.  Sponsor
Holdings hereby grants, contributes, bargains, conveys, assigns, transfers,
sets over and delivers the Manager Contribution Interest to the Manager, its
successors and assigns, for its and their own use forever.

 

Section 3.16           Distribution of Equity in Sponsor
Holdings to Niska Canada.  Niska II Holdings hereby
distributes its      %
equity interest in Sponsor Holdings to Niska Canada as a return of Niska
Canada’s capital.

 

Section 3.17           Execution of Registration Rights
Agreement.  Sponsor Holdings and the Company shall
execute the registration rights agreement, in substantially the form attached
as Exhibit 10.7 to the Registration Statement, pursuant to which the
Company shall agree to register with the Commission certain equity interests in
the Company in accordance with the terms provided therein.

 

Section 3.18           Underwriters’ Cash Contribution. 
The Parties acknowledge that the Company is undertaking the Offering,
and the Underwriters will, pursuant to the Underwriting Agreement, agree to
make a capital contribution to the Company of an amount determined pursuant to
the terms of the Underwriting Agreement in exchange for the issuance by the
Partnership to the Underwriters of the Firm Units.

 

9

 

ARTICLE IV

 

DEFERRED ISSUANCE AND
DISTRIBUTION

 

Section 4.1             Deferred Issuance and
Distribution.  Upon the earlier to occur of the expiration
of the Over-Allotment Option period or the exercise in full of the
Over-Allotment Option, the Company shall issue to Sponsor Holdings a number of
additional Common Units that is equal to the excess, if any, of (x) the total
number of Option Units over (y) the aggregate number of Common Units, if
any, actually purchased by and issued to the Underwriters pursuant to the
exercise(s) of the Over-Allotment Option. 
Upon each exercise of the Over-Allotment Option, the Company shall distribute
to Sponsor Holdings an amount of cash equal to the net proceeds (after
underwriting discounts) of each such exercise.

 

ARTICLE V

 

MISCELLANEOUS PROVISIONS

 

Section 5.1             Effective Time. 
Notwithstanding anything contained in this Agreement to the contrary,
the provisions of Article II, Article III, Article IV and
Section 5.2 shall not be binding or have any effect until the Company
executes the Underwriting Agreement, at which time all such provisions shall be
effective and operative without further action by any Party hereto.

 

Section 5.2             Further Assurances.  From time to time, and without any further
consideration, the Parties agree to execute, acknowledge and deliver all such
additional deeds, assignment, bills of sale, conveyances, instruments, notices,
releases, acquittances and other documents, and to do all such other acts and
things, all in accordance with applicable law, as may be necessary or
appropriate (a) more fully to assure that the applicable Parties own all
of the properties, rights, titles, interests, estates, remedies, powers and
privileges granted by this Agreement, or which are intended to be so granted,
(b) more full and effectively to vest in the applicable Parties and their
respective successors and assigns beneficial and record title to the interests
contributed and assigned by this Agreement or intended to be so and
(c) more fully and effectively to carry out the purposes and intend of
this Agreement.

 

Section 5.3             Headings; References,
Interpretation.  All Article and Section headings in
this Agreement are for convenience only and shall not be deemed to control or
affect the meaning or construction of any of the provisions hereof. The words
“hereof,” “herein” and “hereunder” and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole, including, without
limitation, all Schedules and Exhibits attached hereto, and not to any
particular provision of this Agreement. All references herein to Articles,
Sections, Schedules and Exhibits shall, unless the context requires a different
construction, be deemed to be references to the Articles and Sections of this
Agreement and the Schedules and Exhibits attached hereto, and all such
Schedules and Exhibits attached hereto are hereby incorporated herein and made
a part hereof for all purposes. All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender, shall include all
other genders, and the singular shall include the plural and vice versa. The
use herein of the word “including” following any general statement, term or
matter shall not be construed to limit such statement, term or 

 

10

 

matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
non-limiting language (such as “without limitation,” “but not limited to” or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that could reasonably fall within
the broadest possible scope of such general statement, term or matter.

 

Section 5.4             Successors and Assigns. 
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors and assigns.

 

Section 5.5             No Third Party Rights. 
The provisions of this Agreement are intended to bind the Parties as to
each other and are not intended to and do not create rights in any other person
or confer upon any other person any benefits, rights or remedies, and no person
is or is intended to be a third party beneficiary of any of the provisions of
this Agreement.

 

Section 5.6             Counterparts. 
This Agreement may be executed in any number of counterparts with the
same effect as if all signatory Parties had signed the same document. All
counterparts shall be construed together and shall constitute one and the same
instrument.  The delivery of an executed
counterpart copy of this Agreement by facsimile or electronic transmission in
PDF format shall be deemed to be the equivalent of the delivery of originally
executed copy thereof.

 

Section 5.7             Applicable Law; Forum, Venue and
Jurisdiction.

 

(a)           This Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of law.

 

(b)           Each
of the Parties:

 

(i)            irrevocably agrees that any claims,
suits, actions or proceedings arising out of or relating in any way to this
Agreement shall be exclusively brought in the Court of Chancery of the State of
Delaware;

 

(ii)           irrevocably submits to the exclusive
jurisdiction of the Court of Chancery of the State of Delaware in connection
with any such claim, suit, action or proceeding;

 

(iii)          agrees not to, and waives any right
to, assert in any such claim, suit, action or proceeding that (A) it is
not personally subject to the jurisdiction of the Court of Chancery of the
State of Delaware or of any other court to which proceedings in the Court of
Chancery of the State of Delaware may be appealed, (B) such claim, suit,
action or proceeding is brought in an inconvenient forum, or (C) the venue
of such claim, suit, action or proceeding is improper;

 

(iv)          expressly waives any requirement for
the posting of a bond by a party bringing such claim, suit, action or proceeding;

 

(v)           consents to process being served in
any such claim, suit, action or proceeding by mailing, certified mail, return
receipt requested, a copy thereof to such 

 

11

 

party at the address in effect
for notices hereunder, and agrees that such services shall constitute good and
sufficient service of process and notice thereof; provided, nothing in clause
(v) hereof shall affect or limit any right to serve process in any other
manner permitted by law.

 

Section 5.8             Severability. If any of the provisions of this
Agreement are held by any court of competent jurisdiction to contravene, or to
be invalid under, the laws of any political body having jurisdiction over the
subject matter hereof, such contravention or invalidity shall not invalidate
the entire Agreement. Instead, this Agreement shall be construed as if it did
not contain the particular provisions or provisions held to be invalid and an
equitable adjustment shall be made and necessary provision added so as to give
effect to the intention of the Parties as expressed in this Agreement at the
time of execution of this Agreement.

 

Section 5.9             Amendment
or Modification.
This Agreement may be amended or modified from time to time only by the written
agreement of all the Parties. Each such instrument shall be reduced to writing
and shall be designated on its face as an amendment to this Agreement.

 

Section 5.10           Integration. This Agreement and the instruments
referenced herein supersede all previous understandings or agreements among the
Parties, whether oral or written, with respect to the subject matter of this
Agreement and such instruments. This Agreement and such instruments contain the
entire understanding of the Parties with respect to the subject matter hereof
and thereof. No understanding, representation, promise or agreement, whether
oral or written, is intended to be or shall be included in or form part of this
Agreement unless it is contained in a written amendment hereto executed by the
Parties after the date of this Agreement.

 

Section 5.11           Deed;
Bill of Sale; Assignment. To the extent required and permitted by applicable law, this
Agreement shall also constitute a “deed,” “bill of sale” or “assignment” of the
assets and interests referenced herein.

 

[THE REMAINDER OF THIS PAGE IS
LEFT INTENTIONALLY BLANK]

 

12

 

IN WITNESS WHEREOF, the parties to this Agreement have caused it to be
duly executed as of the date first above written.

 

	
   

  	
  Niska
  GS Holdings US, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Niska
  Gas Storage Partners LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Niska
  Partners Coöpertief U.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Niska
  II Holdings, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Niska
  Holdco ULC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

Signature Pages to Contribution,
Assignment and Assumption Agreement

 

 

	
   

  	
  Niska
  GP ULC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Niska
  II GP LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Niska
  Gas Storage Canada GP, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Niska
  GS Holdings II, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Niska
  Sponsor Holdings Coöpertief, U.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

Signature Pages to Contribution,
Assignment and Assumption Agreement

 

 

	
   

  	
  Niska
  GS Holdings Canada, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Niska
  Gas Storage Management LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AECO
  Gas Storage Partnership

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Niska
  Gas Storage US LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Niska
  Gas Storage Canada, ULC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

Signature Pages to Contribution,
Assignment and Assumption Agreement

 

 

	
   

  	
  Niska
  Gas Storage Canada, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

Signature Pages to Contribution,
Assignment and Assumption Agreement

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