ALGONQUIN POWER INCOME FUND

                              AMENDED AND RESTATED

                              DECLARATION OF TRUST

                               AS OF MAY 26, 2004



                                TABLE OF CONTENTS

                                                                            PAGE
ARTICLE 1   INTERPRETATION ..............................................      1
1.1         Definitions .................................................      1
1.2         References to Acts Performed by the Fund ....................      5
1.3         Income Tax Act ..............................................      5
1.4         Gender ......................................................      6
1.5         Headings for Reference Only .................................      6
1.6         Day Not a Business Day ......................................      6
1.7         Time of the Essence .........................................      6
1.8         Governing Law ...............................................      6
1.9         Subsidiaries, etc. ..........................................      6
ARTICLE 2   DECLARATION OF TRUST ........................................      7
2.1         Establishment of Fund .......................................      7
2.2         Initial Contribution ........................................      7
2.3         Name of Fund ................................................      7
2.4         Head Office .................................................      7
2.5         Nature of the Fund ..........................................      7
2.6         Legal Ownership of Assets of the Fund .......................      8
2.7         Liability of Unitholder .....................................      8
ARTICLE 3   ISSUE AND SALE OF UNITS .....................................      8
3.1         Nature of Units .............................................      8
3.2         Authorized Number of Units ..................................      8
3.3         Issue of Units ..............................................      9
3.4         No Fractional Units .........................................      9
3.5         Re-Purchase of Initial Unit by Fund .........................      9
3.6         Consolidation of Units ......................................      9
ARTICLE 4   INVESTMENTS OF FUND .........................................      9
4.1         Purpose of the Fund .........................................      9
4.2         Investment of Proceeds of Offering ..........................     10
4.3         Other Investments ...........................................     11
4.4         Sole Undertaking ............................................     11


                                       -i-



                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE

ARTICLE 5    DISTRIBUTIONS ..............................................     11
5.1          Computation of Cash Flow ...................................     11
5.2          Computation of Income and Net Realized Capital Gains .......     12
5.3          Distributions of Cash Flow of the Fund .....................     13
5.4          Other Distributions ........................................     13
5.5          Character of Distributions and Designations ................     14
5.6          Enforceability of Right to Receive Distributions ...........     15
5.7          Method of Payment of Distributions .........................     15
5.8          Withholding Taxes ..........................................     15
5.9          Definitions ................................................     15
ARTICLE 6    REDEMPTION OF UNITS ........................................     16
6.1          Right of Redemption ........................................     16
6.2          Exercise of Redemption Right ...............................     16
6.3          Cash Redemption ............................................     16
6.4          No Cash Redemption in Certain Circumstances ................     17
6.5          In Specie Redemption .......................................     18
6.6          Cancellation of Certificates for all Redeemed Units ........     18
ARTICLE 7    TRUSTEES ...................................................     18
7.1          Number of Trustees .........................................     18
7.2          Calling and Notice of Meetings .............................     18
7.3          Place of Meetings ..........................................     19
7.4          Meetings by Telephone ......................................     19
7.5          Quorum .....................................................     19
7.6          Chairman ...................................................     19
7.7          Action by the Trustees .....................................     19
7.8          Adjourned Meeting ..........................................     20
7.9          Remuneration and Expenses ..................................     20
7.10         Officers ...................................................     20
ARTICLE 8    APPOINTMENT, RESIGNATION AND REMOVAL OF TRUSTEES ...........     20
8.1          Qualification of Trustees ..................................     20


                                      -ii-



                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE
8.2          Appointment of Trustees ....................................     21
8.3          Consent to Act .............................................     21
8.4          Failure to Elect Minimum Number of Trustees ................     22
8.5          Ceasing to Hold Office .....................................     22
8.6          Removal of Trustee .........................................     22
8.7          Filling Vacancies ..........................................     22
8.8          Validity of Acts ...........................................     23
ARTICLE 9    CONCERNING THE TRUSTEES ....................................     23
9.1          Powers of the Trustees .....................................     23
9.2          Specific Powers and Authorities ............................     23
9.3          Voting of Shares and Debt Held by the Fund .................     25
9.4          Restrictions on Trustee's Powers ...........................     25
9.5          Banking ....................................................     28
9.6          Arrangements with Administrator ............................     28
9.7          Standard of Care and Duties ................................     29
9.8          Fees and Expenses ..........................................     29
9.9          Limitations on Liabilities of Trustees .....................     29
9.10         Indemnification of Trustees ................................     30
9.11         Contractual Obligations of Fund ............................     30
9.12         Conflicts of Interest ......................................     30
ARTICLE 10   COMMITTEES OF TRUSTEES .....................................     31
10.1         Delegation .................................................     31
10.2         Procedure ..................................................     31
ARTICLE 11   AMENDMENT ..................................................     31
11.1         Amendment ..................................................     31
11.2         Notification of Amendment ..................................     32
ARTICLE 12   MEETINGS OF UNITHOLDERS ....................................     32
12.1         Annual and Special Meetings of Unitholders .................     32
12.2         Notice of Meetings .........................................     32
12.3         Quorum .....................................................     33


                                      -iii-



                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE

12.4         Voting Rights of Unitholders ...............................     33
12.5         Resolutions Binding the Trustees ...........................     33
12.6         Meaning of "Extraordinary Resolution" ......................     34
12.7         Meaning of "Outstanding" ...................................     34
12.8         Record Date for Voting .....................................     35
12.9         Appointment of Inspector ...................................     35
12.10        Resolutions in Writing .....................................     35
ARTICLE 13   CERTIFICATES, REGISTRATION AND TRANSFER OF UNITS ...........     36
13.1         Nature of Units ............................................     36
13.2         Unit Certificates ..........................................     36
13.3         Contents of Unit Certificates ..............................     36
13.4         Register of Unitholders ....................................     37
13.5         Limitation on Non-Resident Ownership .......................     38
13.6         Transfer of Units ..........................................     38
13.7         Units Held Jointly or in a Fiduciary Capacity ..............     39
13.8         Performance of Trust .......................................     39
13.9         Lost Certificates ..........................................     40
13.10        Death of a Unitholder ......................................     40
13.11        Unclaimed Interest or Distribution .........................     40
13.12        Offers for Units ...........................................     40
13.13        Power of Attorney ..........................................     43
ARTICLE 14   TERMINATION ................................................     44
14.1         Term of Fund ...............................................     44
14.2         Termination with the Approval of Unitholders ...............     44
14.3         Automatic Termination ......................................     44
14.4         Procedure Upon Termination .................................     44
14.5         Powers of the Trustees Upon Termination ....................     44
14.6         Sale of Investments ........................................     45
14.7         Distribution of Proceeds ...................................     45
14.8         Further Notice to Unitholders ..............................     45


                                      -iv-



                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE

14.9         Responsibility of the Trustees after Sale and Conversion ...     45
ARTICLE 15   SUPPLEMENTAL INDENTURES ....................................     46
15.1         Provision for Supplemental Indentures for
                Certain Purposes ........................................     46
ARTICLE 16   GENERAL ....................................................     46
16.1         Notices ....................................................     46
16.2         Failure to Give Notice .....................................     47
16.3         Joint Holders ..............................................     47
16.4         Service of Notice ..........................................     47
16.5         Information Available to Unitholders .......................     47
16.6         Income Tax: Obligations of the Trustees ....................     47
16.7         Income Tax: Designations ...................................     47
16.8         Income Tax: General ........................................     48
16.9         Fiscal Year ................................................     48
16.10        Financial Disclosure .......................................     49
16.11        Unitholder Meeting Information .............................     49
16.12        Taxation Information .......................................     49
ARTICLE 17   AUDITORS ...................................................     50
17.1         Qualification of Auditors ..................................     50
17.2         Appointment of Auditors ....................................     50
17.3         Change of Auditors .........................................     50
17.4         Reports of Auditors ........................................     50
ARTICLE 18   MISCELLANEOUS ..............................................     50
18.1         Successors and Assigns .....................................     50
18.2         Counterparts ...............................................     50
18.3         Severability ...............................................     51


                                       -v-



THIS AMENDED AND RESTATED DECLARATION OF TRUST dated as of May 26, 2004, amends
and restates the declaration of trust constituting Algonquin Power Income Fund
(the "FUND"), dated as of September 8, 1997, as amended by the Unitholders by
Extraordinary Resolution on December 18, 1998, June 1, 2000, May 24, 2001, May
23, 2002, June 26, 2003 and May 26, 2004 (this "DECLARATION OF TRUST").

BACKGROUND:

A. Stephen Probyn, George Steves and Ian Bradley (the "INITIAL TRUSTEES") and
Ken Pearce (the "INITIAL UNITHOLDER") entered into a declaration of trust (the
"INITIAL DECLARATION OF TRUST") creating the Fund and providing for certain
matters relating to its undertaking and governance dated as of September 8,
1997, which was subsequently amended by the Unitholders by Extraordinary
Resolution on December 18, 1998, June 1, 2000, May 24, 2001, May 23, 2002, June
26, 2003 and May 26, 2004 (this "DECLARATION OF TRUST");

B. The Unitholders have authorized the Trustees to restate the Initial
Declaration of Trust to reflect such amendments.

C. This amendment and restatement of the Declaration of Trust sets out without
substantial change the currently effective provisions of the Declaration of
Trust, as amended pursuant to the Declaration of Trust.

          NOW THEREFORE THIS DECLARATION WITNESSETH THAT, in consideration of
the premises and the mutual and respective covenants and agreements contained
herein, the Trustees declare, and covenant and agree with the Unitholders, and
the Unitholders covenant and agree with the Trustees, as follows:

                                    ARTICLE 1
                                 INTERPRETATION

1.1 DEFINITIONS

          In this Declaration of Trust and in the Unit Certificates, unless the
context otherwise requires, the following shall have the following meanings:

          "ADMINISTRATION AGREEMENT" means the agreement between the
          Administrator and the Fund, to be entered into as of the Date of
          Closing and pursuant to which the Administrator will provide
          administrative services to the Fund;

          "ADMINISTRATOR" means Algonquin Management Inc., an Ontario
          corporation;

          "ALGONQUIN AMERICA" means Algonquin Power Fund (America) Inc., a
          Delaware corporation wholly-owned by Algonquin Canada;

          "ALGONQUIN CANADA" means Algonquin Power Fund (Canada) Inc., an
          Ontario corporation wholly-owned by the Fund;



                                       -2-


          "ALGONQUIN CANADA SHARES" means common shares of Algonquin Canada;

          "ALGONQUIN NOTE" means the note to be issued by Algonquin Power
          Corporation Inc. to the Fund on Closing;

          "AUDITORS" means the firm of chartered accountants appointed as the
          auditors of the Fund from time to time in accordance with the
          provisions hereof and, initially, means KPMG;

          "BELLETERRE FACILITY EQUIPMENT" means the equipment relating to the
          Belleterre hydroelectric facility and related personal property, but
          does not include the real property on which the equipment is located;

          "BELLETERRE FACILITY LEASE" means the lease agreement to be entered
          into, pursuant to which the Fund will lease the Belleterre Facility
          Equipment to Algonquin Canada;

          "BUSINESS DAY" means any day that is not a Saturday, Sunday or a civic
          or statutory holiday in Ontario;

          "CANADA NOTE" means the secured, subordinated note of Algonquin Canada
          to be issued to the Fund on Closing;

          "CLOSING" means the completion of the issue of Units to the public
          pursuant to the Offering; "DATE OF CLOSING" means the date on which
          Closing occurs; and "TIME OF CLOSING" means the time on the Date of
          Closing at which Closing occurs;

          "COUNSEL" means a barrister and solicitor or firm of barristers and
          solicitors or other lawyers in an appropriate jurisdiction retained by
          the Fund;

          "DISTRIBUTION PAYMENT DATE" means April 15, July 15, October 15 and
          January 15 in each year commencing April 15, 1998 (which payment shall
          be in respect of the period from September 8, 1997 to March 31, 1998)
          and such other dates as may be determined from time to time by the
          Trustees;

          "DISTRIBUTION RECORD DATE" means March 31, June 30, September 30 and
          December 31 and such other dates as may be determined from time to
          time by the Trustees;

          "DONNACONA FACILITY EQUIPMENT" means the equipment relating to the
          Donnacona hydroelectric facility and related personal property, but
          does not include the real property on which the equipment is located;

          "DONNACONA FACILITY LEASE" means the lease agreement to be entered
          into at Closing, pursuant to which the Fund will lease the Donnacona
          Facility Equipment to the Donnacona Partnership;



                                       -3-


          "DONNACONA PARTNERSHIP" means Societe Hydro-Donnacona S.E.N.C., a
          general partnership formed under the laws of Quebec;

          "EXTRAORDINARY RESOLUTION" shall have the meaning attributed thereto
          in Article 12;

          "FUND" means the trust constituted by this Declaration of Trust;

          "INCOME TAX ACT" means the Income Tax Act (Canada);

          "INITIAL CONTRIBUTION" means the amount of $10.00 paid by the Initial
          Unitholder to the Trustees as of the date hereof for the purpose of
          settling the trust constituted by the Fund;

          "INITIAL TRUSTEES" means those persons named as the first trustees of
          the Fund in the Declaration of Trust;

          "LEASE PAYMENT RIGHT" means the right to receive a pro rata share,
          calculated as of the time such right is distributed or assigned, of
          future net lease payments under the Donnacona Facility Lease, the
          Belleterre Facility Lease and/or the Ste-Brigitte Facility Lease, as
          applicable, and net future proceeds of disposition of the Donnacona
          Facility Equipment, the Belleterre Facility Equipment and the
          Ste-Brigitte Facility Equipment, as applicable;

          "LSR ROYALTY INTERESTS" means certain royalty interests relating to
          the Long Sault Rapids hydroelectric facility intended to be acquired
          by the Fund;

          "LSR SUBORDINATE NOTE" means the secured, subordinated note of
          Algonquin Power (Long Sault) Partnership and N-R Power Partnership
          proposed to be acquired by the Fund from Ontario Energy Corporation on
          Closing;

          "NET INCOME OF THE FUND" shall have the meaning attributed thereto in
          Section 5.1;

          "OFFERING" means the offering of Units pursuant to the Prospectus,
          which offering is anticipated to be completed on or before December
          31, 1997 or on or before such later date as may be agreed to by the
          Trustees;

          "PROSPECTUS" means the final prospectus of the Fund providing for the
          initial Offering of Units to the public; and "PRELIMINARY PROSPECTUS"
          means the preliminary prospectus with respect to such Offering; and in
          each case includes any amendment thereof;

          "STE-BRIGITTE FACILITY EQUIPMENT" means the equipment relating to the
          Ste-Brigitte hydroelectric facility and related personal property, but
          does not include the real property on which the equipment is located;



                                       -4-


          "STE-BRIGITTE FACILITY LEASE" means the lease agreement to be entered
          into, pursuant to which the Fund will lease the Ste-Brigitte Facility
          Equipment to Algonquin Canada;

          "THIS DECLARATION OF TRUST", "THIS DECLARATION", "HERETO", "HEREIN",
          "HEREOF", "HEREBY", "HEREUNDER" and similar expressions refer to this
          instrument and not to any particular Article, section or portion
          hereof and include any and every instrument supplemental or ancillary
          hereto;

          "TRAFALGAR CLASS B NOTE" means the 6.10% secured, subordinated note
          due December 31, 2010, jointly and severally, of Trafalgar Power, Inc.
          and Christine Falls Corporation in the principal amount of
          approximately $21.8 million (US$15.8 million);

          "TRANSFER AGENT" means such company as may from time to time be
          appointed by the Fund to act as registrar and transfer agent of the
          Units together with any sub-transfer agent duly appointed by the
          Transfer Agent;

          "TRUST ASSETS", at any time, shall mean monies, properties and any
          other assets as are at such time held by the Fund or by the Trustees
          on behalf of the Fund, including:

          (a)  the Initial Contribution;

          (b)  all funds realized from the sale of Units;

          (c)  the Algonquin Canada Shares;

          (d)  the Canada Note;

          (e)  the US Note;

          (f)  the LSR Subordinate Note;

          (g)  the Donnacona Facility Equipment;

          (h)  the Donnacona Facility Lease;

          (i)  the Belleterre Facility Equipment;

          (j)  the Belleterre Facility Lease;

          (k)  the Ste-Brigitte Facility Equipment;

          (l)  the Ste-Brigitte Facility Lease;

          (m)  the Algonquin Note;



                                       -5-


          (n)  the Trafalgar Class B Note;

          (o)  the LSR Royalty Interests;

          (p)  any proceeds of disposition of the foregoing property;

          (q)  any securities issued by Algonquin Canada on the maturity of the
               Canada Note or by Algonquin America on the maturity of the US
               Note; and

          (r)  all income, interest, profit, gains and accretions and additional
               assets, rights and benefits of any kind or nature whatsoever
               arising directly or indirectly from or in connection with or
               accruing to such foregoing property or such proceeds of
               disposition;

          "TRUSTEE" means at any time, an individual who is, in accordance with
          the provisions hereof, a trustee of the Fund at that time including,
          without limitation, so long as he remains a trustee, the Initial
          Trustee named in the Declaration of Trust; and "TRUSTEES" means, at
          any time, all of the individuals each of whom is at that time a
          Trustee;

          "UNIT CERTIFICATE" means a certificate, in the form approved by the
          Trustees, evidencing one or more Units, issued and certified in
          accordance with the provisions hereof;

          "UNITHOLDERS" means at any time the holders at that time of one or
          more Units, as shown on the register of such holders maintained by the
          Fund or by the Transfer Agent on behalf of the Fund;

          "UNITS" means the Units of the Fund authorized and issued hereunder as
          such and for the time being outstanding and entitled to the benefits
          hereof, each Unit representing an equal undivided beneficial interest
          in the Fund; and

          "US NOTE" means the secured, subordinated note of Algonquin America
          held by the Fund.

1.2 REFERENCES TO ACTS PERFORMED BY THE FUND

          For greater certainty, where any reference is made in this Declaration
of Trust to an act to be performed by the Fund, such reference shall be
construed and applied for all purposes as if it referred to an act to be
performed by the Trustees on behalf of the Fund or by some other person duly
authorized to do so by the Trustees or pursuant to the provisions hereof.

1.3 INCOME TAX ACT

          In this Declaration of Trust, any reference to the Income Tax Act
shall refer to the Income Tax Act, Revised Statutes of Canada 1985, Chapter 1
(5th Supplement) and the Income Tax Regulations as amended from time to time
applicable with respect thereto. Any reference herein to a particular provision
of the Income Tax Act shall include a reference to that provision



                                       -6-


as it may be renumbered or amended from time to time. Where there are proposals
for amendments to the Income Tax Act which have not been enacted into law or
proclaimed into force on or before the date on which such proposals are to
become effective, the Trustees may take such proposals into consideration and
apply the provisions hereof as if such proposals had been enacted into law and
proclaimed into force on the date on which such proposals are to become
effective.

1.4 GENDER

          In this Declaration of Trust, unless herein otherwise expressly
provided or unless the context otherwise requires, words importing the singular
number include the plural, and vice-versa, words importing a gender shall
include the feminine, masculine and neuter genders, and words importing persons
include an individual, partnership, association, body corporate, trustee,
executor, administrator or legal representative.

1.5 HEADINGS FOR REFERENCE ONLY

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

1.6 DAY NOT A BUSINESS DAY

          In the event that any day on which any amount is to be determined or
any action is required to be taken hereunder is not a Business Day, then such
amount shall be determined or such action shall be required to be taken at or
before the requisite time on the next succeeding day that is a Business Day.
This Section is not applicable to Sections 5.1, 5.2, 5.3, 5.4, 5.5, 5.6, 5.8 and
5.9. 1.7 TIME OF THE ESSENCE

          Time shall be of the essence in this Declaration of Trust.

1.8 GOVERNING LAW

          This Declaration of Trust and the Unit Certificates shall be construed
in accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein and shall be treated in all respects as Ontario contracts.
The parties hereto hereby irrevocably submit and attorn to the jurisdiction of
the Courts of the Province of Ontario.

1.9 SUBSIDIARIES, ETC.

          In this Declaration of Trust, any reference to any direct or indirect
subsidiary, affiliate or associate of the Fund or any entity in which the Fund
holds a majority of the equity interests, directly or indirectly, the word
"control", the word "wholly-owned" and similar expressions shall be construed
without reference to the interest by the Administrator in the relevant
subsidiary, affiliate, associate or entity.



                                      -7-


                                    ARTICLE 2
                              DECLARATION OF TRUST

2.1 ESTABLISHMENT OF FUND

          The Trustees hereby declare and agree to hold the Trust Assets in
trust for the use and benefit of the Unitholders, their permitted assigns and
personal representatives upon the trusts and subject to the terms and conditions
hereinafter declared and set forth, such trust to constitute the Fund hereunder.

2.2 INITIAL CONTRIBUTION

          The Initial Unitholder paid, concurrent with the execution hereof, the
Initial Contribution to the Trustees for the purpose of settling the Fund, and
the Initial Unitholder was issued an initial Unit in the Fund.

2.3 NAME OF FUND

          The Fund shall be known and designated as the "Algonquin Power Income
Fund" and, whenever lawful and convenient, the property of the Fund shall be
held and the affairs of the Fund shall be conducted and transacted under that
name.

          If the Trustees determine that the use of such name is not
practicable, legal or convenient, the Fund may use such other designation or may
adopt such other name as the Trustees deem appropriate, and the Fund may hold
property and conduct and transact its affairs under such other designation or
name.

2.4 HEAD OFFICE

          The head office of the Fund hereby created shall be located in
Toronto, Ontario, or such other place or places in Canada as the Trustees may
from time to time designate.

2.5 NATURE OF THE FUND

          The Fund is an unincorporated open ended mutual fund trust,
established for the purpose specified in Section 4.1. The Fund is not, is not
intended to be, shall not be deemed to be and shall not be treated as, a general
partnership, limited partnership, syndicate, association, joint venture,
company, corporation or joint stock company nor shall the Trustees or any
individual Trustee or the Unitholders or any of them or any person be, or be
deemed to be, treated in any way whatsoever as liable or responsible hereunder
as partners or joint venturers. The Trustees shall not be, or be deemed to be,
agents of the Unitholders. The relationship of the Unitholders to the Trustees
shall be solely that of beneficiaries of the Fund and their rights shall be
limited to those conferred upon them by this Declaration of Trust.

2.6 LEGAL OWNERSHIP OF ASSETS OF THE FUND

          The legal ownership of the Trust Assets and the right to conduct the
affairs of the Fund are vested exclusively in the Trustees, or such other
persons as the Trustees may determine,



                                       -8-


and the Unitholders shall have no interest therein other than the rights
specifically set forth in this Declaration of Trust and they shall have no right
to compel any partition, division, dividend or distribution of the Trust Assets
or any of the other assets of the Fund, except as specifically provided herein.
The Units shall be personal property and shall confer upon the holders thereof
only the interest and rights specifically set forth in this Declaration of
Trust.

2.7 LIABILITY OF UNITHOLDER

          No Unitholder in its capacity as such shall be subject to any personal
liability whatsoever, in tort, contract or otherwise, to any person in
connection with the Fund or the obligations or the affairs of the Fund or with
respect to any act performed by or omission of the Trustees or any other person
pursuant to this Declaration of Trust nor shall any Unitholder be liable to
indemnify the Trustees or any other person with respect to any such liability or
liabilities and all such persons shall look solely to the Trust Assets for
satisfaction of claims of any nature arising out of or in connection therewith
and the Trust Assets only shall be subject to levy or execution.

                                    ARTICLE 3
                             ISSUE AND SALE OF UNITS

3.1 NATURE OF UNITS

     (a)  The beneficial interests in the Fund shall be divided into interests
          of one class, described and designated as Units, which shall be
          entitled to the rights and subject to the limitations, restrictions
          and conditions set out herein, and the interest of each Unitholder
          shall be determined by the number of Units registered in the name of
          the Unitholder.

     (b)  Each Unit represents an equal undivided beneficial interest in any
          distribution from the Fund (whether of net income, net realized
          capital gains or other amounts), subject to the provisions of Section
          6.5 hereof, and in any net assets of the Fund in the event of
          termination or winding-up of the Fund. All Units outstanding from time
          to time shall be entitled to equal shares in any distributions by the
          Fund and, in the event of termination or winding-up of the Fund, in
          the net assets of the Fund. All Units shall rank among themselves
          equally and rateably without discrimination, preference or priority.

3.2 AUTHORIZED NUMBER OF UNITS

          The aggregate number of Units which is authorized and may be issued
hereunder is unlimited.

3.3 ISSUE OF UNITS

     (a)  Units may be issued at the times, to the persons, for the
          consideration and on the terms and conditions that the Trustees
          determine and, without limiting the generality of the foregoing, the
          Trustees may authorize the Fund to pay a



                                       -9-


          reasonable commission to any person in consideration of such person
          purchasing or agreeing to purchase Units from the Fund or from any
          other person or procuring or agreeing to procure purchasers for Units.

     (b)  Units are only to be issued as fully paid and are not to be subject to
          future calls or assessments, provided however that Units issued under
          any offering subsequent to the Offering may be issued for a
          consideration payable in instalments and that the Fund may take
          security over any Units issued under any such offering as security for
          unpaid instalments and assign the benefit of all or part of such
          security.

3.4 FRACTIONAL UNITS

          Fractions of Units may be issued.

3.5 RE-PURCHASE OF INITIAL UNIT BY FUND

          Immediately after the Closing, the Fund will purchase the initial Unit
from the Initial Unitholder, and the Initial Unitholder shall sell the initial
Unit to the Fund for a purchase price of $10.00 and upon the completion of such
purchase and sale, the initial Unit shall be cancelled and shall no longer be
outstanding for any of the purposes of this Declaration of Trust.

3.6 CONSOLIDATION OF UNITS

          Immediately after any pro rata distribution of additional Units to all
Unitholders pursuant to Section 5.9, the number of the outstanding Units will be
consolidated such that each Unitholder will hold after the consolidation the
same number of Units as the Unitholder held before the distribution of
additional Units. In this case, each Unit Certificate representing a number of
Units prior to the distribution of additional Units is deemed to represent the
same number of Units after the distribution of additional Units and the
consolidation.

                                    ARTICLE 4
                               INVESTMENTS OF FUND

4.1 PURPOSE OF THE FUND

          The Fund is a limited purpose trust and is restricted to:

     (a)  investing in securities issued by Algonquin Canada, including the
          Algonquin Canada Shares and the Canada Note;

     (b)  investing in securities, directly or indirectly, of Algonquin America,
          including the US Note;

     (c)  investing in the Donnacona Facility Equipment and leasing such
          equipment to the Donnacona Partnership pursuant to the Donnacona
          Facility Lease;

     (d)  investing in the Belleterre Facility Equipment and leasing such
          equipment to Algonquin Canada pursuant to the Belleterre Facility
          Lease;



                                      -10-


     (e)  investing in the Ste-Brigitte Facility Equipment and leasing such
          equipment to Algonquin Canada pursuant to the Ste-Brigitte Facility
          Lease;

     (f)  investing in the LSR Subordinate Note;

     (g)  investing in the Algonquin Note; (h) investing in the Trafalgar Class
          B Note;

     (i)  temporarily holding cash and short term investments in accordance with
          a policy from time to time determined by the Trustees or pursuant to
          escrow agreements approved by the Trustees on behalf of the Fund,
          until such time as such funds are required in order for the Fund to
          acquire Trust Assets and making investments in energy related assets
          and such other investments as the Trustees consider reasonable and
          appropriate;

     (j)  investing in the LSR Royalty Interests; and

     (k)  temporarily holding cash and short term investments in accordance with
          a policy from time to time determined by the Trustees, including
          investments in Algonquin Canada, Algonquin America, Algonquin Power
          Corporation Inc. and the Donnacona Partnership, for the purposes of
          paying the expenses and the liabilities of the Fund, paying amounts
          payable by the Fund in connection with the redemption of any Units,
          and making distributions to Unitholders.

4.2 INVESTMENT OF PROCEEDS OF OFFERING

          At and after the Time of Closing, the Trustees shall use the proceeds,
net of expenses, from the Offering to subscribe for and purchase from Algonquin
Canada all of the issued and outstanding Algonquin Canada Shares and the Canada
Note, subscribe for and purchase from Algonquin America the US Note issued by
Algonquin America, acquire the Donnacona Facility Equipment, the Belleterre
Facility Equipment, the Ste-Brigitte Facility Equipment and the LSR Subordinate
Note, subscribe for and purchase the Algonquin Note, purchase the Trafalgar
Class B Note, purchase the LSR Royalty Interests and temporarily invest certain
of the funds of the Fund pending the acquisition of other investments or, if
such acquisitions are not completed, to return such funds to Unitholders pro
rata based on the number of Units held.

4.3 OTHER INVESTMENTS

          To the extent that any monies or other property received by the Fund
or the Trustees are not to be immediately used by the Trustees for the purpose
of making distributions under Article 5 hereof, the Trustees are hereby
authorized to and, where prudent to do so, shall invest, directly or indirectly,
such monies in (i) debt obligations of or guaranteed by the Government of Canada
or a province of Canada, in short-term paper and certificates of deposit issued
or guaranteed by a Canadian chartered bank whose securities are listed and
posted for trading on The Toronto Stock Exchange; (ii) interest-bearing accounts
in such a Canadian



                                      -11-


chartered bank; (iii) energy related assets and such other investments as the
Trustees consider reasonable and appropriate. Under no circumstances shall the
Trustees purchase or authorize the purchase of any investment such that 20% (or
such other percentage as may be prescribed by the regulations under the Income
Tax Act from time to time) or more of the Trust Assets, determined on the basis
of cost amount, would constitute "foreign property" as defined under subsection
206(1) of the Income Tax Act.

4.4 SOLE UNDERTAKING

          Notwithstanding any other provision hereof, the only undertaking of
the Fund will be:

     (a)  the investing of its funds in property (other than real property or an
          interest in real property);

     (b)  the acquiring, holding, maintaining, improving, leasing or managing of
          any real property (or interest in real property) that is capital
          property of the Fund; or

     (c)  any combination of the activities referred to in subsections 4.4(a)
          and (b).

                                    ARTICLE 5
                                  DISTRIBUTIONS

5.1 COMPUTATION OF CASH FLOW

          For purposes of this Article 5, the Cash Flow of the Fund, for, or in
respect of, the period ending on a Distribution Record Date and commencing
immediately following the preceding Distribution Record Date (or, for the first
Distribution Record Date, the period commencing on the date hereof) (a "Period")
shall be determined pursuant to the following provisions:

          (i)  the following amounts shall be included:

               (A)  all cash amounts which are received by the Fund for or in
                    respect of the Period, including, without limitation,
                    interest, dividends, royalties, lease payments,
                    distributions from trusts, proceeds from the disposition of
                    securities including any proceeds of redemption of shares or
                    trust units, returns of capital and repayments of
                    indebtedness; and

               (B)  all cash amounts received by the Fund for or in respect of
                    any prior Period to the extent not previously distributed;
                    and

          (ii) the following amounts shall be excluded: all amounts required to
               satisfy the redemption of Units and which have become payable in
               cash by the Fund in such Period, and the amount (if any) by which
               Net Income of the Fund for the period is negative.



                                      -12-


          The Distributable Capital for, or in respect of, a Period shall be the
Cash Flow of the Fund for such Period less any amount or amounts ("Fund Cash
Requirements") which the Trustees may reasonably consider to be necessary to
provide for the payment of any costs, expenses or obligations which have been or
may be incurred in the course of the activities and operations of the Fund
(including, for greater certainty, administrative expenses of the Fund and
amounts required for the business and operations of the Fund and, in particular,
amounts required to pay the deferred portion of the purchase price for any
assets acquired by the Fund, directly or indirectly) and to provide for the
payment of any tax liability of the Fund or its subsidiary entities.

5.2 COMPUTATION OF INCOME AND NET REALIZED CAPITAL GAINS

     (a)  The "Net Income of the Fund" for any taxation year of the Fund shall
          be the net income of the Fund for the year computed in accordance with
          the provisions of the Income Tax Act, less the amounts of any
          non-capital losses of the Fund for prior years that are deductible in
          computing the Fund's taxable income for the year in accordance with
          the Income Tax Act; provided, however, that capital gains and capital
          losses shall be excluded and provided further that:

          (i)  the portion of the Fund's income comprised of taxable dividends
               received from corporations resident in Canada shall be calculated
               on the basis that the amount included in the Fund's income is the
               actual amount of the dividend received, excluding the gross-up
               adjustment provided in paragraph 82(1)(b) of the Income Tax Act;
               and

          (ii) no amount shall be deductible in respect of amounts paid or
               payable to Unitholders.

     (b)  The "Net Realized Capital Gains" of the Fund for any year shall be
          determined as the amount, if any, by which the aggregate of the
          capital gains of the Fund in the year exceeds the aggregate of the
          capital losses of the Fund in the year and the product of two (or the
          reciprocal of any proportion other than one-half that may be provided
          under section 38 of the Income Tax Act in respect of the relevant
          year) and the amount of any net capital losses from prior years which
          the Fund is permitted by the Income Tax Act to deduct in computing the
          taxable income of the Fund for the year.

     (c)  Notwithstanding Sections 5.2(a) and (b), Net Income of the Fund and
          Net Realized Capital Gains shall not include any income ("Redemption
          Income") or capital gains ("Redemption Gains"), respectively, which
          are realized by the Fund, in accordance with the Income Tax Act, on a
          distribution of Fund Assets to a Unitholder pursuant to an in specie
          redemption of the Unitholder's Units under Section 6.5.



                                      -13-


5.3 DISTRIBUTIONS OF CASH FLOW OF THE FUND

          The Trustees will, on or before each Distribution Record Date, declare
payable to the holders of Units on such Distribution Record Date, all of the
Distributable Capital of the Fund for the Period which includes such
Distribution Record Date. The proportionate share of each Fund Unit of the
amount of such Distributable Capital of the Fund shall be determined by dividing
the Distributable Capital by the number of issued and outstanding Units on such
Distribution Record Date. Each Unitholder's share of such Distributable Capital
of the Fund shall be an amount equal to the proportionate share of each Fund
Unit of such Distributable Capital of the Fund multiplied by the number of Units
owned of record by each such Unitholder on such Distribution Record Date.
Subject to Section 5.7, Distributable Capital of the Fund which has been
declared to be payable to holders of Units in respect of a Period shall be paid
in cash on the Distribution Payment Date next following the end of such Period.
If a Distribution Payment Date is not a Business Day, the amount payable on that
date shall be paid on the last Business Day preceding such Distribution Payment
Date and such day shall be the Distribution Payment Date for the purpose of such
amount.

5.4 OTHER DISTRIBUTIONS

     (a)  In addition to the distributions which are made payable to holders of
          Units pursuant to Section 5.3, the Trustees may declare to be payable
          and make distributions to holders of Units, from time to time, out of
          Net Income of the Fund, Net Realized Capital Gains, the capital of the
          Fund or otherwise, in any year, in such amount or amounts, and on such
          dates as the Trustees may determine.

     (b)  Having regard to the present intention of the Trustees to allocate,
          distribute and make payable to holders of Units all of the Net Income
          of the Fund, Net Realized Capital Gains and any other applicable
          amounts for each taxation year so that the Fund will not have any
          liability for tax under Part I of the Income Tax Act in any such year,
          the amount, if any, by which the Net Income of the Fund and Net
          Realized Capital Gains for each taxation year exceed the aggregate of:

          (i)  such part of the taxable capital gains of the Fund for the year
               required to be retained by the Fund to maximize its capital gains
               refund for such year, but only if the Trustees have passed a
               resolution that this Section 5.4(b)(i) is to apply to the Fund
               for that year by the end of the year; and

          (ii) any amount that became payable by the Fund during the year to
               Unitholders on the Units (other than amounts that became payable
               to Unitholders on the redemption of their Units), shall without
               any further actions on the part of the Trustees, be due and
               payable at the end of the year to holders of Units of record as
               at that time.

     (c)  The proportionate share of each Fund Unit of the amount of any
          distribution made pursuant to either or both of Sections 5.4(a) and
          (b) shall be determined by dividing such amount by the number of
          issued and outstanding Units on the



                                      -14-


          applicable record date in respect of a distribution pursuant to
          Section 5.4(a) and on the last Distribution Record Date for the year
          in respect of a distribution pursuant to Section 5.4(b). Each holder
          of Units' share of the amount of any such distribution shall be an
          amount equal to the proportionate share of each Fund Unit of such
          amount multiplied by the number of Units owned of record by each such
          holder of Units on such applicable record date or the last
          Distribution Record Date in the year of such distribution, as the case
          may be. Subject to Section 5.7, amounts which have been declared to be
          payable to holders of Units pursuant to either Section 5.4(a) or (b)
          shall be paid in cash on the Distribution Payment Date which
          immediately follows the applicable record date in respect of a
          distribution pursuant to Section 5.4(a) or the last Distribution
          Record Date for the year in respect of a distribution pursuant to
          Section 5.4(b).

     (d)  In addition to the distributions which are made payable to Unitholders
          under Sections 5.3 and 5.4, the Trustees shall allocate any Redemption
          Income and Redemption Gains realized by the Fund in connection with
          the redemption of Units of a particular Unitholder pursuant to Section
          6.5 to that Unitholder, so that an amount equal to such Redemption
          Income and Redemption Gains shall be allocated to and shall be treated
          as an amount paid to the redeeming Unitholder.

5.5 CHARACTER OF DISTRIBUTIONS AND DESIGNATIONS

          In accordance with and to the extent permitted by the Income Tax Act,
the Trustees in each year shall make designations in respect of the amounts
payable to holders of Units for such amounts that the Trustees consider to be
reasonable in all of the circumstances, including, without limitation,
designations relating to taxable dividends received by the Fund in the year on
shares of taxable Canadian corporations, net capital gains realized by the Fund
in the year and foreign source income of the Fund for the year, as well as elect
under subsections 104(13-1) and/or (13.2) of the Income Tax Act that income be
taxed to the Fund, rather than to such Unitholders. Distributions payable to
holders of Units pursuant to this Article 5 shall be deemed to be distributions
of Net Income of the Fund, Net Realized Capital Gains, Fund capital or other
items in such amounts as the Trustees shall, in their absolute discretion,
determine. For greater certainty, it is hereby declared that any distribution of
Net Realized Capital Gains shall include the non-taxable portion of the capital
gains of the Fund which are encompassed in such distribution. In addition,
one-half (or any other proportion that may be provided for from time to time
under section 38 of the Income Tax Act) of Redemption Gains in respect of a
redeeming Unitholder shall be designated as taxable capital gains of that
Unitholder under subsection 104(21) of the Income Tax Act, and any portion of
the Redemption Income and Redemption Gains in respect of that Unitholder as may
be income from a source in a country other than Canada, within the meaning of
subsection 104(22) of the Income Tax Act, shall be designated as that
Unitholder's income from that source in accordance with that subsection.

5.6 ENFORCEABIIITY OF RIGHT TO RECEIVE DISTRIBUTIONS

          For greater certainty, it is hereby declared that each Unitholder
shall have the legal right to enforce payment of, and to be paid, at the end of
each year, any amount payable to



                                      -15-


such Unitholder as a result of any distribution which is payable to such
Unitholder pursuant to this Article and remaining unpaid in respect of that
year.

5.7 METHOD OF PAYMENT OF DISTRIBUTIONS

     (a)  Where the Trustees determine that the Fund does not have available
          cash in an amount sufficient to make payment of the full amount of any
          distribution which has been declared to be payable pursuant to this
          Article on the due date for such payment (in particular, after taking
          into account any Fund Cash Requirements), the payment may, at the
          option of the Trustees, include the pro rata issuance of additional
          Units, or fractions of Units, if necessary, having a value equal to
          the difference between the amount of such distribution and the amount
          of cash which has been determined by the Trustees to be available for
          the payment of such distribution.

     (b)  The value of each Fund Unit which is issued pursuant to Section 5.7(a)
          shall be determined using the closing trading price (or if there was
          no trade, the average of the last bid and the last ask prices) of the
          Units on the relevant Distribution Payment Date (or, if the
          Distribution Payment Date is not a Business Day, on the last Business
          Day preceding that Distribution Payment Date) on the principal stock
          exchange where the Units are listed or, if not so listed, such other
          value as the Trustees shall determine.

5.8 WITHHOLDING TAXES

          The Trustees shall deduct or withhold from distributions payable to
any Unitholder all amounts required by law to be withheld from such
distributions.

5.9 DEFINITIONS

          Unless otherwise specified or the context otherwise requires, any term
in this Article 5 which is defined in the Income Tax Act shall have for the
purposes of this Article 5 the meaning that it has in the Income Tax Act."

                                    ARTICLE 6
                               REDEMPTION OF UNITS

6.1 RIGHT OF REDEMPTION

          Each Unitholder shall be entitled to require the Fund to redeem at any
time or from time to time at the demand of the Unitholder all or any part of the
Units registered in the name of the Unitholder at the prices determined and
payable in accordance with the conditions hereinafter provided.



                                      -16-


6.2 EXERCISE OF REDEMPTION RIGHT

          To exercise a Unitholder's right to require redemption under this
Article 6, a duly completed and properly executed notice requiring the Fund to
redeem Units, in a form approved by the Trustees, shall be sent to the Fund at
the head office of the Fund, together with the Unit Certificate or Unit
Certificates representing the Units to be redeemed. No form or manner of
completion or execution shall be sufficient unless the same is in all respects
satisfactory to the Trustees and is accompanied by any further evidence that the
Trustees may reasonably require with respect to the identity, capacity or
authority of the person giving such notice.

          Upon receipt by the Fund of the notice to redeem Units, the Unitholder
shall thereafter cease to have any rights with respect to the Units tendered for
redemption (other than to receive the redemption payment therefor) including the
right to receive any distributions thereon which are declared payable to the
Unitholders of record on a date which is subsequent to the date of receipt by
the Fund of such notice. Units shall be considered to be tendered for redemption
on the date that the Fund has, to the satisfaction of the Trustees, received the
notice, Unit Certificates and other required documents or evidence as aforesaid.

6.3 CASH REDEMPTION

          Subject to Section 6.4, upon receipt by the Fund of the notice to
redeem Units in accordance with Section 6.2, the holder of the Units tendered
for redemption shall be entitled to receive a price per Unit (hereinafter called
the "Cash Redemption Price") equal to the lesser of:

     (a)  95% of the market price of the Units on the principal market on which
          the Units are quoted for trading during the 10 day trading period
          commencing immediately after the date on which the Units were tendered
          to the Fund for redemption; and

     (b)  the closing market price on the principal market on which the Units
          are quoted for trading on the date that the Units were so tendered for
          redemption.

          For the purposes of subsection 6.3(a), the market price shall be an
amount equal to the weighted average trading price of the Units for each of the
trading days on which there was a closing price; provided that if the applicable
exchange or market cannot provide the weighted average trading price but only
provides the highest and lowest prices of the Units traded on a particular day,
the market price shall be an amount equal to the simple average of the average
of the highest and lowest prices for each of the trading days on which there was
a trade; and provided further that if there was trading on the applicable
exchange or market for fewer than five of the 10 trading days, the market price
shall be the simple average of the following prices established for each of the
10 trading days: the average of the last bid and last ask prices for each day on
which there was no trading; the weighted average trading price of the Units for
each day that there was trading if the exchange or market provides a weighted
average trading price; and the average of the highest and lowest prices of the
Units for each day that there was trading, if the market provides only the
highest and lowest prices of Units traded on a particular day. For the purposes
of subsection 6.3(b), the closing market price shall be: an amount equal to the
closing price of the Units if there was a trade on the date; an amount equal to
the average of the highest and lowest prices of Units if there was trading and
the exchange or other market



                                      -17-


provides only the highest and lowest prices of Units traded on a particular day;
or the average of the last bid and last ask prices if there was no trading on
the date.

          The aggregate Cash Redemption Price payable in respect of the Units
tendered for redemption during any calendar month shall be paid by cheque, drawn
on a Canadian chartered bank or a trust company in lawful money of Canada,
payable at par to or to the order of the Unitholder who exercised the right of
redemption on the last day of the calendar month following the month in which
the Units were tendered for redemption. Payments made by the Fund of the Cash
Redemption Price are conclusively deemed to have been made upon the mailing of a
cheque in a postage prepaid envelope addressed to the former Unitholder unless
such cheque is dishonoured upon presentment. Upon such payment, the Fund shall
be discharged from all liability to the former Unitholder in respect of the
Units so redeemed.

6.4 NO CASH REDEMPTION IN CERTAIN CIRCUMSTANCES

          Section 6.3 shall not be applicable to Units tendered for redemption
by a Unitholder, if:

     (a)  the total amount payable by the Fund pursuant to Section 6.3 in
          respect of such Units and all other Units tendered for redemption in
          the same calendar month exceeds $250,000; provided that the Trustees
          may, in their sole discretion, waive such limitation in respect of any
          calendar month;

     (b)  at the time the Units are tendered for redemption, the outstanding
          Units of the Fund are not listed for trading on The Toronto Stock
          Exchange and are not traded or quoted on any other stock exchange or
          market which the Trustees consider, in their sole discretion, provides
          representative fair market value prices for the Units; or

     (c)  the normal trading of the outstanding Units of the Fund is suspended
          or halted on any stock exchange on which the Units are listed for
          trading or, if not so listed, on any market on which the Units are
          quoted for trading, on the date that such Units tendered for
          redemption were tendered to the Fund for redemption or for more than
          five trading days during the 10 day trading period commencing
          immediately after the date on which such Units tendered for redemption
          were tendered to the Fund for redemption.

6.5 IN SPECIE REDEMPTION

          If, pursuant to Section 6.4, Section 6.3 is not applicable to Units
tendered for redemption by a Unitholder, such Unitholder shall, instead of the
Cash Redemption Price per Unit specified in Section 6.3, be entitled to receive
a price per Unit (hereinafter called the "In Specie Redemption Price") equal to
the fair market value thereof as determined by the Trustees and in making such
determination there shall be deducted from such price otherwise determined the
amount of any tax for which the Fund becomes liable on income or capital gains
realized further to the redemption which are not considered to have been
distributed to the redeeming Unitholder for purposes of the Income Tax Act (the
"Redemption Tax Liability"). The In Specie



                                      -18-


Redemption Price shall, subject to all necessary regulatory approvals, be paid
and satisfied by way of a pro rata distribution in specie of Trust Assets other
than tangible property provided that such payment shall be reduced on a pro rata
basis to reflect the Redemption Tax Liability. No fractional notes or shares
shall be distributed and where the number of notes or shares to be received upon
redemption by a Unitholder would otherwise include a fraction, that number shall
be rounded to the next lowest whole number. The In Specie Redemption Price
payable in respect of Units tendered for redemption during any month shall be
paid by the transfer, to or to the order of the Unitholder who exercised the
right of redemption, on the last day (the "Transfer Date") of the calendar month
following the month in which the Units were tendered for redemption, of the
Trust Assets other than tangible property determined as aforesaid. Payments by
the Fund of the In Specie Redemption Price are conclusively deemed to have been
made upon the mailing of certificates or other evidence of notes and shares and
similar evidence of ownership of other Trust Assets, if any, by registered mail
in a postage prepaid envelope addressed to the former Unitholder. Upon such
payment, the Fund shall be discharged from all liability to the former
Unitholder in respect of the Units so redeemed.

6.6 CANCELLATION OF CERTIFICATES FOR ALL REDEEMED UNITS

          All certificates representing Units which are redeemed under this
Article 6 shall be cancelled and such Units shall no longer be outstanding and
shall not be reissued.

                                    ARTICLE 7
                                    TRUSTEES

7.1 NUMBER OF TRUSTEES

          The Trustees shall consist of not more than seven Trustees nor less
than one Trustee with the number of Trustees from time to time within such range
being fixed by resolution of the Trustees.

7.2 CALLING AND NOTICE OF MEETINGS

          Meetings of the Trustees shall be called and held at such time and at
such place as the Trustees, the Chairman of the Trustees or for so long as there
is only one Trustee, one Trustee, or for so long as there are at least two
Trustees, two Trustees may determine, and any one Trustee or officer of the Fund
may give notice of meetings when directed or authorized by such persons. Notice
of each meeting of the Trustees shall be given to each Trustee not less than 48
hours before the time when the meeting is to be held, provided that if a quorum
of Trustees is present, the Trustees may without notice hold a meeting
immediately following an annual meeting of Unitholders. Notice of a meeting of
the Trustees may be given verbally, in writing or by telephone, fax or other
means of communication. A notice of a meeting of Trustees need not specify the
purpose of or the business to be transacted at the meeting. Notwithstanding the
foregoing, the Trustees may by resolution from time to time fix a day or days in
any month or months for regular meetings of the Trustees at a place and hour to
be named, in which case, provided that a copy of such resolution is sent to each
Trustee forthwith after being passed and forthwith after each Trustee's
appointment, no other notice shall be required for any such regular meeting.



                                      -19-


7.3 PLACE OF MEETINGS

          Meetings of the Trustees may be held at any place in Canada. A Trustee
who attends a meeting of Trustees, in person or by telephone, is deemed to have
consented to the location of the meeting except when he or she attends the
meeting for the express purpose of objecting to the transaction of any business
on the grounds that the meeting is not lawfully held.

7.4 MEETINGS BY TELEPHONE

          With the consent of the chairman of the meeting or a majority of the
other Trustees present at the meeting, a Trustee may participate in a meeting of
the Trustees or of a committee of the Trustees by means of telephone or other
communication facilities that permit all persons participating in the meeting to
hear each other. A Trustee participating in such a meeting in such manner shall
be considered present at the meeting and at the place of the meeting.

7.5 QUORUM

          The quorum for the transaction of business at any meeting of the
Trustees shall consist of one Trustee for so long as there is only one Trustee,
or at any time there is more than one Trustee, two Trustees or such greater
number of Trustees as the Trustees may from time to time determine, and,
notwithstanding any vacancy among the number of Trustees, a quorum of Trustees
may exercise all of the powers of the Trustees.

7.6 CHAIRMAN

          The chairman of any meeting of the Trustees shall be the Trustee
present at the meeting who holds the office of Chairman of the Trustees or if
such person is not present, the Trustees present shall choose one of their
number to be chairman.

7.7 ACTION BY THE TRUSTEES

          At all meetings of the Trustees every question shall be decided by a
majority of the votes cast on the question. In the case of equality of votes,
the chairman of the meeting shall not be entitled to a second or casting vote.
The powers of the Trustees may be exercised by resolution passed at a meeting at
which a quorum is present or by resolution in writing signed by all Trustees who
would be entitled to vote on that resolution at a meeting of the Trustees.
Resolutions in writing may be signed in counterparts.

7.8 ADJOURNED MEETING

          Any meeting of Trustees may be adjourned from time to time by the
chairman of the meeting with the consent of the meeting to a fixed time and
place. Further notice of the adjourned meeting need not be given. The adjourned
meeting shall be duly constituted if a quorum is present and if it is held in
accordance with the terms of the adjournment. If there is not a quorum present
at the adjourned meeting, the original meeting shall be deemed to have
terminated forthwith after its adjournment.



                                      -20-


7.9 REMUNERATION AND EXPENSES

          The Trustees shall be paid such remuneration for their services as
such as the Trustees may from time to time determine, acting reasonably. The
Trustees shall also be entitled to be reimbursed for reasonable travelling and
other expenses properly incurred by them in attending meetings of the Trustees
or any committee thereof or in connection with their services as Trustees.
Nothing herein contained shall preclude any Trustee from serving the Fund in any
other capacity and receiving remuneration therefor.

7.10 OFFICERS

          The Trustees from time to time may appoint one or more officers of the
Fund, including without limitation a Chairman of the Trustees, and, without
prejudice to rights under any employment contract, may remove any officer of the
Fund. The powers and duties of each officer of the Fund shall be those
determined from time to time by the Trustees and, in the absence of such
determination, shall be those usually applicable to the office held.

                                    ARTICLE 8
                APPOINTMENT, RESIGNATION AND REMOVAL OF TRUSTEES

8.1 QUALIFICATION OF TRUSTEES

          The following persons are disqualified from being a Trustee of the
Fund:

     (a)  anyone who is less than eighteen years of age;

     (b)  anyone who is of unsound mind and has been so found by a Court in
          Canada or elsewhere;

     (c)  a person who is not an individual;

     (d)  a person who is a non-resident of Canada as defined in the Income Tax
          Act; and

     (e)  a person who has the status of bankrupt.

8.2 APPOINTMENT OF TRUSTEES

          The Initial Trustee is hereby appointed as the initial Trustee of the
Fund for an initial term of office which, subject to Section 8.5, shall expire
(subject to further appointment) at the close of the first annual meeting of
Unitholders. Notwithstanding Section 8.7, prior to the Closing the Initial
Trustee may appoint up to four additional Trustees for a term to expire (subject
to further appointment) at the close of the first annual meeting of Unitholders
except as otherwise provided in this Declaration of Trust. Trustees shall be
appointed (including the reappointment of incumbent Trustees) at each annual
meeting of Unitholders, and may be appointed at a special meeting of
Unitholders, in each case to hold office, subject to Section 8.5, for a term
expiring at the close of the next annual meeting of Unitholders following such
an appointment. Any such appointment (other than by the Initial Trustee) shall
be made either by a resolution approved by a majority of the votes cast at a
meeting of Unitholders or shall be made



                                      -21-


by resolution in writing in the manner set out in Section 12.10. Notwithstanding
the foregoing, if no Trustees are appointed at the annual meeting of Unitholders
held immediately before the term of office of such Trustees expire, such
Trustees shall continue to hold the office of Trustee under this Declaration of
Trust until successors have been appointed. Notwithstanding Section 8.7, the
Trustees may, between annual meetings of the Unitholders, appoint up to two
additional Trustees for a term to expire (subject to further appointment) at the
close of the next annual meeting of Unitholders.

8.3 CONSENT TO ACT

     (a)  A person who is appointed a Trustee hereunder, other than the Initial
          Trustee, is not a Trustee until the person has, either before or after
          such appointment, executed and delivered to the Fund a consent
          substantially as follows:

               "To:      Algonquin Power Income Fund (the "Fund")
               And to:   The Trustees thereof

               The undersigned hereby consents to act as a Trustee of the Fund
               and hereby agrees, upon the later of the date of this consent and
               the date of the undersigned's appointment as a Trustee of the
               Fund, to thereby become a party, as a Trustee, to the Declaration
               of Trust dated as of September 8, 1997, as amended from time to
               time, constituting the Fund.

               Dated: ___________________________, ___________.

                                   (Signature)

                                                (Print Name)"

     (b)  Upon the later of a person being appointed a Trustee hereunder and
          executing and delivering to the Fund a consent substantially as set
          forth in subsection 8.3(a), such person shall become a Trustee
          hereunder and shall be deemed to be a party (as a Trustee) to this
          Declaration of Trust, as amended from time to time.

8.4 FAILURE TO ELECT MINIMUM NUMBER OF TRUSTEES

          If a meeting of Unitholders fails to elect the minimum number of
Trustees required by this Declaration of Trust by reason of the disqualification
or death of any nominee, the Trustees elected at the meeting may exercise all of
the powers of the Trustees if the number of Trustees so elected constitutes a
quorum.

8.5 CEASING TO HOLD OFFICE

          A Trustee ceases to hold office when:



                                      -22-


     (a)  he or she dies or resigns;

     (b)  he or she is removed in accordance with Section 8.6; or

     (c)  he or she ceases to meet the qualifications as provided under Section
          8.1.

          A resignation of a Trustee becomes effective at the time a written
resignation is sent to the Fund, or at the time specified in the resignation,
whichever is later; provided that if, upon the resignation becoming effective,
the number of remaining Trustees would be less than the number necessary to
constitute a quorum for a meeting of Trustees, the resignation is not effective
until the resigning Trustee's successor is duly appointed as a Trustee.

          Upon a Trustee ceasing to hold office as such hereunder, such Trustee
shall cease to be a party (as a Trustee) to this Declaration of Trust; provided
however that such Trustee shall continue to be entitled to be paid any amounts
owing by the Fund to the Trustee and to the benefits of the indemnity provided
in Section 9.10.

8.6 REMOVAL OF TRUSTEE

          The Unitholders of the Fund may, by resolution approved by a majority
of the votes cast at a meeting of Unitholders, remove any Trustee or Trustees
from office. A vacancy created by the removal of a Trustee may be filled at the
meeting of Unitholders at which the Trustee is removed or, if not so filled, may
be filled as set forth in Section 8.7.

8.7 FILLING VACANCIES

          A quorum of Trustees may fill a vacancy among the Trustees, except a
vacancy resulting from an increase in the number of Trustees or from a failure
to elect the number of Trustees fixed by this Declaration of Trust. If there is
not a quorum of Trustees, or if there has been a failure to elect the minimum
number of Trustees required by this Declaration of Trust, the Trustees then in
office shall forthwith call a special meeting of Unitholders to fill the vacancy
and, if they fail to call a meeting or if there are no Trustees then in office,
the meeting may be called by any Unitholder. A Trustee appointed to fill a
vacancy holds office, subject to Section 8.5, for the unexpired term of his or
her predecessor.

8.8 VALIDITY OF ACTS

          An act of a Trustee is valid notwithstanding an irregularity in the
appointment of the Trustee or a defect in the qualifications of the Trustee.

                                    ARTICLE 9
                             CONCERNING THE TRUSTEES

9.1 POWERS OF THE TRUSTEES

          Subject to the terms and conditions of this Declaration of Trust, the
Trustees may exercise from time to time in respect of the Trust Assets any and
all rights, powers and privileges that could be exercised by a legal and
beneficial owner thereof.



                                      -23-


9.2 SPECIFIC POWERS AND AUTHORITIES

          Subject only to the express limitations contained in this Declaration
of Trust and in addition to any other powers and authorities conferred by this
Declaration of Trust or which the Trustees may have by virtue of any applicable
present or future statute or rule of law, the Trustees (without any action or
consent by the Unitholders) shall have and may exercise at any time and from
time to time the following powers and authorities which may or may not be
exercised by the Trustees in their sole judgment and discretion and in such
manner and upon such terms and conditions as they may from time to time
determine proper:

     (a)  to supervise the activities and manage the investments and affairs of
          the Fund;

     (b)  to maintain records and provide reports to Unitholders;

     (c)  to effect payment of distributions to the Unitholders;

     (d)  to invest funds of the Fund as set forth in Article 4;

     (e)  to possess and exercise all the rights, powers and privileges
          pertaining to the ownership of the Trust Assets to the same extent
          that an individual might, unless otherwise limited herein, and,
          without limiting the generality of the foregoing, to vote or give any
          consent, request or notice, or waive any notice, either in person or
          by proxy or power of attorney, with or without power of substitution,
          to one or more persons, which proxies and powers of attorney may be
          for meetings or actions generally or for any particular meeting or
          action and may include the exercise of discretionary power;

     (f)  where reasonably required, to engage or employ on behalf of the Fund
          any persons as agents, representatives, employees or independent
          contractors (including, without limitation, investment advisors,
          registrars, underwriters, accountants, lawyers, appraisers, brokers or
          otherwise) in one or more capacities;

     (g)  except as prohibited by law, to delegate any of the powers and duties
          of the Trustees to any one or more agents, representatives, officers,
          employees, independent contractors or other persons without liability
          to the Trustees except as provided in this Declaration of Trust;

     (h)  to collect, sue for and receive all sums of money coming due to the
          Fund, and to engage in, intervene in, prosecute, join, defend,
          compromise, abandon or adjust, by arbitration or otherwise, any
          actions, suits, disputes, claims, demands or other litigation or
          proceedings, regulatory or judicial, relating to the Fund, the assets
          of the Fund or the Fund's affairs, to enter into agreements therefor,
          whether or not any suit or proceeding is commenced or claim asserted
          and, in advance of any controversy, to enter into agreements
          regarding, the arbitration, adjudication or settlement thereof;



                                      -24-


     (i)  to arrange for insurance contracts and policies insuring the Fund, its
          assets, the business of Algonquin Canada and its affiliates or
          associates, as applicable, and/or any or all of the Trustees or the
          Unitholders, including against any and all claims and liabilities of
          any nature asserted by any person arising by reason of any action
          alleged to have been taken or omitted by the Fund or by the Trustees
          or Unitholders or otherwise;

     (j)  to cause legal title to any of the assets of the Fund to be held by
          and/or in the name of a Trustee, or except as prohibited by law, by
          and/or in the name of the Fund or any other custodian or person, on
          such terms, in such manner, with such powers in such person as the
          Trustees may determine and with or without disclosure that the Fund or
          a Trustee is interested therein, provided however that should legal
          title to any of the Trust Assets be held by and/or in the name of any
          person or persons other than a Trustee, the Trustees shall require
          such person or persons to execute a trust agreement acknowledging that
          legal title to such assets is held in trust for the benefit of the
          Fund;

     (k)  to enter into and perform the Fund's obligations under and in respect
          of any and all agreements to which the Fund becomes a party, including
          but not limited to any unanimous or other shareholders' agreement with
          the holders of any other securities that may be issued by Algonquin
          Canada or its affiliates or associates, as applicable, agreements in
          connection with the Fund's acquisition of the Trust Assets, the
          management of Algonquin Canada and/or its affiliates or associates,
          the administration and governance of the Fund or the Offering;

     (1)  to do all such other acts and things as are incidental to the
          foregoing, and to exercise all powers which are necessary or useful to
          carry on the purpose and activities of the Fund, to promote any of the
          purposes for which the Fund is formed and to carry out the provisions
          of this Declaration of Trust; and

     (m)  to use their best efforts to ensure that the Fund complies at all
          times with the requirements of paragraph 108(2)(a) and subsection
          132(6) of the Income Tax Act.

9.3 VOTING OF SHARES AND DEBT HELD BY THE FUND

          The Trust Assets held from time to time by the Trustees may be voted
by the Trustees at any and all meetings of shareholders of Algonquin Canada or
its affiliates or associates, as the case may be, or any and all meetings of
noteholders of Algonquin Canada or its affiliates or associates, as the case may
be, at which the holders of such shares or notes are entitled to vote.

9.4 RESTRICTIONS ON TRUSTEE'S POWERS

     (a)  Notwithstanding Section 9.3, the Trustees may not under any
          circumstances whatsoever authorize or vote the Algonquin Canada Shares
          in favour of:



                                      -25-


          (i)   any amendment to the articles of Algonquin Canada or its
                subsidiaries to change the authorized capital of Algonquin
                Canada or its subsidiaries or change or remove any restriction
                on the business of Algonquin Canada or its subsidiaries or
                change or amend the rights, privileges, restrictions and
                conditions attaching to any class of shares of Algonquin Canada
                or its subsidiaries, as applicable;

          (ii)  any sale, lease or other disposition of all or substantially all
                of the property and assets of Algonquin Canada or its
                subsidiaries except in the ordinary course of business;

          (iii) any issue of shares in the capital of Algonquin Canada or its
                subsidiaries other than to the Fund, Algonquin Power Trust or
                any one or more of their respective wholly-owned subsidiaries,
                as applicable;

          (iv)  any amalgamation or other merger of Algonquin Canada or its
                subsidiaries with any other corporation, except one or more
                wholly-owned subsidiaries of the Fund, Algonquin Power Trust or
                any one or more of their respective wholly-owned subsidiaries;
                or

          (v)   any amendment to any unanimous shareholders agreement entered
                into in respect of Algonquin Canada or its subsidiaries,

          except as part of an internal reorganization of the Fund's Assets,
          including, without limitation, Algonquin Power Trust or any one or
          more wholly-owned subsidiaries of the Fund or Algonquin Power Trust or
          any one or more trusts of which the Fund is, directly or indirectly,
          the sole beneficiary.

     (b)  The Trustees shall have no power to borrow, incur any indebtedness or
          give any guarantee on behalf of the Fund or any other person or to
          charge, pledge, hypothecate or grant any security interest, mortgage
          or encumbrance over or with respect to all or any of the Trust Assets;
          provided that:

          (i)   the Fund may subscribe for or otherwise purchase any securities
                of Algonquin Canada or its affiliates or associates including
                the Algonquin Canada Shares, the Canada Note, the US Note, the
                LSR Subordinate Note, the Algonquin Note and the Trafalgar Class
                B Note and may sell, transfer, assign, charge, hypothecate or
                grant any security interest, mortgage or encumbrance in, over or
                with respect to any assets of the Fund, all on such terms and
                conditions as the Trustees may from time to time approve;

          (ii)  the Fund may incur indebtedness for borrowed money up to a
                maximum of $1.5 million incurred for capital expenditures and
                operations related purposes for facilities in which the Fund
                then has an interest, directly or indirectly, and without
                restriction with the approval of the Unitholders by
                Extraordinary Resolution at a meeting of Unitholders called for
                that purpose and may assign, charge, pledge, hypothecate or
                grant any security



                                      -26-


                interest, mortgage or encumbrance in, over or with respect to
                the Trust Assets as security therefor; and

          (iii) the Fund may give a guarantee of any obligations of any direct
                or indirect subsidiary of the Fund or any entity in which the
                Fund holds a majority, directly or indirectly, of the equity
                interest, and charge, pledge, hypothecate or grant any security
                interest, mortgage or encumbrance over or with respect to all or
                any of the Trust Assets in connection with such guarantee; and

          (iv)  the Fund may incur indebtedness for borrowed money from time to
                time, provided that:

               (A)  such indebtedness is on terms and conditions acceptable to
                    the Trustees;

               (B)  such indebtedness is incurred in respect of the acquisition
                    of additional assets which meet the acquisition guidelines
                    established by the Trustees, as the same may be amended by
                    the Trustees from time to time;

               (C)  such indebtedness is incurred in respect of the acquisition
                    of additional assets which is expected to result in an
                    increase in the aggregate amount of Net Income of the Fund
                    and Distributable Capital on a per Unit basis;

               (D)  the Fund will be prohibited from further borrowing if the
                    Consolidated Distributable Cash Coverage Ratio is less than
                    three to one, however, this limitation is not applicable to
                    borrowings by the Fund made solely to refinance existing
                    borrowings;

               (E)  for purposes of subclause (D) above, "CONSOLIDATED
                    DISTRIBUTABLE CASH COVERAGE RATIO" means as of the date of
                    the transaction (the "Transaction Date") giving rise to the
                    need to calculate the Consolidated Distributable Cash
                    Coverage Ratio, the ratio of (i) the aggregate amount of Net
                    Income of the Fund and Distributable Capital that is
                    distributed to Unitholders for the four full calendar
                    quarters immediately prior to the Transaction Date to (ii)
                    the aggregate debt service costs in respect of the
                    consolidated Fund Indebtedness as at the Transaction Date;
                    provided that in respect of Fund Indebtedness incurred prior
                    to June 30, 1999, Net Income of the Fund and Distributable
                    Capital distributed to Unitholders for the preceding four
                    full calendar quarter will be the amount of forecast
                    distributable cash disclosed in the Financial Forecast of
                    the Fund for the period from July 1, 1998 to June 30, 1999
                    contained in the Fund's prospectus dated June 26, 1998 plus
                    the amount of incremental Net Income of the



                                      -27-


                    Fund and Distributable Capital which is anticipated to arise
                    from the investment in the additional assets for which the
                    indebtedness is incurred, as determined by the Trustees,
                    acting reasonably. In addition, if since the beginning of
                    the four full calendar quarters period preceding the
                    Transaction Date, (i) the Fund shall have engaged in any
                    sale of its assets, Net Income of the Fund and Distributable
                    Capital distributed to Unitholders for such period shall be
                    reduced by an amount equal to the Net Income of the Fund and
                    Distributable Capital (if positive), or increased by an
                    amount equal to the Net Income of the Fund and Distributable
                    Capital (if negative), directly attributable to the assets
                    which are the subject of such asset sale for the period
                    calculated on a pro forma basis as if such asset sale and
                    related retirement of indebtedness had occurred on the first
                    day of such period or (ii) the Fund shall have acquired any
                    material assets out of the ordinary course of business, Net
                    Income of the Fund and Distributable Capital shall be
                    calculated on a pro forma basis as if such asset acquisition
                    had occurred on the first day of such four calendar quarters
                    period;

               (F)  for purposes of subclause (E) above, "FUND INDEBTEDNESS"
                    shall refer only to indebtedness for which recourse is not
                    limited to a specific generating facility or group of
                    facilities in which the Fund has an interest, directly or
                    indirectly; and

          (v)  the Fund may assign, charge, pledge, hypothecate or grant a
               security interest, mortgage or encumbrance in, over or with
               respect to the assets of the Fund as security for any permitted
               indebtedness hereunder; and

          provided further, for greater certainty, that such restrictions on
          borrowing, incurring indebtedness, giving of guarantees, or charging,
          pledging, hypothecating or granting of any security interest, mortgage
          or encumbrance do not apply to Algonquin Canada or its affiliates or
          associates.

     (c)  Subject to subsection 9.4(b) hereof, the Trustees shall have no power
          to sell, assign or otherwise dispose of all or substantially all of
          the Trust Assets (except pursuant to an in specie redemption under
          Section 6.5), except:

          (i)  with the approval of the Unitholders called for that purpose; or

          (ii) as part of an internal reorganization of the direct or indirect
               assets of the Fund as a result of which the Fund has the same
               interest, whether direct or indirect, in the assets comprising
               the interest, whether direct or indirect, that it had prior to
               the reorganization.



                                      -28-


          For greater certainty, the Trustees shall have the power to sell,
          assign or dispose of any Trust Assets where such sale, assignment or
          other disposition does not constitute a sale of all or substantially
          all of the Trust Assets.

9.5 BANKING

          The banking activities of the Fund, or any part thereof, shall be
transacted with such bank, trust company, or other firm or corporation carrying
on a banking business as the Trustees may designate, appoint or authorize from
time to time and all such banking activities, or any part thereof, shall be
transacted on the Fund's behalf by one or more officers of the Fund or Trustees
or the Administrator as the Trustees may designate, appoint or authorize from
time to time including, but without restricting the generality of the foregoing,
the operation of the Fund's accounts; the making, signing, drawing, accepting,
endorsing, negotiation, lodging, depositing or transferring of any cheques,
promissory notes, drafts, acceptances, bills of exchange and orders for the
payment of money; the giving of receipts for orders relating to any property of
the Fund; the execution of any agreement relating to any property of the Fund;
the execution of any agreement relating to any such banking activities and
defining the rights and powers of the parties thereto; and the authorizing of
any officer of such banker to do any act or thing on the Fund's behalf to
facilitate such banking activities.

9.6 ARRANGEMENTS WITH ADMINISTRATOR

          The Trustees shall, for and on behalf of the Fund, enter into the
Administration Agreement, on terms satisfactory to the Trustees acting
reasonably, pursuant to which the Administrator shall perform the functions for
the Fund that are similar to the functions performed by the Chief Executive
Officer and Chief Financial Officer of a company carrying on a business similar
to the business carried on by the Fund. Without limiting the generality of the
foregoing, the Trustees hereby authorize and direct the Administrator to execute
and deliver on behalf of the Fund any and all documents and agreements,
including, without limitation, the Preliminary Prospectus, the Prospectus and
any underwriting or agency agreement relating to the Offering and banking
agreements, including guarantees and security documents relating thereto.

9.7 STANDARD OF CARE AND DUTIES

          The Trustees shall act honestly and in good faith with a view to the
best interests of the Fund and in connection therewith shall exercise the degree
of care, diligence and skill that a reasonably prudent person would exercise in
comparable circumstances. A Trustee shall not be liable in carrying out his or
her duties under this Declaration of Trust, except in cases where a Trustee
fails to act honestly and in good faith with a view to the best interests of the
Fund or to exercise the degree of care, diligence and skill that a reasonably
prudent person would exercise in comparable circumstances. The duties and
standard of care of the Trustees provided as aforesaid are intended to be
similar to, and not to be any greater than, those imposed on a director of a
corporation governed by the Business Corporations Act (Ontario). Unless
otherwise required by law, a Trustee shall not be required to give bond surety
or security in any jurisdiction for the performance of any duties or obligations
hereunder. Each Trustee, in his or her capacity as trustee, shall not be
required to devote his or her entire time to the investments and affairs of the
Fund.



                                      -29-


9.8 FEES AND EXPENSES

          As part of the expenses of the Fund, the Trustees may pay or cause to
be paid reasonable fees, costs and expenses incurred in connection with the
administration and management of the Fund, including (without limitation) fees
of auditors, accountants, lawyers, appraisers and other agents, consultants and
professional advisors employed by or on behalf of the Fund and the cost of
reporting or giving notices to Unitholders. All costs, charges and expenses
properly incurred by the Trustees on behalf of the Fund shall be payable out of
the Trust Assets.

9.9 LIMITATIONS ON LIABILITIES OF TRUSTEES

          The Trustees, and the officers and agents of the Fund shall not be
liable to any Unitholder for any action taken in good faith in reliance on any
documents that are, prima facie, properly executed, for any depreciation of, or
loss to, the Fund incurred by reason of the sale of any security, for the loss
or disposition of monies or securities, or for any other action or failure to
act (including, without limitation, the failure to compel in any way any former
Trustee to redress any breach of trust or any failure by Algonquin Canada or its
affiliates or associates to perform obligations or pay monies owed to the Fund),
except for a breach of the standard of care, diligence and skill as set out in
Section 9.7. If the Trustees have retained an appropriate expert or advisor with
respect to any matter connected with their duties under this Declaration of
Trust, the Trustees may act or refuse to act based on the advice of such expert
or advisor and, notwithstanding any provision of this Declaration of Trust,
including, without limitation, the standard of care, diligence and skill set out
in Section 9.7 hereof, the Trustees shall not be liable for any action or
refusal to act based on the advice of any such expert or advisor.

9.10 INDEMNIFICATION OF TRUSTEES

          Each Trustee, each former Trustee, each officer of the Fund and each
former officer of the Fund shall be entitled to be indemnified and reimbursed
out of the Trust Assets in respect of any and all taxes, penalties or interest
in respect of unpaid taxes or other governmental charges imposed upon the
Trustee or officer in consequence of his or her performance of his or her duties
hereunder and in respect of any and all costs, charges and expenses, including
amounts paid to settle an action or satisfy a judgment, reasonably incurred in
respect of any civil, criminal or administrative action or proceeding to which
the Trustee, former Trustee, officer or former officer is made a party by reason
of being or having been a Trustee or officer of the Fund or, at the request of
the Fund, a director or officer of Algonquin Canada or any of its affiliates or
associates; provided that a Trustee, former Trustee, officer or former officer
shall not be indemnified out of the Trust Assets in respect of unpaid taxes or
other governmental charges or in respect of such costs, charges and expenses
that arise out of or as a result or in the course of a breach of the duties and
standard of care, diligence and skill provided under Section 9.7. A Trustee,
former Trustee, officer or former officer shall not be entitled to satisfy any
right of indemnity or reimbursement granted herein, or otherwise existing under
law, except out of the Trust Assets, and no Unitholder or other Trustee or
officer shall be personally liable to any person with respect to any claim for
such indemnity or reimbursement as aforesaid.



                                      -30-


9.11 CONTRACTUAL OBLIGATIONS OF FUND

          In respect of any obligations or liabilities being incurred by the
Fund or the Trustees on behalf of the Fund, the Trustees and the Fund shall make
all reasonable efforts to include as a specific term of such obligations or
liabilities a contractual provision to the effect that neither the Unitholders
nor the Trustees have any personal liability or obligations in respect thereof.

9.12 CONFLICTS OF INTEREST

          A Trustee or an officer of the Fund who is a party to, or is a
director or officer of or has a material interest in any person who is a party
to, a material contract or proposed material contract with the Fund shall
disclose in writing to the Fund or request to have entered in the minutes of
meetings of the Trustees the nature and extent of such interest, and shall not
vote on any resolution to approve the contract, unless the contract is one
relating primarily to his or her remuneration as a Trustee or officer, one for
indemnity or insurance in respect of him or her, or one with Algonquin Canada or
its affiliates or associates. To the extent that management of the Fund involves
matters which should properly be delegated to or determined by an independent
person or persons (which may or may not include certain of the Trustees), the
Trustees will delegate such matters to such independent person or persons and
any decision by such person or persons shall be binding on the Trustees.

                                   ARTICLE 10
                             COMMITTEES OF TRUSTEES

10.1 DELEGATION

          Except as prohibited by law, the Trustees may appoint from their
number a committee of Trustees and may delegate to the committee of Trustees
such authority as the Trustees may in their sole discretion deem necessary or
desirable to effect the administration of the duties of the Trustees under this
Declaration of Trust, without regard to whether such authority is normally
granted or delegated by trustees.

10.2 PROCEDURE

          Unless otherwise determined by the Trustees, a quorum for meetings of
any committee shall be a majority of its members, each committee shall have the
power to appoint its chairman and the rules for calling, holding, conducting and
adjourning meetings of the committee shall be the same as those governing the
Trustees. Each member of a committee shall serve during the pleasure of the
Trustees and, in any event, only so long as he or she shall be a Trustee. The
Trustees may fill vacancies in a committee by appointment from among their
members. Provided that a quorum is maintained, the committee may continue to
exercise its powers, notwithstanding any vacancy among its members.



                                      -31-


                                   ARTICLE 11
                                    AMENDMENT

11.1 AMENDMENT

          The provisions of this Declaration of Trust, except where specifically
provided otherwise, may only be amended by Extraordinary Resolution; provided
that the provisions of this Declaration of Trust may be amended by the Trustees
without the consent, approval or ratification of the Unitholders or any other
person:

     (a)  prior to Closing; or

     (b)  at any time for the purpose of:

          (i)   ensuring continuing compliance with applicable laws,
                regulations, requirements or policies of any governmental
                authority having jurisdiction over the Trustees or the Fund;

          (ii)  providing, in the bona fide opinion of the Trustees, additional
                protection for the Unitholders;

          (iii) removing any conflicts or inconsistencies in this Declaration of
                Trust or making corrections which are, in the opinion of the
                Trustees, necessary or desirable and not materially prejudicial
                to the rights of Unitholders; or

          (iv)  making amendments which, in the opinion of the Trustees, are
                necessary or desirable in the interests of the Unitholders as a
                result of changes in, or in the administration or interpretation
                of, taxation laws,

but notwithstanding the foregoing, no such amendment shall modify the right to
one vote per Unit or reduce the equal undivided beneficial interest in the Trust
Assets represented by any Unit without the consent of the holder of such Unit
and no amendment shall reduce the percentage of votes required to be cast at a
meeting of the Unitholders for the purpose of this Section 11.1 without the
consent of the holders of all of the Units then outstanding.

11.2 NOTIFICATION OF AMENDMENT

          As soon as shall be practicable after the making of any amendment
pursuant to this Article 11, the Trustees shall furnish written notification of
the substance of such amendment to each Unitholder.

                                   ARTICLE 12
                             MEETINGS OF UNITHOLDERS

12.1 ANNUAL AND SPECIAL MEETINGS OF UNITHOLDERS

          Annual meetings of Unitholders shall be called, commencing in 1998, on
a day on or before June 30 in each year, at a time and at a place in Canada set
by the Trustees. The



                                      -32-


business transacted at such meetings shall include the presentation of the
audited financial statements of the Fund for the prior fiscal year, the
appointment of Trustees for the ensuing year in accordance with Article 8, the
appointment of Auditors and the transaction of such other business as
Unitholders may be entitled to vote upon as hereinafter provided in this Article
12 or as the Trustees may determine. Special meetings of Unitholders may be
called at any time by the Trustees and shall be called by the Trustees upon a
written request of Unitholders holding in the aggregate not less than 10% of the
Units then outstanding, such request specifying in reasonable detail the
business proposed to be transacted at such meeting. The chairman of any annual
or special meeting shall be the Chairman of the Trustees or any other Trustee
specified by resolution of the Trustees or, in the absence of any Trustee, any
person appointed as chairman of the meeting by the Unitholders present. The
Trustees, the Auditors and any other person approved by the Trustees, the
chairman of the meeting or by resolution passed by a majority of the Unitholders
may attend meetings of the Unitholders.

12.2 NOTICE OF MEETINGS

          Notice of all meetings of Unitholders shall be given by unregistered
mail, postage prepaid, addressed to each Unitholder at his or her last address
on the books of the Fund, mailed at least 21 days and not more than 50 days
before the meeting. Such notice shall specify the time when, and the place
where, such meeting is to be held and shall specify the nature of the business
to be transacted at such meeting in sufficient detail to permit a Unitholder to
form a reasonable judgment thereon, together with the text of any Extraordinary
Resolution proposed to be passed, at the time of mailing of the notice. Any
adjourned meeting may be held as adjourned without further notice. The
accidental omission to give notice or the non-receipt of such notice by any
Unitholder shall not invalidate any resolution passed at any such meeting.
Notwithstanding the foregoing, a meeting of Unitholders may be held at any time
without notice if all the Unitholders are present or represented thereat or
those not so present or represented have waived notice. Any Unitholder (or a
duly appointed proxy of a Unitholder) may waive any notice required to be given
under the provisions of this section, and such waiver, whether given before or
after the meeting, shall cure any default in the giving of such notice.

12.3 QUORUM

          At any meeting of Unitholders, subject as hereinafter provided, a
quorum shall consist of two or more individuals present in person or represented
by proxy. In the event of such quorum not being present at the appointed place
on the date for which the meeting is called within 30 minutes after the time
fixed for the holding of such meeting, the meeting, if called by request of
Unitholders, shall be terminated and, if otherwise called, shall stand adjourned
to such day being not less than 14 days later and to such place and time as may
be appointed by the chairman of the meeting. If at such adjourned meeting a
quorum as above defined is not present, the Unitholders present either
personally or by proxy shall form a quorum, and any business may be brought
before or dealt with at such an adjourned meeting which might have been brought
before or dealt with at the original meeting in accordance with the notice
calling the same.



                                      -33-


12.4 VOTING RIGHTS OF UNITHOLDERS

          Only Unitholders of record shall be entitled to vote and each Unit
shall entitle the holder or holders of that Unit to one vote on a poll vote at
any meeting of Unitholders. Every question submitted to a meeting, other than an
Extraordinary Resolution, shall, unless a poll vote is demanded, be decided by a
show of hands vote, on which every person present and entitled to vote shall be
entitled to one vote. At any meeting of Unitholders, any holder of Units
entitled to vote thereat may vote by proxy and a proxy need not be a Unitholder,
provided that no proxy shall be voted at any meeting unless it shall have been
received by the Transfer Agent for verification 24 hours prior to the
commencement of such meeting. When any Unit is held jointly by several persons,
any one of them may vote at any meeting in person or by proxy in respect of such
Unit, but if more than one of them shall be present at such meeting in person or
by proxy, and such joint owners of their proxies so present disagree as to any
vote to be cast, such vote purporting to be executed by or on behalf of a
Unitholder shall be deemed valid unless challenged at or prior to its exercise,
and the burden of proving invalidity shall rest on the challenger.

12.5 RESOLUTIONS BINDING THE TRUSTEES

          Unitholders shall be entitled to pass resolutions that will bind the
Trustees only with respect to the following matters:

     (a)  appointment or removal of a Trustee as provided in Article 8;

     (b)  appointment or removal of Auditors as provided in Article 17;

     (c)  appointment of an Inspector as provided in Section 12.9;

     (d)  amendments to this Declaration of Trust as provided in Section 11.1;

     (e)  termination of the Fund as provided in Section 14.2; and

     (f)  sale of the Trust Assets as an entirety or substantially as an
          entirety other than as part of an internal reorganization.

Except with respect to the above matters set out in this Section 12.5, no action
taken by the Unitholders or any resolution of the Unitholders at any meeting
shall in any way bind the Trustees. Any action taken or resolution passed in
respect of any matter at a meeting of Unitholders shall be by Extraordinary
Resolution, unless the contrary is otherwise expressly provided under any
specific provision of this Declaration of Trust and except for the matters set
out in subsections (a) and (b) above, which matters may be dealt with by a
resolution passed by a majority of the votes cast by Unitholders represented at
the meeting.

12.6 MEANING OF "EXTRAORDINARY RESOLUTION"

     (a)  The expression "Extraordinary Resolution" when used in this
          Declaration of Trust means a resolution proposed to be passed as an
          extraordinary resolution at a meeting of Unitholders (including an
          adjourned meeting) duly convened for that



                                      -34-


          purpose and held in accordance with the provisions of this Article at
          which two or more individuals present in person or represented by
          proxy and passed by the affirmative votes of the holders of not less
          than 66 2/3% of the Units represented at the meeting and voted on a
          poll upon such resolution or a written resolution executed in
          accordance with Section 12.10.

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

12.7 MEANING OF "OUTSTANDING"

          Every Unit issued, certified and delivered hereunder shall be deemed
to be outstanding until it shall be cancelled or delivered to the Trustees or
Transfer Agent for cancellation provided that:

     (a)  when a new Unit Certificate has been issued in substitution for a Unit
          Certificate which has been lost, stolen or destroyed, only one of such
          Unit Certificates shall be counted for the purposes of determining the
          number of Units outstanding; and

     (b)  for the purpose of any provision of this Declaration of Trust
          entitling holders of outstanding Units to vote, sign consents,
          requisitions or other instruments or take any action under this
          Declaration of Trust, Units owned directly or indirectly, legally or
          equitably, by the Fund, Algonquin Canada or any affiliate thereof
          shall be disregarded except that:

          (i)  for the purpose of determining whether the Trustees shall be
               protected in relying on any such vote, consent, requisition or
               other instrument or action, only the Units which the Trustees
               know are so owned shall be so disregarded; and

          (ii) Units so owned which have been pledged in good faith other than
               to the Fund, Algonquin Canada, or any affiliate thereof shall not
               be so disregarded if the pledgee shall establish to the
               satisfaction of the Trustees the pledgee's right to vote such
               Units in his or her discretion free from the control of the Fund,
               Algonquin Canada or any affiliate thereof.

12.8 RECORD DATE FOR VOTING

          For the purpose of determining the Unitholders who are entitled to
vote or act at any meeting or any adjournment thereof, the Trustees may fix a
date not less than 21 days and not more than 50 days prior to the date of any
meeting of Unitholders as a record date for the determination of Unitholders
entitled to vote at such meeting or any adjournment thereof; and any Unitholder
who was a Unitholder at the time so fixed shall be entitled to vote at such
meeting or any adjournment thereof, even though the Unitholder has since that
time disposed of his or her Units, and no Unitholder becoming such after that
time shall be so entitled to vote at such meeting or any adjournment thereof. In
the event that the Trustees do not fix a record date



                                      -35-


for any meeting of Unitholders, the record date for such meeting shall be the
date upon which notice of the meeting is given as provided under Section 12.2.

12.9 APPOINTMENT OF INSPECTOR

          The Trustees shall call a meeting of Unitholders upon the written
request of Unitholders holding not less than 5% of the Units then outstanding in
the aggregate for the purpose of considering the appointment of an inspector
(the "Inspector") to investigate the performance by the Trustees of their
responsibilities and duties in respect of the Fund. An Inspector may be
appointed for such purpose, at the expense of the Fund, at such meeting by a
resolution approved by a majority of the votes cast at the meeting.

12.10 RESOLUTIONS IN WRITING

          Notwithstanding any other provision of this Declaration of Trust, a
resolution in writing executed by Unitholders holding 66 2/3% of the outstanding
Units at any time shall be as valid and binding for all purposes of this
Declaration of Trust as if such Unitholders had exercised at that time all of
the voting rights to which they were then entitled hereunder in favour of such
resolution at a meeting of Unitholders duly called for the purpose.

                                   ARTICLE 13
                CERTIFICATES, REGISTRATION AND TRANSFER OF UNITS

13.1 NATURE OF UNITS

          The provisions of this Article 13 shall not in any way alter the
nature of the Units or the relationships of a Unitholder to the Trustees and of
one Unitholder to another but are intended only to facilitate the issuance of
certificates evidencing the ownership of Units and the recording of all
transactions in respect of Units and Unit Certificates, whether by the Fund,
securities dealers, stock exchanges, transfer agents, registrars or other
persons.

13.2 UNIT CERTIFICATES

     (a)  Unit Certificates shall, subject to the provisions hereof, be in such
          form as is authorized from time to time by the Trustees.

     (b)  Unit Certificates are issuable only in fully registered form.

     (c)  The definitive form of the Unit Certificates shall:

          (i)   be in both English and French languages, unless the Trustees
                agree to the contrary;

          (ii)  be dated as of the date of issue thereof; and

          (iii) contain such distinguishing letters and numbers as the Trustees
                shall prescribe.



                                      -36-


     (d)  In the event that any provision of the Unit Certificates in the French
          language shall be susceptible of an interpretation different from the
          equivalent provision in the English language, the interpretation of
          such provision in the English language shall be determinative.

     (e)  Each Unit Certificate shall be signed on behalf of the Trustees and
          the Transfer Agent of such Units. Signatures of the Trustees required
          to appear on such certificate may be printed, lithographed or
          otherwise mechanically reproduced thereon and, in such event,
          certificates so signed are as valid as if they had been signed
          manually.

13.3 CONTENTS OF UNIT CERTIFICATES

          Until otherwise determined by the Trustees, each Unit Certificate
shall legibly set forth on the face thereof, inter alia, the following:

     (a)  the name of the Fund and the words "A trust created under the laws of
          the Province of Ontario by a Declaration of Trust dated as of
          September 8, 1997 or words of like effect;

     (b)  the name of the person to whom the Unit Certificate is issued as
          Unitholder;

     (c)  the number of Units represented thereby and whether or not the Units
          represented thereby are fully paid;

     (d)  that the Units represented thereby are transferable;

     (e)  "The Units represented by this certificate are issued upon the terms
          and subject to the conditions of the Declaration of Trust, which
          Declaration of Trust is binding upon all holders of Units and, by
          acceptance of this certificate, the holder assents to the terms and
          conditions of the Declaration of Trust. A copy of the Declaration of
          Trust pursuant to which this certificate and the Units represented
          thereby are issued may be obtained by a Unitholder on demand and upon
          payment of reasonable reproduction costs" or words of like effect; and

     (f)  "For information as to personal liability of a Unitholder, see the
          reverse side of this certificate" or words of like effect.

          Until otherwise determined by the Trustees, each such certificate
shall legibly set forth on the face or the reverse side thereof, inter alia, the
following:

     (a)  "The Declaration of Trust provides that no Unitholder shall be subject
          to any personal liability whatsoever, in tort, contract or otherwise,
          to any person in connection with the assets of the Fund or the
          obligations or the affairs of the Fund and all such persons shall look
          solely to the assets of the Fund for satisfaction of claims of any
          nature arising out of or in connection therewith and the assets of the
          Fund only shall be subject to levy or execution" or words of like
          effect;



                                      -37-


     (b)  appropriate forms of notice of exercise of the right of redemption and
          the right of transfer and of powers of attorney for transferring
          Units; and

     (c)  a reference to the limitations on foreign ownership set forth in
          Section 13.5 hereof.

          The Unit Certificates may be engraved, printed or lithographed, or
partly in one form and partly in another, as the Trustees may determine.

13.4 REGISTER OF UNITHOLDERS

          A register shall be kept at the principal corporate trust office in
Toronto, Ontario of the Transfer Agent, which register shall contain the names
and addresses of the Unitholders, the respective numbers of Units held by them,
the certificate numbers of the certificates representing such Units and a record
of all transfers and redemptions thereof. Branch transfer registers shall be
maintained at such other offices of the Transfer Agent as the Trustees may from
time to time designate. Only Unitholders whose certificates are so recorded
shall be entitled to receive distributions or to exercise or enjoy the rights of
Unitholders hereunder. The Trustees shall have the right to treat the person
registered as a Unitholder on the register of the Fund as the owner of such
Units for all purposes, including, without limitation, payment of any
distribution, giving notice to Unitholders and determining the right to attend
and vote at meetings of Unitholders.

13.5 LIMITATION ON NON-RESIDENT OWNERSHIP

          At no time may non-residents of Canada be the beneficial owners of a
majority of the Units and the Trustees shall inform the Transfer Agent of this
restriction. The Transfer Agent or the Trustees may require declarations as to
the jurisdictions in which beneficial owners of Units are resident. If the
Transfer Agent or the Trustees become aware, as a result of requiring such
declarations as to beneficial ownership, that the beneficial owners of 49% of
the Units then outstanding are, or may be, non-residents or that such a
situation is imminent, the Transfer Agent or the Trustees may make a public
announcement thereof and the Transfer Agent shall not accept a subscription for
Units from or issue or register a transfer of Units to a person unless the
person provides a declaration in form and content satisfactory to the Trustees
that the person is not a non-resident. If, notwithstanding the foregoing, the
Transfer Agent or the Trustees determine that a majority of the Units are held
by non-residents, the Transfer Agent may, or the Trustee may cause the Transfer
Agent to, send a notice to non-resident holders of Units, chosen in inverse
order to the order of acquisition or registration or in such other manner as the
Transfer Agent or the Trustees may consider equitable and practicable, requiring
them to sell their units or a portion thereof within a specified period of not
less than 60 days. If the Unitholders receiving such notice have not sold the
specified number of Units or provided the Transfer Agent with satisfactory
evidence that they are non-residents within such period, the Transfer Agent may,
on behalf of such Unitholders, sell such Units and, in the interim, shall
suspend the voting and distribution rights attached to such Units. Upon such
sale, the affected holders shall cease to be holders of Units and their rights
shall be limited to receiving the net proceeds of sale upon surrender of the
Unit Certificates representing such Units.



                                      -38-


13.6 TRANSFER OF UNITS

     (a)  Subject to the provisions of this Article 13, the Units shall be fully
          transferable without charge as between persons, but no transfer of
          Units shall be effective as against the Trustees or shall be in any
          way binding upon the Trustees until the transfer has been recorded on
          the register or one of the branch transfer registers maintained by the
          Trustees, the Fund or the Transfer Agent. No transfer of a Unit shall
          be recognized unless such transfer is of a whole Unit.

     (b)  Subject to the provisions of this Article 13, Units shall be
          transferable on the register or one of the branch transfer registers
          only by the Unitholders of record thereof or their executors,
          administrators or other legal representatives or by their agents or
          attorneys duly authorized in writing, and only upon delivery to the
          Fund or to the Transfer Agent of the certificate therefor, properly
          endorsed or accompanied by a duly executed instrument of transfer or
          power of attorney and accompanied by all necessary transfer or other
          taxes imposed by law, together with such evidence of the genuineness
          of such endorsement, execution and authorization and other matters
          that may reasonably be required by the Trustees or the Transfer Agent.
          Upon such delivery, the transfer shall be recorded on the register or
          branch transfer registers and a new certificate for the Units shall be
          issued to the transferee and a new certificate for the balance of the
          Units not transferred shall be issued to the transferor.

     (c)  Any person becoming entitled to any Units as a consequence of the
          death, bankruptcy or mental incompetence of any Unitholder, or
          otherwise by operation of law, shall be recorded as the holder of such
          Units and shall receive a new certificate therefor only upon
          production of evidence satisfactory to the Trustees or the Transfer
          Agent and delivery of the existing certificate to the Trustees or the
          Transfer Agent, but until such record is made, the Unitholder of
          record shall continue to be and be deemed to be the holder of such
          Units for all purposes, whether or not the Trustees or the Transfer
          Agent shall have actual or other notice of such death or other event.

     (d)  Unit Certificates representing any number of Units may be exchanged
          without charge for Unit Certificates representing an equivalent number
          of Units in the aggregate. Any exchange of Unit Certificates may be
          made at the offices of the Fund or the Transfer Agent where registers
          are maintained for Unit Certificates pursuant to the provisions of
          this Article 13. Any Unit Certificates tendered for exchange shall be
          surrendered to the Trustees or appropriate Transfer Agent and then
          shall be cancelled.

13.7 UNITS HELD JOINTLY OR IN A FIDUCIARY CAPACITY

          The Trustees may treat two or more persons holding any Units as joint
owners of the entire interest therein unless their ownership is expressly
otherwise recorded on the register of the Fund, but no entry shall be made in
the register or on any certificate that any person is in any other manner
entitled to any future, limited or contingent interest in any Units; provided,



                                      -39-


however, that any person recorded as a Unitholder may subject to the provisions
hereinafter contained, be described in the register or on any certificate as a
fiduciary of any kind and any customary words may be added to the description of
the holder to identify the nature of such fiduciary relationship.

13.8 PERFORMANCE OF TRUST

          The Trustees and the Unitholders shall not be bound to be responsible
for or otherwise inquire into or ensure the performance of any trust, express,
implied or constructive, or of any pledge or equity to which any of the Units or
any interest therein are or may be subject, or to ascertain or enquire whether
any transfer of any such Units or interests therein by any such Unitholder or by
his or her personal representatives is authorized by such trust, pledge, or
equity, or to recognize any person as having any interest therein except for the
person recorded as Unitholder.

13.9 LOST CERTIFICATES

          In the event that any certificate for Units is lost, stolen, destroyed
or mutilated, the Trustees or the Transfer Agent may authorize the issuance of a
new certificate for the same number of Units in lieu thereof. The Trustees or
the Transfer Agent may in their or its discretion, before the issuance of such
new certificate, require the owner of the lost, stolen, destroyed or mutilated
certificate, or the legal representative of the owner, to make an affidavit or
statutory declaration setting forth such facts as to the loss, theft,
destruction or mutilation as the Trustees or the Transfer Agent may deem
necessary, to surrender any mutilated certificate and may require the applicant
to supply to the Fund a "lost certificate bond" or a similar bond in such
reasonable sum as the Trustees or the Transfer Agent may direct, indemnifying
the Fund and the Transfer Agent for so doing.

13.10 DEATH OF A UNITHOLDER

          The death of a Unitholder during the continuance of the Fund shall not
terminate the Fund or any of the mutual or respective rights and obligations
created by or arising under this Declaration of Trust nor give such Unitholder's
personal representatives a right to an accounting or take any action in court or
otherwise against other Unitholders or the Trustees or the Trust Assets, but
shall merely entitle the personal representatives of the deceased Unitholder to
demand and receive, pursuant to the provisions hereof, a new certificate for
Units in place of the certificate held by the deceased Unitholder, and upon the
acceptance thereof, such personal representatives shall succeed to all rights of
the deceased Unitholder under this Declaration of Trust.

13.11 UNCLAIMED INTEREST OR DISTRIBUTION

          In the event that the Trustees shall hold any amount of interest or
other distributable amount which is unclaimed or which cannot be paid for any
reason, the Trustees shall be under no obligation to invest or reinvest the same
but shall only be obliged to hold the same in a current interest-bearing account
pending payment to the person or persons entitled thereto. The Trustees shall,
as and when required by law, and may at any time prior to such



                                      -40-


required time, pay all or part of such interest or other distributable amount so
held to the public trustee (or other appropriate government official or agency)
whose receipt shall be a good discharge and release of the Trustees.

13.12 OFFERS FOR UNITS

     (a)  In this Section 13.12:

          (i)   "AFFILIATE" and "ASSOCIATE" shall have their respective meanings
                set forth in the Securities Act (Ontario);

          (ii)  "DISSENTING UNITHOLDER" means a Unitholder who does not accept
                an Offer referred to in subsection (b) and includes any assignee
                of the Unit of a Unitholder to whom such an Offer is made,
                whether or not such assignee is recognized under this
                Declaration of Trust;

          (iii) "OFFER" means an offer to acquire outstanding Units;

          (iv)  "OFFER TO ACQUIRE" includes an acceptance of an offer to sell;

          (v)   "OFFERER" means a person, or two or more persons acting jointly
                or in concert, who make an Offer to acquire Units;

          (vi)  "OFFERER'S NOTICE" means the notice described in subsection (c);

          (vii) "OFFERER'S UNITS" means Units beneficially owned, or over which
                control or direction is exercised, on the date of an Offer by
                the Offerer, any Affiliate or Associate of the Offerer or any
                person or company acting jointly or in concert with the Offerer;

     (b)  If an Offer for all of the outstanding Units (other than Units held by
          or on behalf of the Offerer or an Affiliate or Associate of the
          Offerer) is made and, by such Offer, the Offerer agrees to be bound by
          the provisions of this Article 13 and

          (i)   within the time provided in the Offer for its acceptance or
                within 45 days after the date the Offer is made, whichever
                period is the shorter, the Offer is accepted by Unitholders
                representing at least 90% of the outstanding Units, other than
                the Offerer's Units;

          (ii)  the Offerer is bound to take up and pay for, or has taken up and
                paid for the Units of the Unitholders who accepted the Offer;
                and

          (iii) the Offerer complies with subsections (c) and (e) of this
                Section 13.12;

          the Offerer is entitled to acquire, and the Dissenting Unitholders are
          required to sell to the Offerer, the Units held by the Dissenting
          Unitholders for the same consideration per Unit payable or paid, as
          the case may be, under the Offer.



                                      -41-


     (c)  Where an Offerer is entitled to acquire Units held by Dissenting
          Unitholders pursuant to subsection (b) of this Section 13.12, and the
          Offerer wishes to exercise such right, the Offerer shall send by
          registered mail within 30 days after the date of termination of the
          Offer a notice (the "Offerer's Notice") to each Dissenting Unitholder
          stating that:

          (i)   Unitholders holding at least 90% of the Units of all
                Unitholders, other than Offerer's Units, have accepted the
                Offer;

          (ii)  the Offerer is bound to take up and pay for, or has taken up and
                paid for, the Units of the Unitholders who accepted the Offer;

          (iii) Dissenting Unitholders must transfer their respective Units to
                the Offerer on the terms on which the Offerer acquired the Units
                of the Unitholders who accepted the Offer within 21 days after
                the date of the sending of the Offerer's Notice; and

          (iv)  Dissenting Unitholders must send their respective Unit
                Certificate(s) to the Fund within 21 days after the date of the
                sending of the Offerer's Notice.

     (d)  A Dissenting Unitholder to whom an Offerer's Notice is sent pursuant
          to subsection (c) of this Section 13.12 shall, within 21 days after
          the sending of the Offerer's Notice, send his or her Unit
          Certificate(s) to the Fund, duly endorsed for transfer.

     (e)  Within 21 days after the Offerer sends an Offerer's Notice pursuant to
          subsection (c) of this Section 13.12, the Offerer shall pay or
          transfer to the Trustees, or to such other person as the Trustees may
          direct, the cash or other consideration that is payable to Dissenting
          Unitholders pursuant to subsection (b) of this Section 13.12.

     (f)  The Trustees, or the person directed by the Trustees, shall hold in
          trust for the Dissenting Unitholders the cash or other consideration
          they or it receives under subsection (e) of this Section 13.12. The
          Trustees, or such persons, shall deposit such cash in a separate
          account in a Canadian chartered bank, and shall place other
          consideration in the custody of a Canadian chartered bank or similar
          institution for safekeeping.

     (g)  Within 30 days after the date of the sending of an Offerer's Notice
          pursuant to subsection (c) of this Section 13.12, the Trustees, if the
          Offerer has complied with subsection (e) of this Section 13.12, shall:

          (i)  do all acts and things and execute and cause to be executed all
               instruments as in the Trustees' opinion may be necessary or
               desirable to cause the transfer of the Units of the Dissenting
               Unitholders to the Offerer;



                                      -42-


          (ii) send to each Dissenting Unitholder who has complied with
               subsection (d), the consideration to which such Dissenting
               Unitholder is entitled under this Section 13.12; and

     (h)  send to each Dissenting Unitholder who has not complied with
          subsection (d) of this Section 13.12 a notice stating that:

          (i)   his or her Units have been transferred to the Offerer;

          (ii)  the Trustees or some other person designated in such notice are
                holding in trust the consideration for such Units; and

          (iii) the Trustees, or such other person, will send the consideration
                to such Dissenting Unitholder as soon as practicable after
                receiving such Dissenting Unitholder's Certificate(s) or such
                other documents as the Trustees, or such other person may
                require in lieu thereof,

                and the Trustees are hereby appointed the agent and attorney of
                the Dissenting Unitholders for the purposes of giving effect to
                the foregoing provisions.

     (i)  An Offerer cannot make an Offer for Units unless, concurrent with the
          communication of the Offer to any Unitholder, a copy of the Offer is
          provided to the Fund.

13.13 POWER OF ATTORNEY

          Each Unitholder hereby grants to the Trustees and each of them, their
successors and assigns, a power of attorney constituting the Trustees, and each
of them, with full power of substitution, as his or her true and lawful attorney
to act on his or her behalf, with full power and authority in his or her name,
place and stead, and to execute, under seal or otherwise, swear to, acknowledge,
deliver, make, file or record when, as and where required:

     (a)  this Declaration of Trust, any amendment to this Declaration of Trust
          and any other instrument required or desirable to qualify, continue
          and keep in good standing the Fund as a mutual fund trust;

     (b)  any instrument, deed, agreement or document in connection with
          carrying on the activities and affairs of the Fund as authorized in
          this Declaration of Trust;

     (c)  all conveyances and other documents required in connection with the
          dissolution or liquidation of the Fund in accordance with the terms of
          this Declaration of Trust; and

     (d)  any and all elections, determinations or designations whether jointly
          with third parties or otherwise, under the Income Tax Act or any other
          taxation or other legislation or similar laws of Canada or of any
          other jurisdiction in respect of the affairs of the Fund or of a
          Unitholder's interest in the Fund.



                                      -43-


The power of attorney granted herein is irrevocable and will survive the death,
disability or bankruptcy of the Unitholder or the assignment by the Unitholder
of all or part of his or her interest in the Fund and will extend to and bind
the heirs, executors, administrators and other legal representatives and
successors and assigns of the Unitholder.

                                   ARTICLE 14
                                  TERMINATION

14.1 TERM OF FUND

          Subject to other provisions of this Declaration of Trust, the Fund
shall continue for a term ending 21 years after the date of death of the last
surviving issue of Her Majesty, Queen Elizabeth II, alive on September 8, 1997.
For the purpose of terminating the Fund by such date, the Fund shall commence to
wind-up the affairs of the Fund on such date as may be determined by the
Trustees, being not more than two years prior to the end of the term of the
Fund.

14.2 TERMINATION WITH THE APPROVAL OF UNITHOLDERS

          The Unitholders may vote by Extraordinary Resolution to terminate the
Fund at any meeting of Unitholders duly called by the Trustees for the purpose
of considering termination of the Fund, following which the Trustees shall
commence to wind-up the affairs of the Fund. Such Extraordinary Resolution may
contain such directions to the Trustees as the Unitholders determine, including
a direction to distribute the Algonquin Canada Shares, Canada Notes, US Notes,
LSR Subordinate Note, Algonquin Note, Donnacona Facility Equipment, Donnacona
Facility Lease or any of them, in specie.

14.3 AUTOMATIC TERMINATION

          If the Fund ceases to hold any securities of Algonquin Canada, for any
reason, including if the Algonquin Canada Shares or which comprise part of the
Trust Assets are redeemed or otherwise cease to exist (except pursuant to a
permitted amalgamation or other similar arrangement) and the Canada Notes, US
Notes, LSR Subordinate Note and the Algonquin Note which comprise part of the
Trust Assets are repaid or otherwise cease to exist, the Trustees shall
thereupon commence to wind-up the Fund.

14.4 PROCEDURE UPON TERMINATION

          Forthwith upon being required to commence to wind-up the affairs of
the Fund, the Trustees shall give notice thereof to the Unitholders, which
notice shall designate the time or times at which Unitholders may surrender
their Units for cancellation and the date at which the registers of Units of the
Fund shall be closed.

14.5 POWERS OF THE TRUSTEES UPON TERMINATION

          After the date on which the Trustees are required to commence to
wind-up the affairs of the Fund, the Trustees shall carry on no activities
except for the purpose of winding-up the affairs of the Fund as hereinafter
provided and, for this purpose, the Trustees shall continue



                                      -44-


to be vested with and may exercise all or any of the powers conferred upon the
Trustees under this Declaration of Trust.

14.6 SALE OF INVESTMENTS

          After the date referred to in Section 14.4, the Trustees shall proceed
to wind-up the affairs of the Fund as soon as may be reasonably practicable and
for such purpose shall, subject to any direction to the contrary in respect of a
termination authorized under Section 14.12, sell and convert into money all
assets comprising the Fund in one transaction or in a series of transactions at
public or private sales and do all other acts appropriate to liquidate the Fund,
and shall in all respects act in accordance with the directions, if any, of the
Unitholders (in respect of a termination authorized under Section 14.2). If the
Trustees are unable to sell all or any of the assets which comprise part of the
Fund by the date set for termination, the Trustees may distribute undivided
interests in the remaining assets directly to the Unitholders in accordance with
their pro rata shares.

14.7 DISTRIBUTION OF PROCEEDS

          After paying, retiring or discharging or making provision for the
payment, retirement or discharge of all known liabilities and obligations of the
Fund and providing for indemnity against any other outstanding liabilities and
obligations, the Trustees shall distribute the remaining part of the proceeds of
the sale of the assets together with any cash forming part of the Trust Assets
among the Unitholders in accordance with their pro rata shares.

14.8 FURTHER NOTICE TO UNITHOLDERS

          In the event that less than all of the Unitholders have surrendered
their Units for cancellation within six (6) months after the time specified in
the notice referred to in Section 14.4, the Trustees shall give further notice
to the remaining Unitholders to surrender their Units for cancellation and if,
within one (1) year after the further notice, all the Units shall not have been
surrendered for cancellation, such remaining Units shall be deemed to be
cancelled without prejudice to the rights of the holders of such Units to
receive their pro rata share of the remaining Trust Assets, and the Trustees may
either take appropriate steps, or appoint an agent to take appropriate steps, to
contact such Unitholders (deducting all expenses thereby incurred from the
amounts to which such Unitholders are entitled as aforesaid) or, in the
discretion of the Trustees, may pay such amounts into court.

14.9 RESPONSIBILITY OF THE TRUSTEES AFTER SALE AND CONVERSION

          The Trustees shall be under no obligation to invest the proceeds of
any sale of investments or other assets or cash forming part of the Trust Assets
after the date referred to in Section 14.4 and, after such sale, the sole
obligation of the Trustees under this Declaration of Trust shall be to hold such
proceeds in trust for distribution under Section 14.7.



                                      -45-


                                   ARTICLE 15
                             SUPPLEMENTAL INDENTURES

15.1 PROVISION FOR SUPPLEMENTAL INDENTURES FOR CERTAIN PURPOSES

          The Trustees may, without approval of Unitholders and subject to the
provisions hereof, and they shall, when so directed in accordance with the
provisions hereof, execute and deliver indentures or instruments supplemental
hereto, which thereafter shall form part hereof, for any one or more or all of
the following purposes:

     (a)  modifying or amending any provisions of this Declaration of Trust in
          the circumstances set forth in Section 11.1, where the Trustees may do
          so without the consent, approval or ratification of the Unitholders or
          any other person; and

     (b)  modifying or amending any provisions of this Declaration of Trust
          where the modification or amendment has been approved by Extraordinary
          Resolution or, if required, with the consent of the holders of all of
          the Units.

                                   ARTICLE 16
                                    GENERAL

16.1 NOTICES

     (a)  Any notice or other document required to be given or sent to
          Unitholders under this Declaration of Trust shall be given or sent
          through ordinary post addressed to each registered holder at his or
          her last address appearing on the register; provided that if there is
          a general discontinuance of postal service due to strike, lockout or
          otherwise, such notice may be given by publication in the Report on
          Business section of the National Edition of The Globe and Mail or
          similar section of any other newspaper having national circulation in
          Canada; provided further that if there is no newspaper having national
          circulation, then by publishing in the business section of a newspaper
          in each city where the register or a branch register is maintained.
          Any notice so given shall be deemed to have been given on the day
          following that on which the letter or circular was posted or, in the
          case of notice being given by publication, after publishing such
          notice in the designated newspaper or newspapers. In proving notice
          was posted, it shall be sufficient to prove that such letter or
          circular was properly addressed, stamped and posted.

     (b)  Any written notice or written communication given to the Trustees
          shall be addressed to the Trustees at the head office of the Fund and
          shall be deemed to have been given on the date of delivery or, if
          mailed, 5 days from the date of mailing. If any such notice or
          communication shall have been mailed and if regular mail service shall
          be interrupted by reason of a strike, lockout or other work stoppage,
          actual or threatened, involving postal employees, such notice or
          communication shall be deemed to have been received 48 hours after
          12:01 a.m. on the day following the resumption of normal mail service,
          provided that during




                                      -46-


          the period that regular mail service shall be interrupted any notice
          or other communication shall be delivered or given by personal
          delivery, telefax or other means of prepaid, transmitted or recorded
          communication.

16.2 FAILURE TO GIVE NOTICE

          The failure by the Trustees, by accident or omission or otherwise
unintentionally, to give any Unitholder any notice provided for herein shall not
affect the validity, effect or taking effect of any action referred to in such
notice, and the Trustees shall not be liable to any Unitholder for any such
failure.

16.3 JOINT HOLDERS

          Service of a notice or document on any one of several joint holders of
Units shall be deemed effective service on the other joint holders.

16.4 SERVICE OF NOTICE

          Any notice or document sent by post to or left at the address of a
Unitholder pursuant to this Article shall, notwithstanding the death or
bankruptcy of such Unitholder, and whether or not the Trustees have notice of
such death or bankruptcy, be deemed to have been fully served and such service
shall be deemed sufficient service on all persons having an interest in the
Units concerned.

16.5 INFORMATION AVAILABLE TO UNITHOLDERS

          Each Unitholder shall have the right to obtain, on demand and on
payment of reasonable reproduction costs, from the head office of the Fund a
copy of this Declaration of Trust and any amendments thereto relating to Units
held by that Unitholder and shall be entitled to inspect and, on payment of a
reasonable fee thereof, obtain a list of the Unitholders for purposes connected
with the Fund.

16.6 INCOME TAX: OBLIGATIONS OF THE TRUSTEES

          The Trustees shall satisfy, perform and discharge all obligations and
responsibilities of the Trustees under the Income Tax Act (including any
obligations of the Fund under Part XIII of said Act) and neither the Fund nor
the Trustees shall be accountable or liable to any Unitholder by reason of any
act or acts of the Trustees consistent with the carrying out of any such
obligations or responsibilities.

16.7 INCOME TAX: DESIGNATIONS

          In the return of its income under Part I of the Income Tax Act for
each fiscal year, the Fund shall make such designations, determinations and
allocations with respect to any amounts or portions of amounts which it has
received, distributed, declared payable or allocated to Unitholders in the year
including, without restricting the generality of the foregoing, designations
with respect to dividend income and realized capital gains or with respect to
any



                                      -47-


expenses incurred by the Fund or any tax deductions to which the Fund may be
entitled, all as the Trustees in their discretion shall deem to be reasonable
and equitable.

          The policy of the Fund is to make designations, as contemplated in
this Section 16.7, under subsection 104(22) of the Income Tax Act in respect of
foreign source income without deduction for foreign taxes thereon, with the
result that such foreign taxes are deemed for the purposes of the Income Tax Act
to have been paid by the Unitholder, rather than by the Fund. Distribution of
foreign source income upon which foreign taxes have been paid by the Fund shall
be satisfied, (i) to the extent of the amount of such foreign taxes by
allocation of foreign taxes to a particular Unitholder in respect of whom an
income tax designation under subsection 104(22) of the Income Tax Act will be
made in respect of the associated foreign source income; and (ii) to the extent
of such foreign source income net of such foreign taxes, by way of distribution
as otherwise contemplated in Article 5. For greater certainty, to the extent of
a particular Unitholder's share of such foreign taxes incurred by the Fund
allocated to a particular Unitholder in respect of whom a designation will be
made under the Income Tax Act in respect of the associated foreign source
income, distributions will be deemed, for the purposes of this Declaration of
Trust and regardless of the ability of the particular Unitholder to obtain a
foreign tax credit in respect of such taxes, to have been made by the Fund to
the Unitholder by virtue of allocation of foreign taxes to the particular
Unitholder in respect of whom an income tax designation in respect of the
associated foreign source income will be made and the Unitholder will be deemed
for the purposes of Article 5 to have received a distribution equal to the
amount of such foreign taxes in satisfaction of the particular Unitholder's
right to enforce payment of such amount at the relevant Distribution Payment
Date by virtue of such allocation.

          In respect of the first taxation year of the Fund, the Fund shall
elect pursuant to subsection 132(6) of the Income Tax Act that the Fund be
deemed to be a mutual fund trust for the entire year.

16.8 INCOME TAX: GENERAL

     (a)  The Trustees shall claim the maximum deductions available to the Fund
          for the purposes of computing its income pursuant to the provisions of
          the Income Tax Act to the extent required to reduce the taxable income
          of the Fund to nil or such lesser amounts as the Trustees may
          determine to be in the best interests of the Unitholders; and

     (b)  In managing the investments of the Fund, the Trustees shall use their
          reasonable best efforts to ensure the Trust Units do not become
          "foreign property" under subsection 206(1) of the Income Tax Act.

16.9 FISCAL YEAR

          The fiscal year of the Fund shall end on December 31 of each year.

16.10 FINANCIAL DISCLOSURE

          The Fund will send to Unitholders:



                                      -48-


     (a)  at least 21 days prior to the date of each annual meeting of
          Unitholders, the annual financial statements of the Fund for the
          fiscal year ended immediately prior to such annual meeting, together
          with comparative financial statements for the preceding fiscal year,
          if any, and the report of the Auditors thereon referred to in Section
          17.4; and

     (b)  within 60 days after the end of each fiscal quarter of the Fund,
          unaudited quarterly financial statements of the Fund for such fiscal
          quarter, together with comparative financial statements for the same
          fiscal quarter in the preceding fiscal year, if any.

          Such financial statements shall be prepared in accordance with
generally accepted accounting principles in Canada as recommended from time to
time in the Handbook of the Canadian Institute of Chartered Accountants;
provided that such statements may vary from such principles to the extent
required to comply with applicable securities laws or securities regulatory
requirements or to the extent permitted by applicable securities regulatory
authorities.

16.11 UNITHOLDER MEETING INFORMATION

          Prior to each meeting of Unitholders, the Trustees will provide to
each Unitholder, together with the notice of the meeting:

     (a)  a form of proxy which can be used by a Unitholder to appoint a proxy,
          who need not be a Unitholder, to attend and act at the meeting on
          behalf of the Unitholder, in the manner and to the extent authorized
          by the proxy;

     (b)  a management proxy circular substantially similar to a circular which
          the directors of a corporation subject to the Business Corporations
          Act (Ontario) would be required to provide to the shareholders of the
          corporation in such circumstances; and

     (c)  all other information required by applicable law.

16.12 TAXATION INFORMATION

          On or before February 28 in each year, the Fund will provide to
Unitholders who received distributions from the Fund in the prior calendar year,
such information and forms relating to the Fund as may be needed by such
Unitholders in order to complete their tax returns in respect of the prior
calendar year under the Income Tax Act and equivalent provincial legislation in
Canada.

                                   ARTICLE 17
                                    AUDITORS

17.1 QUALIFICATION OF AUDITORS

          The Auditors shall be an independent recognized firm of chartered
accountants which has an office in Canada.



                                      -49-


17.2 APPOINTMENT OF AUDITORS

          KPMG, Chartered Accountants are appointed as the auditors of the Fund,
to hold such office until the first annual meeting of the Unitholders. The
Auditors will be selected at each succeeding annual meeting of Unitholders. The
Auditors will receive such remuneration as may be approved by the Trustees.

17.3 CHANGE OF AUDITORS

          The Auditors may at any time be removed by the Trustees with the
approval of a majority of the votes cast by Unitholders at a meeting of
Unitholders duly called for the purpose and, upon the resignation or the removal
of Auditors as aforesaid, new auditors may be appointed by a majority of votes
cast by Unitholders at a meeting duly called for the purpose or, in the absence
of such meeting, by the Trustees.

17.4 REPORTS OF AUDITORS

          The Auditors shall audit the accounts of the Fund at least once in
each year and a report of the Auditors with respect to the annual financial
statements of the Fund shall be provided to each Unitholder with the annual
financial statements referred to in Section 16.10.

                                   ARTICLE 18
                                 MISCELLANEOUS

18.1 SUCCESSORS AND ASSIGNS

          The provisions of this Declaration of Trust shall enure to the benefit
of, and be binding upon, the parties and their heirs, executors, administrators,
personal representatives, successors and assigns.

18.2 COUNTERPARTS

          This Declaration of Trust may be simultaneously executed in several
counterparts, each of which when executed shall be deemed to be an original, and
such counterparts, together,



                                      -50-


shall constitute but one and the same instrument, which shall be sufficiently
evidenced by any such original counterparts.

18.3 SEVERABILITY

          If any provision of this Declaration of Trust shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect or render invalid or unenforceable such provision in any other
jurisdiction or any other provision of this Declaration of Trust in any
jurisdiction.

          IN WITNESS WHEREOF this amended and restated Declaration of Trust is
executed effective as of the 26th day of May, 2004.


(signed) "Ken Pearce"                   (signed) "Kenneth Moore"
-------------------------------------   ----------------------------------------
Witness                                 Kenneth Moore


(signed) "Ken Pearce"                   (signed) "George Steeves"
-------------------------------------   ----------------------------------------
Witness                                 George Steeves


(signed) "Ken Pearce"                   (signed) "Christopher Ball"
-------------------------------------   ----------------------------------------
Witness                                 Christopher Ball