Exhibit 10.4

 

PORTLAND NATURAL GAS TRANSMISSION SYSTEM

 

AMENDED AND RESTATED

 

PARTNERSHIP AGREEMENT

 

AMONG

 

NATURAL GAS DEVELOPMENT CORPORATION,

 

TENNECO PORTLAND CORPORATION,

 

GAZ METRO PORTLAND CORPORATION,

 

JMC PORTLAND (INVESTORS), INC.,

 

TCPL PORTLAND INC.

 

AND

 

EAST COAST PIPELINE COMPANY

 

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PARTNERSHIP AGREEMENT

 

TABLE OF CONTENTS

 

SECTION

 

PAGE

 

 

 

 

Parties

 

 

1

 

 

 

 

1.

Definitions

 

3

 

1.1

Additional Commitment Date

 

3

 

1.2

Additional Necessary Regulatory Approvals

 

3

 

1.3

Additional Partner

 

3

 

1.4

Affiliate

 

4

 

1.5

AFUDC

 

4

 

1.6

Associate

 

4

 

1.7

Capital Account

 

5

 

1.8

Capital Contribution

 

6

 

1.9

Certified Public Accountants

 

6

 

1.10

Code

 

6

 

1.11

Commitment Date

 

6

 

1.12

Continuation Date

 

6

 

1.13

Cost of An Incremental Expansion

 

7

 

1.14

Cost of The Facilities

 

7

 

1.15

Cost Sharing Agreement

 

7

 

1.16

Defaulting Partner

 

7

 

1.17

Defaulted Contribution

 

8

 

1.18

Estimated Cost Of An Incremental Expansion

 

8

 

1.19

Estimated Cost Of The Facilities

 

8

 

1.20

Facilities

 

8

 

1.21

FERC

 

9

 

1.22

Financing Commitment

 

9

 

1.23

Firm Service Gas Transportation Contract

 

10

 

1.24

First Amendment

 

10

 

1.25

Formation Date

 

10

 

1.26

Gas Purchase Contract

 

10

 

1.27

Gas Transportation Contract

 

10

 

1.28

Holding Company Act

 

10

 

1.29

Incremental Expansion

 

10

 

1.30

Initial Agreement

 

11

 

1.31

Interstate

 

11

 

1.32

Lease

 

11

 

1.33

Majority Vote

 

11

 

1.34

Management Committee

 

11

 

1.35

Memorandum of Understanding

 

12

 

1.36

Natural Gas Act

 

12

 

1.37

Natural Gas Policy Act

 

12

 

1.38

Necessary Regulatory Approvals

 

12

 

1.39

Nonrecourse Deductions

 

13

 

1.40

Nonrecourse Liability

 

14

 

1.41

Operating Agreement

 

14

 

1.42

Operator

 

14

 

1.43

Parent

 

14

 

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1.44

Partner

 

14

 

1.45

Partner Nonrecourse Deductions

 

15

 

1.46

Partner Nonrecourse Debt

 

15

 

1.47

Partner Nonrecourse Debt Minimum Gain

 

16

 

1.48

Partnership

 

16

 

1.49

Partnership Minimum Gain

 

16

 

1.50

Percentage Interest

 

16

 

1.51

Person

 

16

 

1.52

Precedent Agreement

 

16

 

1.53

Pre-Commitment Date Funds

 

17

 

1.54

Qualified Expenditures

 

17

 

1.55

Regulations

 

18

 

1.56

Representative

 

18

 

1.57

Required Accounting Practice

 

18

 

1.58

Securities and Exchange Commission

 

19

 

1.59

Shipper

 

19

 

1.60

60% Vote

 

19

 

1.61

Withdrawn Partner

 

20

 

1.62

Withdrawn Partner Former Capital Account

 

20

 

 

 

 

 

2.

Continuation Of The Partnership

 

20

 

2.1

Continuation

 

20

 

2.2

Name

 

20

 

2.3

Purpose

 

21

 

2.4

Governmental Applications

 

21

 

2.5

Regulatory Status

 

21

 

2.6

Representations And Warranties Concerning Formation Of the Partnership

 

21

 

2.7

Offices

 

24

 

2.8

Development Of The Facilities

 

24

 

2.9

Commitment To Construct The Facilities

 

26

 

2.10

Repayment Of Pre-Commitment Date Funds And Qualified Expenditures To Withdrawn
Partners

 

29

 

2.11

Incremental Expansion

 

32

 

2.12

Commitment to Construct An Incremental Expansion

 

34

 

2.13

Regulatory And Financing Decisions with Respect To Incremental Expansions

 

36

 

 

 

 

 

3.

Capital Contributions

 

37

 

3.1

Initial Capital Contributions

 

37

 

3.2

Post-Commitment Date Capital Contributions

 

41

 

3.3

Payment Of Pre-Commitment Date Funds And Capital Contributions

 

43

 

3.4

Voluntary Contributions

 

49

 

3.5

Withdrawn Partner

 

49

 

 

 

 

 

4.

Capital Accounts

 

54

 

4.1

Maintenance of Partners’ Capital Accounts

 

54

 

4.2

Tax Allocation

 

55

 

4.3

Special Tax Allocations

 

57

 

4.4

Curative Allocations

 

59

 

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5.

Distributions

60

 

 

 

 

6.

Accounting And Taxation

61

 

6.1

Fiscal Year

61

 

6.2

Location Of Records

62

 

6.3

Books of Account

62

 

6.4

Annual Financial Statements And Tax Information

62

 

6.5

Interim Financial Statements

63

 

6.6

Taxation

64

 

6.7

Governmental Reports

65

 

6.8

Record Retention

65

 

6.9

Inspection Of Facilities And Records

66

 

6.10

Deposit And Withdrawal Of Funds

67

 

6 11

Return Preparation

67

 

6.12

Partnership Level Tax Audits

68

 

 

 

 

7.

Management Of The Partnership

73

 

7.1

General Management Structure

73

 

7.2

Management Committee

74

 

7.3

Audit Committee

81

 

7.4

Design And Construction Of The Facilities

83

 

7.5

Operation Of The Facilities

84

 

7.6

Right to Vote

84

 

7.7

Limitation Of Authority

85

 

7.8

Indemnification

85

 

7.9

Other Positions Or Representations

87

 

 

 

 

8.

Limitation Of Liabilities

88

 

8.1

Limitation On Liability Of Partners

88

 

8.2

Limitation Of Authority Of Partners

88

 

8.3

Cross Indemnification

88

 

8.4

Right of Partner to Contribution

89

 

8.5

Third Party Contracts

90

 

 

 

 

9.

Transfer Or Pledge Of Partnership Interest

91

 

9.1

Limitation On Right To Transfer Partner’s Interest

91

 

9.2

Permitted Transfers to Affiliates, Etc

98

 

9.3

Certain Limitations on Transferability

100

 

9.4

Prohibited Affiliate Transactions

101

 

9.5

Admission of New Partner

103

 

9.6

Assignee’s Rights

103

 

9.7

Allocation of Profits, Losses and Distributions Subsequent to Assignment

104

 

9.8

Admission of Additional Partners/Authority of Management Committee

104

 

9.9

Tax Election

106

 

9.10

Effect of Prohibited Transfers

106

 

 

 

 

10.

Consent to Assignment

107

 

 

 

 

11.

Termination And Right Of Withdrawal

107

 

11.1

Term Of Partnership

107

 

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11.2

Automatic Dissolution

108

 

11.3

Automatic Withdrawal

108

 

11.4

Other Withdrawals

110

 

11.5

Winding Up And Liquidation

111

 

11.6

Continuance of Partnership

115

 

 

 

 

12.

Arbitration

118

 

12.1

Optional Arbitration

118

 

12.2

Conduct of Arbitration

119

 

12.3

Costs

119

 

12.4

Optional Arbitration to be Binding

119

 

 

 

 

13.

General

120

 

13.1

Effect Of Agreement

120

 

13.2

Notices

121

 

13.3

Further Assurances

124

 

13.4

Applicable Law

124

 

13.5

Counterparts

124

 

13.6

Headings

125

 

13.7

Waiver

125

 

13.8

Partition

126

 

13.9

Laws And Regulatory Bodies

126

 

13.10

Partnership Opportunity

126

 

13.11

Section Numbers

127

 

13.12

Confidentiality

127

 

13.13

Use of Name or Trademark of a Partner

130

 

13.14

References to Money

130

 

13.15

Severability

130

 

13.16

Third Persons

131

 

SCHEDULE A

APPENDIX A

APPENDIX B

 

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PORTLAND NATURAL GAS TRANSMISSION SYSTEM

 

AMENDED AND RESTATED

 

PARTNERSHIP AGREEMENT

 

AMENDED AND RESTATED PARTNERSHIP AGREEMENT (this “Agreement”) made as of this
1st day of March, 1996, by and among Natural Gas Development Corporation
(“NGDC”) with offices at 300 Friberg Parkway, Westborough, Massachusetts
01581-5039, Tenneco Portland Corporation (“Tenneco”) with offices at 1010 Milam
Street, Houston, Texas 77252-2511, Gaz Metro Portland Corporation (“Gaz Metro”)
c/o Northern New England Gas Corporation, 85 Swift Street, South Burlington,
Vermont 05403, JMC Portland (Investors), Inc., (“JMC”), with offices at One
Bowdoin Square, Boston, Massachusetts 02114, TCPL Portland Inc., (“TCPL”), with
offices at 111-Fifth Avenue S.W., Calgary, Alberta, Canada T2P 4K5, and East
Coast Pipeline Company (“East Coast”), with offices at 500 Griswold Street, 10th
Floor, Detroit, Michigan 48226 (each of NGDC, Tenneco, Gaz Metro, JMC, TCPL and
East Coast being sometimes herein referred to individually as a “Partner” and
collectively as the “Partners”).

 

RECITALS:

 

WHEREAS, Portland Natural Gas Transmission System was organized as a Maine
general partnership by NGDC, Tenneco, Gaz Metro, JMC and Interstate Energy, Inc
(“Interstate”) pursuant to the Portland Natural Gas Transmission System
Partnership Agreement dated November 12, 1993, (the “Initial Agreement”) for the
purpose

 

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of further pursuing the development and construction of the Facilities and their
operation thereafter; and

 

WHEREAS, the Initial Agreement was amended pursuant to that certain First
Amendment to Portland Natural Gas Transmission System dated as of August 29,
1995 (the “First Amendment”); and

 

WHEREAS, pursuant to the terms of that Agreement of Purchase and Sale dated
August 29, 1995, Interstate sold its entire Percentage Interest in the
Partnership to the other Partners in the Partnership, and withdrew as a Partner
in the Partnership; and

 

WHEREAS, the Management Committee has voted unanimously to admit each of TCPL
and East Coast as an Additional Partner, and each of TCPL and East Coast, by its
signature below, agrees to become an Additional Partner pursuant to the terms
and conditions set forth in this Agreement; and

 

WHEREAS, to admit TCPL and East Coast as Additional Partners of the Partnership,
and to make certain other modifications and amendments to the Initial Agreement,
as amended by the First Amendment, the Partners desire to amend and completely
restate the Initial Agreement as amended by the First Amendment.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the Partners, intending to be legally
bound, agree as follows:

 

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1.                                      Definitions. Unless otherwise required
by the context, the terms defined in this §1 shall, for all purposes of this
Agreement, have the respective meanings set forth below:

 

1.1                               Additional Commitment Date. The date on which
the Management Committee votes to commit the Partnership to construction of an
Incremental Expansion pursuant to §2.12.2.

 

1.2                               Additional Necessary Regulatory Approvals. All
licenses, certificates, permits, approvals and determinations (all of which must
be final and nonappealable) from United States and Canadian authorities having
jurisdiction as may be required in connection with (a) the construction and
operation of an Incremental Expansion, other than those licenses, certificates,
permits, approvals and determinations of a nature not customarily obtained prior
to commencement of construction of facilities of the nature of the Incremental
Expansion and (b) the purchase, export, import, transportation and resale, if
any, of the gas to be transported as a resale of such Incremental Expansion.

 

1.3                               Additional Partner A Partner under this
Agreement admitted in accordance with the provisions of §9.

 

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1.4                               Affiliate. Any Person which, directly or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with any Person, including, but not limited to: a Parent
of a Partner; such Parent’s general partners if the Parent is a partnership, any
limited partner owning more than 50% of the limited partnership interest in any
Parent which is a limited partnership, and any corporation which owns directly
or indirectly more than 50% of the voting stock of any such general or limited
partner; a corporation more than 50% of the outstanding voting stock of which is
owned directly or indirectly by a Partner or a Parent of a Partner; or a
corporation more than 50% of the outstanding voting stock of which is owned
directly or indirectly by a corporation more than 50% of the outstanding voting
stock of which is owned directly or indirectly by a Partner or by a Parent of a
Partner.

 

1.5                               AFUDC. Allowance for funds used during
construction, determined in accordance with Required Accounting Practice.

 

1.6                               Associate. (a) Any natural person who is an
Affiliate of a Partner, as defined in §1.4, (b) any officer, director or key
employee of a Partner or

 

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an Affiliate of a Partner, (c) any trust or other estate in which any natural
person specified in clause (a) or (b) of this §1.6 has a substantial beneficial
interest or as to which such person serves as trustee, and (d) any relative or
spouse of a natural person specified in clause (a) or (b) of this §1.6, or any
relative of such spouse, who has the same home as such person.

 

1.7                               Capital Account. The total Capital
Contributions credited to the Capital Account of a Partner in accordance with
§4, plus any profits of the Partnership and less any losses of the Partnership
determined in accordance with Required Accounting Practice and allocated to such
account in accordance with §4, less any distribution to such Partner pursuant to
§§5 or 11.5.2, and less any other adjustments provided for herein. The Capital
Accounts of the Partners established pursuant to this Agreement shall not be
deemed to be, nor have the same meaning as, the capital account of the
Partnership under §12 of the Natural Gas Act or any similar concept found in any
other similar statute or law of the United States or Canada (or any state or
province thereof, as the case may be). Tax books

 

5

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and records will be maintained and determined in accordance with Regulations
Section 1.704-1.

 

1.8                               Capital Contribution. In accordance with
Regulations Section 1.704-1, the amount of cash or the initial fair market value
of other property contributed to the Partnership by a Partner with respect to
the interest in the Partnership held by that Partner, made pursuant, to this
Agreement after the Commitment Date, and any Qualified Expenditures and
Pre-Commitment Date Funds authorized to be credited to Capital Accounts pursuant
to §3 .

 

1.9                               Certified Public Accountants. A firm of
independent public accountants selected from time to time by the Management
Committee.

 

1.10                        Code. The Internal Revenue Code of 1986, as amended
from time to time, or any successor law.

 

1.11                        Commitment Date. The date on which the Management
Committee takes the final vote to commit the Partnership to construction of the
Facilities pursuant to §2.9.

 

1.12                        Continuation Date. March 1, 1996, the date as of
which this Agreement becomes effective and supersedes the Initial Agreement and
the First Amendment.

 

6

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1.13                        Cost of An Incremental Expansion. All costs and
expenses, including AFUDC, incurred, assumed or paid by the Partnership for the
acquisition, planning, design, engineering, financing, construction and start-up
of an Incremental Expansion, and securing Additional Necessary Regulatory
Approvals therefor, determined in accordance with Required Accounting Practice.

 

1.14                        Cost of The Facilities. All costs and expenses,
including AFUDC, incurred, assumed or paid by the Partnership for the
acquisition, planning, design, engineering, financing, construction and start-up
of the Facilities, and securing Necessary Regulatory Approvals therefor,
determined in accordance with Required Accounting Practice.

 

1.15                        Cost Sharing Agreement. That certain Cost Sharing
Agreement by and among NGDC, Tenneco, Gaz Metro and Interstate or such Partners’
Affiliates dated April 11, 1991, providing for the sharing of certain costs in
connection with the conduct of development activities with respect to the
Facilities.

 

1.16                        Defaulting Partner. A Partner who is in default of
its obligation to make Capital Contributions or to advance Pre-Commitment Date
Funds hereunder, and

 

7

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has received notice of such default pursuant to §3.3.4 (a).

 

1.17                        Defaulted Contribution. As defined in §3.5.3.

 

1.18                        Estimated Cost Of An Incremental Expansion. The
estimated cost of an Incremental Expansion as approved from time to time by vote
of the members of the Management Committee in accordance with the provisions of
this Agreement with respect to such vote.

 

1.19                        Estimated Cost Of The Facilities. The estimated Cost
of the Facilities as approved from time to time by vote of the members of the
Management Committee in accordance with the provisions of this Agreement with
respect to such vote.

 

1.20                        Facilities. The real, personal and mixed property
(whether tangible or intangible) to be leased or owned and operated by the
Partnership chiefly for the purpose of the transmission of natural gas through a
new pipeline extending from the United States/Canadian border to the vicinity of
Haverhill, Massachusetts, all as more fully described in Appendix A hereto, with
such changes in size, design and location as may be approved by the Management
Committee (including, but not limited to, an Incremental Expansion approved by

 

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the Management Committee pursuant to §2 12) or with such change in use and
purpose as may be approved by a 60% Vote of the Partners.

 

1.21                        FERC. The Federal Energy Regulatory Commission or
any commission, agency or other governmental body succeeding to the powers of
such Commission.

 

1.22                        Financing Commitment. Definitive agreements between
financial institution (s) and the Partnership pursuant to which such financial
institution (s) agree, subject to the conditions set forth therein, to lend
money to the Partnership, the proceeds of which shall be used to finance all or
a portion of the Cost of the Facilities or of the Cost of an Incremental
Expansion. It is the intention of the Partnership to ensure that the terms of
Financing Commitments shall limit the claim of the parties thereunder to the
assets of the Partnership and shall waive any rights of such parties and other
beneficiaries to proceed against the Partners individually. No Financing
Commitment may bind any Affiliate or require a Partner to cause an Affiliate to
undertake any obligation in connection with any Financing Commitment without
said Affiliate’s consent, which such Affiliate may grant or withhold in its sole
discretion.

 

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1.23                        Firm Service Gas Transportation Contract. Any Gas
Transportation Contract which provides for firm service to the Shipper
thereunder.

 

1.24                        First Amendment. As defined in the Recitals hereto.

 

1.25                        Formation Date. 12:01 A.M. on November 12, 1993, the
date as of which the Partnership was formed and the Initial Agreement became
effective.

 

1.26                        Gas Purchase Contract. Any gas purchase contract
agreed to by a Shipper.

 

1.27                        Gas Transportation Contract. Any gas transportation
contract by and between the Partnership and one or more Shippers for the
transportation of natural gas.

 

1.28                        Holding Company Act. The Public Utility Holding
Company Act of 1935, as amended from time to time, or any successor or
replacement, statute.

 

1.29                        Incremental Expansion. Any facilities installed
within the United States to modify, improve or expand the Facilities or any
existing portion thereof, except in connection with customary maintenance, to
permit the delivery capacity of the Facilities to be increased after the
Commitment Date

 

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1.30                        Initial Agreement. As defined in the Recitals
hereto.

 

1.31                        Interstate. As defined in the Recitals hereto

 

1.32                        Lease. Any lease agreement between a lessor and the
Partnership as lessee pursuant to which the Partnership will acquire all or a
portion of the right-of-way for construction of the Facilities.

 

1.33                        Majority Vote. The affirmative vote, written
approval or written consent of Partners, or in the case of a vote of the
Management Committee or of the audit committee or any other committee of the
Partnership, of Representatives of Partners, having more than 50% of the
Percentage Interests of the Partners entitled to vote on the matter as provided
in §7.6, or in the case of the words “Partners” or “members of the Management
Committee” or “members of the audit committee” preceded by any qualifying term
such as “remaining” or “non-defaulting”, the affirmative vote, written approval
or written consent of Representatives of Partners having more than 50% of the
Percentage Interests of all Partners entitled to vote on the matter as provided
in § 7.6

 

1.34                        Management Committee. The Management Committee
provided for in §7.

 

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1.35                        Memorandum of Understanding. That certain Memorandum
of Understanding, dated April 11, 1991, as amended by a letter of withdrawal
dated June 10, 1991, by and among NGDC, Tenneco, Gaz Metro and Interstate or
their Affiliates and one other third party providing for the conduct of certain
feasibility and evaluation activities in connection with the development of the
Facilities

 

1.36                        Natural Gas Act. The Natural Gas Act, 15 U.S.C.
§§717-717w.

 

1.37                        Natural Gas Policy Act. The Natural Gas Policy Act,
15 U.S.C, §§3301-3432.

 

1.38                        Necessary Regulatory Approvals. The following
licenses, certificates, permits, approvals and determinations (all of which must
be final and nonappealable):

 

(a)                                 All United States federal and state
regulatory and governmental permits and approvals necessary for the construction
and operation of the Facilities and the rendering of service pursuant to the Gas
Transportation Contracts.

 

(b)                                 All Canadian federal and provincial
regulatory and governmental permits and approvals necessary for Shippers’
supplier(s) to export,

 

12

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sell and deliver gas to the Shippers pursuant to the Gas Purchase Contracts.

 

(c)                                  All United States federal and state
regulatory and governmental permits and approvals necessary for the Shippers’
purchase and importation of gas pursuant to the Gas Purchase Contracts.

 

(d)                                 All other Canadian and United States
federal, state, local or municipal or provincial governmental or regulatory
permits, licenses, determinations, certificates and other approvals as may be
necessary in connection with formation of the Partnership or the participation
of a Partner therein, the purchase, export, import, transportation and sale of
the gas to be purchased under the Gas Purchase Contracts and the Gas
Transportation Contracts, and the construction and operation of the Facilities,
which are customarily obtained in advance of construction.

 

1.39                        Nonrecourse Deductions. The definition set forth in
Section 1.704-2 (b) (1) of the Regulations. The amount of Nonrecourse Deductions
for a Partnership fiscal year equals the excess, if any, of the net increase, if
any, in the amount of Partnership

 

13

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Minimum Gain during that fiscal year over the aggregate amount of any
distributions during that fiscal year of proceeds of a Nonrecourse Liability
that are allocable to an increase in Partnership Minimum Gain, determined
according to the provisions of Section 1.704-2 (c) of the Regulations.

 

1.40                        Nonrecourse Liability. The meaning set forth in
Section 1.704-2 (b) (3) of the Regulations.

 

1.41                        Operating Agreement. The Operating Agreement
provided for in §7.5.

 

1.42                        Operator. The Operator provided for in §7.

 

1.43                        Parent. Any Person which owns directly or indirectly
more than 50% of the outstanding voting stock of a Partner; or (i) any general
partners of such a Person if that Person is a partnership, (ii) any limited
partner owning more than 50% of the limited partnership interest in any Person
which is a limited partnership and (iii) any corporation which owns directly or
indirectly more than 50% of the voting stock of such a general partner or
limited partner.

 

1.44                        Partner. Each of the Persons executing this
Agreement, and any Person substituted for an original Partner and any Additional
Partner which

 

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is admitted to the Partnership pursuant to §9, excluding any Withdrawn Partner
or any Person for whom another Person has been substituted as a Partner in the
Partnership pursuant to this Agreement.

 

1.45                        Partner Nonrecourse Deductions. The definition set
forth in Section 1.704-2 (i) (2) of the Regulations. The amount of Partner
Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a
Partnership fiscal year equals the excess, if any, of the net increase, if any,
in the amount of Partner Nonrecourse Debt Minimum Gain attributable to such
Partner Nonrecourse Debt during that fiscal year over the aggregate amount of
any distributions during that fiscal year to the Partner that bears the economic
risk of loss for such Partner Nonrecourse Debt to the extent such distributions
are from the proceeds of such Partner Nonrecourse Debt and are allocable to an
increase in Partner Nonrecourse Debt Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Section 1.704-2 (i) (2) of the
Regulations.

 

1.46                        Partner Nonrecourse Debt. The meaning set forth in
Section 1.704-2 (b) (4) of the Regulations.

 

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1.47                        Partner Nonrecourse Debt Minimum Gain. An amount,
with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum
Gain that would result if such Partner Nonrecourse Debt were treated as a
Nonrecourse Liability, determined in accordance with Section 1.704-2 (i) of the
Regulations

 

1.48                        Partnership. The partnership continued by this
Agreement.

 

1.49                        Partnership Minimum Gain. The definition set forth
in Section 1.704-2 (d) of the Regulations.

 

1.50                        Percentage Interest. The percentage interest in the
Partnership for each Partner as initially set forth on Schedule A hereto and as
modified from time to time in accordance with the provisions of this Agreement.

 

1.51                        Person. An individual or legal entity with the
capacity to contract, including without, limitation, a corporation joint stock
company, business trust or general or limited partnership.

 

1.52                        Precedent Agreement. With respect to Gas
Transportation Contracts, an agreement whereby a Shipper conditionally
undertakes to execute a Gas Transportation Contract on such terms and conditions
as may be approved by the Management

 

16

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Committee by a 60% Vote; and with respect to Gas Purchase Contracts, an
agreement whereby a natural gas supplier conditionally undertakes to execute a
Gas Purchase Contract with a Shipper on such terms and conditions as the
Management Committee by a 60% Vote deems acceptable for all purposes of this
Agreement.

 

1.53                        Pre-Commitment Date Funds. Funds advanced for
funding the costs of planning, designing, obtaining regulatory approvals for,
negotiating the terms of and obtaining rights-of-way for, financing and
constructing the Facilities, (a) prior to the Formation Date by any Partner or
any of its Affiliates as set forth on Appendix B or pursuant to and in
accordance with the Cost Sharing Agreement, and (b) after the Formation Date and
prior to the Commitment Date by or on behalf of any Partner pursuant to §2.8.2
or any Withdrawn Partner pursuant to §3.5.2.

 

1.54                        Qualified Expenditures. Expenditures, other than
Pre-Commitment Date Funds, made by any Partner or any of its Affiliates prior to
the Formation Date, if subsequently approved by the Management Committee, or
after the Formation Date, if previously or subsequently approved by the

 

17

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Management Committee, incurred in the course of activities reasonably related to
planning, designing, obtaining regulatory approvals for, negotiating the terms
of and obtaining rights-of-way for, financing and constructing the Facilities.
The Management Committee shall not unreasonably withhold any approvals required
hereby.

 

1.55                        Regulations. The Income Tax Regulations promulgated
under the Code, as such Regulations may be amended from time to time (including
corresponding provisions of succeeding Regulations).

 

1.56                        Representative. A Person designated by a Partner or
Partners to serve as a member of the Management Committee or any other committee
of the Partnership; a Partner may designate different Persons to serve on
different Partnership committees.

 

1.57                        Required Accounting Practice. Generally accepted
accounting principles as practiced in the United States at the time prevailing
for companies engaged in a business similar to that of the Partnership or, if
inconsistent therewith, the accounting rules and regulations, if any, at the
time prescribed by the regulatory body or bodies under the

 

18

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jurisdiction of which the Partnership is at the time operating.

 

1.58                        Securities and Exchange Commission. The United
States Securities and Exchange Commission or any successor thereto.

 

1.59                        Shipper. Any Person which, with the approval of the
Management Committee, proposes to enter into or has entered into a Gas
Transportation Contract with the Partnership for the transportation of gas
through the Facilities.

 

1.60                        60% Vote. The affirmative vote, written approval or
written consent of Partners, or in the case of a vote of the Management
Committee or of the audit committee or any other committee of the Partnership,
of Representatives of Partners, having 60% or more of the Percentage Interests
of the Partners entitled to vote on the matter as provided in §7.6, or in the
case of the words “Partners” or “members of the Management Committee” or
“members of the audit committee” preceded by any qualifying term such as
“remaining” or “non-defaulting”, the affirmative vote, written approval or
written consent of Representatives of Partners having 60% or more of the
Percentage Interests of all Partners entitled to vote on the matter as provided
in §7.6.

 

19

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1.61                        Withdrawn Partner. A Person who (a) has withdrawn
from the Partnership pursuant to §11.4 or (b) is deemed to have withdrawn from
the Partnership pursuant to §§2.9, 3.3.4 or 11.3 of this Agreement.

 

1.62                        Withdrawn Partner Former Capital Account. A
contingent obligation of the Partnership to a Withdrawn Partner equal to such
Withdrawn Partner’s former Capital Account (as of the date immediately prior to
its withdrawal), increased by the amount of any liabilities of the Partnership
paid by such Withdrawn Partner after withdrawal pursuant to §3.5.2, and
decreased by all payments made to such Withdrawn Partner after its withdrawal
pursuant §3.5.1.

 

2.                                      Continuation Of The Partnership.

 

2.1                               Continuation. The Partners hereby continue the
general partnership that was initially formed on the Formation Date by NGDC,
Tenneco, Interstate, Gaz Metro and JMC pursuant to the Uniform Partnership Act
of the State of Maine and the terms and conditions of the Initial Agreement as
amended by the First Amendment.

 

2.2                               Name. The name of the Partnership shall be the
Portland Natural Gas Transmission System.

 

20

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2.3                               Purpose. The Partnership shall plan, design,
construct, own and operate the Facilities and shall carry on all such other
activities necessary or incidental thereto.

 

2.4                               Governmental Applications. The Partners shall
cooperate in securing the Necessary Regulatory Approvals and, in the case of an
Incremental Expansion approved by the Management Committee, the Additional
Necessary Regulatory Approvals.

 

2.5                               Regulatory Status. The Partners acknowledge
that the Partnership will be a “natural gas company” under the Natural Gas Act.

 

2.6                               Representations And Warranties Concerning
Formation Of the Partnership.

 

2.6.1                     General Representations And Warranties. Each Partner,
at the time of its admission to the Partnership, represents and warrants that
the execution and delivery of this Agreement, the formation or continuation of
the Partnership, as the case may be, and the performance of its obligations
hereunder will not contravene or conflict with any provision of law or of the
charter or other organizing document of such Partner or the bylaws of such
Partner if a corporation, or contravene, conflict with or

 

21

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constitute a default under, any indenture, mortgage, instrument or other
agreement of such Partner or any order of any court, commission or governmental
agency applicable to such Partner. Each Partner further represents, warrants and
covenants that (a) it is, and for so long as it is a Partner hereunder it will
do or cause to be done all things necessary to continue to be, a Person duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, (b) it will not, without the prior consent of the
Management Committee, incur any indebtedness (direct or contingent) of any kind
(except indebtedness incurred to meet obligations hereunder and owing to an
Affiliate or incurred as a result of being a Partner and except indebtedness of
the Partnership, for which such Partner, as a Partner, may be deemed liable
under applicable law), acquire any assets or enter into or conduct any business
or activity of any kind, except to the extent necessary or appropriate in
connection with the performance by it of the terms of this Agreement or
incidental to its status as a Partner, (c) the execution and delivery of this
Agreement has been duly authorized, and this Agreement, when

 

22

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executed and delivered by such Partner, will be its valid and binding agreement,
enforceable in accordance with the terms hereof, (d) it has disclosed in writing
to each other Partner the nature and amount of each and every material financial
relationship it or any of its Affiliates or Associates has with any other
Partner or any Affiliate or Associate thereof (other than the relationships
created by this Agreement and the transactions contemplated hereby) which
relationship poses a material competitive threat to the actual or proposed
business of the Partnership, and (e) during the term of this Agreement, within
thirty (30) days following such Partner, or any of its Affiliates or Associates,
entering into any new material financial relationship with any other Partner or
any Affiliate or Associate thereof which conflicts or may conflict with the
business of the Partnership or which may have a material impact thereon, it
shall notify each other Partner in writing of the nature and amount thereof.

 

2.6.2                     Representations And Warranties Concerning The Holding
Company Act.

 

(a)                                 Each Partner represents and warrants that as
of the date of its admission to the

 

23

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Partnership, it is not a holding company, or a subsidiary or affiliate of a
holding company, which is required to be registered with the Securities and
Exchange Commission under the Holding Company Act and the rules and regulations
promulgated thereunder, within the meaning of the Holding Company Act.

 

(b)                                 All Partners represent and warrant that no
interests will be transferred and no other actions will be taken which would
result in 50% or more of the Percentage Interests in the Partnership being held
by entities which are registered holding companies under the Holding Company
Act, or subsidiaries or affiliates of registered holding companies under the
Holding Company Act.

 

2.7                               Offices. The principal offices of the
Partnership shall be at 300 Friberg Parkway, Westborough, Massachusetts
01581-5039, or at such place as the Management Committee may from time to time
determine. Written notice of any change in such offices shall be given to each
Partner.

 

2.8                               Development Of The Facilities.

 

2.8.1                     Subject to §13.10, each Partner shall devote such
efforts as shall be reasonable and necessary to

 

24

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develop and promote the Facilities for the greatest advantage of the
Partnership, taking into account its respective resources and expertise.

 

2.8.2                     The Management Committee shall, by 60% Vote, approve a
budget for the development of the Facilities and shall from time to time
determine the amounts and timing of Pre-Commitment Date Funds to be advanced to
the Partnership by or on behalf of each Partner in accordance with such
Partner’s respective Percentage Interest provided that, neither TCPL nor East
Coast shall be required to advance any Pre-Commitment Date Funds respecting any
costs incurred or accrued before March 1, 1996 by the Partnership, the Partners
or any Withdrawn Partner but instead shall contribute amounts to the Partnership
as a Capital Contribution after the Commitment Date pursuant, to §3.1.4.

 

2.8.3                     Subject to §3.5.3, if a Partner becomes, or is deemed
to have become, a Withdrawn Partner on or before the Commitment Date in
accordance with any provision of this Agreement, the Percentage Interest of such
Withdrawn Partner shall be allocated among the Partners on the basis agreed to
by all such remaining Partners; provided, however, that if the remaining
Partners are unable to reach

 

25

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such agreement, the Percentage Interest of the Withdrawn Partner shall be
allocated among the remaining Partners pro rata on the basis of their Percentage
Interests.

 

2.9                               Commitment To Construct The Facilities.

 

2.9.1                     Except upon approval by 60% Vote, the Partnership
shall not incur any material costs or obligations (“material costs or
obligations” for this purpose shall mean any capital expenditure exceeding
$500,000, any contractual obligation exceeding $500,000 or extending for more
than twelve (12) calendar months, or any cost exceeding its budgeted amount by
the lesser of 10% thereof or $500,000) with respect to the Facilities (except
for the contingent obligation provided in §2.10 to repay Pre-Commitment Date
Funds advanced by Withdrawn Partners) or become obligated under the Financing
Commitments relating to the Facilities (except for a normal financing commitment
fee) until (a) the Partnership has obtained the right-of-way to construct the
Facilities, (b) the Necessary Regulatory Approvals have been obtained,
(c) arrangements for the Financing Commitments have been made, (d) Firm Service
Gas Transportation Contracts (or Precedent Agreements with respect

 

26

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thereto) have been executed by the Partnership and each Shipper which provide
for transportation by all Shippers in the aggregate of a minimum volume of
natural gas per day, such minimum to be determined by the Management Committee
by Majority Vote, (e) Gas Purchase Contracts or Precedent Agreements with
respect thereto have been executed by each Shipper and its supplier (s) for
supplies to all Shippers in the aggregate of a minimum volume of natural gas per
day, such minimum to be determined by the Management Committee by Majority Vote,
(f) the Estimated Cost of the Facilities has been determined and (g) the
Management Committee has approved the commitment to construct the Facilities as
provided in §2.9.2 or 2.9.3.

 

2.9.2                     Immediately following the last to occur of the events
referred to in clauses (b), (c) and (f) of §2.9.1, the satisfaction of all
conditions set forth in any Precedent Agreements for execution of Firm Service
Gas Transportation Contracts, and the satisfaction of all conditions set forth
in any Precedent Agreements for execution of Gas Purchase Contracts, the
Management Committee shall vote on whether the Partnership shall be committed to
construct the Facilities Approval of the

 

27

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commitment to construct the Facilities shall require a 60% vote of the
Management Committee; provided, however, that if there shall occur a 60% Vote in
favor of the commitment to construct the Facilities, a Partner whose
Representative did not vote in favor shall be deemed to have withdrawn from the
Partnership at the end of the fifth day following such vote, unless within such
five day period such Partner shall have notified the other Partners in writing
that its vote has been changed.

 

2.9.3                     If any Partner is deemed to have withdrawn from the
Partnership pursuant to the provisions of §2.9.2, the Management Committee
shall, upon the request of the Representative of any Partner which voted in
favor of such commitment, arrange for a reconsideration of the decision to
commit the Partnership to construct the Facilities on a date that is not less
than five days nor more than ten days after the conditions referred to in §2.9.2
are once again satisfied. In the case of such a reconsideration pursuant to this
§2.9.3, approval shall require a Majority Vote of the Management Committee
(comprised only of Representatives of Partners which have not been deemed to
have withdrawn from the Partnership pursuant to §2.9.2)

 

28

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in favor of the commitment; provided, however, that if there shall occur a
Majority Vote in favor of the commitment to construct the Facilities as a result
of such reconsideration, a Partner whose Representative did not vote in favor
shall be deemed to have withdrawn from the Partnership at the end of the fifth
day following such vote, unless within such five (5) day period such Partner
shall have notified the other Partners in writing that its vote has been
changed.

 

2.9.4                     After the Commitment Date, except upon approval by 60%
Vote of the Management Committee, the Partnership shall not incur any material
costs or obligations, as defined in §2.9.1, with respect to the Facilities until
all conditions precedent to the obtaining by the Partnership of funds pursuant
to the Financing Commitments relating to the Facilities have been satisfied.

 

2.10                        Repayment Of Pre-Commitment Date Funds And Qualified
Expenditures To Withdrawn Partners.

 

2.10.1              Subject to §2.10.2 and the proviso hereinafter set forth, as
soon as reasonably practicable after firm service to Shippers has commenced, the
Partnership shall repay the Pre-Commitment Date Funds and Qualified Expenditures
advanced by any former

 

29

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Partner which has, or is deemed to have, become a Withdrawn Partner on or before
the Commitment Date, but only to the extent such amounts have not been recovered
by such Persons through rates (which action shall be within the sole discretion
of each Partner at all relevant times), provided, however, that the Management
Committee determines by a 60% Vote that payment of such amounts may be made
without adversely affecting the Partnership’s financing arrangements or
operating and working capital requirements. Such payments are to be made on a
pro rata basis among the foregoing Persons until the Pre-Commitment Date Funds
and Qualified Expenditures so advanced by them are paid in full, provided,
however, that in the event such Persons have not been so repaid in full by the
date which is one year following the date firm service to Shippers has
commenced, the outstanding amounts of Pre-Commitment Date Funds and Qualified
Expenditures which have not been repaid shall thereafter bear interest at a rate
equal to the prime rate announced as in effect by The First National Bank of
Boston from time to time plus two percentage points. In the event that such
funds (including interest) are not repaid prior to the

 

30

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winding up of the Partnership pursuant to §11.5, such amounts shall be deemed to
be contingent liabilities of the Partnership. A Withdrawn Partner’s Capital
Account, if any, shall be recorded in its Withdrawn Partner Former Capital
Account, reduced to zero and eliminated.

 

2.10.2              Pre-Commitment Date Funds and Qualified Expenditures
advanced by any former Partner which has, or is deemed to have, become a
Withdrawn Partner on or before the Commitment Date shall be subject to review
and verification by FERC, and only those expenditures found by FERC to reflect
reasonable and necessary expenditures, prudently incurred, shall be repayable
under the conditions set forth in §2.10.1 by the Partnership, and then only to
the extent appropriately made on behalf of the Partnership for inclusion in the
rate base of the Facilities. It shall be the duty of the Management Committee to
make timely application to the FERC on behalf of the Partnership for such review
and verification, and the Management Committee shall seek inclusion in the rate
base of the Facilities all Pre-Commitment Date Funds and Qualified Expenditures.
As a condition to receipt of any repayment of Pre-Commitment Date Funds or

 

31

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Qualified Expenditures, each Partner agrees hereby that in the event it shall
become a former Partner which has, or is deemed to have, become a Withdrawn
Partner on or prior to the Commitment Date, it shall return to the Partnership
an amount equal to any amount of such repayment to it that is disallowed for
ratemaking purposes by FERC, and, if applicable, an amount equal to the interest
paid by the Partnership on such disallowed Pre-Commitment Date Funds or
Qualified Expenditures promptly following written notice to such former Partner
of such disallowance and the amount due pursuant to this §2.10.2.

 

2.11                        Incremental Expansion.

 

2.11.1              Any Partner or Partners which desire the Partnership to
construct an Incremental Expansion shall notify the other Partners and the
Management Committee of the amount of additional capacity requested and the date
on which such capacity is requested to be available, and shall provide a
detailed explanation of the reasons why such capacity is being requested.

 

2.11.2              Within sixty (60) days after receipt by each Partner of any
proposal for an Incremental Expansion and the explanatory information described

 

32

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in §2.11.1, the Management Committee shall vote on whether to investigate
whether to proceed with the development of the proposed Incremental Expansion.
Upon the vote of the Management Committee to conduct such an investigation,
which shall be by a 60% Vote thereof, the Partnership shall proceed with such an
investigation, by instructing the Operator (i) to determine an estimate of the
cost of the proposed Incremental Expansion, and a proposed financing plan
therefor, and (ii) to create appropriate engineering data, flow diagrams and
maps describing such Incremental Expansion in such detail as is required for
filing as exhibits to an application to FERC for authorization to construct and
operate the proposed Incremental Expansion. The Operator shall send the results
of such investigation to each of the Partners as soon as possible and in any
event within 180 days after the Management Committee instructs the Operator to
conduct such investigation.

 

2.11.3              Within sixty (60) days after the Operator has sent to each
Partner the results of its investigation conducted pursuant to Section 2.11.2,
above, the Management Committee shall vote on whether to proceed with the
development of the proposed

 

33

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Incremental Expansion, which shall be by a 60% vote thereof. A vote to proceed
with the development of an Incremental Expansion shall be without prejudice to
the vote on whether the Partnership shall be committed to construct such
Incremental Expansion under §2.12.2.

 

2.12                        Commitment to Construct An Incremental Expansion.

 

2.12.1              Except as provided in §2.11.2, and except upon approval by a
60% Vote, the Partnership shall not incur any material costs or obligations with
respect to an Incremental Expansion (“material costs or obligations” for this
purpose shall mean any capital expenditure exceeding $500,000, any contractual
obligation exceeding $500,000 or extending for more than twelve (12) calendar
months, or any cost exceeding its budgeted amount by the lesser of 10% thereof
or $500,000, but shall not include the reasonable costs necessary to meet the
conditions precedent set forth in subsections (a) and (b), below) or become
obligated under any interim financing arrangements relating to an Incremental
Expansion (except for a normal financing commitment fee) until (a) the
Partnership has obtained any required right-of-way for such Incremental
Expansion, (b) the Additional Necessary

 

34

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Regulatory Approvals have been obtained, (c) arrangements for such Financing
Commitments, if any, as may be required in the opinion of the Management
Committee for such Incremental Expansion have been made, (d) Firm Service Gas
Transportation Contract (s) (or Precedent Agreements with respect thereto) for
the use of such portion of the capacity of the Incremental Expansion as shall be
sufficient to satisfy any applicable FERC requirements has(ve) been executed by
the Partnership and by one or more Shippers approved by the Management Committee
and related Gas Purchase Contracts (or Precedent Agreements with respect
thereto) have been executed by each such Shipper and its supplier(s), (e) the
Estimated Cost of an Incremental Expansion has been determined and (f) the
Management Committee has approved the commitment to construct such Incremental
Expansion as provided in §2.12.2.

 

2.12.2              Immediately following the last to occur of the events
referred to in Clauses (b), (c) and (e) of §2.12.1, and the satisfaction of all
conditions set forth in any Precedent Agreements with respect to Firm Service
Gas Transportation Contracts and Gas Purchase Contracts by the Shippers which
will

 

35

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utilize the capacity of the Incremental Expansion (other than the vote of the
Management Committee to commit to construct the Incremental Expansion), or at
such time as unanimously agreed by the Management Committee, the Management
Committee shall vote on whether the Partnership shall be committed to construct
the Incremental Expansion. A 60% Vote of the Management Committee shall be
required to approve the commitment to construct the Incremental Expansion.

 

2.13                        Regulatory And Financing Decisions with Respect To
Incremental Expansions. All votes on regulatory and financial matters with
respect to an Incremental Expansion, including without limitation, the filing of
applications for Additional Necessary Regulatory Approvals or amendments
thereto, acceptance of all such approvals and amendments, the filing of any
tariff or tariff revisions relating to an Incremental Expansion, and execution
of financing agreements and commitments related to an Incremental Expansion,
shall be subject to the same voting standard set forth in §2.12.2 for approval
of the commitment to construct

 

36

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3.                                      Capital Contributions.

 

3.1                               Initial Capital Contributions.

 

3.1.1                     The initial Capital Contribution of each Partner to
the Partnership shall be as determined by the Management Committee in accordance
with this §3.

 

3.1.2                     The Pre-Commitment Date Funds and Qualified
Expenditures advanced (whether prior to or after the Formation Date) by each
Partner (or the Affiliate of such Partner) which remains a Partner after the
Commitment Date, to the extent that such amounts have not otherwise been
recovered by such Persons through rates, shall, as provided in this §3.1.2 and
in §3.1.5, be credited to its respective Capital Account as soon as possible
after the Commitment Date, but no later than thirty (30) days after the
Commitment Date

 

3.1.3                     The assets, if any, acquired by means of the
Pre-Commitment Date Funds and Qualified Expenditures of the Partners, shall be
and are hereby contributed to the Partnership. Subject to such change as may be
required by §3.1.5:

 

(a)                                 The valuation by the Partnership of the
Qualified Expenditures credited to each Partner shall be subject to the
determination of the Management Committee, prior to such

 

37

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crediting, by 60% Vote; provided, however, that the valuation of all Qualified
Expenditures shall be finally determined by the Management Committee no later
than thirty (30) days after the Commitment Date;

 

(b)                                 Each Partner may have reasonable access to
the books and records of the other Partners and any Affiliate which has incurred
Qualified Expenditures to be credited to a Partner, as appropriate, to verify
the accuracy of such expenditures; and

 

(c)                                  The Qualified Expenditures credited to each
Partner shall be supported in reasonable detail by an audited statement or by a
verified statement signed by an officer of the Partner with the knowledge or
information and authority to make such verification.

 

3.1.4                     On a date selected by the Management Committee, which
shall be no later than sixty (60) days after the Commitment Date, each Partner
shall make a cash Capital Contribution to the Partnership, as appropriate, and
promptly thereafter the Partnership shall make a distribution (solely out of the
funds so received from other Partners), if appropriate, in order to assure that
the ratio of

 

38

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each Partner’s Capital Account balance to the aggregate of all Partners’ Capital
Account balances, after taking into effect the Pre-Commitment Date Funds and
Qualified Expenditures credited to the Capital Accounts of the Partners in
accordance with §§3.1.2, 3.1.3 and this §3.1.4, will be equal to the Percentage
Interest of such Partner set forth on Schedule A to this Agreement (subject to
any prior adjustment to such Partner’s Percentage Interest effected in
accordance with the provisions of this Agreement). Unless otherwise agreed by
unanimous consent of the Partners, in the event, after the Commitment Date, of
(a) the withdrawal of a Partner or (b) a transfer of a Partner’s interest or
(c) payment of a Capital Contribution as provided in §3.5.3, the Percentage
Interests set forth on Schedule A, as such Percentage Interests have been
adjusted from time to time pursuant to this Agreement, shall be further adjusted
so that the Percentage Interest of each remaining Partner shall be equal to a
fraction, the numerator of which is such Partner’s Capital Account and the
denominator of which is the sum of all the Partners’ Capital Accounts, rounded
to the nearest ten-thousandth of one percent. The

 

39

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Percentage Interests set forth on Schedule A, as they may be adjusted from time
to time in accordance with the provisions of this Agreement, shall govern the
obligations to advance Pre-Commitment Date Funds and to make Capital
Contributions as specified in this §3. For purposes of determining adjustments
to Partners’ Percentage Interests pursuant to this §3.1.4, the latest monthly
statement of Capital Accounts delivered to the Partners shall be controlling.

 

3.1.5                     Pre-Commitment Date Funds and Qualified Expenditures
shall be subject to review and verification by FERC, and only those expenditures
found by FERC to reflect reasonable and necessary expenditures, prudently
incurred, shall be retained in the Capital Accounts after being credited thereto
as provided in §§3.1.2 or 3.1.3, and then only to the extent appropriately made
on behalf of the Partnership for inclusion in the rate base of the Facilities
(provided, that the Management Committee shall seek inclusion in the rate base
of the Facilities of all Pre-Commitment Date Funds and Qualified Expenditures).
Any disallowance for ratemaking purposes by FERC of an amount included in any
Capital Account shall be deducted from such

 

40

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Capital Account, and the Partner from whose Capital Account such deduction has
been made shall promptly make a cash Capital Contribution (which shall be
credited to its Capital Account as of the date of such deduction) to the
Partnership in the amount of such deduction.

 

3.2                               Post-Commitment Date Capital Contributions.

 

3.2.1                     After the Commitment Date, each Partner shall, as
provided in §3.3.1, contribute to the capital of the Partnership an amount equal
to its Percentage Interest multiplied by the amount of the Cost of the
Facilities less (a) any amount previously contributed by such Partner to the
Cost of the Facilities pursuant to §3.1 and (b) an amount equal to its
Percentage Interest multiplied by the amount of the Financing Commitments
relating to the Facilities.

 

3.2.2                     Whenever the Management Committee shall vote to
proceed with the development of a proposed Incremental Expansion as provided in
§2.11.3, the Management Committee shall cause to be prepared and filed on behalf
of the Partnership appropriate applications for Additional Necessary Regulatory
Approvals. Each Partner shall make a cash Capital Contribution to the
Partnership, as provided in

 

41

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§3.3.1, in an amount equal to its Percentage Interest of that portion, if any,
of the Estimated Cost of an Incremental Expansion relating to the preparation
and prosecution of the application(s) for Additional Necessary Regulatory
Approvals and the acquisition of the Financing Commitments determined from time
to time by the Management Committee as being required to be paid from Capital
Contributions made by the Partners prior to the Additional Commitment Date
relating thereto.

 

3.2.3                     After any Additional Commitment Date relating to an
Incremental Expansion approved pursuant to §2.12, each Partner shall make a cash
Capital Contribution to the Partnership, as provided in §3.3.1, in an amount, if
any, equal to its Percentage Interest of the Estimated Cost of an Incremental
Expansion, less (a) any amount previously contributed by such Partner to the
Cost of an Incremental Expansion, (b) its Percentage Interest of the amount
committed under the Financing Commitments, if any, relating to such Incremental
Expansion and (c) its Percentage Interest of the amount, if any, the Management
Committee may determine from time to time is available from the Partnership to
finance such Incremental Expansion.

 

42

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3.2.4                     In the event that, at any time after the completion of
construction of the Facilities, the Partnership shall require additional capital
for operations, other than the capital provided for under §§3.2.1, 3.2.2 and
3.2.3, each Partner shall, as provided in §3.3.1, contribute to the capital of
the Partnership an amount equal to its Percentage Interest multiplied by the
aggregate amount of Capital Contributions determined to be required for such
purpose by 60% Vote of the Partners.

 

3.3                               Payment Of Pre-Commitment Date Funds And
Capital Contributions.

 

3.3.1                     The Management Committee shall issue or cause to be
issued a written request to each Partner for payment of each installment of
Pre-Commitment Date Funds to be advanced in accordance with §2.8.2 and of
Capital Contributions to be made in accordance with §3.2, at such times and in
such amounts (a) in the case of Capital Contributions to be made in accordance
with §§3.2.1 or 3.2.3, as shall be consistent with the schedule of Capital
Contributions contained in the construction fund schedule most recently approved
by the Management Committee as provided in this Agreement, subject only to such
variations in timing of such payments

 

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as may be necessitated by the cash requirements of the Partnership and (b) in
the case of Pre-Commitment Date Funds to be advanced in accordance with §2.8.2
and Capital Contributions be made in accordance with §§3.2.2 and 3.2.4, as the
Management Committee shall approve as provided in this Agreement. All amounts
received by the Partnership pursuant to this §3.3, whether received prior to, on
or after the date specified in §3.3.2(d), shall be credited to the respective
Partners’ (i) obligation to advance Pre-Commitment Date Funds (in the case of
Pre-Commitment Date Funds) or (ii) Capital Account (in the case of Capital
Contributions) as of such specified date. All amounts received from a Partner
after the date specified in §3.3.2(d) by the Partnership pursuant to this §3.3
shall be accompanied by interest on such overdue amounts, which interest shall
be payable to the Partnership and shall accrue from and after such specified
date at a rate equal to the lesser of 2% over the prime rate announced as in
effect by First National Bank of Boston from time to time, or the maximum
interest rate allowed for this purpose pursuant to the laws of the State of
Maine. Any such interest paid with respect to

 

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Pre-Commitment Date Funds or Capital Contributions, as the case may be, shall be
credited to the respective obligations of all of the Partners to advance
Pre-Commitment Date Funds or Capital Contributions, as the case may be, on a pro
rata basis in accordance with their respective Percentage Interests as of the
date such payment is made to the Partnership after giving effect to the payment
of the Pre-Commitment Date Funds or Capital Contribution with respect to which
such interest accrued.

 

3.3.2                     Each written request issued pursuant to §3.3.1 shall
contain the following information:

 

(a)                                 The total amount of Pre-Commitment Date
Funds or Capital Contributions requested from all Partners;

 

(b)                                 The amount of Pre-Commitment Date Funds or
Capital Contributions requested from each Partner, such amounts to be in
accordance with the Percentage Interests of the Partners;

 

(c)                                  The purpose for which the funds are to be
applied in such reasonable detail as the Management Committee shall direct; and

 

(d)                                 The date on which payments of the
Pre-Commitment Date Funds or Capital

 

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Contributions shall be made (which date shall be not less than thirty (30) days
following the date the request is given) and the method of payment, provided
that such date and method shall be the same for each of the Partners.

 

3.3.3                     Each Partner agrees that it shall make payments of its
respective Pre-Commitment Date Funds and Capital Contributions in accordance
with requests issued pursuant to §3.3.1.

 

3.3.4                     (a)                                 In the event a
Partner shall default in the performance of any of its obligations to advance
any Pre-Commitment. Date Funds or make any Capital Contribution to the
Partnership in accordance with the terms of this Agreement and such default
shall continue uncured for a period of thirty (30) days after the giving of
notice to all of the Partners of such default by any of the other Partners or
for such extended cure period as may be approved by a 60% Vote of the Management
Committee exclusive of Representatives of Defaulting Partners, then such Partner
shall be deemed to have withdrawn from the Partnership effective as of the 31st
day after such notice or the day after expiration of the extended cure period,

 

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as the case may be, and such Defaulting Partner shall thereafter be a Withdrawn
Partner. Subsequent to any such event of default and unless and until such
default shall be cured as provided in §3.3.4 (c), the Defaulting Partner shall
have no right to receive any allocations which are attributable to its interest
in the Partnership and made in accordance with §4 and no distribution shall be
made to the Defaulting Partner under §5. Notwithstanding the above, the
allocation and distributive shares of a Defaulting Partner shall be retained by
the Partnership until such time as (i) the Defaulting Partner has timely cured
the default, at which time the Partnership shall distribute the retained funds,
without interest, or (ii) the Defaulting Partner has become a Withdrawn Partner,
at which time the funds so retained shall remain Partnership property.

 

(b)                                 After the receipt of such notice of default
pursuant to §3.3.4 (a) and prior to the curing of any such default as provided
in §3.3.4 (c) of this Agreement or the withdrawal of the Defaulting Partner as
provided in §3.3.4 (a), a

 

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Defaulting Partner shall continue to be a Partner and shall continue to be
obligated to advance all Pre-Commitment Date Funds and make all Capital
Contributions as provided in this §3.3; provided, however, that until such
default is cured, such Defaulting Partner’s Representative shall not have any
vote in matters to be acted upon by the Management Committee, and such
Defaulting Partner’s Percentage Interest shall not be considered in determining
the total Percentage Interests of the Partners for the purpose of any vote of
the Management Committee.

 

(c)                                  A Defaulting Partner shall be deemed to
have cured all defaults under this §3.3 when it has fulfilled its obligations to
make all payments then due under §3.3 prior to the end of the period for cure as
provided in §3.3.4 (a).

 

(d)                                 Notwithstanding any other provision hereof,
the obligation of a Partner to advance Pre-Commitment Date Funds or to make any
Capital Contribution hereunder shall not be reduced because of the Partner’s
previous failure to advance any Pre-Commitment Date Funds or make any Capital
Contribution.

 

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3.4                               Voluntary Contributions. No Partner shall
advance any Pre-Commitment Date Funds or make any Capital Contributions to the
Partnership except pursuant to §2.8.2 and this §3.

 

3.5                               Withdrawn Partner.

 

3.5.1                     Consequences Of Withdrawal.

 

(a)                                 A Withdrawn Partner which has withdrawn from
the Partnership after the Commitment Date pursuant to §3.3.4 or §11.3 shall be
entitled to receive payment from the Partnership, at a time or times when the
Management Committee determines in good faith that such payment may be made
without undue hardship to the Partnership or any Partner, of an amount equal to
its Capital Account on the date of withdrawal (increased by the amount of any
liability paid by such Withdrawn Partner after the date of withdrawal pursuant
to §3.5.2), payable either in a lump sum or in installments as determined by the
Management Committee, in its sole discretion. To the extent that the Management
Committee does not determine to make such a payment, a Withdrawn Partner which
has withdrawn from the Partnership after the Commitment Date in

 

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accordance with §3.3.4 or §11.3 shall be entitled only to such amounts as may be
distributed pursuant to §11.5. From and after the date of its withdrawal, the
Capital Account balance of such a Withdrawn Partner shall be a contingent
obligation of the Partnership and be recorded in its Withdrawn Partner Former
Capital Account, and the Withdrawn Partner’s Capital Account shall be reduced to
zero and eliminated.

 

(b)                                 The rights of a Withdrawn Partner set forth
in §3.5.1 (a) shall (i) be subordinate to the rights of any other creditor of
the Partnership, (ii) not impair in any way the rights of continuing Partners to
receive distributions pursuant to §5, (iii) not include any right on the part of
the Withdrawn Partner to receive any interest or other amounts with respect
thereto, (iv) not be a personal obligation of any Partner and (v) be paid as
provided for in §11.5 in the event of dissolution.

 

3 5.2                     Further Effect. Any Partner that shall have
(a) elected to withdraw or been deemed to have withdrawn from the Partnership
pursuant to §§2.9.2,

 

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2.9.3, 3.3.4, 11.3 or 11.4 or (b) withdrawn in contravention of this Agreement,
shall, have only those rights specifically set forth in this Agreement and such
Partner’s status as a Partner-shall automatically terminate. Except as provided
in §11.2.3, withdrawal by one or more Partners as described in the preceding
sentence shall not effect a dissolution of the Partnership A Withdrawn Partner
shall remain obligated for all liabilities attributable to its respective
interest in the Partnership accruing prior to the date of its withdrawal,
including any such liabilities maturing after such withdrawal but originating
from actions taken prior thereto; provided, however, that no Withdrawn Partner
shall be obligated for any liability of the Partnership originating from any
action taken by the Management Committee on or prior to the Commitment Date, if
the Representative of such Withdrawn Partner voted against such action and the
Withdrawn Partner promptly thereafter notified the Partnership of its withdrawal
from the Partnership in accordance with the provisions of this Agreement.

 

3.5.3                     Consequences Of Withdrawal To Remaining Partners. In
the event any Partner shall have withdrawn from

 

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the Partnership or be deemed to have withdrawn from the Partnership pursuant to
the provisions of this Agreement, if the Management Committee determines that an
amount equal to the whole or any portion of the amount of the Pre-Commitment
Date Funds or Capital Contributions which such Withdrawn Partner failed to pay
when due or had been requested to pay pursuant to §3.3.1 (which amount shall be
herein called the “Defaulted Contribution”) should be contributed to the
Partnership by remaining Partners in order to meet the cash needs of the
Partnership, it shall promptly provide written notice of such determination to
each remaining Partner, which notice shall state the amount of the Defaulted
Contribution. Each remaining Partner shall have the right to elect (by written
notice to the other Partners within ten (10) days of the date of the notice from
the Management Committee of the Defaulted Contribution) to contribute any
percentage of the Defaulted Contribution not in excess of the percentage
determined by dividing the Percentage Interest of such remaining Partner by the
sum of the Percentage Interests of all remaining Partners who so elect to
contribute a portion of the Defaulted Contribution (any

 

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percentage so elected being hereafter called an “Elected Percentage”); provided,
however, that (a) those Partners who so elect to satisfy a portion of the
Defaulted Contribution may unanimously agree to allocate the amounts of their
contributions among such Partners in a manner other than that provided for in
this §3.5.3 and (b) the sum of the Elected Percentages of the Partners who so
elect to satisfy the Defaulted Contribution must be 100%. In the event that such
Partners do not elect to contribute an amount equal to 100% of the Defaulted
Contribution in accordance with the second sentence of this §3.5.3 and the
Management Committee does not alter its determination that the cash needs of the
Partnership should be met by Pre-Commitment Date Funds or Capital Contributions,
then within ten days of the date of a written request therefor from the
Management Committee, each Partner shall contribute to the Partnership an amount
equal to its pro rata share (based on the ratio of such Partner’s Percentage
Interest to the sum of the Percentage Interests of all the remaining Partners)
of the part of the Defaulted Contribution not otherwise elected by the Partners
in accordance with the procedures set forth herein; provided,

 

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however, that nothing herein shall be construed as preventing admission of a new
Partner or Partners to the Partnership in accordance with §9 in order to meet
the cash needs of the Partnership resulting from the withdrawal of a Partner or
Partners. To the extent that any Partner contributes any portion of a Capital
Contribution pursuant to this §3.5.3, that Partner’s Percentage Interest shall
immediately be adjusted to reflect the contribution (due account being given to
the contributions of other Partners and the termination of the Withdrawn
Partner’s status as a Partner).

 

4                                         Capital Accounts; Allocation Of
Profits And Losses.

 

4.1                               Maintenance of Partners’ Capital Accounts. A
separate Capital Account for each Partner shall be established with respect to
such Partner and maintained throughout the term of the Partnership in accordance
with Regulations §1.704-1 as follows:

 

4 .1.1                  The Capital Account of each Partner shall (i) be
credited with the amount of cash and the fair market value, as determined by the
Management Committee, in writing, or in accordance with §3.1.3, as the case may
be, of any property contributed to the Partnership by such Partner, and with any
income and gain allocated to such Partner

 

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pursuant to this Agreement, and (ii) be debited with the amount of cash and the
fair market value, as determined by the Management Committee as aforesaid, of
any property distributed to such Partner by the Partnership, and with any
deductions and losses allocated to such Partner pursuant to this Agreement.

 

4.1.2                     In the event any interest in the Partnership is
transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account, if any, of the transferor to the extent it
related to the transferred interest.

 

4.2                               Tax Allocation. All income, gain, loss,
deduction or credits of the Partnership shall be allocated between the Partners
in accordance with their respective Percentage Interests in the Partnership. The
determination of each Partner’s distributive share of any Partnership income,
gain, loss, deduction, credits and tax preference items shall be made in
accordance with and in proportion to such Partner’s Percentage Interest as of
the date of allocation, except as otherwise provided in this §4. Such
allocations shall be made for each calendar month based upon the average of each
Partner’s daily Percentage Interest during such

 

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month. The provisions of Section 704(c) of the Code shall apply to contributed
property for the purpose of computing gain or loss and for other purposes to the
extent required by future tax regulations. These allocations are subject to
retroactive adjustments resulting from any changes in Capital Accounts pursuant
to FERC or other governmental order. Net income or net losses, determined in
accordance with Regulations §1.704-1, from the sale of Partnership assets,
including gains attributable only to prior depreciation deductions, shall be
allocated to the Partners in proportion to the Partners’ respective Percentage
Interests during the period in which such appreciation or depreciation in value
took place or during the period such depreciation deductions were taken. For
purposes of determining the period during which such appreciation or
depreciation in value took place and the amount of such appreciation or
depreciation, the values assigned to total Partnership capital at the time of
admitting any Additional Partner or at the time of any Capital Contribution by
an existing Partner which is not in proportion to the Partners’ then existing

 

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Percentage Interests, shall be used and shall be controlling.

 

4.3                               Special Tax Allocations. The following special
allocations shall, except as otherwise provided, be made in the following order:

 

4.3.1                     Minimum Gain Chargeback. Notwithstanding any other
provision of this §4, if there is a net decrease in Partnership Minimum Gain
during any Partnership fiscal year, each Partner shall be specially allocated
items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to the portion of such Partner’s share of
the net decrease in Partnership Minimum Gain, determined in accordance with
Regulations §1.704-2 (g). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant thereto. The items to be so allocated shall be determined in
accordance with §1.704-2 (f) (6) of the Regulations. This §4.3.1 is intended to
comply with the minimum gain chargeback requirement in such Section of the
Regulations and shall be interpreted consistently therewith.

 

4.3.2                     Partner Nonrecourse Debt Minimum Gain Chargeback.
Notwithstanding any other provision of this §4

 

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except this §4.3.2, if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership
fiscal year, each Partner which has a share of the Partner Nonrecourse Debt
Minimum Gain attributable to such Partner Nonrecourse Debt, determined in
accordance with Section 1.704-2 (i) (5), shall be specially allocated items of
Partnership income and gain for such year (and, if necessary, subsequent years)
in an amount equal to the portion of such Partner’s share of the net decrease in
Partner Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Regulations §1.704-2 (i). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Partner pursuant thereto. The items to
be so allocated shall be determined in accordance with §1.704-2 (i) (4) of the
Regulations. This §4.3.2 is intended to comply with the minimum gain chargeback
requirement in such Section of the Regulations and shall be interpreted
consistently therewith.

 

4.3.3                     Nonrecourse Deductions. Nonrecourse Deductions for any
fiscal year or other period shall, be specially

 

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allocated to the Partners in accordance with their respective Percentage
Interests.

 

4.3.4                     Partner Nonrecourse Deductions. Any Partner
Nonrecourse Deductions for any fiscal year or other period shall be specially
allocated to the Partner who bears the economic risk of loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Regulations §1.704-2 (i) (1).

 

4.3.5                     Code Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant to Code
Sections 734(b) or 743(b) is required, pursuant to Regulations §1.704-1(b) (2)
(iv) (m), to be taken into account in determining Capital Accounts, the amount
of such adjustment to the Capital Accounts shall be treated as an item of gain
(if the adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such gain or loss shall be specially allocated to the
Partners in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to such Section of the Regulations.

 

4.4                               Curative Allocations. Any special allocation
of items pursuant to §4.3, other than §4.3.5, shall be

 

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taken into account under §4.2 in computing allocations of gain or loss on each
sale of Partnership assets or an interest therein so that the net amount of
income, gains, losses or deductions and all other items allocated to each
Partner pursuant to this §4 shall, to the extent possible, be equal to the net
amount that would have been allocated to each Partner if the above specified
special allocations had not been made. In addition, the Management Committee
shall have reasonable discretion, on behalf of the Partnership, to seek a waiver
of the Minimum Gain Chargeback or the Partner Nonrecourse Debt Minimum Gain
Chargeback from the Commissioner of the Internal Revenue Service to the extent
permitted by §1.704-2 (f) (4) of the Regulations. The Partners are aware of the
income tax consequences of the allocations made by this §4 and hereby agree to
be bound by the provisions of this §4 in reporting their shares of the
Partnership income or loss for income tax purposes.

 

5.                                      Distributions. Subject to the requisite
approval in accordance with §7.2.6, and except as otherwise expressly provided
in this Agreement, distributions to the Partners shall be made only to all
Partners (other than a Defaulting Partner)

 

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simultaneously in proportion to their respective Percentage Interests (at the
time the amounts of such distributions are determined) and in such aggregate
amounts and at such times as shall be determined by the Management Committee;
provided, however, that if for any fiscal year the Partnership shall have earned
a net profit, as determined under Required Accounting Practice, then such net
profit shall be distributed out of available cash (unless the Management
Committee, by 60% Vote, determines otherwise, or unless such cash is required
for operations, or unless such distribution would violate, or result in a
default under any agreement of the Partnership or applicable law) within sixty
(60) days following the end of such fiscal year to the Partners in proportion to
their respective Percentage Interest at the time the amount of such distribution
is determined. All amounts withheld pursuant to the Code or any provision of any
state or local tax law with respect to any payment or distribution to the
Partnership or the Partners shall be treated as amounts distributed to the
Partners pursuant to this §5 for all purposes under this Agreement. The
Management Committee shall allocate any such amounts among the Partners in a
manner that is in accordance with applicable law.

 

6.                                      Accounting And Taxation.

 

6.1                               Fiscal Year. The fiscal year of the
Partnership shall be the calendar year.

 

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6.2                               Location Of Records. The books of account for
the Partnership shall be kept and maintained at such place as the Management
Committee shall determine.

 

6.3                               Books of Account. The books of account for the
Partnership shall be:

 

6.3.1                     Maintained on an accrual basis in accordance with
Required Accounting Practice; and

 

6.3.2                     Audited by the Certified Public Accountants at the end
of each fiscal year.

 

6.4                               Annual Financial Statements And Tax
Information. As soon as practicable following the end of each fiscal year of the
Partnership, the Management Committee shall cause to be prepared and delivered
to each Partner:

 

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6.4.1                     A profit and loss statement and a statement of changes
in financial position for such fiscal year, a balance sheet and a statement of
each Partner’s Capital Account as of the end of such fiscal year, together with
a report thereon of the Certified Public Accountants; and

 

6.4.2                     Such Federal, state and local income tax returns and
such other accounting, tax information and schedules as shall be necessary for
the preparation by each Partner of its income tax return for such fiscal year on
or before three (3) months plus fifteen (15) days after the end of each fiscal
year.

 

6.5                               Interim Financial Statements. As soon as
practicable after the end of each calendar month, and in any event not later
than thirty (30) days thereafter, the Management Committee shall cause to be
prepared and delivered to each Partner, with an appropriate certificate of the
Person authorized to prepare the same:

 

6.5.1                     A profit and loss statement and a statement of changes
in financial position for such month (including sufficient information to permit
the Partners to calculate their tax accruals), for the

 

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portion of the fiscal year then ended and for the twelve-month period then
ended;

 

6.5.2                     A balance sheet and a statement of each Partner’s
Capital Account as of the end of such month; and

 

6.5.3                     A statement comparing the actual financial status and
results of the Partnership as of the end of or for such month and the portion of
the fiscal year then ended with the budgeted or forecasted status and results as
of the end of or for such respective periods.

 

6.6                               Taxation. The Parties intend that the
Partnership shall be treated as a “partnership” for all purposes. The Partners
agree to take all actions and execute and deliver such other documents as is
necessary and appropriate, including an amendment to this Agreement, to qualify
and maintain the Partnership as a partnership for tax purposes. The
Partnership’s state and Federal income tax returns shall be approved by the
Partners. Unless otherwise agreed in writing by the Partners or the Code or
other applicable law does not allow such elections, the following elections
shall be made in preparing Partnership income tax returns and other returns for
taxes measured by income:

 

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(a)                                 To adopt the calendar year as the taxable
year of the Partnership;

 

(b)                                 To adopt the accrual method of accounting;

 

(c)                                  To use the minimum accelerated depreciation
method and shortest permissible life authorized for the computation of
depreciation;

 

(d)                                 To expense research and experimental
expenditures;

 

(e)                                  To adopt the LIFO method for valuation of
inventories;

 

(f)                                   To amortize leasehold, start-up and
organization expenses over the shortest period allowable; and

 

(g)                                  Such other elections as shall maximize and
accelerate all available deductions and defer and minimize the recognition of
taxable income.

 

6.7                               Governmental Reports. Under the direction of
the Management Committee, the Partnership shall prepare and file, or cause to be
prepared and filed, all reports prescribed by FERC and any other commission or
governmental agency having jurisdiction.

 

6.8                               Record Retention. The Management Committee
shall cause all records that are required hereunder or

 

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under any agreement entered into pursuant to this agreement to be retained for
the longer of that period of time required by any applicable law, or the period
of seven years from the date of completion of the activity to which such records
relate, or for a reasonable period of time thereafter if so required by a
Partner by written notice given to the Management Committee prior to the
expiration of such seven year period.

 

6.9                               Inspection Of Facilities And Records. Each
Partner shall have the right at all reasonable times during usual business hours
to inspect any property and facilities of the Partnership, including the
Facilities, and to audit, examine and make copies of the books of account and
other records of the Partnership. Such right may be exercised through any agent
or employee of such Partner designated in writing by it or by an independent
public accountant, petroleum engineer, attorney or other consultant so
designated. The Partner making the request shall bear all costs and expenses
incurred in any inspection, examination or audit made at such Partner’s behest
and shall cause any of its agents, employees or consultants who will conduct
such inspection, examination or audit to execute at

 

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any other Partner’s request a confidentiality agreement containing
confidentiality obligations no more or less extensive than those set forth in
§13.12 hereof.

 

6.10                        Deposit And Withdrawal Of Funds. Funds of the
Partnership shall be deposited in such banks or other depositories as shall be
designated from time to time by 60% Vote of the Management Committee. All
withdrawals from any such depository shall be made only as authorized by the
Management Committee and shall be made only by check, wire transfer, debit
memorandum or other written instruction.

 

6.11                        Return Preparation. The Partnership’s tax returns
and reports shall be prepared by the Tax Matters Partner (as defined in §6.12,
below), and the Tax Matters Partner shall use its best efforts in the
preparation and filing of such returns and reports. The Partners shall furnish
the Tax Matters Partner with any information necessary to prepare such returns
and reports and the Tax Matters Partner shall submit copies of such returns and
reports to the Partners at least fourteen (14) Days in advance of their due
date, as extended, to permit review and approval.

 

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6.12                        Partnership Level Tax Audits. NGDC is hereby
designated the tax matters partner for the Partnership pursuant to Section 6231
(a) (7) of the Code (the “Tax Matters Partner”). The Tax Matters Partner shall
inform the other Partners of all matters which may come to its attention in its
capacity as Tax Matters Partner by giving the other Partners notice thereof
within ten (10) days after becoming informed. The duties of the Tax Matters
Partner and all of the Partners individually with respect to tax matters shall
be as follows; provided, however, that nothing herein shall prevent any Partner,
including the Tax Matters Partner, from taking in its individual capacity any
action which is left to the determination of an individual Partner under
Sections 6221 through 6233 of the Code:

 

(a)                                 The Partners shall furnish the Tax Matters
Partner with such information, including, without limitation, information
specified in Section 6230 (e) of the Code, as it may reasonably request to
permit the Tax Matters Partner to provide the Internal Revenue Service with
sufficient information to allow proper notice to the Partners in accordance

 

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with Section 6223 of the Code. The Partners shall also furnish to each other
copies of all correspondence with the Internal Revenue Service or the Department
of the Treasury regarding any aspect of Partnership items or the Partnership tax
return.

 

(b)                                 No Partner shall knowingly treat a
partnership item on its federal income tax return in a manner inconsistent with
the treatment of such partnership item on the Partnership’s federal income tax
return without first giving reasonable advance notice of such intended action
(including the proposed treatment of such partnership item) to the other
Partners.

 

(c)                                  The Tax Matters Partner shall not enter
into any extension of the period of limitations as provided under Section 6229
of the Code except with the prior written consent of all of the Partners.

 

(d)                                 No Partner shall file, pursuant to
Section 6227 of the Code, a request for an administrative adjustment of
partnership items for any Partnership taxable year without first giving
reasonable advance notice to all other Partners. If all of the Partners agree
with

 

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the requested adjustment, the Tax Matters Partner shall file the request for
administrative adjustment on behalf of the Partnership. If all of the Partners
do not agree with the requested adjustment within thirty (30) days after notice
to the Partners, or within the period required to timely file the request for
administrative adjustment, if shorter, any Partner, including the Tax Matters
Partner, may file a request for administrative adjustment on its own behalf.

 

(e)                                  Any Partner intending to file a petition
under any Section of the Code, including, without limitation, Sections 6226 and
6228 thereof, with respect to any tax matters involving the Partnership,
including, without limitation, any matter with respect to a Partnership item,
shall give reasonable advance notice to the other Partners of such intention and
the nature of the contemplated proceeding. In the case where the Tax Matters
Partner is the Partner intending to file such petition, such notice shall be
given within a reasonable time to allow the other Partners to participate in the
choosing of the forum in which such

 

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petition will be filed. If the Partners do not agree on the appropriate forum,
then the appropriate forum shall be chosen by the Management Committee. If any
Partner intends to seek review of any court decision rendered as a result of a
proceeding instituted under this §6.12, such Partner shall notify all of the
other Partners of such intended action.

 

(f)                                   The Tax Matters Partner and the other
Partners shall not enter into settlement negotiations with respect to the tax
treatment of partnership items without first giving reasonable advance notice of
such intended action (including any proposal for settlement) to the other
Partners. The Tax Matters Partner shall not bind any other Partner to a
settlement agreement without obtaining the written concurrence of any such
Partner. Any other Partner who enters into a settlement agreement with the
Internal Revenue Service or the Secretary of the Treasury with respect to any
partnership items, as defined in Section 6231 (a) (3) of the Code, shall notify
the other Partners of such settlement agreement and its terms within ninety (90)
days from the date of

 

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settlement; provided, that such Partner shall not enter into any settlement
agreement which binds or purports to bind the Partnership or the other Partners.

 

(g)                                  The Tax Matters Partner shall have the
right to engage on behalf of the Partnership legal counsel, certified public
accountants, or other experts without the prior written consent of the other
Partners. Any reasonable item of expense with respect to such matters, including
but not limited to fees and expenses for legal counsel, certified public
accountants, and others which the Tax Matters Partner incurs in connection with
any Partnership level audit, assessment, litigation, or other proceedings
regarding any partnership item, shall be borne by the Partnership. The Tax
Matters Partner shall not be liable for any neglect, omission or action taken by
or attributable to any such expert provided reasonable care was executed by the
Tax Matters Partner in the selection of such expert.

 

(h)                                 The provisions of this §6.12, including but
not limited to the obligation to pay fees and

 

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expenses contained in subsection (g), shall survive the termination of this
Agreement, the Partnership or the termination of any Partner’s interest in the
Partnership and shall remain binding on the Partners for a period of time
necessary to resolve with the Internal Revenue Service or the Department of the
Treasury any and all matters regarding the federal income taxation of the
Partnership for the applicable tax year.

 

(i)                                     The provisions of this §6.12 shall apply
for state income tax purposes (and for other taxes computed with respect to
income) to the extent rules similar to Code Sections 6221 through 6233 are
applicable to such taxes.

 

(j)                                    The Tax Matters Partner shall not be
liable to any Partner for any action taken by or attributable to the Tax Matters
Partner, except for any liability arising out of its gross negligence or willful
misconduct.

 

7.                                      Management Of The Partnership.

 

7.1                               General Management Structure.

 

7.1.1                     The management policies of the Partnership shall be
established by the Management Committee in accordance with this Agreement which,
except as

 

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otherwise provided in this Agreement, shall have exclusive authority with
respect to the affairs of the Partnership. Except as specified in the Operating
Agreement, no Partner shall have authority to act for, or assume any obligation
or responsibility on behalf of, the Partnership without the prior written
approval of the Management Committee.

 

7.1.2                     The day to day management of the affairs of the
Partnership, including maintenance of the financial and other records and books
of account of the Partnership, supervision of construction of the Facilities,
and activities reasonably related thereto, shall be subject to the supervision
of the Management Committee. The Management Committee may delegate to such
Persons as it determines to be appropriate, which Persons may be Partners or
Affiliates of Partners, such responsibility for the management of the
Partnership as it determines to be appropriate from time to time.

 

7.2             Management Committee.

 

7.2.1                     The members of the Management Committee shall consist
of one Representative of each Partner designated from time to time by such
Partner by written notice to each other Partner and the

 

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Partnership. By like notice, each Partner may designate one or more Alternate
Representatives (the “Alternate Representatives”) who shall have authority to
act in the absence of its Representative. Any Partner may at any time, by
written notice to all other Partners and to the Partnership, remove its
Representative or any Alternate Representative(s) on the Management Committee
and designate a new Representative or Alternate Representative(s). Each
Representative shall serve on the Management Committee until his successor shall
be duly appointed or until his death, resignation or removal by the Partner
which appointed him. Any action taken by the Partnership in compliance with the
direction of the Management Committee pursuant to its authority hereunder shall
be binding on the Partnership and each Partner, whether such direction was
approved by the regular members of the Management Committee in accordance with
the provisions hereof or one or more of the Alternate Representatives(s), and
the participation and acts (including the execution of any documents) by any
Alternate Representative of a Partner shall be deemed to be the act of the
Representative for which such Alternate Representative is acting

 

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without, in the case of any written document, any evidence of the absence or
unavailability of such Representative.

 

7.2.2                     The Management Committee shall elect a Chairman from
among its members by Majority Vote and appoint a Secretary of the Management
Committee who shall not be required to be a Representative or Alternate
Representative of a Partner.

 

7.2.3                     The Chairman shall preside at all meetings of the
Management Committee, which shall meet at least quarterly subject to less
frequent meetings upon approval of the Management Committee by 60% Vote. Notice
of and an agenda for all Management Committee meetings shall be provided by the
Chairman or his designee to all Representatives at least ten (10) days prior to
the date of such meetings. Special meetings of the Management Committee may be
called at such times and places, and in such manner, as any Partner deems
necessary. Any Partner calling for any such special meeting or for any other
meeting of the Partnership shall notify the Chairman and all other
Representatives or Partners, as appropriate, of the date and agenda for such
meeting(s) at least ten (10) days prior to the date of such meetings. Partners,
members of

 

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the Management Committee, or any committee designated by the Management
Committee, may participate in any meeting of Partners, the Management Committee
or any such committee, as the case may be, by means of conference telephone or
similar communications equipment by means of which all Persons participating in
the meeting can hear one another. Any action required or permitted to be taken
at any meeting of Partners, the Management Committee, or of any committee
thereof, may be taken without a meeting if all Partners, members of the
Management Committee or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Partners, Management Committee or committee. Written minutes of all
meetings and the record of all actions by written approval or written consent
shall be prepared by the Secretary of the Management Committee and a copy
thereof shall be submitted to each member of the Management Committee not more
than thirty (30) days following each meeting or the execution of a written
approval or written consent. At the immediately following meeting of the
Management Committee, any minutes of a meeting shall be unanimously approved or
revised

 

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and unanimously approved by the Management Committee as appropriate. Once
approved by the Management Committee and signed by the duly designated Chairman
and Secretary thereof, the minutes shall be prima facie evidence of all facts
purporting to be thereby stated.

 

7.2.4                     The Management Committee may, by 60% Vote, create such
committees as it may deem necessary or appropriate, to be comprised of
Representatives of the Partners, provided that the Management Committee shall
retain decisional power over any subject matter delegated to the said created
committees for study or consultation.

 

7.2.5                     Except as otherwise provided by this Agreement, the
Management Committee shall act by Majority Vote.

 

7.2.6                     The approval of the Management Committee by 60% Vote
shall be necessary as provided elsewhere in this Agreement and before any of the
following actions can be taken on behalf of the Partnership:

 

(a)                                 Establishment of the initial size, design
and location of the Facilities and any material changes thereto;

 

(b)                                 Determination, from time to time, of the
Estimated Cost of the Facilities;

 

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(c)                                  Establishment of the development,
construction and operating budgets for the Facilities;

 

(d)                                 Execution of interim financing agreements
and commitments relating to the Facilities and any amendments thereto;

 

(e)                                  Timing and amounts of Capital
Contributions;

 

(f)                                   Selection and retention of counsel and the
Certified Public Accountants;

 

(g)                                  Admission of substitute Partners in
accordance with §9.1.1;

 

(h)                                 Filing of the Partnership’s tariff, or any
amendment thereto, relating to the Facilities, with FERC;

 

(i)                                     Filing of all applications by the
Partnership for Necessary Regulatory Approvals and other governmental or
regulatory approvals, or any amendments to such applications, or any
applications for amendments to such Necessary Regulatory Approvals or other
approvals;

 

(j)                                    Approval of the form and content of the
Operating Agreement contemplated by §7.5 hereof; and

 

(k)                                 Any change in the authority and
responsibility delegated to the Operator;

 

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(l)                                     Selection of a successor Operator, if
such becomes necessary;

 

(m)                             Determination of the form and content of any Gas
Transportation Contract or any Precedent Agreement with respect thereto,
approval of the entering into of any such Gas Transportation Contract or
Precedent Agreement, and approval of any amendment or termination of any such
Gas Transportation Contract, Precedent Agreement or any successor agreement
thereto;

 

(n)                                 Execution of any material Lease and any
related agreements and any amendments thereto and execution of any contracts for
the acquisition or disposal of rights-of-way, servitudes, easements, leases and
real property necessary for the construction, operation and maintenance of the
Facilities;

 

(o)                                 Execution of permanent financing agreements
and commitments relating to the Facilities and any amendments thereto;

 

(p)                                 Timing and amounts of distributions to
Partners pursuant to §5;

 

(q)                                 Payment by the Partnership of any amounts to
a Withdrawn Partner pursuant to this Agreement;

 

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(r)                                    Any change in the authority and
responsibility delegated in this Agreement to any committee;

 

(s)                                   Acceptance of any Necessary Regulatory
Approvals and of any Additional Necessary Regulatory Approvals and amendments
thereto which are granted after the Commitment Date, if the terms of such
approvals and/or amendments thereto vary materially from the
authorization(s) sought in the related regulatory application(s); and

 

(t)                                    Any other action for which the approval
of the Management Committee by 60% Vote is expressly required by this Agreement.

 

7.2.7                     Without modification of its general authority under
§7.1.l, the Management Committee is hereby specifically authorized to initiate
and make any eminent domain takings permitted by state or Federal law and
required for the construction, operation and maintenance of the Facilities, and
the Partners agree to join in any such takings to the extent permitted or
required by Federal or state law.

 

7.3                               Audit Committee.

 

7.3.1                     An audit committee shall be formed which shall consist
of a Representative and an alternate

 

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Representative designated by each Partner. The Management Committee shall
designate one member of the audit committee to serve as chairman of the audit
committee; provided, however, that the chairman of the audit committee shall not
be an officer, director, employee of or otherwise affiliated with, the Operator,
Decisions of the audit committee shall be by Majority Vote of the members. Each
member shall serve on the audit committee until his successor shall be duly
appointed or until his death, resignation or removal by the Partner which
appointed him.

 

7.3.2                     The audit committee shall meet quarterly subject to
less frequent meetings upon approval by 60% Vote of the members of the audit
committee, and at such other times as called by its chairman. The chairman of
the audit committee shall designate the time, place and the manner of all audit
committee meetings. Written minutes of all meetings and the record of all
actions by written approval or written consent shall be prepared by the
secretary of the audit committee (who shall be appointed by the chairman
thereof) and a copy thereof shall be submitted to each member of the audit
committee not more than thirty (30) days following each meeting

 

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At the immediately following meeting of the audit committee, any minutes of a
meeting shall be approved or revised and approved by the audit committee as
appropriate. Once approved by the audit committee and signed by the duly
designated chairman and secretary thereof, the minutes shall be prima facie
evidence of all facts purporting to be thereby stated.

 

7.3.3                     The audit committee shall, on behalf of the
Partnership:

 

(a)                                 Consult with internal and external auditors;

 

(b)                                 Review and monitor the internal audit
coverage and plans for coverage;

 

(c)                                  Analyze and approve internal audit
operating philosophies and strategies;

 

(d)                                 Review the results of all financial audits;
and

 

(e)                                  Review the results of all recommendations
for corrective action.

 

7.3.4                     The audit committee shall report to the Management
Committee at such times and places as the Management Committee deems advisable.

 

7.4                               Design And Construction Of The Facilities. The
Management Committee may cause the Partnership to enter into such service
contracts and other

 

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agreements as it shall deem appropriate with any Person including, without
limitation, any Partner or Affiliate of any Partner for the planning, design and
construction of the Facilities.

 

7.5                               Operation Of The Facilities. The initial
Operator of the Facilities, which may be a Partner or an Affiliate of a Partner,
shall be selected by the Management Committee by a 60% Vote on or prior to the
Commitment Date. The Operating Agreement with the Operator shall be consistent
with the provisions of this Agreement. The Management Committee may, by 60%
Vote, at any time agree to an amendment to such Operating Agreement or, in the
event that such Operating Agreement is terminated pursuant to the terms thereof
or the Operator is removed, select a new Operator or Operators or otherwise
provide for the operation of the Facilities.

 

7.6                               Right to Vote. Each Partner, and each
Partner’s Representatives, shall have the right to vote on all matters requiring
a vote hereunder of the Partners or their Representatives, except as otherwise
specifically provided herein with respect to Withdrawn Partners and Defaulting
Partners, and except as provided hereafter. If a matter to be

 

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voted upon by the Partners or their Representatives concerns the entry into,
renewal, amendment, termination or performance of any contract or transaction
for the provision of goods and services to or by or from, or the use of property
by, the Partnership, and a Partner, or any Affiliate of a Partner, is a party
thereto, then such Partner and such Partner’s Representatives shall not be
eligible to vote thereon. However, the preceding sentence shall not preclude a
Partner from voting on matters related to the tariff, Precedent Agreements, Gas
Transportation Contracts and all other matters generally applicable to all
Shippers even though that Partner, or an Affiliate of that Partner, is a
Shipper.

 

7.7                               Limitation Of Authority. The Management
Committee, the committees appointed as provided in §§7.2.4 and 7.3, and the
Operator shall not have authority to take any action inconsistent with the terms
of this Agreement.

 

7.8                               Indemnification.

 

7.8.1                     The Partnership shall indemnify and save harmless the
members of the Management Committee, the members of any committee appointed as
provided in §§ 7.2.4 and 7.3 and the Operator against all

 

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actions, claims, demands, costs and liabilities arising out of the acts (or
failure to act) of such Persons within the scope of their authority in the
course of the Partnership’s business except any acts or failures to act which
constitute gross negligence or willful misconduct, and such Persons shall not be
liable for any obligations, liabilities or commitments incurred by or on behalf
of the Partnership as a result of any such acts (or failure to act) in the
absence of gross negligence or willful misconduct.

 

7.8.2                     The Partnership shall indemnify and hold each of TCPL,
East Coast and their Affiliates harmless from and against any and all claims,
demands, actions, causes of action, suits, damages, liabilities, fines,
penalties, or other remedies whatsoever, known or unknown, based on contract,
tort or otherwise, in law or in equity, arising out of, or in any way related
to, any act or omission of the Partnership or of any other Partner and their
respective Affiliates, employees and agents occurring prior to the date hereof,
but only if notice of such indemnified event is given before this
indemnification expires pursuant to the provisions of §7.8.3.

 

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7.8.3                     The indemnity contained in Section 7.8.2 shall
terminate and be of no further force and effect with respect to such Partner on
the date that is the earlier of (i) the date on which TCPL or East Coast, as the
case may be, notifies the Partnership that such Partner has completed its due
diligence review of the Partnership to its satisfaction, or (ii) March 31, 1996;
provided, however, that the indemnity contained in § 7.8.2 shall not terminate
but shall survive and continue as to TCPL or East Coast, as the case may be, if
such Partner withdraws from the Partnership prior to the earlier of the dates
described in (i) or (ii) herein.

 

7.8.4                     Notwithstanding anything in this Agreement to the
contrary, TCPL or East Coast, as the case may be, shall look solely to the
assets of the Partnership, and not have the right to proceed against any of the
Partners individually for any amount (s) indemnified by the Partnership pursuant
to §7.8.2.

 

7.9                               Other Positions Or Representations. Any member
of the Management Committee and the committees provided for in §§7.2.4 and 7.3
may also be an officer, director or employee of a Partner or one or more
Affiliates of a Partner.

 

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8                                         Limitation Of Liabilities.

 

8.1                               Limitation On Liability Of Partners. Subject
to the provisions of applicable law, no Partner shall be liable to third Persons
for Partnership losses, deficits, liabilities or obligations, except as
otherwise expressly agreed to in writing by such Partner, unless the assets of
the Partnership shall first be exhausted.

 

8.2                               Limitation Of Authority Of Partners. Except as
specified in the Operating Agreement, no Partner shall have the authority to act
for, or assume any obligation or responsibility on behalf of, any other Partner,
without the prior written approval of such other Partner.

 

8.3                               Cross Indemnification. Each Partner (for
purposes of this §8.3, the “indemnitor”) shall indemnify and hold harmless each
other Partner, the Partnership and the Affiliates, directors, officers, partners
(other than the Partners to this Agreement), employees, agents and
representatives of each such other Partner for purposes of this §8.3,
collectively the “indemnitees”) from and against any costs, losses, claims,
damages and liabilities arising out of any act of the indemnitor or any of its
Affiliates, directors, officers, partners

 

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(other than the Partners to this Agreement), employees, agents or
representatives undertaken so as to bind the indemnitees, or which has the
effect of making the indemnitees liable without their consent, or arising out of
any assumption of any obligation or responsibility by the indemnitor or any of
its Affiliates, directors, officers, partners (other than the Partners to this
Agreement), employees, agents or representatives undertaken so as to bind the
indemnitees, or which has the effect of making the indemnitees liable without
their consent (including, without limitation, sales or other acts entirely on
its part which may give rise to product liability claims); provided, however,
that this §8.3 shall have no application with respect to any actions taken
(a) on behalf of the Partnership by, or on behalf of, the Management Committee
in conformance with this Agreement, (b) on behalf of one Partner by another
Partner in conformance with this Agreement or (c) by, or on behalf of, the
Operator in conformance with the Operating Agreement.

 

8.4                               Right of Partner to Contribution. In order to
provide for just and equitable contribution in circumstances in which the
indemnity agreement

 

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provided for in §8.3 is for any reason held to be unavailable to a Partner, then
each Partner shall contribute to the damages incurred by any indemnitee named in
§8.3 in the proportion that the contributing Partner’s Percentage Interest in
the Partnership bears to the Percentage Interests of all contributing Partners.
The Partners’ obligations to contribute hereunder are several and not joint.

 

8.5                               Third Party Contracts. No contract, lease,
sublease, note, loan agreement, deed of trust or other obligation on behalf of
the Partnership which is material to the Partnership shall be entered into
unless there is contained therein an appropriate provision limiting the claims
of all parties to such instruments and other beneficiaries thereunder to the
assets of the Partnership and expressly waiving any rights of such parties and
other beneficiaries to proceed against the Partners individually; provided,
however, that the exclusion of such a provision from any such instrument may be
authorized by a 60% Vote of the Management Committee.

 

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9.                                      Transfer Or Pledge Of Partnership
Interests; Admission of New Partners.

 

9.1                               Limitation On Right To Transfer Partner’s
Interest.

 

9.1.1                     Subject to (i) the right of first offer provided for
in §§9.1.2 and 9.1.3, (ii) the prior approval of the Management Committee (which
shall not be unreasonably withheld) as set forth in this §9.1.1, and (iii) the
satisfaction of the requirements set forth in §9.1.4, a Partner (“Transferring
Partner”) may sell, assign or otherwise transfer all or any part of its
Percentage Interest to any other Person or Persons (including, without
limitation, a Partner) (“Transferee”). The Management Committee’s approval may
not be withheld unless it is determined by a 60% Vote that the transfer of the
interest will adversely affect the financial and operating integrity of the
Partnership. No such approval for transfer of all or part of the Percentage
Interest of a Partner shall release the Transferring Partner from Partnership
obligations accrued during the period the Transferring Partner was a Partner
except upon the unanimous approval of the remaining Partners. The Management
Committee may pre-approve the transfer by a Partner to another entity (a
“Pre-Approved Transfer”) of all

 

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or any part of the Partner’s Percentage Interest, subject to the full
satisfaction of the requirements set forth in §§ 9.1.2 through 9.1.4.

 

9.1.2                     Any Partner which seeks to transfer all or part of its
Percentage Interest (the portion to be transferred being hereinafter referred to
as a “Transferred Interest”) to any other Person or Persons (including, without
limitation, a Partner) shall first make an offer in writing to all of the other
Partners specifying the Transferred Interest sought to be sold by it and all the
terms and conditions on which the Transferred Interest is offered, including the
amount and form of the purchase price and the terms of payment. The Partners
other than the Transferring Partner shall have a right, exercisable within
thirty (30) days of receipt of such offer, to purchase the Transferred Interest
on a pro-rata basis (determined by dividing each such Partner’s Percentage
Interest by the sum of the Percentage Interests of all of the Partners other
than the Transferring Partner) on the terms and conditions offered by the
Transferring Partner. If any such Partner does not elect to purchase its full
pro-rata share of the Transferred Interest in such

 

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first election round, additional election rounds shall be conducted until either
(a) the Partners which elect to purchase any portion of the Transferred Interest
collectively elect to purchase one hundred percent (100%) of the Transferred
Interest, or (b) no Partner elects to purchase a remaining portion of the
Transferred Interest. Any Partner which does not elect to purchase its full pro
rata share in an election round shall not be eligible to participate in
subsequent election rounds; for purposes of each additional election round, the
“pro-rata” share of each Partner shall be equal to a fraction, the numerator of
which is the percentage of the Transferred Interest which such Partner has
previously elected to purchase, and the denominator of which is the aggregate
percentage of the Transferred Interest previously elected by all Partners which
have previously elected to purchase their full pro-rata shares available to them
in previous election rounds. The Transferring Partner shall provide each Partner
written notice of the aggregate portion of the Transferred Interest elected
within seven days of the conclusion of the first election round and each
successive election round, and each Partner shall

 

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have ten days from receipt of such written notice to elect to purchase any
remaining portion of the Transferred Interest to which it is entitled under this
§9.1.2. Notwithstanding the foregoing provisions for additional election rounds,
the Partners which elect in the first election round to purchase any portion of
their respective pro-rata shares of the Transferred Interest may allocate the
purchase of the Transferred Interest among such Partners, provided that such
Partners collectively agree to purchase one hundred percent (100%) of the
Transferred Interest. In the event that Partners commit to purchase the
Transferred Interest in accordance with this §9.1.2, the transfer shall promptly
be effectuated upon satisfaction of the conditions set forth in §9.3.

 

9.1.3                     If the Partners other than the Transferring Partner
have not elected to purchase the entire Transferred Interest after compliance
with the procedures specified in §9.1.2 and if the Management Committee has
given its approval of a proposed transferee (a “Transferee”) as specified in
§9.1.1, the Transferring Partner shall thereafter be free to sell all (but not
less than all) of the Transferred Interest to a Transferee on terms and
conditions no

 

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more favorable to the prospective purchaser than offered by the Transferring
Partner in its notice to the other Partners in accordance with §9.1.2, provided
that prior to effecting such sale the Transferring Partner shall give written
notice thereof to all the other Partners describing all terms and conditions on
which the Transferred Interest is to be sold, including the amount and form of
the purchase price and the terms of payment. During a period of seven (7) days
following the date of the Transferring Partner’s notice in accordance with the
preceding sentence, any other Partner may object to the proposed sale, but only
on the ground that the terms and conditions thereof are more favorable to the
prospective purchaser than offered by the Transferring Partner in its notice to
the other Partners in accordance with §9.1.2, by giving written notice of such
objection to the Transferring Partner. In the event of any such objection, the
proposed sale shall not be consummated unless such objection shall have been
resolved.

 

9.1.4                     Each transfer of a Transferred Interest pursuant to
§9.1.3 and the related admission to the Partnership

 

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of a substitute Partner shall be subject to the performance and satisfaction of
the following conditions in full as reasonably determined by the Management
Committee:

 

(i)            The Transferee shall have executed and delivered to the
Management Committee a written assignment in form and substance satisfactory to
the Management Committee setting forth the intention of the Transferring Partner
and the Transferee that the Transferee become a substituted Partner in its place
to the extent of the Transferred Interest.

 

(ii)           The Transferee shall have assumed by operation of law or by
express agreement with the Partnership (in form and substance satisfactory to
the Management Committee) all of the obligations of the Transferring Partner
under this Agreement to the extent of the Transferred Interest

 

(iii)          The Transferring Partner and the Transferee shall have executed
and acknowledged such other instruments (in form and substance satisfactory to
the Management Committee) as

 

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reasonably necessary to effect such substitution.

 

(iv)          Prior to substitution, the Transferring Partner and/or the
Transferee shall have paid all expenses, including attorneys’ fees, incurred by
the Partnership in connection with such substitution.

 

(v)           An opinion of counsel to the Transferee, which counsel shall be
reasonably acceptable to the Management Committee (in form and substance
satisfactory to the Management Committee) shall have been furnished to the
Partnership stating that, in the opinion of such counsel, such substitution will
not (a) cause the Partnership to be classified other than as a partnership for
Federal income tax purposes; (b) cause a termination of the Partnership for
Federal income tax purposes; (c) cause the Partnership to become a “Publicly
Traded Partnership” or the Percentage Interests to be considered to be “publicly
traded,” within the meaning of Section 7704 of the Code; (d) violate, or cause
the Partnership to violate, any applicable law or governmental rule or
regulation, including, without limitation, any

 

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applicable federal or state securities law; or (e) cause the Partnership, the
Partners or any Affiliate to be required to register as a public utility holding
company, or otherwise to become subject to regulation, under the Holding Company
Act.

 

9.1.5                     If the transfer of the Transferred Interest to a
Transferee in accordance with §9.1.3 is not consummated within six (6) months
after the expiration of the last election round referred to in §9.1.2, above, no
transfer by the Transferring Partner to any Person may be made without, again
complying with this §9.1.

 

9.2                               Permitted Transfers to Affiliates, Etc.
Notwithstanding the foregoing provisions of this §9, the approval, of the
Management Committee and compliance with the first offer provisions of §§9.1.2
and 9.1.3 hereof (and in the case of a transaction described in §9.2.3 hereof,
the performance and satisfaction of the conditions described in §9.1.4 hereof)
shall not be required in connection with:

 

9.2.1                     The transfer by any Partner of all or any part of its
Percentage Interest in the Partnership to another entity which is (i) its
successor by merger

 

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or consolidation, so long as such merger or consolidation is with an Affiliate
of such Partner, or (ii) an Affiliate of such Partner, including, without
limitation, a limited partnership of which such Partner is the general partner;
or

 

9.2.2                     An assignment, pledge or other transfer creating a
security interest in all or a portion of a Partner’s Percentage Interest to an
assignee, pledgee, mortgagee, trustee or secured party, if such assignment,
pledge or transfer creating a security interest is (i) required by the Financing
Commitment or (ii) approved by a 60% Vote of the Partners; provided, however,
that, except as expressly provided for in §10, (1) the assignee, pledgee,
mortgagee, trustee or secured party shall hold the same subject to all of the
terms of this Agreement and (2) such assignee, pledgee, mortgagee, trustee or
secured party shall not have any voice in the management of the Partnership as a
result of such transfer and shall not become a substituted Partner without the
approval of the Management Committee in accordance with §9.1.1.

 

9.2.3                     Any transfer of all or a portion of a Percentage
Interest pursuant to a written agreement containing the words, in all capital
letters, “THE TRANSFER (S)

 

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OF PERCENTAGE INTERESTS DESCRIBED IN THIS AGREEMENT ARE COVERED BY SECTION 9.2.3
OF THE PORTLAND NATURAL GAS SYSTEM PARTNERSHIP AGREEMENT” (a “Section 9.2.3
Agreement”); provided that, such Section 9.2.3 Agreement is executed by each
Person that was a Partner hereunder on the date of execution of such
Section 9.2.3 Agreement.

 

9.3                               Certain Limitations on Transferability.
Notwithstanding any other provision of this §9, the following additional
limitations shall apply to all transfers of Percentage Interests:

 

9.3.1                     No Partner may assign or agree to assign, directly or
indirectly, all or any part of its respective Percentage Interest, if the effect
of such assignment would be to cause the Partnership, the Partners or any
Affiliate to be required to register as a public utility holding company, or
otherwise to become subject to regulation under the Holding Company Act;

 

9.3.2                     No Partner may assign or agree to assign, directly or
indirectly, all or any part of its respective Percentage Interest, if the effect
of such assignment would be to (i) cause the Partnership to be classified other
than as a partnership for Federal income tax purposes; (ii) cause a

 

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termination of the Partnership’s status as a partnership for Federal income tax
purposes; or (iii) cause the Partnership to be considered a “publicly traded
partnership” under the Code.

 

9.3.3                     No Partner may assign or agree to assign, directly or
indirectly, all or any part of its respective Percentage Interest, if such
assignment would be in contravention of any Financing Commitment to which such
Partner (or its Affiliate) is a party.

 

9.4                               Prohibited Affiliate Transactions.

 

9.4.1                     Any transaction in which the immediate Parent of any
Partner as of the date of this Agreement would cease to own or unconditionally
control, directly or indirectly, more than 50% of the capital stock of such
Partner having the right to vote on the election of directors of such Partner,
shall be deemed to be a transfer of such Partner’s Percentage Interest in the
Partnership and accordingly shall be subject to the provisions of §§9.1 and 9.3
of this Agreement; provided, however, that the foregoing shall not apply to a
transfer of capital stock of a Partner by its Parent to an Affiliate of such
Parent, so long as such Affiliate has material assets in addition to the capital
stock of the Partner owned by it, and provided that.

 

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the provisions of this §9.4.1 shall thereafter apply to such Affiliate of such
Parent; and provided further, that the provisions of this §9.4.1 shall apply to
the immediate Parent of any Affiliate of a Partner to which such Partner
transfers its Percentage Interest pursuant to §9.2.1(ii) hereof, from and after
the effective date of any such transfer.

 

9.4.2                     No portion of the capital stock or any other evidence
of equity ownership in a Partner or in any Affiliate of a Partner may be
assigned, sold or otherwise transferred, directly or indirectly, to any Person
whose ownership thereof would cause the Partnership or any other Partner or
Affiliate (other than the Partner or Affiliate the capital stock of which or
other evidence of equity ownership in which has been assigned or its Affiliates)
to be required to register as a public utility holding company or otherwise to
become subject to regulation under the Holding Company Act, nor may any Partner,
or any Affiliate of such Partner, acquire any investment in, or undertake any
new business activity after the date of this Agreement, which would have such an
effect.

 

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9.5                               Admission of New Partner. Upon any transfer
permitted by this §9, the Transferee shall be automatically admitted as a
Partner in substitution for, or in the case of a partial transfer, in addition
to, the Transferring Partner, upon execution of a counterpart of this Agreement.
In the event of such a transfer before the Commitment Date, the Percentage
Interests of the Transferee and Transferring Partner shall be modified to
reflect the interest transferred and, in the event of such a transfer after the
Commitment Date, the Percentage Interests shall be modified in accordance with
§3.1.4. Except as provided in this §9.5, no such sale, assignment, pledge or
other transfer shall give rise to a right in any transferee to become a Partner
in the Partnership.

 

9.6                               Assignee’s Rights. Any purported assignment of
a Percentage Interest (or a portion thereof) which is not in compliance with
this Agreement is hereby declared to be null and void and of no force or effect
whatsoever. The “effective date” of an assignment of a Percentage Interest under
the provisions of this §9 shall be the last day of the quarter of the fiscal
year of the Partnership in

 

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which the final condition precedent to such assignment has been fulfilled.

 

9.7                               Allocation of Profits, Losses and
Distributions Subsequent to Assignment. All income, gain, credit, deduction,
profit and loss of the Partnership attributable to any Partner’s Percentage
Interest acquired by reason of a permitted assignment and any distributions made
with respect thereto shall be allocated (i) in respect of the portion of the
fiscal year of the Partnership ending on the effective date of the assignment,
to the assignor, and (ii) in respect of subsequent periods, to the assignee.

 

9.8          Admission of Additional Partners/Authority of Management Committee.

 

(a)                                 Except as otherwise provided in this §9, any
Person may be admitted to the Partnership as an Additional Partner upon the
unanimous vote of the Management Committee, as reflected in a written resolution
signed by each Representative, which resolution shall set forth the terms and
conditions of such admission as unanimously agreed to by the Management
Committee.

 

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(b)                                 Notwithstanding anything in this Agreement
to the contrary, the Management Committee may, by unanimous vote reflected in a
written resolution signed by each Representative, modify, amend or waive any of
the terms of this §9, including but not limited to the right of first refusal
provided in §9.1.2 hereof.

 

(c)                                  In the event that Interstate exercises its
option to acquire up to a five percent (5%) interest in the Partnership under
that certain Option Agreement (the “Option Agreement”) between Interstate and
the Partnership dated as of August 29, 1995, then (i) the Percentage Interests
of each of NGDC, Tenneco, Gaz Metro and JMC or their successors (collectively,
the “Optionee Partners”) shall be reduced in the aggregate by the Percentage
Interest issued to Interstate as a result of Interstate’s exercise of its option
under the Option Agreement, and such reduction shall be allocated among the
Optionee Partners in proportion to their respective Percentage Interests (prior
to reduction); (ii) any funds received by the Partnership from Interstate

 

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pursuant to Interstate’s exercise of its option under the Option Agreement shall
be distributed among the Optionee Partners in proportion to their respective
Percentage Interests (prior to reduction); and (iii) neither TCPL nor East Coast
shall reduce its Percentage Interest in the Partnership in the event that
Interstate exercises its option under the Option Agreement, and neither TCPL nor
East Coast will be entitled to receive any portion of the amounts received by
the Partnership pursuant to the Option Agreement. Subparagraph (iii) shall not
apply to the extent that either TCPL or East Coast is a direct or indirect
Transferee of an Optionee Partner’s Percentage Interest.

 

9.9                               Tax Election. In the event that all or any
portion of a Partner’s Percentage Interest is transferred with the consent of
the Management Committee, or otherwise as permitted by this §9, the Partnership
may, but shall not be required to, at the request of the transferee, make an
election pursuant to §754 of the Code.

 

9.10                        Effect of Prohibited Transfers. Any transfer of any
ownership interest in the Partnership by a

 

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Partner in violation of the terms of this Agreement shall be void and shall not
be recognized by the Partnership. Any such transfer shall not cause a
dissolution of the partnership but shall result in the loss by the Partner
making such transfer of the right to vote with respect to Partnership matters
until such Partner shall have rescinded such transfer to the satisfaction of all
other Partners; provided, however, that nothing herein shall be deemed to limit
any right or remedies that such Partnership or any other Partner may have
against such violating Partner.

 

10.                               Consent to Assignment By executing and
delivering this Agreement, each Partner shall be deemed to have consented to the
pledge by each other Partner of all of its Percentage Interest to those
financial institutions providing Financing Commitments and to the exercise by
such financial institutions of their rights under any such pledge.

 

11.          Termination And Right Of Withdrawal.

 

11.1                        Term Of Partnership. Subject to the other terms and
conditions of this Agreement, including, without limitation, the provisions of
§11.2, the Partnership and this Agreement shall continue in existence from the
Formation Date unless and until terminated in accordance with this §11.

 

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11.2                        Automatic Dissolution The Partnership shall be
automatically and without notice dissolved upon the happening of any of the
following events:

 

11.2.1              The sale or abandonment of all or substantially all of the
Partnership’s business and assets; provided, however, that any such sale or
abandonment may only be made pursuant to the unanimous written consent of
Partners;

 

11.2.2              Any event which shall make it unlawful for the business of
the Partnership to be carried on; or

 

11.2.3              Any event which, under the partnership law of the State of
Maine, requires or results in dissolution of the Partnership.

 

11.3                        Automatic Withdrawal In addition to those instances
where withdrawal is permitted or deemed to occur under §§2.9.2, 2.9.3, 3.3.4 or
11.4, a Partner, upon the happening of any of the following events described in
this §11.3, shall be deemed to be a Withdrawn Partner, shall have its Capital
Account, if any, be recorded in its Withdrawn Partner Former Capital Account,
reduced to zero and eliminated, and be entitled to receive payment only as
specified in §2.10 (if withdrawal is deemed to have occurred on or before the
Commitment Date) or

 

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3.5.1 (if withdrawal is deemed to have occurred after the Commitment Date) of
this Agreement;

 

11.3.1              The entry by a court of competent jurisdiction of a decree
or order for relief, unstayed on appeal or otherwise and in effect for ninety
(90) days, in respect of such Partner in an involuntary case under the Federal
bankruptcy laws, or any such order adjudicating such Partner as bankrupt or
insolvent under any other applicable bankruptcy, insolvency or liquidation law;

 

11.3.2              The entry by a court of competent jurisdiction of a decree
or order appointing a receiver, custodian, assignee, trustee, liquidator,
sequestrator or other similar official of such Partner or of any substantial
part of the property of such Partner, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree or order unstayed on
appeal or otherwise and in effect for ninety (90) days, or the commencement by
such Partner of a voluntary case under the Federal bankruptcy laws, or under any
other bankruptcy or insolvency law, seeking reorganization, liquidation,
arrangement, adjustment or composition of such Partner under the bankruptcy laws
or any similar statute;

 

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11.3.3              The making by such Partner of an assignment for the benefit
of creditors; or the failure of such Partner generally to pay its debts as they
become due; or the consenting by such Partner to the appointment of or taking
possession by a receiver, assignee, custodian, trustee, liquidator, sequestrator
or other similar official of it or of any substantial part of its property, or
the taking of corporate or Partnership action by such Partner in furtherance of
any such action;

 

11.3.4              The filing by a Partner for dissolution under the laws of
the jurisdiction of its incorporation or the entering of a final order
dissolving that Partner by any court of competent jurisdiction; or

 

11.3.5              Any event (other than an event of the nature specified in
§11.2.2) which shall make it unlawful for that Partner to carry on the business
of the Partnership in the form of a partnership.

 

11.4                        Other Withdrawals. Except as provided in this §11.4
and in §§2.9.2, 2.9.3, 3.3.4 and 11.3 of this Agreement, or upon the admission
of a substitute Partner in accordance with the provisions of §9, no Partner
shall be entitled to withdraw from the Partnership from and after the Commitment
Date, except upon the unanimous agreement of the

 

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remaining Partners. At any time prior to the Commitment Date, a Partner shall
have the right to withdraw from the Partnership by giving notice to all the
other Partners, and thereafter (except as provided in §2.10.1, if applicable)
the Partnership shall have no further obligation to such Person under this
Agreement unless unanimously agreed to by the remaining Partners.

 

11.5                        Winding Up And Liquidation. After the Partnership
shall be dissolved pursuant to the provisions of §§11.1 or 11.2, the Management
Committee shall continue to exercise its powers under this Agreement for the
purpose of winding up the business of the Partnership and liquidating its assets
in an orderly manner, but the Partnership shall engage in no new business during
the period of such winding up.

 

11.5.1              If dissolution of the Partnership occurs prior to or on the
Commitment Date, the assets of the Partnership remaining after the payment, or
provision for payment, of all the liabilities of the Partnership (other than any
contingent obligation under §2.10.1 with respect to a Withdrawn Partner) shall
be distributed (a) if there is any Withdrawn Partner, to the Partners and

 

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any such Withdrawn Partner(s) in the ratio that the Pre-Commitment Date Funds
and Qualified Expenditures advanced by each such Person (as of the date of
dissolution) bears to the aggregate of all Pre-Commitment Date Funds and
Qualified Expenditures advanced by all Partners and Withdrawn Partners (as of
the date of dissolution), but only to the extent of the outstanding balance of
Pre-Commitment Date Funds and Qualified Expenditures advanced by each such
Person (as of the date of dissolution), or (b) if there is no such Withdrawn
Partner, to the Partners in the ratio and to the extent of the Pre-Commitment
Date Funds and Qualified Expenditures advanced by each Partner (as of the date
of dissolution) and (c) finally, to the extent that there are any assets of the
Partnership remaining after the distributions made pursuant to clause (a) or
(b) above, to the Partners in accordance with their respective Percentage
Interests as of the date immediately prior to any distribution pursuant to this
§11.5.1. For purposes of the application of this §11.5.1, the amount of
Pre-Commitment Date Funds and Qualified Expenditures attributable to each
Partner or Withdrawn Partner shall be reduced to the extent

 

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that such amounts have been recovered by such Persons through rates or have been
taken by such Persons as a deduction for Federal income tax purposes.

 

11.5.2              If dissolution of the Partnership occurs after the
Commitment Date, the assets of the Partnership remaining after the payment, or
provision for payment, of all the liabilities of the Partnership (other than any
Special Contingent Obligations as hereinafter defined) shall be distributed
(a) if there is any Partner who is deemed to have become a Withdrawn Partner
after the Commitment Date pursuant to §§3.3.4 or 11.3, to the Partners and any
such Withdrawn Partner(s) in the ratio that the Capital Account of each Partner
(as of the date of dissolution) or the Withdrawn Partner Former Capital Account
of each such Withdrawn Partner bears to the aggregate of (1) all Capital
Accounts of the Partners (as of the date of dissolution) and (2) all Withdrawn
Partner Former Capital Accounts of any such Withdrawn Partners, but only to the
extent of the balance of each Partner’s Capital Account (as of the date of
dissolution) and each such Withdrawn Partner’s Withdrawn Partner Former Capital
Account, or (b) if there is no such

 

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Withdrawn Partner, to the Partners in the ratio and to the extent of each
Partner’s Capital Account and (c) finally, to the extent that there are any
assets of the Partnership remaining after the distributions made pursuant to
clause (a) or (b) above, to the Partners in accordance with their respective
Percentage Interests as of the date immediately prior to any distribution
pursuant to this §11.5.2. As used in this §11.5.2, “Special Contingent
Obligations” shall mean all contingent obligations of the Partnership with
respect to any Withdrawn Partner in the amount of its Withdrawn Partner Former
Capital Accounts under §3.5. For purposes of this §11.5.2, if dissolution occurs
prior to the date the Facilities are placed in service, Pre-Commitment Date
Funds and Qualified Expenditures advanced by a Withdrawn Partner (reduced to the
extent that such amounts have been recovered by the Withdrawn Partner through
rates or have been taken by such Persons as a deduction for Federal income tax
purposes or by payments made to such Withdrawn Partner after its withdrawal
pursuant to §3.5.1) shall be treated as, to the extent allowable under §2.10.1,
additions to its Withdrawn Partner Former Capital Account.

 

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11.5.3              No termination or dissolution of the Partnership shall
relieve a Partner from any obligation accruing or accrued to the date of such
termination or dissolution.

 

11.5.4              No later than the later of (1) the end of the last taxable
year of the Partnership in which the liquidation occurs or (2) ninety (90) days
following the liquidation date of the Partnership, any Partner whose Capital
Account is negative after taking into account all capital account adjustments
for the Partnership taxable year during which such liquidation occurs within the
meaning of Regulations §1.704-1 (b) (2) (ii) (b) (3), shall contribute the
amount by which its Capital Account is negative to the Partnership.

 

11.6                        Continuance of Partnership. Except as provided in
§§11.1 and 11.2, it is understood and agreed by each of the Partners that the
relationship of partnership among them is intended to continue without
interruption until such relationship is either specifically dissolved by
unanimous consent of the Partners or by the occurrence of any event specified in
§§11.1 or 11.2 as an event of dissolution, and each Partner waives and releases,
to the extent permitted by law, its right to

 

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dissolve or obtain dissolution of the Partnership in any other manner or for any
other reason. In this connection, the Partners agree and intend that the
Partnership shall not be dissolved by the admission of a new Partner pursuant to
§9 or by the withdrawal of a Partner from the Partnership. If, notwithstanding
the foregoing understanding, agreements and intentions of the Partners, the
Partnership may at any time or from time to time be deemed by operation of law
and otherwise than pursuant to §§11.1, 11.2.1 or 11.2.2 to be dissolved (for
example, upon the bankruptcy or withdrawal of a Partner), each of the Partners
hereby covenants and agrees with the other Partners as follows:

 

11.6.1              The business and affairs of the Partnership shall continue
without interruption and be carried out by a new partnership (the “Successor
Partnership”);

 

11.6.2              The Partners of the Successor Partnership shall be the
Persons who were Partners hereunder at the time of such dissolution other than
any Person whose membership in the Partnership shall have been the sole cause of
its dissolution;

 

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11.6.3              The Successor Partnership and the Partners thereof shall be
governed by the terms of this Agreement as if the Successor Partnership were the
Partnership;

 

11.6.4              Each of the Partners covenants and agrees to execute such
further agreements, including (without limitation) notes, novations and
accommodations, as may be necessary to continue the business of the Partnership
and to protect and perfect any lien or security interest granted by the
Partnership;

 

11.6.5              Each of the Partners waives and releases, to the full extent
it may lawfully do so, all rights to a winding up or liquidation of the business
of the Partnership, notwithstanding that the dissolution of the Partnership may
be caused wrongfully or otherwise in contravention of this Agreement by such
Partner or any other Partner, and further notwithstanding that, at the time of
such dissolution, such Partner shall be, or be deemed to be or thereby become, a
Withdrawn Partner pursuant to this Agreement; and

 

11.6.6              As used in this §11.6, the term “Partnership,” at any point
in time, shall mean the Partnership originally formed pursuant to this Agreement
or the Successor Partnership which at such time is

 

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continuing the business and affairs of the Partnership originally so formed.

 

12.          Arbitration

 

12.1                        Optional Arbitration. In the event that the Partners
who are parties to a dispute are unable to agree on any matter arising under
this Agreement, such Partners may, but shall not be obligated, to have such
dispute resolved pursuant to binding arbitration. Any Partner may request
binding arbitration of any dispute arising hereunder by giving written notice to
each of the other Partners that it wishes to invoke the arbitration provisions
of this Agreement. The Partner requesting arbitration shall set forth in such
notice in adequate detail the issues to be arbitrated, and within ten days from
receipt of such notice any other Partner may set forth in adequate detail
additional related issues to be arbitrated. If arbitration is requested by any
Partner, and agreed to by the other Partners which are party to the matter in
dispute, the decision of the arbitrator shall be final and binding upon all the
Partners involved, and the decision of the arbitrator may be entered in any
court having jurisdiction.

 

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12.2                        Conduct of Arbitration. It is the intent of the
Partners that, to the extent practicable, such arbitration shall be conducted by
a Person knowledgeable and experienced in the type of matter that is the subject
of the dispute who is acceptable to each of the Partners. In the event the
Partners are unable to agree upon such Person, then such Person shall be
selected by the Center for Public Resources, Inc., (“CPR”) or, if such
organization is not able or is unwilling to so select. such Person, then by the
American Arbitration Association (“AAA”). The arbitration shall be conducted in
Boston, Massachusetts in accordance with the commercial arbitration rules of CPR
or AAA, as the case may be.

 

12.3                        Costs. Upon the determination of any such dispute,
the arbitrator shall bill the costs attributable to such binding arbitration to
the party whose position he determines is most inconsistent with the actual
decision rendered; provided, however, that the arbitrator shall be empowered to
apportion such costs among the parties if he deems it appropriate.

 

12.4                        Optional Arbitration to be Binding. It is the intent
of the Partners that once arbitration is

 

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requested by a Partner and agreed to by the other Partners which are party to
the dispute in question, the matter(s) set for arbitration shall be decided as
set forth herein and they shall not seek to have this §12 rendered unenforceable
or to have such matter decided in any other way; provided, however, that nothing
herein shall prevent the Partners which are parties to any such arbitration from
negotiating a settlement of any issue at any time.

 

13.          General.

 

13.1                        Effect Of Agreement. From and after the Continuation
Date, this Agreement reflects the whole and entire agreement among the Partners
and supersedes all prior agreements among the Partners related to the subject
matter hereof. This Agreement expressly supersedes that certain Partnership
Agreement dated as of November 5, 1992, the Memorandum Of Understanding, the
Cost Sharing Agreement and the Initial Agreement (as amended by the First
Amendment). This Agreement can be amended, restated or supplemented only by the
vote and written agreement of all Partners; provided, however, that. any
Additional Partner may be admitted to the Partnership in accordance with the

 

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provisions of §9 (and any appropriate adjustment in the Percentage Interests of
the Partners on Schedule A hereto as a result of such admission may be effected)
by the execution of a counterpart of this Agreement by such Additional Partner;
and provided further, that no amendment which would adversely affect the rights
of any Withdrawn Partner(s) under §2.10 shall be effective against such
Withdrawn Partner(s) unless the same is expressly agreed to in writing by such
Withdrawn Partner(s).

 

13.2                        Notices. Notice to all Partners shall be deemed to
be notice to the Partnership. If any Partner receives a notice to or on behalf
of the Partnership, such Partner shall immediately transmit such notice to all
Partners. Any written notice or other communication shall be sufficiently given
or shall be deemed given (a) on the date transmitted by facsimile transmission
provided that the sender shall have a written record generated by the receiving
electronic device of the receipt thereof, and provided further that a copy of
such notice is sent promptly thereafter by registered or certified mail, postage
prepaid, or (b) on the first business day after the sending of such notice

 

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by overnight courier service, in each case addressed as follows:

 

13.2.1              To each of the Partners at the address set forth below or at
such other address as may be designated from time to time by any Partner by
written notice to each other Partner and the Partnership:

 

Natural Gas Development Corporation

300 Friberg Parkway

Westborough, Massachusetts 01581-5039

PHONE:    (508) 836-7000

FAX:    (508) 836-7070

 

Gaz Metro Portland Corporation

c/o Northern New England Gas Corporation

85 Swift Street

South Burlington, Vermont 05403

Attn:       Vice President

PHONE:    (802) 863-8859

FAX:      (802) 658-3926

 

(For small mail:)

Gaz Metro Portland Corporation

c/o Northern New England Gas Corporation

P. O. Box 700

Bur1ington, Vermont 05402-0700

 

With copy to:

 

Gaz Metropolitain, Inc.

1717, rue du Havre

Montreal, Quebec

Canada H2K 2X3

Attn: Executive Advisor, Business Development

PHONE:   (514) 598-3377

FAX:      (514) 598-3725

 

Tenneco Portland Corporation

1010 Milam Street

Houston, Texas 77252-2511

PHONE:  (713) 757-4115

FAX:        (713) 757-2369

 

JMC Development Company, Inc.

 

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One Bowdoin Square

Boston, Massachusetts 02114

PHONE:       (617) 720-7676

FAX:      (617) 227-2690

 

TCPL Portland Inc.

111-Fifth Avenue, S.W.

P. O. Box 1000, Station M

Calgary, Alberta, Canada

TZP 4K5

Attn: Mr. Steve Jakymiw

PHONE:     (403) 267-1020

FAX:      (403) 267-2483

 

East Coast Pipeline Company

500 Griswold Street

10th Street

Detroit, Michigan 48226

Attn:   Vice President and Secretary

PHONE:     (313) 256-5206

FAX:      (313) 965-0009

 

and

 

13.2.2              To the Partnership at its principal office specified by the
Management Committee in accordance with §2.7 or such other address as may be
designated from time to time by written notice to each of the Partners.. Any
Partner may request that copies of notices be given to any Affiliate at such
address designated by such Partner by written notice to each other Partner and
to the Partnership, provided that any failure to give such notice shall not
affect the validity of any notice given to any Partner or the Partnership in

 

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accordance with this §13.2. Each of the Partners agrees to give such notice to
any such Affiliate.

 

13. 3                     Further Assurances. Each of the Partners and Withdrawn
Partners agrees to execute and deliver all such other and additional instruments
and documents and to do such other acts and things as may be reasonably
necessary more fully to effectuate this Partnership and carry on the Partnership
business in accordance with this Agreement.

 

13.4                        Applicable Law. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of Maine without regard
to the principles of conflicts of laws. In the event that any provision of this
Agreement shall be deemed to conflict with any provision of the Maine Uniform
Partnership Act. (the “Act”), the provisions of the Act, shall to the extent
required by the Act, be controlling.

 

13.5                        Counterparts. This Agreement may be executed in
counterparts (including counterparts provided for execution by an Additional
Partner), each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.

 

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

 

13.7                        Waiver. No waiver by any Person of any default by
any Partner or Partners in the performance of any provision, condition or
requirement herein shall be deemed to be a waiver of, or in any manner release,
the said Partner or Partners from performance of any other provision, condition
or requirement herein; nor shall such waiver be deemed to be a waiver of, or in
any manner a release of, said Partner or Partners from future performance of the
same provision, condition or requirement. Any delay or omission of any Partner
to exercise any right hereunder shall not. impair the exercise of any such
right, or any like right, accruing to it thereafter., No waiver of a right
created by this Agreement by one or more Partners shall constitute a waiver of
such right by the other Partners except as may otherwise be required by law with
respect to Persons not parties hereto., The failure of one or more Partners to
perform its or their obligations hereunder shall not release the other Partners
from the performance of such obligations.

 

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13.8                        Partition. The Partners expressly waive and release
any right to have their interest, individually or collectively, in the
Partnership partitioned or sold for the purpose of dividing the proceeds of such
sale for the period during which the Partnership or any Successor Partnership
shall remain in existence.

 

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

 

13.10                 Partnership Opportunity. Participation in the Partnership
shall not in any way restrain any officers, directors, shareholders, employees,
Affiliates or Associates of the Partners in other present or future business
activities, whether or not any such activity is competitive with the business of
the Partnership, or in any way preclude or restrict any of them from entering
into a joint venture, partnership or other business arrangement with the
Partnership. None of any Partner’s officers, directors, shareholders, employees,

 

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Affiliates or Associates shall under any circumstances be obligated or bound to
offer or present to the Partnership any business opportunity offered to such
officers, directors, shareholders, employees, Affiliates or Associates as a
prerequisite to the acquisition of or investment in such business opportunity by
any of them.

 

13.11                 Section Numbers. Unless otherwise indicated, references to
section numbers are to sections of this Agreement.

 

13.12                 Confidentiality. Except as hereinafter provided, the
Partnership and each Partner shall treat as confidential, and not disclose to
any third party not authorized by the Management Committee to receive
confidential information, any information obtained either directly or indirectly
from any other Partner pursuant to this Agreement and designated by such Partner
as confidential, or other confidential information developed or acquired by the
Management Committee, or by the Operator during performance of its obligations
under the Operating Agreement on behalf of the Partnership, unless such
confidential information (a) was already in the possession of the receiving
Partner, or an Affiliate thereof, at the time it

 

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obtained such confidential information hereunder, (b) was or is published or
otherwise is or becomes generally available to the public through no fault of
such receiving Partner or its Affiliate, (c) is developed independently by the
receiving Partner or its Affiliates or (d) was or is made available to such
Partner or its Affiliate without restriction by any Person or entity which is
not bound by, and does not impose, an obligation of confidentiality or use with
respect thereto. Further, neither the Partnership nor any Partner shall (a) use
any such confidential information (other than its own) for any purpose other
than in connection with the activities of the Partnership pursuant to this
Agreement or (b) disclose, reveal or otherwise make any such confidential
information (other than its own) available to any unauthorized third party
without the prior written consent of the other Partners hereunder, unless such
disclosure is required by operation of law or regulation. The Partners and the
Management Committee shall establish and enforce reasonable procedures for the
protection of confidential information and shall restrict disclosure of such
information to as few as possible of the employees, officers, agents and

 

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Affiliates of each Partner and the Partnership, and only to those who need to
know such information in connection with the purposes of the Partnership as set
forth herein. Each Partner and the Management Committee shall take such
reasonable and prudent steps and precautionary measures as are required to
ensure compliance with this §13,12 by such of their employees, officers, agents,
Affiliates and other Persons as shall be given access to such confidential
information and shall be responsible for compliance by their employees,
officers, agents and Affiliates. The obligations of the Partners and Withdrawn
Partners pursuant to this §13.12 shall survive the term of this Agreement for a
period of five (5) years. The Partners agree that no adequate remedy at law
exists for a material breach or threatened material breach of any of the
provisions of this §13.12, the continuation of which unremedied will cause the
injured Partner to suffer irreparable harm. Accordingly, the Partners agree that
the injured party shall be entitled, in addition to other remedies which may be
available to it, to immediate injunctive relief from any material breach of any
of the provisions of this §13.12 and to specific performance of its rights

 

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hereunder, as well as to any other remedies available at law or in equity. The
Operating Agreement shall include similar provisions for the protection of
confidential information.

 

13.13                 Use of Name or Trademark of a Partner. Neither the
Partnership, nor the Partners, their Affiliates or their Associates, shall use
the name or trademark of any Partner, its Affiliates or Associates, in
connection with public announcements or marketing or financing activities of the
Partnership, without the prior approval of any such Partner, Affiliate or
Associate, which shall not be unreasonably withheld.

 

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

 

13.15                 Severability. Should any provision of this Agreement be
deemed in contradiction with the laws of any jurisdiction in which it is to be
performed or unenforceable for any reason, such provision shall be deemed null
and void, but this Agreement shall remain in force in all other respects. Should
any provision of this Agreement be or become ineffective because of changes in
applicable laws

 

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or interpretations thereof, or should this Agreement fail to include a provision
that is required as a matter of law, the validity of the other provisions of
this Agreement shall not be affected thereby If such circumstances arise, the
parties hereto shall negotiate in good faith appropriate modifications to this
Agreement to reflect those changes that are required by law

 

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

 

[SIGNATURES APPEAR ON NEXT PAGE]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and attested by their duly authorized representatives as of the date first set
forth above.

 

ATTEST:

 

NATURAL GAS DEVELOPMENT CORPORATION

 

 

 

 

 

 

 

 

/s/ [ILLEGIBLE]

 

By:

/s/ [ILLEGIBLE]

 

 

Title:

President

 

 

 

 

 

 

 

 

ATTEST:

 

TENNECO PORTLAND CORPORATION

 

 

 

 

 

 

 

 

/s/ [ILLEGIBLE]

 

By:

/s/ [ILLEGIBLE]

 

 

Title:

 

 

 

 

 

 

 

 

 

ATTEST:

 

GAZ METRO PORTLAND CORPORATION

 

 

 

 

 

 

 

 

/s/ [ILLEGIBLE]

 

By:

/s/ [ILLEGIBLE]

 

 

Title:

Director

 

 

 

 

 

 

 

 

ATTEST:

 

JMC PORTLAND (INVESTORS), INC.

 

 

 

 

 

 

 

 

/s/ [ILLEGIBLE]

 

By:

/s/ [ILLEGIBLE]

 

 

Title:

Sr Vice President

 

 

 

 

 

 

 

 

ATTEST:

 

TCPL PORTLAND INC.

 

 

 

 

 

 

 

/s/ [ILLEGIBLE]

 

By:

/s/ [ILLEGIBLE]

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ [ILLEGIBLE]

 

 

Title:

 

 

 

 

 

 

 

 

 

ATTEST:

 

EAST COAST PIPELINE COMPANY

 

 

 

 

 

 

 

 

/s/ [ILLEGIBLE]

 

By:

/s/ Daniel L. Schiffer

 

 

Title:

Daniel L. Schiffer

 

 

 

Vice President & Secretary

 

--------------------------------------------------------------------------------

 

SCHEDULE A

 

Name of Partner

 

Percentage Interest

 

 

 

 

 

TCPL Portland Inc.

 

20.0

%

East Coast Pipeline Company

 

20.0

%

Natural Gas Development Corporation

 

17.8

%

Tenneco Portland Corporation

 

17.8

%

Gaz Metro Portland Corporation

 

17.8

%

JMC Portland (Investors), Inc.

 

6.6

%

 

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APPENDIX A

 

Description of Facilities

 

PNGTS will be an open access, transportation-only natural gas pipeline. The new
pipeline is expected to be either 24-inch (610 mm) or 20-inch (508 mm),
approximately 240 miles (386 km) in length, and is expected to have an initial
capacity of 175 MMcf/d. A portion of the new pipeline may be constructed
adjacent to an existing pipeline corridor occupied by Portland Pipe Line
Corporation oil pipelines. The expected in-service date of the pipeline is
November 1998.

 

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APPENDIX B

 

Name of Partner

 

Amount of Funds

 

 

 

 

 

Natural Gas Development Corporation (Per books @ October 31, 1993)

 

 

 

Canadian Border to Haverhill, MA

 

 

 

Cash Calls 1,2,3,5,6,7,8,8A,8B,10

 

$

516,578

 

Payroll/Engineering/Expenses

 

1,890,019

 

Total

 

$

2,406,597

 

 

 

 

 

Tenneco Portland Corporation

 

 

 

Cash Calls 1,2,3,5,6,7,8,8A,8B,10

 

$

516,578

 

Payroll and Expenses

 

60,000

(A)

Total

 

$

576,478

 

 

 

 

 

Gaz Metro Portland Corporation

 

 

 

Cash Calls 1,2,3,5,6,7,8,8A,8B,10

 

$

516,578

 

Payroll and Expenses

 

41,115

(A)

Total

 

$

557,693

 

 

 

 

 

(INTERSTATE/JMC EQUITY ADJUSTMENT)

 

 

 

 

 

 

 

Interstate Energy, Inc.

 

 

 

Cash Calls 1,2,3,5,6,7,8,8A,8B,10
$516,578 x 16/25

 

$

330,610

 

Payroll and Expenses

 

29,155

(A)

Total

 

$

359,765

 

 

 

 

 

JMC Development Company, Inc.

 

 

 

Cash Calls 1,2,3,5,6,7,8,8A,8B,10
$516,578 x 9/25

 

$

185,968

 

Actual June 1 - Sept. 30, 1993 Mgmt. /Admin. /Acctg.

 

74,850

(B)

Total

 

$

260,818

 

 

 

 

 

Grand Total

 

$

4,161,451

 

 

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(A) — Source: Part. Agr. dated Nov. 5, 1992

 

(B) — Source: JMC budget distributed at November 12, 1993 Partnership meeting
under tab 4.2

 

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