Exhibit 10.1

Execution Copy

 

 

 

THIRD AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

ENBRIDGE ENERGY, LIMITED PARTNERSHIP

 

 

 

 

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TABLE OF CONTENTS

 

ARTICLE I

   DEFINITIONS    1

Section 1.1

   Definitions    1

Section 1.2

   Construction    17

ARTICLE II

   ORGANIZATION    17

Section 2.1

   Continuation    17

Section 2.2

   Name    17

Section 2.3

   Principal Office; Registered Office    17

Section 2.4

   Purpose and Business    18

Section 2.5

   Powers    18

Section 2.6

   Term    18

Section 2.7

   Title to Partnership Assets    18

ARTICLE III

   ESTABLISHMENT AND DESIGNATION OF SERIES    18

Section 3.1

   Establishment and Designation of Series    18

Section 3.2

   Series AC    19

Section 3.3

   Series LH    20

Section 3.4

   Allocation Among Series    21

Section 3.5

   No Transfer or Sale    22

ARTICLE IV

   TRANSFER OF PARTNERSHIP INTERESTS; RIGHT OF FIRST REFUSAL; TAG-ALONG RIGHTS
   22

Section 4.1

   Transfers Generally    22

Section 4.2

   General Restrictions on Transfers of Partnership Interests    23

Section 4.3

   Additional Restrictions on Transfers of Partnership Interests    23

Section 4.4

   Right of First Refusal    24

Section 4.5

   Tag-Along Rights    26

Section 4.6

   Transfers of Certain Partnership Assets—ROFR    27

Section 4.7

   Specific Performance    29

ARTICLE V

   CONVERSION; CAPITAL CONTRIBUTIONS; PARTNERSHIP INTERESTS; FUTURE CAPITAL
REQUIREMENTS    29

Section 5.1

   Conversion of Prior Partnership Interests    29

Section 5.2

   Series LH Capital Contributions    30

Section 5.3

   Initial Series AC Capital Contributions and Initial Debt Financing    30

Section 5.4

   Additional Series AC Capital Contributions    30

Section 5.5

   Additional Debt Financing    34

Section 5.6

   Future Alberta Clipper Expansions    34

Section 5.7

   Interest and Withdrawal of Capital Contributions    36

Section 5.8

   Capital Accounts    36

ARTICLE VI

   ALLOCATIONS AND DISTRIBUTIONS    37

Section 6.1

   Allocations for Capital Account Purposes    37

 

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Section 6.2

   Requirement and Characterization of Series AC Distributions; Distributions to
Series AC Partners    40

Section 6.3

   Distributions to Series LH Partners    41

ARTICLE VII

   MANAGEMENT AND OPERATION OF BUSINESS; LIMITED PARTNERS    41

Section 7.1

   Management    41

Section 7.2

   Certificate of Limited Partnership    42

Section 7.3

   Restrictions on the Managing General Partners’ Authority    43

Section 7.4

   Series AC Annual Budget    45

Section 7.5

   Collection of Series AC Revenue Entitlement    45

Section 7.6

   Compensation of General Partners    46

Section 7.7

   Indemnification    46

Section 7.8

   Interseries Indemnification    47

Section 7.9

   Liability of Indemnitees    48

Section 7.10

   Limitation of Liability    48

Section 7.11

   Management of Business    49

Section 7.12

   Outside Activities of the Limited Partners    49

Section 7.13

   Reliance by Third Parties    49

Section 7.14

   Managing General Partner    50

Section 7.15

   Conflicts of Interest.    50

Section 7.16

   Shared Use of Shared Assets    50

ARTICLE VIII

   BOOKS, RECORDS AND ACCOUNTING    51

Section 8.1

   Records and Accounting    51

Section 8.2

   Fiscal Year    51

ARTICLE IX

   TAX MATTERS    51

Section 9.1

   Tax Returns    51

Section 9.2

   Partner Tax Return Information    51

Section 9.3

   Tax Elections    52

Section 9.4

   Tax Controversies    52

Section 9.5

   Withholding    53

Section 9.6

   Tax Reimbursement    53

Section 9.7

   Tax Partnership    53

Section 9.8

   Tax Matters Following a Fundamental Change    54

ARTICLE X

   OTHER EVENTS    54

Section 10.1

   Fundamental Change    54

Section 10.2

   Surcharge Expiration    56

ARTICLE XI

   DISSOLUTION AND LIQUIDATION    57

Section 11.1

   Dissolution of the Partnership    57

Section 11.2

   Termination of a Series    58

Section 11.3

   Winding Up, Liquidation and Distribution of Assets of the Partnership or a
Series Upon Dissolution of the Partnership or Termination of Such Series    58

 

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Section 11.4

   Cancellation of Certificate of Limited Partnership    59

Section 11.5

   Return of Capital Contributions    60

Section 11.6

   Waiver of Partition    60

Section 11.7

   Capital Account Restoration    60

ARTICLE XII

   AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE; MERGER    60

Section 12.1

   Amendment    60

Section 12.2

   Amendment Requirements    60

Section 12.3

   Voting Rights    61

Section 12.4

   Meetings    61

Section 12.5

   Place of Meetings    61

Section 12.6

   Notice of Meetings    61

Section 12.7

   Quorum    61

Section 12.8

   Proxies    62

Section 12.9

   Action Without a Meeting    62

Section 12.10

   Waiver of Notice    62

Section 12.11

   Merger, Consolidation and Conversion    62

ARTICLE XIII

   GENERAL PROVISIONS    63

Section 13.1

   Addresses and Notices; Written Communications    63

Section 13.2

   Further Action    64

Section 13.3

   Binding Effect    64

Section 13.4

   Integration    64

Section 13.5

   Creditors    64

Section 13.6

   Waiver    64

Section 13.7

   Counterparts    65

Section 13.8

   Applicable Law    65

Section 13.9

   Invalidity of Provisions    65

Section 13.10

   Consent of Partners    65

Section 13.11

   Third Party Beneficiaries    65

EXHIBITS

 

Exhibit A:

   Initial Partnership Interests

Exhibit B:

   Exclusive Series AC Assets

Exhibit C:

   Shared Assets

 

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THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED

PARTNERSHIP OF ENBRIDGE ENERGY, LIMITED PARTNERSHIP

THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of
July 31, 2009, is entered into by and among Enbridge Pipelines (Lakehead)
L.L.C., a Delaware limited liability company (“Lakehead GP”), and Enbridge
Pipelines (Wisconsin) Inc., a Wisconsin corporation (“Wisconsin GP”), each as a
general partner of the Partnership with respect to the applicable Series as set
forth opposite its name on Exhibit A and, in the case of Lakehead GP, as a
general partner of the Partnership generally, and Enbridge Energy Company, Inc.,
a Delaware corporation (“EECI”), Enbridge Pipelines (Alberta Clipper) L.L.C., a
Delaware limited liability company (“EECI Sub”), and Enbridge Energy Partners,
L.P., a Delaware limited partnership (“Enbridge Partners”), each as a limited
partner of the Partnership with respect to the applicable Series set forth
opposite its name on Exhibit A, together with any other Persons who become
Partners in the Partnership associated with any Series or the Partnership
generally as provided herein.

WHEREAS, Lakehead GP, Wisconsin GP and Enbridge Partners entered into that
Second Amended and Restated Agreement of Limited Partnership of Enbridge Energy,
Limited Partnership on October 17, 2002, as amended on September 7, 2007 (as so
amended, the “Prior Agreement”); and

WHEREAS, the parties hereto have determined it to be in their respective best
interests to establish and designate two separate series of partnership
interests and related assets and liabilities of the Partnership in accordance
with Section 17-218 of the Delaware Act, one of which is related to the Alberta
Clipper Project and the other of which is related to all other assets of the
Partnership, and to amend and restate the Prior Agreement in its entirety;

NOW, THEREFORE, in consideration of the covenants, conditions and agreements
contained herein, the parties hereto do hereby amend and restate the Prior
Agreement to provide in its entirety as set forth below:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions.

The following definitions shall be for all purposes, unless otherwise clearly
indicated to the contrary, applied to the terms used in this Agreement.

“154-B Model” means the FERC Opinion No. 154-B model estimate relating to the
Alberta Clipper Surcharge on file with the FERC from time to time.

“Additional Series AC Capital Contribution” has the meaning assigned to such
term in Section 5.4(a).

“Adjusted Capital Account” means the Series Capital Account maintained for a
Partner with respect to a Series, (i) increased by any amounts that such Partner
is obligated to restore or is treated as obligated to restore under Treasury
Regulation Sections 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and 1.704-2(i)(5) and
(ii) decreased by any amounts described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6) with respect to such Partner.

 

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“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with the Person in question. As used herein, the term
“control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise. For the purposes
of this Agreement, (i) with respect to Enbridge Partners and its Subsidiaries,
the term “Affiliate” shall exclude Enbridge Inc. and each of its Subsidiaries
(other than Enbridge Partners and its Subsidiaries) and (ii) with respect to
Enbridge Inc. and its Subsidiaries (other than Enbridge Partners and its
Subsidiaries), the term “Affiliate” shall exclude Enbridge Partners and each of
its Subsidiaries.

“Agreed Value” of property contributed by a Partner to the Partnership with
respect to a Series means the fair market value of such property or other
consideration at the time of contribution as reasonably determined by the
Managing General Partner of such Series. The Managing General Partner of such
Series shall use such method as it determines to be appropriate to allocate the
aggregate Agreed Value of properties contributed by a Partner to the Partnership
with respect to a Series in a single or integrated transaction among each
separate property on a basis proportional to the fair market value of each
contributed property.

“Agreement” means this Third Amended and Restated Agreement of Limited
Partnership of Enbridge Energy, Limited Partnership, including all exhibits
hereto, as it may be amended, supplemented or restated from time to time.

“Alberta Clipper Expansion Budget” means a budget and forecast approved by a
Majority in Interest of Series AC Partners and setting forth the anticipated
revenues and expenses for any Alberta Clipper Expansion Project that has been
designated as a Series AC Asset, including any anticipated growth capital
expenditures, maintenance capital expenditures, revenues, Capital Contributions
and distributions related to such Alberta Clipper Expansion Project.

“Alberta Clipper Expansion Capital Requirement” has the meaning assigned to such
term in Section 5.6(b).

“Alberta Clipper Expansion Project” has the meaning assigned to such term in
Section 5.6(a).

“Alberta Clipper Expansion Project Terms” has the meaning assigned to such term
in Section 5.6(a).

“Alberta Clipper Expansion Proposal” has the meaning assigned to such term in
Section 5.6(a).

“Alberta Clipper Expansion Series” has the meaning assigned to such term in
Section 5.6(d).

 

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“Alberta Clipper Project” means (a) the U.S. segment of the proposed 36-inch
diameter crude oil pipeline that will extend from Hardisty, Alberta to Superior,
Wisconsin, with an initial annual capacity of 450,000 barrels per day and
(b) related terminals, interconnections, tanks and pump stations located within
the United States, each as more fully described in the FERC Settlement Offer.

“Alberta Clipper Surcharge” means the tariff surcharge related to the Alberta
Clipper Project approved by the FERC by letter dated August 28, 2008 (124 FERC ¶
61,200 (2008)) as described in the FERC Settlement Offer.

“Book Value” means, with respect to any property associated with a Series, such
property’s adjusted basis for U.S. federal income tax purposes, except as
follows:

(a) the initial Book Value of any property contributed by a Partner to the
Partnership with respect to a Series shall be the Agreed Value of such property;

(b) the Book Values of all properties of a Series shall be adjusted to equal
their respective fair market values as determined by the Managing General
Partner of such Series in connection with (i) the acquisition of an interest in
such Series by any new or existing Partner in exchange for more than a de
minimis capital contribution, (ii) the distribution to a Partner of more than a
de minimis amount of property of a Series as consideration for an interest in
such Series, (iii) the grant of an interest in such Series (other than a de
minimis interest) as consideration for the provision of services to or for the
benefit of such Series by an existing Partner acting in a Partner capacity, or
by a new Partner acting in a Partner capacity or in anticipation of becoming a
Partner, (iv) the liquidation of the Partnership or any Series within the
meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g)(1) (other than
pursuant to Section 708(b)(1)(B) of the Code), or (v) any other event to the
extent determined by the Managing General Partner of such Series to be necessary
to properly reflect Book Values in accordance with the standards set forth in
Treasury Regulation Section 1.704-1(b)(2)(iv)(q);

(c) the Book Value of any property of a Series distributed to a Partner shall be
the fair market value of such property as reasonably determined by the Managing
General Partner of such Series; and

(d) the Book Values of all properties of a Series shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such property
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
attributable to such Series pursuant to Treasury Regulation
Section 1.704-1(b)(2)(iv)(m) and clause (f) of the definition of Profits and
Losses or Section 6.1(b)(viii); provided, however, Book Value shall not be
adjusted pursuant to this clause (d) to the extent the Managing General Partner
of such Series reasonably determines that an adjustment pursuant to clause
(b) hereof is necessary or appropriate in connection with the transaction that
would otherwise result in an adjustment pursuant to this clause (d).

 

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If the Book Value of any property has been determined or adjusted pursuant to
clauses (b) or (d) hereof, such Book Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such property for purposes of
computing Profits and Losses and other items allocated pursuant to Article VI.

“Business Day” means Monday through Friday of each week, except that a legal
holiday recognized as such by the government of the United States of America or
the State of Texas shall not be regarded as a Business Day.

“Capital Account” means the capital account maintained for a Partner pursuant to
Section 5.8.

“Capital Contribution” means, with respect to any Partner, the amount of money
and the Net Agreed Value of any property contributed by such Partner to the
Partnership with respect to a Series. Any reference in this Agreement to the
Capital Contribution of a Partner shall include its pro rata share of any
Capital Contribution of its predecessors in interest.

“Certificate of Limited Partnership” means the Certificate of Limited
Partnership of the Partnership filed with the Secretary of State of the State of
Delaware as referenced in Section 7.2, as such Certificate of Limited
Partnership may be amended, supplemented or restated from time to time.

“Claims” has the meaning assigned to such term in Section 7.7(a).

“Closing Date” means July 31, 2009.

“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to
time. All references herein to sections of the Code shall include any
corresponding provision or provisions of succeeding law.

“Commission” means the U.S. Securities and Exchange Commission.

“Control Option” has the meaning assigned to such term in Section 10.1(b).

“Damages” has the meaning assigned to such term in Section 7.7(a).

“Default Capital Contribution” has the meaning assigned to such term in
Section 5.4(e).

“Defaulting Series AC Partner” has the meaning assigned to such term in
Section 5.4(e).

“Defaulting Series AC Partner Obligation” has the meaning assigned to such term
in Section 5.4(e)(ii)(B).

“Delaware Act” means the Delaware Revised Uniform Limited Partnership Act, 6 Del
C. Section 17-101, et seq., as amended, supplemented or restated from time to
time, and any successor to such statute.

 

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“Depreciation” means, for each taxable year, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable for U.S.
federal income tax purposes with respect to property for such taxable year,
except that with respect to any property the Book Value of which differs from
its adjusted tax basis for U.S. federal income tax purposes, Depreciation for
such taxable year shall be the amount of book basis recovered for such taxable
year under the rules prescribed by Treasury Regulation Section 1.704-3(d)(2).

“Economic Risk of Loss” has the meaning assigned to such term in Treasury
Regulation Section 1.752-2(a).

“EECI” has the meaning assigned to such term in the preamble to this Agreement.

“EECI Sub” has the meaning assigned to such term in the preamble to this
Agreement.

“Enbridge Inc.” means Enbridge Inc., a Canadian corporation.

“Enbridge Partners” has the meaning assigned to such term in the preamble to
this Agreement.

“Enbridge Partners Long-Term Indebtedness” has the meaning assigned to such term
in Section 5.5(c).

“Enbridge Pipelines Inc.” means Enbridge Pipelines Inc., a Canadian corporation.

“Entity” means a corporation, firm, limited liability company, partnership
(general or limited), joint venture, trust, business trust, unincorporated
organization, cooperative, association or other legal entity.

“Exclusive Series AC Assets” means all assets and rights related exclusively to
the Alberta Clipper Project, including the assets and rights set forth as
“Exclusive Series AC Assets” on Exhibit B hereto.

“Existing Indebtedness” means Indebtedness of the Partnership or Enbridge
Partners or both existing on the Closing Date.

“Facility A1” means the credit facility designated as the A1 Credit Agreement,
dated the Closing Date, by and between EECI and Enbridge Partners, as it may be
amended, supplemented or restated from time to time.

“Facility B1” means the credit facility designated as the B1 Credit Agreement,
dated the Closing Date, by and between Enbridge Partners and the Partnership, on
behalf of the Series AC, as it may be amended, supplemented or restated from
time to time.

“Facility C1” means the credit facility designated as the C1 Credit Agreement,
dated the Closing Date, by and between Enbridge Partners and the Partnership, on
behalf of Series AC, as it may be amended, supplemented or restated from time to
time.

“FERC” means the U.S. Federal Energy Regulatory Commission.

 

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“FERC Settlement Offer” means the Offer of Settlement of the Partnership filed
with the FERC, on June 27, 2008 in Docket No. OR08-12-000.

“Fundamental Change” has the meaning assigned to such term in Section 10.1(a).

“General Partner” means a general partner of the Partnership generally or any
Series, as applicable.

“General Partner Interest” means the Partnership Interest of a General Partner
in the Partnership generally or with respect to a Series (in its capacity as a
General Partner without reference to any Limited Partner Interest held by it).

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

“In-Service Date” means the “In-Service Date” (as such term is used in the
Tariff Term Sheet) of the Alberta Clipper Project.

“Indebtedness” means (a) debt for money borrowed and similar monetary
obligations evidenced by bonds (excluding surety and performance bonds), notes,
debentures or other similar instruments, (b) reimbursement obligations with
respect to letters of credit and (c) guaranties, endorsements and other
contingent obligations whether direct or indirect in respect of liabilities of
others of any of the types described in clauses (a) and (b) above (other than
endorsements for collection or deposit in the ordinary course of business). For
the avoidance of doubt, the term “Indebtedness” excludes trade accounts payable
in the ordinary course of business.

“Indemnified Series” has the meaning assigned to such term in Section 7.8.

“Indemnifying Series” has the meaning assigned to such term in Section 7.8.

“Indemnitee” means, with respect to a Series, (a) any Person who is or was a
General Partner of such Series or a General Partner of the Partnership
generally, (b) any Person who is or was a delegate of any such General Partner,
(c) any Person who is or was an Affiliate of any such General Partner or
delegate, (d) any Person who is or was a member, partner, director, officer,
fiduciary or trustee of any such General Partner or delegate and (e) any Person
who is or was serving at the request of any such General Partner or delegate or
any Affiliate of any such General Partner or delegate as an officer, director,
member, partner, fiduciary or trustee of another Person; provided that a Person
shall not be an Indemnitee by reason of providing, on a fee-for-services basis,
trustee, fiduciary or custodial services.

“Initial Debt Financing” means the borrowings incurred under Facility B1 and
Facility C1 on the Closing Date as described in Section 5.3(b).

“Initial Series AC Capital Contribution” has the meaning assigned to such term
in Section 5.3(a).

 

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“Intercompany Obligations” means the Liabilities incurred, assumed or otherwise
contracted for between Enbridge Partners or any Material Subsidiary of Enbridge
Partners, on the one hand, and the Partnership generally or any Series, on the
other hand.

“Intercompany Preliminary Construction Cost Payable” means outstanding
Indebtedness of the Partnership arising from intercompany borrowings by the
Partnership from Enbridge Partners in an aggregate principal amount equal to the
Preliminary Alberta Clipper Construction Costs.

“Lakehead GP” has the meaning assigned to such term in the preamble to this
Agreement.

“Lakehead System” means the crude oil and liquid petroleum pipeline, owned by
the Partnership (and associated with one or more Series) and regulated by the
FERC, that extends from the U.S.-Canadian border near Neche, North Dakota
extending through the upper and lower Great Lakes region of the U.S. and
re-entering Canada near Marysville, Michigan with an extension across the
Niagara River into the Buffalo, New York area, as such pipeline may be extended
or modified from time to time, including by the Alberta Clipper Project.

“Lending Series AC Partner” has the meaning assigned to such term in
Section 5.4(e)(ii).

“Liability” means any debt, liability, expense or other obligation.

“Limited Partner” means any limited partner of the Partnership generally or of
any Series, as applicable.

“Limited Partner Interest” means the Partnership Interest of a Limited Partner
in the Partnership generally or with respect to a Series (in its capacity as a
limited partner without reference to any General Partner Interest held by it).

“Liquidation Date” means (a) in the case of an event giving rise to the
dissolution of the Partnership or termination of a Series of the type described
in Sections 11.1(a)(iv), 11.1(a)(v) or 11.2(a)(iv), the date on which the
applicable time period during which the Partners have the right to elect to
continue the business of the Partnership or Series, as applicable, has expired
without such an election being made and (b) in the case of any other event
giving rise to the dissolution of the Partnership or termination of a Series,
the date on which such event occurs.

“Long-Term Debt Financing” means the Indebtedness of the Series AC to Enbridge
Partners on substantially the same terms as the Enbridge Partners Long-Term
Indebtedness that is used to refinance the outstanding borrowings of the
Series AC under Facility B1 and Facility C1 as described in Section 5.5(c) and
(d).

“Majority in Interest” means, with respect to a Series, one or more Partners of
such Series holding Partnership Interests in such Series that in the aggregate
exceed fifty percent (50%) of all Percentage Interests owned by Partners of such
Series.

“Managing General Partner” has the meaning assigned to such term in
Section 7.14.

 

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“Material Subsidiary of Enbridge Partners” means any Subsidiary of Enbridge
Partners that directly or through one or more of its Subsidiaries (i) owns
assets with a book value equal to 10% or more of the book value of the
consolidated assets of Enbridge Partners and its consolidated Subsidiaries,
(ii) contributed 10% or more of consolidated operating income for any fiscal
quarter during the four fiscal quarters most recently ended of Enbridge Partners
and its Consolidated Unrestricted Subsidiaries (as defined in the Partnership’s
Second Amended and Restated Credit Facility dated as of April 4, 2007, as
amended), or (iii) is a “significant subsidiary” as defined in Article 1,
Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act as such
Regulation is in effect on any date of determination.

“Maximum Commitment” means, with respect to a Series AC Partner, the amount set
forth opposite such Series AC Partner’s name on Exhibit A in the column entitled
“Maximum Commitment.”

“Maximum Permitted Delegation” has the meaning assigned to such term in
Section 10.1(a).

“Minimum Gain” has the meaning assigned to the term “partnership minimum gain”
in Treasury Regulation Section 1.704-2(d).

“Monthly Capital Requirement” has the meaning assigned to such term in
Section 5.4(b).

“Net Agreed Value” means, (a) in the case of any property contributed by a
Partner to the Partnership with respect to a Series, the Agreed Value of such
property reduced by any liabilities either assumed by such Series upon such
contribution or to which such property is subject when contributed and (b) in
the case of any property of a Series distributed to a Partner, the Book Value of
such property at the time such property is distributed, reduced by any
indebtedness either assumed by such Partner upon such distribution or to which
such property is subject at the time of distribution, in either case, as
determined under Section 752 of the Code.

“New AC Entity” means a new Entity controlled by EECI or its designee, formed
for the purpose of owning and operating the Series AC Assets following any
exercise of the Separation Option.

“Non-Defaulting Series AC Partner” has the meaning assigned to such term in
Section 5.4(e).

“Nonrecourse Deductions” has the meaning assigned to such term in Treasury
Regulation Section 1.704-2(b).

“Note Agreement” has the meaning assigned to such term in Section 3.2(d).

“Offered Interests” has the meaning assigned to such term in Section 4.4(a).

“Offering Partner” has the meaning assigned to such term in Section 4.4(a).

“Omnibus Agreement” means the Omnibus Agreement, dated October 17, 2002, by and
among EECI, Enbridge Partners and Enbridge Pipelines Inc.

 

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“Partner Nonrecourse Debt” has the meaning assigned to such term in Treasury
Regulation Section 1.704-2(b)(4).

“Partner Nonrecourse Debt Minimum Gain” has the meaning assigned to such term in
Treasury Regulation Section 1.704-2(i)(2).

“Partner Nonrecourse Deductions” has the meaning assigned to such term in
Treasury Regulation Section 1.704-2(i)(1).

“Partners” means the General Partners and the Limited Partners.

“Partnership” means Enbridge Energy, Limited Partnership, a Delaware limited
partnership, formed on October 9, 1991 pursuant to the Delaware Act upon the
filing of the Certificate of Limited Partnership in the office of the Secretary
of State of the State of Delaware and the entry into the Agreement of Limited
Partnership of the Partnership dated October 9, 1991.

“Partnership generally” means, with respect to the Partnership, the “limited
partnership generally” as such phrase is used in Section 17-218 of the Delaware
Act.

“Partnership Interest” means a partnership interest in the Partnership generally
or with respect to a Series, which shall include General Partner Interests and
Limited Partner Interests.

“Percentage Interest” means, with respect to any Partner of a Series, the
Percentage Interest set forth opposite such Partner’s name for such Series on
Exhibit A. The Percentage Interests of the Partners of any Series shall be
adjusted as follows:

(a) from time to time pursuant to Sections 5.4(e)(i) or 5.4(e)(ii)(E); and

(b) immediately following (i) the admission of any Person as a new Partner of
such Series or (ii) any Capital Contribution to such Series that is not Pro Rata
among the Partners of such Series (other than a Capital Contribution pursuant to
Sections 5.4(e)(i) or 5.4(e)(ii)(E)), to reflect the quotient, expressed as a
percentage, obtained by dividing (A) such Partner’s Series Capital Account
balance with respect to such Series by (B) the sum of all Partners’ Series
Capital Account balances with respect to such Series, in each case, taking into
account any prior adjustments pursuant to clause (a) of this definition.

Upon the adjustment of the Percentage Interests in the manner set forth in this
definition, Exhibit A will be amended to reflect such adjusted Percentage
Interests. The Percentage Interest of any Partner of the Partnership generally
shall at all times be zero.

“Permitted Transferee” means, with respect to any Person, an Affiliate of such
Person; provided that the term “Permitted Transferee” shall not include any
Affiliate that, at the date of determination, such Person or any of its
Affiliates intends or expects to sell, assign, exchange or otherwise cease to
own or control.

“Person” means an individual, Entity or government agency or political
subdivision thereof.

 

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“Preliminary Alberta Clipper Construction Costs” means $425,142,514.25, which
amount represents the sum of (1) all cash costs, expenses and liabilities
actually paid by the Partnership prior to the Closing Date that are directly
attributable to or properly allocable to the Series AC Assets and (2) all
allowances for funds used during construction (AFUDC) that are directly
attributable to or properly allocable to the Series AC Assets prior to the
Closing Date.

“Primary Obligor” has the meaning assigned to such term in Section 3.4(c).

“Prior Agreement” has the meaning assigned to such term in the preamble to this
Agreement.

“Prior Budget” has the meaning assigned to such term in Section 7.4(c).

“Prior General Partner Interests” means the general partner interests in the
Partnership outstanding immediately prior to the effectiveness of this
Agreement.

“Prior Limited Partner Interests” means the limited partner interests in the
Partnership outstanding immediately prior to the effectiveness of this
Agreement.

“Pro Rata” means apportioned among all Partners of a particular Series in
accordance with their relative Percentage Interests in such Series.

“Profits” or “Losses” means, for each taxable year with respect to any Series,
an amount equal to such Series’ taxable income or loss for such taxable year,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments (without duplication):

(a) any income of such Series that is exempt from U.S. federal income tax and
not otherwise taken into account in computing Profits and Losses pursuant to
this definition of “Profits” and “Losses” shall be added to such taxable income
or loss;

(b) any expenditures of such Series described in Code Section 705(a)(2)(B) or
treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into account in
computing Profits or Losses pursuant to this definition of “Profits” and
“Losses” shall be subtracted from such taxable income or loss;

(c) in the event the Book Value of any asset is adjusted pursuant to clause
(b) or clause (c) of the definition of Book Value, the amount of such adjustment
shall be treated as an item of gain (if the adjustment increases the Book Value
of the asset) or an item of loss (if the adjustment decreases the Book Value of
the asset) from the disposition of such asset and shall be taken into account
for purposes of computing Profits or Losses;

(d) gain or loss resulting from any disposition of property with respect to
which gain or loss is recognized for U.S. federal income tax purposes shall be
computed by reference to the Book Value of the property disposed of,
notwithstanding that the adjusted tax basis of such property differs from its
Book Value;

 

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(e) in lieu of the depreciation, amortization and other cost recovery deductions
taken into account in computing such taxable income or loss, there shall be
taken into account Depreciation for such taxable year;

(f) to the extent an adjustment to the adjusted tax basis of any asset pursuant
to Code Section 734(b) is required, pursuant to Treasury Regulation
Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Account balances for such Series as a result of a distribution other than in
liquidation of a Partner’s Partnership Interest with respect to such Series, the
amount of such adjustment shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or an item of loss (if the adjustment
decreases such basis) from the disposition of such asset and shall be taken into
account for purposes of computing Profits or Losses; and

(g) any items that are allocated pursuant to Sections 6.1(b) and 6.1(c) shall be
determined by applying rules analogous to those set forth in clauses (a) through
(g) hereof but shall not be taken into account in computing Profits and Losses.

“Proportionate Share of Shared Liabilities” has the meaning assigned to such
term in Section 3.4(d).

“Quarter” means, unless the context requires otherwise, a fiscal quarter of the
Partnership.

“Regulatory Allocations” means the allocations set forth in
Sections 6.1(b)(i)-(iii) and 6.1(b)(v)-(vii).

“Revenue Requirement” means the Revenue Requirement as set forth in Section 3
“Revenue Requirement” of the Tariff Term Sheet.

“Revised Tariff Structure” has the meaning assigned to such term in
Section 10.2(a).

“ROFR Asset Closing Period” has the meaning assigned to such term in
Section 4.6(d).

“ROFR Asset Expiration Date” has the meaning assigned to such term in
Section 4.6(b).

“ROFR Asset Notice” has the meaning assigned to such term in Section 4.6(a).

“ROFR Asset Notice Date” has the meaning assigned to such term in
Section 4.6(a).

“ROFR Asset Offer Price” has the meaning assigned to such term in
Section 4.6(a).

“ROFR Closing Period” has the meaning assigned to such term in Section 4.4(d).

“ROFR Expiration Date” has the meaning assigned to such term in Section 4.4(b).

“ROFR Holder” has the meaning assigned to such term in Section 4.4(a).

“ROFR Notice” has the meaning assigned to such term in Section 4.4(a).

 

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“ROFR Notice Date” has the meaning assigned to such term in Section 4.4(a).

“ROFR Offer Price” has the meaning assigned to such term in Section 4.4(a).

“ROFR Offered Asset” has the meaning assigned to such term in Section 4.6(a).

“ROFR Proportionate Share” has the meaning assigned to such term in
Section 4.4(b).

“Securities Act” means the Securities Act of 1933, as amended, supplemented or
restated from time to time and any successor to such statute.

“Separation Option” has the meaning assigned to such term in Section 10.1(c).

“Series” means the Series AC, the Series LH and any Alberta Clipper Expansion
Series.

“Series AC” has the meaning assigned to such term in Section 3.1(a).

“Series AC Annual Budget” has the meaning assigned to such term in
Section 7.4(a).

“Series AC Assets” means the assets identified as Series AC Assets in
Section 3.2(a).

“Series AC Capital Contribution Notice” has the meaning assigned to such term in
Section 5.4(a).

“Series AC Distribution” has the meaning assigned to such term in
Section 6.2(a).

“Series AC Distribution Amount” means, with respect to any Quarter (including
any Quarter in which the liquidation of the Series AC is completed), an amount
equal to (a) the sum of (i) the portion of the Series AC Revenue Entitlement
that has been collected during such Quarter through the system-wide rates of the
Lakehead System as either the facilities surcharge or the base rates as provided
in Section 7.5 (prior to the expiration of the Surcharge Term) or as determined
pursuant to Section 10.2 (following the expiration of the Surcharge Term),
(ii) any other cash receipts attributable to or arising out of the ownership,
operation, sale or other disposition of the Series AC Assets collected during
such Quarter and (iii) any reduction during such Quarter in the amount of
Series AC Reserves established in any prior Quarter that are not used by the
Partnership, less (b) the sum of (i) all Series AC Expenses for such Quarter,
(ii) all cash interest expenses (and principal reductions net of borrowings) of
the Partnership for such Quarter attributable to Series AC Liabilities (other
than any Intercompany Obligation for which the Series AC is not the Primary
Obligor), (iii) any cash maintenance and pipeline integrity capital expenditures
for such Quarter properly allocable to the Series AC, (iv) any other cash
expenses for such Quarter constituting or attributable to or arising out of a
Series AC Liability (other than any Intercompany Obligation for which the Series
AC is not the Primary Obligor) or otherwise attributable to or arising out of
the ownership or operation of the Series AC Assets and (iv) any increase in
Series AC Reserves as shall be established by the Managing General Partner of
the Series AC in respect of such Quarter in accordance with Section 7.3.

 

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“Series AC Expansion Capital Expenditures” means cash expenditures by the Series
AC for:

(a) any transaction in which the Series AC acquires (through an asset
acquisition, merger, stock acquisition or other form of investment) control over
all or a portion of the assets, properties or business of another Person for the
purpose of increasing for a period longer than the short-term the operating
capacity of the Series AC Assets or operating income of the Series AC from the
operating capacity of the Series AC Assets or operating income of the Series AC
existing immediately prior to such transaction, or

(b) any (i) additions or improvements to the capital assets of the Series AC or
(ii) acquisitions of existing, or the construction of new or the improvement or
replacement of existing, capital assets, in each case if such additions,
improvements, acquisitions, replacements or construction is made to increase for
a period longer than the short-term the operating capacity of the Series AC
Assets or operating income of the Series AC from the operating capacity of the
Series AC Assets or operating income of the Series AC existing immediately prior
to such addition, improvement, replacement, acquisition or construction.

The term “Series AC Expansion Capital Expenditures” shall not include Series AC
Maintenance Capital Expenditures. For purposes of this definition, the term
“short-term” generally refers to a period not exceeding 12 months.

“Series AC Expenses” means, for any period prior to the expiration of the
Surcharge Term, the aggregate Series AC General and Administrative Expenses,
Series AC Non-Mandatory Health and Safety Expenses, Series AC Operating
Expenses, Series AC Pipeline Integrity Operating Expenses, Series AC Power
Expenses and Series AC Property Taxes for such period. Following the expiration
of the Surcharge Term, the Series AC Expenses will be determined pursuant to
Section 10.2.

“Series AC General and Administrative Expenses” means, for any period, the cash
general and administrative expenses attributable to the Series AC Assets
determined by applying the allocation methodology used to determine the estimate
of such expenses pursuant to Section 3(f)(i) of the Tariff Term Sheet to the
actual general and administrative expenses of the Partnership for such period.

“Series AC General Partner” means any General Partner of the Series AC.

“Series AC Liabilities” means the Liabilities identified as Series AC
Liabilities on the Series AC Records from time to time in accordance with this
Agreement.

“Series AC Limited Partner” means any Limited Partner of the Series AC.

“Series AC Maintenance Capital Expenditures” means cash expenditures by the
Series AC (including expenditures for the addition or improvement to or
replacement of the capital assets of the Series AC or for the acquisition of
existing, or the construction or development of, new capital assets) if such
expenditures are made to maintain, including for a period longer than the
short-term, the operating capacity of the Series AC Assets or operating income
of the Series AC. The term “Series AC Maintenance Capital Expenditures” shall
not include Series AC Expansion Capital Expenditures. For purposes of this
definition, the term “short-term” generally refers to a period not exceeding 12
months.

 

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“Series AC Non-Mandatory Health and Safety Expenses” means, for any period, the
non-mandatory health and safety cash expenses related to the Series AC Assets
for such period.

“Series AC Operating Expenses” means, for any period, the cash operating
expenses (excluding any cash expenses related to property taxes, power, pipeline
integrity operating expenditures and non-mandatory health and safety
expenditures) attributable to the Series AC Assets determined by applying the
allocation methodology used to determine the estimate of such expenses pursuant
to Section 3(f)(i) of the Tariff Term Sheet to the actual cash operating
expenses (excluding any cash expenses related to property taxes, power, pipeline
integrity operating expenditures and non-mandatory health and safety
expenditures) of the Partnership for such period without regard to the estimated
expenses included in the 154-B Model for such period.

“Series AC Partners” means the Series AC General Partners and the Series AC
Limited Partners.

“Series AC Pipeline Integrity Operating Expenses” means, for any period, the
cash pipeline integrity operating expenses related to the Series AC Assets for
such period without regard to the allocation of such expenses pursuant to
Section 3(f)(iii)(1) of the Tariff Term Sheet.

“Series AC Power Expenses” means, for any period, the cash expenses for power
attributable to the Series AC Assets pursuant to Section 3(f)(ii) of the Tariff
Term Sheet for such period.

“Series AC Property Taxes” means, for any period, the cash property tax payments
attributable to the Series AC Assets determined by applying the allocation
methodology used to determine the estimate of such payments pursuant to
Section 3(f)(i) of the Tariff Term Sheet to the actual cash property tax
payments of the Partnership for such period, without regard to the risk sharing
provisions set forth in the second sentence of Section 3(f)(i)(4) of the Tariff
Term Sheet.

“Series AC Records” means the records maintained for the Series AC in accordance
with Section 3.1(b).

“Series AC Reserves” means any cash reserves established by the Managing General
Partner of the Series AC with respect to the Series AC to provide for the proper
conduct of the business of the Series AC, including reserves for future capital
expenditures and anticipated credit needs of the Series AC, or otherwise comply
with applicable law or any agreement or other obligation of the Series AC or to
which any Series AC Assets are subject.

“Series AC Revenue Entitlement” means, prior to the expiration of the Surcharge
Term, the Revenue Requirement (excluding any reduction attributable to the
“Revenue Credit” provided for in Section 13 of the Tariff Term Sheet). The
Series AC Revenue Entitlement will be calculated in accordance with the 154-B
Model on file at such time. If the Partnership does not file a 154-B Model
during any year prior to the expiration of the Surcharge Term, due to a

 

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change in the FERC’s regulatory requirements or otherwise, then the Series AC
Revenue Entitlement shall be estimated in accordance with a model prepared as if
a 154-B Model was required to be filed. Following the expiration of the
Surcharge Term, the Series AC Revenue Entitlement will be determined pursuant to
Section 10.2.

“Series Capital Account” means the capital account maintained for a Partner with
respect to a Series pursuant to Section 5.8.

“Series Indemnified Damages” has the meaning assigned to such term in
Section 7.8.

“Series LH” has the meaning assigned to such term in Section 3.1(a).

“Series LH Assets” means the assets identified as Series LH Assets in
Section 3.3(a).

“Series LH Distribution” has the meaning assigned to such term in
Section 6.3(a).

“Series LH General Partner” means any General Partner of the Series LH.

“Series LH Liabilities” means the Liabilities identified as Series LH
Liabilities on the Series LH Records from time to time in accordance with this
Agreement.

“Series LH Limited Partner” means any Limited Partner of the Series LH.

“Series LH Partners” means the Series LH General Partners and the Series LH
Limited Partners.

“Series LH Records” means the records maintained for the Series LH in accordance
with Section 3.1(b).

“Shared Assets” has the meaning assigned to such term in Exhibit C.

“Short-Term Debt Financing” means any borrowings incurred under Facility B1 and
Facility C1.

“Springing Guarantee” has the meaning assigned to such term in Section 7.3(g).

“Subsidiary” means, with respect to any Person, (a) a corporation of which more
than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the directors or
other governing body of such Person.

 

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“Surcharge Term” means the primary term of the Alberta Clipper Surcharge and any
extension thereof in accordance with the FERC Settlement Offer.

“Tag-Along Notice” has the meaning assigned to such term in Section 4.5(a).

“Tag-Along Right” has the meaning assigned to such term in Section 4.5(a).

“Tag-Along Transferee” has the meaning assigned to such term in Section 4.5(a).

“Tag Offerees” has the meaning assigned to such term in Section 4.5(a).

“Tag Pro Rata Share” means with respect to any Partner that holds Series AC
Partnership Interests, a fraction (expressed as a percentage), the numerator of
which equals such Partner’s Series AC Percentage Interest and the denominator of
which equals (i) in a situation where the Tag Pro Rata Share is being calculated
with respect to all Partners that hold Series AC Partnership Interests, 100% and
(ii) in a situation where the Tag Pro Rata Share is being calculated with
respect to a particular group of Partners that hold less than 100% of the
Series AC Partnership Interests, the total Series AC Percentage Interests held
by all the Partners of such group.

“Tariff Term Sheet” means the Alberta Clipper U.S. Term Sheet dated June 28,
2007 and approved by the FERC by the letter dated August 28, 2008 (124 FERC ¶
61,200 (2008)), as the same may be amended from time to time.

“Third Party” means, with respect to any Partner, any Person that is not a
Permitted Transferee with respect to such Partner.

“Third Party Asset Offer” has the meaning assigned to such term in
Section 4.6(a).

“Third Party Offer” has the meaning assigned to such term in Section 4.4(a).

“Transfer” means, with respect to any Partnership Interest, a transaction (i) by
which a General Partner assigns its General Partner Interest to another Person,
and includes a sale, assignment, gift, pledge, encumbrance, hypothecation,
mortgage, exchange or any other disposition by law or merger or otherwise or
(ii) by which the holder of a Limited Partner Interest assigns such Limited
Partner Interest to another Person, and includes a sale, assignment, gift,
exchange or any other disposition by law or merger or otherwise, in each case,
including a pledge, encumbrance, hypothecation or mortgage of such Partnership
Interest.

“Transferor” has the meaning assigned to such term in Section 4.5(a).

“Wisconsin GP” has the meaning assigned to such term in the preamble to this
Agreement.

 

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Section 1.2 Construction.

Unless the context requires otherwise: (a) any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa; (b) references to Articles and Sections refer to Articles and Sections of
this Agreement; (c) the terms “include,” “includes,” “including” or words of
like import shall be deemed to be followed by the words “without limitation”;
and (d) the terms “hereof,” “herein” or “hereunder” refer to this Agreement as a
whole and not to any particular provision of this Agreement. The headings
contained in this Agreement are for reference purposes only, and shall not
affect in any way the meaning or interpretation of this Agreement.

ARTICLE II

ORGANIZATION

Section 2.1 Continuation.

Lakehead GP, Wisconsin GP and Enbridge Partners hereby continue the Partnership
as a limited partnership under the Delaware Act and, together with EECI Sub and
EECI, enter into this Agreement, which amends and restates the Prior Agreement
in its entirety. This Agreement shall be effective as of the date set forth in
the introductory paragraph of this Agreement. Except as modified in this
Agreement, the rights, duties (including fiduciary duties), liabilities and
obligations of the Partners and the administration, dissolution and termination
of the Partnership or any Series shall be governed by the Delaware Act.

Section 2.2 Name.

The name of the Partnership shall continue to be “Enbridge Energy, Limited
Partnership.” Subject to applicable law, the Partnership’s business may be
conducted under any other name or names as determined by the Managing General
Partner of the Partnership generally, including the name of such Managing
General Partner. Each Series’ business shall be conducted under the name of the
Partnership on behalf of such Series, the name of such Series or, subject to
applicable law, any other name or names as determined by the Managing General
Partner of such Series, including the name of such Managing General Partner. The
words “Limited Partnership,” “LP” or similar words or letters shall be included
in the Partnership’s or any Series’ name where necessary for the purpose of
complying with the laws of any jurisdiction that so requires. Without the
consent of any Partner being required, the Managing General Partner of the
Partnership generally may amend this Agreement and the Certificate of Limited
Partnership to change the name of the Partnership at any time and from time to
time and shall promptly notify the Partners of such change.

Section 2.3 Principal Office; Registered Office.

(a) The principal office of the Partnership and each Series shall be at 1100
Louisiana, Suite 3300, Houston, Texas 77002 or such other place as the Managing
General Partner of the Partnership generally may from time to time designate.
The Partnership and each Series may maintain offices at such other places as the
Managing General Partner of the Partnership generally or such Series, as
applicable, deems advisable.

 

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(b) The address of the Partnership’s registered office in the State of Delaware
shall be 1209 Orange Street, Wilmington, Delaware 19801, and the Partnership’s
registered agent for service of process on the Partnership in the State of
Delaware shall be The Corporation Trust Company. Without the consent of any
Partner being required, the Managing General Partner of the Partnership
generally may amend this Agreement and the Certificate of Limited Partnership to
change the address of the Partnership’s registered office or the Partnership’s
registered agent for service of process at any time and from time to time and
shall promptly notify the Partners of such change.

Section 2.4 Purpose and Business.

The purpose and nature of the business to be conducted by the Partnership and
each Series shall be to engage in any lawful activity for which limited
partnerships may be organized under the Delaware Act.

Section 2.5 Powers.

The Partnership and each Series shall be empowered to do any and all acts and
things necessary or appropriate for the furtherance and accomplishment of the
purposes and business described in Section 2.4 and for the protection and
benefit of the Partnership or any Series.

Section 2.6 Term.

The term of the Partnership shall continue in existence until the dissolution of
the Partnership in accordance with the provisions of Article XI. The existence
of the Partnership as a separate legal entity shall continue until the
cancellation of the Certificate of Limited Partnership as provided in the
Delaware Act. Each Series shall have a perpetual existence until the earlier of
the dissolution of the Partnership or the termination of such Series in
accordance with the provisions of Article XI.

Section 2.7 Title to Partnership Assets.

Subject to applicable law, record title to any or all of the assets of any
Series may be held in the name of the Partnership, such Series, the Managing
General Partner of such Series or one or more nominees, as the Managing General
Partner of such Series may determine. Each Managing General Partner hereby
declares and warrants that the assets of any Series for which record title is
held in the name of such Managing General Partner or one or more nominees shall
be held in trust by such Managing General Partner or such nominee for the use
and benefit of the applicable Series in accordance with the provisions of this
Agreement.

ARTICLE III

ESTABLISHMENT AND DESIGNATION OF SERIES

Section 3.1 Establishment and Designation of Series.

(a) The Partners hereby establish two series of partnership interests in the
Partnership, the “Series AC” and the “Series LH,” each of which shall constitute
a separate series of partnership interests in accordance with Section 17-218 of
the Delaware Act, having separate rights, powers, duties and obligations as set
forth herein, with each such Series comprised of both General Partner Interests
and Limited Partner Interests, as set forth in Article V.

 

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(b) Each Series shall be separate and distinct from each other Series, and
separate and distinct records shall be maintained for each Series. The records
maintained for each Series shall account for the assets and Liabilities
associated with such Series separately from the assets and Liabilities
associated with any other Series. Records maintained for a Series that
reasonably identify its assets, including by specific listing, category, type,
quantity, computational or allocational formula or procedure (including a
percentage or share of any asset or assets) or by any other method where the
identity of such assets is objectively determinable, will be deemed to account
for the assets associated with such Series separately from the assets associated
with any other Series. Except for the Intercompany Obligations and the Springing
Guarantees or as may be expressly agreed to by a Series or the Partnership
generally, no Liability of a Series shall be a Liability of any other Series or
the Partnership generally. To the fullest extent permitted by applicable law,
except for the Intercompany Obligations and the Springing Guarantees or as may
be expressly agreed to by a Series or the Partnership generally, all of the
Liabilities incurred, contracted for or otherwise now or hereafter existing with
respect to a particular Series shall be enforceable against the assets of such
Series only or a General Partner associated with such Series and not against the
assets of any other Series or of the Partnership generally or any General
Partner not associated with such Series, and, except for the Intercompany
Obligations and the Springing Guarantees or as may be expressly agreed to by a
Series or the Partnership generally, none of the Liabilities incurred,
contracted for or otherwise existing with respect to any other Series shall be
enforceable against the assets of such Series. The Certificate of Limited
Partnership shall contain a notice of the limitation of liabilities of the
Series in conformity with Section 17-218 of the Delaware Act.

(c) Each Series shall have the power and capacity to, in its own name, contract,
hold title to assets (including real, personal and intangible property), grant
liens and security interests and sue and be sued.

Section 3.2 Series AC.

(a) The following shall constitute the Series AC Assets:

(i) the Exclusive Series AC Assets;

(ii) all rights and interests of the Series AC set forth in Exhibit C with
respect to the Shared Assets; and

(iii) all other assets identified as Series AC Assets on the Series AC Records.

(b) The following shall constitute the Series AC Liabilities (without
duplication):

(i) all Liabilities associated with or arising from the ownership or operation
of the Exclusive Series AC Assets, including Facility B1 and Facility C1;

(ii) the Series AC’s Proportionate Share of Shared Liabilities;

 

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(iii) the Intercompany Preliminary Construction Cost Payable;

(iv) the Intercompany Obligations;

(v) the Springing Guarantees; and

(vi) all other Liabilities identified as Series AC Liabilities on the Series AC
Records.

(c) The Partners hereby acknowledge and agree that all Series AC Assets are
available to satisfy the claims of all creditors in respect of any Series AC
Liability, in each case, without priority of claims among such creditors, except
as may be expressly set forth in the documents evidencing the obligations owed
to any such creditor.

(d) The Partners hereby acknowledge and agree that all Series AC Assets will be
available to satisfy the claims of holders of notes pursuant to the Note
Agreement, dated December 12, 1991, related to the Partnership’s 9.15% First
Mortgage Notes due December 15, 2011 (the “Note Agreement”).

Section 3.3 Series LH.

(a) The following shall constitute the Series LH Assets:

(i) all assets and rights of the Partnership that are not associated with any
other Series;

(ii) all rights and interests of the Series LH set forth in Exhibit C with
respect to the Shared Assets; and

(iii) all other assets identified as Series LH Assets on the Series LH Records.

(b) The following shall constitute the Series LH Liabilities (without
duplication):

(i) all Liabilities of the Partnership that are not associated with any other
Series;

(ii) the Series LH’s Proportionate Share of Shared Liabilities;

(iii) the Intercompany Obligations;

(iv) the Springing Guarantees; and

(v) all other Liabilities identified as Series LH Liabilities on the Series LH
Records.

(c) The Partners hereby acknowledge and agree that all Series LH Assets are
available to satisfy the claims of all creditors in respect of any Series LH
Liability, in each case, without priority of claims among such creditors, except
as may be expressly set forth in the documents evidencing the obligations owed
to any such creditor.

 

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(d) The Partners hereby acknowledge and agree that all Series LH Assets will be
available to satisfy the claims of holders of notes pursuant to the Note
Agreement.

Section 3.4 Allocation Among Series.

(a) The Partnership may acquire assets only to the extent that they are acquired
by the Partnership with respect to one or more particular Series and not with
respect to the Partnership generally. To the extent commercially feasible, all
Liabilities (other than any Intercompany Obligations or Springing Guarantees)
contractually created or incurred or amended by any Series following the Closing
Date shall be made expressly non-recourse to (i) the Partnership generally and
any other Series and (ii) the Partners of the Partnership generally or any
Series (in their respective capacities as such).

(b) The Managing General Partner of the Partnership generally shall establish
procedures designed to ensure that, to the extent commercially feasible, all
contracts of a Series (other than contracts relating to any Intercompany
Obligations or Springing Guarantees) entered into or amended after the Closing
Date, (i) expressly acknowledge the separateness of the Partnership generally
and each Series, (ii) notify the contract counterparty of the identity of the
obligor or obligors thereunder (and if more than one obligor, the obligation of
each obligor, which obligation may be joint and several or may be several
depending on the facts and circumstances) and (iii) are properly executed and
delivered by a duly authorized Person on behalf of the Partnership generally
and/or such Series, as applicable.

(c) The Partners (in their respective capacities as such) on the one hand, and
Enbridge Partners (on behalf of itself and each Material Subsidiary of Enbridge
Partners) on the other hand, acknowledge and agree that, for so long as any
Existing Indebtedness (or refinancing thereof) requires, all Intercompany
Obligations currently or hereafter existing are expressly recourse to the
Partnership generally and to each Series, and expressly non-recourse to the
Partners of the Partnership generally and to the Partners of each Series (in the
case of Partners, in their respective capacities as such). The Managing General
Partner of the Partnership generally shall designate each Intercompany
Obligation as the primary obligation of the applicable Series (the “Primary
Obligor”) with respect to which the Intercompany Obligation was incurred. The
Series AC will be the Primary Obligor with respect to the Intercompany
Preliminary Construction Cost Payable and Facility B1 and Facility C1 and any
refinancing thereof, including the Long-Term Debt Financing, and the Series LH
will be the Primary Obligor with respect to all other Intercompany Obligations
existing on the Closing Date. As among each Series of the Partnership and the
Partnership generally, the Primary Obligor with respect to an Intercompany
Obligation shall have the primary responsibility for administering and
discharging such obligation and shall have primary liability to the creditors or
other obligees associated with such obligation.

(d) The Managing General Partner of the Partnership generally shall determine
the portion of the Liabilities associated with or arising from the use,
ownership or operation of the Shared Assets and that arise from events or
circumstances occurring after the Closing Date to be designated as Series AC
Liabilities or Series LH Liabilities (with respect to each Series, its
“Proportionate Share of Shared Liabilities”) based on the following criteria
(and the Managing

 

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General Partners of the Series AC and the Series LH shall maintain the Series AC
Records and the Series LH Records, respectively, in a manner consistent with
such determination):

(i) the relative use by the Series AC and the Series LH of the Shared Asset to
which the Liability relates;

(ii) the relative benefit to the Series AC and the Series LH of the Shared Asset
to which the Liability relates; and

(iii) if applicable, the relative fault of the Series AC and the Series LH with
respect to the activities or events giving rise to the Liability related to such
Shared Asset.

Section 3.5 No Transfer or Sale.

The Partners acknowledge and agree that neither the establishment of the Series
AC and the Series LH, nor the designation of their respective assets as set
forth in this Article III shall constitute a sale, transfer or other disposition
of any asset of the Partnership.

ARTICLE IV

TRANSFER OF PARTNERSHIP INTERESTS;

RIGHT OF FIRST REFUSAL; TAG-ALONG RIGHTS

Section 4.1 Transfers Generally.

(a) Transfers of Partnership Interests may only be made in strict compliance
with all applicable terms of this Agreement, and any purported Transfer of
Partnership Interests that does not so comply with all applicable provisions of
this Agreement shall, to the fullest extent permitted by law, be null and void
and of no force or effect, and no Managing General Partner acting on behalf of
the Partnership generally or any Series shall recognize or be bound by any such
purported Transfer or effect any such purported Transfer on the transfer books
of the Partnership generally or any Series. The Partners agree that the
restrictions contained in this Article IV are fair and reasonable and in the
best interests of the Partnership, each Series and the Partners.

(b) Notwithstanding anything herein to the contrary, no Transfer by a Partner of
all or any part of its Partnership Interest to another Person shall be permitted
unless (i) the transferee agrees in writing to assume the rights and duties of
such Partner under this Agreement and to be bound by the provisions of this
Agreement and (ii) such transferee shall be admitted to the Partnership as a
Partner with respect to the Partnership generally or a Series, as applicable,
pursuant to Section 4.1(c) immediately prior to the transferor ceasing to be a
Partner with respect to the transferred portion of the Partnership Interest, and
the business of the Partnership and each Series shall continue without
dissolution or termination, respectively.

(c) To effect the admission of any Partner to the Partnership generally or any
Series, the Managing General Partner of the Partnership generally and each
applicable Series shall take all steps necessary or appropriate under the
Delaware Act to amend the records of the Partnership and the applicable Series
to reflect such admission and, if necessary, notwithstanding Sections 12.1 or
12.2, to prepare and adopt as soon as practicable an amendment to this

 

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Agreement and, if required by law, the Managing General Partner of the
Partnership generally shall prepare and file an amendment to the Certificate of
Limited Partnership. The transferee shall be admitted to the Partnership with
respect to the Partnership generally or the applicable Series, as the case may
be, as a general partner or limited partner, as applicable, upon satisfaction of
the requirements of Section 4.1(b) and this Section 4.1(c), without the consent
of any other Partner being required.

(d) No Partner shall have any right to withdraw from the Partnership; provided,
however, that when a transferee of a Partner’s Partnership Interest is admitted
to the Partnership in accordance with Section 4.1(c) with respect to the
Partnership Interest so transferred, the transferring Partner shall cease to be
a Partner with respect to the Partnership Interest so transferred.

Section 4.2 General Restrictions on Transfers of Partnership Interests.

(a) Notwithstanding the other provisions of this Article IV, no Transfer of any
Partnership Interests shall be made if such Transfer would (i) violate the then
applicable federal or state securities laws or rules and regulations of the
Commission, any state securities commission or any other governmental authority
with jurisdiction over such Transfer, (ii) terminate the existence or
qualification of the Partnership or any Series under the laws of the State of
Delaware or (iii) cause the Partnership or any Series to be treated as an
association taxable as a corporation or otherwise to be taxed as an entity for
U.S. federal income tax purposes (to the extent not already so treated or
taxed).

(b) The Managing General Partner of the Partnership generally may impose
restrictions on the Transfer of Partnership Interests if it receives an opinion
of counsel that such restrictions are necessary to avoid a significant risk of
the Partnership or any Series becoming taxable as a corporation or otherwise
becoming taxable as an entity for U.S. federal income tax purposes.
Notwithstanding Sections 12.1 and 12.2, the Managing General Partner of the
Partnership generally may impose such restrictions by amending this Agreement.

(c) For so long as the Partnership is a partnership for U.S. federal income tax
purposes, in no event may any Transfer of any Partnership Interests by any
Partner be made if such Transfer is effectuated through an “established
securities market” or a “secondary market (or the substantial equivalent
thereof)” within the meaning of Section 7704 of the Code or if such Transfer
would otherwise result in the Partnership or any Series being treated as a
“publicly traded partnership,” as such term is defined in Section 7704(b) of the
Code and the regulations promulgated thereunder.

Section 4.3 Additional Restrictions on Transfers of Partnership Interests.

(a) Series AC Partnership Interests. No Transfer of a Series AC Partnership
Interest may be made unless (i) such Transfer complies with the provisions of
Section 4.1 and Section 4.2 and (ii) unless such Transfer is to a Permitted
Transferee of the transferring Partner, such Transfer is made in accordance with
Sections 4.4 and 4.5.

(b) Series LH Partnership Interests. No Transfer of a Series LH Partnership
Interest may be made unless (i) such Transfer complies with the provisions of
Section 4.1 and Section 4.2 and (ii) unless such Transfer is to a Permitted
Transferee of the transferring Partner, such Transfer is made in accordance with
Section 4.4.

 

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Section 4.4 Right of First Refusal.

(a) If any Partner receives a bona fide written offer from a Third Party (a
“Third Party Offer”) for the Transfer of all or a part of (i) in the case of
EECI, EECI Sub and their respective Permitted Transferees, such Partner’s
Partnership Interests in any Series or (ii) in the case of Enbridge Partners,
Lakehead GP, Wisconsin GP and their respective Permitted Transferees, such
Partner’s Partnership Interests in the Partnership generally or any Series, and
such Partner (the “Offering Partner”) desires to accept and is otherwise
permitted to effect such proposed Transfer pursuant to this Article IV, such
Offering Partner shall deliver written notice of such Third Party Offer (the
“ROFR Notice”) to the Managing General Partner of the Partnership generally as
soon as reasonably practicable, but in no event less than 35 days prior to the
date of the proposed Transfer. The date that the ROFR Notice is received by the
Managing General Partner of the Partnership generally shall constitute the “ROFR
Notice Date.” Within five Business Days following the ROFR Notice Date, the
Managing General Partner of the Partnership generally shall send a copy of the
ROFR Notice along with a letter indicating the ROFR Notice Date to all other
Partners holding Series AC Partnership Interests (each such Partner, a “ROFR
Holder”). The ROFR Notice shall set forth the identity of the Third Party
(including, (x) if such information is not publicly available, information about
the identity of the Third Party, (y) the identity of Affiliates of the Third
Party and (z) if the Third Party is making the Third Party Offer as a nominee of
another Person, the identity of such other Person and its Affiliates), the
amount and the Partnership Interests to be sold (the “Offered Interests”), the
proposed purchase price for the Offered Interests (the “ROFR Offer Price”), all
details of the payment terms and all other material terms and conditions,
including the nature of the representations and warranties to be made and the
indemnities to be given, in connection with the proposed Transfer. The ROFR
Offer Price shall be expressed in U.S. dollars, whether or not the form of
consideration in the Third Party Offer is wholly or partially cash or cash
equivalents.

(b) Each ROFR Holder shall have the right, but not the obligation, to purchase
up to that amount of the Offered Interests equal to the product of (i) the
amount of the Offered Interests and (ii) a fraction (the “ROFR Proportionate
Share”), the numerator of which shall be the Series AC Percentage Interest of
such ROFR Holder and the denominator of which shall be the sum of all of the
Series AC Percentage Interests held by all ROFR Holders. Within 25 days after
the ROFR Notice Date, each such ROFR Holder may deliver a written notice to the
Offering Partner, the Managing General Partner of the Partnership generally and
each other ROFR Holder of its election to purchase such Offered Interests. Any
ROFR Holder whose written notice has not been received by the Managing General
Partner of the Partnership generally within such 25-day period shall be deemed
to have elected not to exercise its right of first refusal in connection with
such Transfer. To the extent any such ROFR Holder does not elect to purchase its
full ROFR Proportionate Share of such Offered Interests, each ROFR Holder that
has elected to purchase its full ROFR Proportionate Share shall be entitled, by
delivering written notice to the Offering Partner and the Managing General
Partner of the Partnership generally within five Business Days following the end
of such 25-day period (such fifth Business Day, the “ROFR Expiration Date”), to
purchase up to all of the remaining Offered Interests. If there is an
oversubscription, the oversubscribed amount shall be allocated among the

 

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ROFR Holders fully exercising their rights to purchase such remaining Offered
Interests pro rata based on the Series AC Percentage Interest owned by each
fully-electing ROFR Holder. The delivery of a notice of election under this
Section 4.4(b) shall constitute an irrevocable commitment to purchase such
Offered Interests. If the ROFR Holders shall have elected to purchase all but
not less than all of the Offered Interests, the Managing General Partner of the
Partnership generally shall thereafter set a reasonable place and time for the
closing of the purchase and sale of the Offered Interests, which shall be not
less than 10 days nor more than 60 days after the ROFR Expiration Date (subject
to extension to the extent necessary to pursue any required regulatory or
Partner approvals, including to allow for the expiration or termination of all
waiting periods under the HSR Act) unless otherwise agreed by all of the parties
to such transaction.

(c) The purchase price and terms and conditions for the purchase of the Offered
Interests pursuant to this Section 4.4 shall be the purchase price and terms and
conditions set forth in the applicable Third Party Offer (or the cash equivalent
thereof); provided that the purchase price shall be the ROFR Offer Price and
shall be payable in immediately available U.S. dollars; and provided further
that the Offering Partner shall at a minimum make customary representations and
warranties concerning (i) such Offering Partner’s valid title to and ownership
of the Offered Interests, free and clear of all liens, claims and encumbrances
(excluding those arising hereunder and under applicable securities laws),
(ii) such Offering Partner’s authority, power and right to enter into and
consummate the sale of the Offered Interests, (iii) the absence of any
violation, default or acceleration of any agreement or obligation to which such
Offering Partner is subject or by which its assets are bound as a result of the
sale of the Offered Interests and (iv) the absence of, or compliance with, any
governmental or third party consents, approvals, filings or notifications
required to be obtained or made by such Offering Partner in connection with the
sale of the Offered Interests. The Offering Partner and participating ROFR
Holders shall use commercially reasonable efforts to close the purchase of the
Offered Interests as soon as reasonably practicable following the ROFR
Expiration Date and shall each execute and deliver such instruments and
documents and take such actions, including obtaining all applicable approvals
and consents and making all applicable notifications and filings, as the other
parties may reasonably request in order more effectively to implement the
purchase and sale of the Offered Interests hereunder.

(d) Notwithstanding the foregoing, if (i) the ROFR Holders (A) shall have
elected to purchase less than all of the Offered Interests or (B) shall not have
elected to purchase any of the Offered Interests on or prior to the ROFR
Expiration Date, and the Offering Partner has fully complied with the provisions
of this Section 4.4, then the Offering Partner may sell all, but not less than
all, of the Offered Interests within 90 days after the ROFR Expiration Date
(subject to extension for a reasonable amount of time to the extent necessary to
obtain any required regulatory or Partner approvals, including to allow for the
expiration of all waiting periods under the HSR Act) or (ii) if the ROFR Holders
fail to consummate the closing of the purchase and sale of the Offered Interests
within the time period provided in the last sentence of Section 4.4(b) (such
period, the “ROFR Closing Period”) and the Offering Partner has fully complied
with the provisions of this Section 4.4, then the Offering Partner may sell all,
but not less than all, of the Offered Interests within 90 days after the
expiration of the ROFR Closing Period to the Third Party, in each case subject
to the provisions of Section 4.2. Any such sale shall not be at less than the
purchase price or upon terms and conditions more favorable in any material
respect,

 

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individually or in the aggregate, to the purchaser than those specified in the
Third Party Offer. If the Offered Interests are not so transferred within the
applicable time periods specified in this Section 4.4(d), the Offering Partner
may not sell any of the Offered Interests without again complying in full with
the provisions of this Article IV.

(e) Each of EECI and Enbridge Partners shall be entitled to assign any rights it
has to purchase Offered Interests pursuant to this Section 4.4 to any of its
Permitted Transferees.

(f) This Section 4.4 shall not apply to any Transfer or proposed Transfer of
Partnership Interests to a Permitted Transferee.

Section 4.5 Tag-Along Rights.

(a) If a Series AC Partner (the “Transferor”) proposes to Transfer all or a part
of its Series AC Partnership Interests to a Third Party (the “Tag-Along
Transferee”), then such Transferor shall send written notice of such proposed
Transfer (the “Tag-Along Notice”) to the other Series AC Partners (the “Tag
Offerees”) at least 30 days prior to effecting such Transfer. Such Tag-Along
Notice may be combined with a ROFR Notice and may be conditioned upon the ROFR
Holders not exercising the right of first refusal contained in Section 4.4. The
Tag-Along Notice shall set forth the identity of the Tag-Along Transferee
(including, if such information is not publicly available, information about the
identity of the Tag-Along Transferee and its Affiliates), the amount and the
Series AC Partnership Interests to be Transferred, the proposed purchase price
expressed in U.S. dollars (whether or not the form of consideration is wholly or
partially cash or cash equivalents), all details of the payment terms, the time
and place for the closing and all other material terms and conditions, including
the nature of the representations and warranties to be made and the indemnities
to be given, in connection with the proposed Transfer. Each of the Tag Offerees
shall then have the irrevocable right (a “Tag-Along Right”), exercisable by
delivery of an irrevocable notice to the Transferor at any time within 20 days
after receipt of the Tag-Along Notice, to participate in such Transfer by
selling to the Tag-Along Transferee a pro rata portion of such Tag Offeree’s
Series AC Partnership Interests, based on the respective Tag Pro Rata Share of
the Transferor and the other Tag Offerees that exercise their Tag-Along Right,
on the same terms (including with respect to representations, warranties and
indemnification) as the Transferor; provided, however, that (i) any
representations and warranties relating specifically to any such Tag Offeree
shall only be made by such Tag Offeree; (ii) any indemnification provided by the
Transferor and any such Tag Offeree (other than with respect to the
representations referenced in the foregoing subsection (i)) shall be based on
the Series AC Percentage Interest being sold by each party in the proposed sale,
either on a several, not joint, basis or solely with recourse to an escrow (such
escrow not to exceed 25% of the proceeds received by the Tag Offerees that
exercise their Tag-Along Right without the consent of such Tag Offerees)
established for the benefit of the proposed purchaser (each party’s
contributions to such escrow to be on a pro rata basis in accordance with the
proceeds received from such sale), it being understood and agreed that any such
indemnification obligation of any such Tag Offeree shall in no event exceed the
net proceeds to such Tag Offeree from such proposed Transfer; and (iii) the form
of consideration to be received by the Transferor in connection with the
proposed sale shall be the same as that received by such Tag Offeree.

 

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(b) If any Tag Offeree has exercised its Tag-Along Rights and the Tag-Along
Transferee is unwilling to purchase all of the Series AC Partnership Interests
proposed to be Transferred by the Transferor and each exercising Tag Offeree,
then the Transferor and the exercising Tag Offerees shall reduce, on a pro rata
basis, based on their respective Tag Pro Rata Share, the amount of such
Series AC Partnership Interests that each otherwise would have sold so as to
permit the Transferor and the exercising Tag Offerees to sell the portion of
Series AC Partnership Interests (determined in accordance with such Tag Pro Rata
Share) that the proposed Tag-Along Transferee is willing to purchase.

(c) Each Tag Offeree and the Transferor shall sell to the Tag-Along Transferee
all of the Series AC Partnership Interests proposed to be Transferred by them,
at not less than the purchase price payable in immediately available U.S.
dollars and upon terms and conditions, if any, not more favorable in any
material respect, individually and in the aggregate, to the Tag-Along Transferee
than those in the Tag-Along Notice at the time and place provided for the
closing in the Tag-Along Notice, or at such other time and place as the Tag
Offerees, the Transferor and the Tag-Along Transferees shall agree.

(d) The Transferor shall have the right to require the Managing General Partner
of the Series AC and the Managing General Partner of the Partnership generally
to cooperate fully with potential acquirors of its Series AC Partnership
Interests by taking all customary and other actions reasonably required by the
Transferor or such potential acquirors, including making the records and assets
of each Series and the Partnership generally reasonably available for inspection
by such potential acquirors and making the officers and employees who manage the
business of the Partnership and the Series reasonably available for interviews;
provided that the potential acquirer has entered into a customary
confidentiality agreement with the Partnership and the applicable Series.
Neither the Managing General Partner of any Series nor the Managing General
Partner of the Partnership generally shall be required to disclose to any
potential acquirer (i) any information that such Managing General Partner
reasonably believes to be in the nature of trade secrets or (ii) other
information the disclosure of which such Managing General Partner reasonably
believes (A) could damage the Partnership or any Series or their respective
businesses or (B) that the Partnership or any Series is required by law or by
agreement to keep confidential.

Section 4.6 Transfers of Certain Partnership Assets—ROFR.

(a) If the Partnership or any Series receives a bona fide written offer from a
Third Party (a “Third Party Asset Offer”) for the transfer of any Series asset
or group of related assets with a fair market value in excess of $5.0 million,
and the Managing General Partner of the Series associated with such assets
desires to accept and is otherwise permitted to effect such proposed transfer
pursuant to this Section 4.6, such Managing General Partner shall deliver
written notice of such Third Party Asset Offer (the “ROFR Asset Notice”) to EECI
no less than 30 days prior to the date of the proposed Transfer. The date that
the ROFR Asset Notice is received by EECI shall constitute the “ROFR Asset
Notice Date.” The ROFR Asset Notice shall set forth the identity of the Third
Party (including, if such information is not publicly available, information
about the identity of the Third Party and its Affiliates), a description of the
Series asset or group of related assets to be transferred (the “ROFR Offered
Asset”), the proposed purchase price for the ROFR Offered Asset (the “ROFR Asset
Offer Price”), all details of the

 

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payment terms and all other material terms and conditions, including the nature
of the representations and warranties to be made and the indemnities to be
given, in connection with the proposed transfer. The ROFR Asset Offer Price
shall be expressed in U.S. dollars, whether or not the form of consideration in
the Third Party Asset Offer is wholly or partially cash or cash equivalents.

(b) For so long as EECI or any of its Affiliates is a holder of a Partnership
Interest, EECI shall have the right, but not the obligation, to purchase the
ROFR Offered Asset. Within 25 days after the ROFR Asset Notice Date (such 25th
day, the “ROFR Asset Expiration Date”), EECI may deliver a written notice to the
Managing General Partner of the applicable Series of its election to purchase
such ROFR Offered Asset. The delivery of a notice of election under this
Section 4.6 shall constitute an irrevocable commitment to purchase such ROFR
Offered Asset. Such Managing General Partner shall thereafter set a reasonable
place and time for the closing of the purchase and sale of the ROFR Offered
Asset, which shall be not less than 10 days nor more than 60 days after the ROFR
Asset Expiration Date (subject to extension to the extent necessary to pursue
any required regulatory or Partner approvals, including to allow for the
expiration or termination of all waiting periods under the HSR Act) unless
otherwise agreed by all of the parties to such transaction.

(c) The purchase price and terms and conditions for the purchase of the ROFR
Offered Asset pursuant to this Section 4.6 shall be the purchase price and terms
and conditions set forth in the applicable Third Party Asset Offer; provided
that the purchase price shall be the ROFR Asset Offer Price and shall be payable
in immediately available U.S. dollars; and provided further that the applicable
Series shall at a minimum make customary representations and warranties
concerning (i) the Series’ valid title to and ownership of the ROFR Offered
Asset, free and clear of all liens, claims and encumbrances (excluding those
arising hereunder and under applicable securities laws), (ii) the Series’
authority, power and right to enter into and consummate the sale of the ROFR
Offered Asset, (iii) the absence of any violation, default or acceleration of
any agreement to which the Series is subject or by which its assets are bound as
a result of the agreement to sell and the sale of the ROFR Offered Asset and
(iv) the absence of, or compliance with, any governmental or third party
consents, approvals, filings or notifications required to be obtained or made by
the Series in connection with the sale of the ROFR Offered Asset. The Managing
General Partner of such Series and EECI shall use commercially reasonable
efforts to close the purchase of the ROFR Offered Asset as soon as reasonably
practicable following the giving of the ROFR Asset Notice and shall execute and
deliver such instruments and documents and take such actions, including
obtaining all applicable approvals and consents and making all applicable
notifications and filings, as the other party may reasonably request in order
more effectively to implement the purchase and sale of the ROFR Offered Asset
hereunder.

(d) If (i) EECI shall not have elected to purchase the ROFR Offered Asset on or
prior to the ROFR Asset Expiration Date and the Series has fully complied with
the provisions of this Section 4.6, then the Series may sell the ROFR Offered
Asset within 90 days after the ROFR Asset Expiration Date (subject to extension
for a reasonable amount of time to the extent necessary to obtain any required
regulatory or Partner approvals, including to allow for the expiration of all
waiting periods under the HSR Act) or (ii) EECI fails to consummate the closing
of the purchase and sale of the ROFR Offered Asset within the time period
provided in the last

 

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sentence of Section 4.6(b) (such period, the “ROFR Asset Closing Period”) and
the Series has fully complied with the provisions of this Section 4.6, then EECI
shall not have the right to purchase the ROFR Offered Asset, and the Series may
sell the ROFR Offered Asset within 90 days after the expiration of the ROFR
Asset Closing Period, in each case subject to the provisions of Section 7.3. Any
such sale shall not be at less than the purchase price or upon terms and
conditions more favorable in any material respect, individually or in the
aggregate, to the purchaser than those specified in the Third Party Asset Offer.
If the ROFR Offered Asset is not so transferred within the applicable time
periods specified in this Section 4.6(d), the Series may not sell the ROFR
Offered Asset without again complying in full with the provisions of this
Section 4.6.

(e) EECI shall be entitled to assign any rights it has to purchase a ROFR
Offered Asset pursuant to this Section 4.6 to any of its Permitted Transferees.

(f) This Section 4.6 shall not apply to any transfer or proposed transfer of
assets to a Permitted Transferee.

Section 4.7 Specific Performance.

Each Partner acknowledges that it shall be inadequate or impossible, or both, to
measure in money the damage to the Partnership, any Series or the Partners, if
any of them or any transferee or any legal representative of any party hereto
fails to comply with any of the restrictions or obligations imposed by this
Article IV, that every such restriction and obligation is material, and that in
the event of any such failure, the Partnership, the Series and the Partners
shall not have an adequate remedy at law or in damages. Therefore, each Partner
consents to the issuance of an injunction or the enforcement of other equitable
remedies against such Partner at the suit of an aggrieved party without the
posting of any bond or other security, to compel specific performance of all of
the terms of this Article IV and to prevent any transfer of Partnership
Interests or ROFR Offered Assets in contravention of any terms of this
Article IV, and waives any defenses thereto, including the defenses of:
(i) failure of consideration; (ii) breach of any other provision of this
Agreement and (iii) availability of relief in damages.

ARTICLE V

CONVERSION; CAPITAL CONTRIBUTIONS; PARTNERSHIP INTERESTS;

FUTURE CAPITAL REQUIREMENTS

Section 5.1 Conversion of Prior Partnership Interests.

On the date hereof, upon their execution of this Agreement and without further
action by any Partner, the holders of each Prior General Partner Interest and
Prior Limited Partner Interest shall be admitted as General Partners and Limited
Partners, respectively, of Series LH, and each Prior General Partner Interest
shall automatically convert into a Series LH General Partner Interest and each
Prior Limited Partner Interest shall automatically convert into a Series LH
Limited Partner Interest. Exhibit A sets forth the Series LH Percentage Interest
and type of Series LH Partnership Interest of each Series LH Partner immediately
following such conversion. In addition, Lakehead GP shall continue as a General
Partner of the Partnership generally with a General Partner Interest in the
Partnership generally that shall have no Percentage Interest and no economic
rights with respect to the Partnership generally or otherwise.

 

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Section 5.2 Series LH Capital Contributions.

Any Series LH Limited Partner, with the consent of the Managing General Partner
of the Series LH, may, but shall not be obligated, to make additional Capital
Contributions to the Series LH. Upon any such additional Capital Contribution,
each Series LH General Partner and any other Series LH Limited Partner shall be
obligated to make an additional Capital Contribution to the Series LH in an
amount necessary to maintain its Series LH Percentage Interest.

Section 5.3 Initial Series AC Capital Contributions and Initial Debt Financing.

(a) On the Closing Date, each of the Series AC Partners shall make its
respective Capital Contribution (each, an “Initial Series AC Capital
Contribution”) to the Series AC in immediately available U.S. dollars in the
amounts set forth opposite its name on Exhibit A in return for the Series AC
Percentage Interest and type of Series AC Partnership Interest set forth
opposite its name on Exhibit A, and, upon its execution of this Agreement and
the making of its Initial Series AC Capital Contribution, each such Series AC
Partner shall be admitted as a Partner of the Series AC in the capacity set
forth opposite its name on Exhibit A.

(b) On the Closing Date, the Series AC shall (i) borrow under Facility B1 an
amount equal to 66.67% of 45% of the Preliminary Alberta Clipper Construction
Costs and (ii) borrow under Facility C1 an amount equal to 33.33% of 45% of the
Preliminary Alberta Clipper Construction Costs.

(c) On the Closing Date, the Managing General Partner of Series AC shall apply
the proceeds of the Initial Series AC Capital Contributions and the Initial Debt
Financing to repay the Intercompany Preliminary Construction Cost Payable.

Section 5.4 Additional Series AC Capital Contributions.

(a) Each Series AC Partner hereby agrees to make additional Capital
Contributions to the Series AC (the “Additional Series AC Capital
Contributions”) in proportion to such Series AC Partner’s Series AC Percentage
Interest at such times and in such amounts as the Managing General Partner of
the Series AC shall specify in a notice delivered to the Series AC Partners
pursuant to Section 5.4(b) or Section 5.4(c) (“Series AC Capital Contribution
Notice”); provided that in no event shall any Series AC Partner be required to
make, in the aggregate, Capital Contributions in excess of such Series AC
Partner’s respective Maximum Commitment set forth on Exhibit A. All Additional
Series AC Capital Contributions shall be contributed to the Series AC in
immediately available U.S. dollars on the date specified in the applicable
Series AC Capital Contribution Notice. No Series AC Partner shall be required to
make any Additional Series AC Capital Contribution, or to otherwise contribute
any amount, to the Series AC unless such Additional Series AC Capital
Contribution is reflected on the Series AC Annual Budget for such fiscal year or
is otherwise approved by the Managing General Partner of the Series AC and a
Majority in Interest of Series AC Partnership Interests.

 

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(b) On the 12th day of each month beginning prior to the In-Service Date, the
Managing General Partner of the Series AC shall deliver a Series AC Capital
Contribution Notice to each of the Series AC Partners setting forth (i) the
estimated cash construction costs related to the Alberta Clipper Project for
such month, adjusted for the difference between (A) the actual construction
costs related to the Alberta Clipper Project for the immediately preceding month
and (B) the estimated construction costs set forth in the Series AC Capital
Contribution Notice for the immediately preceding month (the “Monthly Capital
Requirement”), (ii) the amount of the required Additional Series AC Capital
Contribution to be made by such Series AC Partner, which shall be an amount
equal to such Series AC Partner’s Pro Rata portion of 55% of the Monthly Capital
Requirement, (iii) that such Additional Series AC Capital Contribution is due on
the 15th day of such month and (iv) the Person or the account to which such
Additional Series AC Capital Contribution is to be made.

(c) From time to time following the In-Service Date, the Managing General
Partner of the Series AC may deliver to the Series AC Partners a Series AC
Capital Contribution Notice related to amounts that the Managing General Partner
of the Series AC determines are necessary to fund the Series AC’s operations and
establish reasonable reserves in respect of the Series AC’s expenses. Such
notice shall set forth (i) the manner in which, and the expected date on which,
such Additional Series AC Capital Contribution is to be applied, (ii) the amount
of the required Additional Series AC Capital Contribution to be made by such
Series AC Partner, which shall be an amount equal to such Series AC Partner’s
Pro Rata portion of the total amount of such Additional Series AC Capital
Contribution, (iii) the date on which such Additional Series AC Capital
Contribution is due, which shall not be less than 10 Business Days from the date
such notice is delivered and (iv) the Person or the account to which such
Additional Series AC Capital Contribution is to be made.

(d) Each Series AC Partner agrees that payment of its required Additional
Series AC Capital Contributions under this Agreement is an obligation of such
Series AC Partner, that any default by any Series AC Partner would cause injury
to the Series AC and to the other Series AC Partners and that the amount of
damages caused by any such default would be difficult to calculate.

(e) If a Series AC Partner fails to fund all or any portion of its required
Additional Series AC Capital Contribution set forth in a Series AC Capital
Contribution Notice and fails to cure such default within five Business Days
after the due date set forth in such Series AC Capital Contribution Notice (the
“Default Capital Contribution”), the Series AC Partner failing to make such
contribution (the “Defaulting Series AC Partner”) will be in default. Upon the
occurrence of any such default, the Managing General Partner of Series AC shall
promptly notify the Defaulting Series AC Partner and the other Series AC
Partners not in default (each a “Non-Defaulting Series AC Partner”) of the
occurrence of such default. As long as a Default Capital Contribution remains
unpaid or arrangements for the payment thereof have not been agreed to by the
Series AC Partners, any Non-Defaulting Series AC Partner may advance to the
Series AC the entire amount of the Defaulting Series AC Partner’s Capital
Contribution that has not been contributed, with each Non-Defaulting Series AC
Partner electing to participate in such advance making its share of such advance
in proportion to its Series AC Percentage Interest (without taking into account
the Series AC Percentage Interest of the Defaulting Series AC Partner). Each
Non-Defaulting Series AC Partner who makes such an advance on behalf of a
Defaulting Series

 

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AC Partner will have the right to elect the extent to which such advance will
(x) constitute a loan to the Defaulting Series AC Partner and/or (y) be treated
as a Capital Contribution by such Non-Defaulting Series AC Partner and result in
an immediate adjustment of the Series AC Percentage Interests of the Defaulting
Series AC Partner and the Non-Defaulting Series AC Partner making such election
in accordance with Section 5.4(e)(i); provided, however, that if the advancing
Non-Defaulting Series AC Partner does not notify the Managing General Partner of
the Series AC of its election to have all, or any portion of, such advance
treated as a loan to the Defaulting Series AC Partner, in writing, at the time
the advance is made, then such advance shall be deemed a Capital Contribution
and will automatically result in an immediate adjustment of the Series AC
Percentage Interests.

(i) To the extent that one or more Non-Defaulting Series AC Partners do not
elect to have an advance made pursuant to this Section 5.4(e) treated as a loan
to the Defaulting Series AC Partner, or affirmatively elects to have such
advance treated as a Capital Contribution, the Managing General Partner of the
Series AC will automatically adjust the Series AC Percentage Interest of
(A) each such Non-Defaulting Series AC Partner to equal the percentage obtained
by dividing (x) the Series AC Capital Account of each such Non-Defaulting
Series AC Partner (including any Capital Contribution made by such
Non-Defaulting Series AC Partner under this Section 5.4(e) multiplied by three)
by (y) the sum of the Series AC Capital Accounts of all Series AC Partners
(including all Capital Contributions made under this Section 5.4(e) multiplied
by three) and (B) such Defaulting Series AC Partner to equal the amount of
(x) such Defaulting Series AC Partner’s Series AC Percentage Interest
immediately prior to the occurrence of such default less (y) the aggregate
increases to the Series AC Percentage Interests of Non-Defaulting Series AC
Partners pursuant to clause (A). Notwithstanding the foregoing, the Defaulting
Series AC Partner will have the right to re-acquire the interest in question
from any advancing Non-Defaulting Series AC Partner within 30 days following the
date on which such Series AC Percentage Interest adjustment is made by paying
the entire amount advanced by such Non-Defaulting Series AC Partner in return
for such adjustment, plus interest thereon at a rate equal to the lesser of
(A) the maximum, lawful interest rate, compounded monthly, that is
then-currently permitted under applicable law or (B) 12% per annum, whereupon
the Series AC Percentage Interests of each Series AC Partner shall be adjusted
to equal the Percentage Interest such Series AC Partner would have had in the
absence of a default by such Defaulting Series AC Partner.

(ii) To the extent one or more Non-Defaulting Series AC Partners (each, a
“Lending Series AC Partner”) elects to have an advance made pursuant to this
Section 5.4(e) constitute a loan to the Defaulting Series AC Partner, such
advance will have the following results (except to the extent otherwise agreed
by the Lending Series AC Partner and the Defaulting Series AC Partner, each in
their sole discretion):

(A) the sum advanced will constitute a loan from the Lending Series AC Partner
to the Defaulting Series AC Partner and an Additional Series AC Capital
Contribution of that sum to the Series AC by the Defaulting Series AC Partner
pursuant to the applicable provisions of this Agreement;

 

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(B) the principal balance of the loan together with all accrued unpaid interest
thereon and all costs and expenses associated therewith (collectively, the
“Defaulting Series AC Partner Obligation”) will be due and payable in whole no
later than the tenth Business Day after the day written demand requesting
payment of the Defaulting Series AC Partner Obligation is made by the Lending
Series AC Partner to the Defaulting Series AC Partner; provided, however, that
the Defaulting Series AC Partner may prepay the Defaulting Series AC Partner
Obligation in whole or in part at any time prior to the date due;

(C) the amount lent will bear interest at the same rate as Facility B1 until
such facility is repaid and, after Facility B1 has been repaid, at the same rate
as the Enbridge Partners Long-Term Indebtedness from the date on which the
advance is deemed made until the date on which the Defaulting Series AC Partner
Obligation is repaid to the Lending Series AC Partner;

(D) the Lending Series AC Partner will have the right, in addition to the other
rights and remedies granted to it pursuant to this Agreement, to take any action
available to it at law or in equity that the Lending Series AC Partner may deem
appropriate to obtain payment from the Defaulting Series AC Partner of the
Defaulting Series AC Partner Obligation; and

(E) initially, a loan by a Lending Series AC Partner to a Defaulting Series AC
Partner as contemplated by this Section 5.4(e)(ii) will not be considered a
Capital Contribution by such Lending Series AC Partner and will not increase the
Capital Account balance of such Lending Series AC Partner. Notwithstanding the
foregoing, if the principal and interest of any such loan have not been repaid
within one year from the date of the loan, a Lending Series AC Partner, at any
time thereafter by giving written notice to the Managing General Partner of the
Series AC and the Defaulting Series AC Partner, may elect to have an amount
equal to the unpaid principal and interest balance of such loan transferred from
such Defaulting Series AC Partner’s Capital Account to such Lending Series AC
Partner’s Capital Account and increase such Lending Series AC Partner’s Capital
Account with a corresponding decrease in such Defaulting Series AC Partner’s
Capital Account. Upon such transfer, the loan will be treated as a Capital
Contribution and the Series AC Percentage Interest for (A) such Lending Series
AC Partner will be automatically adjusted to equal the percentage obtained by
dividing (x) the Capital Account of such Lending Series AC Partner (including
any Capital Contribution made by such Lending Series AC Partner under this
Section 5.4(e)(ii)(E) on behalf of the Defaulting Series AC Partner multiplied
by three) by (y) the sum of the Series AC Capital Accounts of all Series AC
Partners (including all Capital Contributions made under this
Section 5.4(e)(ii)(E) on behalf of the Defaulting Series AC Partner multiplied
by three) and (B) such Defaulting Series AC Partner will be automatically
adjusted to equal the amount of (x) such Defaulting Series AC Partner’s Series
AC Percentage Interest immediately prior to such election by the Lending Series
AC Partner less (y) the increase to the Series AC Percentage Interest of Lending
Series AC Partner pursuant to clause (A).

(f) Notwithstanding the rights of Non-Defaulting Series AC Partners described in
Section 5.4(e), the Managing General Partner of the Series AC, by a vote of a
Majority in Interest of Series AC Partnership Interests (without taking into
account the Series AC Partnership Interests of the Defaulting Series AC
Partner), will have the right to exercise any rights and remedies available at
law or in equity.

 

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Section 5.5 Additional Debt Financing.

(a) On the 15th day of each month beginning prior to the In-Service Date, the
Series AC shall (i) to the extent funded by EECI to Enbridge Partners under
Facility A1, borrow under Facility B1 an amount equal to 66.67% of 45% of the
Monthly Capital Requirement set forth in the Series AC Capital Contribution
Notice for such month delivered to the Series AC Partners pursuant to
Section 5.4(b) and (ii) borrow under Facility C1 an amount equal to 33.33% of
45% of the Monthly Capital Requirement set forth in the Series AC Capital
Contribution Notice for such month delivered to the Series AC Partners pursuant
to Section 5.4(b). The proceeds of such borrowings shall be used to fund
construction costs related to the Alberta Clipper Project.

(b) On the 15th day of each month beginning prior to the In-Service Date,
Enbridge Partners shall borrow under Facility A1 an amount equal to 66.67% of
45% of the Monthly Capital Requirement set forth in the Series AC Capital
Contribution Notice for such month delivered to the Series AC Partners pursuant
to Section 5.4(b). The proceeds of such borrowings shall be used to fund the
borrowings under Facility B1 pursuant to Section 5.5(a).

(c) Promptly following the In-Service Date, Enbridge Partners shall use its
commercially reasonable efforts to issue senior unsecured Indebtedness in an
amount sufficient to refinance the outstanding borrowings under Facility C1 on
such date in accordance with Section 3(d) of the Tariff Term Sheet (the
“Enbridge Partners Long-Term Indebtedness”). The proceeds of the Enbridge
Partners Long-Term Indebtedness shall be loaned to the Series AC on
substantially the same terms as the Enbridge Partners Long-Term Indebtedness in
order to refinance the outstanding borrowings under Facility C1.

(d) On the date of issuance of the Enbridge Partners Long-Term Indebtedness,
EECI shall loan to Enbridge Partners on substantially the same terms as the
Enbridge Partners Long-Term Indebtedness an amount sufficient to refinance the
outstanding borrowings under Facility B1 on such date. The proceeds of such loan
shall be loaned by Enbridge Partners to the Series AC on substantially the same
terms as the Enbridge Partners Long-Term Indebtedness in order to refinance the
outstanding borrowings under Facility B1.

Section 5.6 Future Alberta Clipper Expansions.

(a) Any Series AC Partner may from time to time propose an expansion of the
capacity of the Alberta Clipper Project (each, an “Alberta Clipper Expansion
Project”) by providing a written proposal setting forth in reasonable detail the
terms of such Alberta Clipper Expansion Project, including a budget and capital
expenditure plan (an “Alberta Clipper Expansion Proposal”), to each Series AC
Partner. Promptly following its receipt of an Alberta Clipper Expansion
Proposal, the Managing General Partner of the Series AC shall use its
commercially reasonable efforts to develop, and negotiate with shippers
regarding, the tolling and other financial terms for such Alberta Clipper
Expansion Project that include objectively determinable incremental revenues and
costs (the “Alberta Clipper Expansion Project Terms”) that are as favorable to
the Alberta Clipper Expansion Project as can reasonably be achieved; provided,
however, that the Managing General Partner of the Series AC shall not be
obligated to seek any Alberta Clipper Expansion Project Terms that could
reasonably be expected to have a

 

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material adverse impact on any Series. The Managing General Partner of the
Series AC shall not agree to any Alberta Clipper Expansion Project Terms that
could reasonably be expected to have a material adverse impact on any Series
without the consent of a Majority in Interest of such Series (excluding for
purposes of any such vote of the Series AC Partners or the Partners of an
Alberta Clipper Expansion Series that is not wholly owned by any Partner and its
Affiliates (i) prior to the occurrence of a Fundamental Change, the Partnership
Interests owned by the Managing General Partner of the Series AC and its
Affiliates and (ii) following the occurrence of a Fundamental Change, the
Partnership Interests owned by EECI and its Affiliates). The Managing General
Partner of the Series AC shall provide written notice of the Alberta Clipper
Expansion Project Terms to each Series AC Partner promptly following the
determination of the Alberta Clipper Expansion Project Terms.

(b) Enbridge Partners shall have the right, but not the obligation, to provide
all or any portion of the debt and equity financing required in connection with
each Alberta Clipper Expansion Project (the “Alberta Clipper Expansion Capital
Requirement”) by providing written notice of its election to participate in the
Alberta Clipper Expansion Project to the Series AC Partners as soon as
reasonably practicable but in any event within 30 days following the receipt of
the Alberta Clipper Expansion Project Terms. If Enbridge Partners does not elect
to fund 100% of the Alberta Clipper Expansion Capital Requirement, EECI shall
have the right, but not the obligation, to fund the portion of the Alberta
Clipper Expansion Capital Requirement that Enbridge Partners has elected not to
fund. If EECI elects to fund such portion, it shall provide written notice to
Enbridge Partners promptly following receipt of Enbridge Partners’ notice of
election to fund a portion of the Alberta Clipper Expansion Capital Requirement.
If EECI and/or Enbridge Partners do not elect to fund 100% of the Alberta
Clipper Expansion Capital Requirement, then the Alberta Clipper Expansion
Project will not be undertaken by the Partnership or any Series. Enbridge
Partners and EECI may fund their respective portions of any Alberta Clipper
Expansion Capital Requirement pursuant to this Section 5.6 either directly or
through a Subsidiary or a controlled Affiliate.

(c) If the Alberta Clipper Expansion Capital Requirement is to be provided Pro
Rata by the Series AC Partners, all assets related to such Alberta Clipper
Expansion Project shall be designated as Series AC Assets, and all Liabilities
related to such Alberta Clipper Expansion Project shall be designated as
Series AC Liabilities. Capital Contributions associated with such Alberta
Clipper Expansion Project shall be Additional Series AC Capital Contributions.

(d) The assets of any Alberta Clipper Expansion Project that is undertaken but
that are not designated as Series AC Assets shall be designated as the assets of
a new series of partnership interests in the Partnership to be held by the
Partners participating in such Alberta Clipper Expansion Project in proportion
to their respective capital contributions in respect of such Alberta Clipper
Expansion Project (an “Alberta Clipper Expansion Series”). Subject to
Section 7.3, the Managing General Partner of the Partnership generally is hereby
authorized to take all actions necessary to create and establish the Alberta
Clipper Expansion Series with such rights, powers and duties as the Managing
General Partner of the Partnership generally and the Persons becoming Partners
of such new Series shall determine, including to amend this Agreement and its
exhibits to set forth all relevant terms applicable to such Series. The Persons
becoming Partners of such Alberta Clipper Expansion Series shall be admitted to
the Partnership with respect to such Series as Partners upon their execution of
a counterpart to this Agreement in their capacity as Partners of such Alberta
Clipper Expansion Series.

 

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Section 5.7 Interest and Withdrawal of Capital Contributions.

No interest shall be paid by the Partnership or any Series on Capital
Contributions. No Partner shall be entitled to the withdrawal or return of its
Capital Contribution, except to the extent, if any, that distributions made
pursuant to this Agreement or upon dissolution of the Partnership or the
termination of any Series may be considered as such by law and then only to the
extent expressly provided for in this Agreement. Except to the extent expressly
provided in this Agreement, no Partner shall have priority over any other
Partner either as to the return of Capital Contributions or as to Profits,
Losses or distributions. Any such return shall be a compromise to which all
Partners agree within the meaning of Section 17-502(b) of the Delaware Act.

Section 5.8 Capital Accounts.

(a) A separate Capital Account shall be established and maintained for each
Partner in accordance with the requirements of Treasury Regulation
Section 1.704-1(b)(2)(iv). A Partner that owns a Partnership Interest in more
than one Series shall have a single Capital Account that reflects all such
Partnership Interests; provided, however, that Series Capital Accounts shall be
maintained for each Partner in accordance with the requirements of Treasury
Regulation Section 1.704-1(b)(2)(iv). A Partner’s Capital Account balance shall
be the sum of the balances of each of such Partner’s Series Capital Accounts.

(b) Each Series Capital Account for each Partner shall be increased by (i) the
amount of money contributed by that Partner to the Partnership with respect to a
Series, (ii) the Book Value of property contributed by that Partner to the
Partnership with respect to a Series (net of liabilities secured by such
contributed property that the Partnership is considered to assume or take
subject to under Section 752 of the Code), and (iii) allocations to that Partner
of Profits and any other items of income and gain attributable to a Series, and
shall be decreased by (iv) the amount of money of a Series distributed to that
Partner, (v) the Book Value of property of a Series distributed to that Partner
(net of liabilities secured by such distributed property that such Partner is
considered to assume or take subject to under Section 752 of the Code), and
(vi) allocations to that Partner of Losses and any other items of loss and
deduction attributable to a Series.

(c) The Partners’ Series Capital Accounts shall also be maintained and adjusted
as permitted by the provisions of Treasury Regulation § 1.704-1(b)(2)(iv)(f) and
as required by the other provisions of Treasury Regulation §§ 1.704-1(b)(2)(iv)
and 1.704-1(b)(4).

(d) Whenever the fair market value of property of a Series is required to be
determined pursuant to this Section 5.8, the Managing General Partner of such
Series shall establish the fair market value in a notice to the Partners of such
Series.

(e) On a Transfer of all or part of a Partner’s Partnership Interest, each
applicable Series Capital Account of the transferor that is attributable to the
transferred Partnership Interests shall carry over to the transferee Partner in
accordance with the provisions of Treasury Regulation § 1.704-1(b)(2)(iv)(1).

 

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ARTICLE VI

ALLOCATIONS AND DISTRIBUTIONS

Section 6.1 Allocations for Capital Account Purposes.

(a) Allocations. For purposes of maintaining the Series Capital Accounts
pursuant to Section 5.8 and in determining the rights of the Partners among
themselves with respect to each Series, after making all of the allocations
under Sections 6.1(b) and 6.1(c), Profits and Losses and items thereof with
respect to a Series shall be allocated among the Partners of such Series in each
taxable year (or portion thereof) as provided herein below.

(i) Series AC. Each item of income, gain, loss, deduction and credit
attributable to Series AC Assets and Series AC Liabilities shall be allocated to
the Series AC Partners in accordance with their respective Series AC Percentage
Interests.

(ii) Series LH. Each item of income, gain, loss, deduction and credit
attributable to Series LH Assets and Series LH Liabilities shall be allocated to
the Series LH Partners in accordance with their respective Series LH Percentage
Interests.

(iii) Notwithstanding Sections 6.1(a)(i) and 6.1(a)(ii), in the event of the
dissolution and liquidation of the Partnership or the termination of a Series,
allocations of Profit and Loss, and items thereof in connection with the
liquidation shall be made in accordance with Section 11.3(a).

Losses and other items of deduction and loss specially allocated to a Partner
with respect to a Series shall not exceed the maximum amount of Losses and items
of deduction and loss that can be allocated without causing such Partner to have
a deficit in its Adjusted Capital Account for such Series at the end of any
taxable year or other period. In the event that some but not all of the Partners
would have a deficit in their Adjusted Capital Accounts for such Series as a
consequence of an allocation pursuant to this Section 6.1, the limitation set
forth in the preceding sentence shall be applied on a Partner by Partner basis,
and Losses or items of deduction and loss not allocable to any Partner as a
result of such limitation shall be allocated to the other Partners of such
Series in accordance with and to the extent of the relative positive balances in
such Partners’ Adjusted Capital Accounts attributable to such Series. Any excess
Losses or other items of deduction and loss remaining shall be allocated, Pro
Rata, to the Partners of any other Series whose Adjusted Capital Accounts for
such other Series have positive balances to the extent of such positive
balances.

(b) Special Allocations. Notwithstanding any other provisions of this
Section 6.1, the following special allocations shall be made on a Series by
Series basis in the following order for each taxable period:

(i) Notwithstanding any other provision of this Section 6.1, if there is a net
decrease in Minimum Gain attributable to a Series during any taxable year, each
Partner of such Series shall be allocated items of income and gain attributable
to such Series for such year (and,

 

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if necessary, subsequent taxable years) in the manner and amounts provided in
Treasury Regulation Sections 1.704-2(f)(6), (g)(2) and (j)(2)(i). For purposes
of this Section 6.1(b), each Partner’s Adjusted Capital Account balance for such
Series shall be determined, and the allocation of income or gain required
hereunder shall be effected, prior to the application of any other allocations
pursuant to this Section 6.1 with respect to such taxable year. This
Section 6.1(b)(i) is intended to comply with the minimum gain chargeback
requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted
consistently therewith.

(ii) Notwithstanding the other provisions of this Section 6.1 (other than
Section 6.1(b)(i) above), if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain attributable to a Series during any taxable year, any Partner with
a share of such Partner Nonrecourse Debt Minimum Gain at the beginning of such
taxable year shall be allocated items of income and gain attributable to such
Series for such year (and, if necessary, subsequent taxable years) in the manner
and amounts provided in Treasury Regulation Section 1.704-2(i)(4) and
(j)(2)(ii). For purposes of this Section 6.1(b), each Partner’s Adjusted Capital
Account balance shall be determined, and the allocation of income and gain
required hereunder shall be effected, prior to the application of any other
allocations pursuant to this Section 6.1, other than Section 6.1(b)(i) above,
with respect to such taxable year. This Section 6.1(b)(ii) is intended to comply
with the partner nonrecourse debt minimum gain chargeback requirement in
Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.

(iii) Except as provided in Sections 6.1(b)(i) and 6.1(b)(ii) above, in the
event any Partner unexpectedly receives an adjustment, allocation or
distribution described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
(5) or (6) attributable to a Series, items of income and gain of such Series
shall be allocated to such Partner in an amount and manner sufficient to
eliminate, to the extent required by such Treasury Regulation, the deficit
balance, if any, in its Adjusted Capital Account attributable to such Series
created by such adjustment, allocation or distribution as quickly as possible
unless such deficit balance is otherwise eliminated pursuant to Sections
6.1(b)(i), 6.1(b)(ii), 6.1(b)(iv) or 6.1(b)(v). This Section 6.1(b)(iii) is
intended to constitute a qualified income offset described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.

(iv) After giving effect to the allocations in Sections 6.1(b)(i), 6.1(b)(ii)
and 6.1(b)(iii):

(A) in the event that the Series LH Partners become obligated to make payments
to the Series AC Partners pursuant to Section 6.2(c), items of Partnership gross
income and gain shall be allocated to the Series LH Partners in accordance with
their respective Series LH Percentage Interests until the aggregate amounts of
items allocated to the Series LH Partners pursuant to this Section 6.1(b)(iv)
for such taxable year and all prior taxable years equals the cumulative amount
of payments made by the Series LH Partners to the Series AC Partners pursuant to
Section 6.2(c) for such taxable year and all prior taxable years; and

(B) in the event that the Series AC Partners become obligated to make payments
to the Series LH Partners pursuant to Section 6.3(c), items of Partnership gross
income and gain shall be allocated to the Series AC Partners in accordance with
their respective Series AC Percentage Interests until the aggregate amounts of
items allocated to the Series AC

 

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Partners pursuant to this Section 6.1(b)(iv) for such taxable year and all prior
taxable years equals the cumulative amount of payments made by the Series AC
Partners to the Series LH Partners pursuant to Section 6.3(c) for such taxable
year and all prior taxable years.

(v) In the event any Partner has a deficit balance in its Adjusted Capital
Account attributable to a Series at the end of any taxable year, such Partner
shall be allocated items of gross income and gain of such Series in the amount
of such excess as quickly as possible; provided, however, that an allocation
pursuant to this Section 6.1(b)(v) shall be made only if and to the extent that
such Partner would have a deficit balance in its Adjusted Capital Account for
such Series after all other allocations provided in this Section 6.1(b) (other
than Section 6.1(b)(iii)) have been tentatively made as if Section 6.1(b)(iii)
and this Section 6.1(b)(v) were not in this Agreement.

(vi) Nonrecourse Deductions attributable to a Series for any taxable year shall
be allocated to the Partners of such Series in accordance with their Percentage
Interests for such Series.

(vii) Partner Nonrecourse Deductions with respect to a Partner Nonrecourse Debt
for any taxable year shall be allocated 100% to the Partner that bears the
Economic Risk of Loss with respect to the Partner Nonrecourse Debt to which such
Partner Nonrecourse Deductions are attributable in accordance with Treasury
Regulation Section 1.704-2(i). If more than one Partner bears the Economic Risk
of Loss with respect to a Partner Nonrecourse Debt, Partner Nonrecourse
Deductions attributable thereto shall be allocated between or among such
Partners in accordance with the ratios in which they share such Economic Risk of
Loss. This Section 6.1(b)(vii) is intended to comply with the provisions of
Treasury Regulation Section 1.704-2(i) and shall be interpreted consistently
therewith.

(viii) To the extent an adjustment to the adjusted tax basis of any asset
pursuant to Code Sections 734(b) or 743(b) is required, pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining
Capital Accounts as a result of a distribution in liquidation of a Partner’s
Partnership Interest in a Series, 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
item of gain or loss shall be allocated to the Partners in a manner consistent
with the manner in which their Series Capital Accounts are required to be
adjusted pursuant to such provisions.

(c) Curative Allocation. The Regulatory Allocations are intended to comply with
certain requirements of the Treasury Regulations. It is the intent of the
Partners that, to the extent possible, all Regulatory Allocations attributable
to a Series shall be offset either with other Regulatory Allocations
attributable to such Series, or with special allocations of other items of
income, gain, loss or deduction attributable to such Series pursuant to this
Section 6.1(c). Therefore, notwithstanding any other provision of this
Article VI (other than the Regulatory Allocations), but subject to the Code and
the Treasury Regulations, the Managing General Partner of the applicable Series
shall make such offsetting special allocations of income, gain, loss or
deduction in whatever manner it determines appropriate so that, after such
offsetting allocations are made, each Partner’s applicable Series Capital
Account balance is, to the extent possible, equal to the balance such Partner
would have had if the Regulatory Allocations were

 

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not part of this Agreement. In exercising its discretion under this
Section 6.1(c), the Managing General Partner of the applicable Series shall take
into account future Regulatory Allocations that, although not yet made, are
likely to offset other Regulatory Allocations previously made.

(d) Income Tax Allocations.

(i) Except as otherwise provided in this Section 6.1, each item of income, gain,
loss and deduction of a Series shall be allocated among the Partners of such
Series for U.S. federal income tax purposes in the same manner as such items are
allocated under Sections 6.1(a), 6.1(b) and 6.1(c).

(ii) For U.S. federal income tax purposes, income, gain, loss and deduction with
respect to property contributed to a Series by a Partner or the Book Value of
which is adjusted pursuant to clause (b) or (d) of the definition of Book Value
shall be allocated among the Partners of such Series in a manner that takes into
account the variation between the adjusted tax basis of such property and its
Book Value, as required by Section 704(c) of the Code and Treasury Regulation
Section 1.704-1(b)(4)(i), using the remedial allocation method permitted by
Treasury Regulation Section 1.704-3(d).

(iii) All items of income, gain, loss, deduction and credit allocated to the
Partners in accordance with the provisions hereof and basis allocations
recognized by a Series for U.S. federal income tax purposes shall be determined
without regard to any election under Code Section 754 that may be made by the
Series.

(iv) If any deductions for depreciation or cost recovery are recaptured as
ordinary income upon the sale or other disposition of property of a Series, the
ordinary income character of the gain from such sale or disposition shall be
allocated among the Partners of such Series in the same ratio as the deductions
giving rise to such ordinary income character were allocated.

Section 6.2 Requirement and Characterization of Series AC Distributions;
Distributions to Series AC Partners.

(a) Within 45 days following the end of each Quarter commencing with the Quarter
in which the In-Service Date occurs, the Partnership in respect of the Series AC
shall distribute Pro Rata to the Series AC Partners as of the last day of such
Quarter an amount in cash equal to the Series AC Distribution Amount with
respect to such Quarter (the “Series AC Distribution”). Notwithstanding any
provision to the contrary contained in this Agreement, neither the Partnership
nor the Series AC shall make any distribution to any Series AC Partner on
account of its Partnership Interest if such distribution would violate the
Delaware Act or any other applicable law or violate Section 10.4(a) of the Note
Agreement.

(b) Notwithstanding Section 6.2(a), in the event of the dissolution and
liquidation of the Partnership or the termination of the Series AC, all cash
receipts received during or after the Quarter in which the Liquidation Date
occurs shall be applied and distributed solely in accordance with, and subject
to the terms and conditions of, Section 11.3.

 

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(c) If, for any Quarter (including the Quarter in which the liquidation of the
Series AC is completed), the cash that is distributed by the Partnership to the
Series AC Partners is less than the Series AC Distribution Amount for such
Quarter, then the Series LH Partners shall promptly pay to the Series AC
Partners Pro Rata in cash an amount equal to such shortfall.

Section 6.3 Distributions to Series LH Partners.

(a) On the date the Series AC Distribution is made pursuant to Section 6.2(a),
the Managing General Partner of the Series LH may, in its sole discretion, cause
the Partnership in respect of the Series LH to distribute Pro Rata to the
Series LH Partners any cash that is not otherwise required under this Agreement
to be distributed to the Partners of any other Series or properly reserved by
any other Series in accordance with this Agreement (the “Series LH
Distribution”). Notwithstanding any provision to the contrary contained in this
Agreement, neither the Partnership nor Series LH shall make any distribution to
any Series LH Partner on account of its Series LH Partnership Interest if such
distribution would violate the Delaware Act or other applicable law or violate
Section 10.4(a) of the Note Agreement.

(b) Notwithstanding Section 6.3(a), in the event of the dissolution and
liquidation of the Partnership or the termination of the Series LH, all cash
receipts received during or after the Quarter in which the Liquidation Date
occurs shall be applied and distributed solely in accordance with, and subject
to the terms and conditions of, Section 11.3.

(c) If, for any Quarter (including the Quarter in which the liquidation of the
Series LH is completed), the Series AC Distribution Amount is less than zero,
then the Series AC Partners shall promptly pay to the Series LH Partners Pro
Rata in cash an amount equal to the amount by which the Series AC Distribution
Amount was less than zero.

ARTICLE VII

MANAGEMENT AND OPERATION OF BUSINESS; LIMITED PARTNERS

Section 7.1 Management.

(a) The Managing General Partner of the Partnership generally shall conduct,
direct and manage all activities of the Partnership generally, and the Managing
General Partner of each Series shall conduct, direct and manage all activities
of the Series for which it serves as Managing General Partner. Except as
otherwise expressly provided in this Agreement, (i) all management powers over
the business and affairs of the Partnership generally shall be exclusively
vested in the Managing General Partner of the Partnership generally, and no
Limited Partner or other General Partner shall have any management power over
the business and affairs of (or authority to bind) the Partnership generally and
(ii) all management powers over the business and affairs of each Series shall be
exclusively vested in the Managing General Partner of such Series, and no
Limited Partner or other General Partner shall have any management power over
the business and affairs of (or authority to bind) such Series. In addition to
the powers now or hereafter granted a general partner of a limited partnership
under applicable law or that are granted to a Managing General Partner under any
other provision of this Agreement, each Managing General Partner, subject to any
approval required by Section 7.3 or any other provision of this Agreement, shall
have full power and authority to do all things and on such

 

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terms as it determines to be necessary or appropriate to conduct the business of
the Partnership generally or the applicable Series, as the case may be, to
exercise all powers set forth in Section 2.5 and to effectuate the purposes set
forth in Section 2.4, including the following:

(i) the making of any expenditures, the lending or borrowing of money, the
assumption or guarantee of, or other contracting for, indebtedness and other
liabilities, the issuance of evidences of indebtedness and the incurring of any
other obligations;

(ii) the making of regulatory and other filings, or rendering of periodic or
other reports to governmental or other agencies having jurisdiction over the
business or assets of the Partnership and each Series (other than in connection
with the matters set forth in Section 9.3);

(iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation
or exchange of any or all of the assets of the applicable Series or the merger
or other combination of the Partnership with or into another Person;

(iv) the use of the assets of the applicable Series (including cash on hand) for
any purpose consistent with the terms of this Agreement;

(v) the negotiation, execution and performance of any contracts, conveyances or
other instruments on behalf of the Partnership generally or the applicable
Series;

(vi) the distribution of cash or property of the applicable Series;

(vii) the maintenance of separate or joint insurance policies for the benefit of
the Partnership, any Series, any Partners or any Indemnitees;

(viii) the formation of, or acquisition of an interest in, and the contribution
of property and the making of loans to, any further limited or general
partnerships, joint ventures, corporations, limited liability companies or other
relationships subject to the restrictions set forth in Section 2.4;

(ix) the control of any matters affecting the rights and obligations of the
Partnership or the applicable Series, including the bringing and defending of
actions at law or in equity and otherwise engaging in the conduct of litigation,
arbitration or mediation and the incurring of legal expense and the settlement
of claims and litigation; and

(x) the indemnification of any Person against liabilities and contingencies to
the extent permitted by law.

Section 7.2 Certificate of Limited Partnership.

The Managing General Partner of the Partnership generally has caused an
amendment to and restatement of the Certificate of Limited Partnership to be
filed with the Secretary of State of the State of Delaware as required by the
Delaware Act, which contains a notice of the limitation of liabilities of the
Series in conformity with Section 17-218 of the Delaware Act. To the extent the
Managing General Partner of the Partnership generally determines such action to
be

 

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necessary or appropriate, the Managing General Partner of the Partnership
generally shall file amendments to and restatements of the Certificate of
Limited Partnership and do all necessary things to maintain the Partnership as a
limited partnership (or a partnership or other entity in which the limited
partners have limited liability) under the laws of the State of Delaware or of
any other state in which the Partnership may elect to do business or own
property.

Section 7.3 Restrictions on the Managing General Partners’ Authority.

Notwithstanding any other provision of this Agreement to the contrary, none of
the Partnership, any Series, any Managing General Partner nor any other Partner
shall cause or commit the Partnership or any Series to take any of the following
actions without the prior written consent or vote of a Majority in Interest of
Series AC Partnership Interests:

(a) approve the Series AC Annual Budget as provided for in Section 7.4;

(b) request or otherwise require any additional Series AC Capital Contributions,
pursuant to Section 5.4 or otherwise, that are not reflected in the approved
Series AC Annual Budget or an approved Alberta Clipper Expansion Budget;

(c) establish any Series AC Reserves;

(d) with respect to the Series AC, make any expenditure or series of related
expenditures in excess of $1,000,000 that are not (i) reflected in the approved
Series AC Annual Budget or an approved Alberta Clipper Expansion Budget or
(ii) required to address an emergency;

(e) the issuance, incurrence or assumption of any Indebtedness by the Series AC
other than (i) Indebtedness reflected in the approved Series AC Annual Budget or
an approved Alberta Clipper Expansion Budget, (ii) the Short-Term Debt
Financing, (iii) the Long-Term Debt Financing, (iv) an Intercompany Obligation
permitted by Section 7.3(f) or (v) a Springing Guarantee permitted by
Section 7.3(g);

(f) the issuance, incurrence or assumption of any Indebtedness by the
Partnership generally or any Series (other than the Series AC) unless such
Indebtedness is (i) (x) (A) by its terms, expressly non-recourse to any
Series AC Assets and the Series AC Partners or (B) an Intercompany Obligation
and (y) after giving effect to the issuance, incurrence or assumption of such
Indebtedness, the aggregate principal amount of Indebtedness of the Partnership
and all Series (excluding (A) short term Indebtedness incurred in connection
with the construction of projects that have not yet been placed into service and
(B) Indebtedness of the Series AC) does not exceed 45% of the capitalization of
the Partnership generally and all Series (other than the Series AC) taken as a
whole, (ii) incurred in connection with the refinancing of Existing Indebtedness
for which the Partnership is the direct obligor (other than Existing
Indebtedness that is an Intercompany Obligation), (iii) an Intercompany
Obligation permitted by Section 7.3(e) or (iv) a Springing Guarantee permitted
by Section 7.3(g);

(g) any guarantee of Indebtedness of another Person by the Partnership generally
or any Series other than (i) any guarantee of Indebtedness of another Person
pursuant to a currently existing obligation arising under a debt agreement
related to Existing Indebtedness or (ii) a

 

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guarantee of Indebtedness of another Person similar to those currently existing
under any Existing Indebtedness arising under a debt agreement entered into
after the Closing Date if the Indebtedness under such debt agreement is senior
to or pari passu with the Existing Indebtedness (any guarantee permitted under
clauses (i) or (ii) above, a “Springing Guarantee”);

(h) any material modification of any material contract related to the Series AC
Assets or to which the Series AC is a party (excluding this Agreement);

(i) any material modification to the Tariff Term Sheet or the Alberta Clipper
Surcharge;

(j) any merger, consolidation, conversion, business combination or
reorganization of the Partnership or any Subsidiary of the Partnership that owns
any Series AC Assets (other than any conversion pursuant to Section 12.11(c));

(k) any direct or indirect sale, exchange or other transfer of (i) any Series AC
Assets or (ii) any assets of the Partnership generally or any Series (other than
the Series AC) in excess of $25,000,000, in each case, other than sales,
exchanges or other transfers as a result of the exercise of remedies pursuant to
Existing Indebtedness;

(l) any issuance of any additional Partnership Interests of the Partnership
generally or any Series other than in connection with the creation of an Alberta
Clipper Expansion Series pursuant to Section 5.6(d) (it being agreed that the
making of Capital Contributions pursuant to Section 5.4 shall not constitute the
issuance of additional Partnership Interests);

(m) except as otherwise provided in Section 4.1(c) and Section 5.6(d), the
admission of any Person as a new Partner of the Partnership generally or of any
Series (whether by Transfer of existing Partnership Interests, merger or
issuance of additional Partnership Interests);

(n) except as otherwise provided in Section 4.1(c) and Section 5.6(d), any
withdrawal or removal of any General Partner or admission of any new General
Partner of the Partnership generally or any Series;

(o) the amendment of any provision of this Agreement relating to the Series AC
or any other amendment of this Agreement that would have an adverse effect on
the Series AC, the Series AC Assets or the Series AC Partners;

(p) the entry into or termination of any activity or business, or the
acquisition or divestiture of any asset or business, that would cause the
Partnership or any Series to be taxed as an association taxable as a corporation
or otherwise taxable as an entity for U.S. federal income tax purposes;

(q) the voluntary dissolution or liquidation of the Partnership or voluntary
termination of any Series; or

(r) the commencement of a voluntary case with respect to, or the consent to the
entry of an order for relief in an involuntary case against, the Partnership or
any Series under any bankruptcy laws.

 

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Section 7.4 Series AC Annual Budget.

(a) Fifteen days prior to the beginning of each fiscal year beginning after
December 31, 2009, the Managing General Partner of the Series AC shall cause to
be prepared and submitted to the Series AC Partners a budget and forecast
setting forth the anticipated revenues and expenses for the Series AC for the
following fiscal year, including any anticipated Series AC Expansion Capital
Expenditures, Series AC Maintenance Capital Expenditures, operating expenses,
revenues, Capital Contributions and distributions (the “Series AC Annual
Budget”).

(b) After the Series AC Annual Budget has been approved by a Majority in
Interest of Series AC Partnership Interests, the Managing General Partner of the
Series AC shall implement the Series AC Annual Budget and shall be authorized to
make the expenditures and incur the obligations provided for therein. The
Series AC Annual Budget may be revised at any time during a fiscal year subject
to the approval of a Majority in Interest of Series AC Partnership Interests.

(c) If a Majority in Interest of Series AC Partnership Interests fails to adopt
on or before December 31 of any year a Series AC Annual Budget that has been
properly submitted for approval by the Managing General Partner of the
Series AC, then a Majority in Interest of Series AC Partnership Interests shall
be deemed to have approved as the Series AC Annual Budget for the next calendar
year the last Series AC Annual Budget that was approved by a Majority in
Interest of Series AC Partnership Interests (the “Prior Budget”) adjusted as
follows: (i) all operating expense items (including Series AC Maintenance
Capital Expenditures but excluding Series AC Expansion Capital Expenditures) set
forth in the Prior Budget shall be increased by 5% from the Prior Budget,
(ii) all Series AC Expansion Capital Expenditures set forth in the Prior Budget
shall be excluded and (iii) all expenditures related to the construction of the
Alberta Clipper Project set forth in the Prior Budget shall be replaced with the
estimated expenditures related to the construction of the Alberta Clipper
Project for the next calendar year; provided, however, that if a Series AC
Annual Budget subsequently is approved by a Majority in Interest of Series AC
Partnership Interests, such subsequently approved Series AC Annual Budget shall
be effective for the remainder of the applicable fiscal year.

Section 7.5 Collection of Series AC Revenue Entitlement.

(a) The Series AC Revenue Entitlement for each year will be collected by the
Partnership on behalf of the Series AC through the surcharge provided for in
Section 3 “Revenue Requirement” of the Tariff Term Sheet (excluding any
reduction attributable to the “Revenue Credit” provided for in Section 13 of the
Tariff Term Sheet that is collected through the base system tolls) that is
levied during that year with respect to the projected level of costs and
throughput volumes including the adjustment provided for in Section 4 “Revenue
Requirement Adjustment” of the Tariff Term Sheet for over or under collection
that is included in the surcharge levied in the year following the year of such
over or under collection, inclusive of carrying charges.

(b) The Managing General Partner of the Series AC shall cause the Series AC
Records to set forth the cumulative amount by which the Series AC Revenue
Entitlement exceeds or is less than amounts actually collected, inclusive of
carrying charges.

 

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(c) Neither the Series AC Revenue Entitlement, nor the amount of the Series AC
Revenue Entitlement that is collected on behalf of Series AC in any period, will
be reduced by any part of the revenue credit to the Alberta Clipper Surcharge
specified in Section 13 of the Tariff Term Sheet.

Section 7.6 Compensation of General Partners.

No General Partner shall be compensated for its services as a General Partner of
the Partnership generally or any Series; provided, however, this Section 7.6
shall not prohibit or restrict any reimbursement to which any General Partner is
otherwise entitled for expenses it incurs or payments it makes on behalf of the
Partnership generally or any Series, including any general and administrative
expenses.

Section 7.7 Indemnification.

(a) To the fullest extent permitted by law but subject to the limitations
expressly provided in this Agreement, each Series shall indemnify and hold
harmless all of such Series’ Indemnitees from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including legal fees
and expenses), judgments, fines, penalties, interest, settlements or other
amounts (“Damages”) arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative
(“Claims”), in which any such Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, by reason of its management of the affairs of
such Series or by reason of its status as an Indemnitee of such Series, that
relates to or arises out of such Series, its property, its business or its
affairs; provided, that the Indemnitee shall not be indemnified and held
harmless if there has been a final and non-appealable judgment entered by a
court of competent jurisdiction determining that, in respect of the matter for
which the Indemnitee is seeking indemnification pursuant to this Section 7.7,
the Indemnitee acted in bad faith or engaged in fraud, willful misconduct or, in
the case of a criminal matter, acted with knowledge that the Indemnitee’s
conduct was unlawful. Any indemnification pursuant to this Section 7.7 shall be
made only out of the assets of the indemnifying Series, it being agreed that,
except as provided in Section 11.7, no Partner shall be personally liable for
such indemnification nor shall any Partner have any obligation to contribute or
loan any monies or property to such Series to enable it to effectuate such
indemnification.

(b) To the fullest extent permitted by law, expenses (including legal fees and
expenses) incurred by an Indemnitee who is indemnified pursuant to
Section 7.7(a) in defending any Claim shall, from time to time, be advanced by
the indemnifying Series prior to a determination that the Indemnitee is not
entitled to be indemnified upon receipt by such Series of an undertaking by or
on behalf of the Indemnitee to repay such amount if it shall be determined that
the Indemnitee is not entitled to be indemnified as authorized in this
Section 7.7.

(c) The indemnification provided by this Section 7.7 shall be in addition to any
other rights to which an Indemnitee may be entitled under any agreement,
pursuant to any vote of a Majority in Interest of the indemnifying Series, as a
matter of law or otherwise, both as to actions in the Indemnitee’s capacity as
an Indemnitee and as to actions in any other capacity, and shall continue as to
an Indemnitee who has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Indemnitee.

 

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(d) Any Series may purchase and maintain (or reimburse such Series’ General
Partners or their Affiliates for the cost of) insurance, on behalf of such
Series’ General Partners, their Affiliates and such other Persons as such
Series’ General Partners shall determine, against any liability that may be
asserted against, or expense that may be incurred by, such Person in connection
with such Series’ activities or such Person’s activities on behalf of such
Series, regardless of whether such Series would have the power to indemnify such
Person against such liability under the provisions of this Agreement.

(e) In no event may an Indemnitee subject any Partner to personal liability by
reason of the indemnification provisions set forth in this Agreement.

(f) An Indemnitee shall not be denied indemnification in whole or in part under
this Section 7.7 because the Indemnitee had an interest in the transaction with
respect to which the indemnification applies if the transaction was otherwise
permitted by the terms of this Agreement with respect to the indemnifying
Series.

(g) The provisions of this Section 7.7 are for the benefit of the Indemnitees,
their heirs, successors, assigns and administrators and shall not be deemed to
create any rights for the benefit of any other Persons.

(h) No amendment, modification or repeal of this Section 7.7 or any provision
hereof shall in any manner terminate, reduce or impair the right of any past,
present or future Indemnitee to be indemnified by a Series, nor the obligations
of such Series to indemnify any such Indemnitee under and in accordance with the
provisions of this Section 7.7 as in effect immediately prior to such amendment,
modification or repeal with respect to Claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification or
repeal, regardless of when such Claims may arise or be asserted.

(i) The provisions of this Section 7.7 shall not be construed to limit the power
of any Series to indemnify an Indemnitee of such Series to the fullest extent
permitted by law or to enter into specific agreements, commitments or
arrangements for indemnification permitted by law. The absence of any express
provision for indemnification herein shall not limit any right of
indemnification existing independently of this Section 7.7.

Section 7.8 Interseries Indemnification.

Notwithstanding anything to the contrary set forth in this Agreement, in the
event that any Series (the “Indemnified Series”) (a) becomes liable for any
Liability of another Series (the “Indemnifying Series”), including any Claim for
Damages by a Third Party that relate to or arise out of the actions, obligation,
assets, property, business or affairs of the Indemnifying Series or (b) pays or
discharges an Intercompany Obligation for which the Indemnifying Series is the
Primary Obligor (collectively, “Series Indemnified Damages”), to the fullest
extent permitted by law, the Indemnifying Series shall indemnify the Indemnified
Series for the amount of the Series Indemnified Damages promptly following their
incurrence or payment, as applicable. Any indemnification pursuant to this
Section 7.8 shall be made (i) only out of the assets of the Indemnifying Series,
it being agreed that, except as provided in Section 11.7, no Partner shall be
personally liable for such indemnification nor shall any Partner have any
obligation to contribute

 

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or loan any monies or property to the Indemnifying Series to enable it to
effectuate such indemnification and (ii) only to the extent that the Partners of
the Indemnified Series have not received a payment from the Partners of the
Indemnifying Series under Section 6.2(c) or 6.3(c) with respect to a shortfall
related to the Liability that gave rise to the Series Indemnified Damages.

Section 7.9 Liability of Indemnitees.

(a) Notwithstanding anything to the contrary set forth in this Agreement, no
Indemnitee shall be liable for monetary damages to any Series, any Partner or
any other Person who is bound by this Agreement, for losses sustained or
liabilities incurred as a result of any act or omission of an Indemnitee unless
there has been a final and non-appealable judgment entered by a court of
competent jurisdiction determining that, in respect of the matter in question,
the Indemnitee acted in bad faith or engaged in fraud, willful misconduct or, in
the case of a criminal matter, acted with knowledge that the Indemnitee’s
conduct was criminal.

(b) Subject to its obligations and duties as a Managing General Partner set
forth in this Agreement, each Managing General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its agents, and such Managing
General Partner shall not be responsible for any misconduct or negligence on the
part of any such agent appointed by such Managing General Partner in good faith.

(c) To the extent that, at law or in equity, an Indemnitee has duties (including
fiduciary duties) and liabilities relating thereto to the Partnership, any
Series or the Partners, the General Partners and any other Indemnitee acting in
connection with the Partnership’s or a Series’ business or affairs shall not be
liable to the Partnership, such Series or any Partner for its good faith
reliance on the provisions of this Agreement. The provisions of this Agreement,
to the extent that they restrict or eliminate the duties and liabilities of a
Partner or other Person to the parties hereto otherwise existing at law or in
equity, are agreed by the parties hereto to replace such other duties and
liabilities of such Partner or other Person.

(d) Any amendment, modification or repeal of this Section 7.9 or any provision
hereof shall be prospective only and shall not in any way affect the limitations
on the liability of the Indemnitees under this Section 7.9 as in effect
immediately prior to such amendment, modification or repeal with respect to
Claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such Claims may
arise or be asserted.

Section 7.10 Limitation of Liability.

The Limited Partners shall have no liability under this Agreement except as
expressly provided in this Agreement or the Delaware Act. A General Partner of a
Series shall not be liable for the obligations of the Partnership generally or
any other Series solely as a result of its status as a General Partner of a
Series, and a General Partner of the Partnership generally shall not be liable
for the obligations of any Series solely as a result of its status as a General
Partner of the Partnership generally.

 

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Section 7.11 Management of Business.

No Limited Partner, in its capacity as such, shall participate in the operation,
management or control (within the meaning of the Delaware Act) of the
Partnership’s or any Series’ business, transact any business in the
Partnership’s or any Series’ name or have the power to sign documents for or
otherwise bind the Partnership or any Series. Any action taken by any Affiliate
of a General Partner or any officer, director, employee, manager, member,
general partner, agent or trustee of a General Partner or any of its Affiliates
shall not be deemed to be participation in the control of the business of the
Partnership or any Series by a Limited Partner of the Partnership generally or
any Series (within the meaning of Section 17-303(a) of the Delaware Act) and
shall not affect, impair or eliminate the limitations on the liability of the
Limited Partners under this Agreement.

Section 7.12 Outside Activities of the Limited Partners.

Notwithstanding any duty otherwise existing at law or in equity, except as
otherwise set forth in any other agreement to which a Partner is a party,
including the Omnibus Agreement, any Partner of the Partnership generally or any
Series shall be entitled to and may have business interests and engage in
business activities in addition to those relating to the Partnership or any
Series, including business interests and activities in direct competition with
the Partnership or any Series.

Section 7.13 Reliance by Third Parties.

Notwithstanding anything to the contrary in this Agreement, (a) any Person
dealing with the Partnership shall be entitled to assume that the Managing
General Partner of the Partnership generally, and any officer of such Managing
General Partner authorized by such Managing General Partner to act on behalf of
and in the name of the Partnership, has full power and authority to encumber,
sell or otherwise use in any manner any and all assets of the Partnership
generally, and to enter into any authorized contracts on behalf of the
Partnership as a whole and the Partnership generally, and such Person shall be
entitled to deal with such Managing General Partner or any such officer as if it
were the Partnership’s sole party in interest, both legally and beneficially and
(b) any Person dealing with any Series shall be entitled to assume that the
Managing General Partner of such Series, and any officer of such Managing
General Partner authorized by such Managing General Partner to act on behalf of
and in the name of such Series, has full power and authority to encumber, sell
or otherwise use in any manner any and all assets of such Series and to enter
into any authorized contracts on behalf of such Series and such Person shall be
entitled to deal with such Managing General Partner or any such officer as if it
were such Series’ sole party in interest, both legally and beneficially. Each
Limited Partner hereby waives, to the fullest extent permitted by law, any and
all defenses or other remedies that may be available against such Person to
contest, negate or disaffirm any action of any Managing General Partner or any
such officer in connection with any such dealing. In no event shall any Person
dealing with any Managing General Partner or any such officer or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of such Managing General Partner or any such officer or its
representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership or any Series by the Managing General
Partner of the Partnership

 

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generally or such Series, respectively, or its respective representatives shall
be conclusive evidence in favor of any and every Person relying thereon or
claiming thereunder that (a) at the time of the execution and delivery of such
certificate, document or instrument, this Agreement was in full force and
effect, (b) the Person executing and delivering such certificate, document or
instrument was duly authorized and empowered to do so for and on behalf of the
Partnership or such Series and (c) such certificate, document or instrument was
duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership or such Series, as applicable.

Section 7.14 Managing General Partner.

Except as provided for in Section 10.1, Lakehead GP (or its designee) shall
serve as the managing general partner (the “Managing General Partner”) of the
Partnership generally and each Series. Except as expressly provided in this
Agreement, all management powers over the business and affairs of the
Partnership generally or a Series shall be exclusively vested in the Managing
General Partner of the Partnership generally or of such Series, as applicable,
and no other General Partner nor any Limited Partner shall have any management
power over the business and affairs of the Partnership generally or any Series.

Section 7.15 Conflicts of Interest.

Unless otherwise expressly provided herein, (a) whenever a conflict of interest
exists or arises between a Managing General Partner or any of its Affiliates, on
the one hand, and the Partnership, any Series or any Partner or any Affiliates
thereof, on the other hand, or (b) whenever this Agreement or any other
agreement contemplated herein provides that a Managing General Partner or any of
its Affiliates shall act in a manner that is, or provides terms that are, fair
and reasonable to the Partnership or any Partner or any Affiliate thereof, such
Managing General Partner shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement, transaction
or situation and the benefits and burdens relating to such interests, any
customary or accepted industry practices and any applicable generally accepted
accounting practices or principles. In the absence of bad faith by such Managing
General Partner, the resolution, action or terms so made, taken or provided by
such Managing General Partner shall be permitted and deemed approved by all the
Partners and shall not constitute a breach of this Agreement or any other
agreement contemplated herein or of any duty, including any fiduciary duty, or
obligation of such Managing General Partner at law or in equity or otherwise,
and it shall be presumed in making its decision that the Managing General
Partner acted in good faith. In any proceeding challenging such decision, the
party bringing the challenge shall have the burden of overcoming such
presumption.

Section 7.16 Shared Use of Shared Assets.

The Shared Assets shall be shared between the Series AC and the Series LH in
accordance with the terms set forth in Exhibit C. Exhibit C is hereby
incorporated by reference herein and constitutes an integral, non-severable part
of this Agreement. The parties hereto hereby agree to be bound by the terms and
conditions of Exhibit C.

 

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ARTICLE VIII

BOOKS, RECORDS AND ACCOUNTING

Section 8.1 Records and Accounting.

The Managing General Partner of the Partnership generally and the Managing
General Partner of each Series shall keep or cause to be kept full and true
books of account maintained in accordance with generally accepted accounting
principles consistently applied and in which shall be entered fully and
accurately each transaction of the Partnership generally or such Series, as
applicable. Such books of account, together with a copy of this Agreement, and
of the Certificate of Limited Partnership, shall at all times be maintained at
the principal place of business of the Partnership. The records maintained for
each Series shall account for the assets associated with each such Series
separately from the other assets of the Partnership, if any, or of any other
Series. Upon written request, each Partner associated with a Series shall have
the right, at a time during ordinary business hours, as reasonably determined by
the Managing General Partner of such Series, to inspect and copy, at the
requesting Partner’s expense, the records of such Series for any purpose
reasonably related to such Partner’s interest with respect to such Series.

Section 8.2 Fiscal Year.

The fiscal year of the Partnership and of each Series shall be a fiscal year
ending December 31.

ARTICLE IX

TAX MATTERS

Section 9.1 Tax Returns.

The Partnership shall timely file all returns of the Partnership that are
required for U.S. federal, state and local income tax purposes on the basis of
the accrual method and the taxable year or years that it is required by law to
adopt, from time to time, as determined by the Managing General Partner of the
Partnership generally. In the event the Partnership is required to use a taxable
year other than a year ending on December 31, the Managing General Partner of
the Partnership generally shall use reasonable efforts to change the taxable
year of the Partnership to a year ending on December 31. The tax information
reasonably required by Partners for U.S. federal and state income tax reporting
purposes with respect to a taxable year shall be furnished to them within 90
days of the close of the calendar year in which the Partnership’s taxable year
ends. The classification, realization and recognition of income, gain, losses
and deductions and other items shall be on the accrual method of accounting for
U.S. federal income tax purposes.

Section 9.2 Partner Tax Return Information.

The Partnership shall cause to be delivered to each Partner within 75 days after
the end of the Partnership’s taxable year an IRS Form K-1 or a good faith
estimate of the amounts to be included on such IRS Form K-1 for such Partner and
such other information as shall be necessary (including a statement for that
year of each Partner’s share of net income, net losses and other items allocated
to such Partner) for the preparation and timely filing by the Partners of their
U.S. federal, state and local income and other tax returns.

 

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Section 9.3 Tax Elections.

(a) If there is a distribution of property of a Series as described in Code
Section 734 or a transfer of Partnership Interests as described in Code
Section 743, upon request by notice from any Partner of such Series, to elect,
pursuant to Code Section 754, to adjust the basis of Series property.

(b) Except as otherwise provided herein, the Managing General Partner of the
Partnership generally shall determine whether the Partnership should make any
other elections permitted by the Code.

Section 9.4 Tax Controversies.

(a) Subject to the provisions hereof, the Managing General Partner of the
Partnership generally is designated as the Tax Matters Partner (as defined in
the Code) and is authorized and required to represent the Partnership in
connection with all examinations of the Partnership’s affairs by tax
authorities, including resulting administrative and judicial proceedings, and to
expend funds for professional services and costs associated therewith. Each
Partner agrees to cooperate with the Tax Matters Partner and to do or refrain
from doing any or all things reasonably required by the Tax Matters Partner to
conduct such proceedings.

(b) The Tax Matters Partner shall take such action as may be necessary to cause
any Partner so requesting to become a “notice partner” within the meaning of
Section 6231(a)(8) of the Code. The Tax Matters Partner shall inform each other
Partner of all significant matters that may come to its attention in its
capacity as Tax Matters Partner by giving notice thereof on or before the fifth
Business Day after becoming aware thereof and, within that time, shall forward
to each other Partner copies of all significant written communications it may
receive in that capacity. Any cost or expense incurred by the Tax Matters
Partner in connection with its duties, including the preparation for or
pursuance of administrative or judicial proceedings, shall be paid by the
Partnership.

(c) If an audit of any of the Partnership’s tax returns shall occur, the Tax
Matters Partner shall not settle or otherwise compromise assertions of the
auditing agent that may be adverse to any Partner as compared to the position
taken on the Partnership’s tax returns without the prior written consent of each
such affected Partner.

(d) No Partner shall file a request pursuant to Code Section 6227 for an
administrative adjustment of Partnership items for any taxable year, or a
petition under Code Sections 6226 or 6228 or other Code sections with respect to
any item involving the Partnership, without first notifying the other Partners.
Any Partner that enters into a settlement agreement with respect to any
Partnership item (within the meaning of Code Section 6231(a)(3)) shall notify
the other Partners of such settlement agreement and its terms within 90 days
from the date of the settlement.

 

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(e) If any Partner intends to file a notice of inconsistent treatment under Code
Section 6222(b), such Partner shall give reasonable notice under the
circumstances to the other Partners of such intent and the manner in which the
Partner’s intended treatment of an item is (or may be) inconsistent with the
treatment of that item by the other Partners.

Section 9.5 Withholding.

The Managing General Partner of the Partnership generally is authorized to take
any action that may be required to cause the Partnership or any Series to comply
with any withholding requirements established under the Code or any other
federal, state or local law, including pursuant to Sections 1441, 1442, 1445 and
1446 of the Code. To the extent that the Partnership or any Series is required
or elects to withhold and pay over to any taxing authority any amount resulting
from the allocation or distribution of income to any Partner (including by
reason of Section 1446 of the Code), the Managing General Partner of the
Partnership generally or of the applicable Series may treat the amount withheld
as a distribution of cash pursuant to Section 6.2 or Section 6.3, as applicable,
in the amount of such withholding from such Partner.

Section 9.6 Tax Reimbursement.

If Texas law requires the Partnership or a Series and any Partner both to
participate in the filing of a Texas franchise tax combined group report, and if
such Partner or any other member of the Partner’s combined group pays the
franchise tax liability due in connection with such combined report, the parties
agree that the Partnership or the applicable Series shall promptly reimburse
such Partner for the franchise tax paid on behalf of the Partnership as a
combined group member. The franchise tax paid on behalf of the Partnership with
respect to each applicable Series shall equal the excess, if any, of (i) the
franchise tax that the combined group including the Partnership pays over
(ii) the amount the combined group would have paid if it had computed its
franchise tax liability for the report period without the Partnership as a
member of the combined group, but in no event more than what the Partnership or
each applicable Series would have paid had it filed the franchise tax return not
as a member of a group. In such event, the parties agree that such Partner shall
be considered as paying such amount on behalf of the Partnership with respect to
each applicable Series and the Partnership with respect to each applicable
Series shall deduct for U.S. federal income tax purposes 100% of the Texas
franchise tax attributable to the Partnership with respect to each applicable
Series; provided that in the event that such deduction may not be properly taken
by the Partnership with respect to each applicable Series, the Partnership with
respect to each applicable Series shall reimburse such Partner for the after-tax
cost of such payment of Texas franchise tax paid on the Partnership’s behalf.

Section 9.7 Tax Partnership.

It is the intention of the Partners that the Partnership be classified as a
partnership for U.S. federal tax purposes. Neither the Partnership nor any
Partner shall make an election for the Partnership or any Series to be excluded
from the application of the provisions of subchapter K of chapter 1 of subtitle
A of the Code or any similar provisions of applicable state or local law or to
be classified as other than a partnership pursuant to Treasury Regulation
Section 301.7701-3 or any similar provision of state or local law.

 

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Section 9.8 Tax Matters Following a Fundamental Change.

Following the occurrence of a Fundamental Change, the following provisions shall
take effect and supersede any conflicting provisions of this Article IX:

(a) EECI Sub shall exercise full and exclusive discretion over all tax matters
relating to or affecting the Series AC. For the avoidance of doubt, EECI Sub’s
right to exercise its discretion shall include matters relating to the
Partnership generally, such as Partnership tax elections permitted by the Code,
to the extent that such matter affects the Series AC.

(b) The Partnership shall cause to be delivered to EECI Sub at least 15 Business
Days before the due date of any Partnership tax return a copy of the proposed
tax return. EECI Sub shall have ten Business Days to request changes to any
portions of such tax return that affect Series AC, and the Tax Matters Partner
shall make all changes to such tax return requested by EECI Sub prior to timely
filing such return.

(c) If an audit of any of the Partnership’s tax returns shall occur, EECI Sub
shall have the right, at its discretion, to control all decisions with respect
to any matter relating to or affecting the Series AC, and the Tax Matters
Partner shall act in accordance with EECI Sub’s direction. For the avoidance of
doubt, EECI Sub shall control all decisions with respect to all matters under
audit affecting or relating to the Partnership generally to the extent that such
matters also affect the Series AC.

ARTICLE X

OTHER EVENTS

Section 10.1 Fundamental Change.

(a) If, at any time, (i) EECI is removed as the general partner of Enbridge
Partners pursuant to Section 13.2 (or equivalent provision) of the Fourth
Amended and Restated Agreement of Limited Partnership of Enbridge Partners, as
amended, or (ii) Enbridge Partners shall cease to directly or indirectly control
the Partnership generally and each Series (each, a “Fundamental Change”), then
the Managing General Partner of Series AC and each Managing General Partner of
any Alberta Clipper Expansion Series shall, without any further action on its
part, be deemed to have automatically and irrevocably delegated to EECI Sub (or
its designee), to the fullest extent permitted under this Agreement and Delaware
law, all of such Managing General Partner’s power and authority to manage and
control the business and affairs of the applicable Series (such delegation being
referred to herein as the “Maximum Permitted Delegation”), subject to
termination only in the sole discretion of EECI Sub. Notwithstanding the
delegation provided for in this Section 10.1(a), no Managing General Partner
shall be deemed to have withdrawn as a General Partner of the Partnership
generally or the applicable Series, and such Managing General Partner shall
retain all of its Partnership Interests and Percentage Interests in the
Partnership generally and the applicable Series (as the case may be), and none
of the foregoing shall be deemed to have been assigned or transferred to EECI
Sub (or its designee).

(b) If all or a portion of the Maximum Permitted Delegation is determined to be
invalid or unenforceable for any reason following a Fundamental Change, EECI, in
its sole discretion, may elect to become the Managing General Partner of the
Series AC and each Alberta

 

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Clipper Expansion Series by providing five Business Days’ prior written notice
of such election to the Managing General Partner of the Partnership generally at
any time (such election, the “Control Option”). Upon exercise of the Control
Option:

(i) the Limited Partner Interest of EECI Sub in the Series AC shall
automatically convert into a General Partner Interest in the Series AC;

(ii) EECI Sub shall be granted a General Partner Interest in each Alberta
Clipper Expansion Series that shall have no economic rights with respect to such
Series or otherwise;

(iii) EECI Sub shall automatically become the Managing General Partner of the
Series AC and each Alberta Clipper Expansion Series, with all rights, powers and
obligations of the Managing General Partner of such Series as set forth in this
Agreement; and

(iv) all rights, powers and obligations of the existing Managing General Partner
of the Series AC and each Alberta Clipper Expansion Series (in its capacity as
such) shall immediately terminate.

The exercise of the Control Option pursuant to this Section 10.1(b) shall not
affect (A) the status of any Managing General Partner of the Partnership
generally or any Series (other than the Series AC or an Alberta Clipper
Expansion Series) or (B) the Percentage Interest of the Series AC Partners or
the Partners of any Alberta Clipper Expansion Series.

(c) Following a Fundamental Change, in addition to the rights set forth in
Section 9.8 and Section 10.1, EECI, in its sole discretion, may elect to cause
the Series AC Assets and the right to operate the assets of each Alberta Clipper
Expansion Series to be transferred to the New AC Entity by providing five
Business Days’ prior written notice of such election to the Managing General
Partner of the Partnership generally at any time (such election, the “Separation
Option”). Upon exercise of the Separation Option, the Managing General Partner
of the Partnership generally and each Series AC Partner shall (i) negotiate
reasonably and in good faith in connection with a transfer of all Series AC
Assets and Series AC Liabilities to the New AC Entity and (ii) use their best
efforts to (A) effectuate such transfer and (B) allow the newly formed entity to
own and operate the Series AC Assets and operate any Alberta Clipper Expansion
Projects, including the transfer of all necessary permits, licenses and
rights-of-way and the good faith negotiation and performance of any necessary
service agreements between the New AC Entity and the Partnership. The Series AC
Partners at the time of exercise of the Separation Option shall be the initial
partners or members, as applicable, of the New AC Entity, and their relative
percentage interest in the New AC Entity shall be proportionate to their
Series AC Percentage Interest at the time of exercise of the Separation Option;
provided, however, that EECI or its designee shall be the managing general
partner, managing member or the equivalent thereof of the New AC Entity. All
costs reasonably incurred by the Partnership in complying with this
Section 10.1(c) shall be reimbursed by the Series AC.

(d) In connection with the exercise of the Control Option or the Separation
Option pursuant to this Section 10.1, each of the Partners agrees to cooperate
with respect to such matters and to execute such further assignments, releases,
assumptions, amendments of this

 

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Agreement and the Certificate of Limited Partnership, notifications and other
documents as may be reasonably requested by EECI, EECI Sub or the Managing
General Partner of the Series AC for the purpose of giving effect to, or
evidencing or giving notice of, the transactions contemplated by such provisions
and the otherwise continued operations of the Partnership.

Section 10.2 Surcharge Expiration.

(a) Upon the expiration or earlier termination of the Surcharge Term, the Tariff
Term Sheet shall be replaced with a revised tariff structure in accordance with
Section 2(b) of the Tariff Term Sheet (the “Revised Tariff Structure”).

(b) If the Revised Tariff Structure sets forth an objectively determinable
definition of (i) the revenue that the Partnership is entitled to collect in
tolls and other charges in respect of the Series AC Assets and (ii) the expenses
that the Partnership is entitled to allocate in respect of the Series AC Assets,
then the Series AC Revenue Entitlement and Series AC Expenses shall be
calculated in accordance with the Revised Tariff Structure.

(c) If the Revised Tariff Structure does not set forth an objectively
determinable definition of (i) the revenue that the Partnership is entitled to
collect in tolls and other charges in respect of the Series AC Assets and
(ii) the expenses that the Partnership is entitled to allocate in respect of the
Series AC Assets, then EECI Sub and Lakehead GP, on behalf of all Partners of
the Partnership generally and each Series, will negotiate in good faith an
arrangement to allocate among each Series the total Lakehead System revenue
collected by the Partnership following the expiration or earlier termination of
the Surcharge Term. Such allocation arrangement will be based on the relative
economic value of each Series as of the expiration or earlier termination of the
Surcharge Term. If EECI Sub and Lakehead GP are able to agree on such allocation
arrangement, then the Series AC Revenue Entitlement and Series AC Expenses will
be calculated in accordance with such arrangement. If EECI Sub and Lakehead GP
are unable to agree on such allocation arrangement at least 180 days prior to
the expiration or earlier termination of the Surcharge Term, then the matter
will be submitted to arbitration pursuant to Section 10.2(d).

(d) If the Revised Tariff Structure does not set forth an objectively
determinable definition of (i) the revenue that the Partnership is entitled to
collect in tolls and other charges in respect of the Series AC Assets and
(ii) the expenses that the Partnership is entitled to allocate in respect of the
Series AC Assets, and EECI Sub and Lakehead GP are unable to agree on an
allocation arrangement pursuant to Section 10.2(c), such allocation arrangement
shall be determined through binding arbitration using three arbitrators, in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, as supplemented to the extent necessary to determine any procedural
appeal questions by the Federal Arbitration Act (Title 9 of the United States
Code). If there is any inconsistency between this Section 10.2(d) and the
Commercial Arbitration Rules or the Federal Arbitration Act, the terms of this
Section 10.2(d) will control the rights and obligations of the parties.
Arbitration shall be initiated 180 days prior to the expiration of the Surcharge
Term. Each of EECI Sub and Lakehead GP shall appoint an arbitrator at least 150
days prior to the expiration of the Surcharge Term. If either party fails for
any reason to name an arbitrator within such period, the other party shall
petition to the American Arbitration Association for appointment of an
arbitrator for such party’s

 

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account. The two arbitrators so chosen shall select a third arbitrator within 15
days after the second arbitrator has been appointed. Each of EECI Sub and
Lakehead GP will pay the compensation and expenses of the arbitrator named by or
for it. The costs of petitioning for the appointment of an arbitrator, if any,
shall be paid by the party that has failed to appoint an arbitrator in the
requisite period. Each of EECI Sub and Lakehead GP will each pay one-half of the
compensation and expenses of the third arbitrator. All arbitrators must (a) be
neutral Persons who have never been officers, directors or employees of Enbridge
Partners, EECI or any of their Affiliates and (b) have not less than seven years
experience in the energy industry. The hearing will be conducted in Houston,
Texas and commence within 30 days after the selection of the third arbitrator.
Within five days after the selection of the third arbitrator, EECI Sub and
Lakehead GP shall exchange in writing, signed by the respective parties, their
respective proposed allocation arrangements. At the conclusion of the hearing,
the arbitrators shall choose either the allocation arrangement of EECI Sub or
the allocation arrangement of Lakehead GP, and shall have no power or authority
whatsoever to reach any other result. In making their choice, the arbitrators
shall choose the allocation arrangement that in their judgment most equitably
allocates the total Lakehead System revenues in a manner that best represents
the relative economic value of each Series as of the expiration of the Surcharge
Term. EECI Sub, Lakehead GP and the arbitrators shall proceed diligently and in
good faith in order that the determination may be made as promptly as possible.
Except as provided in the Federal Arbitration Act, the decision of the
arbitrators will be binding on and non-appealable by the parties.

ARTICLE XI

DISSOLUTION AND LIQUIDATION

Section 11.1 Dissolution of the Partnership.

(a) The Partnership shall not be dissolved by the admission of additional
Partners. The Partnership shall dissolve, and its affairs shall be wound up,
upon:

(i) subject to Section 7.3(q), an election to dissolve the Partnership by the
Managing General Partner of the Partnership generally and the Managing General
Partner of each Series that is approved by a Majority in Interest of each
Series;

(ii) the entry of a decree of judicial dissolution of the Partnership pursuant
to the provisions of the Delaware Act;

(iii) the termination of the last remaining Series;

(iv) at any time that there are no Limited Partners, unless the Partnership is
continued without dissolution in accordance with the Delaware Act; or

(v) any event that causes a General Partner to cease to be a general partner of
the Partnership generally or any Series; provided that the Partnership shall not
be dissolved and required to be wound up in connection with any such event if
(A) at the time of the occurrence of such event there is at least one remaining
general partner of the Partnership generally or any Series who is hereby
authorized to and does carry on the business of the Partnership or (B) within 90
days after the occurrence of such event, a Majority in Interest of the Limited

 

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Partners of each Series agree in writing or vote to continue the business of the
Partnership and to the appointment, effective as of the date of such event, if
required, of one or more additional general partners of the Partnership
generally and, to the extent applicable, each Series.

(b) Upon the dissolution of the Partnership as provided herein, the Partnership
shall be wound up by winding up each Series in the manner provided by
Section 11.3.

Section 11.2 Termination of a Series.

(a) a Series shall be terminated upon any of the following events:

(i) the dissolution of the Partnership;

(ii) the entry of a decree of judicial termination of such Series under
Section 17-218 of the Delaware Act;

(iii) subject to Section 7.3(q), the approval of each General Partner of such
Series and a Majority in Interest of the Partnership Interests of such Series;
or

(iv) any event that causes a General Partner to cease to be a general partner of
the Series; provided that the Series shall not be terminated and required to be
wound up in connection with any such event if (A) at the time of the occurrence
of such event there is at least one remaining general partner of the Series who
is hereby authorized to and does carry on the business of the Series or
(B) within 90 days after the occurrence of such event, a Majority in Interest of
the Limited Partners of such Series agree in writing or vote to continue the
business of the Series and to the appointment, effective as of the date of such
event, if required, of one or more additional general partners of the Series.

(b) The termination and winding up of a Series (other than the last Series)
shall not, in and of itself, cause a dissolution of the Partnership or the
termination of any other Series. The termination of a Series shall not affect
the limitation on liabilities of such Series or any other Series provided by
this Agreement, the Certificate of Limited Partnership and the Delaware Act.

Section 11.3 Winding Up, Liquidation and Distribution of Assets of the
Partnership or a Series Upon Dissolution of the Partnership or Termination of
Such Series.

(a) Upon dissolution of the Partnership or termination of a Series, the Managing
General Partner of the Partnership generally or of such Series, as applicable,
shall commence to wind up the affairs of the Partnership (and all Series) or
such Series, as applicable; provided, however, that a reasonable time shall be
allowed for the orderly liquidation of the assets of any applicable Series and
the discharge of liabilities of the Partnership (and all Series) or such Series,
as applicable, to its creditors so as to enable the Partners to minimize the
normal losses attendant upon a liquidation. Upon dissolution of the Partnership
or termination of a Series after taking into account Regulatory Allocations, all
allocations of Profit, Losses and items thereof with respect to a Series shall
be made in a manner so that, to the greatest extent possible, the Series Capital
Accounts of each Partner in such Series shall equal the amount that would be
distributed to such Partner if liquidating distributions were made in accordance
with the Partners’ Percentage Interests in such Series. The Partners of each
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shall be furnished with a statement prepared by a certified public accountant
selected by the Managing General Partner of the Partnership generally, in its
sole discretion, at the expense of such Series, if applicable, that shall set
forth the assets and liabilities of the Partnership (and all Series) or such
Series (as applicable) as of the date of termination. The proceeds of
liquidation shall be distributed in the following order and priority:

(i) to creditors of each applicable Series, including Partners who are
creditors, to the extent otherwise permitted by law, in satisfaction (whether by
payment or the making of reasonable provision for payment thereof) of all
Liabilities of such Series, including, without limitation, the expenses incurred
in connection with the liquidation of the Partnership (and all Series) or such
Series;

(ii) to the Partners of each Series being liquidated in accordance with such
Partners’ Series Capital Account balances for such Series (after giving effect
to all contributions, distributions, allocations and other Series Capital
Account adjustments for all taxable years, including the year during which such
termination and liquidation occurs) in compliance with Treasury Regulation §
1.704-1(b)(2)(ii)(b)(2); and

(iii) if any Limited Partner has a deficit balance in its Series Capital Account
for such Series (after giving effect to all contributions, distributions and
allocations for all fiscal years, including the fiscal year during which such
liquidation occurs), such Limited Partner shall have no obligation to make any
contribution to the capital of the Partnership or of such Series with respect to
such deficit, and such deficit shall not be considered a debt owed to the
Partnership, such Series or to any other Person for any purpose whatsoever.

(b) Notwithstanding any other provisions of this Section 11.3, in the event the
Partnership is “liquidated” within the meaning of Treasury Regulation §
1.704-1(b)(2)(ii)(g), but such liquidation does not constitute a dissolution of
the Partnership, the assets of the Partnership (and each Series) shall not be
liquidated, the liabilities of the Partnership (and each Series) shall not be
paid or discharged and the affairs of the Partnership (and each Series) shall
not be wound up. Instead, solely for U.S. federal income tax purposes, the
Partnership (and each Series) shall be deemed to have distributed all of the
assets of the Partnership (and each Series) in kind to a new partnership in
exchange for an interest in such new partnership and, immediately thereafter,
the Partnership shall be deemed to liquidate by distributing interests in the
new partnership to the Partners.

(c) The Managing General Partners and Partners shall comply with all
requirements of applicable law pertaining to the winding up of the affairs of
the Partnership or any Series and the final distribution of its assets.

Section 11.4 Cancellation of Certificate of Limited Partnership.

Upon the completion of the winding up of the Partnership and each Series and the
distribution of Series cash and property as provided in Section 11.3 in
connection with the liquidation of the Partnership and each Series, the
Certificate of Limited Partnership and all qualifications of the Partnership as
a foreign limited partnership in jurisdictions other than the State of Delaware
shall be canceled, and such other actions as may be necessary to terminate the
Partnership and each Series shall be taken.

 

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Section 11.5 Return of Capital Contributions.

(a) Except as otherwise provided by applicable laws, upon termination of a
Series, each Partner of such Series shall look solely to the assets of such
Series for the return of its Capital Contributions made to such Series, and if
the assets of such Series remaining after satisfaction (whether by payment or
reasonable provision for payment) of the Liabilities of such Series are
insufficient to return such Capital Contributions, such Partner shall have no
recourse against any other Series, the Partnership or any Partner, except as
otherwise provided by law or by Section 6.2(c) or 6.3(c).

(b) Except as provided in Section 6.2(c), 6.3(c) or 11.7, no General Partner
shall be personally liable for, and shall have no obligation to contribute or
loan any monies or property to the Partnership or any Series to enable it to
effectuate, the return of the Capital Contributions of the Limited Partners, or
any portion thereof, it being expressly understood that any such return shall be
made solely from Series assets.

Section 11.6 Waiver of Partition.

To the maximum extent permitted by law, each Partner hereby waives any right to
partition of the Partnership or any Series property.

Section 11.7 Capital Account Restoration.

No Limited Partner shall have any obligation to restore any negative balance in
its Capital Account or any Series Capital Account upon liquidation of the
Partnership or such Series. A General Partner shall be obligated to restore any
negative balance in its Capital Account upon liquidation of its interest in the
Partnership or any Series by the end of the taxable year of the Partnership
during which such liquidation occurs, or, if later, within 90 days after the
date of such liquidation.

ARTICLE XII

AMENDMENT OF PARTNERSHIP AGREEMENT;

MEETINGS; RECORD DATE; MERGER

Section 12.1 Amendment.

Except as otherwise provided by this Agreement, this Agreement may be amended by
the Managing General Partner of the Partnership generally in writing without the
approval of any other Partner; provided that the provisions of Section 7.7 shall
not be amended in any way that would adversely affect an Indemnitee without the
consent of such Indemnitee.

Section 12.2 Amendment Requirements.

Notwithstanding the provisions of Section 12.1, no provision of this Agreement
that establishes a Percentage Interest required to take any action with respect
to any Series shall be

 

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amended, altered, changed, repealed or rescinded in any respect that would have
the effect of reducing such voting percentage unless such amendment is approved
by the written consent or the affirmative vote of holders of Partnership
Interests of such Series whose aggregate Percentage Interests constitute not
less than the voting requirement sought to be reduced.

Section 12.3 Voting Rights.

Unless otherwise required by the Delaware Act or this Agreement, all actions,
approvals and consents to be taken or given by the Partners of a Series under
the Delaware Act, this Agreement or otherwise shall require the affirmative vote
or written consent of a Majority in Interest of such Series, or if with respect
to the Partnership as a whole, the affirmative vote or written consent of a
Majority in Interest of each Series.

Section 12.4 Meetings.

Meetings of the Partners of a Series, for any purpose or purposes, may be called
by the Managing General Partner of such Series or by any Partner or Partners of
such Series holding at least 25% of the Percentage Interests of such Series.

Section 12.5 Place of Meetings.

The Partner or Partners calling a meeting may designate any place, either within
or outside the State of Delaware, as the place of meeting for any meeting of the
Partners of a Series. If a designation is not made, the place of meeting shall
be the principal place of business of the Partnership. The Partners of a Series
may participate in a meeting of the Partners of such Series by means of
conference telephone or similar communications equipment; provided that all
individuals participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at such meeting.
If all the participants of a meeting are participating by conference telephone
or similar communications equipment, the meeting shall be deemed to be held at
the principal place of business of the Partnership.

Section 12.6 Notice of Meetings.

Written notice stating the place, day and hour of a meeting and the purpose or
purposes for which a meeting of the Partners of a Series is called shall be
delivered not less than five nor more than 30 days before the date of the
meeting, either personally or by mail, at the direction of the Partner or
Partners calling the meeting, to each Partner of such Series entitled to vote at
such meeting; provided, however, if the Partners of a Series representing a
Majority in Interest of such Series shall meet or participate in a meeting at
any time and place, either within or outside the State of Delaware, and consent
(whether orally or in writing) to the holding of a meeting at such time, such
meeting shall be valid without call or notice, and at such meeting lawful action
may be taken.

Section 12.7 Quorum.

Partners of any Series holding a Majority in Interest of such Series entitled to
vote, represented in person or by proxy, shall constitute a quorum at any
meeting of Partners of such Series. In the absence of a quorum at any such
meeting, Partners of such Series holding a

 

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Majority in Interest of such Series may adjourn the meeting from time to time
for a period not to exceed 60 days without further notice. However, if the
adjournment is for more than 60 days, a notice of the adjourned meeting shall be
given to each Partner of such Series of record entitled to vote at such meeting.
At such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted that might have been transacted at the meeting as
originally noticed. The Partners of such Series present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal during such meeting of Partners of such Series whose absence would
cause less than a quorum to be present. If a quorum is present, the affirmative
vote of Partners of such Series holding a Majority in Interest of such Series
shall be the act of the Partners of such Series, unless a vote of greater or
lesser proportion is otherwise expressly required or permitted by this
Agreement.

Section 12.8 Proxies.

At all meetings of Partners of a Series, a Partner of such Series may vote in
person or by proxy executed in writing by such Partner or by a duly authorized
attorney-in-fact. Such proxy shall be filed with the Partnership before or at
the time of the meeting. No proxy shall be valid after eleven months from the
date of its execution, unless otherwise provided in the proxy. A proxy may only
be given orally during a meeting taking place by conference telephone or similar
communications equipment and shall expire at the termination of such meeting.

Section 12.9 Action Without a Meeting.

Any action required or permitted to be taken at a meeting of Partners of any
Series may be taken without a meeting and without prior notice if the Managing
General Partner of such Series receives written consents by the Partners of such
Series representing the minimum number of votes that would be necessary to
authorize or to take such action at a meeting at which all Partners of such
Series were present and voted.

Section 12.10 Waiver of Notice.

When any notice is required to be given to any Partner, a waiver thereof in
writing signed by the Partner entitled to such notice, whether before, at or
after the time stated therein, or the presence and participation of such Partner
in a meeting, or the participation by such Partner in a meeting by conference
telephone or similar communications equipment, shall be equivalent to the giving
of such notice.

Section 12.11 Merger, Consolidation and Conversion.

(a) Subject to Section 7.3, the Partnership may merge or consolidate with or
into one or more corporations, limited liability companies, statutory trusts or
associations, real estate investment trusts, common law trusts or unincorporated
businesses, including a partnership (whether general or limited (including a
limited liability partnership)) or convert into any such entity, whether such
entity is formed under the laws of the State of Delaware or any other state of
the United States of America, pursuant to a written plan of merger or
consolidation or a written plan of conversion, as the case may be, approved by
the Managing General Partner of the Partnership generally and a Majority in
Interest of each Series.

 

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(b) Pursuant to Section 17-211(g) of the Delaware Act, an agreement of merger or
consolidation approved in accordance with this Section 12.11 may (i) effect any
amendment to this Agreement or (ii) effect the adoption of a new partnership
agreement for the Partnership. Any such amendment or adoption made pursuant to
this Section 12.11 shall be effective at the effective time or date of the
merger or consolidation.

(c) The Managing General Partner of the Partnership generally shall have the
authority to convert the Partnership to a Delaware statutory trust if, on the
advice of counsel, such conversion (i) is necessary and advisable for Wisconsin
GP to have or retain condemnation authority under Wisc. Stat. § 32.01, et seq.
and (ii) would not result in a default under any Indebtedness of the Partnership
or Enbridge Partners existing at such time; provided that (A) the trust is
structured as a series trust pursuant to Del. Code tit. 12, § 3801, et seq.,
(B) the relative rights and obligations of the Partners of each Series are
maintained in the trust (and each series thereof), (C) the beneficial owners of
each series of the trust own an undivided beneficial interest in all of the
assets of the Series of which they are beneficial owners, (D) the trust would be
disregarded for U.S. federal income tax purposes and (E) the limited liability
of the beneficial owners of the trust (and each series thereof) would be
expected to be respected in all relevant states to the same extent as that
applicable to limited partners of a Delaware limited partnership.

ARTICLE XIII

GENERAL PROVISIONS

Section 13.1 Addresses and Notices; Written Communications.

(a) Any notice, demand, request or report required or permitted to be given or
made to a Partner under this Agreement shall be in writing and shall be deemed
given or made when delivered in person or when sent by first class United States
mail or by other means of written communication to the Partner at the following
addresses:

If to EECI or EECI Sub, to:

Enbridge Inc.

3000 Fifth Avenue Place

425 – 1st Street S.W.

Calgary, Alberta

T2P 3L8 Canada

Attention: Group Vice President, Corporate Law

Facsimile: 403-231-3920

If to Enbridge Partners, Lakehead GP or Wisconsin GP, to:

Enbridge Energy Partners, L.P.

1100 Louisiana Street, Suite 3300

Houston, Texas 77001

Attention: Vice President—Law and Deputy General Counsel

Facsimile: 713-821-2000

 

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Any notice, payment or report to be given or made to a Partner hereunder shall
be deemed conclusively to have been given or made, and the obligation to give
such notice or report or to make such payment shall be deemed conclusively to
have been fully satisfied, upon sending of such notice, payment or report to
such Partner at its address as shown on the records of the Partnership,
regardless of any claim of any Person who may have an interest in such
Partnership Interests by reason of any assignment or otherwise. Any notice to
the Partnership generally or any Series shall be deemed given if received by the
Managing General Partner of the Partnership generally or the applicable Series
at the principal office of the Partnership generally or the applicable Series
designated pursuant to Section 2.3. Each Managing General Partner may rely and
shall be protected in relying on any notice or other document from a Partner or
other Person if believed by it to be genuine.

(b) The terms “in writing,” “written communications,” “written notice” and words
of similar import shall be deemed satisfied under this Agreement by use of
e-mail and other forms of electronic communication.

Section 13.2 Further Action.

The parties shall execute and deliver all documents, provide all information and
take or refrain from taking action as may be necessary or appropriate to achieve
the purposes of this Agreement.

Section 13.3 Binding Effect.

This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.

Section 13.4 Integration.

This Agreement constitutes a single, non-severable agreement and the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.

Section 13.5 Creditors.

None of the provisions of this Agreement shall be for the benefit of, or shall
be enforceable by, any creditor of the Partnership or any Series.

Section 13.6 Waiver.

No failure by any party to insist upon the strict performance of any covenant,
duty, agreement or condition of this Agreement or to exercise any right or
remedy consequent upon a breach thereof shall constitute a waiver of any such
breach of any other covenant, duty, agreement or condition.

 

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Section 13.7 Counterparts.

This Agreement may be executed in counterparts, all of which together shall
constitute an agreement binding on all the parties hereto, notwithstanding that
all such parties are not signatories to the original or the same counterpart.

Section 13.8 Applicable Law.

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

Section 13.9 Invalidity of Provisions.

If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.

Section 13.10 Consent of Partners.

Each Partner hereby expressly consents and agrees that, whenever in this
Agreement it is specified that an action may be taken upon the affirmative vote
or consent of less than all of the Partners of the Partnership or any Series,
such action may be so taken upon the concurrence of less than all of the
Partners and each Partner shall be bound by the results of such action.

Section 13.11 Third Party Beneficiaries.

Except for the provisions of Section 3.4(c) (which are intended to be for the
benefit of, and shall be enforceable by, each Material Subsidiary of Enbridge
Partners as if they were party to this Agreement), nothing in this Agreement,
express or implied, is intended to or shall confer upon any Person other than
the parties hereto and Indemnitees any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

ENBRIDGE ENERGY PARTNERS, L.P. By: ENBRIDGE ENERGY MANAGEMENT, L.L.C., as
delegate of authority of Enbridge Energy Company, Inc., its general partner By:
  /s/ TERRANCE L. MCGILL Name:   Terrance L. McGill Title:   President

 

ENBRIDGE PIPELINES (LAKEHEAD) L.L.C. By:   /s/ BRUCE A. STEVENSON Name:   Bruce
A. Stevenson Title:   Secretary

 

ENBRIDGE PIPELINES (WISCONSIN) INC. By:   /s/ BRUCE A. STEVENSON Name:   Bruce
A. Stevenson Title:   Secretary

 

ENBRIDGE ENERGY COMPANY, INC. By:   /s/ STEPHEN J.J. LETWIN Name:   Stephen J.J.
Letwin Title:   Managing Director

 

ENBRIDGE PIPELINES (ALBERTA CLIPPER) L.L.C. By:   /s/ STEPHEN J.J. LETWIN Name:
  Stephen J.J. Letwin Title:   Managing Director

[Signature Page – Third Amended and Restated Agreement of Limited Partnership

of Enbridge Energy, Limited Partnership]

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

EXHIBIT A

Initial Partnership Interests

 

Series AC Partners

  

Series AC Partnership Interest

   Initial Series AC
Capital Contribution    Maximum Commitment

EECI

   66.66% limited partner interest    $ 155,870,000.00    $ 446,188,710.00

EECI Sub

   0.01% limited partner interest      23,382.84      66,935.00

Enbridge Partners

   33.329% limited partner interest      77,932,661.72      223,087,661.50

Lakehead GP

   0.0005% general partner interest      1,169.14      3,346.75

Wisconsin GP

   0.0005% general partner interest      1,169.14      3,346.75                 
 

Total:

   100.0000%    $ 233,828,382.84    $ 669,350,000.00

 

Series LH Partners

  

Series LH Partnership Interest

Enbridge Partners

   99.999% limited partner interest

Lakehead GP

   0.0005% general partner interest

Wisconsin GP

   0.0005% general partner interest     

Total:

   100.0000%

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

EXHIBIT B

Exclusive Series AC Assets

 

1. Approximately 325 miles of new 36-inch diameter crude oil pipeline from the
U.S.-Canadian border near Neche, North Dakota to Superior, Wisconsin.

 

2. Three new pump stations located at Viking, Clearbrook and Deer River,
Minnesota.

 

3. 30-inch delivery piping with manifold connections and related control valves
at Clearbrook, Minnesota.

 

4. Five 200,000-barrel break out tanks at Superior, Wisconsin.

 

5. 36-inch diameter tank lines from each tank at Superior, Wisconsin.

 

6. Three 1,000-horsepower booster pumps at Superior, Wisconsin.

 

7. 36-inch line from tank manifold to connections with Southern Access Expansion
(Line 61) and Line 6A.

 

8. All service agreements, easements and rights-of-way related solely to the
operation of the Alberta Clipper Project.

 

9. All permits, licenses, consents and approvals related solely to the operation
of the Alberta Clipper Project.

 

10. All rights to the Revenue Requirement.

 

11. All shipping, transportation and storage agreements or arrangements related
solely to the Alberta Clipper Project.

 

12. All other property interests (including real and personal property and
tangible and intangible property) solely related to the Alberta Clipper Project.

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

EXHIBIT C

Shared Assets

ARTICLE I

DEFINITIONS

1.1 Additional Defined Terms. The following additional definitions shall be for
all purposes, unless otherwise clearly indicated to the contrary, applied to the
terms used in this Exhibit C. Unless specifically defined in this Exhibit C,
terms defined in the Agreement are used in this Exhibit C as defined in the
Agreement.

“Capital Improvement Project” has the meaning assigned to such term in
Section 4.3(a) of this Exhibit C.

“Force Majeure Event” has the meaning assigned to such term in Section 5.1(b) of
this Exhibit C.

“Governmental Authority” shall mean (i) the United States of America or Canada,
or any state, province or political subdivision thereof within the United States
of America or Canada and (ii) any court or any governmental or administrative
department, commission, board, bureau or agency of the United States of America
or Canada, or of any state, province or political subdivision thereof within the
United States of America or Canada.

“Improvement Series” has the meaning assigned to such term in Section 4.3(a) of
this Exhibit C.

“Rejecting Series” has the meaning assigned to such term in Section 4.3(b) of
this Exhibit C.

“Shared Asset Manager” has the meaning assigned to such term in Section 4.2(a)
of this Exhibit C.

“Shared Assets” means collectively, the Shared Contracts, the Shared Facilities,
the Shared Permits and the Shared Real Property Rights.

“Shared Contract Party” means one or more of the Partnership generally, the
Series AC or the Series LH, depending on which is or are parties to a particular
Shared Contract.

“Shared Contracts” means the contracts, agreements and commitments of the
Partnership generally or a Series existing as of the Closing Date or entered
into thereafter that are related to or necessary for the operation of both the
assets of the Series AC and the assets of the Series LH, including the contracts
described in Schedule 1 to this Exhibit C.

“Shared Facilities” means the information systems, control systems, electrical
infrastructure and equipment, data lines, emergency response equipment,
communication lines, maintenance facilities, valves, motor control centers,
buildings, pump station locations, terminal facilities, lab facilities, fire
protection systems, tank farms and other facilities or systems of the

 

[Exhibit C – Page 1]

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Partnership generally or a Series existing as of the Closing Date or developed,
constructed or acquired thereafter that are related to or necessary for the
operation of both the assets of the Series AC and the assets of the Series LH.

“Shared Permits” means the licenses, consents, approvals, registrations,
franchises, permits and authorizations of the Partnership generally or a Series
existing as of the Closing Date or acquired thereafter that are related to or
necessary for the operation of both the assets of the Series AC and the assets
of the Series LH.

“Shared Real Property Rights” means the easements, leasehold rights, real
property at station sites, other surface use rights and rights-of-way of the
Partnership generally or a Series existing as of the Closing Date or acquired
thereafter that are related to or necessary for the operation of both the assets
of the Series AC and the assets of the Series LH.

ARTICLE II

DESIGNATION OF SHARED ASSETS

2.1 Shared Facilities. Each of the Series AC and the Series LH is hereby granted
an unconditional, irrevocable, perpetual royalty free right to use the Shared
Facilities to the extent necessary in connection with the construction,
operation or maintenance of the assets of such Series.

2.2 Shared Contracts. Each Shared Contract Party shall hold each Shared Contract
to which it is a party for the benefit of the Partnership generally, the Series
AC and the Series LH. Each of the Partnership generally, the Series AC and the
Series LH shall have the benefit of all rights available to the Shared Contract
Party under each Shared Contract. All decisions in respect of the Shared
Contracts shall be made by the Shared Asset Managers in accordance with the
terms of Section 4.2 of this Exhibit C. The Shared Contract Party shall comply
with such decisions or delegation of authority, as applicable, with respect to
each Shared Contract. Without limiting the foregoing, (i) promptly upon receipt
and delivery as applicable, the Shared Contract Party shall provide (a) to the
Shared Asset Managers copies of all notices and other correspondence relating to
each Shared Contract and (b) additionally, to the Series AC Partners copies of
all notices and other correspondence relating to the Tariff Term Sheet, and
(ii) the Shared Contract Party shall immediately notify the Shared Asset
Managers if a default or other material event occurs in respect of a Shared
Contract (such as an event that affects the validity or enforceability of a
Shared Contract or an event that may result in an early termination of a Shared
Contract).

2.3 Shared Real Property Rights. Each of the Series AC and the Series LH is
hereby granted an unconditional, irrevocable, perpetual royalty free right to
use the Shared Real Property Rights to the extent necessary in connection with
the construction, operation or maintenance of the assets of such Series.

2.4 Shared Permits. The Partnership shall hold the Shared Permits for the
benefit of the Series AC and the Series LH. Each of the Series AC and the Series
LH shall have the benefit of all rights available to the Partnership under the
Shared Permits. All decisions in respect of the Shared Permits shall be made by
the Shared Asset Managers in accordance with the terms of

 

[Exhibit C – Page 2]

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Section 4.2 of this Exhibit C. The Partnership shall comply with such decisions
or delegation of authority, as applicable. Without limiting the foregoing,
promptly upon receipt and delivery as applicable, the Partnership shall provide
to the Shared Asset Managers copies of all notices and other correspondence
relating to the Shared Permits.

2.5 Designation of Shared Assets. The designated interest of each Series in a
Shared Asset shall be allocated to the Series pro rata in accordance with a
ratio the numerator of which is the costs incurred by each Series to develop,
construct or acquire such Shared Asset and the denominator of which is the
aggregate costs incurred by the Series AC and the Series LH collectively to
develop, construct or acquire such Shared Asset; provided, however, that all of
the Shared Assets existing as of the Closing Date will be allocated to the
Series LH, except for any of the Shared Assets existing as of the Closing Date
that have been developed, constructed or acquired by the Partnership in
connection with the Alberta Clipper Project, which shall be allocated to the
Series AC. The rights of each Series to use the Shared Assets as described in
this Article II shall not be affected by the terms of this Section 2.5.

ARTICLE III

ADDITIONAL SERIES

3.1 Additional Series. In the event that, subsequent to the Closing Date, an
additional Series is established, then each of the Series AC and the Series LH
shall cooperate in good faith with such additional Series and the Partnership
generally, if necessary, to amend the Agreement and this Exhibit C as
appropriate to reflect the addition of such Series and for the applicable assets
to be shared among the Series on mutually agreeable terms, reasonably determined
on a basis similar to the terms set forth in this Exhibit C.

ARTICLE IV

COVENANTS OF THE PARTIES

4.1 Use of Shared Assets.

(a) Rights to Use. Each of the Series AC and the Series LH acknowledges that
both of the Series AC and the Series LH will have the right to use the Shared
Assets in accordance with the terms of this Exhibit C.

(b) Liability. Each Series shall be responsible for its Proportionate Share of
Shared Liabilities with respect to each Shared Asset pursuant to Section 3.4(d)
of the Agreement.

(c) Cooperation. The Series AC and the Series LH shall cooperate in good faith
with each other with respect to the use of the Shared Assets and will not use
the Shared Assets in a manner that interferes unreasonably with the operations
of any other Series or the Partnership generally.

(d) Priority of Use. In the event of a conflict limiting the ability of both
Series to make use of a particular Shared Asset to the extent desired by each of
the Series AC and the Series LH, priority of use shall be given for the Series
AC or the Series LH to use such Shared Asset in the following order:

 

  (i) first, to the Series AC or the Series LH, to the extent necessary to
address any emergency;

 

[Exhibit C – Page 3]

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

  (ii) second, prior to the In-Service Date, to the Series AC, to the extent
necessary in connection with the construction of the Alberta Clipper Project;
provided that the Series AC’s use of the Shared Assets pursuant to this clause
(ii) shall not result in interruptions that could materially and adversely
affect the business operations of the Series LH without the consent of the
Series LH’s Shared Asset Manager; and

 

  (iii) third, in the proportions required by the Series AC and the Series LH to
conduct their respective operations, provided in the event of a conflict
limiting the ability of both Series to make use of a particular Shared Asset to
the extent desired by each Series in such a situation, the Managing General
Partner of the Partnership generally shall determine priority of use for the
Series AC or the Series LH based on the needs of each Series in respect of such
Shared Asset.

(e) Standard of Care. Each Series shall act with respect to the Shared Assets
(i) in a professional manner and in accordance with generally accepted industry
standards, (ii) in accordance with the Partnership’s policies, procedures and
requirements, as determined by the Managing General Partner of the Partnership
generally, and (iii) in accordance with applicable law in all material respects.
Each Series shall use commercially reasonable efforts to do or cause to be done
all such things as shall be necessary and proper with respect to the Shared
Assets to ensure that the rights of the other Series in respect of the Shared
Assets shall be preserved for the benefit of such Series.

4.2 Management of Shared Assets.

(a) Managers. Each Series hereby appoints the Managing General Partner of such
Series (each a “Shared Asset Manager”) to serve as the primary point of contact
for communications between the Series relating to the day-to-day operations of
the Shared Assets, to have overall responsibility for managing and coordinating
the performance of the appointing Series’ obligations under this Exhibit C, and
to be authorized to act for and on behalf of the appointing Series concerning
all matters relating to this Exhibit C.

(b) Decisions.

 

  (i) All decisions in respect of the Shared Assets shall require the joint
decision of the Shared Asset Managers of the Series AC and the Series LH unless
otherwise required by the terms of this Agreement. The Shared Asset Managers
shall act reasonably, taking into account the considerations of each Series, in
connection with all decisions regarding the Shared Assets.

 

[Exhibit C – Page 4]

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  (ii) In the event of a conflict between the Shared Asset Managers of the
Series AC and the Series LH, then (1) if one Series has priority of use pursuant
to Section 4.1(d) of this Exhibit C, then such Series shall prevail and
(2) other decisions shall be made by the Shared Asset Manager of the Series that
is reasonably likely to bear the greater proportion of the costs relating to
such matter.

 

  (iii) If the Shared Asset Managers are not the same Person, then
notwithstanding the foregoing, the following actions shall require the prior
written consent of the Majority in Interest of the Series AC and the Majority in
Interest of the Series LH:

 

  (A) the disposition, transfer, sale, conveyance or exchange of any Shared
Asset in excess of $25,000,000, in each case; or

 

  (B) material modifications of the Shared Contracts, Shared Real Property
Rights or Shared Permits.

(c) Meetings. The Shared Asset Managers agree to have meetings if called at any
time upon five Business Days prior written notice by a Shared Asset Manager.
Each Series shall make available at such meetings their personnel who are
familiar with the details of the particular Shared Assets under review.

4.3 Capital Improvements.

(a) A Series (the “Improvement Series”) may submit from time to time to the
other Series written requests to undertake capital expenditures or capital
improvement projects relating to the Shared Assets (each, a “Capital Improvement
Project”). Any such requests shall specify in reasonable detail the Capital
Improvement Project, any permits that may be required, the estimated cost of
such Capital Improvement Project, any proposed changes to this Exhibit C, and
any other relevant information relating to such Capital Improvement Project.
Each Series agrees that it will consider in good faith any such request, but a
Series shall have no obligation to agree to undertake any Capital Improvement
Project and may reject any request by the other Series. If the Series agree to
undertake any Capital Improvement Project, the Series shall cooperate in good
faith to reach agreement on the allocation of responsibility for all costs
associated with such Capital Improvement Project.

(b) A rejecting Series (the “Rejecting Series”) shall provide the other Series a
written explanation for the rejection of any request to undertake a Capital
Improvement Project. If the Improvement Series desires to undertake a Capital
Improvement Project relating to the Shared Assets despite the Rejecting Series’s
rejection, then the Improvement Series (i) may undertake such Capital
Improvement Project on a sole risk basis, (ii) shall bear the entire cost and
Liability associated with such Capital Improvement Project, (iii) shall be
solely entitled to all the benefits and rights of use associated with such
Capital Improvement Project and (iv) shall develop such Capital Improvement
Project in a manner that does not interfere unreasonably with the operations of
any other Series or the Partnership generally.

 

[Exhibit C – Page 5]

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4.4 Nature of Right to Use. The right to use the Shared Assets as provided in
this Exhibit C (i) is an integral, non-severable part of the Agreement, (ii) is
an integral part of the Partnership Interests of the Series and the assets of
the Series designated under the Agreement and (iii) shall not be deemed to be an
executory contract or agreement that can be rejected or otherwise terminated in
any bankruptcy, receivership or similar proceeding of the Partnership.

4.5 Valuation. In any valuation of the assets of a Series, the value of such
assets shall include the continuing right to use the Shared Assets as provided
in this Exhibit C.

ARTICLE V

FORCE MAJEURE

5.1 Force Majeure Event.

(a) Subject to the following provisions of this Article V, a Series shall not be
in default hereunder or responsible for any loss or damage to the other Series
resulting from any delay in performing or failure to perform any obligation of
such Series under this Exhibit C (other than payment obligations) to the extent
such failure or delay is caused by a Force Majeure Event.

(b) “Force Majeure Event” means the following events, conditions and
circumstances, except to the extent any of the following is within the
reasonable control of, could be sufficiently alleviated by the reasonable
efforts of, or caused by the negligence, breach, default or misconduct of the
Series claiming the Force Majeure Event:

 

  (i) any act of God or the public enemy, fire, explosion, perils of the sea,
flood, drought, war, terrorism, riot, sabotage or embargo, and any interruption
of or delay in transportation, or any inadequacy or shortage or failure or
breakdown of supply of raw materials or equipment resulting from the foregoing;

 

  (ii) any labor disputes from whatever cause arising and whether or not the
demands of the employees involved are within the power of the claiming Series to
concede; or

 

  (iii) compliance with any order, action, direction or request of any
Governmental Authority or with any applicable law not brought about by any
action or omission on the part of the Series claiming the Force Majeure Event.

5.2 Force Majeure Notice. The Series whose ability to perform is affected by a
Force Majeure Event must, as a condition to its right to suspend its obligations
under Section 5.1 of this Exhibit C, (i) be actually prejudiced by such Force
Majeure Event and (ii) promptly give the other Series notice setting forth the
particulars of the Force Majeure Event and, to the extent possible, the expected
duration of the Force Majeure Event. Such notice shall also include a
description of the steps taken and proposed to be taken to lessen and cure the
Force Majeure Event. The cause of the Force Majeure Event shall so far as
commercially reasonable be remedied with all reasonable dispatch, except that no
Series shall be obligated to resolve any labor disputes other than as it shall
determine to be in its best interests.

 

[Exhibit C – Page 6]

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ARTICLE VI

MISCELLANEOUS

6.1 Conflict with Agreement. The terms of the Agreement, excluding this Exhibit
C, shall govern to the extent of any inconsistency or conflict between the terms
of the Agreement, excluding this Exhibit C, and this Exhibit C.

6.2 Amendments. The terms of this Exhibit C shall be amended to the extent
required to conform with any amendment or modification to the other terms of the
Agreement.

6.3 Governing Law. This Exhibit C shall be governed by and construed under the
laws of the State of Delaware (without regard to conflict of laws principles),
all rights and remedies being governed by said laws.

 

[Exhibit C – Page 7]

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Schedule 1

Shared Contracts

1. Canadian Association of Petroleum Producers contracts that are related to or
necessary for the operation of both the Alberta Clipper Project and the assets
or operations of the Series LH.

2. Power supply contracts that are related to or necessary for the operation of
both the Alberta Clipper Project and the assets or operations of the Series LH.

3. Communication contracts that are related to or necessary for the operation of
both the Alberta Clipper Project and the assets or operations of the Series LH.

4. Emergency response contracts that are related to or necessary for the
operation of both the Alberta Clipper Project and the assets or operations of
the Series LH.

 

[Exhibit C – Page 8]