Document:

exv4w1

 

Exhibit 4.1

 

 

CLECO POWER LLC

(Successor to Cleco Utility Group Inc., formerly Central Louisiana Electric Company, Inc.)

TO

THE BANK OF NEW YORK TRUST COMPANY, N.A.

(Successor to The Bank of New York, successor to Bankers Trust Company),

as Trustee

 

SEVENTH SUPPLEMENTAL INDENTURE

DATED AS OF JULY 6, 2005

 

Supplementing the Indenture

dated as of October 1, 1988

 

 

 

 

          SEVENTH SUPPLEMENTAL INDENTURE, dated as of July 6, 2005, between CLECO POWER LLC (successor
to Cleco Utility Group Inc., formerly Central Louisiana Electric Company, Inc.), a Louisiana
limited liability company (the “Company”), having its principal office at 2030 Donahue
Ferry Road, Pineville, Louisiana 71360-5226, and THE BANK OF NEW YORK TRUST COMPANY, N.A.
(successor to The Bank of New York, successor to Bankers Trust Company), a national banking
association organized under the laws of the United States, as trustee (the “Trustee”),
having its principal Corporate Trust Office at 10161 Centurion Parkway, Jacksonville, Florida 32256
(the “Seventh Supplemental Indenture”).

RECITALS OF THE COMPANY

          Central Louisiana Electric Company, Inc., a Louisiana corporation, executed and delivered its
Indenture dated as of October 1, 1988 to Bankers Trust Company, as trustee (the “Original
Indenture” and, as previously and hereby supplemented and amended, the “Indenture”), to
provide for the issuance from time to time of its unsecured debentures, notes or other evidences of
indebtedness, in the manner and subject to the conditions set forth therein.

          Cleco Utility Group Inc. (formerly Central Louisiana Electric Company, Inc.) (“Utility
Group”) executed and delivered to the Trustee a First Supplemental Indenture dated as of
December 1, 2000 (the “First Supplemental Indenture”) to the Original Indenture, as
permitted by Section 901(8) of the Original Indenture, in order to amend the Original Indenture in
certain respects to clarify that Utility Group could consolidate with, or sell, lease or convey all
or substantially all of its assets to, or merge with or into any limited liability company.

          Pursuant to that certain Joint Agreement of Merger of Utility Group with and into Cleco Power
LLC effective December 31, 2000, Utility Group merged with and into the Company, and the Company
was vested with all rights, privileges and franchises of Utility Group and became responsible for
all liabilities and obligations of Utility Group.

          The Company, as successor to Utility Group, executed and delivered to the Trustee a Second
Supplemental Indenture dated as of January 1, 2001 (the “Second Supplemental Indenture”) to
the Original Indenture as supplemented and modified by the First Supplemental Indenture, in
accordance with Section 901(1) thereof, in order to evidence and confirm its succession to Utility
Group and its assumption of the covenants therein contained and the Securities.

          The Company executed and delivered to the Trustee a Third Supplemental Indenture dated as of
April 26, 2001 to the Original Indenture, a Fourth Supplemental Indenture dated as of February 1,
2002 to the Original Indenture, a Fifth Supplemental Indenture dated as of May 1, 2002 to the
Original Indenture and a Sixth Supplemental Indenture dated as of April 28, 2003, in each case as
supplemented and modified by the supplemental indentures entered into prior thereto and providing
for the creation and issue of an additional series of securities as provided therein.

          The Company, in the exercise of the power and authority conferred upon and reserved to it
under the provisions of the Original Indenture, including Section 901(6) thereof, and pursuant to
appropriate resolutions of the Board of Directors, has duly determined to make,

 

 

execute and deliver to the Trustee this Seventh Supplemental Indenture to the Indenture in
accordance with Sections 201, 301 and 303 of the Original Indenture in order to establish the form
or terms of, and to provide for the creation and issue of, an additional series of Securities under
the Original Indenture in the aggregate principal amount of $50,000,000.

          All things necessary to make this Seventh Supplemental Indenture a valid agreement of the
Company have been done.

          NOW, THEREFORE, THIS SEVENTH SUPPLEMENTAL INDENTURE WITNESSETH:

          For and in consideration of the premises and of the covenants contained in the Indenture and
in this Seventh Supplemental Indenture and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all the Holders of the Securities or of series thereof, as
follows:

ARTICLE ONE

ADDITIONAL DEFINITIONS

     Section 1.01. Additional Definitions. Capitalized terms used herein shall have the
meanings specified herein or in the Indenture, as the case may be. Unless otherwise indicated,
section references herein shall be to the sections of the Indenture.

          For all purposes of this Seventh Supplemental Indenture:

          “Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday which
is not a day on which banking institutions in The City of New York are authorized or
obligated by law to close.

          “Certificated Note” has the meaning set forth in Section 2.09(b) hereof.

          “Comparable Treasury Issue” has the meaning set forth in Section 3.01 hereof.

          “Comparable Treasury Price” has the meaning set forth in Section 3.01 hereof.

          “Corporate Trust Office of the Trustee” means the principal office of the
Trustee located at The Bank of New York Trust Company, N.A., 10161 Centurion Parkway,
Jacksonville, Florida 32256; telecopier: (904) 645-1931.

          “Covenant Defeasance” has the meaning set forth in Section 4.03 hereof.

          “Defaulted Interest” has the meaning set forth in Section 2.04(c) hereof.

          “Defeasance” has the meaning set forth in Section 4.02 hereof.

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          “Depositary” means, with respect to Securities of any series issuable in whole
or in part in the form of one or more Global Securities, a clearing agency registered under
the Exchange Act that is designated to act as Depositary for such Securities.

          “Global Security” means a Security that evidences all or part of the Securities
of any series and bears the legend set forth in the Form of Note as Exhibit A hereto.

          “Holder,” as used in this Seventh Supplemental Indenture, means the Person in
whose name a Note is registered in the Security Register.

          “Indenture” has the meaning set forth in the Recitals hereof.

          “Independent Investment Banker” has the meaning set forth in Section 3.01
hereof.

          “Interest Payment Dates” means January 15 and July 15 of each year, commencing
on January 15, 2006.

          “Maturity Date” means, with respect to a Note, the date on which the principal
of such Note becomes due and payable as therein or herein provided, whether at Stated
Maturity or by declaration of acceleration, upon redemption by the Company as referred to in
Article Three hereof or otherwise.

          “Notes” has the meaning set forth in Section 2.01 hereof.

          “Original Issue Date” means July 6, 2005.

          “Participant” means an institution that has one or more accounts with the
Depositary or a nominee thereof.

          “Primary Treasury Dealer” has the meaning set forth in Section 3.01 hereof.

          “Redemption Date” has the meaning set forth in Section 3.01 hereof.

          “Redemption Price” has the meaning set forth in Section 3.01 hereof.

          “Regular Record Date” means, with respect to each Interest Payment Date, the
close of business on the January 1 or July 1, as the case may be, next preceding the
applicable Interest Payment Date.

          “Reference Treasury Dealer” has the meaning set forth in Section 3.01 hereof.

          “Reference Treasury Dealer Quotations” has the meaning set forth in Section
3.01 hereof.

          “Seventh Supplemental Indenture” has the meaning set forth in the introductory
paragraph hereof.

          “Specimen Note” has the meaning set forth in Section 2.08 hereof.

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          “Stated Maturity” has the meaning set forth in Section 2.03 hereof.

          “Treasury Rate” has the meaning set forth in Section 3.01 hereof.

          “U.S. Government Obligation” has the meaning set forth in Section 4.04(a)
hereof.

ARTICLE TWO

ESTABLISHMENT OF 4.95% NOTES DUE JULY 15, 2015

     Section 2.01. Title of the Securities. The title of the Securities established by this
Seventh Supplemental Indenture shall be “4.95% Notes due July 15, 2015” of the Company (the
“Notes”).

     Section 2.02. Limitation on Aggregate Principal Amount. The aggregate principal amount of
the Notes shall be limited to $50,000,000; provided, however, that the authorized aggregate
principal amount may in the future be increased without the consent of the Holders pursuant to the
provisions of the Indenture.

     Section 2.03. Stated Maturity. The Notes shall mature and the principal amount thereof
shall be due and payable, together with all accrued and unpaid interest thereon, on July 15, 2015
(the “Stated Maturity”).

     Section 2.04. Interest and Interest Rates.

          (a) Each Note shall bear interest at the rate of 4.95% per annum, from and including
the immediately preceding Interest Payment Date to which interest has been paid or duly
provided for (or from, and including, the Original Issue Date if no interest has been paid
or duly provided for), to, but excluding, the Maturity Date. The initial date on which
interest will be paid for the Notes will be January 15, 2006 and the payment on such date
will include all accrued interest from the Original Issue Date.

          (b) The amount of interest payable for any period shall be computed on the basis of a
360-day year of twelve 30-day months. The amount of interest payable for any partial period
shall be computed on the basis of a 360-day year of twelve 30-day months and the days
elapsed in any partial month. In the event that any date on which interest is payable on a
Note is not a Business Day, then payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay) with the same force and effect as if made on the date
the payment was originally payable.

          (c) The interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the Persons in whose names the Notes are registered at the
close of business on the applicable Regular Record Date, except that interest payable on the
Maturity Date as provided herein shall be paid to the Holder to whom principal is payable in
accordance with Section 2.05 hereof. Any such interest not so punctually paid or duly
provided for (“Defaulted Interest”) shall forthwith cease to be

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payable to the Holder on such Regular Record Date and may be paid by the Company, at
its election in each case (i) in accordance with the provisions of Section 307(1) of the
Original Indenture to the Persons in whose name such Notes are registered at the close of
business on a Special Record Date or (ii) be paid in any other lawful manner not
inconsistent with the requirements of any securities exchange or automated quotation system,
if any, on which the Notes may be listed or traded, and upon such notice as may be required
by such exchange or quotation system, if, after notice is given by the Company to the
Trustee of the proposed payment pursuant to this clause, such payment shall be deemed
practicable by the Trustee, all as more fully provided in the Indenture.

Section 2.05. Place and Manner of Payment of Principal and Interest.

          (a) The Trustee shall initially serve as the Paying Agent for the Notes. Payment of
the principal of and any interest on the Notes due on the Maturity Date shall be made in
immediately available funds in such coin and currency of the United States of America as at
the time of payment is legal tender for payment of public and private debt upon presentation
and surrender of the applicable Note at the office or agency maintained by the Company for
that purpose, initially the Corporate Trust Office of the Trustee, or at such other paying
agency as the Company may determine; provided, however, that if the Maturity Date falls on
or after an Interest Payment Date then the Holders presenting and surrendering Notes on such
Maturity Date will only be entitled to interest accruing on or after such Interest Payment
Date.

          (b) Payment of interest due on any Interest Payment Date other than on the Maturity
Date will be made at the Corporate Trust Office of the Trustee or, at the option of the
Company, (i) by check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register or (ii) by wire transfer of immediately available
funds at such place and to such account at a banking institution in the United States as may
be designated in wire transfer instructions received in writing by the Trustee at least
fifteen (15) days prior to such Interest Payment Date. Any such wire transfer instructions
received by the Trustee shall remain in effect until revoked by such Holder.

     Section 2.06. Place of Registration or Exchange; Notices and Demands with Respect to Notes.
The place where the Holders of the Notes may present the Notes for registration of transfer or
exchange and may make notices and demands to or upon the Company in respect of the Notes shall be
the Corporate Trust Office of the Trustee.

     Section 2.07. Sinking Fund Obligations. The Notes will not be subject to any sinking fund,
but may be redeemable as and to the extent provided in Article Three of this Seventh Supplemental
Indenture.

     Section 2.08. Form of Securities. The Notes shall be issuable only in fully registered
form, without coupons. The Notes shall be issuable in whole or in part in the form of one or more
Global Securities registered in the name of the Depositary or its nominee. Global Securities shall
not be deemed to be temporary Securities in global form for purposes of Section 304 of the Original
Indenture. A beneficial owner of an interest in a Global Security

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representing the Notes will not be considered the Holder thereof for any purpose of the Indenture.
Except as may otherwise be provided in an Officers’ Certificate or Company Order subsequently
delivered to the Trustee, the Notes will be issuable in denominations of $1,000 or any amount in
excess thereof that is an integral multiple of $1,000.

          The Notes shall be substantially in the form attached as Exhibit A hereto (the “Specimen
Note”).

     Section 2.09. Global Securities.

          (a) The Notes shall be issuable in whole or in part in the form of one or more Global
Securities. The Global Securities shall be deposited with, or on behalf of, The Depository
Trust Company, New York, New York, which shall act initially as Depositary with respect to
the Notes, or any other duly appointed depositary (the “Depositary”). The Notes
shall be issued only as fully registered securities in the name of the Depositary’s nominee,
Cede & Co. In addition to any other legend permitted pursuant to the provisions of the
Indenture, each Global Security shall bear legends in substantially the following form:

               “THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET,
NEW YORK, NEW YORK) OR OTHER DULY APPOINTED DEPOSITORY (THE “DEPOSITARY”). UNLESS AND UNTIL
IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY OR OTHER DULY APPOINTED
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO
A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.”

               “Unless this certificate is presented by an authorized representative of The Depository
Trust Company, a New York corporation, to the issuer hereof or its agent for registration of
transfer, exchange, or payment, and any certificate issued is registered in the name of Cede
& Co. or in such other name as is requested by an authorized representative of The
Depository Trust Company (and any payment is made to Cede & Co. or to such other entity as
is requested by an authorized representative of The Depository Trust Company), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.”

          (b) Unless and until it is exchanged in whole or in part for one or more Notes in
certificated form (each a “Certificated Note”), a Global Security representing all
or a portion of the Notes may not be transferred except as a whole (i) by the Depositary to
a nominee of such Depositary, (ii) by a nominee of such Depositary to such Depositary or
another nominee of such Depositary or (iii) by such Depositary or any such nominee to a

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successor Depositary or a nominee of such successor Depositary. Certificated Notes may
be presented for registration of transfer or exchange at the office or agency provided for
in the Indenture, as supplemented and amended.

          (c) If at any time the Depositary notifies the Company that it is unwilling or unable
to continue as Depositary or if at any time the Depositary shall no longer be a clearing
agency registered under the Securities Exchange Act of 1934, as amended, or other applicable
statute or regulation, the Company shall appoint a successor Depositary. If a successor
Depositary is not appointed by the Company within sixty (60) days after the Company receives
such notice or becomes aware of such condition, the Company shall execute, and the Trustee,
upon receipt of a Company Order for the authentication and delivery of Certificated Notes,
shall authenticate and deliver Certificated Notes in an aggregate principal amount equal to
the principal amount of the Global Security or Notes held by the Depositary in exchange
therefor.

          (d) The Company may at any time and in its sole discretion determine that all or any
portion, in authorized denominations, of the Notes issued in the form of one or more Global
Securities shall no longer be represented by such Global Security or Notes. In such event,
the Company shall execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of Certificated Notes, shall authenticate and deliver
Certificated Notes in an aggregate principal amount equal to the principal amount of such
Global Security or Notes in exchange therefor.

          (e) Except as may be otherwise provided in an Officers’ Certificate or Company Order
subsequently delivered to the Trustee and except as specifically provided in Section 2.09(c)
or 2.09(d) hereof, interests in the Notes represented by a Global Security will not be
exchangeable for and will otherwise not be issuable in the form of Certificated Notes.
Upon the occurrence in respect of any Global Security of any one or more of the conditions
specified in Section 2.09(c) or 2.09(d) hereof or as may otherwise be provided in an
Officers’ Certificate or Company Order subsequently delivered to the Trustee, such Global
Security shall be cancelled by the Trustee and Certificated Notes issued in exchange for a
Global Security shall be registered in such names and in such authorized denominations as
the Depositary for such Global Security, pursuant to instructions from its direct or
indirect Participants or otherwise, shall instruct the Trustee. Unless otherwise specified
in such instructions, the Trustee shall deliver such Certificated Notes to the Persons in
which names such Certificated Notes are so registered. If the Certificated Notes are so
delivered, the Company may make such changes to the form of such Notes as are necessary or
appropriate to allow for the issuance of such Certificated Notes. Notwithstanding any other
provision of the Indenture, unless otherwise provided in an Officers’ Certificate or Company
Order subsequently delivered to the Trustee, any Note authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, any Global Security shall
also be a Global Security and shall bear the legends specified in Section 2.09(a) hereof,
except for any transfer of a Global Security pursuant to this Section 2.09.

     Section 2.10. Security Registrar. The Trustee shall initially serve as the Security
Registrar for the Notes.

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     Section 2.11. Transfer. No service charge will be made for the registration of transfer or
exchange of Notes; provided, however, that the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection with the transfer or exchange.
The Company shall not be required (a) to issue, register the transfer of or exchange any Notes
during a period beginning at the opening of business fifteen (15) days before the day of the
mailing of a notice pursuant to Section 1104 of the Original Indenture identifying the certificate
numbers of the Notes to be called for redemption, and ending at the close of business on the day of
the mailing, or (b) to register the transfer of or exchange any Notes theretofore selected for
redemption in whole or in part, except the unredeemed portion of any Note redeemed in part.

ARTICLE THREE

OPTIONAL REDEMPTION OF THE NOTES

     Section 3.01. Redemption Price. The Company shall have the right to redeem the Notes as a
whole or in part, at its option, at any time and from time to time, at a price (“Redemption
Price”) equal to the greater of:

          (a) 100% of the principal amount of such Notes, and

          (b) the sum of the present values of the remaining scheduled payments of principal and
interest on such Notes (exclusive of unpaid interest to the date of redemption
(“Redemption Date”)) discounted to the Redemption Date semiannually (assuming a
360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below),
plus 25 basis points,

plus, in either case (a) or (b), accrued and unpaid interest on such Notes to (but excluding) the
Redemption Date.

“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the
semiannual equivalent yield to maturity of the Comparable Treasury Issue (as defined below),
assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price (as defined below) for such Redemption Date.

“Comparable Treasury Issue” means the United States Treasury security selected by an
Independent Investment Banker (as defined below) as having a maturity comparable to the remaining
term of the Notes to be redeemed that would be used, at the time of selection and in accordance
with customary financial practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Notes.

“Independent Investment Banker” means an independent investment banking institution of
national standing appointed by the Company. If the Company fails to appoint such an independent
investment banking institution at least thirty (30) Business Days prior to a Redemption Date, or if
the institution appointed by the Company is unwilling or unable to select the Comparable Treasury
Issue, the selection shall be made by KeyBanc Capital Markets, a

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Division of McDonald Investments Inc., or, if it is unwilling or unable to make the selection, by
an independent investment banking institution of national standing appointed by the Trustee.

“Comparable Treasury Price” means, with respect to any Redemption Date, (i) the average of
the Reference Treasury Dealer Quotations (as defined below) for such Redemption Date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Trustee
obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such
quotations.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury
Dealer (as defined below) and any Redemption Date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00
p.m. on the third Business Day preceding such Redemption Date.

“Reference Treasury Dealer” means each of KeyBanc Capital Markets, a Division of McDonald
Investments Inc., Wedbush Morgan Securities Inc., and their respective successors, and three other
primary U.S. Government securities dealers in the United States (“Primary Treasury Dealer”)
appointed by the Company in connection with the redemption; provided, however, that if any of the
foregoing shall cease to be a Primary Treasury Dealer, the Company shall replace that former dealer
with another Primary Treasury Dealer.

     Section 3.02. Partial Redemption. If the Notes are redeemed in part pursuant to this
Article Three, the Notes shall be redeemed pro rata or by lot or by any other method that the
Trustee deems fair and appropriate. Such partially redeemed Notes shall be surrendered at any
office or agency of the Company maintained for that purpose pursuant to Section 1002 of the
Original Indenture, initially the Corporate Trust Office of the Trustee, with, if the Company or
the Trustee so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his or her
attorney duly authorized in writing, and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder, without charge, a new Registered Security of authorized
denominations for the principal amount for the unredeemed portion pursuant to Section 1107 of the
Original Indenture.

     Section 3.03. Notice of Optional Redemption. If the Company elects to exercise its right
to redeem all or some of the Notes pursuant to this Article Three, the Company or, at the Company’s
request, the Trustee, shall mail a written notice of such redemption to each Holder of any Note
that is to be redeemed not less than thirty (30) days nor more than sixty (60) days prior to the
Redemption Date.

     Section 3.04. No Limitation on Purchase of Notes by the Company. Subject to the foregoing
and to applicable law (including, without limitation, United States federal securities laws), the
Company and its affiliates may, at any time and from time to time, purchase outstanding Notes by
tender, in the open market or by private agreement.

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ARTICLE FOUR

DEFEASANCE AND COVENANT DEFEASANCE

     Section 4.01. Election by Company. The Company may elect, at its option at any time, to
have Section 4.02 or 4.03 hereof applied to any or all of the Notes, upon compliance with the
conditions set forth below in this Article Four. Any such election shall be evidenced by a Board
Resolution or in another manner contemplated by the Indenture, as supplemented hereby, with respect
to such Notes.

     Section 4.02. Defeasance. Upon the Company’s exercise of its option to have this Section
4.02 applied to any Notes, the Company shall be deemed to have been discharged from its obligations
with respect to such Notes as provided in this Article Four on and after the date the conditions
set forth in Section 4.04 hereof are satisfied (hereinafter called “Defeasance”). For this
purpose, such Defeasance means that the Company shall be deemed to have paid and discharged the
entire indebtedness represented by such Notes and to have satisfied all its other obligations under
such Notes and the Indenture, insofar as such Notes are concerned (and the Trustee, at the expense
of the Company, shall execute proper instruments acknowledging the same), subject to the following,
which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders
of such Notes to receive, solely from the trust fund described in Section 4.04 hereof and as more
fully set forth in such section, payments in respect of the principal of and interest on such Notes
when payments are due, (b) the Company’s obligations with respect to such Notes under Sections 304,
305, 306, 1002 and 1003 of the Original Indenture, (c) the rights, powers, trusts, duties and
immunities of the Trustee under the Indenture and (d) this Article Four. Subject to compliance
with this Article Four, the Company may exercise its option to have this Section 4.02 applied to
any Notes notwithstanding the prior exercise of its option to have Section 4.03 hereof applied to
such Notes.

     Section 4.03. Covenant Defeasance. Upon the Company’s exercise of its option to have this
Section 4.03 applied to any Notes, (a) the Company shall be released from its obligations under
Article Eight of the Original Indenture, Sections 1007 and 1009 of the Original Indenture and any
covenants for the benefit of the Holders of such Notes provided pursuant to Sections 301(17),
Section 901(2) and 901(6) of the Original Indenture and (b) the occurrence of any event specified
in Sections 501(4) (with respect to Article Eight of the Original Indenture, Sections 1007, 1009
and/or to any such covenants provided pursuant to Sections 301(17), 901(2) or 901(6)), and 501(8)
of the Original Indenture shall be deemed not to be or result in an Event of Default, in each case
with respect to such Notes as provided in this Section 4.03 on and after the date the conditions
set forth in Section 4.04 hereof are satisfied (hereinafter called “Covenant Defeasance”).
For this purpose, such Covenant Defeasance means that, with respect to such Notes, the Company may
omit to comply with and shall have no liability in respect of any term, condition or limitation set
forth in any such specified section (to the extent so specified in the case of Section 501(4) of
the Original Indenture), whether directly or indirectly by reason of any reference elsewhere in the
Indenture or herein to any such section or by reason of any reference in any such section to any
other provision in the Indenture, herein or in any other document, but the remainder of the
Indenture, as supplemented hereby, and such Notes shall be unaffected thereby.

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     Section 4.04. Conditions for Defeasance or Covenant Defeasance of Notes. The following
shall be the conditions to the application of Section 4.02 or Section 4.03 hereof to any Notes:

          (a) The Company shall irrevocably have deposited or caused to be deposited with the
Trustee (or another trustee that satisfies the requirements contemplated by Section 609 of
the Original Indenture and agrees to comply with the provisions of this Article Four
applicable to it) as trust funds in trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to, the benefits of the Holders
of such Notes, (1) money in an amount, or (2) U.S. Government Obligations (as defined below)
which through the scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than 10:00 a.m., New York City time, on
the due date of any payment, money in an amount, or (3) a combination thereof, in each case
sufficient, in the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay and discharge,
and which shall be applied by the Trustee (or any such other qualifying trustee) to pay and
discharge, the principal of and interest on such Notes on the Stated Maturity, in accordance
with the terms of the Indenture, and such Notes. As used herein, “U.S. Government
Obligation” means (x) any security which is (i) a direct obligation of the United States
of America for the payment of which the full faith and credit of the United States of
America is pledged or (ii) an obligation of a Person controlled or supervised by and acting
as an agency or instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United States of
America, which, in either case (i) or (ii), is not callable or redeemable at the option of
the issuer thereof, and (y) any depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act of 1933, as amended) as custodian with respect to any U.S.
Government Obligation which is specified in Clause (x) above and held by such bank for the
account of the holder of such depository receipt, or with respect to any specific payment of
principal of or interest on any U.S. Government Obligation which is so specified and held,
provided that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of the U.S. Government Obligation or the specific
payment of principal or interest evidenced by such depository receipt.

          (b) In the event of an election to have Section 4.02 hereof apply to any Notes, the
Company shall have delivered to the Trustee an Opinion of Counsel stating that (1) the
Company has received from, or there has been published by, the Internal Revenue Service a
ruling or (2) since the date of this Seventh Supplemental Indenture, there has been a change
in the applicable federal income tax law, in either case (1) or (2) to the effect that, and
based thereon such opinion shall confirm that, the Holders of such Notes will not recognize
gain or loss for federal income tax purposes as a result of the deposit, Defeasance and
discharge to be effected with respect to such Notes and will be subject to federal income
tax on the same amount, in the same manner and at the same times as would be the case if
such deposit, Defeasance and discharge were not to occur.

11

 

          (c) In the event of an election to have Section 4.03 hereof apply to any Notes, the
Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Notes will not recognize gain or loss for federal income tax purposes as a
result of the deposit and Covenant Defeasance to be effected with respect to such Notes and
will be subject to federal income tax on the same amount, in the same manner and at the same
times as would be the case if such deposit and Covenant Defeasance were not to occur.

          (d) The Company shall have delivered to the Trustee an Officers’ Certificate to the
effect that such Notes, if then listed on any securities exchange, will be delisted as a
result of such deposit.

          (e) No event which is, or after notice or lapse of time or both would become, an Event
of Default with respect to such Notes shall have occurred and be continuing at the time of
such deposit or, with regard to any such event specified in Sections 501(6) and (7) of the
Original Indenture, at any time on or prior to the sixtieth (60th) day after the date of
such deposit (it being understood that this condition shall not be deemed satisfied until
after such sixtieth (60th) day).

          (f) Such Defeasance or Covenant Defeasance shall not cause the Trustee to have a
conflicting interest within the meaning of the Trust Indenture Act (assuming all Notes are
in default within the meaning of such Act).

          (g) Such Defeasance or Covenant Defeasance shall not result in a breach or violation
of, or constitute a default under, any other agreement or instrument to which the Company is
a party or by which it is bound.

          (h) Such Defeasance or Covenant Defeasance shall not result in the trust arising from
such deposit constituting an investment company within the meaning of the Investment Company
Act of 1940, as amended, unless such trust shall be registered under such Act or exempt from
registration thereunder.

          (i) The Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent with respect to such
Defeasance or Covenant Defeasance have been complied with.

     Section 4.05. Acknowledgement of Defeasance. Subject to Section 4.07 below and after the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each
stating that all conditions precedent referred to in Section 4.04 hereof, as the case may be,
relating to the defeasance or satisfaction and discharge of the Indenture, have been complied with,
the Trustee upon request of the Company shall acknowledge in writing the defeasance or the
satisfaction and discharge, as the case may be, of the Indenture, and the discharge of the
Company’s obligations under the Indenture.

     Section 4.06. Trustee Obligations. Subject to the provisions of the last paragraph of
Section 1003 of the Original Indenture, all money and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee or other qualifying trustee (solely for purposes of
this Section and Section 4.07 hereof, the Trustee and any such other trustee are referred to

12

 

collectively as the “Trustee”) pursuant to Section 4.04 hereof in respect of any Notes
shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes
and the Indenture, to the payment, either directly or through any such Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of such Notes,
of all sums due and to become due thereon in respect of principal and interest, but money so held
in trust need not be segregated from other funds except to the extent required by law.

          The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against the U.S. Government Obligations deposited pursuant to Section 4.04 hereof or
the principal and interest received in respect thereof other than any such tax, fee or other charge
which by law is for the account of the Holders of Outstanding Notes.

          Anything in this Article Four to the contrary notwithstanding, the Trustee shall deliver or
pay to the Company from time to time upon Company Request any money or U.S. Government Obligations
held by it as provided in Section 4.04 hereof with respect to any Notes which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof which would then be required
to be deposited to effect the Defeasance or Covenant Defeasance, as the case may be, with respect
to such Notes.

     Section 4.07. Reinstatement of Note Obligations. If the Trustee or the Paying Agent is
unable to apply any money in accordance with this Article Four with respect to any Notes by reason
of any order or judgment of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the obligations under the Indenture, and such Notes from which
the Company has been discharged or released pursuant to Section 4.02 or 4.03 hereof shall be
revived and reinstated as though no deposit had occurred pursuant to this Article Four with respect
to such Notes, until such time as the Trustee or Paying Agent is permitted to apply all money held
in trust pursuant to Section 4.06 hereof with respect to such Notes in accordance with this Article
Four; provided, however, that if the Company makes any payment of principal of or interest on any
such Note following such reinstatement of its obligations, the Company shall be subrogated to the
rights (if any) of the Holders of such Notes to receive such payment from the money so held in
trust.

ARTICLE FIVE

MISCELLANEOUS

     Section 5.01. One Instrument. As supplemented by this Seventh Supplemental Indenture, the
Indenture shall be read, taken and construed as one and the same instrument.

     Section 5.02. No Additional Duties. Except as expressly set forth in this Seventh
Supplemental Indenture, the Trustee assumes no duties, responsibilities or liabilities by reason of
this Seventh Supplemental Indenture, other than as set forth in the Indenture, as fully as if said
terms and conditions were herein set forth at length.

13

 

     Section 5.03. Counterparts. This Seventh Supplemental Indenture may be executed in any
number of counterparts, each of which, when so executed and delivered, shall be an original; but
such counterparts shall together constitute one and the same instrument.

     Section 5.04. Governing Law. This Seventh Supplemental Indenture shall be governed by and
construed in accordance with the laws of the State of New York applicable to agreements made and to
be performed in such state.

14

 

     IN WITNESS WHEREOF, the Company has caused this Seventh Supplemental Indenture to be executed
in its limited liability company name and its limited liability company seal to be hereunto affixed
and attested by its duly authorized officers, all as of the date first above written.

CLECO POWER LLC

[SEAL]

By: _______________________

      Keith D. Crump

      Treasurer

ATTEST:

Judy P. Miller

Secretary

Signed, sealed, acknowledged and delivered

by CLECO POWER LLC, in the presence of:

_______________________

Name:

_______________________

Name:

[Signatures continued on next page.]

 

 

     IN WITNESS WHEREOF, the Trustee has caused this Seventh Supplemental Indenture to be executed
in its corporate name and attested by its duly authorized officers, all as of the date first above
written.

THE BANK OF NEW YORK TRUST COMPANY, N.A., as

Trustee

By: _______________________

      Name:

      Title:

ATTEST:

_______________________

Name:

Title:

Signed, acknowledged and delivered

by THE BANK OF NEW YORK TRUST

COMPANY, N.A. in the presence of:

_______________________

Name:

_______________________

Name:

 

 

STATE OF LOUISIANA

PARISH OF _________

     BE IT KNOWN, that on this ___day of July, 2005, before me, the undersigned authority, duly
commissioned, qualified and sworn within and for the State and Parish aforesaid, personally came
and appeared:

          1. Keith D. Crump

          2. Judy P. Miller

to me known to be the identical persons who executed the above and foregoing instrument, who
declared and acknowledged to me, Notary, in the presence of the undersigned competent witnesses,
that they are respectively (1) the Treasurer and (2) the Secretary of Cleco Power LLC (the
“Company”); that the seal impressed beside their respective signatures on the foregoing
Seventh Supplemental Indenture is the official seal of the Company; that the aforesaid instrument
was signed and sealed by them, on behalf of the Company by authority of a resolution duly adopted
by the Board of Managers of the Company on July 25, 2003; and that the above named persons
acknowledge said instrument to be the free act and deed of the Company.

1. _______________________

     Keith D. Crump

     Treasurer

2. _______________________

     Judy P. Miller

     Secretary

WITNESSES:

_______________________

_______________________

_______________________

Notary Public

 

 

STATE OF FLORIDA

COUNTY OF _________

     BE IT KNOWN, that on this ___day of July, 2005, before me, the undersigned authority, duly
commissioned, qualified and sworn within and for the State and County aforesaid, personally came
and appeared:

          1. _______________________

          2. _______________________

to me known to be the identical persons who executed the above and foregoing instrument, who
declared and acknowledged to me, Notary, in the presence of the undersigned competent witnesses,
that they are respectively (1) the ___and (2) the ___of The
Bank of New York Trust Company, N.A. (the “Trustee”); that the aforesaid instrument was
signed by them on behalf of the Trustee by authority of its By-laws; and that the above named
persons acknowledge said instrument to be the free act and deed of the Trustee.

1. _______________________

     Name:

     Title:

2. _______________________

     Name:

     Title:

WITNESSES:

_______________________

_______________________

_______________________

Notary Public

 

 

EXHIBIT A

FORM OF 4.95% NOTE

 

 

[FORM OF FACE OF NOTE]

[If Global Security, insert — THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (55
WATER STREET, NEW YORK, NEW YORK) OR OTHER DULY APPOINTED DEPOSITORY (THE “DEPOSITARY”). UNLESS
AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY OR OTHER DULY APPOINTED DEPOSITARY TO
A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE
OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY.

Unless this certificate is presented by an authorized representative of The Depository Trust
Company, a New York corporation, to the issuer hereof or its agent for registration of transfer,
exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of The Depository Trust Company (and any
payment is made to Cede & Co. or to such other entity as is requested by an authorized
representative of The Depository Trust Company), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede &
Co., has an interest herein.]

	 	 	 
	NO. ____

	 	CUSIP NO. 185508 AD0

CLECO POWER LLC

4.95% NOTE

DUE JULY 15, 2015

	 	 	 	 	 
	Principal Amount:

	 	$50,000,000		 
	Regular Record Date:

	 	January 1 or July 1, as the case may be, next preceding the applicable Interest Payment Date

	Original Issue Date:

	 	July 6, 2005

	Stated Maturity:

	 	July 15, 2015

	Interest Payment Dates:

	 	January 15 and July 15, commencing January 15, 2006

	Interest Rate:

	 	4.95% per annum

	Authorized Denomination:

	 	$1,000 and integral multiples in excess thereof

 

 

     CLECO POWER LLC, a Louisiana limited liability company (the “Company”, which term includes any
successor corporation under the Indenture referred to on the reverse hereof), for value received,
hereby promises to pay to ______________________, or registered assigns, the principal sum
of ________________________ ($          ) on the Stated Maturity shown above (or upon any earlier date of redemption or acceleration
of maturity) (each such date being hereinafter referred to as the “Maturity Date”) and to
pay interest thereon, from and including the immediately preceding Interest Payment Date to which
interest has been paid or duly provided for (or from, and including, the Original Issue Date if no
interest has been paid or duly provided for), to, but excluding, the Maturity Date, semiannually in
arrears on each Interest Payment Date as specified above, commencing on January 15, 2006 at the
rate per annum shown above until the principal hereof is paid or made available for payment and on
any overdue principal and on any overdue installment of interest. Capitalized terms used herein
shall have the meanings specified in the Indenture or the Seventh Supplemental Indenture (each as
defined on the reverse hereof), as the case may be.

     The interest so payable, and punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name this 4.95% Note due July 15, 2015 (this “Note,” and
collectively, the “Notes”) is registered at the close of business on the applicable Regular Record
Date, except that interest payable on the Maturity Date as provided herein shall be paid to the
Holder to whom principal is payable in accordance with Section 2.05 of the Seventh Supplemental
Indenture. Any such interest not so punctually paid or duly provided for (“Defaulted
Interest”) shall forthwith cease to be payable to the Holder hereof on such Regular Record Date
and may be paid by the Company, at its election in each case (i) in accordance with the provisions
of Section 307(1) of the Indenture to the Person in whose name this Note is registered at the close
of business on a Special Record Date or (ii) be paid in any other lawful manner not inconsistent
with the requirements of any securities exchange or automated quotation system, if any, on which
the Notes may be listed or traded, and upon such notice as may be required by such exchange or
quotation system, if, after notice is given by the Company to the Trustee of the proposed payment
pursuant to clause 2.04(c)(ii) of the Seventh Supplemental Indenture, such payment shall be deemed
practicable by the Trustee, all as more fully provided in the Indenture.

     Interest payments on this Note will include interest accrued to, but excluding, the respective
Interest Payment Dates or the Maturity Date. Interest payments for this Note shall be computed and
paid on the basis of a 360-day year of twelve 30-day months. The amount of interest payable for
any partial period shall be computed on the basis of a 360-day year of twelve 30-day months and the
days elapsed in any partial month. In the event that any date on which interest is payable on this
Note is not a Business Day (as defined below), then payment of the interest payable on such date
will be made on the next succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay) with the same force and effect as if made on the date the
payment was originally payable. A ‘Business Day,’ means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in The City of New York are authorized
or obligated by law to close.

     The Trustee shall initially serve as the Paying Agent for the Notes. Payment of the principal
of and any interest on this Note due on the Maturity Date shall be made in immediately available
funds in such coin and currency of the United States of America as at the

 

 

time of payment is legal tender for payment of public and private debt upon presentation and
surrender of this Note at the office or agency maintained by the Company for that purpose,
initially the Corporate Trust Office of the Trustee, or at such other paying agency as the Company
may determine; provided, however, that if the Maturity Date falls on or after an Interest Payment
Date then the Holder presenting and surrendering this Note on such Maturity Date will only be
entitled to interest accruing on or after such Interest Payment Date.

     Payment of interest due on any Interest Payment Date other than on the Maturity Date will be
made at the Corporate Trust Office of the Trustee or, at the option of the Company, (i) by check
mailed to the address of the Person entitled thereto as such address shall appear in the Security
Register or (ii) by wire transfer of immediately available funds at such place and to such account
at a banking institution in the United States as may be designated in wire transfer instructions
received in writing by the Trustee at least fifteen (15) days prior to such Interest Payment Date.
Any such wire transfer instructions received by the Trustee shall remain in effect until revoked by
such Holder.

     Reference is hereby made to the further provisions of this Note set forth on the reverse
hereof, which provisions shall for all purposes have the same force and effect as if set forth on
the face hereof.

     Unless the Certificate of Authentication hereon has been executed by the Trustee by manual
signature, this Note shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

 

 

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its
corporate seal.

Dated: __________ ___, 2___

CLECO POWER LLC

By: _______________________

      Name:

      Title:

(Seal of CLECO POWER LLC appears here)

Attest:

_______________________

Name:

Title:

CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.

Dated: __________ ___, 2___

THE BANK OF NEW YORK TRUST COMPANY, N.A., as

Trustee

By: _______________________

      Authorized Signatory

23

 

[FORM OF REVERSE OF NOTE]

     This Note is one of a duly authorized issue of Notes of the Company, issued and issuable in
one or more series under the Indenture, dated as of October 1, 1988 (as previously and hereby
supplemented and amended, the “Indenture”), between the Company and The Bank of New York
Trust Company, N.A., as trustee (the “Trustee,” which term includes any successor trustee under the
Indenture), to which Indenture and all indentures incidental thereto reference is hereby made for a
statement of the respective rights, limitation of rights, duties and immunities thereunder of the
Company, the Trustee and the Holders of the Notes issued thereunder and of the terms upon which
said Notes are, and are to be, authenticated and delivered. This Note is designated on the face
hereof as 4.95% Notes due July 15, 2015 (the “Notes”) in the aggregate principal amount of
$50,000,000; provided, however, that the authorized aggregate principal amount may in the future be
increased without the consent of the Holders of the Notes pursuant to the provisions of the
Indenture.

     The Company shall have the right, subject to the terms and conditions of the Seventh
Supplemental Indenture, dated as of July 6, 2005, between the Company and the Trustee (the
“Seventh Supplemental Indenture”), to redeem this Note, as a whole or in part, at its
option, at any time and from time to time, at a Redemption Price equal to the greater of:

   (a)100% of the principal amount of this Note, and

   (b) the sum of the present values of the remaining scheduled payments of principal and
interest on this Note (exclusive of unpaid interest to the Redemption Date) discounted to
the Redemption Date semiannually (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate, plus 25 basis points,

plus, in either case (a) or (b), accrued and unpaid interest on this Note to (but excluding) the
Redemption Date, all as more fully provided in the Seventh Supplemental Indenture.

     If the Company elects to exercise its right to redeem all or part of this Note, the Company
or, at the Company’s request, the Trustee, will mail a written notice of such redemption to the
Holder hereof not less than thirty (30) days nor more than sixty (60) days prior to the Redemption
Date. In the event of redemption of this Note in part only, a new Note or Notes for the unredeemed
portion will be issued in the name of the Holder hereof upon the surrender hereof pursuant to the
terms of Section 3.02 of the Seventh Supplemental Indenture. The Notes will not have a sinking
fund.

     No reference herein to the Indenture and no provision of this Note shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the principal of and
interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed.

     If an Event of Default shall occur and be continuing under the Indenture, the principal of the
Notes may be declared due and payable in the manner, with the effect and subject to the conditions
provided in the Indenture.

24

 

     The Indenture contains provisions for defeasance of (i) the entire indebtedness of the Notes
or (ii) certain covenants and Events of Default with respect to the Notes, in each case upon
compliance with certain conditions set forth therein.

     The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Notes at any time by the Company and the Trustee with the consent of the Holders of a majority in
principal amount of the Outstanding Notes affected thereby. The Indenture also contains provisions
permitting the Holders of a majority in principal amount of the Outstanding Notes, on behalf of the
Holders of all such Notes, to waive compliance by the Company with certain provisions of the
Indenture. Furthermore, provisions in the Indenture permit the Holders of a majority in principal
amount of the Outstanding Notes, in certain instances, to waive, on behalf of all of the Holders of
Notes, certain past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all
future Holders of this Note and other Notes issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon
this Note.

     Prior to due presentment of this Note for registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the contrary, except as
required by law.

     The Notes are issuable only in registered form without coupons in denominations of $1,000 and
any integral multiple thereof.

     As provided in the Seventh Supplemental Indenture and subject to certain limitations therein
and herein set forth, the transfer of this Note is registrable in the Security Register upon
surrender of this Note for registration of transfer at the office or agency of the Company
maintained for that purpose. Every Note presented for registration of transfer shall (if so
required by the Company or the Security Registrar) be duly endorsed, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security Registrar duly
executed, by the Holder hereof or by his or her attorney duly authorized in writing, and thereupon
one or more new Notes having the same terms and provisions, of Authorized Denominations and for the
same aggregate principal amount, will be issued by the Company to the designated transferee or
transferees. No service charge shall be made for any such registration of transfer or exchange of
this Note, provided, however, that the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection with the transfer or exchange.

     The Company shall not be required (i) to issue, register the transfer of or exchange any Notes
during a period beginning at the opening of business fifteen (15) days before the day of the
mailing of the notice of redemption pursuant to the Indenture identifying the certificate numbers
of the Notes to be called for redemption, and ending at the close of business on the day of the
mailing, or (ii) to register the transfer of or exchange any Notes theretofore

 25

 

selected for redemption in whole or in part, except the unredeemed portion of any Note
redeemed in part.

     As provided in the Seventh Supplemental Indenture and subject to certain limitations therein
and herein set forth, this Note is exchangeable for a like aggregate principal amount of Notes of
different authorized denominations but otherwise having the same terms and provisions, as requested
by the Holder hereof surrendering the same.

     Notwithstanding anything to the contrary, if (x) the Depositary at any time notifies the
Company that it is unwilling or unable to continue as Depositary or if at any time the Depositary
shall no longer be a clearing agency registered under the Securities Exchange Act of 1934, as
amended, or other applicable statute or regulation, and a successor Depositary is not appointed by
the Company within sixty (60) days after the Company receives such notice or becomes aware of such
condition, or (y) the Company executes and delivers to the Trustee a Company Order to the effect
that this Note shall be exchangeable for certificates issued in definitive form (“Certificated
Notes”), this Note shall be exchangeable for Certificated Notes of like tenor and of an equal
aggregate principal amount, in authorized denominations of $1,000 and integral multiples thereof.
Such Certificated Notes shall be registered in such name or names as the Depositary, pursuant to
instructions from its direct or indirect Participants or otherwise, shall instruct the Trustee.
Unless otherwise specified in such instructions, the Trustee shall deliver such Certificated Notes
to the Persons in which names such Certificated Notes are so registered. If Certificated Notes are
so delivered, the Company may make such changes to the form of this Note as are necessary or
appropriate to allow for the issuance of such Certificated Notes.

     THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.

26

 

[If not Global Security, insert —

ABBREVIATIONS

     The following abbreviations, when used in the inscription on the face of this Note, shall be
construed as though they were written out in full according to applicable laws or regulations:

	 	 	 
	TEN COM

	-	as tenants in common
	TEN ENT

	-	as tenants by the entireties
	JT TEN

	-	as joint tenants with right of
survivorship and not as tenants in
common
	UNIF GIFT MIN ACT

	-	_____Custodian ________
	

	 	(Cust)          
          
(Minor)
	

	 	Under Uniform Gifts to Minors Act
	

	 	_____________________________
	

	 	              
          (State)

Additional abbreviations may also be used though not in the above list.

27

 

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR

OTHER IDENTIFYING NUMBER OF ASSIGNEE

______________________        ______________________

______________________        ______________________

 

(Please print or typewrite name and address including postal zip code of assignee)

 

This Note and all rights thereunder hereby irrevocably constituting and appointing

 

Attorney to transfer this Note on the books of the Trustee, with full power of substitution in the
premises.

	 	 	 	 	 
	Dated:
	 	 	 	 
	 
	 	 	 	 
	

	 	______________________
	 	_________________________________________________________________________
	 
	 	 	 	 
	 

	 	______________________
	 	_________________________________________________________________________
	

	 	 	 	Notice: The signature(s) on this Assignment
must correspond with the name(s) as written
upon the face of this Note in every
particular, without alteration or enlargement
or any change whatsoever.]

28exv10w1

 

EXHIBIT 10.1

PRECEDENT AGREEMENT

     This PRECEDENT AGREEMENT (“Precedent Agreement”) is made and entered into as of the 29th day of
June, 2005, by and between Maritimes & Northeast Pipeline, L.L.C., a Delaware limited
liability company (“Pipeline”), and Anadarko LNG Marketing LLC, a Delaware limited liability
company (“Customer”). Pipeline and Customer are sometimes referred to herein individually as a
“Party”, or collectively as the “Parties”.

W I T N E S S E T H:

     WHEREAS, Pipeline and its Canadian pipeline affiliate, Maritimes & Northeast Pipeline Limited
Partnership (“Maritimes-Canada”), have developed and constructed a natural gas pipeline project
(the “Maritimes Project”), extending from the tailgate of a processing plant located near Goldboro,
Nova Scotia, to the Canadian-United States border, through the states of Maine and New Hampshire
and into Massachusetts with an interconnection with Tennessee Gas Pipeline Company at Dracut,
Massachusetts and an interconnection with Algonquin Gas Transmission, LLC at Beverly,
Massachusetts;

     WHEREAS, Pipeline jointly owns with Portland Natural Gas Transmission System (“PNGTS”) an
approximately 100-mile portion of the Maritimes Project, extending from Dracut, Massachusetts to
Westbrook, Maine with an interconnection with PNGTS at Westbrook;

 

 

     WHEREAS, Customer, or an affiliate thereof, is proposing to develop, construct, own, operate
and maintain a liquefied natural gas (“LNG”) regasification facility in Nova Scotia, Canada,
referred to as the Bear Head LNG Project (“Customer’s Terminal”);

     WHEREAS, in order to provide pipeline transportation access to enable Customer, and/or an
affiliate thereof, or third parties purchasing gas from Customer and/or Customer’s affiliate to
access natural gas markets in Canada and the United States, Customer desires to have Customer’s
Terminal physically connected to Maritimes-Canada’s system;

     WHEREAS, in order to establish such an interconnection and enable mainline service, it will be
necessary for Maritimes-Canada to construct certain pipeline facilities on its existing system to
make available to Anadarko Canada LNG Marketing, Corp. (“Customer-Canada”) the quantity of firm
transportation capacity contemplated in the precedent agreement between Customer-Canada and
Maritimes-Canada being executed contemporaneously herewith (such precedent agreement is referred to
hereinafter as the “Maritimes-Canada Precedent Agreement”);

     WHEREAS, in order to make available to Customer the quantity of firm transportation capacity
contemplated in this Precedent Agreement, it will be necessary for Pipeline to construct, own and
operate certain compressor facility additions and pipeline facilities as will be described by
Pipeline in its certificate application filed with the Federal Energy Regulatory Commission (“FERC”
or “Commission”) as amended from time to time (the “Project”); and

-2-

 

     WHEREAS, Customer desires to obtain firm transportation service from Pipeline as part of the
Project for specified quantities of Customer’s natural gas as hereinafter provided; and

     WHEREAS, subject to the terms and conditions of this Precedent Agreement and applicable law,
Pipeline shall construct the Project and provide the firm transportation service Customer desires.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and
intending to be legally bound, subject to the terms and conditions hereof, Pipeline and Customer
agree to the following:

     1. Pipeline’s Regulatory Authorizations. Subject to the terms and conditions of this
Precedent Agreement, Pipeline shall proceed following the date hereof with due diligence to obtain
from all governmental and regulatory authorities having competent jurisdiction over the Project,
including, but not limited to, the FERC, the authorizations and/or exemptions Pipeline reasonably
determines are necessary: (i) for Pipeline to construct, own, operate, and maintain the Project
facilities necessary to provide the firm transportation service for Customer contemplated herein;
and (ii) for Pipeline to perform its obligations as contemplated in this Precedent Agreement.
Pipeline reserves the right to file and prosecute any and all applications for such authorizations
and/or exemptions, any supplements or amendments thereto, and, if necessary, any court review, in a
manner that Pipeline reasonably determines to be in its best interest and that is consistent with
Pipeline’s obligations under this Precedent Agreement. Customer expressly agrees reasonably to
support and cooperate with, and

-3-

 

to not oppose, obstruct or otherwise interfere with in any manner whatsoever, the efforts of
Pipeline to obtain all authorizations and/or exemptions and supplements and amendments thereto
necessary for Pipeline to construct, own, operate, and maintain the Project facilities and to
provide the firm transportation service contemplated in this Precedent Agreement and to perform its
obligations as contemplated by this Precedent Agreement; provided, however, that Customer reserves
all rights to protect its interests in the exercise of its sole discretion with respect to any
proposal(s) (whether such proposals are made by Pipeline, or any other party or in connection with
an industry-wide forum, conference or proceeding) to change, clarify, or restate any tariff
provisions relating to natural gas quality or heating content, including, without limitation,
Section 12 of the General Terms and Conditions of Pipeline’s FERC Gas Tariff (the “Tariff”). Such
support and cooperation may include providing reasonable assurances and undertakings to the FERC
and other regulatory authorities with jurisdiction relating to the Project or Customer’s Terminal,
subject to Customer’s obligations under non-disclosure agreements with third parties; provided that
Customer shall use reasonable efforts to obtain any waivers necessary under such non-disclosure
agreements to ensure that Customer is able to provide any such reasonable assurances and
undertakings. Customer shall have the right to seek confidential treatment from such regulatory
authorities for any such reasonable assurances or undertakings. Pipeline agrees to promptly notify
Customer in writing when each of the required authorizations, approvals and/or exemptions set forth
in Resource Report No. 1 contained in Exhibit F-1 to the FERC certificate application for the
Project are received, obtained, rejected or denied. Pipeline shall also promptly notify Customer
in writing as to whether any such

-4-

 

authorizations, approvals, and/or exemptions received or obtained are acceptable or
unacceptable to Pipeline.

     2. Description of Customer’s Facilities and List of Customer’s Authorizations. Within
sixty (60) days after execution of this Precedent Agreement, Customer, or an affiliate thereof,
will advise Pipeline in writing of: (i) any material facilities which Customer, or an affiliate
thereof, must construct, or cause to be constructed, in the Province of Nova Scotia in order for
Customer, or an affiliate thereof, to complete Customer’s Terminal and to connect Customer’s
Terminal to Maritimes-Canada’s facilities (“Customer’s Facilities”); (ii) any necessary
governmental and/or regulatory authorizations, approvals, certificates, permits and/or exemptions
associated with the facilities identified pursuant to (i) above (“Customer’s Authorizations”); and
(iii) any necessary authorizations to import and export natural gas or LNG, as applicable, through
the facilities of Customer’s Terminal. Customer, or an affiliate thereof, shall, however, have the
right to update, modify or supplement the list of Customer’s Facilities or Customer’s
Authorizations periodically.

     3. Customer’s Regulatory Authorizations. Subject to the terms and conditions of this
Precedent Agreement, Customer shall proceed with due diligence to obtain Customer’s Authorizations.
Customer reserves the right to file and prosecute applications for Customer’s Authorizations in a
manner it deems to be in its best interest; provided, however, Customer shall pursue Customer’s
Authorizations in a manner designed to implement the firm transportation service contemplated
herein in a timely manner and Customer shall not take any action that would obstruct, interfere
with or delay Pipeline’s receipt of the authorizations and/or exemptions and any supplements

-5-

 

and amendments thereto contemplated hereunder or otherwise jeopardize timely implementation of
the firm transportation service contemplated in this Precedent Agreement. Pipeline expressly
agrees reasonably to support and cooperate with, and to not oppose, obstruct or otherwise interfere
with in any manner whatsoever, the efforts of Customer to obtain all authorizations and/or
exemptions and supplements and amendments thereto necessary for Customer to construct, own, operate
and maintain Customer’s Terminal and to perform its obligations as contemplated by this Precedent
Agreement; provided, however, that the foregoing commitment shall not preclude Pipeline in the
exercise of its sole discretion from seeking to change, clarify, or restate any provision of the
Tariff with respect to any proposal(s) to change, clarify, or restate any tariff provision relating
to natural gas quality or heating content, including, without limitation, Section 12 of the General
Terms and Conditions of the Tariff or to participate in any FERC proceeding or any industry-wide
forum to protect its interests in the exercise of its sole discretion with respect to any
proposal(s) to change, clarify, or restate any tariff provision relating to natural gas quality or
heating content. Customer agrees to promptly notify Pipeline in writing when each of the required
authorizations, approvals and/or exemptions is received, obtained, rejected or denied. Customer
shall also promptly notify Pipeline in writing as to whether any such authorizations, approvals,
and/or exemptions received or obtained are acceptable or unacceptable to Customer.

     4. Firm Transportation Service Agreement

     (A) To effectuate the firm transportation service contemplated herein, Customer and Pipeline
are executing contemporaneously herewith a firm transportation service agreement under Pipeline’s
Rate Schedule MN365 (“Service Agreement”) which

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shall become effective in accordance with its terms. The Service Agreement: (i) specifies a
Maximum Daily Transportation Quantity (“MDTQ”) of 699,300 dekatherms per day (“Dth/d”), exclusive
of fuel requirements, subject to the further conditions noted below; (ii) specifies a primary term
of twenty (20) years, with right of first refusal (“ROFR”) extension rights to the extent such ROFR
rights are approved by FERC for this particular transaction and reflected in the Service Agreement;
(iii) specifies a primary point(s) of receipt at the U.S.-Canadian border near Calais, Maine and
Primary Point(s) of Delivery as reflected in Schedule A hereto and in the Service Agreement; and
(iv) shall be subject to a negotiated rate agreement to be executed on or about December 15, 2005,
by Customer and Pipeline (the “Negotiated Rate Agreement”) which shall become effective in
accordance with its terms.

     (B) (i) Pipeline and Customer agree that the Primary Points of Delivery reflected on Schedule
A may be modified, prior to September 1, 2005, by mutual written agreement of the Parties from time
to time. The Parties agree further that such modifications may encompass changes to the projected
Primary Points of Delivery and delivered volumes or to the allocation of delivered volumes between
U.S. and Canadian Primary Points of Delivery.

          (ii) After September 1, 2005, Pipeline shall use its reasonable efforts to accommodate
changes in Primary Points of Delivery and delivered volumes, to the extent such changes are
operationally feasible, will not result in material adverse changes in the cost of providing
service by Pipeline under the Service Agreement, and will not result in the need to re-file or file
an amendment to Pipeline’s FERC certificate application related to the Project facilities or
materially delay, in Pipeline’s reasonable

-7-

 

judgment, its ability to promptly complete the FERC certificate application for the Project
facilities.

     5. Service Commencement Date

     (A) Customer shall have a right to elect partial service under the Service Agreement subject
to the provisions of this Paragraph 5(A):

	 	(i)	 	No later than the tenth (10th) day following the date on which
Pipeline provides Customer with the Project Description (defined below),
Customer may elect to receive partial service as contemplated under Paragraphs
5(B) and 5(C) by notifying Pipeline in writing of such election. The rate for
such service shall be governed by the Negotiated Rate Agreement.
	 
	 	(ii)	 	In the event that Customer has not elected to receive partial
service by the deadline set forth under sub-paragraph 5(A)(i), then no later
than one hundred and eighty (180) days following the date on which Pipeline
provides Customer with the Project Description, Customer may elect to receive
partial service as contemplated under this Paragraph 5(A)(ii) by notifying
Pipeline in writing of such election. The rate for such service shall be
governed by the Negotiated Rate Agreement.
	 
	 	(iii)	 	The election rights set forth in sub-paragraphs 5(A)(i) and
(ii) are the exclusive means for Customer to elect to receive partial service.

-8-

 

	 	 	 	If Customer does not elect to receive partial service in strict compliance
with either such provision, Customer shall have no right to partial service
under the Service Agreement and the provisions of Paragraphs 5(B) and 5(C)
of this Precedent Agreement shall have no further force or effect.

     (B) Service under the Service Agreement for the Initial MDTQ (defined below) under the Service
Agreement shall commence on the later of: (i) the Target Date for Partial Service; or (ii) the
date that all of the conditions precedent set forth in Paragraph 8 of this Precedent Agreement are
satisfied or waived in writing to the extent necessary to permit the transportation of such Initial
MDTQ under the Service Agreement (“Initial Commencement Date”).

     (C) The “Target Date for Partial Service” and the Initial MDTQ shall be established as
follows:

	 	(i)	 	The Parties will use reasonable efforts to ensure that an
“Initial MDTQ,” equal to the maximum percentage of the full MDTQ under the
Service Agreement that Pipeline can make available, will be available to
Customer under the Service Agreement within a window from November 1, 2007 to
November 1, 2008 (the “First Window Period for Partial Service”).
	 
	 	(ii)	 	By the later of (a) September 15, 2005, or (b) forty-five (45)
days after the conclusion of the open season and reverse open season procedures
and the Joint Facilities Expansion Notice Procedures

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	 	 	 	(defined in Paragraph 6 of this Precedent Agreement) all of which will be
conducted with respect to the Project and all of which are more fully
described below, (x) the Parties shall meet and negotiate in good faith to
establish in writing a 180-day window within the First Window Period for
Partial Service (the “Second Window Period for Partial Service”), whereby
the Preliminary Initial MDTQ under the Service Agreement will be available
to Customer, and (y) Pipeline shall establish the “Preliminary Initial
MDTQ,” which will be Pipeline’s good faith estimate of the percentage of the
full MDTQ (less than the full MDTQ) that Pipeline will be able to provide by
the Initial Commencement Date.
	 
	 	(iii)	 	Twelve (12) months prior to the first day of the Second Window
Period for Partial Service, (a) the Parties shall meet and negotiate in good
faith to establish in writing a 90-day window within the Second Window Period
for Partial Service (the “Third Window Period for Partial Service”), whereby
the Preliminary Initial MDTQ will be available to Customer, and (b) Pipeline
shall provide a good faith estimate of any modifications that are necessary to
the Preliminary Initial MDTQ. In the event that the Parties are unable to
agree in writing upon such 90-day window period, the Third Window Period for
Partial Service shall be the 90-day period ending on the last day of the Second
Window Period for Partial Service.

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	 	(iv)	 	Twelve (12) months prior to the first day of the Third Window
Period for Partial Service, Pipeline shall establish the “Initial MDTQ,” which
will be any quantity less than the full MDTQ under the Service Agreement, but
will be based upon the Preliminary Initial MDTQ and all information regarding
the status of the development of the Project that Pipeline has in its
possession at the time.
	 
	 	(v)	 	Six (6) months prior to the first day of the Third Window
Period for Partial Service, the Parties shall meet and negotiate in good faith
to establish in writing the targeted in-service date within the Third Window
Period for Partial Service (the “Target Date for Partial Service”), whereby the
Initial MDTQ will be available to Customer. In the event that the Parties are
unable to agree in writing upon such Target Date for Partial Service, the last
day of the Third Window Period for Partial Service shall be the Target Date for
Partial Service.
	 
	 	(vi)	 	Commencing six (6) months prior to the Target Date for Partial
Service, the Parties agree that their respective project teams will meet on a
regular basis, to be no less frequent than monthly, to update each other on the
progress of their respective projects.
	 
	 	(vii)	 	Any agreement or notice of the Parties that establishes the
Preliminary Initial MDTQ, the Initial MDTQ and/or the timing of the

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	 	 	 	commencement of partial service described in this Paragraph 5(C) shall be
made in writing.

     (D) The “Target Date for Full Service” shall be established as follows:

	 	(i)	 	The Parties shall use reasonable efforts to ensure that the
full MDTQ under the Service Agreement will be available to Customer within a
window from June 1, 2008 to November 1, 2009 (the “First Window Period for Full
Service”).
	 
	 	(ii)	 	By the later of (a) September 15, 2005, or (b) forty-five (45)
days after the conclusion of the open season and reverse open season procedures
and the Joint Facilities Expansion Notice Procedures (defined in Paragraph 6 of
this Precedent Agreement) all of which will be conducted with respect to the
Project and all of which are more fully described below, the Parties shall meet
and negotiate in good faith to establish in writing a 270-day window within the
First Window Period for Full Service (the “Second Window Period for Full
Service”), whereby the full MDTQ under the Service Agreement will be available
to Customer (in the event that the Parties are unable to agree in writing upon
such 270-day window period, the Second Window Period for Full Service shall be
the 270-day period ending on the last day of the First Window Period for Full
Service).
	 
	 	(iii)	 	Twenty-four (24) months prior to the first day of the Second
Window Period for Full Service, the Parties shall meet and

-12-

 

	 	 	 	negotiate in good faith to establish in writing a 180-day window within the
Second Window Period for Full Service (the “Third Window Period for Full
Service”), whereby the full MDTQ under the Service Agreement will be
available to Customer (in the event that the Parties are unable to agree in
writing upon such 180-day window period, the Third Window Period for Full
Service shall be the 180-day period ending on the last day of the Second
Window Period for Full Service).
	 
	 	(iv)	 	Twelve (12) months prior to the first day of the Third Window
Period for Full Service, the Parties shall meet and negotiate in good faith to
establish in writing a 90-day window within the Third Window Period for Full
Service (the “Fourth Window Period for Full Service”), whereby the full MDTQ
under the Service Agreement will be available to Customer (in the event that
the Parties are unable to agree in writing upon such 90-day window period, the
Fourth Window Period for Full Service shall be the 90-day period ending on the
last day of the Third Window Period for Full Service).
	 
	 	(v)	 	Six (6) months prior to the first day of the Fourth Window
Period for Full Service, the Parties shall meet and negotiate in good faith to
establish in writing the targeted in-service date for full service, which
shall be a date within the Fourth Window Period for Full Service (the “Target
Date for Full Service”), whereby the full MDTQ under the Service Agreement will
be available to Customer (in the

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	 	 	 	event that the Parties are unable to agree in writing upon such targeted
in-service date, the Target Date for Full Service shall be the last day of
the Fourth Window Period for Full Service).
	 
	 	(vi)	 	Commencing six (6) months prior to the Target Date for Full
Service, the Parties agree that their respective project teams will meet on a
regular basis, to be no less frequently than monthly, to update each other on
the progress of their respective projects.

     (E) Service under the Service Agreement for the full MDTQ under the Service Agreement shall
commence on the latest to occur of: (i) the Target Date for Full Service, (ii) the date Customer’s
Facilities are ready for service; provided that, such date shall be no later than the Target Date
for Full Service plus 120 days; or (iii) the date that all of the conditions precedent set forth in
Paragraph 8 of this Precedent Agreement are satisfied or waived in writing to permit transportation
of the full MDTQ under the Service Agreement (“Service Commencement Date”).

     (F) To facilitate full and complete understanding at the Parties’ senior management levels of
the status and progress of both Parties’ respective projects, the Parties agree that their
respective project teams will make project update presentations (with respect to Pipeline, Pipeline
shall provide information regarding the development of the Project, and with respect to Customer,
Customer shall provide information regarding the development of Customer’s Terminal and the status
of Customer’s LNG supply commitments) to joint meetings of the Parties’ designees no less than
quarterly, commencing September 1, 2005.

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     (G) At least thirty (30) days prior to the date on which Pipeline files its certificate
application with the Commission regarding the Project, Pipeline shall provide Customer with a draft
of the Exhibit K to such application. Pipeline shall respond to reasonable requests from Customer
for information related to the amounts set forth in such draft Exhibit K. At Customer’s request,
Pipeline shall meet with Customer regarding such Exhibit K within fifteen (15) days following
Customer’s receipt of such exhibit, to discuss the exhibit and, subject to Customer’s reasonable
request, to provide additional information regarding the amounts set forth in such exhibit.

     6. Design and Permitting of Facilities

     (A) Promptly following the date hereof, Pipeline will undertake the design of the Project
facilities and any other preparatory actions necessary for Pipeline to complete and file its
certificate application(s) with the Commission, including, but not limited to, conducting a reverse
open season and an open season and the PNGTS notice of expansion procedures contemplated in Section
11 of the Ownership Agreement between Maritimes and PNGTS and Article III of the Operating
Agreement among Maritimes, PNGTS and M&N Operating Company (both agreements are dated October 8,
1997, and are on file with the FERC in Docket No. CP97-238) (“Joint Facilities Expansion Notice
Procedures”). Prior to satisfaction of the conditions precedent set forth in Paragraph 8 of this
Precedent Agreement, and consistent with the requirements of Paragraph 5 hereof, Pipeline shall
have the right, but not the obligation, to proceed with the necessary design of facilities,
acquisition of materials, supplies, properties, rights-of-way and any other necessary preparations
to implement the firm

-15-

 

transportation service under the Service Agreement as contemplated in this Precedent
Agreement.

     (B) Within forty-five (45) days following the conclusion of the reverse open season and open
season procedures and the Joint Facilities Expansion Notice Procedures relating to the Project,
Pipeline shall provide Customer with a written detailed description of the Project to be
constructed, the estimated costs of the Project and the volumes (for both partial service, rounded
to the nearest increment of ten thousand (10,000) Dth/d, and full service) that can be transported
through Pipeline’s facilities as expanded by the Project (the “Project Description”). In addition,
Pipeline shall, within the same forty-five (45) day period, provide Customer with a written good
faith estimate of the negotiated rate to be applicable for service to Customer on Pipeline’s system
under the Service Agreement.

     7. Construction of Project. Upon satisfaction of all of the conditions precedent set
forth in Paragraph 8 of this Precedent Agreement (except for the conditions in Paragraphs 8(A)(x)
and 8(B)(vi)), or waiver in writing of the same by Pipeline or Customer, as applicable, Pipeline
shall proceed with due diligence to construct the authorized Project facilities and to implement
the firm transportation service as contemplated in Paragraph 5 of this Precedent Agreement. If,
notwithstanding Pipeline’s due diligence, Pipeline is unable to commence the firm transportation
service for Customer as contemplated in Paragraph 5 of this Precedent Agreement, Pipeline will
continue to proceed with due diligence to complete arrangements for such firm transportation
service, and commence the firm transportation service contemplated thereunder for Customer at the
earliest practicable

-16-

 

date thereafter. Pipeline will neither be liable nor will this Precedent Agreement, the
Service Agreement or the Negotiated Rate Agreement be subject to cancellation (except with respect
to termination as provided in Paragraph 10 hereof) if Pipeline is unable to complete the
construction of such authorized Project facilities and commence the firm transportation service
contemplated herein as contemplated in Paragraph 5 of this Precedent Agreement; provided that,
nothing in this sentence is intended to limit Customer’s rights under Paragraph 10 of this
Precedent Agreement.

     8. Conditions Precedent. Commencement of service under the Service Agreement and
Pipeline’s and Customer’s rights and obligations under the Service Agreement and the Negotiated
Rate Agreement are expressly made subject to satisfaction or, as applicable, waiver in writing of
the following conditions precedent:

     (A) Conditions precedent for the benefit of Pipeline (only Pipeline shall, except as set forth
below, have the right to waive, in writing, the conditions precedent set forth in Paragraph 8(A),
and neither Party shall have the right to waive the conditions precedent set forth in Paragraph
8(A)(x) and 8(B)(vi)):

	 	(i)	 	Pipeline’s receipt and acceptance by May 1, 2007, of all
necessary certificates and authorizations from the Commission to construct,
own, operate and maintain the Project facilities, as described in Pipeline’s
certificate application(s) as the same may be amended from time to time,
necessary to provide the firm transportation service contemplated herein and in
the Service Agreement;

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	 	(ii)	 	Pipeline’s receipt by June 1, 2007, of approval from its
management committee or similar governing body to proceed with construction of
the Project and expend the capital necessary to construct the Project
facilities to provide the firm transportation service contemplated herein and
in the Service Agreement;
	 
	 	(iii)	 	Pipeline’s receipt of all necessary governmental
authorizations, approvals, and permits required to construct the Project
facilities necessary to provide the firm transportation service contemplated
herein and in the Service Agreement other than those specified in Paragraph
8(A)(i);
	 
	 	(iv)	 	Pipeline’s procurement of all necessary rights-of-way,
easements, or condemnations in connection with the Project in form and
substance acceptable to Pipeline;
	 
	 	(v)	 	Pipeline’s receipt by June 1, 2007, of approval from the
lenders that provided long-term financing for the development and construction
of the existing Maritimes Project facilities (“Existing Lenders”) to proceed
with construction of the Project facilities;
	 
	 	(vi)	 	Pipeline’s receipt by June 1, 2007, of funding from banks or
other financial institutions (“Project Lenders”) in accordance with agreements
between such Project Lenders and the Pipeline governing the short-term and/or
long-term financing for the development and construction of the Project
facilities;

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	 	(vii)	 	Customer or its guarantor having by February 1, 2006, an
investment grade rating, as set forth in the first sentence of Paragraph 11(A);
	 
	 	(viii)	 	[intentionally left blank]
	 
	 	(ix)	 	The receipt and acceptance by Customer, or an affiliate
thereof, of the following environmental or siting governmental authorizations
for the site of Customer’s Terminal by June 1, 2005:

	 	(a)	 	Federal Environmental Assessment Approval;
	 
	 	(b)	 	Provincial Environmental Assessment Approval;
	 
	 	(c)	 	Provincial Industrial (Division V) Approval;
	 
	 	(d)	 	Provincial Water (Division I) Approval;
	 
	 	(e)	 	Provincial Permit for Breaking Soil of Highway;
	 
	 	(f)	 	Provincial Beaches Act Clearance; and
	 
	 	(g)	 	Municipal Development Permit;

	 	(x)	 	Pipeline’s completion of construction of the necessary Project
facilities required to render firm transportation service for Customer pursuant
to the Service Agreement and Pipeline having the authorization necessary to
place such facilities into gas service;

-19-

 

	 	(xi)	 	Execution and delivery of this Precedent Agreement, the
Maritimes-Canada Precedent Agreement, the Service Agreement, the
Maritimes-Canada Service Agreement (defined in Paragraph 26 of this Precedent
Agreement) and the Negotiated Rate Agreement;
	 
	 	(xii)	 	Satisfaction or waiver in writing of all of the conditions
precedent set forth in the Maritimes-Canada Precedent Agreement, other than the
conditions precedent set forth in Paragraphs 8(A)(x) and 8(B)(vi) thereof; and
	 
	 	(xiii)	 	Pipeline’s receipt and acceptance by August 1, 2007, of the certificates
and/or permits listed in Resource Report No. 1 contained in Exhibit F-1 to the
FERC certificate application for the Project facilities.

     (B) Conditions precedent for the benefit of Customer (only Customer shall, except as set forth
below, have the right to waive, in writing, the conditions precedent set forth in Paragraph 8(B),
and neither Party shall have the right to waive the conditions precedent set forth in Paragraph
8(A)(x) and 8(B)(vi)):

	 	(i)	 	The receipt and acceptance by Customer, or an affiliate
thereof, of all governmental authorizations as may be necessary to construct
and operate Customer’s Terminal and Customer’s Facilities and to export and
import natural gas or LNG, as applicable, through the facilities of Customer’s
Terminal, other than those contemplated in Paragraph 8(A)(ix) above, by May 1,
2006;

-20-

 

	 	(ii)	 	Approvals from the board of directors or similar governing body
of Anadarko Petroleum Corporation (“Anadarko”) by May 1, 2007, to proceed with
the construction and development of Customer’s Terminal and Customer’s
Facilities, and to proceed with related LNG supply, LNG transportation,
regasification, and regasified natural gas marketing activities and the receipt
of firm transportation under the Service Agreement;
	 
	 	(iii)	 	Customer’s receipt of short-term and/or long-term funding by
May 1, 2007, from lenders financing the construction and development of
Customer’s Terminal and Customer’s Facilities on a non-recourse or limited
recourse basis;
	 
	 	(iv)	 	Customer’s receipt, at least fifteen (15) days prior to the
Service Commencement Date, of a letter from an officer of Pipeline certifying
that Pipeline has requested authorization from FERC to place the Project
facilities into service;
	 
	 	(v)	 	Customer arranging for all necessary marine transportation of
LNG by January 1, 2006;
	 
	 	(vi)	 	Pipeline’s completion of construction of the necessary Project
facilities required to render firm transportation service for Customer pursuant
to the Service Agreement and Pipeline having the authorization necessary to
place such facilities into gas service;

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	 	(vii)	 	[intentionally left blank]
	 
	 	(viii)	 	Execution and delivery of this Precedent Agreement, the Maritimes-Canada
Precedent Agreement, the Service Agreement, the Maritimes-Canada Service
Agreement (defined in Paragraph 26 of this Precedent Agreement) and the
Negotiated Rate Agreement; and
	 
	 	(ix)	 	Satisfaction or waiver in writing of all of the conditions
precedent set forth in the Maritimes-Canada Precedent Agreement, other than the
conditions precedent set forth in Paragraphs 8(A)(x) and 8(B)(vi) thereof.

     Unless otherwise provided for herein, the Commission authorization(s) and approval(s)
contemplated in Paragraph 1 of this Precedent Agreement must be issued in form and substance
satisfactory to both Parties. For the purposes of this Precedent Agreement, such Commission
authorization(s) and approval(s) shall be deemed satisfactory if issued or granted in form and
substance as requested, or if issued in a manner acceptable to Pipeline and such authorization(s)
and approval(s), as issued, will not have a material adverse effect on Customer. Customer shall
notify Pipeline in writing not later than fifteen (15) days after the issuance of the Commission
certificate(s), authorization(s) and approval(s), including any order issued as a preliminary
determination on non-environmental issues, if such certificate(s), authorization(s) and approval(s)
are not satisfactory to it. All other governmental authorizations, approvals, permits and/or
exemptions required of Pipeline must be

-22-

 

issued in form and substance acceptable to Pipeline. All other governmental authorizations,
approvals, permits and/or exemptions required of Customer, shall be issued in form and substance
acceptable to Customer. All governmental approvals required by this Precedent Agreement must be
duly granted by the Commission or other governmental agency or authority having jurisdiction, and
must be final and no longer subject to rehearing or appeal; provided, however, that Pipeline or
Customer may waive in writing with respect to the governmental authorizations required of it, the
requirement that such authorization(s) and approval(s) be final and no longer subject to rehearing
or appeal. Customer and Pipeline each agree to provide written notice to the other promptly after
the dates specified in Paragraphs 8(A) and 8(B) above in the event that a condition precedent for
the benefit of such Party has not been satisfied.

     9. Reimbursement

     (A) If this Precedent Agreement is terminated under Paragraph 10(C), 10(E) or 10 (F) of this
Precedent Agreement or because of the failure to satisfy one or more of the conditions precedent
set forth in Paragraphs 8(A)(vii), 8(A)(ix), 8(B)(i), 8(B)(ii), 8(B)(iii), or 8(B)(v) (or
Paragraphs 8(A)(i), 8(A)(v) or 8(A)(vi), to the extent that the failure to satisfy one or more of
these three conditions precedent is due solely to Customer’s failure to provide sufficient evidence
regarding the quantity of Customer’s LNG supply, provided, however, that Pipeline shall first have
requested in writing specific information regarding such quantity of LNG and Customer shall have
had thirty (30) days in which to provide such information requested by Pipeline), then Customer
shall, at the option and election of Pipeline (such option to be exercised, if at all, in writing
within sixty (60) days of such termination), reimburse Pipeline as hereinafter

-23-

 

provided for all of Pipeline’s reasonable and verifiable costs incurred, allocated and paid as
of the date of such termination, or for which Pipeline is contractually obligated to pay (and does
pay), as of the date of such termination, solely in conjunction with its efforts to satisfy its
obligations under this Precedent Agreement (“Pre-service Costs”), except to the extent such
expenses previously have been reimbursed or are reimbursable by Anadarko or by any third party or
parties. Pre-service Costs will include those third-party expenditures and/or costs incurred,
allocated and paid by Pipeline or for which Pipeline is contractually obligated to pay and does
pay, and Pipeline’s internal direct and corporate overhead costs allocated to technical services
associated with the Project, which shall include engineering, construction, materials and
equipment, environmental, land acquisition and any other technically-based costs related to the
firm service contemplated in this Precedent Agreement and incurred in furtherance of Pipeline’s
efforts to satisfy its obligations under this Precedent Agreement. For clarity, the Parties
specifically agree that Pre-service Costs will not include internal management and internal legal
costs. In addition, identifiable physical assets for which Pipeline is reimbursed pursuant to this
Paragraph 9 and not already installed as part of Pipeline’s FERC or National Energy Board of Canada
jurisdictional facilities by Pipeline shall become the sole property of Customer, if and to the
extent Customer so elects and provides written notice of such election to Pipeline.

     (B) Customer’s obligations under this Paragraph 9 are subject to Pipeline’s fulfillment of
Pipeline’s periodic reporting requirements and compliance with the milestone-based cost limits with
respect to the Project facilities to be applied in connection with this Paragraph 9 as set forth in
Schedule B.

-24-

 

     (C) If Pipeline exercises its option to seek reimbursement pursuant to Paragraph 9(A) of this
Precedent Agreement, then Pipeline shall, within sixty (60) days of exercising such option in
writing, submit to Customer an invoice reflecting the Pre-service Costs for which it seeks
reimbursement. Such invoice shall be accompanied by such detailed and supporting documentation as
Customer may reasonably request in writing. Customer shall, no later than sixty (60) days
following receipt of (i) such invoice and (ii) such detailed and supporting documentation as it may
reasonably request in writing (the “Due Date”), pay by electronic funds transfer to an account
designated by Pipeline in writing the amount so invoiced by Pipeline; provided that Customer may
withhold from such payment the portion, if any, of such invoiced amount that Customer in good faith
disputes. In the event that Customer in good faith disputes any portion of such invoiced amount,
Customer shall submit to Pipeline on or before the Due Date, in writing and in reasonable detail,
an explanation of the reason(s) for such dispute. Customer and Pipeline shall in good faith
attempt to promptly resolve any such disputed invoice amount. Any disputed invoice amounts
subsequently determined by the Parties or by arbitration pursuant to the provisions of Paragraph 24
to have been properly invoiced by Pipeline shall be paid by Customer within sixty (60) days
following such determination, plus interest on late payments and disputed amounts found to be
proper with interest determined at the U.S. prime interest rate as published in the Wall Street
Journal from time to time, plus 200 basis points, from the date Customer should have paid Pipeline
until the date Customer actually pays Pipeline.

     (D) If, within five (5) years from the time Customer pays the Pre-service Costs with respect
to the Project facilities, any other expansion project on Pipeline’s system

-25-

 

results in an executed precedent agreement that contemplates utilization of any of the same
facilities contemplated for use by Customer in connection with this Precedent Agreement, Pipeline
will pay back to Customer all payments Pipeline has received from Customer or any affiliate thereof
for the Project facilities (including all costs reimbursed to Pipeline under the Reimbursement
Agreement among Anadarko, Pipeline and Maritimes-Canada dated May 26, 2004, as amended from time to
time); provided that, the obligation of Pipeline to pay back such amount shall be limited to only
the amount that Pipeline has received from Customer, Anadarko, or any affiliate thereof in
connection with such expansion facilities (i) that Pipeline actually constructs as part of the
other expansion or (ii) for which Pipeline actually receives reimbursement from the new expansion
shipper(s). The amount required to be paid back pursuant to this Paragraph 9(D), including amounts
repaid pursuant to any audit, accounting or dispute resolution procedure hereunder, shall also
include interest at the US prime interest rate as published in the Wall Street Journal, from time
to time, plus 200 basis points, from the date of receipt of such funds by or on behalf of Pipeline
until the date of payment in full to Customer. Pipeline shall use a reasonable allocation
methodology in determining how to allocate costs among various portions of the Project facilities
that have been incurred in connection with the Project facilities but that are not directly
attributable to any particular portion of such Project facilities. Customer shall have audit
rights and the right to an accounting of Pipeline and its affiliates whose costs are subject to a
claim for reimbursement hereunder to enforce the provisions of this Paragraph 9 regarding
Pre-service Costs. Disputes regarding this Paragraph 9 shall be resolved between the Parties
pursuant to the provisions of Paragraph 24 below.

-26-

 

     10. Termination

     (A) If any of the conditions precedent set forth in Paragraph 8 of this Precedent Agreement,
excluding the condition precedent set forth in Paragraphs 8 (A)(x), 8(B)(iv) and 8(B)(vi), have not
been fully satisfied, or waived in writing by Pipeline or Customer, as applicable, pursuant to the
terms of Paragraph 8, by the earlier of the applicable dates specified therein (if any) or November
1, 2009, then either Pipeline or Customer may for any such failure to satisfy or to waive
thereafter terminate this Precedent Agreement, the Service Agreement and the Negotiated Rate
Agreement by giving sixty (60) days prior written notice of its intention to terminate to the
non-terminating Party; provided, however, if the conditions precedent are satisfied, or waived in
writing by Pipeline or Customer, as applicable, pursuant to the terms of Paragraph 8 of this
Precedent Agreement, within such sixty (60) day notice period, then such termination will not be
effective. In the event notice of termination is provided by either Party, and this Precedent
Agreement subsequently is terminated as a result of such notice, Customer’s financial obligations
with respect to Paragraph 9 of this Precedent Agreement, if any, shall cease to increase as of the
date of such notice of termination, with the exception of reasonable and incidental
post-termination notice expenses (such as demobilization and contract termination expenses) shown
to Customer’s reasonable satisfaction, by Pipeline in writing to have been required of Pipeline.

     (B) On the latest to occur of (i) the Target Date for Full Service, (ii) November 1, 2009, or
(iii) the last day of the second, consecutive full Construction Cycle following the Construction
Authorization Date, if Pipeline has not completed construction of the

-27-

 

Project facilities and made such facilities available for full service, Customer shall have
the right, to be exercised if at all no later than thirty (30) days following the last to occur of
the foregoing dates, to terminate this Precedent Agreement by giving sixty (60) days prior written
notice of its intention to terminate to Pipeline; provided, however, if Pipeline makes such Project
facilities available for full service during such sixty (60) day notice period, then such
termination will not be effective. If Customer does not exercise the right it has to terminate
this Precedent Agreement under the preceding sentence of this Paragraph 10(B), then the November 1,
2009 date referred to therein and in Paragraph 10(A) shall become November 1, 2011. For purposes
of this Paragraph 10(B), “Construction Cycle” shall mean, with respect to any calendar year, the
period from June 1 through December 31 of such calendar year, and “Construction Authorization Date”
shall mean the date on which Pipeline has received (i) all of the governmental authorizations set
forth in Paragraphs 8(A)(i) and 8(A)(xiii) of this Precedent Agreement and (ii) Pipeline’s
management committee authorizations necessary to initiate construction of the Project facilities.
Pipeline promptly shall provide written notice of such Construction Authorization Date to Customer.
Notwithstanding any provision to the contrary in this Paragraph 10(B), Customer shall not have a
right to terminate this Precedent Agreement pursuant to this Paragraph 10(B) unless and until
Customer’s Facilities are completed and available for service.

     (C) With respect to Paragraph 6(B) of this Precedent Agreement, to the extent the good faith
estimate of the negotiated rate or the scope of the Project contemplated in the Project Description
materially differs from that which forms the basis for this Precedent Agreement, Customer shall
have the option but not the obligation to

-28-

 

terminate this Precedent Agreement, in Customer’s sole discretion, after providing written
notice to Pipeline of such election within forty-five (45) days following receipt of such good
faith estimate and the Project Description.

     (D) Pipeline shall have the option but not the obligation to terminate this Precedent
Agreement in good faith for inability or anticipated inability to meet any one or more of the
following conditions precedent, prior to the dates set forth above for satisfaction of such
conditions precedent in Paragraph 8(A) of this Precedent Agreement: 8(A)(v) and 8(A)(vi); provided
that, Pipeline shall have the option at any time to terminate this Precedent Agreement prior to the
date on which the condition precedent set forth in Paragraph 8(A)(ii) is satisfied or waived by
Pipeline in writing. Such options shall be exercised by providing notice of termination to
Customer in writing.

     (E) Customer shall have the option but not the obligation to terminate this Precedent
Agreement in good faith for inability or anticipated inability to meet any one or more of the
following conditions precedent, prior to the dates set forth above for satisfaction of such
conditions precedent in Paragraph 8(B) of this Precedent Agreement: 8(B)(iii), 8(B)(v), and
8(B)(vii); provided that, Customer shall have the option at any time to terminate this Precedent
Agreement prior to the date on which the condition precedent set forth in Paragraph 8(B)(ii) is
satisfied or waived by Customer in writing. Such options shall be exercised by providing notice of
termination to Pipeline in writing.

-29-

 

     (F) The Parties acknowledge that the availability of LNG supplies to support Customer’s
Terminal is a necessity for Customer to successfully operate Customer’s Terminal, and, accordingly,
Customer’s access to LNG supplies is a necessity for Pipeline to agree to expand its pipeline
system. Therefore, in addition to and notwithstanding any other provision in this Precedent
Agreement, Customer agrees that Pipeline shall have the right to terminate this Precedent Agreement
on or after the date on which Pipeline provides Customer with the Project Description, if Customer
fails to demonstrate to Pipeline, to Pipeline’s satisfaction acting reasonably, that Customer has
arranged for an adequate quantity of LNG supplies to support the operation of Customer’s Terminal
when considering the period covered by the Primary Term of the Service Agreement (such
demonstration may include production of LNG supply contracts or other types of written commitments
of supply redacted to exclude confidential pricing provisions but which would include the identity
of the counterparty to such supply contract(s) (or country in which such supplies are produced) and
provisions related to the character of service (i.e., whether such supply is firm or interruptible
and the terms related to any potential supply interruption), and the term of the supply
agreement(s)). If Pipeline exercises this right to terminate this Precedent Agreement, Pipeline
shall provide written notice to Customer on or after the date on which Pipeline provides Customer
with the Project Description, stating that Pipeline has elected to terminate this Precedent
Agreement under this Paragraph 10, and this Precedent Agreement shall terminate upon delivery of
such written notice to Customer. Such termination option shall be exercised, if at all, within one
hundred twenty (120) days after the Pipeline provides Customer with the Project Description.

-30-

 

     (G) Except as provided in Paragraph 25 hereof, if this Precedent Agreement is not terminated
pursuant to Paragraphs 10(A), 10(B), 10(C), 10(D), 10(E) or 10(F) of this Precedent Agreement, then
this Precedent Agreement will terminate by its express terms on the Service Commencement Date under
the Service Agreement, as provided for in Paragraph 5 of this Precedent Agreement, and thereafter
Pipeline’s and Customer’s rights and obligations related to the transportation transaction
contemplated herein shall be determined pursuant to the terms and conditions of such Service
Agreement, the Negotiated Rate Agreement and the Tariff, as effective from time to time.

     11. Creditworthiness. Customer will endeavor to satisfy by February 1, 2006, one of
the following creditworthiness requirements set forth in Paragraph 11(A) and agrees that, upon
written request by Pipeline, Customer shall promptly provide evidence to Pipeline of same:

     (A) Customer (or any entity that guarantees all of Customer’s obligations under the Service
Agreement for the initial twenty (20) year term of the Service Agreement) shall have an investment
grade rating for its long-term senior unsecured debt from Moody’s Investors Service, Inc. of Baa3
or higher or from Standard & Poor’s of BBB- or higher. In the event that Customer or its guarantor
meets the requirement contained in the immediately preceding sentence initially, but is later
downgraded below such investment grade rating, Customer will be required to obtain a guarantee from
any affiliate of Customer that is an investment grade rated entity as defined in Paragraph 11(A);
provided, that if Customer does not have any affiliates with such investment

-31-

 

grade rating, Customer shall be required to satisfy the requirement set forth in Paragraph
11(B).

     (B) At any time and from time to time that neither Customer nor its guarantor meets the
requirements set forth in the first sentence of Paragraph 11(A), Customer will be accepted as
creditworthy by Pipeline if Pipeline reasonably determines that, notwithstanding the absence of
such investment grade credit rating, the financial position of Customer (or an entity that
guarantees all of Customer’s obligations under the Service Agreement for the initial twenty (20)
year term of the Service Agreement) is reasonably acceptable to Pipeline and acceptable to
Pipeline’s Existing Lenders and the Project Lenders.

     (C) The Parties agree that, if and when Pipeline requests evidence in writing of Customer’s or its
guarantor’s ability to satisfy the creditworthiness requirements set forth in Paragraphs 11(A),
11(B) and/or 11(E), and Customer or its guarantor fails, in Pipeline’s reasonable discretion, to
provide such evidence, Pipeline may suspend its obligations under this Precedent Agreement until
Customer or its guarantor has provided such evidence; provided, further that Pipeline shall first
provide Customer with written notice of its intent to suspend performance hereunder (which notice
will state whether Pipeline is suspending its obligations due to Customers’ noncompliance with
Paragraph 11(A), 11(B) and/or 11(E)) and Pipeline shall provide Customer, prior to suspension, with
at least 30 days in which to cure the claimed failure to provide such evidence.

     (D) If and to the extent that an entity guarantees Customer’s obligations for the initial
twenty (20) year term of the Service Agreement and/or for Customer’s

-32-

 

obligations under this Precedent Agreement, such guarantees shall be in the form, content, and
substance as expressly set forth as Schedule C hereto (for the Service Agreement) and Schedule D
hereto (for the Precedent Agreement), respectively. Each such guaranty shall be assignable in
accordance with its stated terms.

     (E) With respect to Customer’s obligations under this Precedent Agreement, Customer, or its
guarantor, shall meet the credit rating requirements of Paragraph 11(A). If Customer or its
guarantor loses such investment grade rating and, if Customer’s guarantor is not an affiliate of
Customer, then Customer shall endeavor to first provide a guaranty from an affiliate of Customer
with an investment grade rating as defined in Paragraph 11(A), and if Customer’s guarantor is an
affiliate of Customer, then Customer shall endeavor to first provide a guarantee from another
affiliate of Customer with an investment grade rating as defined in Paragraph 11(A). If no
affiliate of Customer has such investment grade rating, Customer or its guarantor shall provide a
standby irrevocable letter of credit from a financial institution reasonably acceptable to Pipeline
and acceptable to Pipeline’s Existing Lenders and Project Lenders (“Letter of Credit”) in an amount
equal to the applicable estimated Pre-service Costs set forth in Schedule B as of the date on which
such assurances are requested, plus the estimated additional costs projected to be incurred for the
following twelve months as set forth in Schedule B. The right of Pipeline to suspend its
obligations under this Precedent Agreement under Paragraph 11(C) shall not be affected by Customer
providing a letter of credit under this Paragraph 11(E); provided, however, if Pipeline provides
notice of its intention to suspend performance pursuant to Paragraph 11(C), the Parties agree that
Customer may replace any outstanding letters of credit previously posted by Customer

-33-

 

pursuant to this Paragraph 11(E) with a replacement Letter of Credit in the amount of the
applicable estimated Pre-Service Costs for the next Milestone Event set forth in Schedule B
scheduled to occur following the date on which Pipeline provides such notice of suspension;
provided further that, in the event Pipeline subsequently resumes performance under this Precedent
Agreement after providing notice of suspension (and provides written notice to Customer of
Pipeline’s resumption of performance), but prior to any termination of this Precedent Agreement,
then Customer shall tender an additional Letter of Credit in an amount equal to the difference
between (i) the amount of the Letter of Credit posted by Customer during suspension, and (ii) an
amount equal to the applicable estimated Pre-service Costs set forth in Schedule B as of the date
on which Pipeline suspended performance under this Agreement, plus the estimated additional costs
projected to be incurred for the following twelve months as set forth in Schedule B.

     12. Pipeline Representations and Warranties and Customer Acknowledgments

     Pipeline represents and warrants that (i) it is duly organized and validly existing under the
laws of the State of Delaware and has all requisite legal power and authority to execute this
Precedent Agreement and carry out the terms, conditions and provisions hereof; (ii) this Precedent
Agreement constitutes the valid, legal and binding obligation of Pipeline, enforceable in
accordance with the terms hereof; (iii) there are no actions, suits or proceedings pending or, to
Pipeline’s knowledge, threatened against or affecting Pipeline before any court or administrative
body that might materially adversely affect the ability of Pipeline to meet and carry out its
obligations hereunder; and (iv) the

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execution and delivery by Pipeline of this Precedent Agreement has been duly authorized by all
requisite limited liability company action.

     13. Customer’s Representations and Warranties. Customer represents and warrants that
(i) it is duly organized and validly existing under the laws of the State of Delaware and has all
requisite legal power and authority to execute this Precedent Agreement and carry out the terms,
conditions and provisions thereof; (ii) this Precedent Agreement constitutes the valid, legal and
binding obligation of Customer, enforceable in accordance with the terms hereof; (iii) there are no
actions, suits or proceedings pending or, to Customer’s knowledge, threatened against or affecting
Customer before any court or administrative body that might materially adversely affect the ability
of Customer to meet and carry out its obligations hereunder; (iv) the execution and delivery by
Customer of this Precedent Agreement has been duly authorized by all requisite limited liability
company action; and (v) upon execution and delivery of the Service Agreement, Customer, or its
guarantor, shall satisfy all of the creditworthiness requirements of the Tariff, as it may be
amended from time to time.

     14. Modification or Amendment. This Precedent Agreement may not be modified or
amended unless the Parties execute written agreements to that effect.

     15. Succession, Merger, Consolidation of Properties. Any party which succeeds by
purchase, merger, or consolidation of title to the properties of Pipeline or Customer necessary to
provide or receive service pursuant to this Precedent Agreement or (separately) the Service
Agreement and the Negotiated Rate Agreement, will, if its predecessor in title is a Party, be
entitled to the rights and will be subject to the

-35-

 

obligations of its predecessor in title under this Precedent Agreement, the Service Agreement
and the Negotiated Rate Agreement provided that such party, (either the successor to Pipeline or
the successor to Customer or any entity guaranteeing the credit of such party), shall be considered
creditworthy by the other Party. For purposes of this Paragraph 15, the test of creditworthiness
shall be satisfied if such successor or its guarantor satisfies the investment grade rating
threshold set forth in the first sentence of Paragraph 11(A). Except as provided in the foregoing
sentence and in Paragraphs 16(A) and 16(C) below, neither Customer nor Pipeline may assign any of
its rights or obligations under this Precedent Agreement without the prior written consent of the
other Party, which consent may not be unreasonably withheld or delayed.

     16. Assignment

     (A) Each Party acknowledges and agrees that the other Party shall have the right, without the
prior written consent of the other Party, to assign, mortgage, or pledge all or any of its rights,
interests, and benefits under this Precedent Agreement and/or the Service Agreement and/or the
Negotiated Rate Agreement to secure payment of any indebtedness incurred or to be incurred in
connection with the development and construction of the Project facilities, or Customer’s Terminal
and/or Customer’s Facilities, as applicable. Each Party agrees to provide the other Party’s
lenders such reasonable assurances and undertakings as they may require in connection with such
assignment, so long as the terms thereof are reasonable and not contrary to market standards for
such assurances and undertakings and do not decrease such non-assigning Party’s rights or increase
its obligations under this Precedent Agreement, the Service Agreement, or the Negotiated Rate
Agreement in any material manner. In

-36-

 

addition, each Party shall reasonably cooperate with the other Party to obtain such other
Party’s financing by supplying such other Party’s lenders information concerning the first Party
(that is in the first Party’s possession and is not of a proprietary or confidential nature)
reasonably requested in writing by the other Party’s lenders.

     (B) Customer may assign either all of its rights and obligations in or an undivided interest
to its rights and obligations under this Precedent Agreement and all or any portion of its rights
and obligations under the Service Agreement and/or the Negotiated Rate Agreement to a subsidiary,
affiliate, co-venturer, joint venture entity or other third party; provided that, each such
assignee of rights and obligations under this Precedent Agreement, the Service Agreement and/or the
Negotiated Rate Agreement executes a new firm service agreement under Rate Schedule MN365 and a new
negotiated rate agreement covering the rights and obligations which have been assigned to it.
Notwithstanding any other provision of this Paragraph 16(B), no assignment of all of Customer’s
rights under either this Precedent Agreement or the Service Agreement or the Negotiated Rate
Agreement (other than assignments made pursuant to Paragraph 16(C) below) under this Paragraph
16(B) will release Customer of any of its obligations under this Precedent Agreement, until
Customer receives the prior written consent of Pipeline, which consent shall not be unreasonably
withheld or unduly delayed; provided, that Pipeline agrees that it will promptly provide such
consent if (i) such assignee or its guarantor has an investment grade credit rating as defined in
Paragraph 11(A) hereof and (ii) such assignee possesses, in Pipeline’s reasonable discretion, the
requisite technical expertise or the demonstrated ability to acquire the requisite technical
expertise to complete Customer’s Terminal and Customer’s Facilities

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in a timely manner to meet the Service Commencement Date under the Service Agreement. ANY
SUCH ASSIGNMENT HEREUNDER TO WHICH PIPELINE HAS CONSENTED SHALL FULLY, COMPLETELY AND IRREVOCABLY
DISCHARGE, RELEASE AND TERMINATE CUSTOMER’S OBLIGATIONS HEREUNDER FROM THE EFFECTIVE DATE OF SUCH
ASSIGNMENT FORWARD, AND IF AND TO THE EXTENT THAT AN ENTITY GUARANTEES CUSTOMER’S OBLIGATIONS UNDER
THIS PRECEDENT AGREEMENT AS CONTEMPLATED BY THE TERMS OF PARAGRAPH 11(D), SUCH GUARANTEE, THE FORM
OF WHICH IS SET FORTH IN SCHEDULE C HERETO, SHALL AUTOMATICALLY AND WITHOUT ANY ACTION OF CUSTOMER
OR THE GUARANTOR UNDER SUCH GUARANTEE TERMINATE OR BE REDUCED IN ALL RESPECTS EFFECTIVE FOR ALL
PURPOSES AS OF THE EFFECTIVE DATE OF THE FOREGOING ASSIGNMENT.

     (C) Customer may assign all or any part of its rights and obligations under the Service
Agreement to any party; provided that, each such assignee executes a new firm service agreement
under Rate Schedule MN365 and a new negotiated rate agreement substantially identical in all
respects (other than the quantity of natural gas to be transported in the event of assignments to
more than one party of partial undivided interests) with the Service Agreement and the Negotiated
Rate Agreement covering the rights and obligations which have been assigned to it. ANY SUCH
ASSIGNMENT HEREUNDER SHALL, WITH RESPECT TO THE RIGHTS AND OBLIGATIONS OF CUSTOMER SO ASSIGNED,
FULLY, COMPLETELY AND IRREVOCABLY DISCHARGE, RELEASE AND TERMINATE CUSTOMER’S OBLIGATIONS UNDER THE
SERVICE AGREEMENT AND THE NEGOTIATED RATE AGREEMENT FROM

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THE EFFECTIVE DATE OF SUCH ASSIGNMENT FORWARD, AND IF AND TO THE EXTENT THAT AN ENTITY
GUARANTEES CUSTOMER’S OBLIGATIONS UNDER THIS PRECEDENT AGREEMENT AS CONTEMPLATED BY THE TERMS OF
PARAGRAPH 11(D), SUCH GUARANTEE, THE FORM OF WHICH IS SET FORTH IN SCHEDULE C HERETO, SHALL
AUTOMATICALLY AND WITHOUT ANY ACTION OF CUSTOMER OR THE GUARANTOR UNDER SUCH GUARANTEE TERMINATE OR
BE REDUCED IN ALL RESPECTS EFFECTIVE FOR ALL PURPOSES AS OF THE EFFECTIVE DATE OF THE FOREGOING
ASSIGNMENT.

     (D) Notwithstanding any other provision of Paragraphs 16(B) or 16(C) of this Precedent
Agreement, Customer may not assign any rights or obligations as contemplated under Paragraph 16(B)
or 16(C) to any entity, unless (i) the assignee (or assignee’s guarantor) has an investment grade
credit rating as defined in the first sentence of Paragraph 11(A) of this Precedent Agreement, and
(ii) the assignment is implemented prior to the earlier of the Initial Commencement Date or the
Service Commencement Date. After the Initial Commencement Date, any assignment of firm capacity
must be effectuated pursuant to the provisions of the Tariff. In addition, any assignment of
Customer’s rights and obligations under the Service Agreement and Negotiated Rate Agreement under
Paragraph 16(B) or 16(C) prior to the Initial Commencement Date shall be an assignment of rights
and obligations that are substantially identical to those under the Service Agreement and
Negotiated Rate Agreement, except with respect to the MDTQ and Points of Delivery (in connection
with assignments of partial undivided interests); provided, that in the aggregate, the service
rights remaining under the Service Agreement and the service rights under all service

-39-

 

agreements between Pipeline and any of Customer’s assignees resulting from such assignments
shall not exceed the service rights under the Service Agreement and the Points of Delivery in any
new service agreement shall either be Customer’s Points of Delivery or points of delivery within
Customer’s Contract Path (as defined in the Tariff).

     17. No Third Party Beneficiaries. Except as expressly provided for in this Precedent
Agreement, nothing herein expressed or implied is intended or shall be construed to confer upon or
give to any person or entity not a Party any rights, remedies or obligations under or by reason of
this Precedent Agreement.

     18. Joint Efforts. Each and every provision of this Precedent Agreement shall be
considered as prepared through the joint efforts of the Parties and shall not be construed against
either Party as a result of the preparation or drafting thereof. It is expressly agreed that no
consideration shall be given or presumption made on the basis of who drafted this Precedent
Agreement or any specific provision hereof.

     19. Representations. The recitals and representations appearing first above are
hereby incorporated in and made a part of this Precedent Agreement.

     20. Governing Law. This Precedent Agreement shall be governed by, construed,
interpreted, and performed in accordance with the laws of the State of Texas, without recourse to
any laws of Texas governing its conflict of laws or choice of laws, except to the extent the
matters at issue herein fall within the primary or exclusive jurisdiction of the FERC.

-40-

 

     21. Limitation of Damages. NEITHER PARTY, NOR ANY AFFILIATE THEREOF, SHALL BE LIABLE
TO THE OTHER PARTY, OR ANY AFFILIATE THEREOF, FOR ANY SPECIAL, INDIRECT, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES OF ANY NATURE RESULTING FROM ANY BREACH OF OR DEFAULT UNDER THIS PRECEDENT
AGREEMENT, INCLUDING ANY DAMAGES RESULTING FROM LOST PROFITS OR BUSINESS INTERRUPTION HOWSOEVER
CAUSED OR OCCASIONED, EVEN IF SUCH PARTY HAS BEEN MADE AWARE OF THE POSSIBILITY OF SUCH DAMAGES,
LOST PROFITS OR BUSINESS INTERRUPTION.

     22. Notices. Except as herein otherwise provided, any notice, advisement, request,
demand, statement, or invoice provided for in this Precedent Agreement, or any notice which either
Party desires to give to the other, must be in writing and will be deemed duly delivered (a) upon
personal delivery to the Party to be notified, (b) on confirmation of receipt by facsimile by the
Party to be notified, (c) one (1) working day after deposit with a reputable overnight courier,
prepaid for overnight delivery and addressed to the Party to be notified, or (d) three (3) days
after deposit with the U.S. Postal Service, postage prepaid, registered or certified, with return
receipt requested and addressed to the Party to be notified, at the address indicated for such
Party below:

	 	 	 
	Pipeline:

	 	Maritimes & Northeast Pipeline, L.L.C.
	 

	 	Suite 300
	 

	 	890 Winter Street
	 

	 	Waltham, MA 02415
	 

	 	Attn: Vice President, Marketing
	 

	 	Phone: (617) 560-1383
	 

	 	Fax: (617) 560-1552

-41-

 

	 	 	 
	Customer:

	 	Anadarko LNG Marketing, LLC
	 

	 	c/o Anadarko Petroleum Corporation
	 

	 	1201 Lake Robbins Drive
	 

	 	The Woodlands, Texas 77380
	 

	 	Attn: Manager, Commercial Development
	 

	 	Phone: (832) 636-1000
	 

	 	Fax: (832) 636-8263
	 
	 	 
	 

	 	Anadarko LNG Marketing, LLC
	 

	 	c/o Anadarko Petroleum Corporation
	 

	 	1201 Lake Robbins Drive
	 

	 	The Woodlands, Texas 77380
	 

	 	Attn: Gas Marketing Operations Manager
	 

	 	Phone: (832) 636-1000
	 

	 	Fax: (832) 636-7215

or at such other address as such Party designates by five (5) days advance written notice to the
other Party given in the foregoing manner.

     23. Multiple Counterparts. This Precedent Agreement may be executed in multiple
counterparts, each of which shall, if both Parties execute a counterpart, be deemed an original but
all of which together shall constitute one and the same instrument. The facsimile transmission of
any signed original of this Precedent Agreement, and transmission or retransmission of any signed
facsimile transmission, shall be the same as delivery of an original. At the request of either
Party, the Parties will confirm facsimile transmitted signatures by signing an original document
for delivery between them.

     24. Dispute Resolution

     (A) Any controversy, cause of action, dispute or claim arising out of, relating to, or in
connection with, this Precedent Agreement, or the breach, termination or validity thereof
(collectively a “Dispute”), shall be settled solely, exclusively and finally

-42-

 

through mandatory and binding arbitration, to which the Parties hereby agree to submit, it
being the intention of the Parties that this is a broad form arbitration agreement designed to
encompass all possible Disputes between the Parties relating to this Precedent Agreement.

     (B) A Party shall not be permitted to submit a Dispute to arbitration under this Precedent
Agreement unless such Party provides the other Party prior notice of its intention to submit such
Dispute to arbitration hereunder. Such notice shall, in reasonable detail, identify the grounds
for such Dispute. Following the receipt of such notice, executive officers of the Parties, or
their designees, shall immediately, for a period of ten (10) consecutive working days, use
reasonable commercial efforts to resolve and settle such Dispute. If the executive officers of the
Parties, or their designees, are able to resolve such Dispute during such period, the Parties shall
prepare and sign a written memorandum setting forth the terms of such resolution, which shall be
binding upon the Parties. Failing such resolution and settlement within such period, either Party
shall have the right to submit such Dispute to arbitration pursuant to the terms of this Precedent
Agreement. With respect to any Dispute, all applicable statutory limitations periods and defenses
based upon the passage of time will be tolled for the duration of the negotiations provided for
above and for the duration of the arbitration proceedings set forth in this Paragraph 24.

     (C) All arbitration procedures under this Precedent Agreement shall be conducted in accordance
with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association
(“AAA”), as amended and in effect from time to time. All arbitration procedures shall be
administered by the AAA. The tribunal for the

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arbitration shall consist of three arbitrators, one to be designated by each Party and the
third to be selected by the mutual written agreement of the two arbitrators. In the event either
Party fails to appoint an arbitrator, or if the two arbitrators appointed by the Parties fail to
reach agreement on a third arbitrator, the AAA shall select such arbitrator(s). Each Party shall
designate its arbitrator within twenty (20) days of receiving a notice of arbitration. Prior to
acceptance of appointment as an arbitrator, each arbitrator shall have read and affirmatively
agreed to observe all provisions of the AAA’s Code of Ethics for Arbitrators in Commercial
Disputes. THE EXPEDITED PROCEDURES SET FORTH IN THE RULES SHALL APPLY AND THE SUBSTANTIVE AND
PROCEDURAL LAWS OF THE STATE OF TEXAS (EXCLUDING ANY CONFLICT OF LAWS OR CHOICE OF LAWS RULES OR
PRINCIPLES AS APPLIED IN TEXAS) SHALL APPLY. This Precedent Agreement involves interstate
commerce in several ways, including, without limitation, the fact that the Project involves the
transportation of natural gas in interstate commerce pursuant to the Natural Gas Act. The choice
of Texas law shall not be interpreted as a choice to exclude applicability of the Federal
Arbitration Act to the enforceability and scope of this arbitration provision. It is therefore
specifically understood that both Texas and federal law, neither to the exclusion of the other,
shall apply to the enforceability and scope of this provision, and, in the event of a conflict
between Texas and federal law, the law maximizing the enforceability and scope of this provision,
including laws relating to appellate remedies, may be invoked, without excluding applicability of
other law, by the Party seeking to compel arbitration. If, for purposes of determining Texas or
federal law, a conflict or difference of opinion exists between lower state courts and lower

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federal courts, as the case may be, this arbitration provision shall be interpreted to select
the precedent of that lower state court or that lower federal court that maximizes the
enforceability and scope of this arbitration provision. All arbitrations hereunder shall take
place in Houston, Texas. The Parties specifically agree that the judgment or award of the tribunal
shall be final and binding on each Party and for all purposes. Judgment upon an arbitration award
may be entered in any court having jurisdiction. This arbitration provision shall survive the
termination of this Precedent Agreement. Should the Parties ever be prevented by applicable law
from utilizing arbitration to resolve Disputes hereunder, then the choice of law provisions of
Paragraph 20 shall nevertheless remain in full force and effect, and the Parties shall submit such
Disputes to the exclusive jurisdiction of the appropriate court located in Harris County, Texas (to
whose exclusive jurisdiction the Parties hereby agree to submit). Notwithstanding the foregoing,
nothing in this Paragraph 24 shall be construed in any manner to exclude, qualify, limit or
condition the exclusive or primary jurisdiction of the FERC (as well as the United States Courts of
Appeal that may review decisions of FERC) over matters, disputes or controversies within the scope
of FERC’s exclusive or primary jurisdiction, or limit, qualify or condition the right of either
Party to present, prosecute or defend its interests before FERC or reviewing courts.

     25. Survival. Notwithstanding any termination of this Precedent Agreement, the
provisions of Paragraphs 7, 9, 11(D), 12, 13, 17, 20, 21, 22 and 24 of this Precedent Agreement
shall survive such termination pursuant to their respective terms.

     26. Related Agreements

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     (A) Contemporaneously with the execution of this Precedent Agreement and the Service
Agreement, Maritimes-Canada and an affiliate of Customer are entering into the Maritimes-Canada
Precedent Agreement and a firm transportation service agreement for service on the Maritimes-Canada
system (the “Maritimes-Canada Service Agreement”). The Parties will also enter into the Negotiated
Rate Agreement which will govern the rate for service under the Service Agreement.

     (B) Upon termination of any of the agreements described in Paragraph 26(A), except with
respect to a termination of this Precedent Agreement or the Maritimes-Canada Precedent Agreement
upon commencement of service under the Service Agreement or the Maritimes-Canada Service Agreement,
respectively, and except with respect to a termination of the Negotiated Rate Agreement in
accordance with its terms, each of the agreements described in Paragraph 26(A) to which Pipeline
and Customer are Parties shall promptly terminate, except as provided herein, and have no further
force or effect.

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     IN WITNESS WHEREOF, the Parties have caused this Precedent Agreement to be duly executed by
their duly authorized officers as of the day and year first above written.

	 	 	 	 	 
	Maritimes & Northeast Pipeline, L.L.C.	 	Anadarko LNG Marketing, LLC
	 by:

	 	M&N Management Company	 	 
	 

	 	  Its Managing Member	 	 

	 	 	 	 	 	 	 
	By:

	 	/s/ Douglas P. Bloom	 	By:
	 	/s/ James R. Larson
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Name:

	 	Douglas P. Bloom	 	Name:
	 	James R. Larson
	 
	 	 	 	 	 	 
	Title:

	 	President	 	Title:
	 	Senior Vice President, Finance

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