Document:

exv10w32

IMAX CORPORATION

EXHIBIT 10.32

SECURITIES PURCHASE AGREEMENT

          SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of May 5, 2008, by and between IMAX
Corporation, a corporation incorporated under the federal laws of Canada (the “Company”), and each
of the entities whose names appear on the signature page hereof (each, an “Investor” and
collectively, the “Investors”).

     A. The Company wishes to sell to each Investor, and each Investor wishes to purchase, on the
terms and subject to the conditions set forth in this Agreement, common shares, without par value,
of the Company (the “Common Shares”). The aggregate number of Common Shares purchased and sold
pursuant to this Agreement shall be 2,726,447 Common Shares and shall collectively be referred to
herein as the “Securities”. The Securities shall be allocated among the Investors as is set forth
on the signature page hereto.

     B. The sale of the Securities by the Company to the Investors will be effected in reliance
upon the exemption from securities registration afforded by Section 4(2) under the Securities Act.

     In consideration of the mutual promises made herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each
Investor hereby agree as follows:

1. PURCHASE AND SALE OF THE SECURITIES.

     1.1 Closing. Upon the terms and subject to the satisfaction or waiver of the
conditions set forth herein, the Company agrees to sell and the Investors agree to purchase the
Securities for a purchase price equal to an amount per Common Share calculated as the average
closing price of the Common Shares on the Nasdaq Global Market over the five (5) Trading Days
ending on the last Trading Day prior to the later of (i) the date hereof and (ii) five (5) days
prior to the Closing Date (the “Per Share Price”). The aggregate purchase price shall be
determined by multiplying the Per Share Price by the total number of Common Shares being sold
hereunder (the “Purchase Price”). The date on which the closing of such purchase and sale occurs
(the “Closing”) is hereinafter referred to as the “Closing Date” and will be on or about May 8,
2008. If the Closing occurs on or before May 9, 2008, the Per Share Price will be $6.602, and the
Purchase Price will be $18,000,000.00. The Closing will be deemed to occur at the offices of
Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York 10022, when (A) this Agreement
has been executed and delivered by the Company and each Investor, (B) each of the conditions to the
Closing described in Section 5 of this Agreement has been satisfied or waived as specified
therein and (C) full payment of the Purchase Price has been made by the Investors to the Company by
wire transfer of immediately available funds against physical delivery by the Company of duly
executed certificates representing the Securities being purchased by the Investors, registered in
the name and address of the Investors as is set forth on the signature page hereto.

 

 

     1.2 Certain Definitions. When used herein, the following terms shall have the
respective meanings indicated:

          “Affiliate” means, as to a specified Person, a Person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common control with, the
specified Person. For the purposes of this definition, “control” (including the terms
“controlling” “controlled by” and “under common control with”) 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 the ownership of voting securities, by contract or otherwise.

          “beneficial ownership”, “beneficially own” and “beneficial owner” shall have the meaning set
forth in Rule 13d-3 (without regard to the 60-day provision in paragraph (d)(1)(i)) of the Exchange
Act.

          “Board of Directors” means the Company’s board of directors.

          “Business Day” means any day other than a Saturday, a Sunday or a day on which The NASDAQ
Global Market is closed or on which banks in The City of New York are required or authorized by law
to be closed.

          “Closing” has the meaning specified in Section 1.1 of this Agreement.

          “Closing Date” has the meaning specified in Section 1.1 of this Agreement.

          “Commission” means the Securities and Exchange Commission.

          “Common Shares” has the meaning specified in the preamble to this Agreement.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended (or any successor act),
and the rules and regulations thereunder (or respective successors thereto).

          “Filing
Deadline” has the meaning specified in Section 4.2(a) of this
Agreement.

          “First Quarter Form 10-Q” means the Company’s Form 10-Q for the fiscal quarter ended March 31,
2008 provided to the Investors in draft form.

          “GAAP” means United States generally accepted accounting principles, applied on a consistent
basis.

          “Governmental Authority” means any nation or government, any state, provincial or political
subdivision thereof having jurisdiction over the Company and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining to government,
including without limitation any stock exchange, securities market or self-regulatory organization.

          “Intellectual Property” has the meaning specified in Section 3.16 of this Agreement.

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          “Investor Party” has the meaning specified in Section 4.7 of this Agreement.

          “Law” means any applicable federal, state, local or foreign or provincial law, statute, code,
ordinance, rule, regulation, judgment, order, injunction, decree or agency requirement of or
undertaking to or agreement with any Governmental Authority, including common law.

          “Material Adverse Effect” means, with respect to any Person, any fact, circumstance, event,
change, effect or occurrence that, individually or in the aggregate with all other facts,
circumstances, events, changes, effects or occurrences (i) has or would be reasonably expected to
have a material adverse effect on or with respect to the business, results of operation or
financial condition of such Person and its Subsidiaries, if any, taken as a whole, or (ii) that
prevents or materially delays or materially impairs the ability of such Person to consummate the
transactions contemplated by this Agreement.

          “Person” means any individual, corporation, trust, association, company, partnership, joint
venture, limited liability company, joint stock company, Governmental Authority or other entity.

          “Principal Market” means the NASDAQ Global Market or such other principal exchange or market
on which the Common Shares are then listed or traded.

          “Prospectus” has the meaning specified in Section 4.2(c) of this Agreement.

          “Purchase Price” has the meaning specified in Section 1.1 of this Agreement.

          “Registration Deadline” has the meaning specified in Section 4.2(b) of this Agreement.

          “Registration Default” has the meaning specified in Section 4.4(e) of this Agreement.

          “Registration Penalty” has the meaning specified in Section 4.4(e) of this Agreement.

          “Registration Statement” has the meaning specified in Section 4.2(a) of this
Agreement.

          “Registration Statement Termination Date” has the meaning specified in Section 4.2(c)
of this Agreement.

          “Rule 144” means Rule 144 under the Securities Act or any successor provision.

          “SEC Reports” means (i) the Company’s Form 10-K for the fiscal year ended December 31, 2007
filed with the Securities and Exchange Commission on March 17, 2008, (ii) each form, document,
statement and report filed by the Company since March 17, 2008, and (iii) the First Quarter Form
10-Q.

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          “Securities” has the meaning specified in the preamble to this Agreement.

          “Securities Act” means the Securities Act of 1933, as amended (or any successor act), and the
rules and regulations thereunder (or respective successors thereto).

          “Subsidiary” means, with respect to any Person, any corporation or other entity of which at
least a majority of the outstanding shares of stock or other ownership interests having by the
terms thereof ordinary voting power to elect a majority of the board of directors (or Persons
performing similar functions) of such corporation or entity (regardless of whether or not at the
time, in the case of a corporation, stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned or controlled by such Person or one or more of its Subsidiaries or by
such Person and one or more of its Subsidiaries.

          “Suspension” has the meaning specified in Section 4.4(b) of this Agreement.

          “Suspension Notice” has the meaning specified in Section 4.4(b) of this Agreement.

          “Takedown Notice” has the meaning specified in Section 4.4(c) of this Agreement.

          “Trading Day” means any day on which the Common Shares are purchased and sold on the Principal
Market.

          “Trading Market” means the NASDAQ Global Market or the Toronto Stock Exchange, or any national
securities exchange, market or trading or quotation facility on which the Common Shares are then
listed or quoted.

     1.3 Other Definitional Provisions. All definitions contained in this Agreement are
equally applicable to the singular and plural forms of the terms defined. The words “hereof”,
“herein” and “hereunder” and words of similar import referring to this Agreement refer to this
Agreement as a whole and not to any particular provision of this Agreement.

2. REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR.

     Each Investor hereby represents and warrants to the Company and agrees with the Company, that,
as of the date hereof:

     2.1 Enforceability. Such Investor has the requisite power and authority to purchase
the Securities to be purchased by it hereunder and to execute, deliver and perform its obligations
pursuant to this Agreement. This Agreement constitutes, upon execution and delivery thereof, such
Investor’s valid and legally binding obligation, enforceable in accordance with its terms, subject
to (i) applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other
similar laws of general application relating to or affecting the enforcement of creditors’ rights
generally and (ii) general principles of equity.

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     2.2 Investor Status. At the time such Investor was offered the Securities, such
Investor was and at the date hereof, is (i) an “accredited investor” as defined in Rule 501 of
Regulation D under the Securities Act, (ii) not formed or organized with the specific purpose of
making an investment in the Company and (iii) not a resident of or located in Canada. Such
Investor’s financial condition is such that it is able to bear the risk of holding the Securities
for an indefinite period of time and the risk of loss of its entire investment. Such Investor has
such knowledge and experience in business and financial matters so as to enable it to understand
the risks of and form an investment decision with respect to its investment in the Securities.

     2.3 Purchase Entirely for Own Account. Such Investor is acquiring the Securities for
its own account and not with a view to, or for sale in connection with, any distribution of the
Securities in violation of the Securities Act. Such Investor has no present agreement,
undertaking, arrangement, obligation or commitment providing for the disposition of the Securities.

     2.4 Information. Such Investor acknowledges that it has been provided with
information regarding the business, operations and financial condition of the Company and has,
prior to the date hereof, been granted the opportunity to ask questions of and receive answers from
representatives of the Company, its officers, directors, employees and agents concerning the
Company in order for such Investor to make an informed decision with respect to its investment in
the Securities. Such Investor has sought such accounting, legal and tax advice as it deems
appropriate in connection with its proposed investment in the Securities.

     2.5 Securities Not Registered in the United States. Such Investor understands that
the Securities have not been registered under the Securities Act, by reason of their issuance by
the Company in a transaction exempt from the registration requirements of the Securities Act, and
that the Securities must continue to be held by such Investor until a subsequent disposition
thereof is registered under the Securities Act, including pursuant to the Registration Statement,
or is exempt from such registration.

     2.6 Securities Not Qualified in Canada. Such Investor also understands that the
Securities will not be qualified for sale under the securities laws of any province or territory of
Canada.

     2.7 Reliance on Exemptions. Such Investor understands that the Securities are being
offered and sold to it in reliance upon specific exemptions from the registration requirements of
U.S. federal and state securities laws and that the Company is relying upon the truth and accuracy
of the representations and warranties of such Investor set forth in this Section 2 in order
to determine the availability of such exemptions and the eligibility of such Investor to acquire
the Securities.

     2.8 Common Stock Ownership. Such Investor’s investment in the Securities is not for
the purpose of acquiring, directly or indirectly, control of, and they have no intent to acquire or
exercise control of, the Company or to influence the decisions or policies of the Board of
Directors.

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     2.9 Investors’ Financing. At the Closing, such Investor will have all funds necessary
to pay to the Company the Purchase Price for the Securities being purchased by such Investor hereby
in immediately available funds.

     2.10 Brokers. Such Investor has not retained, utilized or been represented by any
broker or finder in connection with the transactions contemplated by this Agreement whose fees the
Company would be required to pay.

     2.11 No Governmental Review. Such Investor understands that no Governmental Authority
has passed on or made any recommendation or endorsement of the Securities or the fairness or
suitability of the investment in the Securities nor have such authorities passed upon or endorsed
the merits of the offering of the Securities.

     2.12 No General Solicitation. Such Investor is not purchasing the Securities as a
result of any advertisement, article, notice or other communication published in a newspaper or
magazine or similar media or broadcast over television or radio, whether closed circuit, or
generally available, or any seminar, meeting or other conference whose attendees were invited by
any general solicitation or general advertising.

     2.13 Trading in Common Shares. Since the date such Investor initially was contacted
by the Company through the date of this Agreement, such Investor has not entered into any purchase
or sale of Common Shares or executed any Short Sales. For purposes of this Section, “Short Sales”
means all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls,
short sales, swaps (including on a total return basis) and sales. Such Investor covenants that
neither it nor any Person acting on its behalf or pursuant to any understanding with it, will
engage in any transactions in the Common Shares (including Short Sales) prior to the time that the
transactions contemplated by this Agreement are publicly disclosed.

     2.14 Reliance on Information. Such Investor has, in connection with such Investor’s
decision to purchase the Securities, not relied upon any representations or other information
(whether oral or written) other than as set forth in the representations and warranties of the
Company contained herein and in the SEC Reports, and such Investor has, with respect to all matters
relating to this Agreement and the offer and sale of the Securities, relied solely upon the advice
of such Investor’s own counsel and has not relied upon or consulted counsel of the Company.

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and
warrants to each Investor and agrees with each Investor that, as of the date hereof:

     3.1 Organization, Good Standing and Qualification. The Company is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its organization, with
all requisite power and authority to carry on its business as now conducted. Except as would not,
individually or in the aggregate, result in a Material Adverse Effect, each of the Subsidiaries of
the Company is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, with all requisite power and authority to carry on its business
as now conducted. The Company and each of its Subsidiaries is duly qualified to do business and is
in good standing in each jurisdiction in which it conducts business except where the failure
so to qualify has not had or would not have a Material Adverse
Effect. Neither the Company nor

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any
of its Subsidiaries is in violation of its certificate of incorporation, by-laws or other
equivalent organizational or governing documents, except where the violation in the case of a
Subsidiary of the Company would not, individually or in the aggregate, have a Material Adverse
Effect.

     3.2 Authorization; Consents. The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement and to issue and sell the
Securities to the Investors in accordance with the terms hereof. All consents, approvals, orders
and authorizations required on the part of the Company or its Subsidiaries in connection with the
execution, delivery or performance of this Agreement have been obtained or made, other than such
consents, approvals, orders and authorizations the failure of which to make or obtain would not
have a Material Adverse Effect.

     3.3 Enforcement. This Agreement has been duly executed and delivered by the Company.
This Agreement constitutes the valid and legally binding obligation of the Company, enforceable
against it in accordance with its terms, subject to (i) applicable bankruptcy, insolvency,
fraudulent transfer, moratorium, reorganization or other similar laws of general application
relating to or affecting the enforcement of creditors’ rights generally, (ii) general principles of
equity and (iii) with respect to the enforcement of any rights to indemnity and contribution,
federal and state securities laws and principles of public policy.

     3.4 SEC Reports. The Company has filed on a timely basis with the SEC all SEC
Reports. The SEC Reports constitute all of the documents required to be filed by the Company with
the Commission under Section 13 or 14 of the Exchange Act since December 31, 2007. Each SEC Report
other than the First Quarter Form 10-Q, as of the date of the filing thereof with the Commission
(or if amended or superseded by a filing prior to the date hereof, then on the date of such
amending or superseding filing) or as of the date hereof in the case of the First Quarter Form
10-Q, complied in all material respects with the requirements of the Securities Act or Exchange
Act, as applicable, and the rules and regulations promulgated thereunder. The SEC Reports, at the
time they were filed (or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such amending or superseding filing) and as of the date hereof, did not and do
not contain any untrue statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. As of their respective dates (or if
amended or superseded by a filing prior to the date hereof, then on the date of such amending or
superseding filing), the financial statements of the Company included in the SEC Reports
(including, in each case, any related notes), including any SEC Reports filed after the date of
this Agreement until the Closing, complied or will comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements have been or will be
prepared in accordance with GAAP consistently applied at the times and during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may
be condensed or summary statements as permitted by Form 10-Q of the Commission) and fairly present
in all material respects the financial position of the Company as
of the dates thereof and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end adjustments).

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     3.5 Absence of Certain Changes. Except as otherwise disclosed in the SEC Reports,
since December 31, 2007, the Company and its subsidiaries have conducted their business in the
ordinary course and, since such date, the Company has not suffered any change or effect that has
resulted, or would result, in a Material Adverse Effect.

     3.6 Capitalization. The capitalization of the Company, including its authorized
capital stock, the number of shares issued and outstanding, the number of shares issuable and
reserved for issuance pursuant to the Company’s stock option plans and agreements and the number of
shares issuable and reserved for issuance pursuant to securities exercisable for, or convertible
into or exchangeable for any Common Shares, is as set forth in the SEC Reports. All outstanding
shares of the Company have been duly authorized, validly issued, fully paid and are nonassessable
and free of any liens or encumbrances created by the Company and are not subject to preemptive
rights. Other than as contemplated by this Agreement and as described in the SEC Reports, there
are no options, warrants, calls, rights, commitments, preemptive rights, rights of first refusal or
other agreements to which the Company is a party or by which it is bound obligating the Company to
issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of the capital stock of the Company or obligating the Company to grant, extend
or enter into any such option, warrant, call, right, commitment or agreement. No preemptive right,
co-sale right, right of first refusal or other similar right exists with respect to the Securities
or the issuance and sale thereof. No further approval or authorization of any stockholder, the
Board of Directors or others is required for the issuance and sale of the Securities. Except as
set forth in the SEC Reports, no holder of any of the securities of the Company or any of its
Subsidiaries has any rights (“demand”, “piggyback” or otherwise) to have such securities registered
by reason of the intention to file, filing or effectiveness of the Registration Statement.

     3.7 Due Authorization; Valid Issuance. The Securities are duly authorized and, when
issued in accordance with the terms of this Agreement, will be duly and validly issued, fully paid
and nonassessable, free of pre-emptive or similar rights and free and clear of all liens,
encumbrances and other restrictions (other than those arising under federal, provincial or state
securities laws as a result of the private placement contemplated hereby).

     3.8 No Conflict. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (i) conflict with, or result in any
violation of any provisions of the Company’s charter, bylaws or any other organizational or charter
document, (ii) conflict with, result in any violation or breach of, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse
of time or both) of, any agreement, lease, credit facility, debt, note, bond, mortgage, indenture
or other instrument or obligation (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound, or affected, except to the extent that such conflict,
default, termination, amendment, acceleration or cancellation right would not have a Material
Adverse Effect, or (iii) result in a violation of any Law to which the
Company or a Subsidiary is subject, or by which any property or asset of the Company or a
Subsidiary is bound or affected, except to the extent that such violation would not have a Material
Adverse Effect.

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     3.9 General Solicitation; No Integration. Neither the Company nor any of its
Affiliates, nor any person acting on its or their behalf, has engaged in a general solicitation or
general advertising (within the meaning of Regulation D) of investors with respect to offers or
sales of the Securities. Assuming the accuracy of the Investors’ representations and warranties
set forth in Section 2 of this Agreement, the Company has not, directly or indirectly,
sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security
(as defined in the Securities Act) which, to its knowledge, is or will be integrated with the
Securities sold pursuant to this Agreement.

     3.10 Listing and Maintenance Requirements. The Company has no action pending to
delist the Common Shares from any Trading Market on which the Common Shares are or have been listed
or quoted, nor has the Company received any notification that any such Trading Market is currently
contemplating terminating such listing, and the Company has complied with all notification and
filing requirements as may be required pursuant to the rule and regulations of the Principal Market
with respect the sale of Securities contemplated hereby.

     3.11 Compliance with Laws. The Company has complied with, is not in violation of, and
has not received any notices of violation with respect to, any federal, state or local statute, law
or regulation with respect to the conduct of its business, or the ownership or operation of its
business, except for failures to comply or violations which would not have a Material Adverse
Effect.

     3.12 Disclosure. No statements by the Company contained in this Agreement, its
exhibits and schedules, or any of the certificates or documents, required to be delivered by the
Company to the Investors under this Agreement contain any untrue statement of material fact or
omits (when read together with all such other statements) to state a material fact necessary in
order to make the statements contained herein or therein not misleading in light of the
circumstances under which they were made.

     3.13 Stockholder Consent. No consent or approval of the stockholders of the Company
is required or necessary for the Company to enter into this Agreement or to consummate the
transactions contemplated hereby and thereby.

     3.14 Litigation. Except as otherwise disclosed in the SEC Reports, (i) there is no
private or governmental action, suit, proceeding, claim, arbitration or investigation pending
before any agency, court or tribunal, foreign or domestic, or, to the knowledge of the Company or
any of its Subsidiaries, threatened against the Company or any of its properties or any of its
officers or directors (in their capacities as such), which would have a Material Adverse Effect,
and (ii) there is no judgment, decree or order against the Company, or, to the knowledge of the
Company, any of its respective directors or officers (in their capacities as such) relating to the
business of the Company, the presence of which would have a Material Adverse Effect. To the
Company’s knowledge, no circumstances exist that could form a valid basis for a claim against the
Company as a result of the conduct of the Company’s business (including, without limitation,
any claim of infringement of any intellectual property right) that would have a Material
Adverse Effect.

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     3.15 Governmental Permits. Each of the Company and its Subsidiaries has all necessary
franchises, licenses, certificates and other authorizations from any foreign, federal, state or
local government or governmental agency, department, or body that are currently necessary for the
operation of the business of the Company and its Subsidiaries as currently conducted, except where
the failure to currently possess would not have a Material Adverse Effect.

     3.16 Intellectual Property. Each of the Company and its Subsidiaries owns or
possesses sufficient rights to use all patents, patent rights, trademarks, copyrights, licenses,
inventions, trade secrets, trade names and know-how (collectively, “Intellectual Property”) that
are necessary for the conduct of its business as now conducted except where the failure to
currently own or possess would not have a Material Adverse Effect. Except as set forth in the SEC
Reports, (i) neither the Company nor any of its Subsidiaries has received any notice of, or has any
knowledge of, any infringement of asserted rights of a third party with respect to any Intellectual
Property that, individually or in the aggregate, would have a Material Adverse Effect and
(ii) neither the Company nor any of its Subsidiaries has received any notice of any infringement
rights by a third party with respect to any Intellectual Property that, individually or in the
aggregate, would have a Material Adverse Effect.

4. OTHER AGREEMENTS OF THE PARTIES.

     4.1 Transfer Restrictions.

          (a) Each Investor covenants that the Securities will only be disposed of pursuant to an
effective registration statement under, and in compliance with the requirements of, the Securities
Act (including pursuant to the Registration Statement) or pursuant to an available exemption from
the registration requirements of the Securities Act, and in compliance with any applicable state
securities laws. As the Securities will not be qualified for sale under the securities laws of any
province or territory of Canada, each Investor agrees that it will not offer, sell or distribute
any of the Securities, directly or indirectly, in Canada or to, or for the benefit of, any resident
thereof before the date that is four months and one day after the Closing Date, and after such
time, only in accordance with Canadian securities law. In connection with any transfer of
Securities other than pursuant to an effective registration statement (including the Registration
Statement) or to the Company, the Company may require the transferor to provide to the Company an
opinion of counsel selected by the transferor, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does not require
registration under the Securities Act. Notwithstanding the foregoing, the Company hereby consents
to and agrees to register on the books of the Company and with its transfer agent, without any such
legal opinion, except to the extent that the transfer agent requests such legal opinion, any
transfer of Securities in the following circumstances:

     (x) as contemplated in the Registration Statement;

     (y) by an Investor to an Affiliate of such Investor, provided that the
transferee certifies to the Company that (i) it is an Affiliate of the Investor and
(ii) it is an “accredited investor” as defined in Rule 501(a) under the Securities
Act,

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and further provided that such Affiliate does not request any removal of any
existing legends on any certificate evidencing the Securities; and

     (z) in connection with a bona fide pledge or hypothecation of any Securities
under a margin arrangement with a broker-dealer or other financial institution or
the sale of any such Securities by such broker-dealer or other financial institution
following such Investor’s default under such margin arrangement.

          (b) Each Investor agrees to the imprinting, so long as is required by this Section
4.1(b), of a legend on any certificate evidencing Securities substantially to the following
effect:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S.
SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES,
AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE
904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (C) PURSUANT TO
THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, (D) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, OR
(E) IN COMPLIANCE WITH CERTAIN OTHER PROCEDURES SATISFACTORY TO THE
CORPORATION, IN EACH CASE IN COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS.

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN QUALIFIED FOR SALE
UNDER THE SECURITIES LAWS OF ANY PROVINCE OR TERRITORY OF CANADA.
THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE
BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY NOT BE OFFERED,
SOLD OR DISTRIBUTED, DIRECTLY OR INDIRECTLY, IN CANADA OR TO, OR FOR
THE BENEFIT OF, ANY RESIDENT THEREOF BEFORE
SEPTEMBER 9, 2008 AND AFTER SUCH TIME, ONLY IN ACCORDANCE WITH
CANADIAN SECURITIES LAW.

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DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN
SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”

     4.2 Registration Rights — Obligations of the Company. The Company shall:

          (a) subject to receipt of necessary information from the Investors, prepare and file with the
Commission, on or before the date which is 210 days from the date hereof (the “Filing Deadline”), a
registration statement (the “Registration Statement”) to enable the resale of the Securities by the
Investors from time to time on the Principal Market or in privately-negotiated transactions;

          (b) use commercially reasonable efforts, subject to receipt of necessary information from the
Investors, to cause the Registration Statement to become effective within 90 days after the
Registration Statement is filed by the Company (the “Registration Deadline”);

          (c) prepare and file with the Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection therewith (the “Prospectus”) and take all other
such actions (subject to Section 4.2.(d) and Section 4.2(e)) as may be necessary to
keep the Registration Statement current and effective for a period not exceeding the earlier of
(i) the date on which the Investors may sell all Securities then held by the Investors without
restriction by the volume limitations of Rule 144(e) of the Securities Act, as determined by the
Investors in their entire discretion or (ii) such time as all Securities purchased by the Investors
pursuant hereto have been sold pursuant to a Registration Statement (the “Registration Statement
Termination Date”);

          (d) promptly furnish to the Investors with respect to the Securities registered under the
Registration Statement such number of copies of the Registration Statement, Prospectuses and
preliminary Prospectuses in conformity with the requirements of the Securities Act and such other
documents as the Investors may reasonably request, in order to facilitate the public sale or other
disposition of all or any of the Securities by the Investors; provided, however, that the
obligation of the Company to deliver copies of Prospectuses or preliminary Prospectuses to an
Investor shall be subject to the receipt by the Company of reasonable assurances from such Investor
that such Investor will comply with the applicable provisions of the Securities Act and of such
other securities or blue sky laws as may be applicable in connection with any use of such
Prospectuses or preliminary Prospectuses;

          (e) file documents required of the Company for normal blue sky clearance in states specified
in writing by the Investors; provided, however, that the Company shall not be required to qualify
to do business or consent to service of process in any jurisdiction in which it is not now so
qualified or has not so consented;

          (f) bear all expenses in connection with the procedures in paragraph (a) through (e) of this
Section 4.2 and the registration of the Securities pursuant to the Registration Statement
(which shall include, for the avoidance of doubt, reasonable expenses of one counsel
chosen by the Investors for the review of the Registration Statement), regardless of whether a
Registration Statement becomes effective; provided, however, that reimbursement for expenses of one
counsel chosen by the Investors for the review of the Registration Statement shall be limited to a
maximum of US$50,000, in the aggregate, of such reasonable, actual fees and expenses; and

12

 

          (g) advise the Investors, promptly (i) after it shall receive notice or obtain knowledge of
the issuance of any stop order by the Commission delaying or suspending the effectiveness of the
Registration Statement or of the initiation or threat of any proceeding for that purpose; and it
will promptly use its reasonable efforts to prevent the issuance of any stop order or to obtain its
withdrawal at the earliest possible moment if such stop order should be issued, (ii) when the
Prospectus or any Prospectus Supplement or post-effective amendment has been filed, and, with
respect to the Registration Statement or any post-effective amendment thereto, when the same has
become effective; and (iii) subject to Section 4.2(d), after the Company shall receive
notice or obtain knowledge of the existence of any fact or the happening of any event that makes
any statement of a material fact made in the Registration Statement, the Prospectus, any amendment
or supplement thereto, or any document incorporated by reference therein untrue, or that requires
the making of any additions to or changes in the Registration Statement or the Prospectus in order
to make the statements therein not misleading.

     4.3 Registration Rights — Obligations of the Investors. Each Investor agrees that it
will:

          (a) promptly notify the Company of any changes in the information set forth in the
Registration Statement regarding such Investor or their plan of distribution;

          (b) after the Registration Statement has become effective, sell all of the Securities before
any other Common Shares beneficially owned by such Investor or by any Affiliate of such Investor
are sold;

          (c) promptly notify the Company when all of the Securities have been sold; and

          (d) promptly notify the Company at such time as the Investors may sell all Securities then
held by the Investors without restriction by the volume limitations of Rule 144(e) of the
Securities Act and the date of such determination.

     4.4 Maintenance of Registration Statement.

          (a) Except in the event that either or both of paragraphs (d) or (e) below applies, the
Company shall promptly (i) prepare and file from time to time with the Commission a post-effective
amendment to the Registration Statement or a supplement to the related Prospectus or a supplement
or amendment to any document incorporated therein by reference or file any other required document
so that such Registration Statement will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the statements therein
not misleading, and so that, as thereafter delivered to purchasers of the Securities being sold
thereunder, such Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading; (ii) provide the Investors copies of any documents filed pursuant to Section 4.4(a)(i); and (iii) inform each Investor that the Company has complied with its
obligations in

13

 

Section 4.4(a)(i) (or that, if the Company has filed a post-effective
amendment to the Registration Statement which has not yet been declared effective, the Company will
notify the Investors to that effect, will use its reasonable efforts to secure the effectiveness of
such post-effective amendment as promptly as possible and will promptly notify the Investors when
the amendment has become effective).

               (b) Subject to paragraph (c) below, in the event of (i) any request by the Commission or any
other federal or state governmental authority during the period of effectiveness of the
Registration Statement for amendments or supplements to the Registration Statement or related
Prospectus or for additional information; (ii) the issuance by the Commission or any other federal
or state governmental authority of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose; (iii) the receipt by the Company
of any notification with respect to the suspension of the qualification or exemption from
qualification of any of the Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; or (iv) any event or circumstance which
necessitates the making of any changes in the Registration Statement or Prospectus, or any document
incorporated or deemed to be incorporated therein by reference, so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material fact or any omission
to state a material fact required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the Prospectus, it will not contain any untrue statement of
a material fact or any omission to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which they were made, not
misleading; then the Company shall cause to be received by the Investors a certificate in writing
to the Investors (the “Suspension Notice”) to the effect of the foregoing and, upon receipt of such
Suspension Notice, each Investor will refrain from selling any Securities not already sold pursuant
to the Registration Statement (a “Suspension”) until such Investor’s receipt of copies of a
supplemented or amended Prospectus prepared and filed by the Company, or until it is advised in
writing by the Company that the current Prospectus may be used, and has received copies of any
additional or supplemental filings that are incorporated or deemed incorporated by reference in any
such Prospectus. Subject to paragraph (c) below, in the event of any Suspension, the Company will
use commercially reasonable efforts to cause the use of the Prospectus so suspended to be resumed
as soon as reasonably practicable after the delivery of a Suspension Notice to the Investors. In
addition to and without limiting any other remedies (including, without limitation, at law or at
equity) available to the Investors, the Investors shall be entitled to specific performance in the
event that the Company fails to comply with the provisions of this Section 4.4(b).

               (c) Notwithstanding anything in this Agreement to the contrary, if the Company shall furnish
to the Investors a certificate (a “Takedown Notice”) signed by the President or Chief Executive
Officer of the Company, stating that its Board of Directors has made the good faith determination
(i) that continued use by the Investors of the Registration Statement for purposes of effecting
offers or sales of the Securities pursuant thereto would require, under the Securities Act,
premature disclosure in the Registration Statement (or the prospectus relating thereto) of
material, nonpublic information concerning the Company, its
business or prospects or any of its proposed material transactions, and (ii) that such
premature disclosure would be materially detrimental to the Company, then (x) the Company may
postpone

14

 

the filing or effectiveness of such Registration Statement, or (y) suspend the right of
the Investors to use the Registration Statement (and the prospectus relating thereto) for purposes
of effecting offers or sales of the Securities pursuant thereto. Upon receipt of a Takedown
Notice, each Investor will refrain from selling any Securities not already sold pursuant to the
Registration Statement (a “Takedown”) until such Investor’s receipt of copies of a supplemented or
amended Prospectus prepared and filed by the Company, or until it is advised in writing by the
Company that the current Prospectus may be used, and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference in any such
Prospectus. Notwithstanding the foregoing, the Company shall not under any circumstances be
entitled to exercise its right to postpone the filing or effectiveness of, or suspend the use of,
the Registration Statement more than two (2) times in any twelve (12) month period, and the
aggregate number of days during which the filing or effectiveness of, or the suspension of the use
of, the Registration Statement may be postponed or suspended shall not exceed ninety (90) days in
any such (12) month period. Each Investor hereby covenants and agrees that it will not sell any
Securities pursuant to the Registration Statement during a period in which the ability to sell
thereunder is suspended as set forth in this Section 4.4(c) and will maintain in confidence
the fact and content of any notice provided under this Section 4.4(c).

          The effectiveness of the Registration Statement may not be postponed and the rights of each
Investor to sell Securities under the Registration Statement may not be suspended under this
Section 4.4(c) unless the Company has similarly suspended distribution rights under any
other effective registration statement of which it is the registrant (except for registration
statements on Form S-8) and has similarly suspended the rights of its officers and directors to
trade in its securities for at least the same period.

          (d) Provided that a Suspension or a Takedown is not then in effect, each Investor may sell
Securities under the Registration Statement, provided that it arranges for delivery of a current
Prospectus to the transferee of such Securities. Upon receipt of a request therefor, the Company
has agreed to provide an adequate number of current Prospectuses to the Investors and to supply
copies to any other parties requiring such Prospectuses.

          (e) If (i) the Registration Statement is not filed on or before the Filing Deadline or
declared effective by the Commission on or before the Registration Deadline, (ii) after the
Registration Statement has been declared effective by the Commission, other than during a Takedown,
sales of Securities cannot be made by the Investors under the Registration Statement for any reason
not within the exclusive control of the Investors or (iii) other than during a Takedown, an
amendment or supplement to the Registration Statement, or a new registration statement, required to
be filed pursuant to the terms of this Agreement is not filed as required hereunder (each of the
events described in the foregoing clauses (i), (ii) and (iii) being referred to herein as a
“Registration Default”), the Company shall make cash payments to the Investors (the “Registration
Penalty”), as liquidated damages and not as a penalty, equal to three-quarters of one percent
(0.75%) of the Per Share Price for each of the Securities subject to the Registration Statement for
the first 90-day period or portion thereof following the Registration Default, and thereafter the
Registration Penalty shall increase by an incremental three-quarters of one percent (0.75%) of the
Per Share Price for each of the Securities subject to
the Registration Statement for each successive 90-day period or portion thereof during which
the Registration Default exists and is continuing, provided
that in no event shall the Registration Penalty exceed three
percent (3.00%) of the Purchase Price, provided further that

15

 

no Registration
Penalty shall accrue after the Registration Statement Termination Date, and provided further that
no Registration Penalty shall accrue during any Takedown. Upon the cure of all Registration
Defaults, the accrual of the Registration Penalty will automatically cease. The Registration
Penalty shall be computed based on the actual number of days elapsed in each 90-day period in which
a Registration Default exists, and each payment required to be made under this Section
4.4(e) shall be made within five (5) Business Days following the last day of each 90-day period
in which a Registration Default exists. Any such payment shall be the sole monetary remedy
available to the Investors pursuant to the terms hereof or otherwise.

     4.5 Use of Investor Name. Except as may be required by applicable law and/or this
Agreement, the Company shall not use, directly or indirectly, the name of any Investor or the name
of any Affiliate of any Investor in any advertisement, announcement, press release or other similar
communication unless it has received the prior written consent of such Investor for the specific
use contemplated or as otherwise required by applicable law or regulation.

     4.6 Listing. The Company hereby agrees to use reasonable best efforts to maintain the
listing and trading of its Common Shares on the NASDAQ Global Market and the Toronto Stock Exchange
(or another nationally recognized Trading Market). The Company further agrees, if the Company
applies to have the Common Shares traded on any other Trading Market, it will include in such
application the Securities, and will take such other action as is necessary or desirable to cause
all of the Securities to be listed on such other Trading Market as promptly as possible.

     4.7 Indemnification of Investors. (a) The Company will indemnify and hold each
Investor and, if applicable, their trustees, beneficiaries and agents (each, an “Investor Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs
and expenses, including all judgments, amounts paid in settlements, court costs and reasonable
attorneys’ fees and costs of investigation that any such Investor Party may suffer or incur as a
result of or relating to any action instituted against an Investor or its Affiliates with respect
to or based upon (i) in the case of the Registration Statement, any untrue statement of a material
fact or any omission to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and, in the case of any Prospectus, any untrue statement of
a material fact or any omission to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which they were made, not
misleading, and (ii) any breach of the Company’s representations, warranties or covenants under
this Agreement (unless such breach is based upon a breach of such Investor’s representations,
warranties or covenants under this Agreement or any violations by such Investor of state or federal
securities laws or any conduct by such Investor which constitutes fraud, gross negligence, willful
misconduct or malfeasance). If any action shall be brought against any Investor Party in respect
of which indemnity may be sought pursuant to this Agreement, such Investor Party shall promptly
notify the Company in writing, and the Company shall have the right to assume the defense thereof
with counsel of its own choosing. Any Investor Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Investor Party except to the extent
that (i) the employment thereof has been specifically authorized by the Company in writing,
(ii) the Company has failed after a reasonable period of time following such Investor Party’s
written request that it do so, to assume such defense and to employ counsel or

16

 

(iii) in
such action
there is, in the reasonable opinion of such separate counsel, a material conflict on any material
issue between the position of the Company and the position of such Investor Party. The failure of
an Investor Party to deliver written notice to the Company within a reasonable time of the delivery
of notice of any such action, to the extent materially prejudicial to its ability to defend such
action, shall relieve the Company of any liability to such Investor Party under this Section
4.7 with respect to such action, but the omission so to deliver written notice to the Company
will not relieve the Company of any liability that it may have to such Investor Party otherwise
than under this Section 4.7 or with respect to any other action. The Company will not be
liable to any Investor Party under this Agreement (i) for any settlement by an Investor Party
effected without the Company’s prior written consent, which shall not be unreasonably withheld or
delayed; or (ii) to the extent, but only to the extent, that a loss, claim, damage or liability is
attributable to such Investor Party’s fraud, gross negligence, willful misconduct or malfeasance or
to such Investor Party’s breach of any of the representations, warranties, covenants or agreements
made by such Investor in this Agreement.

          (b) In the event that the indemnity provided in this Section 4.7 is unavailable or
insufficient to hold harmless an Investor Party (other than by reason of exceptions provided
herein), the Company agrees to contribute to the aggregate Losses to which such Investor Party may
be subject in such proportion as is appropriate to reflect the relative fault of the Company and
such Investor Party in connection with the actions which resulted in such Losses as well as any
other relevant equitable considerations. The Company and the Investors agree that it would not be
just and equitable if contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this Section 4.7, no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent misrepresentation.

     4.8 Standstill.

          (a) Each Investor covenants and agrees that, except as set forth herein, neither such Investor
nor any of its Affiliates shall directly or indirectly, in one transaction or a series of related
transactions:

     (i) acquire, offer to acquire, or agree to acquire, directly or indirectly, by
purchase or otherwise, (x) any securities or direct or indirect rights to acquire
any securities of the Company or any Subsidiary of the Company, or of any successor
of the Company or any such Subsidiary, or (y) any assets of the Company or any
division thereof or of any successor of the Company or any Subsidiary of the
Company; provided, however, that the Investors shall be permitted to acquire,
directly or indirectly, by purchase or otherwise, such number of securities or
direct or indirect rights to acquire any securities of the Company as shall permit
the Investors and their Affiliates to maintain their ownership percentage at 19.9%
of the total issued and outstanding Common Shares;

     (ii) seek or propose to influence or control the management or policies of the
Company, make or in any way participate in, directly or indirectly,
any “solicitation” of “proxies” (as such terms are used in the rules of the Commission)
to vote any voting securities of the

17

 

Company or any Subsidiary, or seek to advise or
influence any person or entity with respect to the voting of any voting securities
of the Company or any Subsidiary;

     (iii) make any public announcement with respect to, or submit a proposal for or
offer of (with or without conditions), any merger, amalgamation, recapitalization,
reorganization, business combination or other extraordinary transaction involving
the Company or any Subsidiary or any of their securities or assets;

     (iv) enter into any discussions, negotiations, arrangements or understandings
with any third party with respect to any of the foregoing, or otherwise form, join
or in any way engage in discussions relating to the formation of, or participate in,
a “group” within the meaning of Section 13(d)(3) of the Exchange Act, or relating in
any way to, the Company or any of its securities;

     (v) sell or otherwise transfer Common Shares to any Person or any Persons
constituting a “group” within the meaning of Section 13(d)(3) of the Exchange Act,
which after such sale or transfer would be the beneficial or record owner of 5% or
more of the then outstanding Common Shares, unless each such Person agrees to be
subject to the restrictions of this Section 4.8; provided, however, that the
foregoing shall not apply to any sale or transfer of Common Shares in a bona fide
public offering or ordinary broker transactions; or

     (vi) request the Company, directly or indirectly, to amend or waive any
provision of this Section 4.8 in a manner that would require any public
disclosure by the Company, such Investor or any other Person.

          (b) Each Investor’s obligations under this Section 4.8, except for the obligations
under Section 4.8(a)(v), shall terminate immediately upon the fifth anniversary of this
Agreement and each Investor’s obligations under Section 4.8(a)(v) shall terminate upon the
earlier of (i) the fifth anniversary of this Agreement and (ii) the date when the Investors and
their Affiliates beneficially own less than 14.56% of the outstanding Common Shares.

5. CONDITIONS TO CLOSING.

          5.1 Conditions to Investors’ Obligations at the Closing. Each Investor’s obligations
to effect the Closing, including without limitation its obligation to purchase the Securities at
Closing, are conditioned upon the fulfillment (or waiver by such Investor in its sole and absolute
discretion) of each of the following events as of the Closing Date:

	 	5.1.1	 	the representations and warranties of the Company set forth in
this Agreement shall be true and correct in all material respects as of the
Closing Date as if made on such date (except that to the extent that any such
representation or warranty relates to a particular date,
such representation or warranty shall be true and correct in all
material respects as of that particular date); provided, however,
that such representations and warranties that are qualified by
materiality or Material Adverse Effect shall be true and correct in
all respects as so qualified;

18

 

	 	5.1.2	 	the Company shall have complied with or performed in all
material respects all of the agreements, obligations and conditions set forth
in this Agreement that are required to be complied with or performed by the
Company on or before the Closing;
	 
	 	5.1.3	 	the Company shall have delivered to such Investor a
certificate, signed by a Co-Chief Executive Officer of the Company or the Chief
Financial Officer of the Company and dated as of the Closing Date, certifying
(i) that the conditions specified in Sections 5.1.1 and 5.1.2 above
have been fulfilled, it being understood that such Investor may rely on such
certificate as though it were a representation and warranty of the Company made
herein, (ii) all resolutions of the Board of Directors (and committees thereof)
relating to the Agreement and the transactions contemplated thereby and (iii)
the incumbency of all officers of the Company executing the Agreements and any
other agreement or document contemplated thereby;
	 
	 	5.1.4	 	the Company shall have delivered to such Investor opinions
from McCarthy Tétrault LLP and/or Shearman & Sterling LLP, dated as of the
Closing Date, covering the matters set forth in Exhibit A;
	 
	 	5.1.5	 	the Company shall have delivered to such Investor a duly
executed certificate representing the Securities being purchased by such
Investor at the Closing;
	 
	 	5.1.6	 	trading in the Common Shares shall not have been suspended by
the Commission or any Trading Market (except for any suspensions of trading of
not more than one Trading Day solely to permit dissemination of material
information regarding the Company) at any time since the date of execution of
this Agreement, and the Common Shares shall have been at all times since such
date listed for trading on a Trading Market; and
	 
	 	5.1.7	 	there shall be no injunction, restraining order or decree of
any nature of any court or Government Authority of competent jurisdiction that
is in effect that restrains or prohibits the consummation of the transactions
contemplated hereby.

          5.2 Conditions to Company’s Obligations at the Closing. The Company’s obligations to
effect the Closing with each Investor are conditioned upon the fulfillment (or waiver by the
Company in its sole and absolute discretion) of each of the following events as of the Closing
Date:

19

 

	 	5.2.1	 	the representations and warranties of such Investor set forth
in this Agreement shall be true and correct in all material respects as of the
Closing Date as if made on such date (except that to the extent that any such
representation or warranty relates to a particular date, such representation or
warranty shall be true and correct in all material respects as of that date);
provided, however, that such representations and warranties that are qualified
by materiality or Material Adverse Effect shall be true and correct in all
respects as so qualified;
	 
	 	5.2.2	 	such Investor shall have complied with or performed all of the
agreements, obligations and conditions set forth in this Agreement that are
required to be complied with or performed by the Investor on or before the
Closing;
	 
	 	5.2.3	 	there shall be no injunction, restraining order or decree of
any nature of any court or Government Authority of competent jurisdiction that
is in effect that restrains or prohibits the consummation of the transactions
contemplated hereby; and
	 
	 	5.2.4	 	the Investors shall have tendered to the Company the Purchase
Price for the Securities being purchased by it at the Closing by wire transfer
of immediately available funds in accordance with the wire transfer
instructions set forth on Exhibit B hereto.

6. MISCELLANEOUS.

     6.1 Termination. This Agreement may be terminated by the Company or the Investors, by
written notice to the other party, if the Closing has not been consummated by May 16, 2008;
provided that no such termination will affect the right of any party to sue for any breach by the
other party (or parties).

     6.2 Survival; Severability. The covenants and indemnities, agreements,
representations and warranties made by the parties herein shall survive the Closing, provided,
however, that the representations and warranties set forth or made by each Investor herein will
terminate upon the final sale by such Investor of such Investor’s Securities. In the event that
any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and effect without said
provision; provided that in such case the parties shall negotiate in good faith to replace such
provision with a new provision which is not illegal, unenforceable or void, as long as such new
provision does not materially change the economic benefits of this Agreement to the parties.

     6.3 Successors and Assigns. The terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective successors and permitted assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and permitted assigns any rights,
remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement. Each Investor may assign their respective rights and obligations
hereunder, in

20

 

connection with any private sale or transfer of the Securities in accordance with the
terms hereof, as long as, as a condition precedent to such transfer, the transferee executes an
acknowledgment agreeing to be bound by the applicable provisions of this Agreement, in which case
the term “Investor” shall be deemed to refer to such transferee as though such transferee were an
original signatory hereto. The Company may not assign its rights or obligations under this
Agreement without the written consent of the Investors.

     6.4 No Reliance. Each party acknowledges that (i) it has such knowledge in business
and financial matters as to be fully capable of evaluating this Agreement and the transactions
contemplated hereby, (ii) it is not relying on any advice or representation of any other party in
connection with entering into this Agreement or such transactions (other than the representations
made in this Agreement), (iii) it has not received from any other party any assurance or guarantee
as to the merits (whether legal, regulatory, tax, financial or otherwise) of entering into this
Agreement or the performance of its obligations hereunder, and (iv) it has consulted with its own
legal, regulatory, tax, business, investment, financial and accounting advisors to the extent that
it has deemed necessary, and has entered into this Agreement based on its own independent judgment
and on the advice of its advisors as it has deemed necessary, and not on any view (whether written
or oral) expressed by any other party.

     6.5 Remedies. In addition to being entitled to exercise all rights provided herein or
granted by law, including recovery of damages, each of the Company and each Investor will be
entitled to seek specific performance under this Securities Purchase Agreement. The parties agree
that monetary damages may not be adequate compensation for any loss incurred by reason of any
breach of obligations described in the foregoing sentence and hereby agrees to waive in any action
for specific performance of any such obligation (other than in connection with any action for
temporary restraining order) the defense that a remedy at law would be adequate.

     6.6 Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in
the Borough of Manhattan of the City of New York for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby and hereby irrevocably waives,
and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in
an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the address in effect
for notices to it under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law. Each party hereby
waives all rights to a trial by jury.

     6.7 Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, and all of which together shall constitute one and the same
instrument. This Agreement may be executed and delivered by facsimile transmission.

21

 

     6.8 Headings. The headings used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this Agreement.

     6.9 Notices. Any notice, demand or request required or permitted to be given by the
Company or any Investor pursuant to the terms of this Agreement shall be in writing and shall be
deemed delivered (i) when delivered personally or by verifiable facsimile transmission, unless such
delivery is made on a day that is not a Business Day, in which case such delivery will be deemed to
be made on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to
an overnight courier and (iii) on the Business Day actually received if deposited in the U.S. mail
(certified or registered mail, return receipt requested, postage prepaid), addressed as follows:

If to the Company:

IMAX Corporation

110 East 59th Street

Suite 2100

New York, New York 10022

Attn: Robert D. Lister, Esq.

Tel: (212) 821-0100

Fax: (212) 371-7584

with a copy (which shall not constitute notice) to:

Jason R. Lehner, Esq.

Shearman & Sterling LLP

599 Lexington Avenue

New York, New York 10022

Tel: (212) 848-4000

Fax: (212) 848-7179

If to the Investors:

Kevin Douglas

125 E Sir Francis Drake Boulevard

Larkspur, California 94939-1860

Tel: (415) 526-2200

Fax: (415) 526-2214

with a copy (which shall not constitute notice) to:

James Black, Esq.

Orrick, Herrington & Sutcliffe LLP

The Orrick Building

405 Howard Street

San Francisco, California 94105

Tel: (415) 773-5700

Fax: (415) 773-5759

22

 

     6.10 Fees and Expenses. The Company shall pay all expenses incurred incident to the
negotiation, preparation, execution, delivery and performance of this Agreement, including
reasonable fees and expenses of the Investors’ legal advisers incurred on or prior to the Closing
Date. The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied
in connection with the sale and issuance of their applicable Securities.

     6.11 Entire Agreement; Amendments. This Agreement constitutes the entire agreement
between the parties with regard to the subject matter hereof, superseding all prior agreements or
understandings, whether written or oral, between or among the parties. Except as expressly
provided herein, neither this Agreement nor any term hereof may be amended except pursuant to a
written instrument executed by the Company and the Investors, and no provision hereof may be waived
other than by a written instrument signed by the party against whom enforcement of any such waiver
is sought. Any waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.

[Signature Pages to Follow]

23

 

     IN WITNESS WHEREOF, the undersigned have duly executed this Securities Purchase Agreement as
of the date first above written.

	 	 	 	 	 
	 	IMAX CORPORATION

 	 
	 	By:  	                /s/   Richard L. Gelfond
 	 
	 	 	Name:  	Richard L. Gelfond 	 
	 	 	Title:  	Co-Chief Executive Officer 	 

 

 

	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	K&M DOUGLAS TRUST	 	 	 	JAMES DOUGLAS AND JEAN

DOUGLAS IRREVOCABLE 

DESCENDANTS’ TRUST	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 

Name:

	 	/s/ Kevin Douglas
 

Kevin Douglas
	 	 	 	By:

Name:
	 	/s/ Kevin Douglas
 

Kevin Douglas
	 	 
	Title:

	 	Trustee
	 	 
	 	Title:
	 	Trustee	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Michelle M. Douglas
	 	 	 	By:
	 	/s/ Michelle M. Douglas	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Name:

	 	Michelle Douglas
	 	 	 	Name:
	 	Michelle Douglas	 	 
	Title:

	 	Trustee
	 	 	 	Title:
	 	Trustee	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Number of Securities: 1,172,372	 	 	 	Number of Securities: 736,141	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	DOUGLAS FAMILY TRUST	 	 	 	JAMES E. DOUGLAS III	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ James Douglas
	 	 	 	By:
	 	/s/ James E. Douglas	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Name:

	 	James Douglas	 	 	 	 	 	 	 	 
	Title:	 	Trustee	 	 	 	Number of Securities: 272,645	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Jean A. Douglas	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	Name:

	 	Jean Douglas	 	 	 	 	 	 	 	 
	Title:

	 	Trustee	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Number of Securities: 545,289	 	 	 	 	 	 	 	 

 

 

In connection with the Securities Purchase Agreement, please provide the following information:

	1.	 	The exact name that your Securities are to be registered in (this is the name that will
appear on your share certificate(s)). You may use a nominee name if appropriate:

Douglas Family Trust (545,289)

James Douglas and Jean Douglas Irrevocable Descendants’ Trust (736,141)

James E. Douglas III (272,645)

K&M Douglas Trust (1,172,372)

	2.	 	The mailing address at which the Registered Holder listed in response to item 1 above would
like to receive share certificate(s) and closing documents:

c/o Douglas Telecommunications, Inc

125 E. Sir Francis Drake Blvd., Ste. 400

Larkspur, CA 94939

	1.	 	The Social Security Number or Tax Identification Number of the Registered Holder listed in
response to item 1 above:

Douglas Family Trust — ###-##-####

James Douglas and Jean Douglas Irrevocable Descendants’ Trust — 94-6729163

James E. Douglas, III — ###-##-####

K&M Douglas Trust — ###-##-####

 

 

EXHIBIT A

FORM OF LEGAL OPINIONS

McCARTHY TÉTRAULT LLP

	(1)	 	The Company is a corporation duly organized, validly existing and in good standing under the
federal laws of Canada.
	 
	(2)	 	The Securities have been duly authorized by all necessary corporate action on the part of the
Company. The Securities, when issued, sold and delivered against payment therefor in
accordance with the provisions of the Securities Purchase Agreement will be validly issued,
fully paid and nonassessable, and the issuance of the Securities will not be subject to any
pre-emptive rights or similar rights restricting the transfer of the Securities under the
Canada Business Corporations Act or the Company’s Articles of Incorporation or By-Laws or, to
our knowledge, otherwise.
	 
	(3)	 	The Company has full corporate power and corporate authority to enter into, perform, and
consummate the transactions contemplated by the Agreement.
	 
	(4)	 	The Agreement has been duly authorized by all necessary corporate action on the part of
Company.
	 
	(5)	 	The execution, delivery, and performance of the Agreement by Company and the consummation by
Company of the transactions to be consummated at Closing do not conflict with or violate the
Company’s charter, bylaws or any other organizational or charter document.
	 
	(6)	 	The execution, delivery and performance of the Agreement by Company and the consummation of
the transactions contemplated thereby by Company to be consummated at the Closing do not and
will not require Company to obtain any consent, approval, authorization, license, waiver,
qualification, order or permit of, or require the Company to make any filing with or
notification to, any Canadian federal or Ontario governmental or regulatory authority,
domestic or foreign, except (a) for compliance with applicable requirements, if any, of
Canadian securities laws, (b) for compliance with applicable requirements, if any, of The
Toronto Stock Exchange, and (c) any filings, registrations and qualifications which if not
made, would not be expected to have a Material Adverse Effect.

SHEARMAN & STERLING LLP

	(1)	 	The Agreement has been duly executed and delivered by Company and is a legal, valid, and
binding obligation of Company, enforceable against Company in accordance with its terms,
except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws affecting
creditors’ rights, and subject to general equity principles and to limitations on availability of equitable
relief, including specific performance.

 

 

	(2)	 	The offer, sale and issuance of the Securities to be issued in accordance with the Agreement
are exempt from the registration requirements of Section 5 of the Securities Act of 1933, as
amended.

 

 

EXHIBIT B

WIRE INSTRUCTIONS

	 	 	 	 	 	 	 
	Destination Bank:

	 	WACHOVIA BANK N.A. NEW YORK
	 	 
	 
	 	 	 	 	 	 
	ABA Number:

	 	026005092	 	 	 	 
	 
	 	 	 	 	 	 
	SWIFT:

	 	PNBPUS3NNYC
	 	 
	 
	 	 	 	 	 	 
	Beneficiary’s Bank :

	 	BANK OF MONTREAL

INT’L BANKING H.O. MONTREAL
	 	 
	 
	 	 	 	 	 	 
	SWIFT:

	 	BOFMCAM2
	 	 
	 
	 	 	 	 	 	 
	Beneficiary Customer:

	 	IMAX CORPORATION
	 	 
	 
	 	 	 	 	 	 
	Account Number:

	 	24774700073ex10_2-1.htm

    EXHIBIT
10.2.1

    
 

    SECOND
AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     

     

    This
Second Amended and Restated Employment Agreement (the “Agreement”) is entered
into effective as of March 25, 2008, between CALPINE CORPORATION, a Delaware
corporation (the “Company”), and ROBERT P. MAY (“Executive”) to provide the
terms and conditions for Executive’s employment with the Company and its
affiliates from time to time (together, the “Group”).

     

    The Board
of Directors of the Company (the “Board”) named Executive as Chief Executive
Officer of the Company and a member of the Board on December 12, 2005 (the
“Start Date”) pursuant to an Employment Agreement dated as of December 12, 2005
(the “2005 Agreement”).  The Company and Executive entered into an
Amended and Restated Employment Agreement dated as of October 10, 2007 (the
“2007 Agreement”).

     

    The
Company and Executive have agreed that Executive will continue to be employed by
the Company and will serve as the Company’s Chief Executive Officer, upon the
terms and conditions set forth below.

     

    Accordingly,
and in consideration of the mutual obligations set forth in this Agreement,
which Executive and the Company agree are sufficient, Executive and the Company
agree as follows:

     

     

    1           Term of
Employment.

     

    Executive’s
term of employment (“Term of Employment”) begins as of the date hereof and ends
on December 31, 2008, subject to the termination provisions of paragraph 4
below.

     

     

    2           Position and
Responsibilities.

     

    During
the Term of Employment, Executive shall have the position and responsibilities
described below.  Executive shall be employed as the Company’s Chief
Executive Officer, with the general executive powers and authority that
accompany that position.  Executive shall report directly to the Board
and shall have the duties and responsibilities that are typically performed by
the chief executive officer of a public company, as well as any other duties
consistent with his position that are assigned to Executive by the
Board.  Unless and until the Board elects a President of the Company,
Executive shall also have the powers, duties and responsibilities that the
Company’s Bylaws confer on the President of the Company.  Executive
agrees to comply with such lawful policies of the Company as may be adopted from
time to time.  Although Executive may be reasonably required to travel
from time to time for business reasons, his principal place of employment shall
be the Company’s corporate offices wherever located.

     

    
      	
               
      

            	
              (a)

            	
              Executive
      shall devote all of his full business time and his best efforts, skill,
      and attention to the Company’s business and affairs and to promoting the
      Company’s best interests.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Executive
      shall serve as a non-chairman member of the Board for as long as Executive
      continues to be nominated and elected; however, Executive shall offer his
      resignation from the Board upon the termination of Executive’s employment
      with the Company.

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      	
               
      

            	
              (c)

            	
              Notwithstanding
      the foregoing, nothing herein shall preclude Executive from (i) serving on
      the boards of directors of other corporations and/or charitable
      organizations (subject to the approval of the Board, such approval not to
      be unreasonably withheld), (ii) engaging in charitable activities and
      community affairs, and (iii) managing his personal investments and
      affairs, provided that any such activities listed in (i) and (ii) above do
      not interfere in more than a de minimis manner with the proper performance
      of his duties and responsibilities hereunder and comply with the
      limitations set forth in paragraph
5.a.

            

    

     

     

    3           Compensation.

     

    For all
of his services during the Term of Employment, Executive shall receive the
following compensation:

     

    
      	
               
      

            	
              (a)

            	
              Base
      Salary.  Executive’s annual base salary shall be
      $1,500,000 (as may be increased from time to time, the “Base
      Salary”).  The Board will review the Base Salary at least
      annually and may increase it at any time for any reason, in its sole
      discretion; however, it shall have no obligation to do
  so.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Bonus.  In
      addition to his Base Salary, Executive shall be eligible to receive an
      annual cash performance bonus (the “Bonus”) for each fiscal year,
      including 2008, ending during the Term of Employment if, and to the extent
      that, corporate performance objectives established by the Board (or a
      committee thereof) are achieved, as determined by the Board or a committee
      thereof in its sole discretion.  Payment of the Bonus shall be
      made at the same time that other senior-level executives receive their
      bonuses, and no later than March 15th of the calendar year after the
      calendar year in which the Bonus is earned.  The target level
      for Executive’s Bonus shall be established by the Board (or a committee
      thereof) in its sole discretion, provided that the minimum target level
      for any year shall be 100% of the Base Salary (the “Target Annual
      Bonus”).

            

    

     

    
      	
               
      

            	
              (c)

            	
              Benefits.  Executive
      shall be eligible to participate in all Company benefit plans and programs
      as are generally available for its senior executives, and his benefits
      shall be based on the terms of the applicable plan as established by the
      Company from time to time.  Nothing in this Agreement shall
      restrict the Company’s ability to change or terminate any or all of its
      employee benefit plans and programs from time to time; nor shall anything
      in this Agreement prevent any such change from affecting
      Executive.

            

    

     

    
      	
               
      

            	
              (d)

            	
              Success
      Fee.  Executive shall be entitled to receive a one-time
      payment in an amount equal to the amount set forth on Exhibit A attached
      hereto (the “Success Fee”), which shall be due and payable on the date the
      plan of reorganization confirmed by the Bankruptcy Court becomes effective
      (the “Plan Effective Date”).

            

    

     

    
      	
               
      

            	
              (e)

            	
              Intentionally
      blank.

            

    

     

    
      	
               
      

            	
              (f)

            	
              Relocation.  Executive
      shall be responsible for all temporary housing, living and commuting
      expenses incurred by Executive, in each case while an employee
      of

            

    

     

    

    
      
        
           

        

        
          
            
              

            
2

          
            

          

        

        
           

        

      

    

    

    the
Company.  Executive shall not be reimbursed by the Company for any
such expenses.

     

    (g)              Equity Grant.

     

    
      	
               
      

            	
              (i)

            	
              Stock
      Options.  Executive shall be granted 325,500 options (the
      “Options”) to purchase shares of the Company’s common stock under the 2008
      Equity Incentive Plan (the “Equity Incentive Plan”) promptly following
      execution of the Agreement.  The Options shall be subject to the
      terms of the Executive’s Stock Option Agreement, attached as Exhibit
      B.

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Restricted
      Stock.  Effective February 6, 2008, Executive was granted
      547,600 restricted shares (the “Restricted Stock”) of the Company’s common
      stock under the Equity Incentive Plan.  Promptly following the
      execution of the Agreement, the terms applicable to 73,000 shares of such
      Restricted Stock shall be amended and shall be subject to the terms of the
      Restricted Stock Plan and Executive’s Restricted Stock Agreement, attached
      hereto as Exhibit C.  The remaining 474,600 shares of Restricted
      Stock shall be immediately canceled and rendered null and void and
      Executive shall not be entitled to any compensation on account
      thereof.

            

    

     

    
      	
               
      

            	
              (iii)

            	
              Emergence Stock
      Options.  Effective January 31, 2008, Executive was
      granted 348,700 options (the “Emergence Options”) to purchase shares of
      the Company’s common stock under the Equity Incentive
      Plan.  Upon the execution of the Agreement, the Emergence
      Options shall be immediately canceled and rendered null and void and
      Executive shall not be entitled to any compensation on account
      thereof.

            

    

     

    4           Termination.

     

    (a)              Termination of
Employment.

     

    
      	
               
      

            	
              (i)

            	
              Termination by the Company for
      Cause.  The Board may terminate Executive’s employment
      for Cause at any time after (x) providing Executive with 5 business days’
      advance written notice explaining the circumstances that justify the
      termination (a “Termination Notice”); and (y) except in the case of
      termination for an event covered by (2) below, providing Executive with
      the opportunity to appear before the Board prior to any vote to terminate
      Executive’s employment for Cause, which opportunity may occur during the
      5-business-day notice period.  “Cause” means any of the
      following:  (1) Executive’s breach of any material term of this
      Agreement that is not corrected within 10 days after delivery of a
      Termination Notice to Executive with respect to such breach; (2)
      Executive’s commission of, or formal prosecutorial charge or indictment
      alleging commission of, a felony or any crime of similar status, any crime
      involving fraud, or any crime involving moral turpitude (other than motor
      vehicle related) (it being agreed that in the case of a crime involving
      moral turpitude, only to the extent such crime materially
    and

            

    

     

    

    
      
        
           

        

        
          
            
              

            
3

          
            

          

        

        
           

        

      

    

    

    adversely
affects the business, standing or reputation of the Company or any other member
of the Group); (3) Executive’s breach of fiduciary duty to the Company or any
other member of the Group that has any material and adverse impact on the
Company that is not corrected within 10 days after delivery of a Termination
Notice to Executive with respect to such breach; (4) Executive’s
misappropriation of funds or material property of the Company or any other
member of the Group; (5) Executive’s  refusal to follow the lawful
directives of the Board without a materially valid business justification that
is not corrected within 10 days after delivery of a Termination Notice to
Executive with respect to such refusal; (6) Executive’s fraud related to the
Company that is not corrected within 10 days after delivery of a Termination
Notice to Executive with respect to such fraud; (7) Executive’s material
dishonesty, disloyalty, gross negligence or willful misconduct, where such
dishonesty, disloyalty, gross negligence or willful misconduct is reasonably
likely to result, in substantial and material damage to the Company or any other
member of the Group and that is not corrected within 10 days after delivery of a
Termination Notice to Executive with respect to such event; (8) Executive’s
willful and material violation of any of the Company’s Code of Conduct or
employment policies that is not corrected within 10 days after delivery of a
Termination Notice to Executive with respect to such violation; or (9)
Executive’s material violation of any federal, state or local laws that could
result in a direct or indirect financial loss to the Company or any other member
of the Group or damage the reputation of the Company or any other member of the
Group.

     

    For this
definition, no act or omission by the Executive will be “willful” unless it is
made by him in bad faith or without a reasonable belief that his act or omission
was in the best interests of the Company or the Group.  Any act, or
failure to act, based upon the advice of counsel to the Company or any member of
the Group shall be presumed to be done, or omitted to be done, by the Executive
in good faith and in the best interests of the Company and the
Group.

     

    
      	
               
      

            	
              (ii)

            	
              Termination by the Company
      without Cause.  The Company may terminate Executive’s
      employment under this Agreement without Cause immediately upon written
      notice to Executive.  For purposes hereof, a Termination by the
      Company without Cause shall also include a termination of Executive’s
      employment after the parties’ failure to enter into a new employment
      agreement prior to December 31, 2008 that results in Executive’s
      termination of employment with the Company on December 31,
      2008.

            

    

     

    
      	
               
      

            	
              (iii)

            	
              Death or
      Disability.  Executive’s employment by the Company will
      immediately terminate upon Executive’s death and at the option of either
      Executive or the Company, exercisable upon written notice to the
      other

            

    

     

    

    
      
        
           

        

        
          
            
              

            
4

          
            

          

        

        
           

        

      

    

    

    party,
may terminate upon the Executive’s Disability.  For purposes of this
Agreement, “Disability” will occur if (A) Executive becomes eligible for
benefits under a long-term disability policy provided by the Company, if any, or
(B) Executive has become unable, due to physical or mental illness or
incapacity, to substantially perform the essential duties of his employment with
reasonable accommodation for a period of 90 days or an aggregate of 180 days
during any consecutive 12 month period, as determined by an independent
physician approved by the Company and Executive.

     

    
      	
               
      

            	
              (iv)

            	
              Termination by Executive for
      Good Reason.  Executive may terminate his employment for
      Good Reason within 90 days of the occurrence of an event constituting Good
      Reason.  “Good Reason” shall mean the occurrence, during the
      Term of Employment, of any of the following actions or failures to act,
      but in each case only if it is not consented to by Executive in
      writing:  (A) a material adverse change in Executive’s duties,
      reporting responsibilities, titles or elected or appointed offices
      (including the failure to be elected to the Company’s Board) as in effect
      immediately prior to the effective date of such change (including but not
      limited to the appointment of any person to an executive position at the
      Company that is co-equal or senior to that of Executive); (B) any
      reduction or failure to pay when due the Executive’s Base Salary or the
      Success Fee; (C) any reduction by the Company in Executive’s Target Annual
      Bonus opportunity; (D) the Company’s breach of any material term of this
      Agreement that is not corrected within 10 days after delivery of a notice
      to the Company with respect to such breach or (E) the failure of the
      Company to obtain the assumption in writing of this Agreement by any
      successor to or an acquirer of all or substantially all of the assets of
      the Company on or prior to a merger, consolidation, sale or similar
      transaction; provided, however, that Executive first notifies the Company
      in writing of an occurrence constituting Good Reason and the Company fails
      to cure such occurrence within 30 days of such notice.  For
      purposes of this definition, none of the actions described in clauses (A)
      through (E) above shall constitute “Good Reason” with respect to Executive
      if it was an isolated and inadvertent action not taken in bad faith by the
      Company and if it is remedied by the Company within 10 days after receipt
      of written notice thereof given by
Executive.

            

    

     

    
      	
               
      

            	
              (v)

            	
              Termination by Executive
      without Good Reason.  Executive may terminate his
      employment under this Agreement without Good Reason immediately upon
      written notice to the Company.

            

    

     

    (b)              Consequences of Termination of
Employment.

     

    
      	
               
      

            	
              (i)

            	
              Termination by the Company
      without Cause or by Executive for Good Reason.  Executive
      shall receive the benefits described in this paragraph 4.b if the
      Executive’s employment is terminated without Cause (under paragraph
      4.a.ii) at any time during the Term
of

            

    

     

    

    
      
        
           

        

        
          
            
              

            
5

          
            

          

        

        
           

        

      

    

    

    Employment
or if Executive terminates his employment at any time during the Term of
Employment for Good Reason (under paragraph 4.a.iv).  For a period of
one year following the date of termination of Executive’s employment from the
Company, the Company shall at its sole cost and expense (but disregarding any
individual tax liability of Executive), and at the election of COBRA by
Executive, provide Executive (and his spouse and eligible dependents) with group
health benefits substantially similar to those benefits that Executive (and his
spouse and eligible dependents) were receiving immediately before his
termination (which may at the Company’s election be pursuant to reimbursement of
the applicable COBRA premium).  Such coverage shall be provided to
Executive as COBRA benefits and shall terminate prior to the end of the one-year
period if Executive, his spouse or eligible dependents are no longer eligible
for COBRA coverage.  To the extent possible, the benefits under this
section 4.b.i. shall be made in a manner that is tax efficient for the Executive
so long as there are no adverse tax consequences to the Company.  If
Executive receives the benefits set forth in this paragraph 4.b.i, Executive
shall not be eligible for severance benefits from any other plan, program or
policy of the Company then in effect.

     

    
      	
               
      

            	
              1

            	
              Amount and Payment
      Schedule.  Executive’s severance benefit (in addition to
      the other payments specifically contemplated in this Agreement) shall be
      an annual amount equal to the sum of his (x) annual Base Salary and (y)
      Target Annual Bonus as of the date his employment terminates, paid for one
      year. Subject to the timing rule described in paragraph 4.b.i.2, below,
      the severance benefit shall be paid ratably on the same payment schedule
      that applied to Executive’s salary at the time of his
      termination.

            

    

     

    
      	
               
      

            	
              2

            	
              Timing.  To
      the extent necessary to comply with the restriction in Section
      409A(a)(2)(B) of the Internal Revenue Code of 1986, as amended (the
      “Code”) concerning payments to specified employees, the first severance
      payment to Executive shall be made on the first installment date
      (determined under paragraph 4.b.i.1, above) that is at least six months
      after Executive’s termination date.  The first payment shall
      include any installments that would have been paid previously under
      paragraph 4.b.i.1 were it not for this special timing rule, plus interest
      on the delayed installments at an annual rate (compounded monthly) equal
      to the federal short-term rate (as in effect under Section 1274(d) of the
      Code on Executive’s termination
date).

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Death or
      Disability.  In the event of termination of Executive’s
      employment due to death or Disability (under paragraph 4.a.iii), Executive
      shall be entitled to receive (in addition to any other
      payments

            

    

     

    

    
      
        
           

        

        
          
            
              

            
6

          
            

          

        

        
           

        

      

    

    

    specifically
contemplated in this Agreement) a pro rata portion of his Target Annual Bonus
for the portion of the calendar year before the date of termination of
employment, as promptly as practicable and in any event payable on or before
March 15th of the calendar year after the calendar year in which such
termination of employment occurs; but Executive shall not be eligible to receive
any other severance benefit under this paragraph 4.  Executive’s
eligibility (if any) to receive a severance or retirement benefit under any
other severance or retirement plan or program maintained by the Company shall be
determined by the terms of that plan or program as in effect on his termination
date.

     

    
      	
               
      

            	
              (iii)

            	
              Termination for Cause or
      Voluntary Termination.   If the Company terminates
      Executive’s employment for Cause (under paragraph 4.a.i), or if Executive
      terminates his employment without Good Reason (under paragraph 4.a.v), (x)
      Executive shall not be eligible to receive any severance benefit under
      this paragraph 4.b and (y) all equity grants to Executive, including but
      not limited to the Options and Restricted Stock defined in paragraph 3(g),
      shall become null and void and Executive shall not be entitled to any
      compensation on account thereof.  Executive’s eligibility (if
      any) to receive a severance or retirement benefit under any other
      severance or retirement plan or program maintained by the Company shall be
      determined by the terms of that plan or program as in effect on his
      termination date.  The foregoing shall not limit the remedies
      available to the Group, at law or in equity, for any loss or other injury
      caused directly or indirectly by
Executive.

            

    

     

    
      	
               
      

            	
              (iv)

            	
              Earned but Unpaid
      Bonus.  In addition to any other amounts owed to
      Executive under this paragraph 4.b, if the Company terminates the
      Executive’s employment for any reason other than Cause or if Executive
      terminates employment on or after December 31, 2008, Executive shall be
      entitled to receive any Bonus earned by Executive for 2008 as calculated
      in accordance with paragraph 3.b but not yet paid as of the termination
      date.

            

    

     

    
      	
               
      

            	
              (v)

            	
              Release.  The
      Company will not be required to make the payments stated in this paragraph
      4 unless the Executive executes and delivers to the Company an agreement
      releasing from all liability (other than Executive’s rights under this
      Agreement and any indemnification arrangement of the Company with respect
      to Executive) the Group and any of their respective past or present
      directors, officers, employees, shareholders, controlling persons or
      agents of the Group.  No payment will be made until the period
      for revocation of the release has ended and unless Executive has not
      revoked the release.  This agreement will be substantially in
      the form attached hereto as Exhibit
D.

            

    

     

     

    5           Restrictive
Covenants.

     

    
      	
               
      

            	
              (a)

            	
              Non-Competition.  During
      the time Executive is employed by the Company and for 12 months
      thereafter, Executive shall not directly or indirectly
    manage,

            

    

     

    

    
      
        
           

        

        
          
            
              

            
7

          
            

          

        

        
           

        

      

    

    

    operate,
participate in, be employed by, perform consulting services for, or otherwise be
connected with NRG Energy, Inc., Mirant Corporation, Reliant Energy, Dynegy
Inc., Edison Mission Energy/Edison International, Constellation Energy Group,
Inc. (FPL Group, Inc.) or Pacific Gas & Electric Company (each a
“Competitive Enterprise”); nor shall Executive receive compensation from any
other company or business during the time Executive is employed with the Company
unless the arrangement giving rise to such compensation has been (i) disclosed
to and approved by the Board in advance or (ii) is otherwise permitted by the
terms of this Agreement.  Executive may invest in any Competitive
Enterprise, provided that Executive and his immediate family members (as defined
in Section 1361(c)(B) of the Code) do not own collectively more than three
percent of the voting securities of any such entity at any time.

     

    
      	
               
      

            	
              (b)

            	
              Use and Disclosure of
      Proprietary Information.

            

    

     

    
      	
               
      

            	
              (i)

            	
              Definition of Proprietary
      Information.  “Proprietary Information” means
      confidential or proprietary information, knowledge or data concerning (1)
      the Group’s businesses, strategies, operations, financial affairs,
      organizational matters, personnel matters, budgets, business plans,
      marketing plans, studies, policies, procedures, products, ideas,
      processes, software systems, trade secrets and technical know-how, (2) any
      other matter relating to the Group, (3) any matter relating to clients of
      the Group or other third parties having relationships with the Group and
      (4) any confidential information from which the Group derives business
      advantage or economic value.  Proprietary Information includes
      (A) the names, addresses, phone numbers and buying habits and preferences
      and other information concerning clients and prospective clients of the
      Group, and (B) information and materials concerning the personal affairs
      of employees of the Group.  In addition, Proprietary Information
      may include information furnished to Executive orally or in writing
      (whatever the form or storage medium) or gathered by inspection, in each
      case before or after the date of this Agreement.  Proprietary
      Information does not include information (X) that was or becomes generally
      available to Executive on a non-confidential basis, if the source of this
      information was not reasonably known to Executive to be bound by a duty of
      confidentiality,  (Y) that was or becomes generally available to
      the public, other than as a result of a disclosure by Executive, directly
      or indirectly, or (Z) that Executive can establish was independently
      developed by Executive without reference to Proprietary
      Information.

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Acknowledgements.  Executive
      acknowledges that he will obtain or create Proprietary Information in the
      course of Executive’s involvement in the Group’s activities and may
      already have Proprietary Information.  Executive agrees that the
      Proprietary Information is the exclusive property of the
      Group.  In addition, nothing in this Agreement will operate to
      weaken or waive any rights the Group may have
  under

            

    

     

    

    
      
        
           

        

        
          
            
              

            
8

          
            

          

        

        
           

        

      

    

    

    statutory
or common law, or any other agreement, to the prohibition of unfair competition
or the protection of trade secrets, confidential business information and other
confidential information.

     

    
      	
               
      

            	
              (iii)

            	
              During
      Employment.  Executive will use and disclose Proprietary
      Information only for the Group’s benefit and in accordance with any
      restrictions placed on its use or disclosure by the
  Group.

            

    

     

    
      	
               
      

            	
              (iv)

            	
              Post-Employment.  After
      the termination of Executive’s employment, Executive will not use or
      disclose any Proprietary Information for any purpose.  For the
      avoidance of doubt, but without limitation of the foregoing, after
      termination of Executive’s employment, Executive will not directly or
      indirectly use Proprietary Information from which the Group derives
      business advantage or economic benefit to solicit, impair or interfere
      with, or attempt to solicit, impair or interfere with, any person or
      entity, who, at the time of the termination of Executive’s employment, is
      then a customer, vendor or business relationship of the Group (or who
      Executive knew was a potential customer, vendor or business relationship
      of the Company within the six months prior to the termination of his
      Employment).

            

    

     

    
      	
               
      

            	
              (c)

            	
              Non-Solicitation of
      Employees.  During the Term of Employment and for an 18
      month period after termination of Executive’s employment, Executive will
      not directly or indirectly solicit or attempt to solicit anyone who, at
      the time of the termination of Executive’s employment, is then an employee
      of the Group (or who was an employee of the Group within the six months
      prior to the termination of his Employment) to resign from the Group or to
      apply for or accept employment with any company or other
      enterprise.

            

    

     

    
      	
               
      

            	
              (d)

            	
              Non-Disparagement.  During
      and after Executive’s employment with the Company, the parties mutually
      covenant and agree that neither will directly or indirectly disparage the
      other, or make or solicit any comments, statements, or the like to any
      clients, competitors, suppliers, employees or former employees of the
      Company, the press, other media, or others that may be considered
      derogatory or detrimental to the good name or business reputation of the
      other party.  Nothing herein shall be deemed to constrain either
      party’s cooperation in any Board authorized investigation or governmental
      action.  In the event of Executive’s termination or the
      non-renewal of this Agreement, Executive and Company shall agree on any
      press release relating to such termination or non-renewal and the Company
      and Executive shall not publicly discuss or comment on Executive’s
      termination or non-renewal in any manner other than as mutually agreed in
      the press release.

            

    

     

     

    
      	
              6

            	
              Excise
      Tax.  If, (I) in the written opinion of the Company’s
      independent accountants, (x) any payment or benefit to Executive under
      this Agreement or otherwise contingent upon a change of control (including
      without limitation, the Success Fee and any payments under paragraph 4.b
      above) is an “excess parachute payment” as defined in Section 280G(b) of
      the Code, and (y) such excess parachute payment is subject to
      the

            

    

     

    

    
      
        
           

        

        
          
            
              

            
9

          
            

          

        

        
           

        

      

    

    

     

    excise
tax imposed by Section 4999 of the Code (or any similar tax under state or local
law) or (II) the Internal Revenue Service determines that any payment or benefit
to Executive under this Agreement or otherwise is an excess parachute payment
that is subject to the excise tax imposed by Section 4999 of the Code, the
Company shall pay to Executive such amount or amounts necessary to place
Executive in the same after-tax position in which Executive would have been if
such excise tax (together with any interest and penalties) had not been imposed
(the “Gross-Up”).  The Gross-Up shall be in an amount determined by
the Company’s independent accountants and shall be paid on or prior to the date
the applicable withholding taxes are due. For purposes of determining the amount
of the Gross-Up, the Executive shall be deemed to pay federal, state and local
income taxes at the highest marginal rate of taxation for the calendar year in
which the Gross-Up is to be made.  Notwithstanding anything to the
contrary, the Gross-Up obligation of the Company under this Section shall
survive any termination of this Agreement or Executive’s termination of
employment.

     

     

    
      	
              7

            	
              Employment
      Taxes.  All payments and other compensation under this
      Agreement shall be subject to withholding of the applicable income and
      employment taxes.

            

    

     

     

    
      	
              8

            	
              Nonduplication of
      Benefits.  No term or other provision of this Agreement
      may be interpreted to require the Company to duplicate any payment or
      other compensation that Executive is already entitled to receive under a
      compensation or benefit plan, program, or other arrangement maintained by
      the Company.

            

    

     

     

    
      	
              9

            	
              Indemnification.  To
      the fullest extent permitted by applicable law, the Company shall provide
      indemnification for Executive under its Articles of Incorporation and
      Bylaws.  Executive shall be covered by the Company’s standard
      indemnification agreement and by any director’s and officer’s liability
      insurance policy maintained by the
Company.

            

    

     

     

    
      	
              10

            	
              Successors.  Any
      successor to the Company or to all or substantially all of the Company’s
      business and/or assets (whether a direct or indirect successor, and
      whether by purchase, lease, merger, consolidation, liquidation, or
      otherwise) shall assume the obligations under this
      Agreement.  In case of any succession, the term “Company” shall
      refer to the successor.  The terms of this Agreement and all of
      Executive’s rights hereunder shall inure to the benefit of, and be
      enforceable by, Executive’s personal or legal representatives, executors,
      administrators, successors, heirs, distributees, devisees, and
      legatees.

            

    

     

     

    
      	
              11

            	
              No Third-Party
      Beneficiaries.  Except as provided in paragraph 10 above,
      nothing in this Agreement may confer upon any person or entity not a party
      to this Agreement any rights or remedies of any nature or kind whatsoever
      under or by reason of this
Agreement.

            

    

     

     

    
      	
              12

            	
              No Duty to
      Mitigate.  Executive shall not be required to seek new
      employment or otherwise to mitigate the payments contemplated by this
      Agreement.  The payments contemplated by this Agreement shall
      not be reduced by earnings that Executive may receive from any other
      source; provided, however, that COBRA payments may cease in accordance
      with the provisions of this
Agreement.

            

    

     

    

    
      
        
           

        

        
          
            
              

            
10

          
            

          

        

        
           

        

      

    

    

     

    
      	
              13

            	
              Notice.  Notices
      and other communications between the parties to this Agreement shall be
      delivered in writing and shall be deemed to have been given when
      personally delivered or on the third business day after mailing by U.S.
      registered or certified mail, return receipt requested and postage
      prepaid.

            

    

     

    (a)              Notices
and other communications to Executive shall be addressed to Executive, at the
most recent home address that he provided in writing to the
Company.

     

    (b)              Notices
and other communications to the Company shall be addressed to the Company’s
corporate headquarters, to the attention of the Company’s
Secretary.

     

     

    
      	
              14

            	
              Waiver and
      Amendments.  No provision of this Agreement may be
      modified, waived, or discharged, unless the modification, waiver, or
      discharge is agreed to in writing signed by Executive and by an authorized
      representative of the Company (other than Executive).  Unless
      specifically characterized as a continuing waiver, no waiver of a
      condition or provision at anyone time may be considered a waiver of the
      same provision or condition (or any different provision or condition) at
      any other time.

            

    

     

     

    
      	
              15

            	
              Costs.  In the
      event that Executive is a prevailing party in any dispute or disagreement
      with the Company relating to this Agreement and/or the Company’s
      obligations under this Agreement, the Company will reimburse any expenses,
      including reasonable attorney’s fees (and such fees incurred at
      Executive’s attorney’s normal hourly rates will be presumed reasonable),
      incurred by Executive as a result of, or in connection with, any such
      dispute or disagreement.  Nothing herein shall adversely impair
      or limit any rights Executive has under the Company’s Articles of
      Incorporation, Bylaws and directors’ and officers’ liability insurance
      policies.  Notwithstanding anything to the contrary, the
      obligation of the Company under this Section shall survive any termination
      of this Agreement or Executive’s termination of
  employment.

            

    

     

     

    
      	
              16

            	
              Ability to Enter this
      Agreement.  Executive represents and warrants that
      neither the execution and delivery of this Agreement nor the performance
      of Executive’s services hereunder will conflict with, or result in a
      breach of any employment or other agreement to which Executive is a party
      or by which Executive might be bound or affected.  Executive
      further represents and warrants that Executive has full right, power, and
      authority to enter into and carry out the provisions of this
      Agreement.

            

    

     

     

    
      	
              17

            	
              Remedy at Law
      Inadequate.  Executive acknowledges that a remedy at law
      for any breach or attempted breach of the covenants described in paragraph
      5 of this Agreement will be inadequate and agrees that the Group shall be
      entitled to specific performance and injunctive and other equitable relief
      in the case of any such breach or attempted
  breach.

            

    

     

     

    
      	
              18

            	
              American Jobs Creation Act of
      2004.  This Agreement shall be construed, administered
      and interpreted in accordance with a good-faith interpretation of Section
      409A of the Code and Section 885 of the American Jobs Creation Act of
      2004.  If the Company or Executive determines that any provision
      of this Agreement is or might be inconsistent with such provisions
      (including any administrative guidance issued thereunder), the parties
      shall make their best efforts in good faith to agree to such amendments to
      this Agreement as may be necessary or appropriate to comply with such
      provisions.

            

    

    

    
      
        
           

        

        
          
            
              

            
11

          
            

          

        

        
           

        

      

    

    

     

    
      	
              19

            	
              Choice of
      Law.  This Agreement (including its validity,
      interpretation, construction, and performance) shall be governed by the
      laws of the State of New York, without regard to any concerning conflicts
      or choice of law that might otherwise refer construction or interpretation
      to the substantive law of another
jurisdiction.

            

    

     

     

    
      	
              20

            	
              Section
      Headings.  All headings in this Agreement are inserted
      for convenience only.  Headings do not constitute a part of the
      Agreement and may not affect the meaning or interpretation of any term or
      other provision of this Agreement.

            

    

     

     

    
      	
              21

            	
              Severability and
      Reformation.  Each substantive provision of this
      Agreement is a separate agreement, independently supported by good and
      adequate consideration, and is severable from the other provisions of the
      Agreement.  If a court of competent jurisdiction determines that
      any term or provision of this Agreement is unenforceable, then the other
      terms and provisions of this Agreement shall remain in full force and
      effect, and the unenforceable terms or provisions shall be equitably
      modified to the extent necessary to achieve the underlying purpose in an
      enforceable way.

            

    

     

     

    
      	
              22

            	
              Whole
      Agreement.  This Agreement reflects the entire
      understanding and agreement between the Company and Executive regarding
      Executive’s employment.  This Agreement supersedes all prior
      negotiations, discussions, correspondence, communications, understandings,
      and agreements, including the 2005 Agreement and 2007 Agreement, whether
      oral or written, relating to Executive’s employment with the
      Company.  The respective rights and obligations of the parties
      to this Agreement shall survive the termination of Executive’s employment
      to the extent necessary to give such rights and obligations their intended
      effect.

            

    

     

     

    
      	
              23

            	
              Counterparts.  This
      Agreement may be executed in counterparts, each of which shall be deemed
      an original, but all of which together shall constitute a single
      instrument.

            

    

     

    *           *           *

     

    IN
WITNESS WHEREOF, the parties to this Agreement have executed this Agreement on
March 25, 2008.

     

    

     

    CALPINE
CORPORATION:

     

    

     

    

     

    
      	
              By:

            	  
      /s/  William J. Patterson	 
      	  
      /s/  Robert P. May
	 
      	
              William
      J. Patterson

            	 
      	
              Robert
      P. May, in his individual capacity

            
	 
      	
              Chairman
      of the Board of Directors

            	 
      	 
      

    

    

     

     

     

      
        

      

    

    12

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